We start our review of the case against the Missouri Funeral Trust with the procedural issues raised in the State Board’s Complaint and MFT’s Answer. From the Answer, we learn that the preneed financial examination was initiated on January 20, 2011. But, it was almost three years before an examination report was sent by the State Board to MFT. The early financial examinations often involved an on-site visit that lasted several weeks. For a seller the size of MFT, the on-site visit could have lasted a few months. But, on several occasions, the MFT openly challenged the Board’s authority to request records and documents, and instructed funeral home providers that they were not required to respond to State Board inquiries. So, the three year delay in the MFT examination report was probably due to MFT’s resistance to records and document requests.
For most preneed sellers, an examination report comes within a few weeks after the on-site review is completed. The exception report identifies issues which the State Board seeks clarification or changes from the preneed seller. According to the State Board complaint, the MFT examination report listed 17 exceptions. Based on our experience, 17 exceptions is not that high of a number. However, these may be categories of exceptions that involve multiple issues per exception.
According to the pleadings, the State Board and MFT met on May 29, 2014, to discuss the examination report, and thereafter traded a handful of correspondences until November 2014. Then, two years passed before the State Board filed its Complaint with the Missouri Administrative Hearing Commission. The delay in filing the Complaint is due in part to the MFT’s May 2015 lawsuit against the State Board for alleged breaches of confidentiality. If the lawsuit was meant to head off a State Board disciplinary action, it worked. And, the lawsuit also had a chilling effect on State Board efforts to establish audit procedures and preneed record keeping standards for future financial examinations. Unaware of the MFT exception report, industry members wrangled with the State Board for more than a year over record keeping proposals and the scope of future audits. When a consensus could not be reached at the State Board’s September 2016 meeting, the MFT Complaint was filed a few weeks later.
While the MFT had expressed a willingness to participate in discussions to re-work the record keeping proposal, it proved to be too little, too late.