Mounting SIBTF Liabilities: California employers are on the hook for a staggering $7.9 billion in liabilities under the Subsequent Injuries Benefits Trust Fund (SIBTF) program. Without immediate reform, these liabilities could soar to as much as $10.5 billion. This alarming figure, based on a 12-year review of claims, excludes the thousands of recent and future claims filed since May 2023. With 2,000 to 2,500 new claims submitted annually, the financial strain on employers shows no sign of easing.
Hidden Costs and Unchecked Processes Escalate Liabilities
Mounting SIBTF Liabilities: A RAND Corporation report, commissioned by the Department of Industrial Relations (DIR), uncovered a dramatic surge in SIBTF payments—from $13.6 million in 2010 to an overwhelming $232 million by 2022. Despite these findings, DIR delayed the report’s release until Workers’ Comp Executive obtained it through a Public Records Act request.
DIR acknowledges the financial burden but highlights ongoing efforts to maintain the SIBTF program sustainably. However, an unspoken reality continues to drive costs—SIBTF settlements are frequently leveraged as negotiation tools by both applicant and defense counsel. These settlements, compounded by the absence of regulations governing the med-legal process under SIBTF, exacerbate the program’s escalating costs. Unlike other areas of the workers’ compensation system, SIBTF lacks the stringent oversight required to prevent excess costs from accumulating.
Employer Assessments Continue to Surge
California employers bear the weight of these rising costs through increasing assessments. In the latest round, DIR collected $488 million from insured and self-insured employers, with $168 million earmarked for a reserve. This represents a 13.3% increase over the prior year, and without reform, these assessments are likely to continue escalating.
Consequences of Inaction: A Heavy Price for Employers
RAND researchers issued a stark warning: “Inaction is a choice that will lead to rising financial implications for employers.” The report emphasizes that leaving the system unchanged will necessitate substantial increases in employer assessments to cover billions in current and future liabilities. Moreover, higher administrative costs will be required to evaluate cases and manage the program effectively.
Potential Reforms: Balancing Costs and Fairness
While program reforms could limit eligibility for SIBTF benefits or introduce stricter program management, they would also reduce future liabilities and bring administrative costs under control. However, these reforms would impact potential applicants who may no longer qualify for benefits under new regulations. Policymakers face difficult decisions, as the status quo threatens unsustainable financial consequences for employers.
The Path Forward: Act Now to Protect Employers
California’s policymakers and stakeholders must confront these pressing challenges. Without swift intervention, employers will face mounting financial burdens. SIBTF.org continues to monitor the situation closely, providing valuable insights and updates.
➡️ Explore more insights and updates on SIBTF reforms at SIBTF.org.
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👉 Learn about the financial implications of SIBTF liabilities and reform options by visiting Workers’ Comp Executive.