Tough as Nails went to extreme lengths to create and enforce a strict set of COVID-19 rules to ensure the safety of cast and crew while filming this season. If a contestant violates the quarantine bubble in any way, they will likely be forced to leave, regardless of how big or small their transgression was. Mikey took a huge fall in the Individual Challenge, leaving him physically winded. It's possible that, like Mariner Tara Alverson, Mikey broke the quarantine rules in some way and was not medically cleared to continue in the Team Challenge.
However, it's also possible that he was removed off-camera due to his behavior during the Team Challenge in Episode 2. During this task, Mikey shoved fellow contestant Patrick "Freight Train" Hargan into the lobster traps, which caused him to get wet and almost drown. Many viewers were not happy with Mikey's actions and he could have been removed off-camera for pushing another contestant. If this is the case, Phil would likely have made mention of it in a later episode.