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February 2016

Consumers Stand to Lose in Battle Between Pennsylvania Funeral Directors and Cemeteries

A “turf battle” between funeral directors and StoneMor Partners, a public company that has a 60-year deal with the Archdiocese of Philadelphia to manage 13 Catholic cemeteries in the Philadelphia area, threatens to impose restrictions on cemeteries throughout Pennsylvania that will reduce consumer choice and raise prices. The Pennsylvania Funeral Directors Association supports Senate Bill 874, co-sponsored by Senator Robert Tomlinson (R), owner of Tomlinson Funeral Home in Bensalem, Pennsylvania.

The bill proposes several changes to the Pennsylvania Cemetery and Funeral Merchandise Trust Fund Law.  If a person purchases funeral or cemetery goods and services on a preneed basis in Pennsylvania, current law requires that the funeral home or cemetery deposit 70% of the retail sales price of the goods or services in a merchandise trust fund established with a Pennsylvania bank. Customers can pay for a preneed contract in one lump sum, or in payments over time. The law currently states that the funeral home or cemetery must make the deposit to the merchandise trust fund within 30 days after the final payment is made. So, if a customer is paying over, say, 60 months, the seller isn’t required to make the 70% deposit into the merchandise trust fund for five years. SB 874 proposes that the 70% deposit must be made each month that the seller receives payments on the preneed contract.

SB 874 also provides that “there shall be no delivery of merchandise or product, except for mausoleums, cremation gardens, markers and lawn crypts, prior to the death of the person for whose benefit the contract was made.” This change eliminates “constructive delivery” of caskets and vaults in Pennsylvania. Under the current law, a customer could enter into a preneed contract and the seller could immediately take their funds and purchase the casket or vault and then “warehouse” them until the time of need. Cemeteries “warehouse” vaults by installing them into the ground, sometimes years before they are actually used.

The changes regarding the timing of deposits to the merchandise trust fund and the end of constructive delivery are pro-consumer changes. But consumer protection isn’t the goal of SB 874. That is clear in the bill’s failure to change one of the most anti-consumer aspects of the Cemetery and Funeral Merchandise Trust Fund Law—the liquidated damages provision.

Under current Pennsylvania law, if a customer defaults on a single payment under a preneed contract (even the final payment), the funeral home or cemetery is permitted to retain 30% of the contract price (not the payments to date, but the total contract price) as liquidated damages. So, let’s say I enter into a preneed contract with a funeral home today for $10,000 worth of funeral goods and services, with a plan to make $1,000 payment each year for the next ten years. The funeral home will collect my payments and deposit 70% in the merchandise trust fund with the remaining 30% in their own special account. If I default at any time during that ten-year period, the funeral home is permitted to keep $3,000 of my payments as liquidated damages and terminate our preneed contract. Keep in mind that the funeral home hasn’t actually spent any money on goods and services to benefit me—they have just been collecting payments and waiting for me to die.

These liquidated damages are justified by the industry based on the seller’s need to be compensated for their time and effort in securing the preneed contract. But that logic is undermined by the very different treatment of customers who make their payment without default and then move out of state after the final payment. In that situation, the customer can cancel the contract and receive a refund of the entire prepayment. The seller, however, gets to keep the interest earned.

The real purpose of the bill is made clear with the seemingly innocuous provision that “a [preneed] seller must … adhere to the Federal Trade Commission’s Funeral Industry Practices Revised Rules regarding the sale of the merchandise.” This reference is to the FTC’s so-called “Funeral Rule,” which requires “funeral providers” (which are sellers of both funeral goods and services, i.e. funeral homes) to give customers detailed price lists and to make certain disclosures. The FTC Funeral Rule does not apply to cemeteries because they do not sell “funeral services.” Many of the disclosures required by the Funeral Rule make little sense if they are imposed on cemeteries. For example, the Funeral Rule requires funeral providers to include the following disclosure on their outer burial container (vault) price list: “In most areas of the country, state or local law does not require that you buy a container to surround the casket in the grave. However, many cemeteries require that you have such a container so that the grave will not sink in. Either a grave liner or a burial vault will satisfy these requirements.” If a cemetery is required to publish an outer burial container price list with this disclosure, consumers would be understandably confused.

Cemetery customers in Pennsylvania, prepare to be confused. SB 874 proposes to extend the FTC Funeral Rule to cemeteries in Pennsylvania. In a comment letter dated October 20, 2015, the FTC’s Office of Policy Planning and Bureau of Economics, Competition, and Consumer Protection urged the Pennsylvania legislature not to extend the Funeral Rule to cemeteries. The FTC noted that in its 2008 review of the Funeral Rule, it chose not to extend it to cemeteries because “there is insufficient evidence that commercial cemeteries, crematories, and third-party sellers of funeral goods are engaged in widespread unfair or deceptive acts or practices.” The FTC also noted that extending the Funeral Rule to cemeteries would lead to consumer confusion because the FTC Act is not applicable to most non-profit entities. Approximately 70% of the active cemeteries in the United States are owned by non-profit entities such as municipalities and religious organizations.

In its comment letter, the FTC also argued against ending constructive delivery, at least with respect to vaults, noting that it may be much more cost effective for a cemetery to install vaults in bulk rather than one by one. The FTC noted that consumer demand for pre-need funeral goods and services was growing, but the cumulative effect of the changes proposed by SB 874 would make it less attractive for cemeteries to engage in pre-need sales. SB 874 would “lessen competition, resulting in potentially higher prices and fewer options for consumers, without countervailing benefits to consumers.” Now, let’s see, if consumers continue to demand pre-need funeral goods and services yet the rules make it less attractive for cemeteries to offer those goods and services, where will consumers go? Oh right, the funeral homes.

In fact, the Pennsylvania Cemetery, Cremation and Funeral Association (PCCFA) argues that SB 874 is a thinly veiled attempt by the state to protect funeral homes from competition from StoneMor Partners. Before StoneMor Partners took over management of the Philadelphia-area Catholic cemeteries in 2013, funeral directors in and around Philadelphia had a monopoly on selling caskets and vaults in the Catholic cemeteries. PCCFA, which represents cemeteries across the state, is understandably upset that a “classic turf war over who can sell caskets and vaults” in the Philadelphia Catholic cemeteries threatens cemeteries and consumers across the state.

Former Pennsylvania Cemetery, Cremation and Funeral Association President Guy Saxton summed up the response of the Pennsylvania cemetery industry in testimony on the legislation. Directing his comments to Senator Tomlinson, the funeral director who co-sponsored SB 874, Saxton said: “I know you don’t like StoneMor, but I’m not StoneMor. And this bill puts me out of business. And everything I’ve heard today tells me that this bill is not in good faith. It’s not trying to help the consumer, it’s attempting to put StoneMor out of business, and we’re collateral damage.”

Tanya D. Marsh

Arizona Pretends to Reduce but Instead Significantly Raises Barriers to Entry for Cremationists

Arizona House Bill 2613,  approved by the House Commerce Committee last week, proposes to eliminate state licensing requirements for occupations such as fruit packers. Yes, you read that correctly. Under current Arizona law, you may not pack citrus fruit without a license from the state, which will cost you $200 per year. Packing citrus fruit without a license will earn you a $500 fine. HB2613 also removes questionable licensing requirements for occupations including yoga instructor, landscape architect, and geologist. The bill is consistent with one of Republican Governor Doug Ducey’s top priorities—to reduce the regulatory burden on businesses and consumers. One of Governor Ducey’s policy advisors explained that “[occupational] licensing should be the last option, not the first. … reducing regulations means more money for hardworking Arizonans.”

That sounds great, but HB2613 doesn’t uniformly reduce barriers to entry. In at least one case, it significantly raises them. For at least 300 hardworking cremationists in Arizona, this regulation “reduction” will mean far less money because they will suddenly become unqualified to do their job. Under current Arizona law, only a person licensed as a cremationist can operate a crematory retort and perform the cremation of human remains. HB2613 eliminates the cremationist license, but not the requirement that a licensed person operate a crematory retort and perform cremations—it grants the ability to perform those tasks to another licensed group: funeral directors. HB2613 does so by redefining “funeral directing” to include “operating a crematory retort and performing the actual cremation of human remains.” Arizona law already provides that no one may perform “funeral directing” without a funeral director’s license.

Under current Arizona law, in order to receive a cremationist license, a person must complete a crematory operator’s certificate course, submit a fingerprint card for a background check, have a good moral character, and pay an annual fee of $85 to the Arizona Board of Funeral Directors & Embalmers.  

To become a licensed funeral director in Arizona, an applicant must pass the funeral service arts section of the national board examination or the state equivalent examination, pass an examination on funeral director state laws and rules, be of good moral character, pay an annual fee of $85 to the Board and, oh yes, have held an active license as an embalmer for at least one year and have assisted in arranging and directing at least 25 funerals.

To become a licensed embalmer in Arizona, an applicant must pass the funeral service science section of the national board examination or the state equivalent examination, pass an examination on embalmer state laws, have been licensed as an intern for at least one year, have successfully completed an internship program that included assisting in the embalming of at least 25 human bodies, and pay an annual fee of $85 to the Board.

To become a licensed intern in Arizona, an applicant must be a high school graduate, be a graduate of an accredited school of mortuary science, be of good moral character, and pay an annual fee of $85 to the Board.

So, to recap, HB2613, which is designed to implement Governor Ducey’s plan to reduce needless occupational licensing in the State of Arizona, proposes to replace the requirement that people who operate the crematory retort must first take a course on crematory operations with a requirement that people who operate a crematory retort must: (1) graduate from a two-year mortuary school program, (2) complete a one year internship where they must embalm at least 25 bodies, (3) pass the national board examination in funeral service arts and funeral service science, (4) pass two examinations on the laws that apply to funeral directors and embalmers, (5) work as a licensed embalmer for at least one year, and (6) assist in arranging and directing at least 25 funerals. Oh, and we can’t forget that they must continue to pay an annual fee of $85 to the Board.

Unfortunately, Arizona is not alone in its overly aggressive approach to occupational regulation. Nearly 1/3 of U.S. workers must obtain a license from the state to engage in their occupation. In 1950, less than 1/20 of U.S. workers needed a license. It has been estimated that over 1,100 occupations are licensed in at least one state, but fewer than 60 are regulated in all 50 states—clearly the states disagree quite a bit on what occupations require licensing and which do not. It is easy to understand why states may use occupational licensing to protect the public from unqualified doctors and lawyers, but it is a bit harder to understand how state legislatures rationalize requiring a license for hair braiders and florists.

Critics across the ideological spectrum argue that occupational licensing regimes do little to protect consumers from incompetent practitioners and instead raise costs for consumers by stifling competition and imposing barriers to entry. In July 2015, the White House issued a report prepared by the Department of Treasury Office of Economic Policy, the Council of Economic Advisers, and the Department of Labor calling for state policymakers to adopt a more “tailored approach” to occupational regulation. For example, the report recommends that states target occupational regulations to closely tie the substantive requirements (like education and experience) with public health and safety concerns. The Institute for Justice has found that occupational licensing regimes “can pose substantial barriers” for those seeking even low and moderate income jobs, particularly for “minorities, those of lesser means and those with less education.” Cremationist seems like a prime example of this phenomenon. Under the guise of reducing regulation, Arizona has transformed a fairly low paying occupation with low barriers to entry into a job that requires a significant investment of time and money to acquire. It is unclear how requiring cremationists to master the art of embalming and graduate from mortuary college (which typically includes no training on operating a crematory retort) protects Arizonans.

Arizona’s cremation rate is among the highest in the country—approximately 70%. Cremation is an attractive option for many people because it is lower in cost and perceived to be more environmentally friendly. Many crematories in Arizona are independent of funeral homes and not owned or managed by funeral directors. (Economists have shown that independent crematories typically charge less than crematories run by funeral directors.) If HB2613 passes in its current form, the future of the independent crematories is uncertain. Governor Ducey’s first official action in January 2015 was to implement a moratorium on new regulatory rulemaking by state agencies. His office’s press release promised that “Governor Ducey’s order will promote and propel job growth by preventing burdensome, antiquated and unnecessary government rules and regulations on private sector employers.” I’m sure that’ll make the soon-to-be-unemployed Arizonan cremationists feel much better.

Tanya D. Marsh

Home Funerals, Rent-Seeking, and Religious Liberty

The death of a family member triggers a flurry of decisions, all of which must be made in a time of great emotional stress. At the center of the decisions is a single question—how should the dead be mourned and memorialized? The “right” answer can vary significantly based on religious beliefs, family politics, social norms, and the economic capacity of the family.

Many families are relieved to be able to hire a funeral director to take care of all of the practical details, but there is a growing interest in “home funerals,” in which human remains are prepared for disposition in the home, rather than at the funeral parlor. As described in a recent New York Times article, remains may be washed and dressed by family, members of a religious community, or a funeral director. Surrendering control of the corpse to a funeral director immediately after death, allowing it to be embalmed, and displaying it in an open casket is often referred to as the “traditional” American funeral, but in fact that has only been the “tradition” for a little over a century. Until the end of the 19th century, most American funerals were home funerals.

Families may choose home funerals for many reasons. For some, ritually preparing human remains for burial has significant religious implications. For others, it is a last meaningful act of love.  For too many, the “traditional” American funeral, which averages $8,500 plus the cost of the burial plot, is simply beyond their means.

Throughout the world, home funerals are routine and accepted. In the United States, a country that prides itself on religious liberty and the freedom of self-expression, the growing interest in home funerals represents a challenge to the commercial funeral industry. That industry has responded as economics expect, by engaging in classic “rent seeking” behavior and lobbying state legislatures to enact restrictive laws that insulate it from competition. In the case of home funerals, the competition comes from families themselves.

Sixteen states require that human remains be embalmed or refrigerated within a particular time period after death (usually 24-48 hours). (Those states are: Arizona, Arkansas, Colorado, Delaware, Florida, Hawaii, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Nevada, New Mexico, North Dakota, Texas, and Virginia.) Four of those states (Arkansas, Louisiana, New Mexico, Texas) require that human remains be refrigerated below a particular temperature (typically 35-40 degrees). Virginia already requires that human remains be embalmed or refrigerated within 48 hours after death. Virginia State Senator Kenneth Alexander, a funeral director, has proposed Senate Bill 595 to specify that the remains must be refrigerated at a temperature of no more than 40 degrees. This bill has been received with appropriate outrage by funeral consumer advocates and some funeral directors.

Legal requirements that human remains must be embalmed or refrigerated after death are classic examples of industry rent-seeking.  By requiring “refrigeration,” particularly at a specific temperature, rather than simply permitting cooling via dry ice or other means, these states place heavy burdens on families and religious communities that want to care for remains at home.

On the surface, these requirements seem reasonable. Aren’t human remains a health hazard? Don’t these laws prevent public health nightmares? Actually, it turns out, unembalmed and unrefrigerated human remains don’t pose significant public health risks. The Centers for Disease Control (CDC) reports that “[t]here is no direct risk of contagion or infectious disease from being near human remains for people who are not directly involved … handling dead bodies.”  The CDC further advises that those directly handling human remains can protect themselves from potential bacteria and viruses by wearing gloves and washing their hands. “The sight and smell of decay are unpleasant,” the CDC advises, “but they do not create a public health hazard.” The World Health Organization (WHO) agrees. “The widespread belief that corpses pose a major health risk is inaccurate. Especially if death resulted from trauma, bodies are very unlikely to cause outbreaks of diseases…”  The WHO also advises that “[d]ead or decayed human bodies do not generally create a serious health hazard, unless they are polluting sources of drinking-water…” The Association Française d'Information Funéraire advises that there are three methods for preserving human remains before final disposition: dry ice, refrigeration, and embalming. The use of dry ice is the “common traditional technique for preservation at home,” the Association reports, and “[i]t gives perfect results in 95% of the cases.”

In a 2009 article, author Max Alexander contrasted the home funeral of his father-in-law and the “traditional” funeral of his father. “Home after-death care is not for everyone or every situation,” Alexander acknowledged, “[but it] occurred to me that if more Americans spent more time with their dead … they would come away with a new respect for life.” In the United States, of all places on earth, families should be able to make the choice of how to care for their own dead without the interference of laws designed to protect no one but a for-profit industry.

Tanya D. Marsh

BONES: When Do People Lose Their Identity After Death?

In modern American culture, death and human remains are not typically discussed.  Despite this, Fox’s very successful television series Bones, just began its eleventh season.  This show follows the cases of a forensic anthropologist and FBI agent who identify human remains and determine what happened to the person. 

The show’s main protagonist, Dr. Temperance Brennan (also known as “Bones”), is a world renowned forensic anthropologist who is often criticized for her logical, rational, and unemotional demeanor in addressing human remains.  However, Dr. Brennan devotes her life to identifying the deceased and telling the story of the individual’s life and death based upon his or her bones.  She also recognizes the importance of identifying all human remains.  In Dr. Brennan’s eyes, it doesn’t matter if it is someone who died last week or hundreds of years ago, all bones are human remains that have an identity and a story to be told.  Her job is to tell their stories for them.

The show frequently points on the juxtaposition of society’s distaste for talking about human remains in such an objective, scientific manner, which is devoid of identity or personality, with the commonplace practice of forgetting that all human remains were once people with identities. Specifically, the juxtaposition between Dr. Brennan and the others on her team highlights the societal disconnect between human remains and individual’s with identities.  

For example, in Season 1, Episode 9, Brennan’s team members want to attend the work Christmas party and do not see the importance of rushing to identify human remains, which had been sealed up in a fall-out shelter for fifty years.  Everyone, other than Brennan, seemed to think that the age of the bones meant the person was not entitled to the careful attention of his story being told like someone who was recently murdered.  However, Dr. Brennan was insistent that she wanted to determine his identity, even if it meant missing the party.  Interestingly, after the others had learned more about his life – by opening up the suitcase that was found with the remains, which offered clues to the story of his life and who he left behind – the others on the team became increasingly interested in not only identifying the remains, but in determining what happened and informing the surviving relatives. This reaction highlights people’s tendency to dissociate bones from the person they once were. society’s tendency to dissociate human remains and one’s identity.

Even though on the surface it seems that Dr. Brennan confronts death in a sterile, scientific way, she actually treats human remains with more reverence than most people. Because unlike society who devalues human lives if they do not recognize the person, Dr. Brennan always recognizes that bones are never just bones, but instead represent an individual with a story to be told. 

Katilin Price

Unfortunate Mix-Up at Cemetery Leaves Family with Difficult Decision

In Fresno, California, a family was horrified to learn that the cemetery plot they had reserved next to their recently-buried newborn son actually belonged to someone else.  David Miranda lost his newborn son only eight hours after the child was born due to a fatal disorder discovered before the baby was born. Mr. Miranda made cemetery arrangements for his son in a local cemetery and also reserved the plot next to his son for himself and his fiancé. Mr. Miranda was given a reservation slip by the cemetery office and told his first payment would be due in mid-November. When Mr. Miranda came in at the end of October to make his first payment, cemetery officials told him that there had been a mistake. The plot Mr. Miranda reserved had actually been sold to another family three days prior. The salesperson who made the sale to the other family had recorded the sale in the cemetery’s computer system, but had failed to record the sale on the cemetery map.  The cemetery officials offered the couple two options: choose plots near, but not next to, their son or have their son disinterred and moved to another spot with an adjacent available plot.  Mr. Miranda and his fiancé are dissatisfied with both.

Buying a cemetery plot is not the same as buying other real property. The real property is still owned by the cemetery, but a purchaser gains title to use that specific plot of land for a specific purpose – burial. Many of these documents look like traditional deeds, but include a list of restrictions for what can be done on the property. The most important of those restrictions is obviously limiting its use to burial, but it can also include certain restrictions about what can be done above ground to the property in conformance with cemetery rules.

In terms of priority of property interest, California is a race-notice jurisdiction. This means that the subsequent interest of a bona fide purchaser achieves priority over a prior interest where they acquire a subsequent interest in the property for valuable consideration and in good faith and records the instrument creating the interest first. A bona fide purchaser is a purchaser who acquires a lien or title interest in good faith and for value (not a gift) without knowledge or notice of a prior interest. Assuming the recording of the interest on the cemetery map counts as recording for property purposes, had the cemetery official gone ahead with accepting Mr. Miranda’s payment and recording the interest on the cemetery map, Mr. Miranda’s rights to the plot would trump the rights of the prior purchaser. Because we want to encourage recording, race-notice jurisdictions favor the interest of the innocent subsequent purchaser who properly records their deed over the negligent prior purchaser who failed to record.

We often forget that, at the end of the day, cemeteries are real property. Although the ownership interest acquired in a cemetery plot is not the same as the ownership interest acquired by a purchaser of other real property, cemeteries are real property and those rules do still apply. While these rules did not save Mr. Miranda from this tragic situation, they could be applied to other bona fide purchasers who are able to record their interest.

Brandy Davis

A Family's Right to Sepulcher After 34 Years

Kathleen McCormack Durst disappeared over thirty three years ago when she was completing her last year at the Albert Einstein School of Medicine in the Bronx. At the time of her disappearance, she was living with her husband, Robert Durst, a real estate tycoon estimated to be worth nearly $100 million. Her husband didn't report her missing for four days, telling investigators he had last seen her at the train station. Police were suspicious of Robert but he was never charged in her disappearance. Kathleen Durst was declared dead in 2001.

In January, HBO aired a six-episode documentary about Robert's strange life. Since the disappearance of Kathleen, unsolved disappearances and murders have followed him. In California, in December 2000, he was questioned but never charged in the execution style murder of his friend, Susan Berman. Then in Texas in 2001, he was charged with killing his neighbor, dismembering the body, and dumping it in the bay. He led authorities on a nationwide manhunt ending in Pennsylvania. When he was brought back to Texas, he admitted to dismembering his neighbor's body. He claimed self defense and two years later was acquitted of homicide charges. He pled guilty to lesser charges, was put on probation, which he then violated and was sent to jail for a couple months. At the end of the documentary, Robert is heard whispering "What the hell did I do? Killed them all, of course!"

Since agreeing to participate in the documentary, Robert has faced a slew of charges. He agreed to provide 25 hours of interviews, credit card records and court papers. His lawyer had warned him not to participate in the documentary, but Durst was undeterred. He said in an interview “[i]t’s so long ago. Some D.A. would have to commence a major budget-busting investigation. I don’t see that happening.” Unfortunately for Durst, the documentary spurred the reopening of investigations. He's currently in jail in New Orleans on a gun charge. Then, one day before the airing of the final episode of the documentary, Robert Durst was arrested for the murder of Susan Berman. After he's sentenced in New Orleans, he'll be sent to California to face the murder charge. 

Nearly thirty-four years later and Kathleen's family has held off on filing a lawsuit against Durst, but after seeing the documentary they decided it was time. Kathleen's brother petitioned to be named administrator of the estate in order to file a wrongful death suit on the families behalf. The documentary made this suit legally possible because New York has a two year statute of limitations on wrongful death suits unless there is new evidence. 

Recently, Kathleen's mother and sisters filed a $1oo million lawsuit against Robert Durst. They have long suspected that Robert killed Kathleen but remained hopeful that she would someday return. The lawsuit contends that he violated the McCormack family's right to sepulcher. The right to sepulcher is a NY law which grants family members the immediate right to possession of a body for burial.  If the right is interfered with, the next of kin may be entitled to bring a claim for the emotional harm that has been suffered. The family's lawyer said that "their priority has been and continues to be to provide Kathleen with a proper and dignified burial."

Emily Morris