News Briefs - NY Appellate Decision Affirms Sandy Hate Crime Conviction; Wisconsin Supreme Court Says Health Insurers Can't Omit Coverage for Surrogate Mothers

On Friday, July 16, the NY Law Journal published a ruling by the NY Appellate Division (2nd Dept.) in Brooklyn, upholding the conviction on a charge of manslaughter as a hate crime of Anthony Fortunato, described in the Law Journal as a bisexual man who lured a gay man to his death.  This was an appeal from the much-publicized trials arising from the death of Michael Sandy. 

Evidence showed Mr. Sandy was identified as a potential victim because he was a gay man, and in a subsequent robbery scheme gone awry, Sandy ran from a bunch of young men who were plotting to rob him and was struck by an automobile and died.  Fortunato argued against being prosecuted on a hate crime charge, based on his own bisexuality and avowed lack of hatred for gay people.  The trial judge ruled that if the evidence showed that a victim was selected because of his sexual orientation -- in this case, according to testimony, Sandy was picked because the young men thought that a gay man would be an easy mark -- the requirements of the hate crime statute were met, as the statute did not require that the perpetrator be personally biased against gay people. The focus of the statute was solely on whether the victim was selected because of one of the listed characteristics. 

In affirming the verdict, the Appellate Division did not issue a detailed opinion discussing the trial court's analysis of this issue, merely stating that "viewing the evidence in the light most favorable to the prosecution, we find that it was legally sufficient to establish the defendant's guilt of that crime beyond a reasonable doubt.  Moreover, upon our independent review pursuant to CPL 470.15(5), we are satisfied that the verdict of guilt was not against the weight of the evidence." 

Thus, the Appellate Division has implicitly agreed with Justice Konviser's reasoning, but without expressly articulating her theory of the case.  Unfortunately, this leaves the trial courts without express guidance from the Appellate Division, on a possibly controversial issue as to which there is no definitive interpretive ruling by the state's highest court, the Court of Appeals.  One can understand issuing cryptic memorandum affirmances in cases that do not present significant interpretive issues or which concern points that constitute well-settled law, but in this case one has the sense that the panel is shirking its duty by failing to explain its reasoning, or at least more clearly adopt the trial judge's reasoning by at least mentioning the point of contention.  Perhaps Mr. Fortunato will seek review from the Court of Appeals and the issue can be addressed out in the open in an appellate decision that can guide trial judges.

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Also on July 16, the Wisconsin Supreme Court issued a ruling rejecting a health insurance company's appeal of the State Insurance Commissioner's decision that the health insurer could not specially exclude coverage for maternity expenses that the insured incurred as a gestational surrogate.  Mercycare Insurance Co. v. Wisconsin Commissioner of Insurance, 2010 WL 2791999. 

Two women who were insured by Mercycare had served as a gestational surrogates and submitted claims to for their medical expenses under their insurance policies.  Mercycare denied the claims, asserting that the policies in question did not cover costs associated with pregnancies voluntarily undertaken to provide children to others, where the surrogate was not genetically related to the child.  The women protested to the state, and the Insurance Commissioner took their side.  The insurance company appealed and the circuit court took its side, giving no deference to the Commissioner's ruling and deciding as a matter of law that the insurer could exclude this coverage.

The Supreme Court first tackled the standard of review, concluding that the circuit court erred in according no deference to the Commissioner's ruling.  While great deference need not be given, since the Commissioner was construing statutory language for which there was no precedent on this particular case, the court said that due deference, an intermediate level of deference, should be given in light of the statutory enforcement mandate and expertise of the Commissioner.   The Court, backing up the Commissioner, whose construction of the statute the court found to be reasonable, concluded that the policies did not unambiguously exclude coverage for these services and, even if they did, that such exclusion was improper.  The court was unanimous on the former point, divided on the latter, with three judges dissenting, arguing that an insurer could through express contract language exclude such coverage.

The majority, however, was not willing to go down the road of letting insurers discriminate in their coverage depending upon how the woman became pregnant and for what purpose.  (These cases both involved in vitro fertilization and implantation in the gestational surrogate of a fertilized ovum; the surrogate was providing her womb for the pregnancy, but not the egg to be fertilized, so the resulting child would not be genetically related to her.)  "We conclude," wrote the court, "that the statute permits an insurer to exclude or limit certain services and procedures, as long as the exclusion or limitation applies to all policies.  However, an insurer may not make routine maternity services that are generally covered under the policy unavailable to a specific subgroup of insureds, surrogate mothers, based solely on the insured's reasons for becoming pregnant or the method used to achieve pregnancy."  The court seems to have been convinced of this view by various hypotheticals under which insurers might figure out ways to avoid covering various kinds of claims for some people while covering them for other people, coming to the conclusion that it could result in insurers figuring out how to extract premiums without providing coverage for anything.  (Many insurance companies are undoubtedly doing what they can to come close to that money-making ideal - an approach one hopes will be short-circuited by the recently enacted federal health insurance reform legislation.)

Insurers are always concerned about taking on unanticipated risks, and apparently hadn't originally factored in the possibility of gestational surrogates in determining what it would cost to fund health care coverage for women, so they wanted to limit coverage to pregnancies that were expected to produce offspring to be raised by the insured.  In the policies at issue in these cases, the insurer had added provisions trying to exclude coverage, but the drafting was inartful enough to give the court room to find a lack of any clear exclusion -- indeed, so poorly done that even the concurring/dissenting judges found that the women in this case were entitled to the benefits.

As a result of the Wisconsin Supreme Court's ruling, health insurers selling policies in that state will have to underwrite the risk of women becoming pregnant to provide offspring for other women or men to raise, which will throw off existing actuarial tables.  More work for the actuaries - to recalculate the risks and resulting premium costs - or for the legislature to amend the statute, along the lines consistent with the dissenters' arguments.  On suspects that the phenomenon of gestational surrogacy is still infrequent enough that the overall impact on health insurance premiums in Wisconsin shouldn't be particularly large.  In the meantime, in Wisconsin those making arrangements with surrogates can - at least for now - count on the surrogate's health insurance policy covering costs of the medical care associated with the pregnancy, even if the policy purports to exclude coverage associated with surrogate services, since the statute has been authoritatively construed to void any such exclusions as contrary to public policy.