When a Severance Release Does Not Reach Your ERISA Claim: C.D. California Holds a General Release Cannot Waive a Disability Claim That Had Not Yet Accrued

In Cude v. Lincoln National Life Insurance Company, No. 8:25-cv-00123-AH-KESx, 2026 WL 3036131 (C.D. Cal. Oct. 9, 2026), District Judge Anne Hwang of the United States District Court for the Central District of California addressed whether a general release that a claimant signed to settle an employment dispute barred his later ERISA claim for short-term disability benefits. The court held that it did not, denied the defendant Wells Fargo & Company Short-Term Disability Plan’s motion for summary judgment, and granted Plaintiff summary judgment on the Plan’s release defense.

The sequence of dates drove the result. Plaintiff filed a short-term disability claim under the Plan on June 28, 2023. Lincoln Financial Group, the claims administrator, denied the claim on September 7, 2023, and Plaintiff appealed that denial the same day. On February 5, 2024, while his appeal remained pending, Plaintiff signed a Confidential Settlement Agreement and General Release resolving an employment claim against Wells Fargo. The Release discharged all claims “based on any actions or events which occurred prior to the date he executes this Agreement.” On February 23, 2024, Lincoln issued its final denial, upholding the earlier decision and advising Plaintiff that his administrative right to review was exhausted. The Plan then moved for summary judgment, arguing that Plaintiff released his ERISA claim when he signed the Release.

When does an ERISA disability claim accrue for purposes of a general release?

The court held that an ERISA cause of action accrues either when benefits are actually denied or when the claimant has reason to know the claim has been denied, citing Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Insurance Program. An ERISA claim is deemed actually denied only after the claimant exhausts all internal appeals, citing Heimeshoff v. Hartford Life & Accident Insurance Co. A claimant has “reason to know” only when the plan communicates a clear and continuing repudiation of the claimant’s rights, citing Wise v. Verizon Communications, Inc. Applying that standard, the court found that Plaintiff’s ERISA claim accrued no earlier than February 23, 2024, because only the final denial notified Plaintiff that he had exhausted the internal appeal process.

The court rejected the Plan’s contention that the claim accrued no later than September 7, 2023, when Lincoln issued the initial denial and Plaintiff filed his appeal. That argument was inconsistent with Wise, the Plan’s own cited authority, under which an ERISA claim accrues only after the claimant is informed that no further internal appeals are possible. Because Plaintiff learned he had exhausted his internal appeals only upon receiving the final denial, his claim accrued on February 23, 2024, after he signed the Release.

Can a general release waive an ERISA claim that has not yet accrued?

Turning to the scope of the Release, which California law governs, the court held that clear and explicit contractual language controls, citing Bank of the West v. Superior Court. The Release reached only claims based on actions or events occurring before February 5, 2024, the date Plaintiff executed it. Plaintiff’s complaint, however, based his ERISA claim on the February 23, 2024 final denial, and the Plan itself forbade Plaintiff from filing an ERISA claim based on anything other than the final appeal determination. A backward-looking release, the court reasoned, does not waive an ERISA claim that was not yet ripe, because “one can scarcely release claims that one does not possess,” quoting Perez-Jones v. Liberty Life Assurance Company of Boston, which in turn quoted Smart v. Gillette Company Long-Term Disability Plan.

Although Plaintiff had not separately noticed a cross-motion, the court invoked Federal Rule of Civil Procedure 56(f), which permits a court to grant summary judgment for the non-moving party based on undisputed facts and controlling law. The court found that the Plan lacked sufficient evidence for a reasonable factfinder to conclude that Plaintiff’s ERISA claim fell within the scope of the Release. The court therefore denied the Plan’s motion for summary judgment and granted Plaintiff summary judgment on the Plan’s tenth defense. Because the scope of the Release disposed of the matter as a threshold question, the court did not reach the Plan’s remaining arguments.