I found a few of these caterpillars associated with fungus-killed wood-boring beetle larvae inside a trunk of basswood (Tilia americana). The beetle larva carcasses themselves were embedded in chambers in the wood, and I would never have seen them had I not been prying and pulling apart the wood to find out what the woodpeckers were after (the birds had been tearing up this tree for a while before I came across it.)

For this photo, I removed a beetle larva carcass from the cell in which it died, revealing the caterpillar that had been hidden behind the carcass. The whitish material you see surrounding the caterpillar is fungal mycelium lining the beetle larva's cell.

I was able to keep this caterpillar alive for a time in a rearing container into which I placed a small amount of wood from the tree and one of the fungus-ridden beetle larva carcasses. It appeared to me that the caterpillar was feeding on the fungus, though I am not totally sure about that.