HB1645

SECTION 1. The legislature finds that nonprofit social service organizations provide essential, mandated services to children and families in partnership with the State, that otherwise would have to be performed by the State itself. The legislature further finds that these nonprofit organizations are now facing increasing challenges in securing general and professional liability insurance coverage. Many insurance carriers have withdrawn from the market, reduced coverage limits, or imposed drastically higher premiums, making coverage either unavailable or unaffordable.

The legislature additionally finds that without adequate liability insurance coverage, nonprofit organizations cannot maintain state contracts or deliver critically needed services. Furthermore, the legislature finds that rising insurance costs combined with stagnant contract reimbursements threaten the financial sustainability of these nonprofit organizations. These circumstances risk disrupting services provided by nonprofit organizations under contract with the State, which would leave vulnerable children and families without necessary resources and place an unsustainable burden on state agencies.

Moreover, the legislature finds that the underlying cause of the crisis faced by these nonprofit organizations is the growing frequency and severity of lawsuits involving child-related tragedies. Litigation strategies often include nonprofit organizations even when they are not found responsible, resulting in nuclear judgments that destabilize the insurance market. As a result, nonprofit organizations are increasingly forced to rely on excess and surplus lines insurance coverage, which offers reduced liability protection at significantly higher costs.

The legislature finds that if this issue is not addressed, nonprofit organizations may withdraw from this type of work, creating significant gaps in services and straining state agencies that are tasked with filling those gaps. The legislature further finds that legislative and administrative solutions are needed to ensure that nonprofit organizations that provide foster care services can obtain reasonable and sustainable liability insurance coverage, thereby safeguarding the continuity of essential services for children and families across the State.

The purpose of this Act is to provide certain liability protections for nonprofit foster care agencies that are under contract with the State to provide foster care services to children in foster care, including:

(1) Requiring contracts between foster care agencies and the State to include a state indemnification clause and requiring foster care agencies to name the State as an additional insured;

(2) Prohibiting punitive damages and pre- and post-judgment interest for foster care agencies;

(3) Requiring actions against foster care agencies to be tried by the court, except in certain circumstances;

(4) Removing joint and several liability for foster care agencies; and

(5) Specifying that no bond shall be required from a foster care agency on appeal.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

FOSTER CARE AGENCIES; FOSTER CARE; LIABILITY

§ -1 Definitions. As used in this chapter:

"Authorized agency" means the department of human services, other public agency, or a foster care agency that is licensed by the department of human services or approved by the family court to receive children for control, care, maintenance, or placement.

"Foster care" means continuous twenty-four-hour care and supportive services provided for a child by an authorized agency or the family court.

"Foster care agency" means a nonprofit organization or entity that is under contract with the State to provide foster care services for children in foster care.

§ -2 Foster care agencies; state contracts; indemnification; additional insured. (a) Any contract entered into between a foster care agency and the State to provide foster care shall include a provision that indemnifies and holds harmless the State of Hawaii and its officers, agents, and employees from and against any and all claims arising out of or resulting from the foster care agency's provision of foster care, unless there is a finding of gross negligence on the part of the State.

(b) The foster care agency shall obtain sufficient insurance to provide the indemnification under subsection (a), if requested to do so by the department of human services.

(c) Any insurance policy obtained by a foster care agency shall name the State of Hawaii, and its officers, agents, and employees as additional insured and shall constitute primary insurance for the State, with respect to operations performed for the State.

§ -3 Liability; interest; punitive damages. A foster care agency shall not be liable for:

(1) Interest prior to or after judgment; or

(2) Punitive damages.

§ -4 Jury trial, when. Any action against a foster care agency under this chapter shall be tried by the court without a jury; provided that the court, with the consent of all the parties, may order a trial with a jury, whose verdict shall have the same effect as if trial by jury had been a matter of right.

§ -5 Foster care agency as a tortfeasor; abolition of joint and several liability. (a) Any other law to the contrary notwithstanding, in any case in which a foster care agency is determined to be a tortfeasor along with one or more other tortfeasors, the foster care agency shall be liable for no more than that percentage share of the damages attributable to the foster care agency.

(b) For purposes of this section, the liability of a foster care agency shall include its vicarious liability for the acts or omissions of its officers and employees.

§ -6 Judgment on appeal; no bond. When an appeal is taken by a foster care agency, and the operation or enforcement of the judgment is stayed, no bond, obligation, or other security shall be required from the foster care agency."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1645
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII