Barthel: Is SIBTF a Great Idea Gone Awry?

Monday, January 5, 2026 | 0

Well, it seemed like a good idea at the time.

Donald R. Barthel

It was 1945, World War II had been won, and our soldiers were returning home — many with crippling, permanent disabilities. Out of this history sprang California’s Subsequent Injuries Benefits Trust Fund.

Why do we need SIBTF?

The SIBTF is administered by the Division of Workers’ Compensation and covers the gap in PD compensation when a work injury increases an employee’s overall prior disability from an earlier, older injury. For instance, the prior injury could range from a previous work injury or nonindustrial injuries such as an auto accident, a disease or even a birth defect.

This allows the employer to avoid being penalized with a higher PD award caused by the combination of the old disability that the employer did not cause, and the new disabilities. Thus, this program encourages employers to hire and keep employees with disabilities by preventing the employer from bearing the sole financial burden when a new workplace injury combines with a prior disability.

It is also important for injured workers because it provides them with additional lifetime compensation beyond what workers’ compensation would cover alone.

Example: A soldier returns from WWII with a back injury equating to 50% PD. He then suffers a 40% PD injury at work. If combined using the Combination Values Chart found in the 2005 and 2013 California Permanent Disability Schedule and the AMA guides, this gives rise to a 70% PD, plus a life pension.

If it were not for the SIBTF, either:

• The employer would unfairly be responsible for a 70% PD despite having caused only a 40% PD injury.
• The employee would only receive a 40% PD award despite suffering a significantly worse disability.

I was never too good at math, but in order to get SIBTF benefits, one needs to satisfy these two criteria:

• 70% PD threshold rule. The original disability and new PD must combine to equate to 70% or higher.
• Threshold rule (need one of these two):
  • New injury rated at least 35%.
  • If first disability involved a hand, arm, foot, leg or eye, and the new PD impacts the opposite one, the new injury needs to be rated at only 5%. (Think of Kite’s “synergistic effect” theory or furthered in Todd.)

Causes of financial woes

Many factors combine to help dramatically increase the chances that an injured worker will qualify for SIBTF benefits, thereby driving up the fund's costs. Let’s explore those a little more.

Doctor shopping

The employee typically relies on a QME hand-picked by the employee or his attorney to do the injured worker’s bidding. Unlike garden-variety workers’ compensation cases that try to utilize “neutral” doctors by requiring the parties to select a physician from a QME panel or consent to an agreed medical examiner, the SIBTF allows applicants to use their own experts, thus inflating PD ratings specifically designed to trigger SIBTF payouts.

Statute of limitations

Also working against the SIBTF is the statute of limitations. In fact, there is no SOL as one would normally interpret the term. The injured worker needs merely to file within a “reasonable time” after he knows or should reasonably know he has a probable SIBTF claim.

Remember our two criteria listed above? In order to “reasonably know” one has a probable SIBTF claim, one would have to realize that the Workers' Compensation Appeals Board's formal PD findings met those thresholds (e.g., the subsequent injury rating at 35% or more and the combined disability — assessed via addition — being 70% or more).

Looser eligibility

Although originally for serious preexisting conditions (like a missing limb from war), the SIBTF is now frequently used for common age-related issues (e.g., high blood pressure, arthritis, sleep apnea) that, when added/combined with a work injury, push to or over the 70% PD line.

Problematic case law

Todd v. SIBTF changed the “math” for calculating disabilities. Much akin to Athens Administrators v. WCAB (Kite) and Vigil v. County of Kern, Todd provides that, if the physician can demonstrate the disabilities affected by separate injuries do not overlap, or that overlap intensifies the overall impact, the PD can be added rather than using the CVT’s more conservative combination methodology. This makes it easier to fulfill the 70% PD threshold rule.

Is the SIBTF piggybank really in trouble?

Given all the advantages held by injured workers, it may come as no surprise that the SIBTF is facing a major solvency crisis. Costs are exploding. Given the ugly past, present and future numbers outlined below, the business community, Legislature and administration are highly concerned.

For instance, a comprehensive 2024 Rand report stated that the SIBTF is paying out significantly more than it was ever designed to, and payments have grown exponentially:

• 2010 payouts — $13.6 million.
• 2022 payouts — $232 million.
• Projected liability — SIBTF currently owes between $7.9 billion and $10.5 billion in future payments for claims that are already filed or pending.

Who cares? You do!

The SIBTF is not funded by general taxes but rather by a surcharge on California employers. Because the SIBTF is bleeding money, California has drastically raised this assessment:

• 2015 — employers paid approximately $14 million.
• 2025 — employers projected to pay more than $850 million (6,000% increase).
• Future projection — without reform, this assessment is expected to hit $1.5 billion by 2030.

What now?

In 2025, the Legislature passed Assembly Bill 1329 in an attempt to “fix” the SIBTF. However, Gov. Gavin Newsom vetoed it.

In his veto message, Newsom argued that the bill didn’t go far enough, called the current system “unsustainable” and demanded that a “comprehensive reform” proposal be ready for the January 2026 budget.

One can expect major changes to the SIBTF in 2026. These will likely include stricter rules on what counts as a “preexisting disability” and requiring SIBTF cases to use neutral QME doctors instead of hired experts. Other possible changes include creating a firm SOL and reversing Todd.

Conclusion

The new year promises to be legislatively active in California, possibly with regard to workers’ compensation in general, but most certainly about the SIBTF in particular. Keep your eyes glued to future editions of the B&B blog in which our editor-in-chief, John Kamin, will keep us updated on the latest legislative action as it occurs, blow-by-blow.

Don R. Barthel is a founding partner of Bradford and Barthel and is based in the firm’s Sacramento office. This entry from Bradford & Barthel's blog appears with permission.