There is important new bill language just in print. The proposed budget trailer bill outlines much needed and extensive reforms to the troubled Subsequent Injuries Benefits Trust Fund (SIBTF). It will amend the program to address its runaway costs and to bring it back in line with its original intent and purpose.
For perspective, last year Gov. Gavin Newsom vetoed an SIBTF bill for failing to include comprehensive reforms for a program whose employer assessments have skyrocketed from roughly $14 million a decade ago to nearly $860 million this year. In his veto of AB 1329 by Assemblyman Liz Ortega (D-Hayward), Gov. Newsom announced that he was ordering the Department of Industrial Relations and the Division of Workers’ Compensation to develop a comprehensive reform proposal for this year’s budget cycle.
And create comprehensive reform they did.
This year, the Governor, the labor agency, and the Department of Industrial Relations are all on board with these reforms. The language in the bill will prevent California’s private employers, as well as state, city, and town governments, from becoming liable for billions in liabilities.
Here are some of the reforms the language calls for:
Notably, one change would require any prior “labor-disabling” impairment to have demonstrably impacted the claimant’s ability to work, while another reform would address how multiple body parts are counted.
Main Cost Drivers
But unlike the Ortega bills past and present (AB 1576), the trailer bill language is far more in-depth and complete. It takes on the main cost driver in the program, not least of which is a Workers’ Compensation Appeals Board decision that lowered the bar for reaching 100% PD and a broader definition of what is considered labor-disabling for SIBTF purposes.
The WCAB’s Todd v. SIBTF decision is not named, but those who know understand it is clearly addressed in the bill’s language. The bill would essentially overrule the decision and calls for the use of the combined values chart for permanent disability determinations involving multiple body parts.
The bill also calls for using the whole person impairment (WPI) percentage before applying the 1.4 modifier introduced by SB 863 reforms, and before any modification for age or diminished future earning capacity. The bill also would bar workers’ comp claimants who already have 100% PD awards from applying to the SIBTF for PD benefits.
Labor Disabling
The trailer bill also states that, with the introduction of a new labor code section 4750 that revises the definition of “labor disabling,” the Legislature intends to “restore the Subsequent Injuries Benefits Trust Fund to its original intent.”
The proposed revisions to section 4750 state that labor “means one of the following that resulted in a loss of earnings, interfered with the employee’s work activity in the occupation or occupations in which the employee was employed, or otherwise had a demonstrable impact on the employee’s ability to perform work activity:”
- An impairment that resulted in an award of permanent partial disability.
- A nonindustrial impairment that could support an award of permanent partial
Importantly, the trailer bill also holds that a preexisting disability is not labor disabling if it’s “treatable by medication or the use of a medical device so that the employee engaged in employment without incapacity to do work.”
To qualify, a preexisting disability will have to be found disabling by a qualified medical evaluator in a med-legal report that constitutes substantial medical evidence. The medical evidence must also show that the disability or impairment existed before the subsequent industrial injury.
The bill also includes a presumption favoring offsets to prevent double recovery and to reduce SIBTF benefits for money the injured worker is already receiving for a preexisting disability or impairment. The bill exempts military service disability pensions and certain public assistance benefits, as well as attorney fees and costs spent to obtain them.
Other provisions allow the DWC Director to contract with outside vendors to handle claims and represent the program at the WCAB. The bill also provides that vocational rehabilitation reports obtained to support an SIBTF claim are not admissible and that the SIBTF is not responsible for their cost. Additionally, the new evidence developed for the SIBTF claim cannot be used to reopen the compensation decision for the underlying workers’ comp claim.
Copies of the trailer bill language are available in our Resources section or by clicking here.
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