I swear most surrogacy trips don’t end in disaster. Or a complicated legal battle. Most games actually end on two very lucky sides – the intended parents adding a new addition to their families; and the pregnant surrogate mother who is rightly compensated and happy to know that she changed a family’s life forever.
But as the readers of this column know, we are always amazed at how surrogacy can go sideways. I don’t know what Sarah Koenig, famous journalist and podcast host for Serial, is up to to this day, but she really should review this situation and let us know if Robert Park and the rest of the Omega crew are guilty – in that case of hideous Fraud against families at their most vulnerable – or, as they claim, mere victims themselves.
In recent years, Omega Family Services (“Omega”) – or Lyfgro (pronounced like “Life Grow”), among other names that have been used – have been aggressively selling an insurance product called PregnancyCare to pregnancy surrogacy adjustment programs and their programs Customers. The product looked promising and appeared to solve a major recurring problem in the surrogacy field. Promising enough that, according to Omega, around 700 hopeful parents have taken out PregnancyCare insurance to cover medical complications and delivery costs for pregnant pregnancy replacement persons.
Too bad it all turned out to be a fraud and surrogacy was in jeopardy, and hopeful parents – many of whom had endured costly and painful fertility treatments for years before turning to surrogacy – were hooked up for huge medical bills.
It looked good. First.
One of the main obstacles to surrogacy agreements during pregnancy is finding insurance that will cover the cost of pregnancy and childbirth of the surrogate mother. While many women who raise their hands in surrogacy are already covered by health insurance, a large number of these policies contain provisions that specifically exclude coverage for surrogate pregnancies. That said, insurance is good for a surrogate mother’s pregnancies, but not a pregnancy in which she acts as a surrogate mother for another person. As an alternative, many Intended Parents can find a surrogacy-friendly policy through the Affordable Care Act market. However, these policies can only be used for the following year in the few months of open enrollment and depending on the location of the replacement may not be available at all.
So PregnancyCare came along. While the policy wasn’t cheap, it was around $ 1,000 to $ 1,350 per month (premiums rose while the product was sold) but promised to cover the surrogate’s pregnancy-related medical expenses. Hooray!
PregnancyCare was a viable option and not outrageously expensive (compared to other private insurance options starting at $ 30,000). And the policy seemed to be working. First. Claims were paid.
However, last fall, rumors surfaced that PregnancyCare stopped paying claims and canceled the policy. In fact, with just nine days notice, PregnancyCare canceled all policies on October 31, 2020 – a particularly scary Halloween for policyholders. Omega Family Services then filed for bankruptcy in California on December 23, 2020. Zoom held a public hearing on January 19, 2021, and, oh man, this was an unusually popular bankruptcy hearing.
At the hearing, Robert Park, one of the owners of Omega Family Services, the broker who sells the PregnancyCare product, testified. But his testimony was evasive, to say the least. Omega’s bankruptcy reports showed it had no assets. Like literally nothing. This means that nothing can be distributed to the many victims. Apparently, all of those more than $ 1,000 monthly premiums from 700 Intended Parents (so more than $ 700,000 per month) went to the Omega Insurance Company Segregated Portfolio, a Cayman Islands company. Probably. Although Park is also a major shareholder in Omega Insurance, he declined to answer questions about that company because the hearing was only for Omega Family Services. Interestingly, he also started by saying that Omega Family Services was just another victim of COVID-19.
Nobody buys that.
Bankruptcy professional Justin Leonard’s attorney took the lead in interviewing Park. His questions included several inquiries about money transfers from Omega Family Services to other Omega companies. Park stated that the remittances were being made to encourage the other companies’ “cash flow”. Hmm
Were the Omega Guys themselves victims?
In a December 2020 email titled “Update December” sent by Omega Insurance (the Cayman based company) to all concerned parties, the company stated that PregnancyCare was licensed through a nationally accredited insurance carrier called State National, when they got a contract claim the same thing. State National adamantly claims, however, that they never had such a contract and were never involved with the PregnancyCare product or any of the Omega companies.
Omega claims it relied on the services of a captive insurance company advisor, Brandon White, of Ambassador Captive Solutions. And in a seemingly unrelated (but now directly related) case in Kentucky with AIG, White was accused of forging contracts. State National intervened in the AIG case when it learned its name had been used in a number of insurance schemes. These programs included the “bogus guidelines issued to Omega Family Services” which “purported to provide medical care to surrogacy service customers in the California area.” Omega Insurance’s email to the parties concerned stated: “As a result of the dispute [the Kentucky case]State National immediately terminated our license and declined to continue licensing [PregnancyCare.] … The uniqueness of PregnancyCare has made it impossible to find an alternate license agreement in time to move the insurance plan forward. “
But it wasn’t that State National “canceled” the license. There was no relationship with State National from the start. A key question, of course, is: who knew? And when?
Insurance economics are complicated.
I spoke to surrogacy insurance expert Sarah Paige at ART Risk Financial and Insurance Solutions. Paige stated that she too was hopeful that PregnancyCare was a viable option, but the numbers on PregnancyCare cast some doubts. She found that the average pregnancy costs $ 18,000. In addition to paying medical bills, a policy must cover the costs of third-party administrators, claims handlers, network access fees, brokerage fees, licenses, reinsurers, and potential investors. And unlike other insurance policies where only a percentage of members are likely to claim, this policy is specifically designed and sold for use by surrogate mothers with an expected 100% usage. However, with trusted insurance names like AXA, State National and Lloyd’s of London represented as supporters of the product, she understands why so many people – many after extensive research – have been persuaded to buy the policy.
Omega Family Services’ next bankruptcy hearing is scheduled for February 18, 2021. Expect the conspiracy to re-densify before the truth is finally revealed.
Ellen Trachman is the managing director of Trachman Law Center, LLC, a Denver-based law firm specializing in assisted reproductive technology law, and co-hosted the podcast I want to put a baby inside you. You can reach them at [email protected].