Liability Issues in the Foster Care System

Without question, children that reside in the foster care system are members of an at-risk population. These children have been placed into the system, either because they were abused or neglected, “delinquent,” voluntarily placed by their parent or guardian, or adjudicated in court as a “persons in need of supervision” (“PINS”).

Abused or neglected children usually indicate emotional and physical needs which must be addressed by the system.1 They tend to be a troubled group of children needing various therapies and often, quite specialized care.

Children found to be “delinquent” frequently have experienced their first introduction to the foster care system as victims of abuse or neglect. Children adjudicated as “delinquent “2 are over the age of 9 and under the age of 16, and whose conduct legally would be deemed as criminal acts if they were not within these age specifications. “Delinquent” acts could be as petty as stealing a candy bar, or as serious as rape and murder. Delinquent children may be placed by the Family Court in a secure facility (juvenile “jail”), but usually are often referred into foster care, whether a group home or with a foster family home.3

PINS4 children are those whose parent or guardian was unable to supervise and control them, and were forced to turn to Family Court in the context of a quasi-criminal proceeding to assist with the further day to day upbringing of the child. The adjudication of a child as a PINS allows the court to issue appropriate orders “against” the child,5 which may include placement in a foster care facility,6 or requirements to attend school regularly. As a practical matter, delinquency cases often are pled down to PINS cases.

Each group of children, regardless of the statutory mechanism triggering their entry into the foster care system, requires a foster home setting which can address their particular needs. One might ask, from where do these homes come? They are recruited by foster care agencies. Foster care agencies then contract with the local governmental child protection agency to provide appropriate on-going supervision and care. The governmental child protective arm thereby cedes much of the day to day planning and supervision of these children to these private foster care agencies.7 Private foster care agencies have also assumed responsibility for ensuring that each foster home is duly certified pursuant to state regulations. In return, the governmental agency indemnifies the foster care agency for the cost of the child’s care.8 Contracts between the child care agency and the private foster care agency usually, though not always, require that the foster care agency purchase and maintain appropriate insurance coverage in order to defend and indemnify the child care agency should a child become injured, or worse, abused, while in foster care.

The recruited foster home, whether comprised of individuals biologically related to the child or not, receives a stipend from the foster care agency.9 In return, the foster parent(s) agree to adhere to set standards of care when providing for the minor(s) in their charge; standards delineated by state regulations.10 In recognition of the fact, that this population of children comes with myriad extraordinary needs, state regulations also provide enhanced remuneration for foster parents who are willing to take on children with diagnosed special needs.

The at-risk children in these foster homes are supervised in accordance with this plan by the private foster care agency’s social worker who, by state regulation, must visit the home at least once a month. This minimal requirement is frequently insufficient to prevent serious deficiencies in the oversight of these foster homes. Nevertheless, such a system usually manages to sustain acceptable consistency in the quality of services and care being provided to foster children. There are occasions, however, when children are injured or abused while in foster care by other children, sometimes even by the hand of the foster parent themselves.

When this occurs, the foster care agency, as well as the local child protective agency and the foster parent are all subject to liability. Lawsuits in these types of cases may sound in tort, but often are filed as violations of the Civil Rights Act (42 U.S.C 1983), where attorney fees are recoverable when the plaintiff prevails. Most contracts between the private agency and local child protective agency require that the private agency indemnify the child protective agency should an adjudication of wrongdoing and/or negligence become indicated. Because the private agency must bear the brunt of this financial responsibility, it typically shifts this risk by procuring insurance coverage.

Recently, in City of New York v. The Salvation Army (Index. No. 401467/08), the New York County Supreme Court has upheld the right of a governmental agency to require that its subcontracting private agency carry a commercial general liability insurance policy with coverage limits no lower than $1 million per occurrence, but with a deductible no higher than $10,000. The Salvation Army in this case, was the private agency that subcontracted with the Administration for Children’s Services11 (ACS) of New York City. In this case, governmental entity mandated its subcontractor, The Salvation Army, to “carry a policy with coverage at least as broad as that provided by ISO form CG 00-01 and shall contain no additional exclusion of any kind whatsoever except for those accepted by [ACS] in writing.” The City’s coverage thereunder “shall be as additional insured” as the purchaser of a Service Contract Agreement for provision of Child Welfare Services (see the movant’s motion papers in Exhibit 1). The Salvation Army contended that it had satisfied the contractual obligation to carry an insurance policy by way of a self-insured retention for liabilities up to and in excess of $500,000 through its financing arm, the Salvation Army Risk Trust. The Salvation Army represented that the coverage was for liability arising out of its “operations,” and that such self insurance effectively was identical to that provided for in ISO form CG 00-01.

In the underlying action, the City was served with a summons and complaint arising out of a serious injury that was suffered by a foster child while in a foster home certified by the Salvation Army. The Salvation Army had refused to assume defense of the City, however, which resulted in the City bringing suit against the Salvation Army to compel them to provide such defense. Salvation Army argued that the nexus of the lawsuit did not arise from its “operations;” hence, it had no obligation to defend or indemnify the City. In granting the City’s Motion for Summary Judgment, Judge Cooper cited the General Insurance Company of America [GEICA] v. City of New York, 2005 WL 3535113 (SDNY), where the City moved for partial summary judgment by declaring that an insurer of a private foster care agency12 is required to defend and indemnify it in an action commenced by an infant and his grandmother for injuries sustained in the non-kinship foster home which had been certified by the defendant private foster care agency. Judge Cooper seemed to be particularly persuaded by the language in GICA, where the Court stated that, “As a frontline foster care provider, [the private foster care agency] was in an excellent position – perhaps the best position – to avoid or reduce the risk that [the infant] would be harmed while out of his family’s custody.” Id., at *7. The Court clearly understood that the private foster care agency held the closest contact with the foster home, so, ultimately, the private agency had the duty to defend and indemnify the City.

Litigation filed on behalf of foster children, their parents or guardians usually result in a blend of tort and/or Civil Rights laws, and demands requisite legal expertise background in both areas. Perhaps even more important is a working knowledge of the Family Court, with all of its attendant service providers so as to differentiate between real failures caused by the system, rather than simply unfortunate, unanticipated circumstances. Exposure in such cases is exceptionally high, so it would behoove the practitioner to master both legal and practical issues encompassing diverse areas of practice.

Susan Levy Miller is an Associate at Kaufman Borgeest & Ryan LLP.

1. Children who are allegedly abused or neglected enter the foster care system pursuant to Article 10 of the Family Court Act. Usually, an Order transferring legal custody to the local government authority who files the petition is sought from the Family Court at the time of the filing of the Abuse or Neglect petition.
2. Children are adjudicated as “delinquent” pursuant to Article 3 of the Family Court Act.
3. Group homes usually house groups of teenagers of varying ages who live together under adult supervision.
4. Children are adjudicated as “PINS” pursuant to Article 7 of the Family Court Act.
5. The child is the respondent in a PINS case, much as in a delinquency case, and, therefore, is directly subject to the orders of the court.
6. Under state regulations, children charged with committing delinquent acts, however, are not permitted to be placed in the same facility with children who were abused or neglected.
7. This includes provision of services, including all social work aspects of the case, but excludes medical costs, because these which are borne by the Medicaid system.
8. The local agency shares these costs in thirds with the state and federal government through a complicated claiming budget that is calculated on a per-child basis.
9. In Matter of Eugene F., Index No. 1125/86 (Sup.Ct., NY Co.), the Court decided that relatives who undertake the care of a child in foster care should receive the same stipend as non-relatives so long as their home is certified according to the same standards. The practice is codified in 18 NYCRR 443.
10. For instance, no corporal punishment may be used on a foster child.
11. The Administration for Children’s Services is the child-protective arm of the City of New York.

12. The private agency in question in this case was the now-defunct Talbot-Perkins Agency.