An update from Greg Moran of the Union Tribune on the recent restitution filing of Sharp HealthCare:
With nearly $2 billion in annual revenues and a network of seven hospitals around the county, Sharp HealthCare is one of the region’s leading companies.
And according to a filing in a federal court case, it’s also a crime victim — owed hundreds of thousands of dollars for being victimized in an international baby-peddling scheme run by Poway lawyer Theresa Erickson.
In documents filed for Erickson’s sentencing in February, the hospital argues it is due $614,860 in restitution from the lawyer. She pleaded guilty in August to conspiracy to commit wire fraud for orchestrating a scheme federal prosecutors said evaded California’s surrogacy laws and sold babies carried by surrogates to parents for $100,000 or more.
A nationally known figure in surrogacy law, Erickson, 43, faces up to five years in prison but will likely get less. Her sentencing is scheduled for Feb. 24.
The hospital is not the only entity that will seek money from her. A state-funded program that provides insurance to expectant mothers who don’t qualify for Medi-Cal also will be seeking restitution, a spokeswoman for the program said.
Erickson obtained insurance for pregnant surrogates through that program by falsely saying the surrogates were California residents. Jeanie Esajian, the spokeswoman for the Access for Infants and Mothers program, could not say how much money the state would seek.
Lawyers for Sharp HealthCare said in court filings that the $614,860 is what the hospital lost on seven births from surrogates who were working for Erickson’s business, Conceptual Options.
The hospital said while Erickson took care to insure the surrogates — fraudulently signing them up for the state-funded insurance program — she made no provisions for paying the medical costs associated with the birth or the care of the babies.
When the couples who had agreed to become the children’s parents showed up at the hospital to take them home, they were handed a bill for the babies’ medical costs.
The hospital said in a court filing that the parents told them Erickson had misled them about whether insurance would cover the medical expenses for the children, or how large those expenses could be.
In all, Sharp said it incurred $850,616 in medical costs for the seven births. It said it was able to negotiate $235,746 in payments from the families adopting the babies.
Now, the hospital says it is owed the balance because it qualifies as a victim of Erickson’s crimes under the federal victim restitution law.
That law allows crime victims who are “directly and proximately harmed” by a fraud to get restitution.
A spokesman for Sharp HealthCare declined to comment on the filing because the case is ongoing and Erickson has not been sentenced.
The hospital filed an itemized breakdown of the costs for the seven births with the court, but it was done under seal.
It’s not unusual to see a corporation or business seeking restitution as a victim, said San Diego criminal defense lawyer Michael Crowley. Seeking repayment under the law has several advantages, he said.
“There is a lot of leverage with it,” Crowley said. “You’ve got the full force of the federal government behind it. And unless a person can prove in the future they don’t have the money, the restitution is going to be the first priority, before you get a new car or anything else.”
The restitution order would also become a condition of federal probation, which would enforce it. The other legal option — filing a lawsuit — is far more time consuming and difficult to enforce. A company would have to hire a collections agency to pursue payment instead of having a federal probation official do that work, Crowley said.
Erickson’s lawyer declined to comment about Sharp’s claims for restitution.
It is possible Erickson could argue that Sharp, through the settlements with the parents, has already been compensated and can’t seek more money.
Erickson is a well-known expert in surrogacy and reproductive law. Prosecutors said she and two others — Carla Chambers, 51, of Las Vegas, and Hilary Neiman, 32, of Maryland — arranged for women to travel to the Ukraine where they would become implanted with embryos. The women, known as gestational carriers, were paid $35,000 to $45,000.
Once the pregnancies entered a second trimester, Erickson would offer the unborn children to prospective parents. Those parents were told the children were products of legitimate surrogate arrangements, but that the original parents had backed out. The new parents were told they could step in and take over the surrogacy contract for a cost of $100,000 to $150,000 and be listed as the parents on the birth certificate.
But there were no original parents. Claiming there were prospective parents allowed Erickson to circumvent state law, which says surrogacy agreements must be made before a surrogate becomes pregnant. Her actions also allowed the parental rights to be granted to the new parents, who could then immediately take the baby.
In addition, Erickson filed false documents with the court stating that the babies were products of legal surrogate arrangements.
Neiman pleaded guilty and in December was sentenced to a year in custody, split between five months in prison and seven months of home confinement. Chambers has pleaded guilty and will be sentenced along with Erickson.
Sentencing for Ms. Erickson and Ms. Chambers has been continued to February 24th.