Analysis by two independent actuaries and the state’s own nonpartisan Legislative Analyst’s Office (LAO) proves that employers’ unpaid liabilities for Subsequent Injuries Benefits Trust Fund claims are more than double prior estimates, topping $20 billion. Even that number could be understated, say officials, given the rapid increase in SIBTF claims and the ever-increasing backlog still to be processed.
The financial liabilities are expected to grow rapidly in the absence of legislative intervention to reform eligibility requirements and benefits calculation and to stem the ongoing rampant abuse of the system.
Private employers, self-insureds, joint powers authority (JPA), and all employers are on the hook for tens of billions of dollars. Employers, public and private, are already paying significant costs.
Nearly all parties agree that swift and comprehensive legislative action is urgently needed during this session.
There is one bill making its way through the legislature – AB 1329 by Assemblyman Liz Ortega (D-San Leandro) – that the author says could trim costs by 20% to 25%.
However, the LAO states that far more extensive changes are needed than those found in AB 1329.
The SIBTF program was originally intended to aid disabled war veterans, not aging workers, suffering from everyday maladies such as acid reflux, sleep apnea, arthritis, hypertension, or whatever other non-work related maladies can be created.
The Legislative Analyst’s report notes that the SIBTF program “now rivals the size of the standard workers’ compensation system but with looser standards, broader eligibility, and more generous benefits.”
The vast majority of SIBTF claimants are now receiving 100% permanent total disability awards that pay them $1,700 a week for the rest of their lives (no matter what country they reside in). The average cost for each of these 100% claims works out to an estimated $2.3 million.
The Department of Industrial Relations previously contracted with Rand to study the program and conduct an assessment of employers’ future liability for SIBTF claims. That report, which concluded last June, found that employers were liable for $7.9 billion in future payments for claims that were resolved before May 2023. However, two more years of data show that the fund is in more trouble than RAND thought.
More recently, two independent actuaries examined employers’ liability for SIBTF claims that have been incurred but not yet reported to the fund. Their findings show an additional $11.4 billion in unpaid liabilities.
The kicker here is that the $11.4 billion estimate only covers incurred claims as of December 31, 2022. Workers’ Comp Executive will provide additional coverage and analysis of the LAO report and recommendations, as well as the findings of the independent actuaries, in next week’s premium edition.
-30-