Ninth Circuit Holds Substantial Compliance Doctrine Applies to ERISA Benefit Elections, Not Just Beneficiary Designations, and Reverses Dismissal of Dying Participant’s Pension Claim

In Liu v. Kaiser Permanente Employees Pension Plan for the Permanente Medical Group, Inc., No. 24-4303, — F.4th —-, 2026 WL 2562029 (9th Cir. Aug. 31, 2026) (Before: Paez, Bea, and Forrest, Circuit Judges), the Ninth Circuit reversed the district court’s dismissal for failure to state a claim of Plaintiff’s action under ERISA challenging the denial of her claim for pension benefits due to her deceased sister. Plaintiff’s sister, the decedent, was an employee of The Permanente Medical Group and participated in the Kaiser Permanente Employees Pension Plan, a pension plan governed by ERISA. The decedent was diagnosed with cancer and took a medical leave of absence. While hospitalized and requiring 24-hour care, the decedent had a benefit election form submitted online at her request on March 26, 2022, electing a lump sum rollover of her pension benefits and designating Plaintiff as her beneficiary. The decedent died of cancer three days later, on March 29, 2022. Plaintiff submitted a claim for the decedent’s $676,980.77 earned pension benefits, which Kaiser denied on the reasoning that the decedent initiated but did not finalize an election, and that substantial compliance with the Plan’s requirements is not a basis for benefits under ERISA.

The panel held that the state law doctrine of substantial compliance is available under ERISA for benefit elections, as it is for beneficiary designation changes under Becker v. Williams, 777 F.3d 1035 (9th Cir. 2015). The panel rejected Kaiser’s argument that Becker was distinguishable because the Plan here set forth a specific process for elections and designations. The panel reasoned that the doctrine’s purpose, to circumvent harsh results engendered by overly technical adherence to a plan’s exact terms, applies to plans with specific procedures and arises in the benefit election and beneficiary designation contexts alike, particularly where there is a risk of benefit forfeiture. The panel further concluded that the Plan did not in fact specify that Kaiser’s unpublished administrative practice of requiring election confirmations and acknowledgement of notices was required to complete a valid election, and that neither the Plan nor the Summary Plan Description clarified that these steps were necessary. While Kaiser retained discretion to deny benefits based on its interpretation of the Plan, it could not deny benefits based upon an erroneous legal conclusion.

The panel clarified that Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009), did not nullify the doctrine of substantial compliance, consistent with the court’s application of the doctrine in Becker. The panel explained that Kennedy did not involve an attempted beneficiary designation consistent with the plan’s terms, and that while plan administrators may not consider expressions of intent in external documents not contemplated by the plan, the doctrine of substantial compliance may be available where a participant attempts to effectuate her intent through the plan itself. Because the complaint plausibly alleged that the decedent used the Plan’s designated mechanism, the case was governed by Becker.

Applying California law, under which a participant who has done all that she could to effect the change but dies before the change is actually made satisfies the standard, the panel concluded that the complaint plausibly alleged that the decedent did all that could reasonably be required of her. The decedent was hospitalized and requiring 24-hour care when the election form was completed and submitted at her request, and she died three days later, before she could acknowledge any subsequent notices or submit any re-confirmations. The panel therefore reversed and remanded for further proceedings. The panel addressed Plaintiff’s additional claims in a concurrently filed memorandum disposition.

In Liu v. Kaiser Permanente Employees Pension Plan for the Permanente Medical Group, Inc., No. 24-4303, — F. App’x —-, 2026 WL 2568624 (9th Cir. Aug. 31, 2026) (Before: Paez, Bea, and Forrest, Circuit Judges), filed concurrently with its published opinion, the Ninth Circuit affirmed the district court’s dismissal of two of Plaintiff’s remaining claims. First, Plaintiff argued that she was entitled to the decedent’s death benefits under 29 U.S.C. § 1132(a)(1)(B) because the Plan incorporates 26 U.S.C. § 401(a)(9)(E), which defines an “eligible designated beneficiary” to include an individual not more than 10 years younger than the employee. The panel disagreed, reasoning that the Plan incorporates § 401(a)(9) only “as applicable,” and that the definition of “eligible designated beneficiary” is not applicable to the defined benefit plan at issue. The panel therefore affirmed dismissal of Count 2.

Second, Plaintiff sought a tax gross-up, surcharge, and reformation under 29 U.S.C. § 1132(a)(3). The panel affirmed dismissal for three reasons. Plaintiff forfeited her reformation claim by failing to challenge the district court’s dismissal in her opening brief. Her surcharge claim for the decedent’s lump sum benefit did not allege a distinct remedy from her § 1132(a)(1)(B) claim. And under circuit precedent, plaintiffs may not recover tax benefit losses under § 502(a)(3). The panel therefore affirmed dismissal of the § 1132(a)(3) claim. The disposition is not precedential except as provided by Ninth Circuit Rule 36-3.