HB1645 HD2

SECTION 1. The legislature finds that nonprofit child welfare 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 nonprofit child welfare service 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 Many insurance carriers have withdrawn from the market, reduced coverage limits, or imposed drastically higher premiums, making coverage either unavailable or unaffordable.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 child welfare service 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 child welfare service 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 nonprofit child welfare service organizations is the growing frequency and severity of lawsuits involving child-related tragedies. Litigation strategies often include naming nonprofit child welfare service organizations in lawsuits even when they are not found responsible, resulting in nuclear judgments that destabilize the insurance market. As a result, nonprofit child welfare service organizations are increasingly forced to rely on excess and surplus lines insurance coverage, which offers reduced liability protection at significantly higher costs.

The legislature further finds that legislative and administrative solutions are needed to ensure that nonprofit organizations that provide child welfare services to children and families can obtain reasonable and sustainable liability insurance coverage, thereby safeguarding the continuity of essential services for children and families across the State. If this issue is not addressed, nonprofit child welfare service 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 purpose of this Act is to provide certain liability protections for nonprofit child welfare service organizations that are under contract with the State to provide child welfare services to children and families, including:

(1) Prohibiting both child welfare service organizations and the State from utilizing indemnification clauses in child welfare service contracts or requiring either party to name the other as an additional insured;

(2) Prohibiting pre- and post-judgment interest and punitive damages for nonprofit child welfare service organizations;

(3) Requiring actions against nonprofit child welfare service organizations to be tried by the court, except in certain circumstances;

(4) Removing joint and several liability for nonprofit child welfare service organizations; and

(5) Specifying that no bond shall be required from a nonprofit child welfare service organization 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

NONPROFIT CHILD WELFARE SERVICE ORGANIZATIONS; LIABILITY

§ -1 Definitions. As used in this chapter, "nonprofit child welfare service organization" means a nonprofit child welfare organization that is under contract with the department of human services to provide welfare services to children.

§ -2 Nonprofit child welfare service organizations; state contracts; indemnification; additional insured. Any contract entered into between a nonprofit child welfare service organization and the State shall not include any provision that allows either party to indemnify or hold harmless the other party from and against any and all claims arising out of the provision of child welfare services. The State and nonprofit child welfare service organizations shall not be required to name each other as additional insureds in their respective liability insurance policies.

§ -3 Liability; interest; punitive damages. A nonprofit child welfare service organization shall not be liable for:

(1) Interest before or after judgment; or

(2) Punitive damages.

§ -4 Jury trial, when. Any action against a nonprofit child welfare service organization to which this chapter applies 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 Nonprofit child welfare service organization as a tortfeasor; abolition of joint and several liability. (a) Notwithstanding any other law to the contrary, in any action in which a nonprofit child welfare service organization is determined to be a tortfeasor together with one or more other tortfeasors, the nonprofit child welfare service organization shall be liable only for the percentage share of damages attributable to the nonprofit child welfare service organization.

(b) For purposes of this section, the liability of a nonprofit child welfare service organization 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 nonprofit child welfare service organization, and the operation or enforcement of the judgment is stayed, no bond, obligation, or other security shall be required from the nonprofit child welfare service organization."

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 on July 1, 3000.

Report Title:

DHS; Nonprofit Child Welfare Service Organizations; Child Welfare Services; Liability; Indemnification; Additional Insured; Trial; Bond

Description:

Provides certain liability protections for nonprofit child welfare service organizations that are under contract with the Department of Human Services to provide child welfare services to children and families. Prohibits both child welfare service organizations and the State from utilizing indemnification clauses in child welfare service contracts or requiring either party to name the other as an additional insured. Prohibits pre- and post-judgment interest and punitive damages for nonprofit child welfare service organizations. Requires actions against nonprofit child welfare service organizations to be tried by the court, except in certain circumstances. Removes joint and several liability for nonprofit child welfare service organizations. Specifies that no bond shall be required from a nonprofit child welfare service organization on appeal. Effective 7/1/3000. (HD2)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

HOUSE OF REPRESENTATIVES	H.B. NO.	1645
THIRTY-THIRD LEGISLATURE, 2026		H.D. 2
STATE OF HAWAII