Thousands of foster kids in California could lose their homes amid insurance crisis

Monique Lewis has figured out a few tricks to lure her foster child to school.

Some days, it’s McDonald’s frappuccinos. But on days the 13-year-old girl still struggles to get out of bed, a counselor from Aviva Family and Children’s Services is available to help out.

Lewis’ Compton home is the first one the girl has never run away from, a judge said.

The girl, whom The Times is not identifying because she is a minor, is one of thousands of California foster children who may soon have to move to a new home amid a statewide insurance crisis.

A major insurer says that because of the rising cost of sexual abuse claims, it can no longer cover agencies like Aviva that recruit, certify and support foster parents. Without insurance, these foster family agencies can no longer oversee the parents.

Aviva and many other agencies say they have never been sued for sexual abuse themselves. But, citing an overall increase in costly litigation, Nonprofits Insurance Alliance of California, which says it backs roughly 90% of foster family agencies, will begin letting policies expire in October.

Roughly 1 in 5 of the more than 40,000 children in foster care statewide — who have already experienced tremendous instability in their lives — may be uprooted, according to advocates for the children.

Some government officials who are familiar with the situation see two potential solutions.

The nonprofits could find new insurers, though many have already left the market. Or, if that doesn’t happen, county governments will have to quickly take over responsibility for the homes now overseen by the foster family agencies — a complex bureaucratic process that can take months.

Advocates and foster parents say it’s far from clear whether already short-staffed county agencies — which oversee about 20,000 kids in foster homes statewide — can provide the same level of support as the nonprofits, which typically offer extra wraparound services.

“These children are going to suffer the most,” Lewis, a veteran foster parent, said from her 13-year-old foster daughter’s upstairs bedroom. “Especially if they are passed off to hands that are not the right ones.”

Nonprofits Insurance Alliance of California declined to tell The Times how much it has spent recently on sex abuse claims, citing confidential settlements.

But Pamela Davis, president of the insurance alliance, pointed to a recent $25-million jury verdict in Sonoma County in favor of three siblings, ages 7, 5 and 2, who were sexually abused by a foster parent.

Similar to how wildfires and floods have made some properties prohibitively expensive to insure, payouts like these are forcing the company to withdraw from the market, she said.

Amber Rivas, Aviva’s president, has been desperately searching for an insurer before the nonprofit’s policy lapses in November. Only one company got back to her, offering a quote that “would bankrupt our program.”

“It’s devastating,” Rivas said. “We absolutely support the right of sexual abuse survivors to pursue justice in court. At the same time, California leaders can’t sit by while foster youth are at risk of being out on streets.”

Susan Abrams, deputy director of the Children’s Law Center of California, which advocates for foster children across the state, said it’s crucial that current and former foster children have a path to sue for abuse.

She hopes that counties can step in for the foster homes affected by the insurance change so children can stay put.

Monique Lewis says a judge told her that her home was the first place her 13-year-old foster child had not run away from.

(Christina House / Los Angeles Times)

The L.A. County Department of Children and Family Services, the state’s largest child welfare agency, said in a statement that losing these homes would be “devastating to hundreds of children who could be displaced.”

At least 1,100 of the roughly 13,700 foster children placed by DCFS may have to move to a new home within the next year if the insurance lapses, according to a survey by the California Alliance of Child and Family Services.

Awards hang in the bedroom of Lewis’ youngest foster child.

(Christina House / Los Angeles Times)

After California passed a law in 2020 extending the statute of limitations for adults to sue for sexual abuse they suffered as children, a wave of lawsuits has hit school districts, archdioceses and other entities responsible for children’s welfare.

L.A. County has predicted that it could spend up to $3 billion to compensate victims for sexual abuse in juvenile halls and foster homes.

“This is not just a [foster family agency] issue. It’s not just a county issue,” said Eileen Cubanski, executive director of the County Welfare Directors Assn. of California, an advocacy group for county department heads. “All entities that have contact in some form with children ... are grappling with this.”

Davis of the Nonprofits Insurance Alliance said the statute of limitations change is only part of the picture.

Plaintiffs’ attorneys have gotten more aggressive, incentivizing some agencies to settle a claim before they fully know the facts of the case, she said.

More often, she said, the foster family agencies are paying for county governments’ mistakes because of contract clauses requiring them to take legal responsibility.

And juries, infuriated over prominent sex abuse scandals inside universities and the Catholic Church, are more willing to award large sums, even when agencies couldn’t have prevented the abuse, Davis said.

She pointed to the nearly $25-million verdict in Sonoma County. Alternative Family Services, the agency that supported the children in the home, had to pay about $15 million, and the foster parents were responsible for the rest.

Davis argued that the agency couldn’t have predicted the abuse from a foster parent who passed a background check.

Nonprofits Insurance Alliance sponsored a bill in the most recent legislative session that would have made it harder for victims to sue foster family agencies.

The bulk of the bill was scrapped after several advocacy groups argued that it took a sledgehammer to victims’ rights and that there was little proof of an onslaught of sex abuse settlements.

“There is not a shred of evidence that’s true,” Ed Howard with the Children’s Advocacy Institute said in an interview.

“We haven’t seen it,” said Nancy Peverini of Consumer Attorneys of California, one of the groups that opposed the bill. “They’ve cited one case.”

Both organizations pinned much of the blame for the crisis on Nonprofits Insurance Alliance for letting the Sonoma County case go to trial instead of reaching a settlement, and then moving quickly to cancel policies.

Assemblymember Gail Pellerin (D-Santa Cruz), who introduced the bill, reworked it to make it easier for counties to take over responsibility for foster homes from the nonprofits. The bill is awaiting the governor’s signature.

Pellerin emphasized in a statement that the bill was a “temporary solution” to keep the most vulnerable foster kids in their homes.

“Unfortunately, counties are not set up to adequately and appropriately care for these children,” she said.

Damien Zillas, corporate compliance counsel for the insurance alliance, said the watered-down bill probably is the nail in the coffin for the foster family agencies.

“We stayed in the game as long as we could,” he said.