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Assisted Reproduction

Are Agencies Exposing Their Surrogates & Intended Parents To Potential Insurance Fraud Allegations?

I would have thought the revelations regarding the SurroGenesis insurance scam would have served as a clarion call to this industry to clean up its act. Of course, that was too optimistic a thought in an industry that continues to demonstrate a mind-numbing ability to ignore the most obvious warning signals. So while news of the unethical practices of SurroGenesis were met with pubic displays of indignation and condemnation, many have continued to engage in similarly questionable practices that, undoubtedly, will cause an entire new wave of scandals.

As many in this industry already know, the inability to secure medical coverage for surrogates reached almost crisis proportions a few years ago as health insurers chose to exclude maternity benefits for women serving as surrogates. This crisis largely subsided with the introduction of Surrogate Maternity Coverage Plans underwritten by Lloyds of London. As a result of the Lloyds plans, coverage became available for all surrogates, though at a major cost. Between deductibles and premiums, these plans could exceed $25,000.00, easily putting the cost to the Intended Parents pursuing a gestational carrier arrangement at $100,000.00 or more.

So what have some agencies done to gain a competitive advantage? They have begun placing their surrogates with government assisted health care plans such as Medicaid and state-run programs like California’s Access for Infant & Mothers (AIM). Make no mistake about it, these low-cost health care coverage programs for pregnant women were never intended to cover Surrogates who were receiving compensation for the pregnancy and for which there is another party, the Intended Parents, legally, contractually and financially responsible for the cost of the process.

Setting aside for now the question of whether a woman who qualifies under these programs’ income guidelines should even be eligible to be a surrogate, it likely will be construed as insurance fraud by federal and state governments. Some states already prohibit anyone seeking government assistance from serving as a surrogate. For those states that are silent on the issue, it defies logic to believe that they would take kindly to a woman on public assistance, receiving compensation to serve as a gestational carrier, using the public dole to pay for a pregnancy on behalf of Intended Parents who have (or should have) the financial wherewithal to cover the cost of the process.

These agencies that are placing their surrogates on Medicaid, AIM and similar programs are sitting on a powder keg that will surely explode. In the process, they are exposing their surrogates and Intended Parents to potentially huge fines and even criminal prosecution. They are taking the easy route out and desperate Intended Parents are relying upon the guidance of these “experienced” agencies to their detriment.

The climate surrounding the field of surrogacy has never been more precarious. The ART industry has been rocked by scandals repeatedly over the past two years yet it appears that few have learned any lessons from these incidents. No one can avoid hearing the vitriolic arguments being made in the ongoing public health care debate as that bill gets closer to a vote. Right-wing ideologues who oppose government health care are now turning their focus towards government funded abortions, compensated egg donations for stem cell research and surrogate pregnancies to rile up supporters to oppose the President’s health care bill. Throw into this explosive mix the record budget deficits that the federal government and state governments are experiencing and it should be obvious that these shady practices have a huge bullseye on them. Regardless of how you feel about the passage of health care reform, it is inevitable that public scrutiny will be focused upon surrogate agencies placing their gestational carriers on low income health care programs to cover their pregnancies. This practice needs to end immediately.

There was a universal consensus that SurroGenesis’ scheme of classifying their surrogates as employees, only to terminate their “employment” and require the Intended Parents to pay COBRA, was illegal and fraudulent. Seeking out surrogates who meet the income eligibility guidelines for these government offered, low-income health plans is exploitative and unethical. So too is the practice of intentionally electing not to finalize parental rights of the Intended Mother so as to take advantage of the surrogate’s insurance or other low-income state and federal programs to cover the medical expenses of the newborn. Not only does this practice fly in the face of the stated intent of the contract and the laws in many states, but it also ultimately reduces the amount of lifetime medical coverage available to the surrogate. Parenthetically, I would be remiss if I did not point out that many agencies today eschew these unscrupulous practices to their competitive disadvantage and ought to be commended for their principled approach.

If you are an Intended Parent or Surrogate and are asked to avail yourself of low-income, government sponsored health care, please immediately consult with your independent attorney regarding the legality of such a practice. As long as agencies remain unlicensed and unregulated, these types of business practices will, unfortunately, be prevalent. However, you can protect yourself by doing your due diligence before it is too late. Because, mark my words, some unsuspecting Surrogate or Intended Parent is going to find themselves in the middle of an investigation as to whether they committed insurance fraud. Whatever short-term savings the Intended Parents might have enjoyed by following the advice of their agency, it will be far outweighed by the consequential cost of their actions. And, when it comes time to pay the piper, the agency will likely be long-gone leaving the Surrogate and Intended Parents to deal with the aftermath.


6 comments for “Are Agencies Exposing Their Surrogates & Intended Parents To Potential Insurance Fraud Allegations?”

  • Mia

    Andrew, after all the heartache we have been through with the SGUSA scandal we can finally, happily say, our surrogate is currently pregnant. Of course this time we decided to go independently without an agency. We are approaching our 6 week ultrasound and have paid the hefty insurance premiums for our surrogate (New Life Agency). We are about to fund our deductible (another $15,000). I have to say, I am scared to death to send this amount of money, given what we already have lost through the MC Financial Group Trust Fund. How do we know New Life Agency is a legitimate company? I don’t know where to begin to research. I have searched online and have found nothing negative about this company, except for the very expensive premiums and deductible. But researching online is also what we did with SGUSA, and look what has happened. What can I advise our family and friends who are also suffering from infertility, and would like to explore their options through surrogacy? I don’t want another person to have to go through what my husband and I have been through. Thanks for any advice.

    • Hi MIA,

      First, congratulations on the pregnancy and best of luck on the ultrasound!

      As far as New Life Agency goes, I have had nothing but good experiences with them for many, many years. They are ethical and reputable with a long track record in this industry. Also, please know that the insurance they are likely offering you is underwritten by Lloyds of London which is a secure and financially solvent market. As it stands today, the Lloyds plan is the gold standard and you will be well protected.

      As far as what you can do to advise family and friends on how to avoid retaining an agency of the SurroGenesis ilk, I’d encourage you to start with this blog post: http://www.eggdonor.com/blog/2009/11/03/a-cautionary-tale-how-to-protect-yourself-from-unscrupulous-agencies/. While it is only a starting point, it does have what I believe are some helpful points to screen out many of the agencies that are operating questionable programs. I also cannot stress enough the importance of retaining independent counsel to review every aspect of your arrangement with any agency you are considering – starting with their retainer agreement.

      Unfortunately, there is no realistic way to eliminate every risk. However, being informed about the unethical practices that are currently taking place and diligently investigating every individual and entity you are considering working with, is the best advice I can give. Hopefully we will see some well-considered legislation that will impose minimum requirements including licensure which may eliminate a lot of the guess work and risk-taking. Until then, all you can do is be diligent.

      I wish there was more I could do. Again, best of luck on the ultrasound!

  • Mia

    Thank you Andrew for the advice and for all you do on keeping us updated on the current infertility industry. Hopefully regulation will happen soon, without negatively affecting our IP’s.

  • LaLa

    What would you say if the CA AIM program allows surrogates to use their insurance? What would your advice be, use AIM that you know the max is about $700 or use New Life Agency that is pricey in the upwards of $25,000?

    • Hi Lala,

      I would have to see the actual language of the California AIM program where they specifically include maternity benefits for women serving as surrogates.

      Even if there is a legal right to do so (and my review of the Summary Plan does not indicate that they explicitly cover maternity benefits for surrogate arrangements), I would nevertheless remain uncomfortable about using the program unless the intent of the California Legislature is clearly expressed. From what I recall, it was never designed to assist high-income earners who are using financially eligible women as gestational carriers. So even if it was technically legal, I believe it crosses a line that will only lead to problems down the road.

      Now if you can provide me with actual policy language that specifically articulates an intent by the State of California to offer these benefits to gestational carriers, then I would reconsider my position. However, I have found no such language in the Program information that I have received and reviewed.

  • LaLa

    Well I had an agency tell me they were going to have me apply for it. Of course I am thinking they are trying to get me into something way over my head. Because I thought there is NO WAY they would cover this. I looked online and did not find anything, so I called and talked to a rep. The rep said yes they cover it, they go off the surrogate’s income (comp included) not the IP’s, and some of their policies do have an exclusions for surrogacy. So she said to check each policy before picking. I am wondering if the allow surrogates because it even states if you have a deductible of $500 or more AND meet the income guidelines then you will qualify for AIM. The New Life Agency is going to be over $500, so maybe they are trying to save people from those high prices?

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