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Court Finds Health Plan’s Denial of Surrogacy Expenses Reasonable Despite Ambiguous Plan Provision



Roibas v. EBPA, LLC, 2018 WL 4690354 (D. Me. 2018)

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A court has held that a health plan administrator’s denial of a participant’s surrogacy expenses was reasonable under the terms of the plan. The participant (and the parents of the child she gave birth to pursuant to a gestational carrier agreement) sued the health plan administrator and the employer plan sponsor after claims for her pregnancy-related medical expenses were denied. She argued that expenses of pregnancy, regardless of the cause or purpose, were unambiguously covered by the plan and that the plan’s exclusion of “expenses for surrogacy” applied only to a participant’s costs of retaining a surrogate. She further contended that she was a gestational carrier (hosting the fertilized egg of another individual and carrying it to term) rather than a surrogate (who provides her own egg to be fertilized), and the plan did not exclude expenses for gestational carriers. The plan administrator maintained that her expenses were surrogacy expenses, which were clearly excluded by the plan. While conceding that the term “surrogacy” was not defined in the plan, the administrator argued that the plain meaning of surrogacy is broad and commonly understood to encompass the entire process of carrying and delivering a child for another person.

The court found the plan’s surrogacy expense exclusion ambiguous, but ruled that the plan administrator’s interpretation was nevertheless reasonable. The court rejected the participant’s argument that her expenses should be covered because she was a gestational carrier rather than a surrogate, finding it inconceivable that the drafters of the plan intended to cover one type of expenses but not the other. And the court concluded that the plan administrator’s determination that surrogacy expenses means all expenses associated with a pregnancy by means of a surrogate—including the costs of preparing a surrogacy agreement, in vitro fertilization, pre-natal care, delivery, and post-birth care for the mother and child—was grounded in the common understanding of surrogacy.

EBIA Comment: Plan sponsors should proceed with caution when considering and drafting surrogacy exclusions. Although the court did not address the issue, the Pregnancy Discrimination Act (PDA) may prohibit enforcement of a health plan’s exclusion for the pregnancy and birth-related medical expenses of a plan participant who is acting as a surrogate mother. Since the PDA mandates that a plan cover pregnancy in the same manner as other medical conditions, it would be difficult for a plan to maintain that excluding pregnancy expenses based on the circumstances of conception or the plans for the child once it is born would be permitted under the PDA. Further complicating matters, health care reform may also require a plan to cover a participant’s surrogacy medical expenses as preventive health services or essential health benefits, and a plan may be subject to a patchwork of conflicting state laws and regulations on surrogacy. For more information, see EBIA’s Group Health Plan Mandates manual at Section XXI.E (“The PDA and Health Coverage”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.E (“Coverage Limitations and Exclusions”) and EBIA’s Health Care Reform manual at Section XII.C (“Coverage of Preventive Health Services”).

Contributing Editors: EBIA Staff.

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