More Bad News For Victims Of A Surrogacy Insurance Scandal

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Insurance companies often have a bad reputation for taking premiums from their insured customers and then denying coverage when care is needed. But one insurance company in particular has really caused the industry reputational harm. Readers might recall the scandal involving the popular surrogacy-focused health insurance product, PregnancyCare, sold by a company called Omega Family Services (“Omega”). The company was also known as “LyfGro Insurance Solutions” and “Prime Insurance Solutions.” Hindsight is 20/20, but one red flag was that the company was using so many “DBAs” — or “doing business as” company names. In the end, no amount of name acrobatics could save Omega from a disastrous bankruptcy.


Partnering with a gestational carrier, or surrogate, to carry a baby to term is expensive. Medical expenses in particular can price people out of the market for growing their families. So it was welcome news when, for a few years, many intended parents and surrogates had the option of Omega’s policy, promising to cover pregnancy-related medical expenses when other insurance options weren’t available or were less appealing. However, in the fall of 2020, the company abruptly alerted all of its insured customers — many in the middle of a pregnancy — that all of their insurance policies were being cancelled.

Last week, surrogacy agencies with clients who were victims of Omega received even more bad news as part of Omega’s bankruptcy liquidation.

Liquidation Complete And No Money For Victims

With the sudden cancellation of all policies, the intended parents, who were already burdened by the expensive surrogacy process, wondered where all of their sizeable monthly premiums had gone. The Omega owners pointed toward a Cayman Islands entity called Omega Insurance Company SP, a segregated portfolio of Performance Insurance Company SPC. This might have been another red flag … if anyone had known that the funds were making their way offshore.

Because there were so many creditors and so few funds to distribute, the Cayman entity was placed into liquidation proceedings by Cayman authorities. Victims hoped that funds left from liquidation would pay some of the medical bills intended to be covered by the insurance policies they had purchased. Unfortunately, with an estimate of only about $200,000 in assets held by the entity and upfront disclosure from the bankruptcy liquidators that their services were expensive — with monthly bills in the $40,000 to $50,000 range — it looked doubtful that any money would be left for the victims.

And the official answer to that question arrived last week in an e-mail from one of the Cayman joint official liquidators (JOLs). The email notified “Potential Creditors” that, “As outlined in the JOLs’ Fourth and Final Report dated 25 November 2022, the JOLs sought and obtained an order on 27 June 2023, that Omega (and two other SPs) be dissolved with an effective date of 31 December 2022 … As the costs of the liquidation have exceeded the available assets, there are no funds available to pay a distribution to creditors.

The outcome was not unexpected, but still disappointing.

What Other Updates Are Out There?

Most information is still being kept confidential, as civil and criminal investigations remain active at the state and federal levels.

However, at least one entity concluded its process against Omega, which meant that some pleadings have shed additional light on what happened and who was affected. In April 2022, for instance, the State of Oregon, Department of Consumer and Business Services, Division of Financial Regulation (the “Division”) issued a “Final Order to Cease and Desist and Final Order Assessing Civil Penalties, Entered By Default” against Robert Y. Park and Omega Family Services, LLC, d/b/a Prime Insurance Solutions and d/b/a Lyfgro Insurance Solutions.

The order provides a helpful summary of findings in a complicated case — specifically addressing the timeline of communications from Omega to third parties concerning its relationship with nationally licensed insurance entities, including AXA and State National. But the order also confirms that Omega actually had no legal relationship to either of those insurance entities.

Also, as part of its investigation, “the Division learned that approximately 60 Oregon consumers paid more than $2 million in premium payments for PregnancyCare over a two-year period. The investigation further identified 38 of those Oregon consumers who had total unpaid claims of approximately $691,726.93 under their PregnancyCare policies.” (And of course, that’s just the Beaver State’s tally of victims.)

The result of the division’s investigation was a finding that Omega “sold, solicited, or negotiated in Oregon by: exchanging PregnancyCare for money, receiving and collecting premiums, enrollment fees, or other consideration for PregnancyCare … attempting to sell PregnancyCare and asking or urging surrogacy centers and individuals to apply for PregnancyCare, [and] conferring directly with surrogacy centers and prospective individual to apply for PregnancyCare.” By selling, soliciting, or negotiating PregnancyCare without being licensed as insurance producers, Omega violated Oregon State Law, codified at ORS Section 744.053.

The court ordered Omega to cease and desist from violating Oregon insurance law and assessed a civil penalty of $5,000 for violating certain provisions of Oregon insurance law, and an additional $70,000 for violating other provisions of the state’s insurance law.

Those seem like small numbers given the sizable losses to victims. But the investigation and findings are themselves a positive step. As the wheels of justice move slowly, more legal actions and revelations are expected to emerge.

A Silver Lining

Lisa Stark Hughes, a surrogacy agency owner who served on an ad hoc committee organized by the Cayman liquidators to represent Omega victims, described a bright side to the otherwise distressing situation. “It was heartening to see the industry come together to support victims.” She explained how the Society for Ethics in Egg Donation and Surrogacy (SEEDS) organized regular informational meetings and a publicly available shared Dropbox to facilitate open communication; and surrogacy insurance brokers like ART Risk Financial & Insurance Solutions and SurroPlans stepped up to assist victims in negotiating and settling outstanding medical claims. “SurroPlans worked for victims for free and organized grants to help pay off outstanding medical bills.”

Hopefully we will never see a repeat of this situation. But it’s nice to know that if another disaster strikes, professionals in this area are likely to be there for those that need it.

Ellen TrachmanEllen Trachman is the Managing Attorney of Trachman Law Center, LLC, a Denver-based law firm specializing in assisted reproductive technology law, and co-host of the podcast I Want To Put A Baby In You. You can reach her at


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