BILL ANALYSIS                                                                                                                                                                                                    Ó






                              SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          AB 2019 (Hill)
          As Amended April 18, 2012
          Hearing Date: June 26, 2012
          Fiscal: Yes
          Urgency: No
          RD   
                    

                                        SUBJECT
                                           
               Foster Family Home and Small Family Home Insurance Fund

                                      DESCRIPTION  

          Existing law requires that the State Department of Social 
          Services (DSS), or its designated agency, approve or reject a 
          claim made against the Foster Family Home and Small Family Home 
          Insurance Fund (Fund) within 180 days after it is presented.  
          This bill would require DSS or its designated agency, as 
          specified, to notify the claimant of the decision to reject or 
          approve a claim within 15 days of the decision, and would 
          provide that the applicable statute of limitations for the 
          underlying claim would toll (be suspended) from the date the 
          claim against the Fund has been filed until the date the 
          department or designated agency, as specified, has notified the 
          person that the department has either rejected or approved the 
          claim. 

          Existing law also prohibits specified insurance carriers from 
          failing or refusing to accept an application for that insurance 
          or to issue that insurance to an applicant or canceling that 
          insurance, solely on the basis that the applicant or 
          policyholder is engaged in foster home activities in a licensed 
          foster family home or licensed small family home, as defined.  
          This bill would expand this protection to applicants or 
          policyholders engaged in foster home activities in certified 
          family homes, as specified. 

          The bill would also make other technical, non-substantive 
          changes.

                                                                (more)



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                                      BACKGROUND  

          In 1986, the Legislature passed SB 1159 (Royce, Ch. 1330, Stats. 
          1986) to establish the Foster Family Home and Small Family Home 
          Insurance Fund (Fund) and prohibit insurance carriers from 
          rejecting any applicant or policyholder solely on the basis that 
          they are foster parents, as specified under law, in response to 
          the growing insurance crisis in the state's foster cares system. 
           (See also Sen. Rules Com., Analysis of SB 1159 (1985-1986 Reg. 
          Session) as amended Aug. 28, 1986.)  Foster parents were 
          reportedly becoming increasingly aware that their home owners 
          insurance provided for limited insurance coverage, if any, for 
          claims arising from caring for foster children. SB 1159 
          recognized that the need for foster family and small family home 
          liability insurance had increased significantly over the years 
          because the profile of the foster child had changed so much 
          (from those that were not properly loathed, fed or had access to 
          sanitation facilities, to those who were victims of child abuse, 
          sexual abuse, and psychological abuse, as well as severely 
          neglected and abandoned) and the social atmosphere had become 
          increasingly litigious, on top of which such insurance was not 
          available. 

          The Fund is designed to pay claims that foster children, or 
          their parents, guardians, or guardians ad litem file for damages 
          arising out of specified occurrences related to the foster care 
          relationship and the provision of foster care services.  The 
          liability of the Fund is capped at $300,000 for any single 
          foster family home or small family home for all claims arising 
          due to one or more occurrences during a single calendar year.  
          The types of occurrences covered are those accidents, as 
          specified, which result in bodily injury or personal injury 
          neither expected nor intended by the foster parent, and losses 
          arising out of certain acts are statutorily excluded from 
          recovery.  Notably, not all foster family homes are covered by 
          the Fund: only foster family homes and small family homes 
          licensed by the Department of Social Services (DSS) or by a 
          county under contract with DSS are currently eligible for 
          coverage from the Fund.  (See Health & Saf. Code Sec. 1527 et 
          seq.) 

          Significant to this bill, under California law, a person who 
          intends to bring a civil action against a foster parent insured 
          by the Fund, or against the Fund, must first file a claim 
          against the Fund as a precondition to bringing a civil action.  
          A civil action may be brought only after the claim is rejected 
                                                                      



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          or is filed, approved and paid, and the person claims damages in 
          excess of the payment.  (Health & Saf. Code Sec. 1527.6(d).)  
          California law further mandates that the DSS, or its designated 
          agency (currently the Department of General Services (DGS)) 
          approve or reject a claim made against the Fund within 180 days 
          after it is presented.  A recent report by the Bureau of State 
          Audits indicates that not all claims were decided in that 
          mandated timeframe.  (See California State Auditor, Foster 
          Family Home and Small Home Insurance Fund: Expanding its 
          Coverage will Increase Costs and the Department of Social 
          Service Needs to Improve its Management of the Insurance Fund, 
          September 2011 Report 2010-121.)  

          The interplay of these two provisions, at times further 
          aggravated by the failure of DSS to ensure compliance with that 
          180 day timeframe, has seemingly led to instances in which cases 
          have been dismissed for the running of the applicable statute of 
          limitations to bring a civil action for the underlying claim.  
          Moreover, nothing in existing law specifies the time frame in 
          which the decision rendered must be relayed to the claimant.  
          This bill would require that the claimant be notified of the 
          decision to reject or approve a claim within 15 days by DSS or 
          its designated agency, and would otherwise provide that the 
          applicable statute of limitations for the underlying claim would 
          toll from the date the claim against the fund has been filed 
          until the date the department or designated agency, as 
          specified, has notified the person that the department has 
          either rejected or approved the claim. 

          Additionally, existing law under the California Insurance Code 
          prohibits specified insurance carriers from failing or refusing 
          to accept an application for that insurance or to issue that 
          insurance to an applicant or canceling that insurance, solely on 
          the basis that the applicant or policyholder is engaged in 
          foster home activities in a licensed foster family home or 
          licensed small family home, as defined.  This bill would expand 
          this protection to applicants or policyholders engaged in foster 
          home activities in certified family homes, as specified. 

                                CHANGES TO EXISTING LAW
           
           1.Existing law  establishes the Foster Family Home and Small 
            Family Home Insurance Fund to pay, on behalf of foster family 
            homes and small family homes, as defined, claims of foster 
            children, their parents, guardians, or guardians ad litem 
            resulting from occurrences peculiar to the foster-care 
                                                                      



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            relationship and the provision of foster-care services.  
            Existing law provides that the fund may sue and be sued.  
            (Health & Saf. Code Sec. 1527.1.)  
             
            Existing law  provides that a foster family home is a 
            residential facility providing 24-hour care for six or fewer 
            foster children that is the residence of the foster parent.  
            Existing law similarly defines small family home, except that 
            the foster children have mental disorders or development or 
            physical disabilities requiring special care and supervision. 
            (Health & Saf. Code Sec. 1502(a)(5)-(6).)

             Existing law  provides that the Fund is not liable for 
            specified damages or acts, including, among other things, any 
            loss arising out of a dishonest, fraudulent, criminal, or 
            intentional act.  (Health & Saf. Code Sec. 1527.3.)

             Existing law  requires that any claim against the fund be filed 
            with the Fund in accordance with claims procedures and on 
            forms prescribed by the Department of Social Services (DSS) or 
            its designated contract agency, and that any claim against the 
            Fund filed by a foster parent or a third party be submitted to 
            the Fund within the applicable period of limitations for the 
            appropriate civil action underlying the claim, as specified.  
            Existing law provides that if a claim is not submitted to the 
            Fund within the applicable time, there shall be no recourse 
            against the fund.  (Health & Saf. Code Sec. 1527.6(a)-(b).)

             Existing law  requires DSS approve or reject a claim within 180 
            days after it is presented.  Existing law provides that no 
            person may bring a civil action against a foster parent for 
            which the Fund is liable unless that person has first filed a 
            claim against the Fund and the claim has been rejected, or the 
            claim has been filed, approved, and paid, and damages in 
            excess of the payment are claimed.  (Health & Saf. Code Sec. 
            1527.6(c)-(d).)  
             Existing law  mandates that all processing of decisions and 
            reports, payment of claims, and other administrative actions 
            relating to the fund be conducted by the DSS or its designated 
            contract agency.  (Health & Saf. Code Sec. 1527.7.)

             Existing law  states the legislative intent to maintain the 
            Fund at an adequate level to meet anticipated liabilities.  
            (Health & Saf. Code Sec. 1527.8.)
             
            Existing law  provides that if a person entitled to bring an 
                                                                      



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            action other than for the recovery of real property, as 
            specified, is, at the time the cause of action accrued either 
            under the age of majority or insane, the time of the 
            disability is not part of the time limited for the 
            commencement of the action.  Existing law provides that such 
            tolling of the statute of limitations does not apply to causes 
            of actions against a public entity or public employee for 
            which a claim is required to be presented in accordance with 
            specified sections of law.  (Code Civ. Proc. Sec. 352.)  
            Existing case law provides that there was no such exception in 
            the tolling statute for an action involving a claim against 
            the Fund pursuant to the Health and Safety Code.  (See e.g. 
            Rodriguez v. L.A. County Superior Court (2003) 108 Cal.App.4th 
            301, 308.)

             Existing law  requires that an action for assault, battery, or 
            injury to, or for the death of, an individual caused by the 
            wrongful act or neglect of another, be brought within two 
            years.  (Code Civ. Proc. Sec. 335.)

             This bill  would amend the above to require that the 
            Legislature maintain the Fund at an adequate level to meet 
            anticipated liabilities. 

             This bill  would require DSS or its designated agency, as 
            specified, to notify the claimant of the decision to reject or 
            approve a claim within 15 days of the decision.  
             
            This bill  would provide that the applicable statute of 
            limitations for the underlying claim would toll from the date 
            the claim against the fund has been filed until the date the 
            department or designated agency, as specified, has notified 
            the person that the department has either rejected or approved 
            the claim. 

           2.Existing law  prohibits an admitted insurer, licensed to issue 
            and issuing homeowner's or tenant's policies, as described, 
            from (1) failing or refusing to accept an application for that 
            insurance or to issue that insurance to an applicant or (2) 
            canceling that insurance, solely on the basis that the 
            applicant or policyholder is engaged in foster home activities 
            in a licensed foster family home or licensed small family 
            home, as defined.  (Ins. Code Sec. 676.7(a).)
             
            This bill  would expand the above protection to applicants or 
            policyholders engaged in foster home activities in certified 
                                                                      



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            family homes, as specified.
             
            This bill  would make other technical, non-substantive changes. 


                                        COMMENT
           
          1.    Stated need for the bill  

          According to the author: 

            The laws governing the Fund's coverage have not been revisited 
            since 1986, yet there have been many changes in the foster 
            care system. In 1986, about 86 Ýpercent] of foster children 
            were in homes licensed by the state or counties and 14 
            Ýpercent] were in homes certified by Foster Family Agencies 
            ÝFFA].  Today, nearly half of children in foster care are 
            placed a certified home.  These homes should have the same 
            protections as those afforded to licensed foster homes-this 
            means not having to worry about being denied insurance 
            coverage for being a foster parent.  This protection is 
            especially important, given the outcome of Garcia v. W&W 
            Community Development.  In this case, the court made it very 
            clear that FFAs are not responsible or liable for certified 
            homes.  Absent coverage by the Fund, the state should make it 
            as easy as possible for certified foster parents to be able to 
            buy insurance coverage to protect their resources.  Also, by 
            extending the statute of limitations for claims that go 
            through the Fund, this bill takes an important step in 
            ensuring that any child that is harmed while in foster care 
            has the same right to due process as anyone else.  

          2.    Tolling of the statute of limitations once claim is made, 
          until notice given of decision  

          Existing law requires that any claim against the Fund filed by a 
          foster parent or a third party be submitted to the Fund within 
          the applicable period of limitations for the appropriate civil 
          action underlying the claim, as specified.  If a claim is not 
          submitted to the Fund within the applicable time, there is no 
          recourse against the fund.  California law also mandates that 
          the Department of Social Services (DSS), or its designated 
          agency (i.e. Department of General Services (DGS)) approve or 
          reject a claim within 180 days after it is presented, while also 
          prohibiting a civil action from being brought against a foster 
          parent for which the Fund is liable unless that person has first 
                                                                      



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          filed a claim against the Fund and the claim has been rejected, 
          or the claim has been filed, approved, and paid, and damages in 
          excess of the payment are claimed. This bill would require that 
          the claimant be notified of the decision to reject or approve a 
          claim within 15 days by DSS or its designated agency, and would 
          otherwise provide that the applicable statute of limitations for 
          the underlying claim would toll from the date the claim against 
          the Fund has been filed until the date the department or 
          designated agency, as specified, has notified the person that 
          the department has either rejected or approved the claim.

             a.     Statute of limitations, generally

            A statute of limitation is a requirement to commence legal 
            proceedings (either civil or criminal) within a specific 
            period of time.  Statutes of limitations are tailored to the 
            cause of action at issue - for example, cases involving injury 
            must be brought within two years from the date of injury, 
            whereas cases relating to written contracts must be brought 
            within four years from the date that the contract was broken. 
            Although it may appear unfair to bar actions after the statute 
            of limitations has elapsed, that limitations period serves 
            important policy goals that help to preserve both the 
            integrity of our legal system and the due process rights of 
            individuals.

            Generally, statutes of limitations are deadlines created for 
            consistency for both plaintiffs and defendants.  Plaintiffs 
            must utilize due diligence in discovering facts giving rise to 
            their claims and thereafter file actions on these claims 
            within the time specified by statute.  These deadlines 
            function to prevent the assertion of stale claims and, 
            ultimately, "to promote justice by preventing surprises 
            through the revival of claims that have been allowed to 
            slumber until evidence is lost, memories have faded, and 
            witnesses have disappeared." (3 Witkin Cal. Proc. Actions Sec. 
            433.) Limitations periods promote finality by encouraging an 
            individual who has been wronged to bring an action sooner 
            rather than later - timely actions arguably ensure that the 
            greatest amount of evidence is available to all parties.

            It should be noted that this bill would not provide for an 
            alternate statute of limitations for the types of claims that 
            may be made against the Fund, but instead provides for the 
            tolling of the current statute during the time in which the 
            claim is being reviewed by DSS or its contracting agency, DGS. 
                                                                      



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              b.   Need to toll the statute of limitations while claims 
               against the Fund are decided
                
            This bill seeks to ensure that the statute of limitations does 
            not run while waiting for a response from DGS. 

            Proponents argue that lack of follow though with the 180 day 
            statutory deadline to make a decision on a claim filed against 
            the Fund, coupled with a lack of notice of the decision to the 
            claimant, as well as the prohibition against the filing of a 
            civil action until a claim against the Fund is made and 
            decided, as specified, can impact a claimant's ability to seek 
            legal recourse.  A Bureau of State Audits report (Report) 
            found that DGS took between 182 and 415 days to approve or 
            reject 16 of the 118 claims between July 1, 2005 and December 
            31, 2010 that were reviewed, due in part to inconsistencies in 
            the claims process.  This was despite the fact that DGS had a 
            process called "procedural rejections" in place, wherein DGS 
            would reject any claim that has not been approved or rejected 
            by the statutory 180 deadline, even if the investigation to 
            determine if the Fund is liable has not be completed. The 
            Report specifically recognized that DGS' failure to do so had 
            the effect of "delaying the claimant's ability to seek 
            judicial remedy through litigation" in at least one instance. 
            (See California State Auditor, Foster Family Home and Small 
            Home Insurance Fund: Expanding its Coverage will Increase 
            Costs and the Department of Social Service Needs to Improve 
            its Management of the Insurance Fund, September 2011 Report 
            2010-121, p. 2.)  

            Staff notes, however, that the statute of limitations may run 
            during the time in which DGS is investigating and making its 
            decision, even if DGS were to make its decision consistently 
            on the 179th day or even earlier, given the requirement that a 
            claimant not file a civil claim until the Fund is made and 
            decided. 
           
            Generally, a statute of limitations commences running upon the 
            happening of an event providing notice to claimants that a 
            cause of action has accrued. This bill seeks to help 
            ameliorate the situation wherein a party could run past the 
            applicable statute of limitation to bring a civil action for 
            the injury allegedly suffered, while awaiting the decision on 
            their claim against the Fund.  It would do so by first 
                                                                      



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            requiring that notice be provided within 15 days of the 
            decision being made, and also providing that the applicable 
            statute of limitations be tolled from the time the claim is 
            filed to the date that notice is provided to the litigant of 
            the decision.  In other words, if a claim is filed with the 
            Fund with one day left on the two-year statute of limitations 
            to file an action for personal injury caused by the negligent 
            act of the foster parent in the provision of foster care 
            services, the clock would freeze at the time of the filing, 
            and only upon notice to the claimant as to whether their claim 
            is rejected or accepted, would the clock unfreeze and 
            commence, leaving the claimant one day to file their action in 
            court if their claim was rejected or approved.  Importantly, 
            the clock would not be reset. 

            Under existing law, various circumstances can toll a statute 
            of limitations.  For example, it can be tolled when one of the 
            parties is under a legal disability-the lack of legal capacity 
            to do an act-at the time the cause of action accrues.  (See 
            e.g. Code Civ. Proc. Secs. 340.6 and 352(a).)  With respect to 
            the foster children, their claims can toll under existing law 
            until they reach the age of majority, with respect to actions 
            other than for the recovery of real property.  (Code Civ. 
            Proc. Sec. 352; see Rodriguez v. L.A. County Superior Court 
            (2003) 108 Cal.App.4th 301, 308 which provides that there was 
            no such exception to this tolling statute for an action 
            involving a claim against the Fund pursuant to the Health and 
            Safety Code.)  At the same time, they, their parents or their 
            guardians must file a claim against the Fund within the 
            applicable statute of limitations for bringing an action for 
            the underlying claim.  Moreover, they are prohibited from 
            bringing a civil action until certain preconditions are 
            met-namely, a claim must be filed against the Fund and a 
            decision must be rendered either rejecting the claim or is 
            filed, approved, and paid, but damages in excess of the 
            payment are claimed.  This is not dissimilar to the equitable 
            tolling of the statute of limitations that courts have applied 
            when a party must, as a precondition to bringing suit, have 
            exhausted all of their administrative remedies.  

            As a matter of public policy, it appears reasonable to allow 
            for the tolling of the statute in this manner, given that the 
            law ties the hands of the injured party in restricting their 
            remedies first to the Fund, upon which DGS can legally take up 
            to 180 days to review the injured parties case and there is 
            presumably nothing that the injured party can do to expedite 
                                                                      



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            the review of his or her claim in order to ensure that he or 
                                                she brings a claim before the applicable statute of 
            limitations on the underlying action runs.  This arguably 
            strikes a balance between the interest of the parties against 
            whom the claim might be filed, and the party seeking remedy 
            for the injury suffered is following the procedures by which 
            the law requires them to act.  Moreover, this bill would not 
            affect the requirement that the claim be filed again the Fund 
            within the applicable statute of limitations period.  

           1.Expansion of the current prohibition against the 
            discriminatory denial or termination of insurance to those who 
            are foster parents in certified foster homes
           
          This bill would apply the current prohibition on discrimination 
          by insurance carriers against applicants and policyholders 
          solely on the basis that the applicant or policyholder is 
          engaged in foster home activities in a licensed foster family 
          home or licensed small family home, as defined.  This bill would 
          expand this protection to applicants or policyholders engaged in 
          foster home activities in certified family homes, as specified.

          In support, Aspiranet points out that this part of the bill 
          "reflects changes that have occurred in the foster care system 
          since this section of the insurance code was first put into law 
          in 1986."  Specifically, at the time that the Legislature first 
          discovered that foster parents were unable to obtain homeowner 
          or tenant's insurance coverage and passed legislation to 
          prohibit discrimination against foster parents by insurance 
          carriers, solely based on their status as a foster parent in 
          licensed homes, Aspiranet points out that the vast majority of 
          foster homes were directly operated under county or state 
          supervision.  In contrast, it notes that in the 25 years since, 
          the landscape has changed such that the percentage of those in 
          homes operated under licensure by private non-profit agencies 
          has risen substantially.   

          In the Bureau of State Audits report, the state auditor 
          indicated that DSS data indicates that the State has 11,754 
          state- or county-licensed homes, with 9,222 foster children 
          placed in them as of the first half of 2011.  In comparison, the 
          data indicated that there were 8,065 certified homes, 17,614 
          foster children. (See California State Auditor, Foster Family 
          Home and Small Home Insurance Fund: Expanding its Coverage will 
          Increase Costs and the Department of Social Service Needs to 
          Improve its Management of the Insurance Fund, September 2011 
                                                                      



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          Report 2010-121, p. 5.)

          Importantly, this bill does not expand the Fund to cover the 
          certified homes that are private entities.  It merely prohibits 
          discrimination against applicants or policyholders by insurance 
          carriers, solely on the basis of their status as foster families 
          in the certified home context.  The policy decisions that 
          support the prohibition of such discrimination in the state or 
          county-licensed homes context appears applicable to the context 
          in which DSS licenses Foster Family Agencies, which are 
          organizations that recruit, certify, and train parents providing 
          foster family homes not licensed by the state.  Thus, this 
          bill's expansion of the prohibition against this type of 
          discrimination by insurance carriers appears consistent with 
          existing law.     
           Support  :  Aspiranet; American Federation of State, County and 
          Municipal Employees, AFL-CIO

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Author

           Related Pending Legislation :  None Known

           Prior Legislation  :

          AB 2206 (Hill, 2010) would have limited the Fund's liability 
          exclusions to only those criminal or intentional acts committed 
          by a foster parent.  That bill was held in the Assembly 
          Appropriations Committee.  

          SB 706 (Florez, 2004), among other things, would have narrowed 
          the scope of the Fund and would have excluded from liability any 
          losses arising from dishonest, fraudulent, criminal or 
          intentional acts, or licentious, immoral, or sexual behavior on 
          the part of either foster parent or any person residing in the 
          home, even if there was a related allegation of negligence.  
          That bill died in the Assembly Judiciary Committee. 

          AB 1467 (Alby, 1997) would have clarified the scope of coverage 
          of the Fund and, among other things, prohibit a natural parent 
          from making a claim against the insurance fund for the wrongful 
          death of a foster child when the child was removed from the home 
          because of neglect, abuse, abandonment, or incapacity due to 
                                                                      



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          substance abuse, if the natural parent was ineligible for 
          reunification services.  The bill died in the Senate Health & 
          Human Services Committee.  

          SB 470 (Royce, Ch. 195, Stats. 1988) removed Fund's sunset date 
          and thereby allowed for continuation of the Fund indefinitely.

          SB 1159 (Royce, Ch. 1330, Stats. 1986) See Background.

           Prior Vote  :

          Assembly Floor (Ayes 72, Noes 0)
          Assembly Appropriations Committee (Ayes 16, Noes 0)
          Assembly Human Service Committee (Ayes 6, Noes 0)

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