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"Surrogate mother's" expenses are not covered by her health insurer; statutory definition of "surrogate mom" not controlling

Stephanie Lehr and Spectrum Health Hospital sued NGS American, Inc., the Administrator of Lehr's health plan, arguing that the plan should have covered the health costs of the triplets Lehr delivered after being implanted with embryos from another couple.  Under existing rules, since the ERISA Plan Administrator was granted discretion in the ERISA Plan, the Court is constrained to uphold the administrator's decision unless it is arbitrary and capricious. [This standard is weaker if the Plan administrator would pay out of its own pocket.] Lehr and the Hospital argued that the administrator was required to consider the statutory definition of a "surrogate mother" in the Surrogate Parenting Act, and that to do so would require benefit payment.

The Court held that since the ERISA plan did not define "surrogate mother," ERISA rules required that the term be given its "plain meaning" as it would be understood by an ordinary person.  It further held that since the parties were not actually construing a statute in deciding the coverage issue, the rule that statutory definition supersedes a commonly accepted definition does not apply. Accordingly, it held that NGS's interpretation of "surrogate mother" in a manner that denied benefit payment was not arbitrary.
Thompson O’Neil, P.C.
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Traverse City, Michigan 49684
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