The six plaintiffs sued the state Department of Social and Health Services last year, charging that the Mirandas, who lived in Tacoma, should not have been licensed as foster parents.
The state has now settled, avoiding a trial next year, The Seattle Times reported.
Denise Revels Robinson, head of the department's Children's Administration, said a trial would have been expensive and harrowing for the plaintiffs.
"We regret that these children suffered at the hands of adults they had trusted to love and keep them safe," she said.
In the lawsuit, the plaintiffs said Juanita Miranda, who died of a drug overdose in 2006, was licensed as a foster parent while she was under Department of Corrections supervision. They also said she lost custody of her own children while living in California.
Caseworkers did not heed complaints from teachers, coaches and other adults that the children were being physically abused, the plaintiffs said.
Jose Miranda, who pleaded guilty to raping foster children, died in prison.
Jeremy Johnston, a lawyer for the plaintiffs, said last year that the place the children were sent was "not a home, it was a house of horrors."
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