California lawmakers considered making sweeping changes to the Subsequent Injuries Benefits Trust Fund during the 2026 legislative session, but ultimately opted for smaller changes while hinting that more change could be on the way.
Gov. Gavin Newsom signed Senate Bill 171 into law on July 13, 2026, in an attempt to reform and save the beleaguered trust fund from skyrocketing liabilities.
If you’re unfamiliar with the fund and it’s unusual acronym (SIBTF), it was originally created to help compensate World War II veterans return to the workforce. The SIBTF is California’s version of a “Second Injury Fund.” Applicants can obtain SIBTF benefits by proving that a combination of a preexisting disability and a second injury have brought them to 70% PD or more.
SB 171 changes how applicants can achieve that burden of proof by requiring:
- Applicants to show that their PD has caused earnings loss;
- Applicants have to use a medical-legal report that constitutes substantial evidence, and cite evidence prior to the second or subsequent injury;
- The PD rating will use the PD rating that existed on the date of the subsequent injury;
- When determining whether the applicant has reached the 70% PD threshold, they have to use the Combined Values Chart (CVC). This is notable because prior WCAB decisions stated that applicants should be adding their PD ratings.
- The underlying claim for regular benefits against the workers’ compensation defendant shall not be relitigated as the applicant tries for SIBTF benefits.
- Vocational rehabilitation reports that were used in the earlier underlying workers’ compensation case cannot be used in the SIBTF case.
To put it simply, these requirements will make SIBTF claims more like regular workers’ compensation claims. For example, the “substantial evidence” standard is reminiscent of the famous Escobedo decision, and practitioners routinely use the Combined Values Chart in most cases.
WHY WAS REFORM NECESSARY?
Newsom began ringing the warning bell about the fund’s rising liabilities during the 2025 session, warning that without reform, employer assessments would rise from $372 million in FY 2021-22 to $1.5 billion in FY 2029-30.
However, Newsom ultimately vetoed 2025 legislation that would have reformed the fund because it did not go far enough. In 2026, lawmakers got SB 171 signed into law.
WHAT WASN’T IN THE 2026 REFORMS
One reason why the undersigned held off on writing about the SIBTF reforms until the dust had settled is because there was a competing SIBTF bill that got held up for further review – Assembly Bill 1576. That bill was approved by the Assembly and was referred to the Senate, before being benched (or held under submission) in August.
What’s interesting about this bill is that lawmakers seriously considered barring the use of specific body parts and medical conditions to reach the 70% threshold, such as:
- Acid reflux, including gastroesophageal reflux disease (GERD)
- Allergies
- Arthritis
- Asthma
- Diabetes
- Headaches
- Hypertension
- Sexual dysfunction
- Sleep apnea
An earlier version of the bill would have barred any consideration of these body parts or conditions as applicants tried to get to the 70% PD goal. However, this list of body parts was later removed from the bill in midsummer amendments.
Other language in this bill would have created a special set of qualified medical evaluators (QMEs) who specialize in SIBTF cases. This was left in the final version of the bill, but alas, the final version stalled and never made it to Newsom’s desk.
Why cover this? It goes to show that there was generally strong support among lawmakers for having QMEs who specialize in SIBTF cases, and mixed lesser support for excluding body parts and conditions from SIBTF claims. In other words, we could see these arise in future legislative sessions.
CONCLUSION
Senate Bill 171 was necessary in making the SIBTF more like “regular” workers’ compensation claims, and should lessen the red ink that the SIBTF is seeing. However, these changes do seem to be relatively minor, and there appears to be significant interest in additional changes to help the SIBTF’s liabilities from spiraling out of control.
Editor’s note: To read about other bills from the 2026 legislative session, please check out our blog for our annual summary of other important bills.
Got a question about workers’ compensation defense issues or pending legislation? Feel free to contact John P. Kamin. Mr. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location, where he monitors the recent legislative affairs as the firm’s Director of the Editorial Board. Mr. Kamin previously worked as a journalist for WorkCompCentral, where he reported on work-related injuries in all 50 states. Please feel free to contact John at jkamin@bradfordbarthel.com or at (818) 654-0411.
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