Regulating Surrogacy Agencies Through Value-Based Compliance.

Author:Davis, Jordan Stirling
  1. INTRODUCTION II. BACKGROUND A. Surrogacy as a Market and the Role of Intermediaries B. Ethical Concerns in the Surrogacy Market C. Accounting for Rights in the Surrogacy Market D. Regulating Intermediaries E. Social Enterprises and Compliance III. ANALYSIS A. The ABA Model Act for Governing ART and Regulation 1. Information Asymmetries and the Intended Parents 2. Information Asymmetries and the Surrogate B. The Social Enterprise Business Model and Compliance 1. Integrated Purpose 2. Culture IV. RECOMMENDATION A. Surrogacy Agencies Should Be Licensed B. Licensing Surrogacy Agencies Protects Intended Parents C. How Licensing Surrogacy Agencies Should Protect Surrogates D. Licensing Should Protect the Potential Children E. Surrogacy Agencies Should Choose to Form as Social Enterprises and Implement Value-Based Compliance V. CONCLUSION I. INTRODUCTION

    Since the advent of surrogacy technology, news stories of surrogacy agreements gone awry have shocked the public. (1) During the infamous Baby M case, Americans were horrified as the story of William and Elizabeth Stern unfolded in the custody battle for the child they commissioned in a commercial surrogacy agreement with Mary Beth Whitehead. (2) Despite the public outcry and the consequent flurry of state legislation to restrict surrogacy arrangements, (3) the surrogacy industry has flourished. (4)

    However, after the initial burst of legislation in the aftermath of Baby M, little legislation has been passed even though technology has continued advancing, making surrogacy a more attractive option. (5) Markens contributes "the legislative inertia in the [United States] surrounding surrogacy" to the "tension between those who see [surrogacy] as typifying the commodification of reproduction and those who see it as epitomizing reproductive freedom." (6) Thus, states fall short of treating surrogacy like a market, instead "fretting over an impending commercialization or commodification that, in fact, took place long ago." (7)

    Today, surrogacy is a billion-dollar industry (8) that goes largely unregulated. (9) The lion's share of revenue goes to surrogacy intermediaries: physicians, lawyers, and surrogacy agencies. (10) While the medical and legal professionals involved in the arrangement are "regulated to some extent" by the rules of their respective organization and licensing requirements, surrogacy agencies are virtually unregulated. (11) The "lack of law and regulation has permitted ... agencies to take advantage of their clients to the extent of delayed or lost reproductive cycles, and, in some ... cases ... theft of millions of dollars." (12) This was evident in 2012 when Theresa Erickson, a leading surrogacy attorney, was found guilty of bypassing California surrogacy laws and running a baby-selling ring. (13) This Note argues that by accepting surrogacy as a market, states can better address the current ethical issues manifest as market failures in the surrogacy industry. Licensing surrogacy intermediaries and encouraging a social enterprise business form, coupled with value-based compliance, will enable surrogacy intermediaries to continue playing their crucial role in the market while protecting the rights of other stakeholders in the industry--intended parents, surrogates, and the potential children.


    First, this Part describes the role intermediaries play in the surrogacy market, and ethical concerns in the surrogacy industry in general. Next, this Part provides an overview of existing laws regulating commercial surrogacy agencies, including the ABA's proposed Model Act Governing Assisted Reproductive Technology Agencies. Lastly, this Part discusses social enterprises and value-based compliance.

    1. Surrogacy as a Market and the Role of Intermediaries

      The surrogacy industry is a market, and intermediaries play an integral role in it. A market is where buyers and sellers "interact to exchange goods or services for money." (14) In a market transaction, the parties may be constrained "by their own resources and by the rules of the marketplace," but nevertheless the parties act of their own volition. (15) At the time of the exchange, each party is happier giving up what they have for what they are getting in return. (16) Without a market, people may wish to exchange something they have for something they want, but cannot otherwise get. (17) Thus, "markets create value" because they "bring[] an array of buyers and sellers together" to make desired trades. (18) Of course, "trades produce gains [and] people are relentless in finding ways to realize them." (19)

      Surrogacy is a market, in part, because there is both a supply and a demand for the opportunity to raise a child. People want children, and when procreation on their own is not possible, people may turn to assisted reproduction technology (ART)--an array of alternatives including egg and sperm donation, adoption, and surrogacy. (20) People who desire children are willing to give up other resources for "even the chance" to raise a child. (21) In fact, "[c]hildless couples with means (and sometimes couples without) are often willing to pay anything." (22)

      Other people are willing to give their body for a time in order to supply the chance of raising a child. (23) While the desire to have children is understandable, what motivates a woman to carry the child of another couple or person is less intuitive. Women participating in surrogacy often cite a desire "to help someone who desperately wants to have children." (24) In conjunction with altruistic reasons, women also cite wanting to be pregnant and wanting the money, but "despite the fact of payment, they regard having a baby for a childless couple as a gift--a blessing--of the highest order." (25)

      Surrogacy agencies act as intermediaries to bring these buyers and sellers together, thus creating a market for exchange. Like intermediaries in other markets, surrogacy agencies capitalize on the asymmetries of information between the "would-be trading partners," and thus "save parties the time, effort, and money.... that it would otherwise cost to find the right trading partner." (26) As repeat players, surrogacy agencies are equipped to expedite the process of matching and price-setting for both intended parents and surrogate candidates. (27) Furthermore, surrogacy agencies "provide parties with some level of assurance about the quality of the deal." (28)

    2. Ethical Concerns in the Surrogacy Market

      Of course, the surrogacy market has some significant differences from more typical markets. First and foremost, the product of a successful surrogacy arrangement is a child, a human being with inalienable rights. Second, the buyers are often couples coping with the psychological and financial costs of infertility. (29) In fact, intended parents "exposed to the stress of infertility are predisposed to making decisions without sufficient information and by accepting an unreasonable paradigm of risk." (30) Third, in contrast to other services with monetary compensation, "payment for commercial surrogacy is defined as a deeply emotional transaction." (31) As Drabiek asserts, approaching payment as incidental diminishes the bargaining power of surrogates. (32) Consequently, "psychological and emotional affirmation to induce surrogacy participation" stymies surrogates' willingness to bargain for more, despite the incredible demands of surrogacy: "a consistent physical labor commitment, 24 hours a day for nine months." (33) Lastly, between the vulnerable intended parents and the relatively weak bargaining position of surrogates, surrogacy agencies are powerfully situated to "profit handsomely." (34)

    3. Accounting for Rights in the Surrogacy Market

      As Spar observes, "markets drive only toward those purposes for which they are so perfectly suited: matching supply and demand, allowing firms to produce products and maximize profits and offering customers the opportunity to buy." (35) Sometimes this neutral mechanism that brings buyers and sellers together results in socially beneficial matching, and sometimes it does not. (36) In other words, markets are neither inherently good or bad for protecting individual rights. (37) Thus, examining the particular characteristics of a specific market is necessary to determine a market's capacity to affect individual rights. (38)

      The reproductive market has "historically brought tangible benefits to the so-called consumer." (39) Initial moral opposition and legal restrictions on the controversial markets for contraception, the Pill and in vitro fertilization (IVF), proved futile and sales for these products continued to thrive. (40) Legalization of contraceptives was primarily driven by the robust demand from consumers "determined not to conceive" and the enterprising private firms "arguing on commercial grounds." (41) For IVF, funding bans failed to hinder research and development, and even the steep price for in vitro fertilization "exerted little downward pressure on demand." (42)

      The reproductive market seems to promote reproductive rights by facilitating access to the products and services "couples hoping not to conceive, individuals trying to avoid sexually transmitted diseases, and would-be parents attempting to conceive a child" want and need. (43) Yet, this expansion of reproductive rights was not a product of some normative intent latent in commercial markets. (44) Rather, these sectors of the reproductive market, like other markets "simply follow[ed] the course of commercial activity, bringing supply (in this case, of contraceptive devices, birth control pills and babies) to those who deeply desire them." (45) While the rights of consumers in the reproductive market are preserved, concerns for the rights of other participants--particularly the suppliers and the resultant children-- in assisted reproduction are hotly debated. (46) Many argue "that selling ... eggs and wombs, places the sellers (young women) in...

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