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By: @Kristin Withrow

As workers’ compensation costs continue to climb across California, special districts must be increasingly aware of the risk of high value claims. To better understand what is driving those costs—and what employers should be paying close attention to—we spoke with Gideon Baum, president of the California Workers’ Compensation Institute, on his presentation at the SDRMA Spring Education Day in March.

Baum, who assumed leadership of CWCI in late 2025, has spent much of his career working at the intersection of public policy, data, and workers’ compensation reform. In our interview, he pointed to three major cost drivers that are reshaping the system for employers: the Subsequent Injury Benefit Trust Fund (SIBTF), cumulative trauma claims, and the increasing use of Functional Restoration Programs (FRPs).

“These are not abstract issues,” Baum emphasized. “They are already affecting what employers are paying and how claims evolve.”

The Subsequent Injury Benefit Trust Fund: A Program Out of Balance

Baum began by discussing the Subsequent Injury Benefit Trust Fund, a program created after World War II to support workers who became totally disabled due to a combination of a prior, non-industrial injury and a later work-related injury.

“The original intent was very narrow and very humane,” Baum explained. “It was about making sure people with pre-existing disabilities weren’t left behind.”

For decades, the program remained relatively small. According to Baum, that changed after broad workers’ compensation reforms were enacted in 2012 without corresponding updates to the SIBTF statute. As the rest of the system evolved, SIBTF remained largely frozen in time.

“The result was an inadvertent loophole,” he said. “And once that loophole was identified, claims and award sizes grew very quickly.”

Baum described the fund’s unfunded liabilities as “enormous,” noting that they now total billions of dollars. More concerning, he said, is the way employer assessments used to fund SIBTF are crowding out other priorities.

“It is getting to the point where folks are paying more in assessments for the Subsequent Injury Benefit Trust Fund than they are for just about any other activity those assessments were meant to support,” Baum said.

For special districts, those rising assessments translate directly into higher costs that are difficult to anticipate or control.

Cumulative Trauma Claims: A Growing Source of Friction

The second major cost driver Baum highlighted was cumulative trauma. Unlike a specific injury that occurs at a single point in time, cumulative trauma develops gradually from repetitive motion or long-term physical stress.

“Cumulative trauma has always existed in the system,” Baum said. “What’s changed is how common it’s becoming and how expensive it is to deal with.”

CWCI research shows a significant increase in cumulative trauma claims since the pandemic, along with shifts in who is filing those claims and how often attorneys are involved. Baum noted that cumulative trauma claims are especially challenging because they are highly fact-intensive.

“They’re complex, they’re almost always litigated, and just figuring out whether the claim exists can be arduous and expensive,” he said.

Because these claims often require multiple medical evaluations, legal opinions, and depositions, costs can escalate quickly—even before benefits are awarded. For special districts with long-tenured employees in physically demanding roles, Baum cautioned that cumulative trauma represents a growing exposure.

“What used to be a nuisance is becoming something that actually threatens the stability of the system,” he said.

Functional Restoration Programs Under Review

Baum also discussed Functional Restoration Programs, which were originally developed to help injured workers recover from chronic pain and reduce reliance on opioids through a holistic approach to care.

“These programs have been around for over 20 years,” Baum said. “And their intent is good.”

However, CWCI research has shown increased use of FRPs and rising associated costs. Baum explained that while proponents argue the programs deliver long-term benefits that justify the expense, the data does not always clearly support that claim.

“Our research asked a simple question,” he said. “If these programs are increasing in use and cost, are we actually seeing the offsetting benefits that are promised?”

When FRPs are layered onto already complex claims—particularly those involving cumulative trauma or potential SIBTF exposure—Baum said they can significantly increase total claim costs.

Why Risk Mitigation Matters

Throughout the interview, Baum repeatedly returned to one theme: prevention.

“If you are not mitigating the risk of an injury occurring,” he said, “and if you’re not making sure injured workers receive the support they’re entitled to early on, that is going to wind up being a very expensive claim.”

Strong safety practices, Cal/OSHA compliance, prompt reporting, and effective return-to-work strategies all reduce the likelihood that a claim will escalate into one of these high-cost scenarios.

Baum emphasized the importance of experienced guidance in navigating these challenges, pointing to the role of Special District Risk Management Authority in helping special districts apply best practices and manage risk proactively.

“Special districts don’t have the option to just raise prices or absorb unlimited costs,” Baum said. “Every dollar that didn’t need to be spent on a claim is a dollar that can be used to serve the community.”

For Baum, understanding these three cost drivers is not about assigning blame—it’s about giving employers the information they need to protect their employees, their budgets, and the public services they provide.