BILL ANALYSIS
AB 2206
Page 1
Date of Hearing: April 13, 2010
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Jim Beall, Jr., Chair
AB 2206 (Hill) - As Introduced: February 18, 2010
SUBJECT : Foster Care: Insurance.
SUMMARY : Limits the Foster Family Home and Small Family Home
Insurance Fund liability exclusions to only those criminal or
intentional acts committed by a foster parent.
EXISTING LAW
1)Establishes the Foster Family Homes and Small Family Home
Insurance Fund (the Fund), administered by the Department of
Social Services (DSS) to pay for damages to foster children,
their parents or guardians, on behalf of foster family homes
and small family homes, that result from claims related to the
provision of foster care services. Article 2.5 Health and
Safety Code (HSC) Sections 1527-1527.8.
2)Requires the Fund to pay for all valid claims of bodily or
personal injury that result from the activities of the foster
parent(s) during the time which the child lived in the foster
family home. HSC 1527.5.
3)Defines "foster parent" for the purposes of the Fund as the
person, along with his or her spouse, providing care to a
foster child placed in a licensed foster family home. HSC
1527.
4)Exempts the Fund from liability as follows:
a) Any loss resulting from a dishonest, fraudulent,
criminal or intentional act;
b) Any occurrence unrelated to the foster care
relationship;
c) Bodily injury cases involving a motor vehicle,
aircraft or watercraft owned or operated by the foster
parent;
d) Losses resulting from licentious, immoral, or sexual
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behavior committed by a foster parent intended to lead
to, or culminating in, a sexual act;
e) Any allegation of alienation of affection against a
foster parent;
f) Any loss or damage for an occurrence prior to
October 1, 1986;
g) Exemplary damages; and
h) Any liability resulting from the failure on the part
of the foster parent to obtain insurance pursuant to
Section 676.2 of the Insurance Code. HSC 1527.3.
1)Limits the liability of the fund to $300,000 for any single
foster family home for total claims filed in a single calendar
year. HSC 1527.4.
2)Provides that homeowner's or tenant's insurance may not be
cancelled or denied based solely on the policyholder or
applicant's operation of a licensed foster family home or
small family home. Insurance Code (INS) Section 676.7 (a).
3)States that it is against public policy for a homeowner's or
tenant's insurance policy to provide liability coverage for
claims payable through the Fund. INS 676.7 (c).
FISCAL EFFECT : Unknown
COMMENTS :
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.
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Once licensed, a foster family home is covered by the Fund for
claims totaling up to $300,000 in a single year for valid claims
submitted by foster children or their parents or guardians that
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 twenty years
since. According to DSS, in fiscal year 2008/2009, there were
22 new claims submitted to the Fund, of which $346,999 were paid
in claim settlements. In 2009/2010 thus far, there have been 13
new claims submitted and $115,000 has been paid in claim
settlements. 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 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 (c), (d), (e) and (h).
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.
Need for this bill: 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
concerned 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.
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case, "Although legitimate policy questions are raised by the
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."
According to the author of this bill, the Brandon S. case,
"changed the historic interpretation of the Fund coverage,
putting the personal assets of foster parents at risk when a
third party intentionally harms a foster child." The author
goes on to assert that, "If foster parents are held financially
responsible for any damages to the child under their care, even
if it was out of their control, it will make it increasingly
difficult for the State to recruit and retain foster parents."
Arguments in Support: The sponsor of this bill, the Children's
Advocacy Institute, adds that this bill seeks to "modestly
clarify the law" in light of the Brandon S. case,
"Because foster parenting is the most common source of
adoption for foster children - and, hence, their exit from
foster care into the enduring care of a family instead of a
program- it is important for both state budgetary and
humanitarian reasons to promote such placements. For this
reason, creation of the Fund was and is an essential
element of state policy toward its abused and neglected
children."
The California Alliance for Child and Family Services writes in
support of this bill,
"Currently, the statute is missing the word "foster parent"
in a section whereby a recent court decision thus concluded
that the state insurance liability fund is not available to
cover the liability of a foster parent even when the foster
parent is innocent of any wrongdoing or intentional act.
In "Brandon S. v. The State of California ex rel Foster
Family Home and Small Family Home Insurance Fund," the
foster parents were on the hook for damages even though it
was a third party that inflicted injury upon the child.
This new ruling means that a foster parent's personal
property and assets are liable if a situation arises where
a third party causes harm and the foster parent acted in a
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way that would normally trigger coverage.
Recruiting and retaining safe and stable foster parents
will become more difficult if the liability for being a
foster parent escalates and is not remedied. The weakening
of this state liability fund will have a serious and
growing negative impact on the ability of counties to
recruit qualified and caring foster parents."
Question: Should the state pay claims to foster children or
their parents on behalf of foster parents for dishonest,
fraudulent, criminal or intentional acts committed by a third
party?
Consistent with insurance practices, this bill would not cover
damages related to the criminal or intentional acts of the
"insured," in this case, the foster parent. As a matter of
public policy, it would seem appropriate to compensate the
state's foster children for injuries suffered, either due to an
accident or criminal or intentional act of a third party while
in the state's custody.
Prior Legislation:
SB 706 (Florez) 2004 was a DSS-sponsored bill that would have
narrowed the scope of the Fund and would have, among other
provisions, specified that losses arising from criminal,
intentional or fraudulent acts by a foster parent or a person
residing in the home were excluded from liability, even if there
was a related allegation of negligence. This bill died in the
Assembly Judiciary Committee without a hearing.
AB 1467 (Alby) of 1997 clarified the scope of coverage of the
fund by, among other things, including members of the foster
parent's household under the exclusion of liability for Fund for
immoral or sexual behavior. This bill passed the Assembly with
overwhelming support, but died after it was not heard in Senate
Health and Human Services Committee.
SB 470 (Royce) Chapter 195, Statutes of 1988 removed the sunset
date, allowing for continuation of the Fund.
SB 1159 (Royce) Chapter 1330, Statutes of 1986 established the
Fund.
REGISTERED SUPPORT / OPPOSITION :
AB 2206
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Support
Children's Advocacy Institute (sponsor)
California Alliance for Child and Family Services
Opposition
None on file.
Analysis Prepared by : Michelle Doty Cabrera / HUM. S. / (916)
319-2089