California governor orders reform plan for second-injury fund

In vetoing a bill that would have revised eligibility criteria for the Subsequent Injuries Benefits Trust Fund, California Gov. Gavin Newsom ordered the Division of Workers’ Compensation to prepare a reform plan for the beleaguered second-injury program.

Mr. Newsom said the assessments employers pay for the program are projected to hit $1.5 billion within five years, while injured workers submitting SIBTF claims today could wait up to 10 years to receive benefits because of processing delays.

“This situation is dire, and the state must act immediately,” the governor wrote in his veto message for A.B. 1329, which he argued “does not contain the comprehensive reforms necessary” to save the program.

Under the bill, to qualify for SIBTF benefits would have required substantial evidence of a prior permanent partial disability causing a loss of earnings or an inability to perform activities of daily living. It also would have prohibited consideration of sleep apnea, acid reflux, diabetes or sexual dysfunction as preexisting conditions.

The bill would have required injured workers to file claims within five years of the date of their second injury or within a year of the Workers’ Compensation Appeals Board determining the level of permanent disability from the second injury, whichever is later. It would have applied medical-legal processes for typical work comp claims to SIBTF claims.

Mr. Newsom wrote in his veto message that the proposed statute of limitations and changes to med-legal processes for SIBTF claims were important, but that other changes would take the program in the wrong direction.

“For example, including the impact on the ‘activities of daily living’ in the determination of a prior disability contradicts the concept that the prior disability must be labor-disabling,” Mr. Newsom wrote. “This change would increase SIBTF claims and liabilities.”

Mr. Newsom said he will pursue comprehensive SIBTF reforms next year and directed the DWC to develop a plan for inclusion in the 2026 state budget.

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