SB1 and Missouri's Show Me Year

The anxiety over Missouri’s new preneed law will temporarily peak this Friday with the passing of the due dates for annual reports and license applications. To give the industry a breather, and to assess SB1’s flaws, the Missouri State Board of Embalmers and Funeral Directors reached an informal agreement on October 20th to table any corrective SB1 legislation for one year. While their emergency rules continue on the path to approval, the State Board will begin exploring ways to identify SB1’s problems, and to prioritize issues for permanent regulations.

To view the Board’s emergency rules click here.
 

Missouri's Price Tag for Oversight: $36

Missouri will look to a combination of licensing fees from preneed sellers, providers and agents to fund a portion of the projected costs of preneed oversight under SB1. But, most of SB1’s enforcement price will be funded by the $36 to be charged for each preneed contract sold. The ‘per contract’ fee is not new to the Missouri preneed industry, but the fee does represent a substantial increase from the $2 charged under the prior law.

According to State Board’s statistics, the Missouri preneed industry has sold an average of more than 22,000 preneed contracts each year during the past 6 years. Using that average, the new per contract fee will increase the State Board’s annual budget by more than $750,000. Appropriately, consumers and death care companies are asking how this budget will be used.

Another question is who should bare this expense. When the fee was at $2, many funeral homes absorbed that cost. But in today’s economy, the fee represents an expense that many funeral directors can no longer absorb. One of the proposed emergency rules reflects the division that exists between the Attorney General and some the State Board members with regard to how this new fee should be assessed.

With the purchase price of a preneed contract based on the funeral home’s current prices, a preneed seller must already absorb the costs of developing and maintaining a compliant program. Funeral homes and cemeteries must also bare a portion of SB1’s costs through new licensing fees. By passing the per contract fee on to consumers, the death care industry can begin to make regulators accountable to the public for the oversight they plan to provide for the preneed consumer.
 

Rules are Rules

Rules and regulations provide an important framework for the operation and maintenance of a cemetery.  However, cemeteries should retain the flexibility to revise their rules to adapt to changes in operations, business and customs.   It's difficult to understand why a cemetery would risk complaints and the prospect of losing business by rigidly adhering to a set of rules and regulations that are almost 80 years old.

It's the family's names that are etched in stone, not the cemetery rules and regulations.

My way, or the highway: reasonable cemetery rules

Like homeowner’s covenants, ownership of an interment right in a burial space comes subject to the cemetery’s published rules. Cemetery rules are used to regulate such issues as the planting of trees and shrubs, establishing uniform requirements for markers, the removal of decorations, and a transfer of the interment right. Consequently, it’s common for states to pass a law like Georgia’s Section 10-14-16 that subjects cemetery rules to a standard of reasonableness. That law was at the heart of a recent lawsuit that ended in a court order precluding a cemetery’s efforts to impose a “My way, or the highway” rule on lot owners.

Most cemeteries require the use of a vault to maintain the integrity of the casket and the uniformity of the burial spaces. As a consequence, the vault is an item that the funeral home and cemetery compete to sell. As the news article reports, most vaults are made out of concrete.

To gain the upper hand on his competition, the cemetery owner implemented a rule requiring lot owners to use a new type of vault made of a steel-polymer composition (that the cemetery had exclusive rights to sell). Putting aside a couple of ‘minor’ legal issues, this strategy should fail the reasonableness test if the newspaper’s reporting is accurate. The article attributes the following to cemetery owner:

….people who already bought burial plots and demanded concrete vaults could sell their plots and relocate to another cemetery.

Regardless of whether a lighter, stronger type of vault is a better choice, it is not reasonable to impose a new rule that forces existing lot owners to make a choice between purchasing that vault or selling their lots. Even if the cemetery’s attorney were to prevail on an appeal of the court’s order, the cemetery’s competitors have other legal challenges such as anti-tying violations or the impairment of contracts.