Fertility clinics and medical professionals that provide in vitro fertilization services can expect greater scrutiny from liability insurers and potential rate hikes in the wake of February’s Alabama Supreme Court embryo ruling, industry sources said.

A bill signed into law March 6 by Alabama Gov. Kay Ivey that would shield providers of IVF goods and services from civil and criminal liability offers some protections but is not a cure-all, they said. 

The Feb. 16 ruling in LePage v. Center for Reproductive Medicine, in which the state’s highest court held that “extrauterine embryos” are considered children under Alabama’s Wrongful Death of a Minor Act, created legal ambiguities for IVF providers and insurers. 

The case arose from a lawsuit filed by three Alabama couples whose frozen embryos were destroyed in an accident at a fertility clinic. Several clinics in Alabama put their IVF services on hold in the wake of the ruling, according to news reports.

Without legal protections for clinics, the ruling makes the storing of embryos uninsurable in Alabama, said Rob Francis, Birmingham, Alabama-based executive vice president, health care professional liability, at medical malpractice insurer ProAssurance Corp.

“The ruling essentially makes it a crime to destroy or harm a child, which equals an embryo outside the womb. We don’t insure criminal acts,” Mr. Francis said.

From an insurance perspective, the decision creates a lot of uncertainty, said Peter Reilly, West Chester, Pennsylvania-based practice leader and chief sales officer of Hub International Ltd.’s North American health care practice.

Alabama lawmakers moved quickly to pass legislation, now signed by Gov. Ivey, that would provide “civil and criminal immunity for death or damage to an embryo to any individual or entity when providing or receiving goods or services related to in vitro fertilization” with retroactive effect. 

While insurers intend to continue to cover IVF providers, they remain concerned over how the ruling will be interpreted, Mr. Reilly said.

“There’s going to be a very cautionary approach taken by the underwriters for IVF facilities and doctors, probably at least in the near term,” Mr. Reilly said.

Rusty Hughes, Birmingham, Alabama-based senior vice president at CRC Group Inc. said legislation providing legal protections for IVF facilities and professionals won’t necessarily make insurers more comfortable providing coverage. 

“I don’t think it solves the entire issue. There’s one school of thought that an opportunistic carrier could come in and charge four times what we were charging to cover this exposure,” he said.

The legislation is a “stop gap” and doesn’t entirely mitigate the potential liability that clinics, hospitals and health care providers are facing, said Jarrett Kerr, Chicago-based senior vice president at RT ProExec Healthcare, part of RT Specialty, a unit of Ryan Specialty Holdings Inc. 

“The ruling at hand is deeming that embryos created through the IVF process are now considered to be children,” and the legislation doesn’t change that, Mr. Kerr said.

“I could foresee potential instances where for these clinics and hospitals, liability could still be there,” he said.

Fertility treatment and IVF clinics have always been considered a high-risk med mal exposure, said Paula Sullivan, Chicago-based managing director at Marsh LLC.

The Alabama Supreme Court decision has increased potential liability, and “therefore it’s going to make it a more difficult and costly product to underwrite,” Ms. Sullivan said.

There will be greater scrutiny, additional questions from insurers, “and probably more premium attributed,” she said.

The decision “will likely create greater liability exposure for our Alabama members and result in higher indemnity payouts on their behalf,” Robert White, president of The Doctors Co. and TDC Group, said in an emailed statement.

Several sources said the ruling could have ripple effects for medical professionals and IVF facilities beyond Alabama.

Since the U.S. Supreme Court decision in 2022 that overturned the Roe vs. Wade ruling and held there is no constitutional right to an abortion in the U.S., various states have introduced or are considering fetal personhood laws to grant rights to embryos.

The new Alabama law may solve the immediate issue by granting IVF providers immunity from civil or criminal prosecution, but sidesteps the bigger question, said Vivian Gallo, Jacksonville, Florida-based casualty coverage and claims leader for Marsh’s health care practice. 

“The personhood issue is still a question,” Ms. Gallo said.

“Although for now the LePage case appears to be limited to IVF clinics operating in Alabama, other states with fetal personhood laws that recognize embryos or fetuses as persons, like Louisiana and Georgia; those with current fetal personhood ballot initiatives, like Florida; and others with abortion bans predicated on the idea that life starts at fertilization may follow suit,” attorneys at Boston-based Goodwin Procter LLP said in a Feb. 23 note.

Groups representing Alabama doctors and hospitals have urged the state Supreme Court to revisit its decision. 

Evolving risks of handling embryos lead to increased scrutiny of policies

Clinics and storage facilities that provide in vitro fertilization services should review their insurance coverage and take a close look at contracts in the wake of the Alabama Supreme Court ruling, experts say. 

This is an evolving area of litigation, and every state is different, said Rob Francis, Birmingham, Alabama-based executive vice president, health care professional liability, at medical malpractice insurer ProAssurance Corp.

Health care providers in states with very restrictive legal language should probably contact their attorneys “to make sure that they are comfortable that their policies are covering the risk that their practice generates,” Mr. Francis said.

From a risk management perspective, IVF clinics and storage facilities use some of the most sophisticated technology in the sector, said Rusty Hughes, Birmingham-based senior vice president at CRC Group Inc.

Contracts and hold-harmless agreements that determine which party is responsible for what in the event something goes wrong will likely need to be reviewed, Mr. Hughes said.

The LePage ruling highlights the importance of risk mitigation, first and foremost the security of facilities, said Tanner Schultz, assistant vice president at RT ProExec Healthcare, part of RT Specialty, a unit of Ryan Specialty Holdings Inc.

“Making sure there are safeguards around how these specimens are protected has become a hot-button issue and very important for clinics,” Mr. Schultz said.

If specimens need to be transferred to a different clinic or state, there could potentially be increased costs, and facilities need to take extra steps to make sure those specimens are completely safe, he said.