November 13, 2023

U.S. Department of State

#### CA/OCS/PRI

Adoption Regulations Docket Room, SA-29

2201 C Street, NW.

Washington, DC 20520

Re: **[Docket State/AR-01/96: Comments to Risk and]{.underline}**

> **[Liability Provisions of Hague Regulations]{.underline}**

To Whom It May Concern:

Reaching Out thru International Adoption ("Reaching Out"), a non-profit
international adoption and humanitarian aid organization, hereby submits
its comments to certain provisions of the Proposed Hague Regulations
(the "Proposed Regulations").  The Proposed Regulations provide some
excellent guidance for international adoption agencies to follow to
ensure that important policies behind the Hague Adoption Convention are
accomplished.  However, we are extremely troubled by the impact of the
risk and liability provisions that are proposed. Therefore, we have
devoted the majority of our comments to those points. In addition, we
address certain additional important issues to a lesser extent following
our risk and liability analysis. We respectfully request that the U.S.
Department of State consider our serious concerns in seeking certain
changes to the proposed regulatory scheme. 

I. [Risk and Liability Provisions]{.underline}

A. [Introduction]{.underline}

The Hague Convention\'s stated policy is to protect the children, birth
parents and adoptive parents involved in intercountry adoptions and to
prevent child-trafficking and other abuses.  On many issues, the
drafters of the Regulations were on the mark in accomplishing these
important goals.  However, certain provisions relating to risk and
liability issues directly counter certain of the goals of not only the
Hague Convention, but of the Regulations themselves.  While initially
the adoption agencies may pay the price by increased costs or going out
of business altogether, ultimately, the children of foreign nations and
adoptive parents will suffer from the high costs and responsibilities
heaped on the agencies, and there will likely be a chilling effect on
international adoption. Ironically, the Regulations, as currently
drafted, undermine the very purpose that the drafters of the Hague
legislation sought in good faith to accomplish.\
\
The following statement in the Regulations goes right to the heart of
our concerns: \
\
"In deference to the historically important role the formation of
networks and the use of small agencies and persons have played in
providing services \...the Department has created regulations that allow
such relationships among agencies to continue.  The Department\'s goal
is to mirror current practices and to provide regulatory flexibility so
that the regulations do not negatively affect small agencies and persons
and other providers."\
\
Preamble, p. 54077.  Notwithstanding this important recognition, the
drafters propose implementation of a financial framework that goes far
beyond the scope of the legislation and endangers the agencies\' very
existence.  Specifically, the financial framework does the following:\
\
(i) Channels all liability of adoption service providers throughout the
system to a single \"primary provider;\"

\(ii\) Statutorily assigns all risk between adoptive parents and their
agencies/service providers to the agency/service providers;\
\
(iii) Ties the agencies\' hands from sharing any risk within the system
with adoptive parents by prohibiting informed waiver provisions;\
\
(iv) Requires maintenance of \$1,000,000 per occurrence of insurance
coverage; and\
\
(v) Incongruously, imposes non-profit status on most agencies.\
\
With the exception of the requirement for non-profit status, imposition
of any of these requirements alone would be an enormous hardship for
most agencies.  However, taken together, the drafters have imposed an
impossible scheme for agencies to implement.\
  \
B.  [Analysis\
]{.underline}\
1.   [Assignment of Risk between Adoptive Parents to Service Providers
and Channeling of Such Liability to a Single Primary
Provider]{.underline}\
\
By enacting certain liability sections of the Proposed Regulations, the
drafters are placing an improper and unmanageable financial burden on
the agencies that serve as primary providers.  Specifically, the
provisions expressly require that agency primary providers retain legal
authority and \"(1) assume tort, contract, and other civil liability to
the prospective adoptive parent(s) for the supervised provider\'s
provision of the contracted services and its compliance with the
standards in this subpart F..."  Proposed Reg. 96.45(b)(8) & (c) and
96.46(b)(9) & (c).  These provisions have 2 important implications:\
\
(i) The provisions will channel all liability, in tort, contract or
otherwise within each case to a single \"primary provider\" for the
actions of all adoption service providers in the U.S. and abroad in the
process (subject to certain limited exceptions); and\
\
(ii) The provisions will assign all risk that is inherent in the
international adoption system to the agencies versus the adoptive
parent(s), thereby creating a statutory cause of action for the adoptive
parents to pursue against their agencies.

It is clear on their face that the proposed Regulations are creating a
strict liability framework. Reaching Out respectfully submits that
creation of the proposed framework exceeds the authority of the
Department of State as it reaches far beyond the legislation it purports
to implement, and that such a framework presents enormous dangers for
the future of international adoption.

a\. [Implementation of the Strict Liability Framework Exceeds the
Authority of the State Department.]{.underline}

First, Reaching Out respectfully submits that implementation of the
proposed risk and liability framework in section 96.45(c)(1) and
96.46(c)(1) goes far beyond the scope of the Hague Convention Treaty and
the Intercountry Adoption Act of 2000 (the "IAA") and that the State
Department would be exceeding its authority to implement such a
structure. Specifically, the Hague Convention, ensuing legislation and
implementing regulations have a specific mandate -- to protect children,
birth parents and adoptive parents from abuse and child trafficking. To
accomplish this important goal, the IAA requires the following:
designation of the State Department as the Central Authority to oversee
the accreditation and approval process; establishment of a case
registry, reporting of adoption data to Congress; designation of
requirements and standards for agencies to follow; establishment of a
scheme of suspension, cancellation, non-renewal, debarment or punishment
in the event certain deficiencies exist or violations occur;
standardization of a system for recognition of foreign adoptions;
amendment of the Immigration Nationality Act to assist families with
visas for their children; and implementation of safeguards for child
protection; preservation of records. To effect this framework, the State
Department was asked to issue the Proposed Regulations to do the
following: set out the requirements to select accrediting entities,
specify the standards to be met by agencies and individuals providing
adoption services in Hague countries, and set out the procedures to be
followed for Hague Convention cases.

The majority of the proposed regulations accomplish this mandate
successfully and properly within the scope of the IAA; however, certain
risk and liability provisions exceed far beyond permissible boundaries.
Specifically, the proposed regulations require that agencies "assume\[\]
tort, contract, and other civility liability to the prospective adoptive
parents for the ... supervised provider's provisions of the contracted
adoption services and its compliance with the standards in this subpart
F." [See]{.underline} 96.45(c)(1) & 96.46(c)(1). This language creates a
strict liability scheme,[^1] as it requires that accredited agencies
that are primary providers be held financially responsible for all risks
within the international adoption process without regard to their
fault.[^2]

Under standard principles of common law evolved over the decades, a
plaintiff must demonstrate that a defendant was negligent in order to
hold such defendant legally responsible for resulting damages.[^3] Such
plaintiff must prove the defendant's negligence by a preponderance or
greater weight of the credible evidence standard and that such
negligence was a proximate cause of the incident that caused the alleged
damage.[^4]   The Proposed Regulations alter basic principles of tort
law by removing the need for adoptive parents to demonstrate any fault
whatsoever on the part of their accredited agency in order to collect a
judgment. Adoptive parents need merely assert a claim for damages
incurred to collect against their accredited agency. Indeed, the
proposed scheme would bestow upon parents a greater legal guarantee than
they would have if their adopted child had been conceived biologically.

Creation of a strict liability scheme is a public policy decision vested
solely in the legislative branch of government - Congress. The
legislative process and accountability are the cornerstones of the
democratic process which justify Congress' role as a lawmaker. Congress,
an elected body of officials accountable to their constituents, alone
has the authority and accountability to dictate public policy. If we as
constituents are unhappy with policy determinations of our elected
officials, we make our voices heard at the voting booth. Unlike the
legislative process, rulemaking by administrative agencies does not
involve the collaborative effort of elected officials but the views of
officials appointed by other branches of government. Accordingly,
administrative agencies do not have the authority to dictate public
policy, but rather to expound upon public policy already established by
Congress. [Accord]{.underline} [Chambers v. St. Mary's
School]{.underline}, 697 N.E.2d 198 (Ohio 1998). Reaching Out
respectfully submits that the State Department's proposal and adoption
of regulations that create a strict liability standard is an
unconstitutional usurpation of legislative authority.

b\. [The Risk and Liability Provisions Have Disastrous Implications for
the Future of International Adoption]{.underline}

The drafters\' stated goals in proposing the risk and liability
provisions of the proposed Regulations were: (i) to \"improve
supervision,\" by American agencies over its counterparts in the U.S.
and abroad, Preamble, at p. 54081, and (ii) to give parents \"legal
recourse against a single entity.\"  Preamble, at 54081.   The
drafters\' proposed solutions present enormous dangers for a number of
reasons.\
\
First, the proposed liability framework will not cause primary provider
agencies to improve supervision over their U.S.-based supervised
homestudy agencies. Rather, primary provider agencies will avoid using
supervised provider agencies who do only home study, parent preparation
and post-placement services altogether.  Given a choice between
utilizing the services of another accredited provider for these
functions and utilizing an unaccredited supervised provider, most
accredited agencies would be unwilling to accept the legal
responsibility and liability that using supervised providers would
entail under the proposed regulatory scheme.  If these small agencies
and social workers (who collectively place thousands of children) are
unable to procure written agreements with accredited agencies, they will
surely go out of business.  The drafters must recognize that these small
providers are a vital link in the international adoption community, and
without them, many children and adoptive parents will be lost to one
another.  And, ironically, these small local service providers are the
only ones who can still get their own professional liability insurance
coverage without difficulty since they are not involved with placing
children and are almost never sued. [See]{.underline} Section I(B)(3)
below (Insurance Requirements).\
\
Second, imposition of liability on primary provider agencies will not
improve supervision over foreign contacts. Agencies have little
meaningful control over the events in foreign lands that can cause a
problem with an adoption case to arise.  In addition to obvious language
and cultural barriers, many foreign agency contacts do not have access
to the money, resources, health care, training, record keeping, or legal
services that are in anyway comparable to those that we have in the
United States.  American agencies cannot be present for every
abandonment in order to seek birth parent background and medical
information or ask about their pre-natal care, nor can they visit every
orphanage, supervise every doctors\' visit, and file every paper for
every child eligible for international adoption.  If resources were
available to help children in foreign lands to this extent, there would
not be such an enormous need for international adoption to help the
children of these nations to find homes in the first place. American
agencies\' chances of successfully policing the events in foreign lands
and their foreign counterparts is extraordinarily difficult to
accomplish, and this purpose will not be accomplished effectively by
imposition of an extraordinary level of liability on American primary
provider agencies.

Moreover, improvement of supervision over foreign contacts is more
appropriately accomplished elsewhere in the Hague Regulations and,
therefore, the liability provisions are duplicative in purpose,
unnecessary and excessive.  Specifically, the drafters proposed a
reasonable and appropriate means of encouraging supervision by expressly
requiring agencies to investigate their foreign contacts, and to ensure
that supervised providers here and abroad are ethical, meet certain
standards, and understand and abide by the principles behind the Hague
Convention.  See Preamble, at 54084; Proposed Reg. Sec. 96.45(a) &
96.46(a).  The Hague Regulations take the further well-justified step of
requiring that American agencies execute written agreements with their
supervised providers in the U.S. and abroad that impose certain
predefined requirements and certifications that are consistent with the
Convention goals.  Proposed Reg. Sec. 96.45(b) & 96.46(b).  In short,
absent the liability provisions, the Hague Regulations already propose a
scheme for reasonable supervision which American agencies can reasonably
and effectively impose over their U.S.-based and foreign supervised
providers, and this scheme does not endanger agencies in the manner they
are impacted by the liability provisions.\
\
Third, the drafters have placed an enormous financial burden on the
agencies that the agencies are in no position to assume.  Most agencies
are not deep pockets - they are non-profit corporations with inherently
limited resources.  Non-profit corporations face enough of a challenge
in training and promoting responsible behavior of, and protecting
themselves from the negligence of, their own employees without asking
them to assume responsibility for the \"local service providers\" in the
U.S. as well as for third party independent contractors in foreign
lands.\
\
Agencies are in business to promote the charitable purpose of
\"unit\[ing\] children living in terrible conditions in foreign
orphanages with parents who want them,\" Howard M. Cooper, \"Enforcement
of Contractual Release and Hold Harmless Language in \'Wrongful
Adoption\' Cases,\" Boston Bar Journal, May/June 2000.  For this reason,
the state and federal government have granted such agencies non-profit
status so that they can fulfill their important mission.\
\
If anything, non-profit corporations deserve protection from liability
in this already overly litigious society.  In recognition of this
policy, some states have enacted statutes that provide non-profits with
immunity from liability for its own negligence.  For instance, the New
Jersey Charitable Immunity statute provides as follows:\
\
"No nonprofit corporation, society or association organized exclusively
for religious, charitable or educational purposes or its trustees,
directors, officers, employees\... shall \... be liable to respond in
damages to any person who shall suffer damage from the negligence of any
agent or servant of such corporation \... where such person is a
beneficiary, to whatever degree, of the works of such nonprofit\..."\
\
[See]{.underline} N.J. 2A:53A-7.  Non-profit immunity statutes codify
the public policy that ensures that the dedicated staff of not
for-profit corporations can accomplish their charitable purpose free of
fear from litigation due to negligence. Forcing non-profit international
adoption corporations to expressly assume the liability not only for
their own employees but for supervised providers here and in foreign
lands over whom agencies have no direct control runs counter to other
non-profit policy and law and imposes an extraordinarily heavy burden.\
\
Fourth, the language of Sections 96.45(c) and 96.46(c), statutorily
shifts all risk undertaken by prospective adoptive parents in pursuing
foreign adoption to their agencies and creates a statutory cause of
action for them. [See]{.underline} section I(b)(1)(a), above.  This
strict liability standard will surely invite litigation from adoptive
parents against the very agencies that are trying to help them build a
family.\
\
The predetermination of this result is expressly stated in the Preamble,
which provides the purpose of these provisions is to \"give the adoptive
parents legal recourse against a single entity\...\"  Preamble V(c)(6).
Neither this purpose nor the means of achieving it are appropriate or
necessary - adoptive parents do not need a statutory right to sue. They
already have a right to sue and are actively using it! 
[See]{.underline} [Wall Street Journal]{.underline}, December 7, 1998,
\"Are Adoption Agencies Liable for Not Telling All?\"  These regulations
will promote litigation and, thereby, pit agencies against other
agencies and agencies against client adoptive parents.  This
blame-oriented framework will ultimately destroy the mutual trust the
agency community works so hard to build. And Reaching Out respectfully
submits that while the rest of the country is seeking tort reform and
limitations on damage awards, any government policy that expressly seeks
to promote litigation is misplaced.\
\
Those who have advocated for recourse through litigation may suggest
that the liability provisions are a necessary and appropriate means of
punishing agencies so that they will seek to ensure that the event that
led to a disappointing result for the adoptive parents will not
reoccur.  However, as stated previously, agencies cannot practicably
control the world events, orphanage conditions, available medical
equipment, unknown genetic predispositions, or any of the other risks
that lead to the disappointing result in the first place.  Using
liability as a hammer to force agencies to improve these types of events
will be excessive and ineffective.\
\
Moreover, the drafters have already - appropriately - proposed a scheme
that will ensure that agencies maintain equitable standards, ensure they
work with third parties who maintain ethical standards, and be punished
in the event they fail to comply with Hague standards. [See]{.underline}
Hague Regulations Subpart J, K and M.  Specifically, the Proposed
Regulations already contain a system that permits adoptive parents to
file complaints against agencies, that ensures their timely
investigation, and that permits imposition of adverse actions or other
sanctions.  The drafters do not need to layer the liability provisions
on top of this solid framework to provide for agency accountability any
more than states need to upgrade sentencing standards from life
imprisonment to the death penalty in order to deter crime.\
\
Those who advocate for recourse through liability may further suggest
that the liability provisions are an appropriate mechanism to compensate
the parents for economic losses resulting from the acts of the foreign
coordinators.  However, why should the agencies be forced to accept
fiscal responsibility for all participants throughout the entire
system?  The agencies are serving the greater good of carrying out their
charitable mission of finding homes for the orphaned children of the
world.  If the drafters wish for parents to have a means of compensation
in the event of a tragic result, more reasonable alternatives exist. 
[See]{.underline} Section I (C), below (Alternative Solutions).\
\
Further, giving adoptive parents carte blanche to sue their adoption
agencies would not only expose the agencies to enormous financial risk,
but it would increase the agencies\' legal and insurance costs
tremendously! These tremendous costs, would, in turn, be passed on to
the adoptive parents and further increase the cost of their adoption
substantially. [See]{.underline} Section II(B), below (Costs).

Of course, the increased cost of higher insurance premiums presumes that
we are able to acquire such a policy in the first place.  Our insurance
broker has advised us specifically that no carrier with which his agency
works would insure for the acts of foreign independent contractors. For
a further discussion of insurance issues, [see]{.underline} Section
I(B)(3) below (Insurance Requirements).\
\
Finally, the flaws discussed above are not remedied by the drafters\'
permitting the agencies to retain the right to seek indemnification
against their providers.  See Proposed Regulation 96.45(d) and
96.46(d).  The agencies will be long out of business before they could
ever make use of these tools.\
\
2. [Prohibition Against Contractual Waivers]{.underline}\
\
In addition to statutorily assigning all risk to agencies that normally
is shared with parents, the drafters further prohibit reallocation of
this risk by contract.  Specifically, the Regulations state \"the agency
or person \[may\] not require a client or prospective client to sign a
blanket waiver of liability in connection with the provision of adoption
services in Convention cases.\" Section 96.39(d). \
\
It is currently standard practice for agencies to advise their clients
that international adoption is not a risk-free means of growing their
families.  Agencies advise the adoptive parents at the outset of the
process that they will be working in a foreign country, with a foreign
government, foreign language, foreign culture, foreign medical systems
and will be subject to the unknowns of foreign law and custom.  We all
run the risk of countries spontaneously deciding to close their adoption
programs. Moreover, agencies cite the universal risk of developmental
delays in orphanage children and the possibility of unknown or
undiagnosed medical and psychological conditions of the children due to
factors beyond their control.  After acknowledging the possible hurdles
and roadblocks, many prospective adoptive parents choose to proceed
despite the known obstacles.  And agencies reasonably ask parents to
forego suing the agency if any of the risks becomes a reality.\
\
Once again, the drafters have altered current practice substantially,
and prohibited adoption agencies from protecting themselves in this
abundantly reasonable manner.  Simply stated, to be able to survive as a
business, agencies must be able to share the risk and to protect
themselves contractually from the threat of litigation by adoptive
parent(s).  Why should agencies be prohibited from educating their
clients about the inherent risks and asking them to decide whether they
wish to proceed?  As stated in an article on this topic:\
\
"In a litigious society such as ours, the ability of an agency to
educate prospective parents about the risks of international adoption
and then to ask them to accept those risk is indispensable to an
agency\'s ability to carry out its charitable purpose\...Put simply, the
risks are multiple and known; and absent an ability to require
prospective adoptive parents to a voluntarily accept the known risks,
agencies may be precluded from their critical mission of finding homes
for children."\
\
Howard M. Cooper, \"Enforcement of Contractual Release and Hold Harmless
Language in Wrongful Adoption Cases,\" Boston Bar Journal May/June
2000.\
\
Imposition of a statutory prohibition such as that proposed in the
Regulations is inappropriate interference with well-justified business
practice. This principle has been recognized by various courts who have
determined that exculpatory provisions in this precise context are
appropriate and consistent with public policy.  See Howard M. Cooper,
\"Enforcement of Contractual Release and Hold Harmless Language in
\'Wrongful Adoption\' Cases,\" Boston Bar Journal, May/June 2000 (citing
[Forbes v. The Alliance for Children, Inc., et al]{.underline}, Suffolk
County, Civil Action No. 97-04869B; [Regensburger v. China Adoption
Consultant ltd.]{.underline}, 138 F.3d 1201 (7th Cir. 1999); [French v.
World Child, Inc]{.underline}., 977 F. Supp. 56 (D.D.C. 1997),
[aff\'d]{.underline}, No. 97-7167 (D. D.C. Cir. Sept. 10, 1998)).\
\
3. [Insurance Requirements]{.underline}\
\
The Regulations further mandate coverage at a prohibitively high amount
of insurance coverage - \$1 million per occurrence.  Proposed Reg. Sec.
96.33(h).  This is inappropriate for several reasons.  First, it is
already impossible for many agencies to procure professional liability
coverage. Our agency has been seeking to renew or purchase a policy for
several weeks and we have been met with denials notwithstanding our
excellent service record, well-drafted contract, and broad charitable
immunity available in our home state. The level of \$1 million may be
impossible to satisfy depending on cost and whether insurers will once
again begin to underwrite this type of policy.\
\
Second, if the Proposed Regulations specify a minimum of \$1 million,
this will encourage litigious clients and their attorneys to sue for
this specific high amount, knowing that it is available even though it
will far exceed the client's out of pocket costs (rarely higher than
\$40,000) and/or medical bills for almost any child. The combination of
this high floor of insurance coverage and the proposed risk and
liability provisions described in sections (a) and (b) above will open
the floodgates to litigation and mire agencies in a future of unlimited
and groundless lawsuits.

Third, Reaching Out submits that there are more effective tools
available to provide a safety net for adoptive parents if an unforeseen
event occurs and they suffer a loss. [See]{.underline} Section I(C),
below (Proposed Alternative Solutions).

4\. [Additional Comments Concerning Risk and Liability
Provisions]{.underline}\
\
We appreciate the encouragement of the Department of State to provide
the agency point of view on these issues.   The sections of the
Regulations discussed herein strongly suggest to us that the drafters of
certain of the Proposed Regulations have served as the sounding board
for advocates of a vocal minority of adoptive parents who either
experienced a disappointing result or were truly victimized by unethical
international adoption agencies.  Like every industry, the international
adoption industry has its bad apples and war stories.  We all recognize
them and are ashamed when our colleagues give into greed or dishonesty
when dealing with adoptive parents during this important and vulnerable
period of their lives.\
\
We would, however, respectfully ask the Department of State to also
factor into its assessment the real world circumstances that the
legitimate agencies are now being asked to police.  Indeed, the same
circumstances that lead to children becoming available for international
adoption create the inherent risk in the process about which the
Department now complains. Agencies can not change the fact that
birthmothers feel forced to abandon their children due to extreme
poverty, or that a country does not have the resources to provide
adequate care for its young, or that a birthmother mother had some
degree of substandard pre or post natal care/nutrition, or possible
undiagnosed genetic conditions.  The term \"abandonment\" alone dictates
that often very little information may be known about a child\'s medical
history or genetic disposition.  Orphanage workers are usually not
skilled, trained medical professionals, but often volunteers or low-paid
labor providing basic care only.  Orphanages staff spend their time and
resources in meeting the basic life-sustaining needs of the children and
are usually  ill-equipped to focus on extensive and accurate medical
evaluations and diagnosis.  In many instances, adequate testing to
determine true levels of physical, development and/or emotional delays
is not readily available in third world countries, too cost-prohibitive
for underfunded orphanages, or is viewed as an unnecessary expense to
waste on the country\'s unwanted children.  These are the real world
circumstances that agencies and adoptive families navigate everyday.
Agencies will not suddenly become empowered to bring third world
countries up to the medical and practical standards of the western world
by a burdensome strict liability scheme.

We would further respectfully ask that the Department of State consider
the precarious position of agencies in relation to the adoptive
parents.  As one author stated:\
\
"Passions run high in these \[wrongful adoption\] cases.  Often,
they\... involve parents whose emotions were already rubbed raw by not
being able to have their own children.  Many then faced a legal obstacle
course to adopt.  Gradually realizing that their long-awaited child has
physical or mental problems can be the last straw, emotionally.  What\'s
more, to prove their case \[against their agency\], parents must often
argue that they would not have adopted the children if they had known
the truth."\
\
Wall Street Journal, December 7, 1998, \"Are Adoption Agencies Liable
for Not Telling All?\" cited in Howard M. Cooper, \"Enforcement of
Contractual Release and Hold Harmless Langue in \'Wrongful Adoption\'
Cases,\" [Boston Bar Journal]{.underline}, May/June 2000.  Arming
emotionally-charged parents with a target for their blame and despair
will only fuel the litigation crisis further and lead to a
counter-productive result.\
\
The international adoption agency community would like the Department of
State to recognize that the vast majority of us are in this industry for
the right reasons - to bring together children living as orphans in
dangerous conditions in foreign lands with able parents who want to
nurture them. And we are proud to report that that the success stories
far outweigh the tragedies.  In fact, considering that international
adoption has brought almost 160,000 children to the United States for
adoption from foreign countries since 1989, the tragedies are remarkably
few.  [See]{.underline} State Department Website,
<http://travel.state.gov/orphan_numbers.html>.

Moreover, we would like the Department of State to consider the
broad-sweeping ramifications of a scheme that will chill international
adoption. International adoption improves not only the lives of adoptive
parents and the adoptees, but those of the millions of children who
remain in the orphanages around the world. Because of donations by
adoptive parents to their adopted childrens' orphanages and communities,
and the humanitarian aid projects that international adoption agencies
such as ours sponsor with the support of our wonderful and generous
families, the orphanages receive greater resources for medicine, medical
care, bedding, clothes, food and education. Since China began its
international adoption programs, infant mortality rates have plummeted
for institutionalized children largely because of the generosity of
adoptive parents to the homelands of their children via their agencies.
Accordingly, the Proposed Regulations that will undoubtedly close
agencies threaten the future of not only adoptive parents and potential
adoptees, they threaten the lives of all of the children in the
orphanages who will no longer enjoy the benefits of donations from an
enormous pool of grateful new families around the world.\
\
We believe that the proposed liability structure of the Hague
Regulations will throw the baby out with the bathwater and go far
beyond, and run counter to, the purpose of the Hague Convention.  It
will not only prevent the tragedies but it will destroy the ability of
Americans who seek to grow their families through adoption to do so
because they can\'t afford the cost of the few agencies that were able
to stay in business.   And, of course, imposition of these impossible
standards will have a tragic effect on the very children who the
agencies, and the drafters of the Hague legislation, seek to help. \
\
C. [Proposed Alternative Solutions]{.underline}\
\
The Hague Regulations can accomplish the purpose of the Hague
Convention, and even some of the new purposes that apparently were added
when drafting the Hague Regulations, by striking the following
provisions:\
\
(i) Strike sections 96.45(b)(8) & (c) and 96.46(b)(9) & (c) - These are
the key provisions which assign all risk between adoptive parents and
their service providers to the service providers, and channel that
liability to the primary providers;\
\
(ii)  Strike section 96.39(d), which ties the agencies hands from
sharing any risk within\
the process with adoptive parents by prohibiting informed waiver
provisions.  Waiver provisions should be permissible if the agencies
educate their clients about known risks and parents knowingly decide to
undertake such risk; and\
\
(iii) Strike section 96.33(h) - Requiring \$1,000,000 per occurrence of
insurance\
coverage. Insurance at this level should not be a requirement unless the
Department of State can propose a reasonable amount of coverage that is
reasonably related to compensatory damages and will not encourage
litigation, and until the Department of State can guaranty the
availability and affordability of such policies.\
\
As stated previously, the justifications for these provisions are
accomplished effectively and appropriately by other provisions in the
Regulations.  The requirements of sections 96.45 and 96.46 (without
sections 96.45(b)(8) and (c) and 96.46(b)(9) and (c)) accomplish
effectively the drafters\' desire to gain control and supervision over
supervised providers here and abroad.    The provisions are bolstered by
Subsections J, K and M, which demand that all agencies conduct
themselves with the highest of standards or risk losing their
reputations or, worse, their licenses and/or accreditation.\
\
The requirement for insurance coverage and prohibition against waivers
forces the agencies to accept substantial risk that could effectively be
spread throughout others in the process.  Parents (of all income levels)
should be able to consider international adoption as an affordable means
of growing their families, and make a knowing decision whether to
proceed in the face of uncontrollable world conditions.  Agencies should
be able to pursue their charitable purposes without the threat of
constant litigation.\
\
As an alternative solution, we propose that the Department of State
consider asking the federal government to provide a market for
international adoption professional liability insurance. It is our
understanding that other federal insurance programs are offered in other
contexts where it has been difficult for industries to obtain insurance.
For instance, the National Flood Insurance Program allows the federal
government to financially back programs while using insurance companies
to process the policies. Implementing a system like that used in the
flood insurance context may provide one solution that would allow
agencies to carry insurance.

We further ask the Department to request that the insurance industry
analyze underwriting international adoption insurance policies for
parents to individually defray the known risks of international
adoption.  Insurers cover domestic adoption risks, as well as travel
insurance risks.  It is not a far stretch for insurance companies to
cover the risks associated with foreign adoption and not unreasonable to
ask that the parents pay insurance premiums if they want the added
protection from financial loss in the event of a disappointing result.
Indeed, the prevailing likelihood of successful adoptions may actually
create a solid revenue opportunity for insurers and lessen the risk on
the agencies. Ultimately, because of the spread of risk among parties in
the process, the insurers may once again be willing and able to provide
agencies with professional and directors and officers policies to
agencies.\
\
Finally, to the extent that the drafters wish to create some scheme that
would allow financial compensation in the event of a tragic result, we
believe that the agencies, under the administration of the State
Department or some other governing body, might develop and implement a
claims mechanism similar to what is used by other professionals in other
industries.  For example, many state bar associations have a Lawyers\'
Fund For Client Protection.  Law firms remit annual \"dues\" and,
basically, commit a predefined amount of resources to cover the misdeeds
of the dishonest lawyer in the community.  Of course, there would need
to be a claims process that would require the claimant adoptive parent
to demonstrate need, and a governing body to determine if the standards
are met.  But this may be a compromise with which the industry, the
adoptive parents, and the needy children of the world can actually live.

> II\. [Additional Comments Regarding Other Provisions of Proposed
> Regulations]{.underline}
>
> Reaching Out further provides the following additional comments to the
> Proposed Regulations.

###### Extension of Comment Period and Interim Ruling/Publication/Comment of Proposed Regulations, as Revised

Reaching Out hereby requests that the Department of State extend the
December 15, 2003 deadline for providing comments to the Proposed
Regulations. While our agency and many involved with JCICS have been
following closely the evolution of the Hague legislation and
regulations, there are hundreds of agencies around the country that have
only recently learned of the imminent legislative changes. Those
agencies should be afforded more time to review the Proposed Regulations
and determine how they will impact their agencies and their industry.
Consideration of the input of more agencies will ensure the Proposed
Regulations will be finalized with input from as many industry
professionals as possible and that all relevant factors have been
considered and evaluated.

Moreover, Reaching Out requests that the next round of changes to the
Proposed Regulations from the State Department be issued as an Interim
Ruling, together with publication and an appropriate comment period. The
current draft differs substantially from the Acton Burnell draft that
has been circulating for the last several months, and raises entirely
new issues that warrant a more thorough analysis and exchange of ideas.

###### Costs

Reaching Out would like the Department of State to consider the economic
impact of the Proposed Regulations. Without factoring in the risk and
liability issues and insurance requirements raised in Part I above,
Reaching Out is concerned that the balance of the framework, while
reasonable, will likely raise administrative costs substantially, which
will, in turn be passed onto adoptive families. Some industry experts
have estimated cost increases could be in the range of \$4,500 per case
(\$3000 per case for accreditation purposes and another \$1,500 per case
for additional work to maintain Hague standards on an ongoing basis).
John Towriss, "The Hague: Noble Treaty or Flawed Concept," [Adoption
Today]{.underline} September 2003) (quoting Carl Jenkins, an attorney
specializing in adoption law).

These costs will increase even further if and when agencies procure
professional liability policies and if such policies would cover the
acts of third party supervised providers, as suggested by the risk and
liability provisions described above. [See]{.underline}, Section I (A),
above. One agency has done a comprehensive analysis on the subject and
summarized its findings as follows:

"While the specifics of these policies and the scope of coverage offered
vary, our experience highlights that despite our excellent record,
reputation and \"loss histories\" and well drafted waiver provisions in
our documents, a lawsuit, regardless of merit, can jeopardize an
agency\'s ability to obtain coverage.  If the proposed Hague regulations
go into effect with the liability and risk allocation provisions in
place, we question whether any insurance carrier will continue to write
policies for our community and, if so, at what cost.  The following
reflects how this regulation will financially impact agencies of all
sizes and adoptive families."

  ------------------------------------- ---------------------- -----------
  **Current Yearly Cost of Obtaining    **Divided by Number of **Cost per
  New Insurance for One Million Dollars Adoptive Families Per  Family**
  Coverage - Not including coverage for Year**                 
  Homestudy agency or Foreign Partner.                         
  Annual Premium;**                                            

  \$210,000                             30                     \$7000

  \$210,000                             100                    \$2100

  \$210,000                             300                    \$700

  \$210,000                             600                    \$350

  \$210,000                             900                    \$233
  ------------------------------------- ---------------------- -----------

Lillian Thogersen, World Association for Children and Parents, Email
Memorandum Dated October 30, 2003 (copied with permission). The cost
increase to be allocated to adoptive parents will clearly be
substantial. Reaching Out fears that international adoption will become
a privilege available only to the rich and elite while potentially
wonderful parents of lesser means are foreclosed from the prospect of
international adoption entirely due to cost.

###### Masters Degree

Section 96.37(f) of the Proposed Regulations requires that home study
personnel have a minimum of a master's degree. Reaching Out believes
that this provision will greatly restrict the qualified applicant pool
for such positions since many geographic areas, particularly in rural
parts of the country, do not have master's level candidates available to
hire. Adoption is not a practice area that is taught in many programs,
and most professionals learn primarily on the job through experience in
the industry. While a master's degree may provide some helpful tools for
social workers performing home studies, it does not provide a guaranty
of appropriate knowledge on intercountry adoption, homestudies, or
attachment disorders, etc.

Moreover, limiting home study personnel to master's level social workers
will reduce the options that adoptive parents have in retaining a
homestudy provider. Master's level social workers will be more expensive
for agencies to hire and retain, and such costs will again be passed on
to adoptive families. Finally, this provision can not be reconciled with
96.37(e) of the Proposed Regulations, which states a homestudy
supervisor can have a bachelor's degree, as long as they also have
appropriate other experience. Retention of these two provisions would
have the incongruous result of requiring social work personnel to have a
master's degree while their supervisors have a bachelors degree. For all
of these reasons, Reaching Out believes that section 36.37(f) should be
modified to track the requirements of 96.37(e), allowing social workers
who perform home studies to have a bachelor's degree, provided they have
prior experience in family and children's services, adoption or
intercountry adoption.

###### Adverse Actions

Reaching Out further submits that Subpart K of the Proposed Regulations
does not comply with the corresponding provisions in the IAA and does
not afford agencies due process with respect to adverse actions issued
by accrediting agencies. The IAA section 204(a)(1) states that the
Department of State can suspend or cancel designation of accreditation
status if it finds an agency to be "substantially out of compliance with
the Convention, this Act, other applicable laws, or implementing
regulations under this Act." IAA 204(a)(2). Further, an agency may be
debarred if [and only if]{.underline} it demonstrates a pattern of
serious, willful or grossly negligent failures to comply or other
aggravating circumstances indicated that continued accreditation or
approval would not be in the best interests of the children or family
concerned." IAA 204(c)(1).

In contrast, the corresponding provisions in the Proposed Regulations
set forth no threshold standards or guidelines to justify the imposition
of adverse actions. Rather, the standards provide each accrediting
entity no guidance whatsoever regarding which adverse actions to impose
(suspension, cancellation of accreditation, non-renewal, or ceasing
provision of services) under which circumstances. They simply state that
the accrediting entity may "decide... based on the seriousness and type
of violation" and on the extent to which the accredited agency corrected
the deficiency. Section 96.76(a). Further, the Proposed Regulations
permit an accrediting entity to impose adverse sanctions that require
the agency to cease operations immediately, regardless of the merit of
the cause for such action. Section 96.77(a). While the Proposed
Regulations permit an accredited agency to respond to notice, Section
96.76(b), the agency will be forced to close its doors before it ever
gets a chance to refute the charged deficiency.

Reaching Out requests that the Department of State modify the language
of the Proposed Regulations to incorporate the standards and guidelines
set forth in the IAA, and to further set forth which violations warrant
imposition of which adverse actions. The process should be modified not
only so it is fair to the agencies, but so it is consistently applied by
various accrediting entities nationwide.

Finally, we respectfully request that the Department delineate standard
and specific procedures that accrediting entities must follow to afford
agencies with due process of law. Reaching Out requests that the
procedures set forth time frames for adequate notice, response
deadlines, standards of proof, and and an administrative hearing board
and procedures. Hearings should be held before an objective fact-finder
and include procedures for expedited consideration, perhaps similar to
hearings for temporary restraining orders/preliminary injunctions in
order for an accrediting agency to have the authority to demand an
agency cease operations. Moreover, the accrediting entity should be
required to demonstrate a high threshold requirement, such as clear and
imminent danger to a child at stake, to receive expedited consideration
of the adverse action.

###### Post-Placement

As our final comment, we would ask that the Department of State,
together with Congress, impose a statutory or regulatory framework that
agencies can use to mandate that adoptive parents provide post-placement
reports, in compliance with the requirements of the countries from which
they adopt. To effectively accomplish the mandate of the Hague
Convention, agencies need a means of securing their clients' future
compliance with country requirements long after they have adopted their
children. American agencies are forced to pay the price when adoptive
parents choose to avoid such requirements by facing the threat of being
foreclosed from future adoptions in such countries. American agencies
are left with virtually no means of forcing their clients' compliance
with country post-placement requirements, and contractual provisions
have proven to be ineffective and difficult to enforce. Accordingly,
Reaching Out respectfully requests that the Department of State,
together with the legislature, take this issue into account when
finalizing the regulatory framework that implements the Hague
Convention.

Reaching Out appreciates the State Department's consideration of the
issues raised herein, and looks forward to participating in a productive
dialogue regarding our concerns.

> Respectfully submitted,

Reaching Out thru International Adoption

Deborah E. Spivack, Esquire

> Executive Director

Jeannene Smith, Founder

Appendix

1.  Section References:

    a.  Preamble V(c)(3). Subpart C -- Accreditation and Approval --

        i.  Pg -- 54077- In deference to the historically important role
            the formation of networks and the use of small agencies and
            persons have played in providing services ...the Department
            has created regulations that allow such relationships among
            agencies to continue. The Department's goal is to mirror
            current practices and to provide regulatory flexibility so
            that the regulations do not negatively affect small agencies
            and person and other providers... [sections 96.45(c) and
            96.46(c) is that a primary provider must assume legal
            responsibility for the actions of supervised providers, both
            in the United States and overseas]{.underline}... (emphasis
            added).

    b.  Preamble V(c) (6) -- Subpart F -- Standards for Convention
        Accreditation and Approval

        i.  Pg - 54081 -- "...Input from congressional staff called for
            the regulations to assign civil liability to the
            accredited/approved provider for the acts of its U.S.
            supervised providers and its foreign supervised providers.
            To address these concern, the regulations made in sections
            96.45(c) and 96.46(c) that any accredited agency,
            temporarily accredited agency, or approved person acting as
            the primary provider [assume legal responsibility vis-à-vis
            the adoptive parents for the acts of other agencies and
            persons in the United States or abroad acting under its
            supervisions and responsibility, in addition to its own acts
            in connection with an adoption. The intend of this provision
            is to give the adoptive parents legal recourse against a
            single entity so far as is reasonable.]{.underline} The
            Department recognizes that this provision may raise the
            costs of liability insurance for accredited agencies and
            approved persons and have an effect on civil litigation.
            [The Department is satisfied, however, that it is consistent
            with the intent and overall purpose of the
            IAA]{.underline}..." (emphasis added)

        ii. Pg 54082 -- "...It seems also appropriate that, in tort,
            contract or similar legal action in which the performance of
            an adoption service provider is challenged, the primary
            provider should assume legal responsibility for the acts of
            supervised providers (domestic and foreign) that it has
            chosen to work with. The Department believes that the
            primary provider will do a better job of supervising if it
            is deemed automatically to be legally responsible for the
            acts of its supervised providers in both the accreditation
            and approval contact and with respect to tort, contract and
            similar civil claims."

        iii. Pg. 54082 -- [The regulations require the agency or person
             to have a professional assessment of the risks it assumes,
             including the risk of assuming legal responsibility for the
             supervised providers in the United states and abroad, and
             to carry an amount of insurance that is reasonable related
             to that risk but in no event less than one million dollars
             per occurrence or claim]{.underline}." (emphasis added)

        iv. Pg 54084 -- This Preamble does not review all of the
            requirements contained in these sections, but generally the
            primary provider must... (1) Screen supervised providers to
            ensure that they have a general understanding of the
            Convention and its requirements; (2) before entering into an
            agreement for the provision of adoption serves, obtain
            information about the supervised provider's history of
            practice and suitability to provider services consonant with
            the Convention..."

        v.  Pg 54084 -- The primary provider is responsible for ensuring
            that the supervised providers with whom it chooses to work
            comply with these requirements. [Failure to do so may be
            grounds for adverse action against the primary provider and
            may jeopardize its accreditation or approval
            status.]{.underline} (emphasis added).

    c.  Subpart F -- Standards for Convention Accreditation and Approval

        i.  Section 96.33(h) -- Budget, audit insurance and risk
            assessment requirements

        ii. Teamleader -- Michael Phenner --

        iii. "The agency or person maintains insurance in amounts
             reasonably related to its expose to risk, including the
             risks of providing services through supervised providers,
             but in no case in an amount less than \$1,000,000 per
             occurrence."

    d.  Subpart F -- Standards for Convention Accreditation and Approval

        i.  Section 96.39(d) -- Information disclosure and quality
            control practices

        ii. Pg - 54103 -- "The agency or person \[may\] not require a
            client or prospective client to sign a blanket waiver of
            liability in connection with the provision of adoption
            services in Convention cases."

    e.  Subpart F - Standards for Convention Accreditation and Approval

        i.  Section 96.45(b)(8) and (c)(1) -

        ii. pg - 54105 -- "the agency... when acting as the primary
            provider and using supervised providers to provide adoption
            services, ensures that each supervised provider "operates
            under a written agreement with the primary provider that ...
            provides that the primary provider will retain legal
            responsibility for each case in which adoption services are
            provided, as required by paragraph (c)...

> c -- The Agency or person, when acting as the primary provider and
> using supervised providers in the Untied States to provide adoption
> services, does the following in relation to risk management: ([1)
> assumes tort, contract, and other civil liability to the prospective
> adoptive parent(s) for the supervised provider's provision of the
> contracted services and its compliance with the standards in this
> subpart F; and (2) maintains a bond, escrow account or liability
> insurance in an amount sufficient to cover the risks of
> liability]{.underline} arising from its work with supervised
> providers..." (emphasis added).

f.  Subpart F -- Standards for Convention Accreditation and Approval

    i.  Section 96.46(b)(9) and (c)

    ii. Pg - 54106 -- "...The agency ...when acting as the primary
        provider and using foreign supervised providers to provide
        adoption services in other Convention countries, ensures that
        each foreign supervised provider operates under a written
        agreement with the primary provider that "provides that the
        primary provider will retain legal responsibility for each case
        in which adoption services are required, as required by
        paragraph © of this section

> \(c\) The agency or person, when acting as the primary provider and
> using foreign supervised providers to provide adoption services in
> other Convention countries, does the following in relation to risk
> management: (1) Assumes tort, contract and other civil liability to
> the prospective adoptive parent(s) for the foreign supervised
> provider's provision of the contracted adoption services and its
> compliance with the standards in this subpart F; and (2) Maintains a
> bond, escrow account or liability insurance in an amount sufficient to
> cover ther isks of liability arising from its work with foreign
> supervised providers."

[^1]: Strict liability is generally defined as liability for injury to
    others without regard to fault or negligence, arising from
    inherently dangerous activities (which may have economic or social
    value). It also may apply to defective or unreasonably dangerous
    products, provided the product reaches or affects the injured person
    without having been altered by another.

[^2]: The Proposed Regulations are actually more severe than strict
    liability standards that have been passed by legislatures in other
    legal contexts since they extend beyond the actions of the primary
    provider agency. Under the proposed scheme, primary provider
    agencies are to be held legally accountable for actions that were
    performed by persons in foreign countries who were not under the
    direct or indirect control of the primary provider agency and
    without regard to any fault by such third parties. [See]{.underline}
    Section 2, below.

[^3]: Negligence is defined as a failure to exercise in the given
    circumstances that degree of care for the safety of others which a
    reasonably prudent person would exercise under the same or similar
    circumstances. Negligence may be the doing of an act which the
    reasonably prudent person would not have done, or it may be the
    failure to do that which the reasonably prudent person would have
    done under the circumstances then existing. Negligence is a
    departure from that standard of care.

[^4]: By proximate cause it is meant that the negligent conduct of a
    party was an efficient cause of the accident, that it necessarily
    set the other causes in motion and naturally and probably led to the
    accident in question.