School districts face nearly $4 billion in verdicts, settlements and premiums
The financial exposure is extending beyond Los Angeles County to California school districts, cities and other public entities. Michael Fine, chief executive of a state task force advising school districts on fiscal issues, told The Wall Street Journal that the impact on public schools from verdicts, settlements and retroactive insurance premiums is approaching $4 billion.
California does not cap liability for taxpayer-funded entities including counties, cities and public-school districts. The possibility of large jury awards has pressured local governments to settle before cases reach trial, according to the Journal.
A 2023 Riverside County jury awarded $135 million to two plaintiffs who alleged they were sexually abused in the 1990s by middle-school teacher Thomas Lee West, who hosted wrestling parties at his home. West is in state prison after a 2006 conviction for aggravated sexual assault and multiple counts of lewd conduct with a minor.
The Moreno Valley Unified School District had hired West despite prior accusations of child abuse and negotiated the verdict down to $45 million. That amount still represented a large share of the district’s $660 million annual budget. Most of the award was not covered by insurance, Superintendent Alejandro Ruvalcaba said, forcing the district to reduce staff, increase class sizes to their maximum capacity and combine different grades in the same classroom.
“Although we support justice, we also have a duty to safeguard the educational needs of our students now,” Ruvalcaba said.
The statewide debate follows a 2019 California law that temporarily suspended the statute of limitations for past childhood sexual assault, raised the maximum age for alleged victims to bring civil claims from 26 to 40 and lowered other barriers to filing. Gov. Gavin Newsom signed the bill, which then-Assembly member Lorena Gonzalez authored. Gonzalez, now head of a labor federation, said after introducing the measure that “the idea that someone who is assaulted as a child can actually run out of time to report that abuse is outrageous.”
The law was intended to reach survivors who often take decades to disclose trauma, a pattern researchers have documented. Prevalence studies cited by the Centers for Disease Control and Prevention estimate that at least one in four girls and one in 20 boys in the United States experience childhood sexual abuse.
Los Angeles County has begun paying up to 11,000 people nearly $5 billion over claims involving county foster homes and juvenile detention centers, The Wall Street Journal reported Aug. 27. A survey of 19 of California’s 58 counties earlier in the year estimated that the counties face at least $12.4 billion in liabilities since the law passed.
Los Angeles County District Attorney Nathan Hochman estimated in court filings that up to 81% of claims in the county’s main settlement fund contain “fraud indicators.” The examples include records indicating that purported victims lived outside the county when they said they were abused.
Hochman told the Journal that his office can use law-enforcement databases with records dating to the 1960s to check whether someone was at a facility. “We can look in the system and see if someone was actually at the facility when they say they were there,” he said.
“There are probably thousands” of legitimate cases, Hochman added. His office hopes to file criminal fraud charges by the end of the year and is investigating suspected fraud in hundreds of sex-abuse lawsuits in Santa Monica that have drained the coastal city’s budget reserves.
L.A. County’s defense lawyers disputed Hochman’s estimate and resumed transferring settlement money to an escrow fund instead of joining his motion to freeze payouts. Andy Baum, an outside attorney hired by the county to defend it against the lawsuits, said the estimate “simply does not match what we are seeing in our review process, which includes a significant, detailed fraud prevention and detection protocol.” The county declined to explain those protocols.
BrownGreer, an independent administrator vetting the claims, had paid plaintiffs $57.2 million as of July 28, according to the L.A. County Counsel’s office. The county still faced 5,400 unresolved claims. Under the main settlement agreement, even plaintiffs suspected of fraud could receive $50,000 to drop their claims.
Some trial lawyers have pursued the cases aggressively, often collecting 40% of payouts as compensation. The firm Manly, Stewart, Finaldi & Thom lists several billion dollars in sex-abuse payouts on its website. After state Sen. Ben Allen, a Democrat, introduced a bill last year requiring “clear and convincing corroborating evidence” for decades-old cases, the firm ran an advertisement calling it a “Predator Shield Law.” Allen later scrapped the proposal.
Firm founder John Manly initially responded to an emailed request for comment: “If you’re a stooge for teachers & public employee unions & the corrupt politicians who have absolutely allowed thousands of kids in California & beyond to be molested I’m not interested in talking to you.” In a later phone call, he apologized and said, “It’s easy to look at this from a policy standpoint and an economic standpoint, but it’s affecting real people on a massive scale.”
A Los Angeles Times investigation in October found seven people who said they were paid to sue the county over sex abuse. Two said they were told to fabricate stories. All had been represented by Downtown L.A. Law Group, which had filed roughly one-quarter of the 11,000 claims at that time, the Times reported. The firm told the Journal by email that it “has never paid anyone to sue” and “has never instructed anyone to fabricate testimony.”
Groups representing California counties, cities and school districts are urging lawmakers to cap liabilities, raise evidence standards or make it harder to hold taxpayers responsible for damages when public entities are only partly responsible. With the legislative session ending Aug. 31, supervisors including Kathryn Barger have warned that the costs will reduce public services.
“People don’t realize that cost is passed on to all of us,” Barger said. “It is eventually going to erode services.”