BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 522| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 CONTINUED SB 522 Page 2 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 CONTINUED SB 522 Page 3 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 CONTINUED SB 522 Page 4 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 **** END **** CONTINUED SB 522 Page 5 CONTINUED