AN ACT Relating to insurance for foster parents; amending RCW 4.92.130; adding a new section to chapter 74.14B RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature recognizes the unique risks that foster parents face in taking children into their care. Third parties may file claims against foster parents for property losses and damage caused by foster children, nearly all of whom "act out" their emotional pain. The legislature finds that some potential foster parents are unwilling to subject themselves to such liability without insurance protection. The legislature further finds that to encourage those people to serve as foster parents, it is necessary to assure that such insurance is available to them.

Sec. 2. Section 7, chapter 159, Laws of 1963 as last amended by section 4, chapter 419, Laws of 1989 and RCW 4.92.130 are each amended to read as follows:

A liability account in the custody of the treasurer is hereby created as a nonappropriated account to be used solely and exclusively for the payment of liability settlements and judgments against the state under 42 U.S.C. Sec. 1981 et seq. or for the tortious conduct of its officers, employees, and volunteers; or for payment of liability settlements and judgments against foster parents licensed under chapter 74.15 RCW.

(1) The purpose of the liability account is to: (a) Expeditiously pay legal liabilities of the state and foster parents resulting from tortious conduct; (b) promote risk control through a cost allocation system which recognizes agency loss experience, levels of self-retention, and levels of risk exposure; and (c) establish an actuarially sound system to pay incurred losses, within defined limits.

(2) The liability account shall be used to pay claims for injury and property damages exclusive of legal defense costs and agency-retained expenses otherwise budgeted.

(3) No money shall be paid from the liability account unless all proceeds available to the claimant from any valid and collectible liability insurance shall have been exhausted and unless:

(a) The claim shall have been reduced to final judgment in a court of competent jurisdiction; or

(b) The claim has been approved for payment.

(4) Earnings on the account's assets shall be credited to the account, notwithstanding RCW 43.84.090.

(5) The liability account shall be financed through annual premiums assessed to state agencies, based on sound actuarial principles, and shall be for liability coverage in excess of agency-budgeted self-retention levels.

(6) Annual premium levels shall be determined by the risk manager, with the consultation and advice of the risk management advisory committee and concurrence from the office of financial management. An actuarial study shall be conducted to assist in determining the appropriate level of funding.

(7) Disbursements from the liability account shall be made to the claimant, or to the clerk of the court for judgments, upon written request to the state treasurer from the risk manager.

(8) The director of the office of financial management may direct agencies to transfer moneys from other funds and accounts to the liability account if premiums are delinquent.

(9) The liability account shall not exceed fifty percent of the actuarial value of the outstanding liability as determined annually by the office of risk management. If the account exceeds the maximum amount specified in this section, premiums may be adjusted by the office of risk management in order to maintain the account balance at the maximum limits. If, after adjustment of premiums, the account balance remains above the limits specified, the excess amount will be prorated back to the appropriate funds.

NEW SECTION. Sec. 3. A new section is added to chapter 74.14B RCW to read as follows:

(1) If sufficient funding to cover foster parents' liability is not provided for in appropriations for the liability account in RCW 4.92.130, the secretary of social and health services shall provide liability insurance to foster parents licensed under chapter 74.15 RCW. Unless the foster parent has professional liability insurance which shall be primary to the insurance provided herein, the coverage shall be primary, with no deductible, in an amount not to exceed one million dollars for bodily injury and property damage alleged to have occurred within their capacity as foster parents. However, such insurance may not cover illegal conduct, gross negligence, or bad faith acts taken in providing foster care on the part of the foster parents.

(2) The secretary of social and health services may purchase the insurance required in subsection (1) of this section or may choose a self-insurance method.

(3) Nothing in this section is intended to modify the foster parent reimbursement plan in place on the effective date of this act.

(4) The liability insurance program shall be available by July 1, 1990.