BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 522
          Author:   Hueso (D)
          Amended:  9/3/13
          Vote:     21

           
          PRIOR SENATE VOTES NOT RELEVANT

           ASSEMBLY FLOOR  :  58-15, 9/9/13 - See last page for vote


           SUBJECT  :    Foster Family Home and Small Family Home Insurance  
          Fund

           SOURCE  :     Author


           DIGEST  :    This bill clarifies liability coverage of the Foster  
          Family Homes and Small Family Home Insurance Fund (Fund).

           Assembly Amendments  delete the Senate version of this bill which  
          required a foster youth's periodic review to include a  
          supplemental report with information regarding whether a county  
          has applied to be a representative payee for Supplemental  
          Security Income (SSI) benefits for a foster child and instead  
          clarify liability coverage of the Fund.

           ANALYSIS  :    

          Existing law 

          1.Establishes within the Department of Social Services, the Fund  
            for the purposes of paying, on behalf of foster family homes  
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            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 relationship and the  
            provision of foster care services. 

          2.Provides that the Fund is not liable for any loss arising out  
            of a dishonest, fraudulent, criminal, or intentional act of  
            any person, or for damages of more than $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.

          This bill:

          1.Limits the Fund liability exclusions to only those criminal or  
            intentional acts committed by a foster parent. 

          2.Requires, for purposes of limiting the liability of the Fund,  
            that multiple incidences of a general course of conduct to be  
            considered one "occurrence," regardless of the period of time  
            during which the acts occurred. 

          3.Prohibits the Fund from being liable for any loss arising out  
            of the dishonest, fraudulent, criminal, or intentional act of  
            any person if the date of the loss is prior to July 1, 2013. 

          4.Restricts the Fund's liability to only once for damages  
            arising from one occurrence. 

           Background
           
          The Fund was created by the Legislature in 1986 to provide gap  
          liability coverage to licensed foster family homes and small  
          family homes. Prior to the creation of the Fund, licensed foster  
          family home operators cited they were routinely denied  
          homeowner's and other types of insurance based on their status  
          as foster parents or related activities.  The Fund, along with  
          companion changes in policy governing insurance coverage (INS  
          676.7), allowed foster family homes indemnification for  
          liability incurred during the course of providing related  
          services. This effort was aimed at ensuring the state could  
          recruit and retain qualified foster family providers. 

          Once licensed, a foster family home is covered by the Fund for  

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          claims totaling up to $300,000 in a single year for valid claims  
          submitted by foster children, or their parents or guardians,  
          which occur as a result of the activities of the foster parent,  
          while the child resides in the home.  The original $300,000 cap  
          was enacted in 1986 and has not changed in the over 20 years  
          since.  According to DSS, in fiscal year 2008-09, there were 22  
          new claims submitted to the Fund, of which $346,999 were paid in  
          claim settlements. In 2009-10 there was a balance of $5,391,000  
          in unspent funds, although the current Fund balance is at  
          $2,391,000. The Fund averages 30-35 claim requests per year. 

          Following the Fund's creation in 1986, DSS issued an All County  
          Letter (ACL No. 86-102) providing guidance to county welfare  
          directors in which the department stated, regarding applicable  
          exclusions, "In addition, certain acts are not covered, such as  
          losses arising out of a criminal act on the part of the foster  
          parent or bodily injury arising out of the operation or use of a  
          motor vehicle, aircraft or watercraft." [Emphasis added.] 

          The statutory language creating the Fund lists several  
          exclusions, including, "any loss arising out of a dishonest,  
          fraudulent, criminal, or intentional act."  This bill would  
          narrow the existing exclusions by clarifying that those criminal  
          or intentional acts must be committed by the foster parent,  
          consistent with exclusions enumerated in current law.  This  
          change would result in a requirement that the Fund pay damages  
          for claims arising out of injury to foster children as a result  
          of intentional or criminal acts committed by third parties. 

           Brandon S. v. The State of California  : This bill seeks to amend  
          existing law following an Appeals Court ruling which upheld the  
          lower court's decision for the defendant in the case of Brandon  
          S. v. The State of California ex rel. Foster Family Home and  
          Small Family Home Insurance Fund ((2009) 174 Cal.App.4th 815).  
          The case pertained to a foster child who was sexually abused by  
          the minor stepson of his licensed foster parent.  The child,  
          Brandon S., filed a claim with the Fund seeking damages for  
          emotional and physical injuries, but because the stepson  
          admitted to the molestation charge, Brandon's claim was denied  
          on the basis that all criminal and intentional acts are excluded  
          from coverage in statute. 

          Judge Willhite wrote in the majority opinion for the Brandon S.  
          case, "Although legitimate policy questions are raised by the  

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          legislative decision to exclude coverage for a claim like  
          Brandon's, we decline to rewrite the statutory language and  
          depart from governing principles of statutory construction to  
          reach the result Brandon seeks.  That is a task for the  
          Legislature." 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Assembly Appropriations Committee:

          The defendant in the Brandon S. v. The State of California  
          lawsuit that drove previous bills on the subject of limiting  
          liability for foster parents was asking for $250,000 in damages.  
           Under this bill, it is likely that he would have received those  
          damages from the fund. Depending on how many similar cases are  
          brought forward, it could cost the fund in excess of $250,000  
          per case (Fund). 


           ASSEMBLY FLOOR  : 58-15, 09/09/13
          AYES: Achadjian, Alejo, Ammiano, Atkins, Bloom, Bocanegra,  
            Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,  
            Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong,  
            Fox, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,  
            Gray, Grove, Hall, Roger Hernández, Holden, Jones-Sawyer,  
            Levine, Lowenthal, Medina, Mitchell, Mullin, Muratsuchi,  
            Nazarian, Nestande, Olsen, Pan, Perea, V. Manuel Pérez, Quirk,  
            Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Weber,  
            Wieckowski, Williams, Yamada, John A. Pérez
          NOES: Bigelow, Chávez, Conway, Dahle, Donnelly, Beth Gaines,  
            Harkey, Jones, Logue, Maienschein, Melendez, Morrell,  
            Patterson, Wagner, Waldron
          NO VOTE RECORDED: Allen, Hagman, Linder, Mansoor, Wilk, Vacancy,  
            Vacancy


          RM:nl  9/9/13   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  NONE RECEIVED

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