Gov. Gavin Newsom has signed immediate reforms to a state fund that paid as much as $1,700 weekly to people claiming that such common ailments as allergies, asthma and erectile dysfunction hampered their ability to work.
The new law tightens eligibility requirements for the Subsequent Injuries Benefits Trust Fund, which was established after World War II to help injured veterans land jobs. It morphed into a program that gave people receiving workers’ compensation extra money for prior ailments exacerbated by their new injuries. It is funded by an annual tax on employers.
Newsom sought the reforms in a trailer bill to his budget package after declaring that the SIBTF was unfettered and out of control, without the safeguards of the traditional workers’ compensation system. Unsustainable, the fund’s liabilities were expected to hit $30 billion by 2029 amid skyrocketing applications.
Here’s how the program operates: Workers file claims for their employment-related injuries with the workers’ compensation system and then file a second claim with the SIBTF for preexisting health conditions that affect their ability to work. Some applicants who are receiving benefits have listed their sleep apnea, obesity and arthritis. Others have listed their infertility and hemorrhoids.
Costs for the program have spiraled over the years.
The state Department of Industrial Relations reported that total payments from the SIBTF climbed from $28 million in 2014 to $326 million in 2025. And the number of yearly applications has soared from 1,011 in 2014 to 5,378 in 2024, said a report for the state Commission on Health and Safety and Workers’ Compensation.
A March report for an Assembly budget subcommittee said 25,000 cases are now pending, a number that is expected to hit 30,000 in July, creating a five- to 10-year backlog.
Cashing in
A look at some cases explain the increase in SIBTF’s popularity.
A California Highway Patrol lieutenant received a 55% disability rating from workers’ compensation for his hypertension. He then went to the SIBTF and claimed preexisting health conditions, including lumbar injury, rhinitis, asthma, sleep apnea, erectile dysfunction and seborrheic dermatitis, or red, flaky skin. He received back benefits from the SIBTF of $208,680 and $1,269 weekly, worth an estimated $2 million over his lifetime, according to Santa Ana law firm Silberman & Lam.
In another case, a California prison guard with spinal problems also claimed other ailments, including toenail fungus and eczema, as work-disabling conditions. He received $291,053 in back benefits and a weekly benefit of $1,284 — with yearly cost-of-living increases — from the SIBTF.
The guard’s lifetime benefits from the special fund are estimated at $1.9 million. That’s on top of what he received from his workers’ compensation claim, which ended in a 79% permanent disability for hypertensive heart disease and trauma to his psyche.
But the new reforms could change all that for some claimants.
The reforms require that the prior medical condition must have been diagnosed before the new injury and that it must be job disabling. The conditions do not apply to claims submitted before July 1, 2020, or those close to being adjudicated.
Attorney Jason Marcus, past president of the California Applicants Attorneys Association, said the reforms raise the threshold that workers have to meet to receive benefits.
“I characterize this as a major takeaway for injured workers … they got nothing in return. To say I’m frustrated about that is an understatement,” Marcus said. “There’s a lot of things these reforms do that contradicts what the courts have been telling us for 10, 15 years.”
Reforms needed
Supporters of the changes say the program needed to be harnessed.
“At the end of the day, these reforms get us substantially back to what the intent of the fund was, to offer people benefits over and above workers’ compensation if the subsequent injury made the (prior) disability worse,” said Jerry Azevedo, a spokesman for the Workers’ Compensation Action Network, a coalition of reform-minded employers, insurers and brokers.
“We suspect it will curtail claims substantially,” Azevedo said, although he said people may still try to claim their common ailments.
“There’s no question workers’ compensation attorneys and medical evaluators are going to push the envelopment,” he said. “But we think the lines are much clearer now, with a lot less room for gamesmanship.”
Some of that gamesmanship occurred when former Orange County Superior Court Judge Israel Claustro tried to profit from the SIBTF program by forming a company to write and submit medical reports for applicants. However, Claustro, a county prosecutor at the time, was not a medical professional, as required by law to operate such a company.
Another problem was that Claustro hired a doctor who had been previously convicted of federal fraud to do the evaluations and falsely submit them under the names of other physicians. The state fund sent more than $3 million to Claustro’s medical company.
Claustro pleaded guilty in January to a federal charge of fraud and resigned from the bench. He is scheduled to be sentenced in August.