Doug Cassity has apparently died alone last Sunday night. The St. Louis Dispatch ran a short story on the death of the man responsible for defrauding preneed consumers out of hundreds of millions of dollars. We wonder whether his NPS preneed contract was an orphan or not.
As suggested in our prior Cemetery Preneed Exemption post, Missouri’s endowed care cemetery law (Chapter 214.270 et seq) has a huge flaw when it comes to religious cemeteries: they are either all in or all out. Religious cemeteries often have good cause for seeking exemption from state endowed care laws. Our religious cemetery clients typically have care trusts that do not comply with state law for one reason or another. One client’s care trust held farmland. Another client trust included provisions for withdrawal for the benefit of the church. Several clients maintained co-trustee relationships with a corporate trustee.
For the religious cemetery that has a proactive preneed program, Missouri’s all in or all out is a major problem. If a religious cemetery is to be exempt from Missouri endowed care requirements, they must elect to be outside of the entire act, including its preneed provisions (RSMO Section 214.387).
When passed in 1994, the law’s focus was on establishing care funds and consumer disclosures. Little thought was given to the preneed transaction. To be fair to those involved, few cemeteries were offering preneed, and most of those sales were for markers and monuments. Cemeteries offering opening/closing services, vaults and engraving services, could register with the Missouri State Board of Embalmers and Funeral Directors.
Prior to 2009, preneed sellers were not licensed in Missouri. Rather, funeral homes could register as a preneed seller. This would require a preneed trust and a contract that complied with Chapter 436. The State Board did not have audit powers, but a $2 per contract fee was required with the annual registration. The preneed compliance threshold was pretty low, and so several cemeteries registered with the State Board.
Everything changed with the implosion of National Prearranges Services in 2008. A major reform effort was launched for the Missouri funeral industry that included licensing, more detailed reporting, examinations and significant new fees. Seeing the writing on the wall, the cemetery industry quickly scrambled to carve out a Chapter 214 preneed niche for cemeteries. But as we now know, that niche is based on the cemetery being licensed under Chapter 214.
Opting in under Chapter 214 as a non-endowed cemetery is not the answer for religious cemeteries. The disclosures required of a non-endowed Missouri cemetery would be misleading. Many religious cemeteries have a care trust, but just one that does not comply with all Chapter 214 requirements. Yet, we hesitate to recommend a religious cemetery take their preneed cemetery program under Chapter 436.
The administration of a cemetery preneed program is dramatically different than that for a preneed funeral trust. A cemetery preneed trust involves multiple subaccounts and frequent distributions for deliveries made prior to death. (See Cemetery Preneed Oversight: the Bucket Factor) The financial examinations conducted by the Missouri State Board of Embalmers and Funeral Directors will be entering their third stage soon, and more attention will be given to trust administration (and distributions in particular). We could see a Chapter 436 financial exam bogging down when reviewing a cemetery preneed program.
Rather, Missouri’s Chapter 214 needs to be amended to provide more flexibility to religious cemeteries and other exempt cemeteries that want to sell preneed while opting out of the endowed care fund requirements.
When Missouri’s endowed care law was passed in 1994, all cemeteries were required to register with the Office of Endowed Care Cemeteries. Cemeteries can seek licensing as either an endowed care cemetery or a non-endowed cemetery, or the cemetery could claim it was exempt from Chapter 214 pursuant to the definition of “Cemetery” pursuant to RSMo Section 214.270(4):
(4) “Cemetery”, property restricted in use for the interment of the human dead by formal dedication or reservation by deed but shall not include any of the foregoing held or operated by the state or federal government or any political subdivision thereof, any incorporated city or town, any county or any religious organization, cemetery association or fraternal society holding the same for sale solely to members and their immediate families;
The Missouri Endowed Care Act also provided definitions of cemetery association, fraternal cemetery and religious cemetery:
(5) “Cemetery association”, any number of persons who shall have associated themselves by articles of agreement in writing as a not-for-profit association or organization, whether incorporated or unincorporated, formed for the purpose of ownership, preservation, care, maintenance, adornment and administration of a cemetery. Cemetery associations shall be governed by a board of directors. Directors shall serve without compensation;
(22) “Fraternal cemetery”, a cemetery owned, operated, controlled or managed by any fraternal organization or auxiliary organizations thereof, in which the sale of burial space is restricted solely to its members and their immediate families;
(36) “Religious cemetery”, a cemetery owned, operated, controlled or managed by any church, convention of churches, religious order or affiliated auxiliary thereof in which the sale of burial space is restricted solely to its members and their immediate families;
The original intent behind the 1994 amendments to Chapter 214 was to provide consumers information and disclosures regarding whether a cemetery did or did not maintain a care fund for future maintenance. The law change would not force a cemetery to establish a care fund, but if it did not that fact had to be disclosed to the consumer at the cemetery gate and on its documents.
The law changes recognized that certain types of cemeteries were dependent on outside sources of funding for future maintenance, and therefore could be excluded from Chapter 214. Cemetery associations are non-profit organizations with a single purpose of providing care and raising funds for their cemetery. Fraternal cemeteries have a very similar purpose, but are also recognized by state law as having a charitable purpose. Religious cemeteries obviously would rely upon a specific church, parish or synagogue for support.
Currently, 1,118 Missouri cemeteries are registered pursuant to the requirements of the state’s endowed care law. Approximately 90% of all registered cemeteries have claimed they are exempt from Chapter 214. However, the number of “exempt cemeteries” is probably much greater that those registered with Missouri’s Office of Endowed Care Cemeteries. Our review of the registered cemeteries did not include any of Kansas City’s prominent religious cemeteries. While a number of Jewish Cemeteries in the St. Louis area are registered, few other prominent religious cemeteries in St. Louis or Springfield are registered.
Our clients include a number of cemetery associations, some of which have made the decision to remain off the regulator’s radar screen. Invariably, representation of a cemetery association will almost certainly lead to a discussion regarding declining revenues and the need to invade their care fund. It is our personal experience that the association’s board will be reluctant to share their financial difficulties with the cemetery membership, let alone with a state regulator.
This begs the question whether Missouri’s endowed care law is of much benefit to the state’s cemetery consumer. A very small number of cemeteries are jumping hurdles for compliance with Chapter 214, but the vast majority of cemetery consumers have no access to information needed to determine whether their cemetery is in a position to provide adequate care for years to come. Should Missouri consider a simpler, more comprehensive cemetery care fund law?
In our next post we will examine how the Chapter 214 exemption puts Missouri religious cemeteries at a preneed disadvantage.
The Missouri State Board of Embalmers and Funeral Directors recently promulgated a rule (20 CSR 2120-3.560) to exempt certain cemetery operators from preneed licensing with the State Board. The rule was a long time coming. We first wrote about preneed licensing confusion for Missouri cemeteries back in 2009 (Lost in the translation: Missouri’s preneed exemption of cemeteries). While the State Board had taken a very public position about excluding cemeteries that complied with Chapter 214 (follow this hyperlink to the Board’s recommendations to the Missouri Legislature), cemeteries were not the Board’s highest priority.
Regardless, the overlap between Missouri’s cemetery law (Chapter 214) and Missouri’s funeral licensing law (Chapter 333) and preneed funeral law (Chapter 436) led to problems for Missouri cemeteries immediately after the passage of Senate Bill No. 1 in 2009. In the following year, this author represented two cemeteries before the State Board regarding their preneed programs. While the State Board’s Executive Director eventually agreed that the cemeteries’ compliance with RSMo. 214.387 was sufficient for the cemeteries to avoid Chapter 333 licensing (and a Chapter 436 contract and trust), the cemeteries would have avoided significant expenses if the Board had adopted an emergency rule with the passage of SB1. Accordingly, this author advocated for a rule to clarify when cemeteries would be exempted by the State Board.
The confusion caused by the overlap among Chapters 214, 333 and 436 resurfaced when the State Board rule was published this past March. The Associated Cemeteries of Missouri (Missouri’s state cemetery association) filed comments objecting to the rule. While most of the ACM’s arguments are difficult to follow, the State Board rule does expose certain cemeteries to regulation under Chapters 333 and 436. But, the ACM could not bring itself to identify the elephant in the room: religious cemeteries that both take a Chapter 214 exemption and sell cemetery services and merchandise through a preneed transaction.
In response to ACM’s objection, the State Board scheduled a special meeting to receive their comments and to reply. The ACM reiterated some of the same concerns that this author did ten years ago. And, the State Board replied in a manner consistent with their actions taken toward my clients years ago. 20 CSR 2120-3.560 is intended to assure cemeteries that comply with RSMo Section 214.387 that they will not be required to also comply with Chapters 333 and 436. Satisfied with that explanation, the ACM representative withdrew the association’s objection to the rule.
While the rule affords clarity to either endowed care cemeteries or non-endowed care cemeteries that comply with RSMo Section 214.387, the vast majority of Missouri cemeteries claim an exemption from Chapter 214. Accordingly, an unknown number of exempt Missouri cemeteries do have exposure to Chapters 333 and 436. This represents more of a problem with Chapter 214 than with Chapters 333 and 436. We will explore the Missouri Chapter 214 exemption in a future post.
While COVID-19 reminds the most vulnerable of our population of the need for funeral planning, safety concerns may preclude following advice given by both the Death Care industry and the Federal Trade Commission: visit multiple funeral homes and request their general price lists. The FTC mandated ‘general price list’ provides an itemized description of the services provided by the funeral home. (Funeral homes will also have separate prices lists for merchandise such as caskets, burial container and urns.) The FTC’s “Funeral Rule” requires funeral homes to provide the general price list to consumers who request it in person. While the Funeral Rule requires funeral homes to respond to telephone requests for prices, the Rule does not require the funeral home to provide the general price list when the request is made by phone. The Funeral Rule predates the email and requests made electronically.
It is too soon to tell whether COVID-19 will permanently alter consumers’ shopping habits, but funeral homes should provide general price lists pursuant to any method of request until a vaccine is developed for the coronavirus.
A funeral home’s best efforts to comply with COVID-19 restrictions can be undermined when the body is delivered to the grave for burial. While the funeral director has the authority to restrict attendance of a funeral service within his/her facilities, most funeral directors are powerless to restrict attendance at the gravesite. When family and friends were denied the ability to enter the funeral home for giving their last respects, then there will likely be a greater demand to attend the burial. The duty to enforce COVID-19 restrictions at the graveside belongs to the cemetery, not the funeral director.
In contrast to funeral home websites, most cemetery websites are silent about COVID-19 restrictions. The International Cemetery, Crematory and Funeral Home Association offers some policy statements to cemeteries, but those policies are for the most part passive in nature. The cemetery policy statement would cancel tours and programs but would not have the cemetery actively enforce attendance restrictions. In contrast the city of Montreal and the Dioceses of Sacramento have taken proactive, but different, approaches to COVID-19 restrictions.
Montreal has implemented a policy that limits access to its city cemeteries by appointment only. Burial services are limited to attendance by immediate family members, limited to 10 persons. Physical distancing measures will still apply on attendees, requiring them to maintain a distance of two meters between themselves. Cemeteries will be totally off-limits to visitors or people who wish to walk among the grounds.
The Diocese of Sacramento is not closing their cemeteries’ gates, but rather, is implementing strict rules at avoiding attendance at burials:
- All Vigils, Funeral Masses and Weekly Saturday 10am Masses are suspended until further notice.
- Only Immediate Graveside Burials will take place until further notice.
- No family or guests are permitted to attend.
- A Priest or Deacon, a funeral director/arranger and ground crew member will attend the committal.
- Families will be notified after the committal has been completed.
Cities seeking to reduce their COVID-19 exposure should consider the Montreal approach for their city cemeteries. Privately held cemeteries should discuss COVID-19 exposures with their liability insurance carrier. If proactive measures are required, the Sacramento approach may be the least disruptive to business.
Jo Ann Howard & Associates, P.C., the receiver of National Prearranged Services, recently sent out a notice to funeral home providers that suggests to us that a settlement with PNC Bank may be in the offering. The “Notice to Funeral Homes” advises that funeral homes will have until June 1st to provide documentation of losses on serviced NPS contracts, and that no loss claims will be accepted on contracts performed after May 1st. This has prompted questions from funeral directors whether they can expect a recovery from the receiver. That may depend on the nature of the settlement that has yet to be announced. The Notice would seem to suggest that the settlement is imminent.
Missouri law, like most states’, restricts cemeteries to being either exclusively for human burials or for animal burials. Accordingly, it has been illegal for Missouri cemeteries to honor a lot owner’s request to be buried with a pet. However, legislation has been introduced that would authorize Missouri cemeteries for the burial of both humans and their pets. HB 1652 would add a new definition to Missouri’s Cemetery Law:
(26) “Human and pet cemetery”, a tract of real estate separate from a cemetery, as defined in this section, in which both human remains and the remains of creatures other than human may be interred and memorialized at the discretion of the lot holder and subject to the rules of the human and pet cemetery. Burial space in a human and pet cemetery shall have the same meaning as defined in this section, but be applicable to pets as well as human dead. A human and pet cemetery shall be treated as a cemetery under sections 214.270 through 214.410 for purposes of licensing and endowed care. referred to as gardens. The cemetery is required to plat the garden’s grave spaces, and record that
Cemeteries seeking new sources of revenue may see an opportunity in this legislation. But that would depend upon whether a cemetery has land that could be dedicated for both human and pet burials. Cemeteries are typically developed section by section, commonly plat at the county recorder of deeds with a dedication of restrictions. Previously recorded cemetery plats would have been restricted to human burials for compliance with Chapter 214 of the Missouri law. Accordingly, the phrase “a tract of real estate separate from a cemetery” would be problematic for a cemetery that has dedicated all of its land for human burials. The cemetery cannot revise a garden plat once a human burial has been made to the garden. So, to take advantage of this legislation, a Missouri cemetery would have to start with land that has not been previously dedicated.
Fall is the time when many cemeteries host their most effective marketing program: voices from the past.
In conjunction with a local community theater, the cemetery will research their “residents” for interesting characters to portray. The community theater actors will then bring those characters to life during a tour of the cemetery. These tours generate revenues for the care of the cemetery, but more importantly, bring live residents who may not have family buried at the cemetery. The tour reinforces for first time visitors the purpose of memorializing a life.
One of my favorite tours is sponsored by Valhalla Cemetery in St. Louis. In contrast to many Voices tours, Valhalla provides a hay ride to visit the different grave locations. Another local favorite is sponsored by the Union Cemetery Historical Society of Kansas City. Union Cemetery is one of Kansas City’s oldest cemeteries, and is rich with history. A little closer to my home is the Voices of Olathe City Cemetery.
The cemetery is not dying, it is evolving.
Since its creation in the 1830’s, America’s public cemetery has gone through three major evolutions. When American was an agrarian society, we buried our dead in a small section of the family farm. As towns grew into cities, the public cemetery was created out of necessity. Located within the core of a city, the urban cemetery served a single utilitarian purpose of burying the dead. Within a couple of decades, urban cemeteries began to run out of space. In response to cemetery overcrowding and health risks, New York State passed the Rural Cemetery Act. The Rural Cemetery Act forced new cemeteries to locate on the outer fringes of cities, and opened the door to cemeteries becoming a commercial business. The Rural Cemetery Act also set the stage for an American cemetery that would thrive for more than a century: the memorial park.
The memorial park represents the golden age for cemeteries. A memorial park would be established on an expansive tract of land that included rolling hills, abundant trees and a lake or pond. This type of cemetery served as a destination for families who would spend a Sunday afternoon picnicking at the resting place of relatives. (This article includes pictures that reflect a societal perception of cemeteries.) But memorial parks began to lose public appeal as cities began to build municipal parks. (See “Our First Public Parks: The Forgotten History of Cemeteries”.)
By the middle of the Twentieth Century, cemetery developers left the memorial park model for the new lawn garden model. Lawn garden cemeteries emphasized a flat and open tree-less contour. Lawn garden cemeteries proved more profitable to operators because they were less expensive to develop and maintain. More grave spaces could be developed per acre of land, and flat surface memorials allowed large tractor mowers to be used. But after several decades of prominence, the lawn garden cemetery is now threaten by cremation.
As reported by the Detroit Free Press, an increasing number of cemeteries are making another pivot in response to rising cremation rates. Metro Detroit cemeteries are attempting to capitalize on their memorial park roots by converting underutilized grounds into small cremation gardens. Working with compact areas of the cemetery, they are developing walking paths, memorial benches, and memorial fountains. Several of the cemeteries are owned by Park Lawn, a Canadian death care conglomerate that has the resources to invest in new cremation gardens. But for smaller cemeteries, a half million dollar capital expenditure may be out of reach. So, we will use future posts to highlight how small cemeteries are making the cremation pivot.