Claude Code fails to read project-specific CLAUDE.md at session startup

Bug Description

Claude Code does not automatically read project-specific CLAUDE.md files located in the working directory when a session starts.

Expected Behavior

Claude Code should automatically check for and read CLAUDE.md in the current working directory at session initialization to load project-specific instructions.

Actual Behavior

Claude Code fails to read the project CLAUDE.md file unless explicitly prompted, even when it's supposed to be core behavior.

Steps to Reproduce

1. Create a CLAUDE.md file in a project directory
2. Start a new Claude Code session in that directory
3. Claude does not automatically read the project-specific CLAUDE.md

Impact

Project-specific instructions are not loaded, leading to Claude not following important project guidelines until manually reminded.