Commentary by J Dale Debber, publisher
Recently, Workers’ Comp Executive, as part of its coverage of regulatory and legislative issues, provided subscribers with several original news stories concerning the liabilities—the massive time bomb of liability—that is California’s Subsequent Injuries Benefits Trust Fund (SIBTF). What most fail to understand is that the SIBTF is an add-on to already settled workers’ compensation claims and paid by employers outside of the Constitutional workers’ compensation system.
All California Employers, including the state, every public agency, private businesses small and large, as well as self-insureds, are already on the hook for some $28 billion with little or no reserves. The system continues to add another $3 billion each year to the out-of-control workers’ compensation program it has created. It’s a program that is not only not part of the grand bargain that is workers’ comp, but rather one that has become a fraud-infested morass.
Now comes AB 1329 by Assemblymember Liz Ortega (D-San Leandro), which proposes to solve the problem. The teaser is a provision that requires SIBTF disability evaluation to be carried out in the same manner as the standard workers’ comp process for disability evaluation. She says it will save 60% of the costs by invoking the QME process. Sounds pretty good, doesn’t it?
But it does not come close to solving the problem.
The language would make SIBTF claims subject to the standard QME process only if they are based on injuries that occur after January 1, 2026. But – and it is a big but – injuries compensated by the SIBTF typically are not filed until 7 years after the occurrence of the injury.
Therefore, the bill does not begin to affect SIBTF payouts until 2032.
The problems with the teaser are (1) that the degree to which the SIBTF disability evaluation procedure is contributing to the accumulation of excess liability is not known with any reliable quantitative certainty, and (2) that even if this change can produce some measurable dent in the $3 billion per year price tag, it won’t kick in until 2032. So, doing the basic math, that equals at least $21 billion extra before the Assemblymember’s fix will take effect.
To summarize, the Ortega bill does absolutely nothing to address the SIBTF’s current multi-billion-dollar time bomb and, in fact, adds another $21 billion.
Workers’ Comp Executive calls upon the governor to veto this bill in favor of a better one next session.
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