Members of Georgia’s childcare industry say their profession could very well go under, for reasons that most people would never suspect.
Given Georgia’s high demand for professional childcare services, most people might naturally guess the industry is in no danger of going away.
Guess again.
A rise in lawsuits and excessive judgments are making insurance for childcare providers too expensive or too difficult to find.
The decline of child services would be a disaster for children statewide and even put a dent in Georgia’s economy.
Just talk to Sharon Foster, who founded the Bells Ferry Learning Center, which operates out of Marietta, Woodstock and Cartersville.
“When you balance out the high need for childcare, it’s already a huge part of a family’s budget, especially when parents are paying higher rates for gas and groceries,” said Foster, who is also a past Georgia Child Care Association (GCCA) president.
“We don’t want to make it any worse by continuously driving up tuition rates.”
But they might have no other option.
Foster says it’s increasingly difficult for Georgia’s childcare centers to find companies who will insure them. More and more attorneys throughout the Peach State are suing child care centers, and people in the state’s childcare industry say the judgments in these lawsuits are excessive.
As a consequence, insurers pay out more and more expensive legal settlements. Childcare centers pay higher premiums. Then they have no other choice but to pass those higher costs of doing business down to parents.
“It’s the fact that we don’t have tort reform that is making it worse,” Foster said.
“That is something we desperately need in our state.”
In case you didn’t already know, the American Tort Reform Foundation recently ranked Georgia as America’s No. 1 Judicial Hellhole.
AN INSURANCE AGENT RESPONDS
Marietta-based insurance agent Donna Marcus specializes in childcare and represents 200 of Georgia’s private childcare centers and private schools.
As Marcus put it, what she offers is not just your typical “cookie-cutter insurance policy.”
“The frivolous lawsuits brought against our insureds have really caused the carriers great pause. Let’s say that 10 years ago a child was injured at a center, and it could have been that he just fell,” Marcus said.
“That claim may have been medical bills of $5,000 or maybe $10,000. That same claim today is $75,000, and even the most minor of injuries is becoming a six-figure claim because the attorneys are targeting the childcare centers. They are suing the childcare centers. These claims will drag on and on, and the longer the liability claim goes on the higher the payout.”
Foster, meanwhile, speaks from personal experience.
“I cannot discuss this in great detail, because it is pending litigation, but our afterschool program is currently involved. It was an incident that should not have happened, but we handled it appropriately,” Foster said.
“A teacher pushed a child into a chair too roughly. It should not have happened, but the child was not injured or hurt. The family is suing us for $1.5 million. You face that kind of liability and that kind of exposure, and it’s very frustrating and very challenging.”
Marcus said that the insurance carriers that are left to write the coverage have lowered the available limits.
“Before we could get abuse and molestation (coverage), for example, of $1 million in their general liability. Then we could get another $5 million umbrella. You can’t get that anymore,” Marcus said.
“You can get maybe $1 million, and a lot of the carriers are looking to even reduce that. It’s not just the carriers leaving the market. The carriers that are left are reducing the coverages that they’ll offer.”
GCCA Executive Committee member Julie Newman said via email that there are only two major insurance carriers in the state that will provide general premises liability insurance to early care and learning programs.
“The cost of insurance premiums outpaces inflation – some centers are looking at over 20% increases,” Newman wrote.
Newman said that in some cases, insurance companies are paying out policy limits without conducting any investigations, mediations or arbitrations.
“The carriers say they cannot make money on this business,” Marcus said.
“It’s too volatile.”
INCREASED ADVERTISING
Marcus said that law firms in Georgia advertise heavily and target childcare centers.
Google the term “suing child care centers in Georgia.” A long list of attorneys’ websites appears, and, yes, they specialize in doing just that.
In April, the American Tort Reform Association reported “an alarming increase in local legal services advertising spending in Georgia” since 2019.
“I just think that insurance companies are thought of as having deep pockets,” Marcus said.
“People are upset when a child is injured or abused, as they should be. It is something hard for an insurance carrier to fight, especially if it gets in front of a jury. There are absolutely cases where there is legitimate negligence and legitimate injuries, but even for the smallest ones it is very hard to defend. I don’t want this to be too negative on attorneys, but [for them] it really is an easy payout.”
TORT REFORM
Foster said she and other people will advocate for tort reform legislation during the 2025 session of the Georgia General Assembly. She said she has already discussed the matter with Gov. Brian Kemp.
But what does the ideal tort reform law look like?
That answer varies, depending upon whom you ask.
“[It would] put a limit on the amounts that we are liable for in the event of unpreventable accidents,” Foster said.
“The different industries that are being affected need to come together with one voice and one message.”
Marcus, meanwhile, also said a cap on the awards that people can get is appropriate.
“There are certainly claims where the people are legitimately negligent and there is a legitimate injury, and those should be compensated,” Marcus said.
“But most of them are very frivolous. I don’t know if [the solution] is a cap on jury awards for certain claims. I don’t know if it’s a certain amount of advertising that can be done. I caution people on that sort of thing. Because where do you stop telling people what they can advertise?”
If there is no tort reform either next year or in the foreseeable future then what are the long-term consequences for the Peach State?
“It makes childcare scarce because people go out of business,” Foster said.
“They [childcare providers] get burnt out from the stress and the liability and the exposure of the risk, and they close their doors. For those that stay open, it drives up the cost of insurance, which drives up the cost of tuition for parents. Rates go up.”
In June, the U.S. Chamber of Commerce reported that 58% of working parents will leave their jobs if they cannot find adequate childcare.
“On top of that, a U.S. Chamber of Commerce Foundation study found that breakdowns in childcare cause states to lose an average of $1 billion in economic activity annually,” the report went on to say.
“Part of the lost revenue stems from the cost of parents missing work because quality childcare was not available—or unaffordable.”
ECONOMICS 101
When asked why the lack of tort reform in Georgia should alarm parents, Marcus said it’s as simple as Economics 101.
“If [am a childcare provider and] my insurance for my childcare goes up then, guess what? You [the parents] are going to pay more tuition, and people are already talking about how it’s too expensive for childcare,” Marcus said.
“You will pay more to put your child somewhere amongst your other expenses that have gone up — your food and labor costs. It is a serious issue that all Georgians need to get behind. If the carriers pull out then that just means less competition, and that means higher prices. I think it’s important that everybody invests in this solution so that it benefits all of the people of Georgia.”