A dying worker filed days before her death - then a notice arrived saying step one was done
A pension plan may not rely on an unwritten step to deny benefits, a federal appeals court ruled - reviving a nearly $677,000 claim.
The Ninth Circuit Court of Appeals reversed a lower court on August 31, 2026, in a decision that turns on how much of a plan's process has to appear in the plan itself.
The employee had worked at The Permanente Medical Group since 2000 and paid into the Kaiser Permanente Employees Pension Plan. She was diagnosed with cancer and took medical leave in May 2021. By late March 2022 she was hospitalized and needed 24-hour care. On March 26, 2022, a benefit election form was submitted online at her request, choosing a lump sum rollover of her $676,980.77 in pension benefits and naming her sister as beneficiary. She died three days later, on March 29, 2022.
Kaiser paid death benefits from the employee's 401(k) but denied the pension claim. Its reasoning: she started the election without finishing it. As Kaiser described the process, a participant first files the required form, then - once Kaiser reviews it - confirms the elections and acknowledges notices to lock them in. That second step, the court noted, came from Kaiser's "consistent administrative practice," which "is not made publicly available to participants."
Two days after the employee died, and before it knew of her death, Kaiser sent her a notice saying the first step was complete and she could finish online. At oral argument, Kaiser's lawyer acknowledged there was "no defect" in the first step.
A district court dismissed the case with prejudice. The appeals panel disagreed and sent it back for further proceedings.
The panel held that the doctrine of substantial compliance - which can rescue a claim when someone has done everything they reasonably could - applies to benefit elections under Employee Retirement Income Security Act, not only to beneficiary changes. It then read the plan and the summary plan description and found neither made the confirmation step a condition of a valid election.
Kaiser kept its discretion to interpret its own plan, the court said, but could not deny benefits based on "an erroneous legal conclusion" about a requirement the documents never stated. Strict enforcement, the panel added, would have caused a "complete forfeiture" of earned benefits.
The panel did not order the money paid. It returned the case to the district court, where whether the employee did enough will be decided on the facts. The court resolved her remaining claims in a separate disposition filed the same day.
