Thousands of foster children across America are being displaced because nonprofit foster family agencies have been forced to close.
When children placed in foster homes are injured, innocent foster family agency nonprofits — that had nothing to do with the injury — are being held liable for it.
Rampant, frivolous lawsuits that take advantage of loopholes in judicial law have created a crisis where foster family agencies can no longer obtain insurance — either because no insurer is willing to provide it, or the price is so high and/or the coverage so meagre that the foster family agencies can no longer afford it.
Over the past year, Texas and California have each had an opportunity to fix the problem. There were two very different outcomes.
In April of 2025, the Texas Senate pulled off a seemingly impossible feat in the current political climate: They garnered nearly unanimous, bipartisan support (30-1) for a bill called SB 1558. In May, the bill then passed the House by a large bipartisan majority (105-28).
The bill limits the liability of Texas foster care agencies, also known as foster family agencies (FFAs) — provided these FFAs do all the due diligence the state requires of them (background checks, abuse prevention training, etc.) to help prevent harm coming to children placed in foster homes.
At the same time, SB 1558 does not shield these organizations from their own negligence if they fail to do that due diligence or from gross negligence.
Gov. Greg Abbott signed this bill into law on Friday, June 20, 2025.
When it takes effect in September, this new law will protect thousands of children in Texas’ foster care system, by allowing foster family agencies to keep operating without fear of being targeted by plaintiff attorneys for factors outside of their control or influence, in cases where they did their jobs properly.
The bill was quarterbacked by the Texas Alliance of Child and Family Services through its journey.
In California, Nonprofits Insurance Alliance (NIA) was insuring 90% of the FFAs statewide by 2024 — again because all other major commercial insurers had dropped all the FFAs.
When NIA became aware that loopholes in California law that were allowing innocent FFAs to be set up as patsies by opportunistic plaintiff attorneys, NIA sponsored similar legislation, but tailored for California, that would have fixed the problem: AB 2496.
At the end of those efforts, powerful and deep-pocketed plaintiff attorneys’ groups were able to exert influence on state policymakers, resulting in the bill being neutered of key provisions that would have fixed the problem.
At the beginning of our advocacy, NIA was clear that the bill needed to pass as originally written in order for it to continue insuring foster family agencies. When the stripped-down bill passed, we followed through on our word by nonrenewing all FFA policies in California. Now, NIA is also no longer writing new policies for FFAs in any state.
In California’s case, many nonprofits have already closed, leaving thousands of foster children displaced and in the care of the individual counties. And all of it has to do with politicians that were influenced by well-funded and opportunistic plaintiff attorneys.
NIA is no longer sponsoring advocacy that attempts to fix this problem in California, though it is willing to provide assistance to any organization that may attempt to take charge of the efforts.
Admittedly, there are nuances that differentiate Texas law from California law and what needs to be done to create a fair, level playing field in California. But the point is: Texas got it done.
NIA would like to congratulate the state of Texas and thank Governor Abbott, the Texas Alliance of Child and Family Services, and the elected officials of Texas for stepping up and doing the right thing for children in this situation. All of these parties have exemplified a gold standard for other states going through the same problem by coming together to protect thousands of children where California policy makers would not.
