February 27, 2024

Recently, there has been broad media reporting of the Alabama Supreme Court’s February 16, 2024 ruling in a civil lawsuit that raised questions about the legal status of frozen embryos routinely produced during in vitro fertilization (IVF) procedures. (Bloomberg, Axios) At a high-level, the court determined that the Alabama Wrongful Death of a Minor Act covers cryogenically stored (frozen) embryos as “minor children” for which damages could be sought. This has caused uncertainty for IVF providers and patients undergoing or contemplating IVF in the State of Alabama and may have implications for provision of IVF or other family-building benefits provided by employers.

In the wake of the Alabama Supreme Court’s (ASC) decision, several IVF providers in Alabama have paused IVF treatments and services in order to understand the legal restrictions and implications of the ruling for providers and patients. (NBC News) Additionally, some Alabama legislators have announced efforts to pursue bipartisan legislation to counteract the ASC’s ruling and address the legal status of embryos prior to in utero implantation – potentially characterizing them in a way that would avoid their inclusion as “children”. (NPR) These developments will likely continue to raise questions for all stakeholders, including patients, providers, and employer plan sponsors about their respective restrictions and responsibilities when it comes to impacted services.

Why Your CEO May Care

Although the circumstances in this case and the trial court actions occurred prior to the June 2022 U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, the ASC’s decision here, interpreting Alabama law and the Alabama constitution, adds further uncertainty into the post-Dobbs regulatory landscape for reproductive services. Employer plan sponsors striving to provide uniform, national coverage and access may find that increasingly challenging as individual states seek to pursue direct restrictions on specific reproductive services and experience legislative action or judicial decisions that impact underlying elements and definition of those services as well as others.

For employer plans this may trigger questions and the need for additional assistance from covered employees and family members who may otherwise seek care in Alabama. And may punctuate efforts to review and ensure the employer’s plan or program is covering and paying for items and services appropriately. We would expect these sensitive and evolving dynamics may raise the already heightened interest in reproductive health and related issues for the company’s leadership to ensure compliance and to continue to support employees and families.

What is the Lawsuit About?

The plaintiffs in the lawsuit brought a civil action for damages against the providers of IVF services when a patient of a hospital in the same building as the cryogenic nursery that stored their embryos (as the ASC described it) “managed to wander into… the cryogenic nursery,” removed several embryo containers by-hand, dropped them because of their subzero temperature.

Among other assertions in the compliant, the plaintiffs contend that Alabama’s civil Wrongful Death of a Minor Act (the Act) allows them to seek punitive damages “[w]hen the death of a minor child is caused by the wrongful act, omission, or negligence of any person” (with other conditions and limitations). The Act does not define child or minor child but has been previously held by the ASC to include that an “unborn child qualifies as a ‘minor child’ under the Act, regardless of that child’s viability or stage of development.”

There are numerous factual and legal elements presumed and discussed in the opinion, but in the end the ASC decided that under the Act, and in-line with their interpretation of the Alabama Constitution, “minor child” includes the fertilized embryos stored in the cryogenic nursery as "unborn children" for which damages may be sought. The ASC termed these stored embryos as “extrauterine children.”

The ASC then returned (remanded) the case back to the trial court to restart the proceedings to determine all of the other required elements of the case asserted by the plaintiffs (and consider any relevant defenses raised by the IVF provider) to reach a conclusion about liability for punitive damages under the Act.

What Does this Lawsuit Mean for Employer Plans, and Covered Employees and Families? 

Many employer plans cover an array of fertility and family-building items and services. In recent years, Business Group on Health surveys have shown 86% of large employers provide assisted reproductive technology (ART), including IVF. The robust and widespread support of IVF may raise the likelihood that national employers potentially have some covered employees or family members that could be facing uncertainty and some need to review Alabama-specific implications.

Initially, the most pressing challenges facing employers may be any impact to employees and family members seeking or receiving IVF services in Alabama. Given the pause of services by IVF providers, patients may struggle to start or continue IVF that may be supported by employers’ family building programs and coverages. Employer plans may receive inquiries for assistance in finding or continuing IVF services and may wish to coordinate with applicable network providers (e.g., TPAs, health plans) and/or centers of excellence (COEs) focused on fertility and family-building services to help ensure patients and prospective patients are aware of the options available within the plan or program.

As is generally the case for all items and services, it is expected that employer plans may continue to pay for items and services that are legally permitted and appropriate in the state where they are provided. While this case does not appear to prohibit IVF in Alabama, the specific contours of what will or will not be permitted or considered “legal” IVF-related items and services under Alabama state law may be subject to clarification in the near term. Without further guidance providers may consider practice changes emphasizing caution that could materially impact practical elements of the current procedure(s). For example, IVF providers could potentially undertake a “one-at-a-time” approach for fertilizing and implanting embryos in utero, which would be expected to impact costs, treatment timelines, and potentially other complications for the services. Plan sponsors, in the meantime, may wish to work with applicable service providers to ensure that the plan’s coverage and payments align with current expectations and understandings of permissibility for items and services in Alabama, and anticipate additional interruptions, clarifications, and restrictions driven by legal guidance or new legislation, and/or IVF providers acting with an abundance of caution in a dynamic environment. 

What’s Next?

Business Group on Health will continue to monitor developments related to this case and will provide additional information to members. We will also discuss this case, any new information, and additional implications at our next Public Policy: Regulatory & Compliance Update webinar on Thursday, March 21, 2024 at 12:00 p,m. ET. Members can register here.

We provide this material for informational purposes only; it is not a substitute for legal advice.

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