Chicago, Ill., Apr 18, 2007 / 11:22 am (CNA).- The child welfare system in Chicago was shocked this week with the news that the foster care program, run by Catholic Charities of the Archdiocese of Chicago will shut down June 30th after a $12-million lawsuit payout led the agency's insurer to drop its coverage.

The child care program, established in 1921, is one of the oldest and largest child care programs in the state. In the 1960s, Catholic Charities advocacy prompted the state to take on foster care, leading to the creation of Department of Children and Family Services.

Erwin McEwen, acting director of DCFS, told the Chicago Tribune that losing the Catholic agency will have “a greater impact on the system in the long run.”

Walter Ousley, chief operating officer for Catholic Charities, said the agency tried to find other insurers to cover the foster care operations, but none was willing to take on the risk.  He told the Tribune that it took Catholic Charities months to come to its final decision.

Catholic Charities has 156 employees in its foster care program, and Ousley said he intends to help most of them find jobs with other agencies, keeping as many as possible working with the children they now serve. The 900 children currently in its care will be absorbed by other child care agencies.

Ousley said the agency's insurance company began to review its contract after Catholic Charities settled a $12-million lawsuit alleging that three children were abused by their foster parents, reported the Tribune.

Catholic Charities agreed to the settlement five years after the suit was originally filed. But the agency and its insurance carrier disagreed on the amount the company should pay, delaying the resolution and ultimately forcing Catholic Charities to pay part of the settlement. Ousley declined to name the insurance carrier.

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