Death Care Compliance Law

Death Care Compliance Law

Preneed: A Pandora's Box of Problems

William Stalter is the founder of Stalter Legal Services and the Preneed Resource Company. Bill focuses his law practice on preneed and death care compliance, serving banks, funeral homes, crematories, and cemeteries. He has written multiple published articles

Missouri Preneed Seller Records: Format of Records

Posted in Compliance, Exams/audits, Recordkeeping

The next section of the Missouri preneed records rule provides the funeral home latitude to maintain records in either a hard paper copy or an electronic format, but so long as the records are provided to the State Board in a timely manner:

All records required to be maintained by a seller may be maintained in paper or electronic or a combination of paper and electronic formats, but shall be maintained in a manner such that the required information may be retrieved and provided to the board in a timely manner, upon request in accordance with the statutes and regulations governing the board.

Some funeral homes have not yet adopted the paperless office concept.  We have such clients, who struggle with Excel spreadsheets and PDF documents.  The proposed regulation is acknowledging those types of sellers, but warning that reliance on paper reports will still require that they be able to find, copy and deliver those reports to the State Board within a timely manner (generally within 30 days of request).

Missouri Preneed Seller Records: Communications

Posted in Compliance, Exams/audits, Recordkeeping

Missouri’s preneed seller records proposal would require preneed sellers to retain all communications that relate to their preneed contracts:

Any written (including electronic) communications between the seller and any preneed agent, provider, trustee, investment advisor, insurance company, purchaser and/or beneficiary of the preneed contract and any other person related to preneed contracts and the funding of those preneed contracts;

Communications will often flag potential problems to an auditor, and accordingly this provision represents a crucial record.   The potential problem with this provision will regard how the State Board expects communications to be organized and stored.   Some communications might need to be stored based on their source.  However, communications that are specific to a particular contract, should be stored with that consumer file.   Funeral directors are bound to ask if this provision is going to require a redundant set of records.

Missouri Preneed Seller Records: Existing Insurance Policies

Posted in Compliance, Exams/audits, Recordkeeping

We anticipate that the following section of the Missouri record keeping proposal is directed at the situation where consumers assign an existing insurance policy to the funeral home:

All information obtained or possessed by the seller related to any insurance policy used to fund any preneed contract that may include, but not be limited to, a copy of the insurance policy, any assignment or beneficiary designations, and the status of any insurance policy.

Nothing in this regulation shall require the seller to affirmatively obtain records from the insurance company, but if the purchaser, beneficiary, insurance company, or any other person provides the seller with this information, the seller shall be required to maintain those records;

This section conflicts with earlier provisions that require the preneed seller to retain periodic statements provided by insurance companies.   To reconcile the two provisions, this provision should be restricted to policies where the funeral home has no contractual relationship with the insurance company.  Funeral homes often find Met Life difficult when seeking policy information.  Appreciating that reality, the proposal would seem to require the funeral home to retain whatever it receives about the policy, but no requirement exists to seek out a report or record

Missouri Seller Preneed Records: Cancellations

Posted in Compliance, Exams/audits, Recordkeeping

With regard to preneed contracts that are canceled, Missouri preneed sellers are being requested to retain the following documents:

 (1)       All records providing any sort of notice to the seller of the cancellation of a preneed contract; and

(2)        All records showing the date, name of who is paid, the amount paid out and a description of the type of payment made to any purchaser or any other person upon cancellation of any preneed contract, and the name and address to whom the payments were made.

The proposal language does not seem to contemplate R.S.Mo. Section 436.457 (when the seller may cancel a preneed contract).

Missouri Preneed Records: Keep Your Bank Records and Insurance Records

Posted in Compliance, Exams/audits, Recordkeeping

The next section of the Missouri preneed seller records rule would require funeral homes to retain copies of the periodic statements provided by banks, trustees and insurance companies:

Copies of account statements for joint accounts, trust statements for trust accounts, and any statements received from insurance companies listing the insurance policies in effect and/or the status of any insurance policy that names the seller or the provider, on a preneed contract sold by the seller, as beneficiary or owner.

If these records are maintained in electronic format by the financial institution or insurance company, then the seller shall have the means to access those records and be able to provide the board with appropriate access to those records within the lawful bounds and authorities of the board;

There shouldn’t be any argument that funeral homes should review and retain the periodic statements made available by their preneed funding agents.  However, the second sentence of the provision may represent an attempt to exercise power beyond the State Board’s authority.  We have underlined the suspect language.   Our criticism of this provision is the same that we discussed in the post regarding “Access to Trustee Deposit Records”.

To the extent that banks and trust companies provide on line access to trust clients, transaction records are typically archived after a couple of years.  After transactions have been archived, the preneed seller can no longer access the records via the internet portal.   Consequently, the staff’s proposals would require preneed sellers to down load transaction records on a regular basis.

Banks and trust companies use a variety of different trust accounting platforms, and some of those platforms offer limited options for reporting transactions.  To minimize account inputting, trustees may aggregate consumer payments prior to inputting deposits to their accounting system.   Consequently, the trustee may not have a record that shows the date and amount of each consumer deposit.   The best record the bank

So, the question is whether the State Board can dictate to sellers the content of, and access to, reports that banks and trust companies provide in an electronic format.

Missouri Preneed Seller Records: Insurance Payments

Posted in Compliance, Exams/audits, Recordkeeping

The next section of Missouri’s preneed record rule is confusing.  A prior provision of the rule (¶D(1)) would require a seller to maintain records reflecting the receipt of funds from an insurance company, and documents showing the seller’s performance of the contract.  However, for insurance funded contracts, the rule would also seek the following additional records:

 (a) Records showing notice received from the insurance company or the provider that the preneed contract has been fulfilled; and

(b) Records of any payment from the insurance company that the insurance company provides to the seller or that the seller obtains from the provider or any other source.

The first section may be seeking a form of notice that includes a confirmation to the insurance company that the preneed contract has been performed.  One insurance representative has suggested to the State Board that insurance companies are not in the practice of obtaining confirmation of the performance of preneed contracts.  Whatever the objective of that section, the language is inadequate to put funeral homes on notice.

Regarding the second section, how is the contemplated record different from that described in the prior paragraph D(1)?

Missouri Preneed Seller Records: Excess Funds

Posted in Compliance, Exams/audits, Recordkeeping

Missouri’s proposed preneed records rule includes a provision that would require funeral homes to document the payment of excess funds:

  1. For all fulfilled preneed contracts:

 (3)   Records showing payments made to the state of Missouri or to any other person including the amounts paid, the dates paid and the name of the person paid; and

The State of Missouri has long asserted that funeral homes have an affirmative duty to determine when the preneed contract beneficiary was the recipient of public assistance, and whether the State has a claim on excess preneed funds.  Preneed contracts with price protection guarantees from the funeral home will not result in excess funds that are subject to state claims.  However, the marketing of final expense products is becoming much more prevalent, and such products frequently pay all proceeds to the funeral home.  If the proceeds exceed the funeral and burial costs, the state wants a record of the excess proceeds and who was paid.  Funeral directors may not want the duties that come with such products, but the state views the funeral home as having benefited from the spend down that gave rise to the preneed contract, and the exclusion of the life insurance policy or final expense trust from resource testing.

Churches: Conversation Sabbath

Posted in Churches/Ritual, Transition Documents, Uncategorized

Churches from different denominations are observing “Conservation Sabbath” from November 11th through the 20th.  In 2010, a faith-related initiative titled the “The Conversation Project” was initiated by journalist Ellen Goodman.  The Conversation Project is dedicated to helping people talk about their wishes for end-of-life care.  Their website states:

“Too many people are dying in a way they wouldn’t choose, and too many of their loved ones are left feeling bereaved, guilty, and uncertain. The Project’s goal is to transform our culture so we shift from not talking about dying to talking about it. It’s time to share the way we want to live at the end of our lives. And it’s time to communicate about the kind of care we want and don’t want for ourselves. We believe that the place for this to begin is at the kitchen table—not in the intensive care unit—with the people we love, before it’s too late. Together we can make these difficult conversations easier. We can make sure that our own wishes and those of our loved ones are expressed and respected.”

Similar projects have been initiated by healthcare providers who care for patients with serious illnesses (Conversations of a Lifetime), hospice and palliative care (Conversations Before the Crisis), and the death care industry (Have the Talk of a Lifetime).  These programs share a common goal of initiating personal conversations among family and friends about end of life preferences.  While congregants might welcome the opportunity to begin the end of life discussion within the comfort of their own church or synagogue, not all clergy are comfortable leading such conversations.  The Conversation provides a good starting point for developing the skills for such discussions.  The ‘other Conversations’ also provide clergy excellent resources to expand their end of life ministry.

Missouri Preneed Records: Provider Payments

Posted in Compliance, Exams/audits, Recordkeeping

The next section of Missouri’s seller records rule proposal seeks the following documents:

  For all fulfilled preneed contracts:

(2)    Documentation showing payment to the provider by the seller including the name of the person or entity to whom payments were made, the date and amount of each payment, and a description of payment to the provider;

The Missouri preneed law is unique in that a third party separate from the funeral home can be licensed as a preneed seller.  We anticipate that this section of the record keeping rule is intended only for contracts where the seller and provider are separate entities.  Otherwise, the rule would be burdensome on the funeral home that is both seller and provider.

Missouri Seller Records: The Hidden Drawer

Posted in Compliance, Exams/audits, Recordkeeping

The next section of Missouri’s seller records rule proposal seeks the following documents:

D.  For all fulfilled preneed contracts:

(1)   Records showing seller’s performance for fulfilled preneed contracts including:

(a)  Written certificate(s) of performance for each preneed contract fulfilled;

(b)  Requests to the financial institution and/or insurance company for payment;

(c) Evidence of the date the seller received the funds from the financial institution or insurance company;

(d) The account from which the funds were paid to the seller; and

(e)  All other records showing the seller’s performance of the preneed contract.

Missouri funeral directors have questioned the need to maintain records reflecting the performance of preneed contracts.  In the prior post titled “Drilling Deeper”, we discussed that the State Board may eventually seek preneed records that would help auditors find any ‘hidden drawers’.    That euphemism is used for the location where the unscrupulous funeral director hides his unfunded preneed contracts.    The ‘fulfilled preneed contract records’ sought by rule proposal may be intended to discourage the hidden drawer.