Omega Insurance surrogacy scandal exceeds $ 6 million in claims
The damage caused by the Omega PregnancyCare insurance scandal continues to mount. The court-appointed liquidators for the separate Cayman-based holding company – which housed the primary insurance entity of the insurance product sold in the United States – appealed for victims’ claims. As reported in a May 6, 2021, Zoom meeting of creditors, those claims have exceeded $ 6 million and are expected to increase before the tally is complete.
Claims to date have been submitted by more than 350 victims – surrogates, intended parents and support organizations who trusted Omega when promised a reliable insurance product to cover the costs. medical related to their surrogate pregnancy. In return, they paid a hefty monthly premium of over $ 1,000, and closer to $ 1,300 when the company closed in late 2020, two years after its inception.
The current accounting of the company’s remaining assets does not give victims much hope for recovery. At least not directly from the company. Liquidators report that the company’s Cayman bank account barely grows to $ 200,000, with another $ 50,000 located in another account and a possible $ 350,000 owed to the company by related parties with an “unknown realizable value. “. But with monthly expense accounts by the liquidators themselves of $ 20,500 in March and $ 52,500 in April, those accounts are dwindling rapidly.
Raise funds for further investigation
Cayman’s liquidators have undertaken a preliminary analysis regarding potential avenues for collection, including, among others, the Directors and Officers (D&O) insurance policy. However, the liquidators explained that it would take significant funds to pursue these contingent assets, including a full investigation, litigation and execution. They estimate that these phases cost between $ 800,000 and $ 1,050,000. The liquidators solicit proposals from interested parties for the provision of financing and ask these interested parties to contact them before June 30, 2021
That’s a lot of money to pay, but it could be worth it if liquidators could successfully access D&O policy funds to help cover damages.
Letter from the victim
The situation has not gone unnoticed by government authorities. Several states – including California and Oregon – have investigative forces at work to shed light on what happened. Among those who dig deep is the California Department of Insurance. In order to help victims as they try to fight hospital billing, the ministry has issued a “letter to victims.” The letter explains that the department has received complaints regarding Omega Insurance Company and the PregnancyCare plan and that the department is investigating these complaints and is aware of related disputes.
In addition to reassuring victims that there is an active investigation, the victim’s letter helps validate the victims’ explanations when describing the situation to the billing services of medical providers. Yes, they were insured. But no, the insurance policy does not pay for covered claims. Really.
So many trials
The victim’s letter references some of the ongoing lawsuits related to the Omega PregnancyCare situation, but not all. There is a lot to keep straight! Bankruptcy lawyer Justin leonard closely follows the various related disputes and summarizes them as follows:
- A lawsuit in Kentucky U.S. District Court against Performance Insurance Company SPC (Performance) (WD Kentucky 3: 20-cv-00330), regarding allegations of insurance fraud involving a Performance captive (Omega Insurance Company SP) and allegedly counterfeit policies (PregnancyCare) issued by Omega Family Services, LLC.
- Omega Family Services, LLC’s Chapter 7 bankruptcy filing (SD Cal. Bankruptcy Case No. 20-06121-LA7), which also did business as “Prime Insurance Solutions” and “Lyfgro”) and a marketed the PregnancyCare insurance plan to various surrogacy agencies and to expectant surrogates and parents.
- The Chapter 7 bankruptcy filing of Omega Risk Management, LLC (SD Cal. Bankruptcy Case No. 21-01389-MM7), which had the trade name “Omega Insurance Company” in the United States, and owned and operated the sites Web of Omega Insurance Company and PregnancyCare.
- The voluntary liquidation proceedings of Performance Insurance Company SPC and its captive insurance companies, including Omega Insurance Company SP (Grand Court of the Cayman Islands Case No. FSD 70 of 2021 (RPJ)), including the appointment of co -independent liquidators (Kenneth M. Krys and Neil S. Dempsey).
- The Chapter 15 bankruptcy case of Performance Insurance Company SPC and its captive insurance companies, including Omega Insurance Company SP (SD Florida (Miami) Bankruptcy Case No. 21-12609-AJC), based on the recognition by the US bankruptcy court of the foreign liquidation proceedings.
Wow. That’s a lot of litigation around a single insurance product!
The real problem
The Cayman liquidators of Omega Insurance Company SP made appointments and formed an ad hoc committee with an advisory role and used to promote transparency with creditors. Lisa Stark Hughes, Founder of Gestational surrogates and president of education and vice-treasurer of the nonprofit organization Society for the Ethics of Egg Donation and Surrogacy (SEEDS), volunteered and was appointed to the committee.
Stark Hughes explained that at this point no one knows exactly at what level the fraud occurred and who knows when. However, the real crime, explained Stark Hughes, is the state of the US healthcare system which put Omega victims in a position where they could not rely on the usual insurance options. Most expectant parents in a surrogacy arrangement have already suffered from failed fertility treatments – probably not covered by insurance – before turning to surrogacy. Universally in the United States, Intended Parents’ Insurance will not cover the cost of surrogate medical care. And then, to make matters more difficult, the surrogate’s own insurance often doesn’t cover her medical bills either. A number of insurance plans have excluded maternity care coverage if a woman’s pregnancy is a surrogate. Other policies place a lien on any compensation a surrogate may receive for acting as a surrogate.
The lack of a cohesive and comprehensive health insurance system has led victims to the open arms of unique insurance “providers” like Omega.
Nevada has the right idea
I’m sure those on both sides of the aisle can agree that America’s medicare system could be dramatically improved. Nevada took a stand a few years ago on insurance coverage for women acting as surrogates. The state passed a law prohibiting discrimination in surrogacy and requiring insurers to treat surrogate mothers the same as any other pregnant woman carrying her own child.
Ensuring affordable healthcare for all would hopefully eliminate all future PregnancyCare-type scams, among many other benefits. In the meantime, buyer beware, good luck to the victims of PregnancyCare, and congratulations to all the well-employed lawyers who profit from the mess.
Ellen Trachman is the Managing Counsel of Trachman Legal Center, LLC, a Denver-based law firm specializing in assisted reproductive technology law, and co-host of the podcast I wanna put a baby inside you. You can reach her at [email protected]om.