BILL ANALYSIS �
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 �percent] of foster children
were in homes licensed by the state or counties and 14
�percent] were in homes certified by Foster Family Agencies
�FFA]. 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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