The California Department of Industrial Relations (DIR) contracted with RAND to conduct a comprehensive study of the SIBTF. The goal of the study was to capture as much data as possible to document a wide range of basic facts about the SIBTF program that might provide a foundation for informed deliberation over policy options in response to the SIBTF s recent growth. The study focused on cases that were filed or pending between 2010 and 2022.
RAND built a dataset of SIBTF cases filed and adjudicated between 2010 and 2022. The resulting database offers many important insights into trends in cases filed in SIBTF cases in recent years. The intended audience of this report is primarily DIR officials and other policymakers in the state of California, as well as other interested stakeholders.
According to the 180 page Report which was recently published on the DWC webiste, total annual payments from the SIBTF on the 12 years of cases considered in this report grew from $13.6 million in 2010 to $232 million in 2022. Looking to the future, this analysis estimates $7.9 billion in SIBTF liabilities for cases filed or pending between 2010 and 2022, the midpoint of an estimated range of $6.4 – $10.5 billion.
The recent surge in current and future liabilities can in part be attributed to interpretations of SBITF’s governing statutes, which the Report claims are “vague” on key issues concerning eligibility and compensation, and which are decades old. More recently, the wide parameters of the governing statutes and SIBTF rules have motivated claimants, their representatives, and vendors to make more frequent claims for injuries which in past decades might have yielded smaller benefits or might not have led to any benefits at all.
This report presents data documenting facts and recent trends about the SIBTF program that might provide a foundation for informed deliberation on policy responses to the SIBTF s recent growth. Focusing on cases filed or pending between 2010 and 2022, the authors obtained key findings that support some potential policy responses that might be considered by decisionmakers interested in stabilizing the SIBTF while continuing to promote the broader objectives of the workers compensation system.
The volume of annual applications for SIBTF benefits has nearly tripled since 2015. Roughly steady at about 850 per year from 2010 to 2014, annual volume reached around 2,000 in 2020, and 2,448 in 2022. This trend combines with other factors, including growth in benefit payments, to increase both current and forecasted liabilities for the Fund.
The Report analyzed the effect of Todd v. Subsequent Injuries Benefits Trust Fund (2020) 85 Cal.Comp.Cases 576 (App. Bd. en banc). The Appeals Board issued an en banc decision interpreting Labor Code section 4751, holding as follows: (1) Prior and subsequent permanent disabilities shall be added to the extent they do not overlap in order to determine the “combined permanent disability” specified in section 4751; and (2) SIBTF is liable, under section 4751, for the total amount of the “combined permanent disability,” less the amount due to applicant from the subsequent injury and less credits allowable under section 4753.
According to the Rand Report “This decision made it far more likely that an SIBTF case would reach a combined rating of 100 percent. In the examples above, the combined rating would increase from 75 percent pre-Todd to 100 percent post-Todd.” And that the “sharp changes in case outcomes and PD ratings that immediately followed the Todd decision have implications for benefit payments and SIBTF liabilities.”
And the health characteristics of a portion of claimants who get SIBTF benefits indicate that common, chronic conditions are contributing to the increase in SIBTF liabilities. Permanent partial disabilities that formed the basis for SIBTF benefits frequently included a number of chronic conditions that are rarely seen in the regular workers compensation system and are common attendants to normal aging.
One of the several recommendations was that “the program would benefit from more specific eligibility requirements, and a clear specification of the evidence required to establish that a PPD was actually labor disabling at the time of the SII. Statues could be revised to include only certain types of pre-existing disability, excluding common chronic conditions, and to specify the nature of evidence required to show that a condition was actually labor disabling at the time of the SII.” (Subsequent Industrial Injury)
“Eleven of the 29 states with an active subsequent injury fund (sometimes called second injury fund or multiple injury fund) limit the conditions that may qualify as a PPD to a list specified in the statute, offering precedent for adopting such an approach in California. However, once a list is defined, there will likely be political pressure to expand the list to include additional conditions.”
The Authors warned that in “the absence of policy changes to ensure the SIBTF is implemented in a sustainable and fair way, decisionmakers can reasonably expect that funding demands will exceed the currently available resources and assessments on workers compensation premiums (or on covered payroll for self-insured employers) will have to continue to rise to cover the Fund s growing liabilities.”