Is an ERISA-based employee medical benefit plan required to pay birth-related hospital expenses incurred by a surrogate mother? In an unpublished Michigan appellate decision, the answer is NO.
Facts of the case: Lehr (“surrogate mother”) became pregnant with triplets after being implanted with embryos created by third parties. Spectrum Health Hospital (Spectrum) treated the surrogate mother during her pregnancy. Third-party defendant NGS American, Inc. (NGS), the administrator of the surrogate mother’s employee medical benefit plan, denied coverage for Spectrum’s services.
The contract claim for benefits: The heart of the decision is as to the claim for insurance benefits since state courts lack subject matter jurisdiction of civil action brought under ERISA except for ERISA actions to recover benefits under 29 USC 1132(a)(1)(B).
Standard of review: Where a “benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan,” courts review the administrator’s decision to deny benefits under the arbitrary and capricious standard of review, which is the least demanding form of judicial review. Any reasonable explanation offered by the plan administrator that is evidence-based, will support a denial that is not arbitrary or capricious
Obligation of plan administrator in interpreting the plan: In this case, all the plan administrator had to do was to comply with the plain meaning of the language of the plan as it would be interpreted by an ordinary person. In this case, the plan did not define the term “surrogate mother.” Interestingly, NGS looked to Wikipedia Encyclopedia and Merriam-Webster Dictionary to define “surrogate mother.” This panel of the court of appeals said that NGS’s use of Wikipedia Encyclopedia to define “surrogacy” is questionable because Wikipedia’s content can be edited by its users, [see here where we discussed other court decisions that had approved use of Wikipedia, and here, from Wikipedia itself, a sortable page of court decisions from around the world].
However, here the Merriam-Webster Dictionary was an acceptable source for NGS to obtain the common and ordinary meaning of “surrogate mother.” That dictionary defines a “surrogate mother” as “a woman who becomes pregnant usually by artificial insemination or surgical implantation of a fertilized egg for the purpose of carrying the fetus to term for another woman.” The court of appeals approved NGS’s interpretation of “surrogate mother” as consistent with the plain meaning of a surrogate mother as it would be construed by an ordinary person.
The surrogate mother took exception to the fact that NGS did not resort to the Surrogate Parenting Act’s definition of “surrogate mother.” The COA, however, re-affirmed that all NGS was obligated to do was to apply the common, ordinary meaning of the plan’s language. NGS was not required to rely solely on the Surrogate Parenting Act to obtain the common, ordinary meaning of “surrogate mother.” As a result, the COA held that NGS’s interpretation of “surrogate mother” was not arbitrary and capricious.
As a result, the following legal conclusions were reached:
- NGS’s decision to deny benefits was not arbitrary and capricious.
- The surrogate mother became pregnant after she was implanted with embryos created by the [______].
- The surrogate mother was a “surrogate mother” under NGS’s reasonable interpretation of the plan, and,
- Spectrum’s services to the surrogate mother concerned her pregnancy.
- NGS is not liable for her pregnancy expenses.
Read here: Spectrum Health Hospital v Lehr, (Michigan Court of Appeals, Unpublished Docket No. 298688, September 8, 2011). [Last accessed Sept. 9, 2011]
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