- When it comes to having children, surrogacy is now increasingly common among Americans, and it's big business.

But unlike in many other countries, the practice of having women carrying children for someone else is not well regulated here.

The issue is left to the states, and the result is a legal mishmash.

- It all goes back to the case of a baby from New Jersey, whose story (mysterious music) riveted the public.

The moral and legal debate over the case divided the nation.

And three decades later, surrogacy is still controversial, even as more families are choosing it.

George Constantinou and Farid Ali are part of a growing group using surrogate mothers to have children: gay men.

- I no longer feel that it's a unique story.

I'm a father now, facing the same challenges as any other parent, gay or straight.

- [Narrator] George and Farid use an egg donor, and the twins were carried by a surrogate, Jeni Denhof, who already had two girls of her own.

- This is a dream for women to be able to give this gift, and have that feeling, knowing I provided a family for someone.

- [Narrator] But it was complicated.

Paid surrogacy is illegal in New York, where George and Farid live.

- Does your cat say meow?

- [Narrator] So they found Jeni, who lives in Colorado, where it is not.

Surrogacy laws vary widely from state to state.

The legacy of the dramatic fight over a baby girl born in New Jersey in 1986.

She was known as Baby M. (mysterious music) - It's a case that might test the wisdom of Solomon.

- [Narrator] It was the first case of its kind.

Pitting a surrogate mother, Mary Beth Whitehead, who bore the baby for a $10,000 fee, against the child's father, William Stern.

- When she was born she just looked so much like my daughter, and to just give her away for $10,000, I couldn't do it.

- Nobody seems to be concerned about father's rights.

Fathers have dreams too.

- [Narrator] Stern provided the sperm, and along with his wife Betsy, hired Whitehead to conceive and carry the child.

- [Man] The contract Mrs. Whitehead signed stated she would not try to keep the baby.

- When she gave birth she did surrender the child, and she was so distraught, she did nothing but cry.

- The Sterns had the baby for several days.

Then Mrs. Whitehead came back, very upset, and said she needed to have the child for a few days back in her house again, and then she would bring the baby back to the Sterns.

- [Narrator] But when she didn't come back, the Sterns got a court to order Whitehead and her husband to return the baby.

- Police officers showed up at her home, and there was some confusion.

And she did what I think any woman would do, any mother who loved their child.

(peaceful music) - While the police were there, she passed the baby out the window to him.

They both escape, and flee to Florida.

- [Reporter] Whitehead had been hiding in Florida for 87 days when police found her at her mother's house, and took the infant away.

- [Narrator] Desperate to keep the baby, Whitehead turned to the media.

- They stole my baby and they let him get away with it.

- She had many a press conference, talking about surrogacy and her child, and this was her child and they were talking her child away from her, and it started to capture the press and the public.

It was the first contested surrogacy case in United States history.

Courts had never seen it.

The media had never seen it.

The public had never seen it.

- [Narrator] Throughout the trial, the press was fascinated with the story and the issues it raised, from income disparity.

- [Reporter] The father, Stern, a biochemist, married to a pediatrician, pitted against the mother, Whitehead, a high school dropout married to a garbage collector.

- [Narrator] To potential exploitation of women.

- [Crowd] Mary back to Sara.

Mary back to Sara.

- We don't want to see surrogate mothering being sort of a cottage industry for the poor women of America.

- [Narrator] Ultimately, the case raised questions about how modern families are made.

- One out of seven married couples in the United States cannot have children, because they are infertile, and adoption is no longer a viable process in this country.

- There's nothing in the best interests of any of these children that they be separated from their natural mothers.

- [Narrator] Inside the courtroom, testimony included a dramatic tape recording of Mary Beth Whitehead calling Bill Stern from Florida.

- [Mary Beth] I gave her life, I can take her life away.

If that's what you want-- - No Mary Beth, no Mary Beth, wait, wait, wait.

- [Mary Beth] That's what I'm gonna do, Bill.

- [Bill] Please Mary Beth.

- [Mary Beth] Don't cry.

- [Reporter] Lawyers for the Sterns introduced the tape saying they show Mrs. Whitehead is too unstable to win custody.

Her lawyers said they only show how much she cared.

(intense music) - Good evening.

Baby M goes to her father.

- [Narrator] In the end, the judge gave custody to the Sterns, and ruled for the first time that a surrogacy contract could be enforced.

- I'm on my way to the Appellate Division right now.

- [Narrator] But on appeal, the New Jersey Supreme Court disagreed.

- They had not much of a problem about the issue of custody, but the question is, what do we do about surrogacy?

- Well let's assume that the surrogacy agreement is declared void.

- [Narrator] The court found the exchange of money for a child, "Illegal, perhaps criminal, "and potentially degrading to women."

- To my shock, shock, seven to zero, it was voted not enforceable.

They said, "We are not going to allow this "to happen in this state."

- [Reporter] But the justice has also ruled the trial court was wrong in terminating all the natural mother's parental rights, including visitation privileges.

- I want to be able to see her, but I don't need her in my home to love her.

- She did not (tinkling bells) get full custody, but she won a battle that preserved the rights of other women, which influenced law around the world.

- This was the beginning of a very big step in the world of family, and the law had totally failed to keep up with it at all.

No one had really looked at it, considered it, put together what to do about it.

(crowd yelling) - [Narrator] Even after the decision, the country remained fascinated with the story of Mary Beth Whitehead and Baby M. A made-for-TV-movie was watched by millions.

(daughter crying) And states began passing laws outlawing, or limiting, paid surrogacy.

- Michigan today became the first state to outlaw paying a woman a profit to be a surrogate mother.

- Visions of Mary Beth Whitehead screaming, "Give me back my baby!"

frightened people from this concept, and made them turn away.

But it didn't stop people from having children through surrogacy, and in fact, if anything, surrogacy grew after 1988.

- [Narrator] It grew in part because of a new development in reproductive technology: in-vitro fertilization.

- [Man] Doctors remove eggs from the woman's fallopian tubes.

The eggs are mixed with the husband's sperm to allow the fertilization to occur outside the body.

The resulting embryo is placed back in the woman's uterus.

- [Narrator] This technique also allowed a surrogate to carry a baby produced with another woman's egg.

- [Man] The surrogate mother had no genetic link to the child.

- [Narrator] In 1990 in California, surrogate mother Anna Johnson sued for custody of a baby conceived in a laboratory, using the egg and sperm of the intended parents.

- [Reporter] But Judge Parslow ruled she was simply a host, in effect, a foster parent.

- Very quickly there was a switch to the non-genetic surrogacy, where the effort was, well, let's try to get around the opinion of the New Jersey Supreme Court.

- At least 99% is now gestational, or egg donor, surrogacy.

- Surrogacy.

It's almost doubled in the past six years.

- [Narrator] The tide (upbeat tones) of public opinion began to turn.

- [Reporter] Like, real life storks, surrogates are bringing babies to an increasing number of families all across the country.

- [Narrator] As celebrities starting coming forward about their use of donor eggs and surrogates.

- He's here, and he's perfect.

That's what Kim Kardashian has to say about her and Kanye's new baby boy, who was born via surrogate.

- [Narrator] No one keeps track of how many surrogate babies are born.

- I'm quite comfortable in saying it's several thousand a year, children being born.

- [Narrator] George and Farid met Jeni through an agency, Circle Surrogacy, where she also worked after the twins were born.

Founder, John Weltman says finding surrogates is surprisingly easy.

- Every month, between 600 and 1,000 women apply to our program to be a surrogate.

- [Narrator] Jeni says she never worried about giving the babies up, nor did she feel exploited.

She said she was aware of the clear medical risk of carrying twins.

- You have to be okay recognizing "This is not my baby, "and yes, I'm offering my body."

They go over all the various things that can happen, including risking your life.

Most surrogates, we know the risks that we're taking.

- Family, this is Jeni.

Jeni, this is our friends and family.

(crowd calling out) That was quite an emotional journey for her, as well as physical.

She got to be a rockstar for nine months to these two gay guys in New York.

- We were not in need financially.

That being said, I never like to downplay the fact that, yes, I was compensated to carry these kids, and it helped our family.

- [Narrator] Jeni's fee, around $30,000, was just a small part of the entire cost.

- The surrogate, the egg donation, the fertility clinics, the surrogate agency, the trips back and forth.

I'd say at least 120,000.

- [Narrator] Because it's so expensive, some intended parents try to find surrogates themselves online.

Others turn to a global marketplace of clinics, where the cost of surrogacy are often lower.

- By some estimates, prospective parents spend more than a billion dollars each year hiring egg donors, surrogate mothers, and brokers all over the world.

- [Narrator] Even as it grows, the surrogacy business in this country remains largely unregulated.

Unscrupulous operators have made off with client's money, and created surrogate babies just for sale.

- I think it is the wild west in surrogacy, because there is no required license.

You don't have to be a lawyer, you don't have to be a social worker or psychologist.

People are entering this, some of whom are very honorable, and some of whom are not so honorable.

I'd like to see regulation take place.

- [Narrator] But regulation requires laws, which many states have never implemented.

And that may be the most lasting consequence of Baby M. - There is nothing resolved (somber music) about the question of whether we, as a people, are going to embrace surrogacy.

- Baby M set back surrogacy, that everybody just doesn't wanna touch it.

The legislators are very, very concerned about whichever way they go, it offends somebody the other way.

It's a very highly controversial topic.

- [Narrator] A few states ban paid surrogacy.

Others allow it in certain circumstances.

And many have no legal framework at all.

In part, under pressure from gay men, some states have recently lifted restrictions, including New Jersey, where Baby M was born.

- What comes next after one gets married?

Kids.

So that's the logical next step.

There needs to be surrogacy equality in all states.

- [Narrator] As for Baby M herself, Melissa Stern is now an adult.

At 18 she terminated her legal relationship with Mary Beth Whitehead, and was adopted by the woman who raised her, Betsy Stern.

- She went to college, she went to graduate school, she met a man, she married that man.

Melissa has done beautifully.

- [Narrator] The Sterns and Melissa have shunned publicity all these years, ever since their case set off a debate about parenthood that has yet to be fully resolved.

- The benefits to surrogacy is biological ties to your child, and it's just gonna get bigger and bigger, because the bottom line is, people want kids.

(upbeat tones)