New Surrogacy Law Brings Opportunities but Practitioners Beware

On April 2, 2020 – during the height of the coronavirus pandemic – the New York State Legislature passed the Child Parent Security Act (CPSA), ushering in significant changes to prior New York law regarding gestational surrogacy.

Gestational surrogacy is the process by which a woman agrees to become pregnant via IVF and embryo transfer and to carry and deliver a baby for intended parent(s), who will be declared to be the legal parent(s) of the child immediately upon birth. For many families experiencing fertility struggles and/or LGBTQ families, gestational surrogacy is an important family building option. For some, it is the only option for conceiving a child that is biologically related to them. However, gestational surrogacy in New York has had a complicated and tumultuous history.

For decades, “surrogate parenting agreements” were deemed void and unenforceable by our state’s Legislature as contrary to New York public policy (DRL § 122). If the surrogacy agreement provided for the surrogate to be compensated, the parties, their attorneys and any other entities involved in the arrangement were also subject to civil and potentially criminal penalties (DRL § 123).

Initially introduced in 2012, the CPSA had languished in the Legislature for nearly a decade, leaving New York in the relative “dark ages” with only two other states nationwide where compensated gestational surrogacy arrangements remain prohibited.¹

Thankfully, the passage of the CPSA changed all of that, legalizing compensated gestational surrogacy in New York and creating a statutory framework for establishing parentage of children born through gestational surrogacy and assisted reproduction. However, before family law attorneys hang out their shingle as surrogacy attorneys, they must be aware of the multitude of statutory and regulatory pitfalls that await an inexperienced practitioner.

What the CPSA Does (and Doesn’t Do)

The CPSA adds an entirely new article – Article 5-C – to the New York State Family Court Act, which became effective on February 15, 2021 (FCA § 581). Pursuant to Part 4 of Section 581, entitled “Surrogacy Agreement,” parties may now enter into enforceable surrogacy agreements, and such agreements may provide for surrogate compensation, provided that all other statutory requirements have been followed (FCA § 581-401).

The law is clear, however, that this only applies to gestational surrogacy – where the surrogate’s own egg is not used to conceive the child. Surrogacy arrangements where the surrogate is biologically related to the child, sometimes referred to as “traditional” or “genetic” surrogacy, remain unenforceable in New York and are statutorily prohibited if the surrogate is being compensated (FCA § 581-401).

Who Is Eligible To Act as a Surrogate?

Before taking on any new surrogacy clients, practitioners should familiarize themselves with the eligibility criteria for gestational surrogacy. Under the CPSA, any woman who is over the age of 21, who is a United States citizen or lawful permanent resident, and who did not contribute her own egg for the pregnancy, is potentially eligible to act as a surrogate (FCA § 581-402). There is no requirement that the surrogate be a New York resident, unless no intended parent resides in New York (FCA § 402).

However, while the statutory text ends there, the lawyer’s inquiry does not. In addition to the statutory requirements, New York surrogates must also meet all regulatory requirements mandated by the New York State Department of Health (FCA § 581-402). DOH issued “emergency regulations” on February 16, 2021 – the day after the law went into effect – which, among other things, contain detailed surrogate eligibility guidelines that borrow heavily from the American Society for Reproductive Medicine and American Congress of Obstetrics and Gynecologists.

Prior to signing a surrogacy agreement, the prospective surrogate must receive a medical evaluation relating to the anticipated pregnancy from a qualified health care practitioner in order to assess any potential medical risks associated with a surrogate pregnancy (FCA § 581-402). It is essential for practitioners to familiarize themselves with these DOH guidelines before advising clients regarding potential surrogacy arrangements. The surrogate must be informed of any medical, psychological or psychosocial risks of a surrogate pregnancy and must provide informed consent to engage in a surrogacy arrangement (FCA § 581-402). Lest they wish to run afoul of the DOH, practitioners representing surrogates will want to ensure that their clients are being evaluated by reputable health care practitioners who are following all the requirements of the CPSA, including the requirements regarding informed consent and conflict of interest procedures.

The surrogate must be represented in the negotiation and execution of the surrogacy agreement by independent legal counsel of her own choosing who is licensed to practice law in New York. However, the surrogate’s legal fees would be paid by the intended parent(s), and the surrogate’s attorney must have a separate retainer agreement clearly stating that the attorney-client relationship lies only with the surrogate, not with the intended parent(s), despite the fact that they are paying the legal bill (FCA § 581-402). Practitioners representing surrogates will need to update their existing retainer agreements to include this statutory language.

Intended Parent Eligibility

In order to enter into an enforceable surrogacy agreement, the CPSA requires that each intended parent be over the age of 18 at the time the surrogacy agreement is signed and requires that at least one intended parent be a United States citizen or lawful permanent resident and a resident of New York State (FCA § 581-402). This means that international surrogacy will not be permissible in New York even if the surrogate is a New York resident – something which practitioners must be aware of when advertising to prospective clients.

An unmarried intended parent can enter into a surrogacy agreement on his or her own, seeking to become the only legal parent to the child, or a married or unmarried couple can pursue surrogacy together (FCA § 581-402). If the intended parents are married to one another, they would both be parties to the surrogacy agreement (and both deemed to be parents of the child) unless the spouses have been living separate and apart for a period of three years or pursuant to an agreement or judgment of separation (FCA § 581-402). In the case of separated spouses, only the petitioning spouse would be a party to the surrogacy agreement and deemed to be a parent of the child, despite the marital presumption of DRL § 24. A married intended parent who is not separated from his or her spouse cannot enter into a surrogacy agreement without the spouse’s participation (FCA § 581-402). Matrimonial attorneys advising their clients about the legal impact of a separation agreement should be mindful of this statutory provision, especially in cases where the parties created or obtained frozen gametes or embryos during their marriage.

If the intended parents are unmarried, they can pursue surrogacy together if they are “intimate partners” (FCA § 581-402). While the phrase “intimate partner” is not specifically defined by the CPSA, it presumably draws from the statutory and case law definition of an “intimate partner” as applicable in Family Court Act Article 8 proceedings (FCA § 812).

Practitioners must also be mindful regarding the potential legal consequences of a change in a party’s marital status during the pendency of the surrogacy arrangement (i.e., if married intended parents divorce while their surrogate is pregnant, or an unmarried surrogate gets married during her pregnancy). While the CPSA provides guidance on these issues (FCA § 581-404), these topics should be considered and addressed during the contract phase of the surrogacy process.

The intended parents must also be represented by independent legal counsel, licensed in New York, through the duration of the surrogacy process.

The Contract Phase – the All-Important Surrogacy Agreement

Arguably the most important (and certainly the most complex) of the CPSA surrogacy provisions is Section 403, which outlines the requirements of a surrogacy agreement. This is the part of the CPSA most fraught with minefields for the rookie ART attorney. The surrogacy agreement – the contract entered into between the surrogate and the intended parent(s), which outlines all of the terms of the surrogacy arrangement – is only enforceable if it is in “substantial compliance” with the statutory requirements of Section 403 (FCA § 581-203).

While the legalization of surrogacy agreements likely means more business for New York attorneys, it may also mean more business for our malpractice carrier. On a serious note, surrogacy is not an area of the law that should be “dabbled in,” and it is crucial that any practitioner involved in the drafting of a surrogacy agreement be well-versed in the statutory requirements, regulatory requirements and medical/ethical opinions regarding gestational surrogacy. Surrogacy is an ever-evolving area of practice, and counsel must be informed regarding all aspects of the process, not simply the statutory requirements described in this article. The recent approval of the coronavirus vaccine(s) presents a perfect example of this, as there are currently conflicting views as to whether it is advisable to obtain such a vaccine during or immediately before pregnancy. While counsel will not be providing medical recommendations to either party, you must be prepared to have these conversations with your clients, which means you must be knowledgeable regarding the relevant medical literature and current recommendations of entities such as the CDC and WHO. Contract terms regarding vaccinations, for example, will almost certainly be included in most surrogacy agreements (or at least they should be), but guidance on these topics will not be found in the text of the statute or even in DOH regulations.

To make things more complicated, the agreement must also comply with the incredibly complex insurance requirements of the CPSA regarding health insurance, life insurance and disability insurance for the surrogate.

To summarize, the surrogate must be provided a life insurance policy (paid for by the intended parent(s)) with a minimum value of $750,000 or the maximum amount the surrogate is able to qualify for. This life insurance must be in effect prior to the surrogate commencing any medications in anticipation of embryo transfer and must remain in effect until 12 months after the conclusion of the pregnancy (FCA § 581-403).

The surrogate must also be provided a health insurance policy (paid for by the intended parent(s))² which likewise takes effect prior to commencing medications in anticipation of embryo transfer. The CPSA contains detailed provisions regarding what type of medical coverage must be provided for the surrogate, when the policy must become effective, and the term/duration of coverage (FCA § 581-403). The surrogacy agreement must specify how the surrogate’s medical expenses (including medical insurance) will be covered and must include a review and summary of the health insurance policy that will be used to cover such expenses (FCA § 581-403). Practitioners are encouraged to consult with a fertility insurance provider or similar entity to review any potential exclusions or exemptions from the selected insurance policy and to guide the intended parent(s) on the purchase of surrogate-friendly insurance (if necessary), including open enrollment periods when such policies may be acquired. Failing to properly advise your clients about the insurance aspects of a surrogacy journey can not only impact the enforceability of the agreement, but may cost your clients tens of thousands of dollars if the surrogate is not properly insured.

If the surrogate also requests a policy of disability insurance, the intended parent(s) shall provide such a policy (at their expense), and the surrogate may designate a beneficiary or beneficiaries of her choosing (FCA § 581-403).

Practitioners must also be vigilant about the timing of each step in the surrogacy process. The surrogacy agreement must be negotiated, drafted, and executed after the medical and psychological screenings have been completed, but prior to the surrogate commencing any medications or medical procedures in preparation for embryo transfer, and all necessary insurance policies must already be in place at that time (FCA § 581-403). This is especially important if the parties are not using a surrogacy matching program, as the attorneys will be the gatekeepers in an “independent” journey, ensuring that all of the necessary statutory requirements have been met prior to clearing the surrogate for embryo transfer. If your clients are using a surrogacy matching program, you must ensure that the program is licensed by the DOH, as New York is now the only state in the nation to regulate surrogacy agencies.

Given the complexity of the insurance requirements of the CPSA and the specific contractual requirements that must be met for the agreement to be deemed enforceable, it is recommended that practitioners speak with an experienced ART attorney before drafting their first surrogacy agreement. If the agreement is not in substantial compliance with Section 403, it is not enforceable, and the court will be required to determine parentage of the child based on the intent of the parties and the best interests of the child (FCA § § 581-203; 581-407). Aside from any ethical and/or malpractice considerations, this potentially jeopardizes the intended parent(s)’ ability to establish legal parentage for their child and could potentially result in unwanted parental rights being vested in a surrogate or gamete/embryo donor. This would obviously be a disastrous result for the intended parent(s), the surrogate, any donors and potentially the child. In addition to becoming familiar with the CPSA and DOH regulations, practitioners can avoid these types of pitfalls by referring their clients to a reputable New York-based licensed surrogacy matching program that can help ensure that all of the necessary requirements have been met, including the necessary medical evaluations and the purchase of surrogacy-friendly insurance, before the surrogacy agreement is signed.

How Much Do Surrogates Get Paid?

Perhaps the biggest change to prior New York law is the authorization of compensation to gestational surrogates. For the first time in our state’s history, gestational surrogates are statutorily permitted to receive compensation for acting as surrogates, to compensate them for the medical risks, physical discomfort, inconvenience and responsibilities they undertake in connection with the surrogacy arrangement (FCA § 581-502).

The CPSA does not suggest a dollar amount for surrogate compensation, but rather requires that such compensation be “reasonable” and negotiated in good faith between the parties (FCA § 581-502). Surrogate compensation varies a bit based on geographical location and whether the surrogate is “experienced” (having served as a surrogate in the past) or a first-timer, but national averages typically range between $30,000 and $60,000 for base compensation. Again, a reputable surrogacy matching program will be able to assist the parties in discussing the issue of compensation to establish reasonable surrogate compensation under the statute.

If the surrogacy agreement provides for the surrogate to be compensated, the intended parent(s) must place sufficient funds in escrow, prior to the surrogate commencing medications in anticipation of embryo transfer, to cover her base compensation as well as “reasonable anticipated additional expenses” associated with the pregnancy, which may include maternity clothes, medical expenses, travel expenses, insurance, etc. (FCA § 581-403). Such funds must be held by an independent escrow agent as that term is defined in FCA § 581-102. Obviously, practitioners will want to ensure that the intended parents’ escrow account is being properly managed and operated, and that the funds are being allocated properly and not co-mingled by the escrow agent.

Establishing Parentage Under the CPSA

Ultimately, the entire purpose of the surrogacy process is for the intended parent(s) to have a child that is legally (and sometimes biologically) theirs. Assuming the surrogacy agreement is compliant with Section 403, a judgment of parentage can be obtained, declaring the intended parent(s) to be the legal parent(s) of the child born as a result of the surrogacy arrangement.

This proceeding can be commenced in the Supreme, Surrogate’s, or Family Court and, while it will most commonly be filed by the intended parent(s), it can also be commenced by the surrogate, her spouse (if applicable), the child or any gamete/embryo donor (FCA § § 581-201; 581-206). The proceeding can be commenced any time after the surrogacy agreement is signed, even before the child is born, and the judgment of parentage can be issued pre-birth, to take effect immediately upon the birth of the child (FCA § § 581-201; 581-203).

The petition should be filed in the county where either the surrogate or the intended parent(s) reside, or the county where the child was born, and the surrogate and her spouse (if applicable) and all intended parent(s) shall be necessary parties (FCA § 581-203). The petition must be verified and must comply with all of the statutory requirements enumerated in the CPSA. The petition must also contain a certification from the surrogate’s attorney and the intended parent(s)’ attorney that the surrogacy agreement fully complied with the material requirements of Section 403, described above – hence why strict compliance with the statutory requirements at the contract drafting phase is so important (FCA § 581-203).

If the court finds the petition and the surrogacy agreement to be in compliance with these statutory requirements, the court shall issue a judgment declaring that, upon the birth of the child, the intended parent(s) are the only parent(s) of the child and DOH shall list the intended parent(s) as the child’s only legal parent(s) on his or her original birth certificate (FCA § 581-203). Notably, the statute says that the court “shall” issue a judgment (assuming there has been compliance with the CPSA) and does not provide the court with any discretion, nor does it direct the court to assess what would be in the child’s “best interests.” This further underscores the importance of getting this right, as a party is automatically entitled to a judgment of parentage (akin to a summary judgment proceeding) assuming all statutory requirements have been met. Where attorneys will get into trouble is in failing to strictly adhere to the statutory or regulatory requirements, or failing to adhere to the proper informed consent procedures, which may result in the judge having to make discretionary parentage determinations based on a host of external factors. No one reading this article wants to be the “test case” for how a court would determine parentage under a non-compliant surrogacy agreement.

As a practical matter, practitioners are encouraged to pursue parentage orders pre-birth (although they can be obtained post-birth) in order to minimize any potential issues with the discharge of the child from the hospital upon delivery and to avoid the necessity of amending the child’s original birth certificate after birth. It is anticipated that the pre-birth order can simply be provided to the birth registrar in the hospital where the child is to be born to be forwarded along to Vital Records.

The record of the parentage proceeding shall be sealed, except that the parties and the child shall have the right to inspect the court record, which would include the identity of the surrogate and any known gamete or embryo donors (FCA § 581-205). As such, practitioners should be cautious to avoid telling clients (intended parents, surrogates, or donors) that any of their identities may remain confidential from one another and/or the child.

Unique to New York: The Surrogate’s Bill of Rights

One of the most unique aspects of the New York law is the Surrogate’s Bill of Rights, contained in Article 6 of the CPSA. Borne from a legislative desire to offer concrete medical, legal and financial protections to surrogates, the Surrogate’s Bill of Rights applies to any person acting as a surrogate in New York, and it cannot be waived or limited in any way, even by an agreement of the parties (FCA § 581-601). No other state in the country has a comparable provision in their surrogacy statute, making New York arguably the most surrogate-friendly and surrogate-protective state in the nation.

The Surrogate’s Bill of Rights must be provided to every surrogate at the very outset of her surrogacy journey, clearly outlining each of the following rights:

• The right to make all health and welfare decisions regarding herself and the pregnancy, including whether to consent to a c-section or multiple embryo transfer, and whether to terminate/reduce the pregnancy (FCA § 581-602);

• The right to independent legal counsel of her own choosing, licensed in New York, paid for by the intended parent(s) (FCA § 581-603);

• The right to comprehensive health insurance coverage and to have all of her pregnancy-related medical expenses covered by the intended parent(s) (FCA § 581-604);

• The right to supportive counseling to address pregnancy-related issues, paid for by the intended parent(s) (FCA § 581-605);

• The right to a life insurance policy, paid for by the intended parent(s) (FCA § 581-606);

• The right to terminate the surrogacy agreement anytime (and for any reason) prior to becoming pregnant (FCA § 581-607).

The major takeaway from this is that the surrogate has the absolute right to make all medical decisions regarding herself and regarding the pregnancy, including decisions regarding abortion. While it is important for all parties to discuss these topics even before being matched, these rights are absolute and cannot be contracted away in a surrogacy agreement. Any attorney who attempts to abridge these rights in a surrogacy agreement potentially runs the risk of having their agreement (or at least a portion of it) deemed void and unenforceable. Any practitioner representing a prospective surrogate should be sure to advise her of these rights and provide her with a written copy of the Surrogate’s Bill of Rights upon their initial consultation – similar to a Statement of Client Rights and Responsibilities in a domestic relations matter.

Conclusion

The CPSA brings long-overdue changes to New York law, finally affording all New Yorkers the right and ability to create and expand their families through gestational surrogacy. No longer will intended parents living in New York be told they have to leave the state to pursue surrogacy, nor will surrogates be denied the opportunity to provide the gift of parenthood to those in their community. It also opens the door to an entirely new legal market in New York; but practitioners should be cautious before rushing to expand their practices. While the practice of family building is incredibly rewarding when done properly, there are few cases more disastrous (emotionally, ethically, financially and physically) than a mismanaged surrogacy arrangement.

Joseph R. Williams, an attorney with the Albany law firm Copps DiPaola Silverman, practices primarily in adoption, assisted reproduction and surrogacy law, and was actively involved in the drafting and lobbying for the CPSA. He is also the co-founder and director of surrogate services for the New York Surrogacy Center, a surrogacy matching program working with prospective surrogates and intended parents.

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1. Louisiana law prohibits compensated gestational surrogacy and limits uncompensated surrogacy to heterosexual married couples using their own egg and sperm only (Surrogacy Bill HB 1102). Michigan law declares all surrogacy contracts void and unenforceable as contrary to public policy and imposes criminal penalties if the contract provides for surrogate compensation (Michigan Surrogate Parenting Act MCL § 722.851).

2. If the surrogate is not receiving compensation, she has the option to waive the statutory requirement that the intended parent(s) pay for her health insurance, life insurance, and/or legal fees.