I disagree that puffing is related to bleaching. They puffed once a while, and if not attached, will move around. (Most heliofungia are sold detached, but a few people have it attach to substrate when young.)
I can't offer any explaination as to what caused it death, but it can die without puffing, and sometime it puffs up without any harmful result. One thing is that it will slightly expand near the mouth if you feed it, but it doubt that is the case for you.