Academic journal article Journal of Corporation Law

Regulating Surrogacy Agencies through Value-Based Compliance

Academic journal article Journal of Corporation Law

Regulating Surrogacy Agencies through Value-Based Compliance

Article excerpt


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 industry8 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.

II. Background

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.

A. 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. …

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