Understanding Health Plan “Liens” and Reimbursement Provisions for Gestational Surrogates

Understanding Health Plan “Liens” and Reimbursement Provisions for Gestational Surrogates

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Perhaps the most common misunderstanding regarding Health Plan “Liens” and Reimbursement obligations in gestational surrogacy matters is when a “lien” (or reimbursement obligation) arises. More often than not, we hear “We did not get a Notice of Lien until months after the baby arrived! We had no idea there was a lien to deal with!”

It is important to correct that misunderstanding, as it can have a direct and significant impact on the contractual responsibilities and duties arising from the Gestational Surrogacy Agreement (GSA) between the surrogate and the intended parents.

Generally, GSAs are written to ensure that the surrogate is not left responsible for any of the costs of surrogacy-relate medical expenses. Health Insurance plans vary, but most (if not all) have surrogacy specific reimbursement clauses. These provisions seek to require the gestational surrogate who receives compensation for the surrogacy to reimburse the Health Plan for the costs of the surrogacy related benefits (services) covered/paid by the plan. This obligation is a contractual term of the Health Insurance Contract and becomes effective upon entering the insurance contract. The Insurance Plan typically seeks to create a lien against some specified funds as security to ensure the reimbursement obligation is met. It is important to recognize that liens themselves do not create any obligation to reimburse – they simply serve as a security mechanism to try to ensure fulfillment of the reimbursement obligation.

The intricacies of lien and reimbursement claims are well beyond this article. However, the key lesson is that the reimbursement obligation (commonly referred to generally and inaccurately as a “lien”) exists and must be taken care of prior to closure of the escrow account. The moment the surrogate receives surrogacy related care under their Health Plan the reimbursement clause is triggered. No post-delivery “Notice of Lien” or reimbursement demand letter from the Health Plan or its agent (typically The Rawlings Company) is required. The reimbursement interest is created by insurance contract, and should be addressed head-on following delivery. Further, any obligations for depositing funds in escrow and retaining funds in escrow pending resolution of the lien/reimbursement issues should be strictly followed to ensure compliance with the terms of the GSA, and protection of the surrogate’s indemnification rights. Failure to follow these provisions not only places the surrogate at financial risk, but could result in litigation in the event of unsatisfied reimbursement obligations. Additionally, if escrow accounts are prematurely closed prior to resolution of the reimbursement obligation/lien, the escrow agent faces potential legal exposure and liability.

Taking a proactive approach to address the reimbursement obligations following the baby’s arrival and completion of post-natal care for the surrogate is in the best interest of both the surrogate and the intended parents. It is essential to ensuring the surrogate is properly indemnified for these costs by the intended parents, funds are properly maintained in the escrow account to meet this obligation, and escrow funds are eligible for release to the intended parents sooner, instead of waiting for the inevitable reimbursement letter to arrive. Using experienced counsel to negotiate, reduce and resolve the Health Plan’s reimbursement claims can save time, allow for quicker closure of the surrogacy, and also save substantial money for intended parents.

The Lien Project, PC are experienced trial attorneys with a proven track record in reducing and resolving surrogacy lien and reimbursement claims by Health Plans on behalf of surrogates and intended parents. While we cannot guarantee any specific result in any specific case, we are typically able to achieve substantial reductions, saving intended parents many thousands of dollars. In fact, the vast majority of our surrogacy-related cases are by repeat referral from surrogacy attorneys who have seen what we were able to achieve for their clients. Ask around or give us a call to discuss our past results and what we can do for your clients.

Surrogacies should be a joyful experience for both the parents and surrogate. At The Lien Project, PC we want to help keep it that way – and to help save parents money for their new family.

Explore More Resources with Lien Project Network

For a deeper dive into lien resolution strategies, settlement planning, and reimbursement challenges, explore our educational modules. Lien Project Network serves as a trusted resource for plaintiff attorneys, providing insights on financial planning, public benefits, and structured settlements in the context of lien management.

Need Assistance? Work With The Lien Project, PC

If you need expert legal assistance in navigating lien resolution, reimbursement claims, or settlement planning, our team at The Lien Project, PC is ready to help. As an LPN member, you earn credits that can be applied toward lien reduction and resolution services provided by The Lien Project, PC, allowing you to offset up to $900 per year. Your investment in continuing education through Lien Project Network not only enhances your lien resolution skills but also reduces the cost of engaging legal experts when needed.

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