Insurance companies often face criticism for accepting premiums from their customers and then retracting coverage when needed. However, one insurance company, Omega Family Services (also known as LyfGro Insurance Solutions and Prime Insurance Solutions), has inflicted serious harm on the industry’s reputation following severe issues involving a popular surrogacy-focused health insurance product, PregnancyCare, and its subsequent bankruptcy. The scandal has particularly impacted its victims, who were left without recourse when the company suddenly alerted all of its insured customers that their insurance policies were being cancelled, in the midst of their pregnancies. Details of the scandal are provided here.
In the fall of 2020, the company left many customers, in the middle of a pregnancy, stranded by this abrupt decision. Clients of surrogacy agencies who were victims of Omega received more bleak news as part of Omega’s bankruptcy liquidation, which just concluded. The financial burden of surrogacy on these intended parents was already substantial when Omega’s sudden policies cancellation left them pondering the destination of their sizable monthly premiums.
In a distressing revelation as part of its bankruptcy proceedings, Omega claimed that the funds were received by a Cayman Islands-based entity, Omega Insurance Company SP, part of Performance Insurance Company SPC. The Cayman-based entity was subsequently put into liquidation by local authorities due to its massive list of creditors and limited funds. However, the proceedings didn’t end well for the victims, whose hopes of satisfying some of their medical bills from the liquidation funds were dashed due to hefty expenses related to the liquidation process.
The end of the liquidation proceedings meant that the affected parties were officially notified no funds were remaining to compensate the creditors. Investigation of this case is still ongoing with plenty of information kept under wraps due to ongoing civil and criminal investigations at the state and federal levels. However, more details about the scandal and its impact on the victims have been unearthed thanks to the completion of Oregon’s process against Omega. This resulted in a Final Order to Cease and Desist and Final Order Assessing Civil Penalties against Omega and Robert Y. Park.
The legal proceedings shed light on the fact that Omega had falsely claimed associations with nationally licensed insurance entities, including AXA and State National. Additionally, the investigation by the Division discovered that around 60 Oregon consumers had paid more than $2 million in premium payments for PregnancyCare over a two-year period. Despite the, relatively, minor fines levied against Omega by the court in response to these findings, the legal actions and findings represent positive headspring towards exacting justice.
Despite this unfortunate situation, there’s a glimmer of hope as seen in the actions of industry professionals offering their assistance. Lisa Stark Hughes, a surrogacy agency owner, described the heartwarming industry response to the victims’ plight, highlighting the support from professionals like those from SEEDS or insurance brokers such as ART Risk Financial & Insurance Solutions and SurroPlans. The latter even worked pro bono, organising grants to help settle the victims’ outstanding medical bills.