Open Thread To Answer Legal Questions

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Open Thread To Answer Legal Questions

By Andrew Vorzimer ⋅ March 19, 2009 ⋅

Filed Under Michael Charles Financial, SurroGenesis, Tonya Collins

I thought it might be helpful to have an open thread where I can respond publicly to any legal questions you might have. I will continue to answer your questions privately via email or telephonically; however some people have expressed discomfort in identifying themselves. Given that the internet allows a modicum of anonymity, I’ve decided to also take questions today on the blog. So feel free to pose any questions you might have through our comment section and the use of a pseudonym.

I also wanted to take a moment to address an issue raised by a commenter in another thread. The services my firm and I are providing are all being done on a pro bono basis. We are not and will not accept payment for this assistance. Further, we will not be accepting any referral fees from any attorney, agency or other professional that we provide as a potential resource to help you recover from this scandal. This is simply our way of trying to help those that have been victimized.

I completely appreciate why many of the victims are distrustful and cynical of this industry. It is precisely for this reason that so many professionals are stepping forward to offer their assistance. There are thousands of honest and ethical professionals that have dedicated their careers to help those struggling with infertility realize their dreams of beginning a family. There will be liars and cheats in every field of work and, as recent events attest, the infertility industry is no exception. However, incidents like this one are extremely aberrational and in no way characterizes the industry as a whole.

Please do not let this isolated incident tarnish your view of the industry or deter you from realizing your dreams of a family. There are many resources available to assist you — please take advantage of them.

*** UPDATE *** I apologize to a number of commenters whose comments were not published. WordPress has a spam filter that attempts to catch comments that it believes to be of questionable origin. Unfortunately it ended up withholding a number of comments that should not have been classified as spam. I have now approved those comments. In the future, if you notice that a comment does not appear after hitting the “submit” button, please email me so that I can clear the comment for publication. Sorry again for any inconvenience this might have caused.

Discussion

24 comments for “Open Thread To Answer Legal Questions”

QUESTIONS

1) Should the ip be responsible for surrogate’s expenses and compensation, given that the contract was not clearly stated out this situation?

2) Will the Texas police at least try to find and talk to Tonya Collins if all victims call them?
- Andrew Vorzimer
  
  With respect to your first question, I will have to qualify my response by stating that without seeing the contract, I cannot provide a definitive answer. However, it is customary for contracts of this type to require the Intended Parents to cover the Surrogate’s expenses, unless those expenses were included as part of her compensation. Further, even though the contract does not contemplate the criminal conduct of a third party, such behavior typically will not absolve the Intended Parents of their financial responsibilities. Now from a practical matter, the Intended Parents may not have sufficient funds available to them to meet their contractual obligations as a result of the embezzlement. It will then become necessary for the Intended Parents and Surrogate to reach a new understanding. If you find yourself in this situation, I strongly encourage you to meet with your Reproductive Attorney and discuss an Addendum to the Contract to address how you intend to move forward.
  
  As for your second question, Texas law enforcement would also have jurisdiction in this case and have an interest in locating Tonya Collins given that she allegedly operated Michael Charles Company out of Grapevine, Texas. Further, SurroGenesis claimed to have at offices in Dallas and Houston and there are several victims of the fraud who reside in Texas. Keep in mind however that the FBI is currently investigating this scandal and has likely contacted Texas law enforcement.
  - Rhonda
    
    Since this has crossed state lines, wouldn’t it be Federal jurisdiction?
    - Andrew Vorzimer
      
      There would be both federal and state jurisdiction. Those involved in the fraud could be criminally charged both federally as well as at the state level.
Concerned about insurance

For those IPs and surrogates that are already pregnant, what do you reccomend as a next step/different options regarding obtaining insurance for the pregnant surrogate. In our case, the surrogate had the insurance that Surrogenesis purchased and now that is likely going away.
- Another Victim
  
  Also, some (if not all of the surrogates) apparently obtained insurance through the Surrogenesis employer-sponsored plan under false pretense– that the surrogate was listed as an employee (unbeknown to the surrogate) of Surrogenesis. Since this is insurance fraud, are the IPs liable for potentially reimbursing the insurance company for services already rendered and covered by the health plan or would the insurance company go after Tonya Collins/Surrogenesis? I imagine that it won’t be too long for the insurance company to uncover the fraud committed by Surrogenesis as it pertains to health coverage and I worry that IPs may have additional, and potentially astronomical, costs to reimburse.
  - Andrew Vorzimer
    
    This is the first time I have heard of SurroGenesis “employing” their surrogates for purposes of obtaining health insurance coverage. Since the contract of insurance was between SurroGenesis and the insurance company, the carrier will likely first look to SurroGenesis and then to their insured — the surrogate. There are some theories in the law (i.e. third party beneficiary) that might allow the insurance company to seek to recover from the Intended Parents for claims already paid out.
    
    If in fact SurroGenesis improperly identified their surrogates as employees, then I strongly encourage that any impacted Surrogate and their Intended Parents consult with their attorney about immediately alterting the insurance company of this information. While the Intended Parents and Surrogate had no reason to know at the inception of the policy of the fraud, upon learning of it, there is likely a duty to notify the insurance company and to insulate yourselves from additional liability, it may be prudent to contact the insurance company and apprise them of these developments. Parenthetically, if in fact your Surrogate was a full time employee of SurroGenesis, then there may not be any wrongdoing that occurred. So before panicking unnecessarily, please speak to the attorney that represented you during the contract phase.
    
    Also, for those that find themselves without coverage, please know that there are policies of insurance available that specifically provide coverage for women serving as surrogates. Insurance brokers such as New Life Insurance, Brown & Brown and Beitler Services offer several different insurance options. Unfortunately I cannot tell you if any of these policies will be available if your Surrogate is already pregnant and you have lost your coverage. However, it is worth contacting them to see what options exist.
    - Another Victim
      
      We discovered the method in which Surrogenesis obtained health coverage for surrogates only from the notice of cancellation letter our surrogate received. To her (and our surprise) the letter made a reference to her “employer” and failure to make premium payments. Our surrogate is actually employed elsewhere.
      - Andrew Vorzimer
        
        As I posted below, you might want your Surrogate to contact Blue Shield directly and see if she can obtain an individual policy. If your surrogate is already pregnant, please make sure you review the policy to confirm that it does not contain a pre-existing condition exclusion. The other option would be to see if your Surrogate can obtain insurance through her employer. My guess, however, is that the policy of insurance offered through her employer contains a surrogacy exclusion which would explain why the elected to classify her as an employee and make her eligible for their group plan.
- Andrew Vorzimer
  
  Do you know who the insurance carrier is?
  
  If it is through a regular medical insurance company, then all you will need to do is to continue making the monthly premium payments. Almost all insurance companies have grace periods before canceling a policy so even if Michael Charles Company missed a payment or two, it should be possible to keep the insurance. If, the policy was canceled, then your Surrogate needs to contact her insurance company or her agent and see if it is possible to have the policy reinstated upon payment of the outstanding premiums.
  - Another Victim
    
    Blue Shield of California is the insurance plan and MC was reponsible for all premium payments. The group plan has been canceled for nonpayment. Even if IPs paid the premium, since the plan is through Surrogenesis, wouldn’t all of the subscribers (surrogates and Surrogenesis employees) be required to pay in order to keep the group plan active?
    - Andrew Vorzimer
      
      If you were insured as an employee under a SurroGenesis group plan, then it will be almost impossible to have the policy restored at the moment. One of the issues your attorney needs to look into is whether a Trustee can be appointed to deal with any outstanding SurroGenesis obligations, including the restoration of the group insurance — though I would not hold out much hope on this front. At this time, my suggestion is that you contact Blue Shield of California directly and see if your Surrogate can procure an individual plan. Perhaps because she was previously insured by Blue Shield, they will waive any potential pre-existing condition exclusion that might be contained in the policy.
QUESTIONS

If we do not join the class action (assumed there is one), will the money (assumed there is any) be returned to us?
- Andrew Vorzimer
  
  If there is a class action (and I have my doubts), any damages that are recovered will be paid out to the class members, i.e., the victims. To the extent a class action is filed, you will be given a choice of participating as a class member or opting out and pursuing your claims independently.
anon

Andrew,

was it Kosher to allow/encourage surrogates to use MediCal for surrogacy related care??
- Andrew Vorzimer
  
  In a word, NO. Ever since Bill Handel did the first surrogate arrangement in the United States back in 1979, one of the automatic disqualifying factors was if the surrogate was on any public assistance. Full stop. Professionals in this industry have steadfastly refused to take advantage of taxpayers in order to fund these arrangements. Moreover, it would be hard to imagine a scenario where a surrogate would be MediCal eligible given the compensation she would receive under her contract. While not an expert in MediCal, I also suspect that a surrogate would be ineligible for benefits given that the surrogacy was an elective procedure she entered into.
  
  Do you have any understanding that SurroGenesis was having their surrogates apply for MediCal benefits?
  - IT’S ABOUT TIME
    
    Andrew, surrogates were NEVER asked to apply for MediCal benefits to cover their surrogate pregnancy. If a surrogate applicant had MediCal, they were made aware that their MediCal coverage could not and would not be used for a surrogate pregnancy. They were advised that this would be fraudulent and would not be permitted. The MediCal comment posted by JAD pertains to coverage for the babies. I know that SurroGenesis previously advised a few International Intended Parents to apply for MediCal coverage to cover their baby upon birth due to the lack of insurance coverage for the baby (due to citizenship). My memory of the exact reason(s) may be cloudy, but I am certain my statement is factual.
anon

No, I have no first hand knowledge of it…but another poster (Jad, I think?) mentioned that they were under the impression that the hospital where their surrogate delivered would accept Medi-Cal.

I suppose, though, that if Tonya was willing to just pretend that surrogates were employees of SGUsa (and I DO know first hand that is the case, it’s what they told me when I was a surrogate – that I’d be a “contracted employee”) then she’d also be willing to let tax payers foot the bill for a surrogate. Perhaps, all the while telling parents they were deducting fees for private insurance that never actually existed???
- Heather
  
  If a surrogate did not have health insurance then SGUSA would get a policy for them through the employee BCBS.
  
  I know when my husband switched jobs we ad a laps in coverage, and SGUSA put me on their BCBS employee plan (that was before i worked there)…
  - Andrew Vorzimer
    
    Heather, once you had coverage, did they “terminate” you and require you to take COBRA?
    - Heather
      
      Andrew, No they did not require me to take COBRA insurance. I found out my insurnce was canceled when i was out of state and hurt my back. I called to find out where i could go to be seen, and they stated that my policy was canceled because the premiums were not paid. I called SGUSA to find out what was going on they told me they would tke care of it.
      The following month my personal insurance came into effect.
      
      However to answer your questions I do know that Surrogates were getting placed on COBRA insurance.
Shannon A.

Andrew,

I know I have said this privately, but I wanted to also publically acknowledge you, your firm and all the other professionals that have dedicated so much of their time without charge to help out all the victims of this terrible mess. Thank you so much!
- Andrew Vorzimer
  
  Shannon, thank you for the kind words. Also, it shouldn’t be lost in all of this that your organization, Surrogate Moms Online, has done an incredible job in raising awareness and offering services to the victims of this scandal. On behalf of my clients, thank you!
U R Lame

As a former employee the first thing I was told to do was disqualify anyone on public assistance. If that changed after I left I don’t know. However I do know we turned many people down for this reason.

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