California finds itself in a financial bind, shelling out billions annually due to a little-known workers’ compensation program. This initiative, meant to aid workers suffering from conditions like sexual dysfunction and allergies, is now under scrutiny, with Governor Gavin Newsom and state lawmakers eager to implement reforms.

The program in question, known as the Subsequent Injuries Benefits Trust Fund, extends additional support to employees who, while already covered by state workers’ compensation, endure further injuries on the job. Despite its benevolent intent, the program has come under fire for its burgeoning costs, which are funded through employer taxes.

Critics argue that the fund has expanded beyond control. Workers are reportedly receiving as much as $1,700 per week for a variety of chronic conditions, including hypertension, sleep apnea, arthritis, and even sexual dysfunction. This information was highlighted in an audit released last year, drawing significant attention to the program’s controversial payouts.

A June 2025 report from the state Legislative Analyst pointed out that the majority of claimants are awarded the state’s most generous disability benefit of $1,700 weekly, a benefit level seldom seen in standard workers’ compensation cases. Such generous payouts have raised eyebrows and calls for reform.

Originally, the fund was established in the 1940s to promote the employment of World War II veterans and individuals with disabilities. However, a pivotal 2020 federal court ruling in the case Todd v. AIBTF has led to a significant increase in claims and the program’s overall costs.

However, thanks in part to a 2020 federal court decision, Todd v. AIBTF, the number of claims and total costs have skyrocketed.

The California Courts of Appeal decision required a generous interpretation of disability claims — spiking annual employer costs to between $2 billion and $3 billion, the audit noted.

Additionally, a growing backlog could push total liabilities past $20 billion within “a few years.”

In one instance, a California prison guard was able to claim $1.9 million in lifetime benefits, or $1,284 a week, because he tacked on other ailments — including toe fungus and eczema — as work-disabling conditions on top of spinal problems that earned him a standard workers’ compensation benefit, according to a report in the Orange County Register.

Many applicants are awarded a 100% “disability rating” — enabling them to claim lifetime disability benefits, according to the Legislative Analyst.

“As benefits grew, so did new claims, with individuals seeking substantial enhancement to benefits due to combinations of pre-existing conditions like acid reflux, migraines, sleep apnea, and a host of other conditions that are commonly associated with aging and lifestyle, not necessarily workplace injuries,” wrote Eric Lawyer of the California Association of Counties in a March blog post.

The skyrocketing costs have strained county employers — Los Angeles County, for example, is on the book for $11.8 million annually in assessments towards the disability claims, an increase of 433% since 2020.

California legislators have proposed reforms to the program, including a budget trailer bill drafted by the Department of Industrial Resources, which administers the program.

“California’s current system for injured workers with subsequent injuries is facing serious long-term sustainability challenges,” said Tara Gallegos, spokesperson for Newsom, in a statement.

“The state needs a stable, effective, and reliable Subsequent Injuries Benefits Trust Fund program that ensures injured workers get the support they need without putting unsustainable pressure on state and local budgets.”

Santa Ana law firm Silberman & Lam, which helps workers claim the benefits, denied to the OC Register that clients are gaming the system.

“Eighty percent of the people, we tell ‘no’ to,” Silberman, who said he mostly represents low-wage workers, told the news site.