Top 20 Items that Cause Escrow Issues in Gestational Surrogacy Agreements (GSA)

Disclaimer: This information is intended to inform and guide attorneys and agencies about the financial matters within Gestational Surrogacy Agreements that cause client confusion and payment issues. This information is not intended to be taken as legal advice or take the place of legal advice from local attorneys qualified to practice in this area of law. The language contained is not intended to be inserted word-for-word into Contracts. Rather, when drafting their Retainer Agreements and Surrogacy Contracts, attorneys and agencies should consider these recommendations, while taking care to comply and coincide with their respective State’s applicable laws and precedent.

1. Lost Wages Calculations

  • Account for both the Gestational Carrier (GC) and her companion.
  • Understand all of the short-term disability policies and procedures. Will the policy already be paying lost wages? If so, establish that the Intended Parent(s)(IP) will only be responsible for the difference or if the policy will not pay them in full.
  • Clearly define if/when lost wages will be paid out. Also, be clear as to when lost wages should be paid. (What if the Surrogate is too sick to go to work but does not have a doctor’s note?).
  • Define lost wages for the GC and her companion; will lost wages be defined as net lost wages or gross lost wages? If net, define net lost wages – is it all deductions or only required State and Federal deductions? Determine either an hourly or daily wage amount – only define one to avoid confusion. Determine whether raises are allowed to be taken into account. Set an allowable rate or percent of the wage increase. Set a maximum payout over the life of the journey. Preferably, DO NOT include any sort of calculation. Instead, simply put in the hourly rate and the maximum number of hours per day/week the GC and companion can be reimbursed for lost wages for the life of the contract.
  • If put on bed rest for an extended period of time, does the Surrogate submit a disbursement request for lost wages each week, at the end of every month, or at the beginning of every month?
  • Make sure to include provisions that discuss what happens if the Surrogate changes job or becomes employed during her surrogacy (if she was not employed prior to pregnancy).

2. Bed Rest Maximums

  • Specify the type of delivery vs. the allowable amount of lost wages and bed rest compensation – Maximum bed rest compensations should be set dependent on the type of delivery; vaginal or caesarian.
  • Clearly define whether the maximum will be guaranteed or if a physician’s note will be required for all bedrest, pre-delivery and post-delivery.
  • Ensure that the difference between gross and net lost wages has been communicated during the contract phase. Often times GCs are unaware of the differences, and this always causes problems. Preferably, DO NOT include any sort of calculation. Instead, simply put in the hourly rate and the maximum number of hours per day/week the GC and companion can be reimbursed for lost wages for the life of the contract.

3. Childcare

  • Define when childcare may be reimbursed or utilized based on specific events (bedrest, appointments, delivery, transfer).
  • Evaluate if the companion/family members who typically care for the children fit into the childcare allocation. If GC has a husband or partner, do they work or can they watch the kids while she is at an appointment? If so, does he get paid or not?
  • Consider a daily cap for childcare. What is needed to prove childcare expense?
  • Set hourly/daily/weekly/monthly limits and consider overnight vs. day needs. Set contract term limits on childcare. Set out exactly what sort of documentation, if any, is required to obtain reimbursement. Decide whether or not a relative will get reimbursed if they watch the child(ren).

4. Mileage

  • Distinguish between short distance and long distance reimbursement. Use clear, easy language that relates to GC’s home address and roundtrips keeping in mind which monitoring clinic she will be traveling to on a regular basis. If short distance mileage is included in monthly stipend, then be clear as to what roundtrip short distance means. If long distance mileage is to be reimbursed, at what mile (in the roundtrip total) does the mileage begin to tally? What if she drives around town when she gets to the long-distance city (to eat, run errands, see a movie, etc…)
  • Include gas, tolls, parking, rental car fees, and wear and tear within the mileage reimbursement. Explicitly include and/or exclude different travel expenses within the mileage reimbursement.
  • Include language that requires GC to provide screenshots of her trip through Google Maps or similar driving service.
  • Expressly state the amount per mile the Surrogate is to receive, making sure to distinguish between the current IRS mileage rate and Medical Mileage rate if you decide not to put in the exact amount (which we strongly recommend over referring to either medical or IRS).

5. Companion

  • Clearly define when they should go, can’t go and may go. Suggestions for “should go” would be embryo transfer and delivery. All other trips require IP pre-approval in writing (email).
  • Expressly limit when GC can take companion, as this will impact companion’s travel reimbursement (e.g., per diem, lost wages, etc.).

6. Monthly Allowance Inclusions

  • The word miscellaneous and the phrase “and any other incidental expenses” should never be used.
    • Distinguish between OTC meds, prescription meds, pre-natal vitamins, co-insurance, insurance premiums, co-pays, faxing, postage and notary fees.
  • Will all the small expenses be reimbursed during the journey? Keeping it open-ended may pose issues later on in the journey. Consider setting a cap on monthly allowance expenses.

7. Base Compensation Disbursements

  • Most GSA’s will account for confirmation of heartbeat (COH) disbursement and then a base comp disbursement. Oftentimes, the payment amounts are similar and the times are very close. If they are close in time, consider dropping the COH payment down and roll it into future base payments.
  • Be clear as to when the base compensation starts. Use the COH date as the benchmark rather than weeks pregnant as the COH date is certain.
  • Consider setting the disbursement date to any other date than the first of the month. Nearly every contract sets the base comps to go out on the 1st. For escrow companies, that means thousands of transactions processing within a two-day window (can’t send out too soon as IP are upset, but can’t send out on the same day as the processing time for banks may mean money does not hit GC account for two days). Also, with so many transactions in such a short window, the likelihood of missing one (your GC’s) is much higher than if the disbursement date were, for example, the 25th or the 5th.

8. Health Insurance Payment Term

  • Clearly define when health insurance coverage begins and ends.
  • Consider all of the potential insurance scenarios and how they may affect the GC’s coverage
    • If her policy ends in February, will it be permissible for the GC to cancel the policy and get her own insurance during open enrollment that will be more affordable for her once the journey is complete?
    • What if her current policy is dropped (e.g., she loses her job, a spouse loses their job, employment policy drastically changes)?

9. Termination Date for GSA and Escrow Account

  • How long should insurance continue? Specify and use the date of delivery as the benchmark.
  • How long should monthly allowance continue? Specify and use the date of delivery as the benchmark.
  • Escrow should remain open for at least 6 months to allow medical providers time to generate and send bills out in the months after delivery.

10. Define “Physician” as in NOT a Doula or Midwife

  • Clearly define which professionals may render services for which IPs shall be responsible for payment. This plays a significant factor when the IPs have to cover medical costs arising out of physician-ordered (as opposed to doula- or midwife-ordered) treatment such as chiropractic care or vitamin regiments.

11. Minimum Balances Requirements

  • Establish minimum balance requirements at each stage of the Journey (med/legal clearance, transfer, COH and delivery).

12. Define a Dropped Cycle

  • Dropped cycle is hardly ever defined and always problematic. Define when it is considered dropped and why (e.g., If she stops taking meds? If doctors order her to hold off on starting meds?, etc.).

13. Per Diem

  • GC and companion: Flat Fee v. Receipts (cap v. no cap) – is the GC entitled to a non-accountable flat fee or is she entitled to her actual and documented meal costs? This should be clearly explained, if receipts are or are not required, this should be clearly stated. What are the max limits if not using a set daily amount?
  • Day fee vs. overnight fee, this should be clearly defined and differentiated.
  • Consider including tips and tip limits.

14. Hotels and Hotel charges

  • Clearly define what charges (made to the room) are and are NOT included, remembering to cover the companion who may consume alcohol. Establish an acceptable room rate including fees and taxes and what to do if the room/hotel must be changed. Keep in mind that people order room service, add tips, order movies and have access to food/drinks in the minibar/courtesy area of the room.
  • What happens if the Surrogate needs to switch hotels for some reason (e.g., construction going on, terrible room/environment/etc.)

15. Invasive Procedures

  • Clearly define which invasive procedures will be included for compensation.
  • Specify what is and what is not an “invasive procedure” (i.e., every time GC is punctured by a needle, cut open, has a scope inserted in her uterus, etc…). Consider that many GCs will request invasive procedure fees for transvaginal ultrasounds, scopes, or removal of polyp or moles. (Yes, moles.)

16. Relying on an Accidental Death and Dismemberment (A&D) Policy to be GC’s only Source of Compensation.

  • Take into account the policy’s compensation. Who will the policy reimburse? Does the GC have to wait for the A&D check to come or can she submit right away to the escrow company for compensation?

17. Multi-Fetal Clauses

  • Specify when monthly multi-fetal payments will begin and decide if GC will receive an initial payment upon confirmation of multiple heartbeats. Recommend compensation starting after 20 weeks, but payment due at the detection of twin heartbeats. Twin transfers suffer from many things such as vanishing twin syndrome, and many do not want to compensate until the pregnancy has been confirmed viable, but the contracts do not always reflect this clearly

18. Airfare

  • What is included in the airfare allocation? (e.g., Carry-on and Checked baggage limits per traveler, coach fare or best available, who books the airfare).

19. Provisions Regarding IP Divorce or Separation

  • Establish divorce and separation IP provisions in every contract pertaining to funds holding or management. Clearly define who will be responsible for funding, for how much, and when the funds will be due in the escrow account. Also, state who will receive the remaining funds once escrow is closed.

20. Minimum Initial Deposit requirement

  • We recommend between $5,000-$10,000.