Reform Efforts for Workers’ Compensation Program With Explosive Costs

A little-known but rapidly growing program has led to cries for major reform. The Subsequent Injuries Benefit Trust Fund (SIBTF) is a separate workers’ compensation benefit that was first established in the 1940’s to improve hiring of veterans and others with pre-existing disabilities.  

Until recent years, the program was small and functioned as designed: paying benefits to injured workers who had pre-existing health issues before sustaining a subsequent injury in the workplace. For the first several decades of the program’s existence, these benefits were paid through modest employer assessments.  

However, in recent years, the number of claims and program costs have skyrocketed, leading to massive increases in employer costs. The reason? Among other things, a 2020 decision, Todd v. SIBTF (2020), changed the calculation for benefits, making it vastly easier for a claimant to receive 100% permanent disability benefits.  

As benefits grew, so did new claims, with individuals seeking substantial enhancement to benefits due to combinations of pre-existing conditions like acid reflux, migraines, sleep apnea, and a host of other conditions that are commonly associated with aging and lifestyle, not necessarily workplace injuries. In addition to rising costs, this has led to a major backlog of cases.  

From 2020 to 2025, assessments on county employers have grown between 102% to 621% for counties. Invariably, the pace of SIBTF cost increases has rapidly outpaced traditional workers’ compensation costs over the same period.  

In response, the Department of Industrial Relations (DIR) commissioned RAND to study the data and propose reform. The RAND study was complemented by an Legislative Analyst’s Office (LAO) soon after.  

Now, the legislature is considering competing reform efforts. On the one side is a budget trailer bill drafted by DIR that represents significant reform, which is supported by CSAC and a coalition of public and private employers. On the other side is AB 1576 (Ortega), which is opposed by the same coalition for not doing enough.  

Without meaningful action, SIBTF growth is expected to cost all employers billions each year.  

For more information, please contact Eric Lawyer, Senior Legislative Advocate, at elawyer@counties.org.