The California foster family system is on the verge of collapse.
The Foster Family Agency Accountability Act (AB 2496) is necessary to avoid a shutdown of California’s foster family agencies.
A shutdown would endanger thousands of foster children.
Summary
Background
There are nearly 45,000 children and youths in the California foster care system, the vast majority of whom have been separated from their parents due to neglect or abuse.
Today, approximately 9,000 of those children are placed in resource family homes supported by nonprofit foster family agencies (FFAs).
California counties rely on and contract with FFAs to recruit, approve, train, and support these resource parents, thereby reducing the number of children in congregate care.
Working with foster children exposes FFAs to the risk of large jury verdicts. FFAs are increasingly being held responsible for the bad acts of others and are on the verge of becoming uninsurable.
Without insurance, FFAs would not be able to serve children in thousands of safe and stable family settings across the state.
The Problem
Runaway verdicts that punish nonprofit FFAs for the unforeseeable actions of others threaten the health and safety of the 9,000 children that rely on FFAs for a safe place to live.
Most insurers have left or are leaving the market. A single nonprofit risk pool, Nonprofits Insurance Alliance of California (NIAC), now insures approximately 90% of the FFAs operating in California.
However, NIAC is no longer accepting new FFA business and has announced its intention to no longer renew FFA insurance policies unless legislation is passed that ensures that FFAs will not be held responsible for matters over which they have no control.
This elimination of liability insurance would cause a collapse of California’s FFA system. Without insurance, FFAs would be required to return foster children to congregate care.
The Solution
To address this problem, AB 2496 is needed to ensure that:
- FFAs are not held responsible for unforeseeable harms
- FFAs that substantially meet their responsibilities under state licensing laws may not be held accountable to a different standard by the courts
- FFAs are not held responsible for the negligence of others
- FFAs are given sufficient facts and time to evaluate claims made against them
Important:
AB 2496 does nothing to absolve FFAs from the consequences of their own negligence.
AB 2496 protects children by making sure that responsible parties are held accountable.
The Most Important Article To Read
For FFAs, lawmakers, and journalists that want straight talk, this post explains:
- How we got here
- Why California FFAs are being set up as scapegoats
- The main opposition to AB 2496
- What might come next
Bill Text
- AB 2496: Original Language – Due to the urgency of this matter, AB 2496 was originally a “gut and amend”
- AB 2496: Amended State – Note: This amended state will not allow FFAs to be insurable
Materials You Can Share
Letters of Support
Most recent
- Support for AB 2496 from 358 FFA professionals
- Support for AB 2496 from 414 nonprofit professionals
- Support for AB 2496 from 247 insurance brokers
Previous
Current Status:
September 9, 2024:
NIA has announced the following coverage options for California FFAs in the wake of AB 2496 as it is currently written:
- NIA will be nonrenewing coverages for Social Services Professional Liability (SSP), Improper Sexual Conduct and Physical Abuse Liability (ISCPA), and Directors & Officers Liability (D&O) for all California foster family agencies (FFAs).
- NIA will continue offering Commercial Auto, Commercial General Liability (CGL), and Property to California FFAs uninterrupted.
- Organizations that cease all FFA operations will likely be able to continue with NIA for all coverages.
- The above points are subject to the full details provided in this post.
September 3, 2024:
NIAC’s underwriting for all types of nonprofits other than California FFAs has not changed. It is business as usual. If you have heard anything to the contrary, it is nothing but rumor. NIAC continues to insure all other types of nonprofits as usual and uninterrupted.
The original language of AB 2496 has been gutted and replaced. The bill likely to be signed into law does not solve any of the four problems in the judicial system that are preventing California FFAs from being insurable for certain key insurances.
Once the bill becomes law, we know that we will be unable to continue with certain coverages for California FFAs. However, we are reviewing our ability to continue with certain other coverages to do our best to limit the disruption for California FFAs.
We will send out notification of our position on California FFAs just as soon as the Governor signs AB 2496 into law.
August 27, 2024:
Pamela Davis has written a new post that colors in some details on how we got to where we are now, why California foster family agencies are being set up as scapegoats, the main opposition to AB 2496, and a look at what might come next.
August 21, 2024:
With incredible sadness, Nonprofits Insurance Alliance of California is announcing that we will be sending out notices of nonrenewal of all coverages for all foster family agencies in the state of California.
AB 2496, as originally drafted, was a moderate bill that would have allowed FFAs in California to continue with their important work. Unfortunately, we learned this morning that the bill will very likely not be passed in a version that offers California FFAs the protections they need.
Read the full announcement.
July 2, 2024:
The California Senate Judiciary Committee passed AB 2496 with a unanimous vote of 11-0 in favor, however, it was amended in a manner that does not allow FFAs to be insurable.
This vote was a small victory, and the first step of many on a path to making AB 2496 law. This result gives us time to work with the various stakeholders toward a resolution and add final language that will allow California FFAs to be insurable.
Because of the uncertainty around AB 2496, NIAC has begun sending out nonrenewal notices to California FFAs.
Should AB 2496 become law — in a form that allows FFAs to be insurable — NIAC will be able to rescind these class-based nonrenewals.
FAQ
What are FFAs, and what are their requirements to carry insurance?
FFAs are nonprofit organizations licensed by the Community Care Licensing Division of the California State Department of Social Services to engage in the recruiting, certifying, training, and providing professional support to, resource parent(s); or in finding homes for placement of children for temporary or permanent care who require that level of care as an alternative to a group home.
In their contracts with FFAs, counties require FFAs to carry insurance.
Will AB 2496 harm foster children?
Under AB 2496, FFAs retain liability for harm to foster children caused by the FFAs or their employees, volunteers, or contractors.
AB 2496 ensures the FFAs remain insurable, so in the event a foster child is harmed by the negligence of the FFA, the foster child can obtain recovery from the FFA’s private insurance carrier through the legal system.
Without AB 2496, there will be no private market to insure FFAs, and thus they will cease to operate — throwing the foster care system into chaos within this calendar year.
Does AB 2496 reduce tort liability for FFAs?
No, lawsuits can still be brought against FFAs for tortious acts of the FFA, its employees, volunteers, or contractors. AB 2496 would focus the court’s attention on the acts of the particular FFA, as opposed to a general class.
Does AB 2496 reduce counties’ liability for harm to foster children?
Counties retain liability for any harm to foster children caused by county employees. What AB 2496 does is to prohibit counties from contractually transferring their legal liability for any wrongful actions of county employees to FFAs.
This will motivate counties to proactively mitigate risk related to its own administration of supports to foster children.
Does AB 2496 eliminate all harm that may come to children in the foster care system?
No, children are placed in foster care due to either abuse or neglect in the foster child’s home.
These children have often been exposed to many traumas in their communities: Poverty, violence, addiction, neglect, abuse, or challenges caused by the physical or mental health of themselves or their families.
Unfortunately, these risks may still exist in the communities where foster children are placed and cannot all be abated by placing a child in foster care.
Resource parents remain liable for any harm to foster children caused by the resource parents, and they are insured by the state through the Foster Family Home and Small Family Home (FSH) Insurance Fund.
Why does AB 2496 change the process for responding to plaintiff settlement offers?
Currently, FFAs and their insurance carriers must respond to a plaintiff attorney’s settlement demand without having sufficient time to understand the facts of the case.
AB 2496 requires the attorneys litigating a claim against a FFA to use a similar process mandated by law for the parties to respond to settlement demands in general liability and auto accident cases.
Moreover, the attorneys for all parties would need to meet to discuss a potential settlement.
If AB 2496 passed the California State Judiciary Committee unanimously, what’s the problem?
In one of its first steps of many on the journey to becoming law, a version of AB 2496 passed the State Judiciary Committee unanimously on July 2, 2024. The problem is that the language in the version that passed doesn’t allow FFAs to be insurable.
Is the language in the version of AB 2496 that passed the State Judiciary Committee final and set in stone?
No. We continue to work with all parties to revise AB 2496, so that a version that allows FFAs to remain insurable can become law.
Has NIAC begun sending out nonrenewals to California FFAs?
Yes. NIAC began sending out nonrenewals to California FFAs in July 2024. On August 21, 2024, NIAC announced that it would begin the process of nonrenewing all California FFAs immediately.
Should AB 2496 become law — in a form that allows FFAs to be insurable — NIAC will be able to rescind these class-based nonrenewals.
What are the next steps?
NIAC continues to work with all parties, including those currently opposing the bill.
What issues have the opposition to AB 2496 raised?
In our conversations with the opposition, there seem to be two main talking points. Each of these are addressed in the next two FAQ items below.
Is AB 2496 a sneaky attempt at tort reform?
The opposition labels AB 2496 as tort reform. We strongly disagree.
AB 2496 is simply an attempt to provide a consistent and predictable process so that innocent parties are not held accountable for the wrongful acts of others.
If AB 2496 fails, will some other insurer or organization magically appear out of the woodwork to insure California FFAs?
The opposition to AB 2496 seems to believe this. However, there is a reason that NIAC insures 90% of the FFAs in California: Other commercial insurers will no longer insure California FFAs because present law makes them uninsurable.
It’s possible that another opportunistic insurance company could arise to offer FFAs a coverage form that excludes many of their key risks, at exorbitant prices.
We expect that any such program would be short-lived once the insurer understands that it is impossible to reasonably handle these claims under the present judicial processes.
Is NIAC concerned that if AB 2496 passes, commercial insurers may come back into the market and take that 90% market share?
NIAC never intended to have a 90% market share. We are in this position because commercial insurers fled when they realized that FFAs are not insurable under present judicial processes in California.
NIAC wants to see a safe and effective foster family system that has access to the insurance it needs.
Why should opposition to this bill care about working to pass it?
If AB 2496 does not pass in a form that allows California FFAs to be insurable, California FFAs will be forced to shut down, sending nearly 9,000 children back to the care of the counties — who are not prepared to care for them.