H. B. 2292
(By Delegates Gallagher, Collins, Manuel,
Riggs and Compton)
[Introduced January 31, 1995; referred to the
Committee on the Judiciary then Finance.]
A BILL to amend and reenact article fourteen, chapter forty-seven
of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, all relating to the regulation of
preneed burial contracts; increasing penalties; providing
for criminal penalties.
Be it enacted by the Legislature of West Virginia:
That article fourteen, chapter forty-seven of the code of
West Virginia, one thousand nine hundred thirty-one, as amended,
be amended and reenacted are to read as follows:
ARTICLE 14. PRENEED BURIAL CONTRACTS.
§47-14-1. Declaration of policy; legislative intent.
It is contrary to public policy for any person to receive,
hold, control or manage funds or proceeds received from the sale
of, or from a contract to sell, funeral services, funeral goods, burial goods or any one or combination of them, where payments
for the same are made either outright or on an installment basis,
prior to the death of the person or persons so purchasing them,
or for whom they are purchased, unless that person holds,
controls or manages those funds subject pursuant to the
limitations and regulations prescribed by this article and the
legislative rules promulgated pursuant thereto.
It is the legislative intent that the provisions of this
article shall be construed as a limitation upon the manner in
which a person is permitted to accept funds in prepayment of
funeral services to be performed in the future, or funeral or
burial goods to be used in connection with the funeral or final
disposition of human remains, so that at all times members of the
public may have an opportunity to arrange and pay for funerals
for themselves and their families in advance of need while at the
same time providing all possible safeguards whereunder such
prepaid funds cannot be dissipated, whether intentionally or not,
in order that such funds are available for the payment of funeral
services so arranged. Further, it is the legislative intent that
no person may offer, sell or negotiate for the sale of a preneed
funeral service contract through anyone who is not licensed pursuant to the provisions of under this article.
§47-14-2. Definitions.
As used in this article, unless the context otherwise
requires:
(1) "Burial goods" means all merchandise supplied in regard
to burial, or entombment in a mausoleum or inurnment in a
columbarium, but does not include those services actually
performed by a cemetery acting only as such, or the sale by any
person of cemetery lots, land or interests therein, services
incidental thereto, or the sale by any person of markers,
memorials, monuments, equipment, crypts, urns, burial vaults or
vaults constructed or to be constructed in a mausoleum or
columbarium.
(2) "Contract beneficiary" means any person specified or
implied in a preneed funeral contract, upon whose death funeral
services, funeral goods or burial goods shall are to be
performed, provided or delivered.
(3) "Contract buyer" means any person, whether or not a
contract beneficiary, who purchases goods or services pursuant
to a preneed funeral contract but shall does not include any
person other than a natural person.
(4) "Contract seller" or "seller" means a person, his agent
or his employee, who sells, makes available or provides preneed
funeral contracts.
(5) "Department" "Division" means the office of the attorney
general.
(6) "Funds" means moneys or other consideration received
pursuant to the sale of a preneed funeral contract, including
interest accrued or earned thereon.
(7) "Funeral goods" means those items of merchandise sold or
offered for sale directly to the public by any person which will
be used in connection with a funeral or alternative for final
disposition of human remains, but does not include those
services actually performed by a cemetery acting only as such,
or the sale by the cemetery of cemetery lots, land or interest
therein, services incidental thereto, or the sale by any person
of markers, memorials, monuments, equipment, crypts, urns, burial
vaults or vaults constructed or to be constructed in a mausoleum
or columbarium.
(8) "Funeral services" means those services usually
performed by a funeral service licensee, including, but not
limited to, care and preparation of human remains and coordinating rites and ceremonies in connection with the
disposition of human remains carried out at the request of any
individual responsible for funeral and disposition arrangements.
(9) "Person" means a natural person, partnership, firm,
association or corporation, including any agent or employee
thereof residing in or doing business in this state who is
engaged in the selling of, making available of or providing of
"preneed funeral contracts," as defined herein, or who is the
recipient of funds paid for such purpose.
(10) "Person who makes a preneed funeral contract available"
means a person who, while not directly selling the contents of a
preneed funeral contract to the public through his efforts, makes
such contracts available to the public but shall does not include
manufacturers of funeral goods or burial goods.
(11) "Personal residence" means any residential building in
which one temporarily or permanently maintains his abode
including, but not limited to, hotels, motels, apartments,
nursing homes, convalescent homes, homes for the aged and public
and private institutions.
(12) "Preneed funeral contract" means any contract,
agreement, mutual understanding, series or combination of contracts, agreements and mutual understandings, other than a
contract of insurance, including a contract that is financed by
the purchase of an insurance policy or annuity, under which, for
a specified consideration paid in advance of death in a lump sum
or by installments, a person promises to furnish or make
available or provide funeral services, funeral goods or burial
goods for use at a time determinable by the death of the
"contract beneficiary" who is either named or implied.
(13) "Provider" means a person who, though not necessarily
a party to a preneed funeral contract does, through his efforts,
make makes the services or goods referred to in such a contract
available to the public pursuant to such a contract.
(14) "Trustee" means any natural person, partnership or
corporation, including any bank, trust company, savings and loan
association or credit union, which receives money pursuant to
any agreement or contract made pursuant to the provisions of
this article.
§47-14-3. Certificate of authority required; fees to go to
division of labor; special account established; duties
of
certificate holder.
(a) No person may receive, hold, control or manage any funds or other thing of value tendered as payment on any preneed
funeral contract unless such person has obtained a certificate of
authority or renewal thereof from the department division:
Provided, That no bank, trust company, savings and loan
association or other financial institution regulated by this
state or insured by an agency of the United States federal
government is required to obtain a certificate of authority.
(b) No person may sell, make available or be a provider of
a preneed funeral contract unless such person has obtained a
certificate of authority or renewal thereof from the department
division.
(c) Any person desiring to obtain a certificate of authority
shall file with the department division, upon forms provided by
the department, a completed application, together with a one two
hundred dollar application fee for his the original certificate
of authority. The fee shall be payable to a special revenue
account to be known as the "Preneed Burial Contract Regulation
Fund" to be used for the purpose of administering the provisions
of this article. The original application or a renewal
application shall contain at least the following information:
(1) The name and address of each person owning ten percent or more interest in the applicant;
(2) The experience of the applicant;
(3) Such other information as the department division may
require to determine to its satisfaction that the applicant
possesses the ability, experience, financial stability and
integrity to deal in negotiate preneed funeral contracts and to
provide the funeral services, funeral goods or burial goods as
specified therein; and
(4) The types of preneed funeral contracts proposed to be
written or otherwise dealt in used and copies of any writings
used pursuant thereto; and if a person is a party to or bound by
any such contract, an itemization of all outstanding preneed
funeral contracts, the dates upon which such contracts were
entered into, the names of all parties involved in such contracts
or having any right thereunder, the amount paid toward each
contract and, if payments are not completed, the amounts owing on
each contract and the present depository or holder of all such
funds.
(d) Each certificate of authority holder shall renew its
certificate of authority according to the schedule established by
this article. The fee for renewal shall be two hundred dollars, payable to the "Preneed Burial Contract Regulation Fund"
established by this section.
(e) Each certificate of authority holder shall file with the
department an annual report with its request for renewal which
shall contain the following:
(1) An identification of all outstanding preneed funeral
contracts, the dates upon which the contracts were entered into,
the names of all parties involved in such contracts or having any
right thereunder, including, but not limited to, the beneficiary,
the amount paid and interest earned on each contract and, if
payments are not completed, the amounts owing and the present
balance of funds applicable to each such contract.
(2) The date on which any insurance policy or annuity was
purchased to fund a preneed funeral contract, the amount paid for
each insurance policy or annuity, and the value of each insurance
policy or annuity.
(2) (3) The name of the contract seller and the name of the
provider of the services and goods and a statement that the
provider has sufficient funds available to perform all of its
obligations under its contracts.
(3) (4) A statement that the contract seller and the person receiving funds paid thereunder have complied with the trust
requirements of this article and of the present depository or
holder of such funds and a statement of the amounts thereof
itemized as to each such contract.
(4) (5) Any changes or amendments in any contracts or
obligations of the seller and provider that which have occurred
since the date of the last report.
(5) (6) Such other information as may be considered
necessary by the department division in order to meet its
responsibilities under this article.
This annual report shall also be required of Any person who
sells, provides or makes preneed funeral contracts available or
receives moneys or other consideration therefor from the public
or who otherwise holds or performs such contracts without a
certificate of authority is also required to file an annual
report with the division as prescribed in this subsection.
Beginning with the year one thousand nine hundred ninety-five,
the reporting year for an annual report shall end on the
thirty-first day of December, and all reports are to be filed
with the division no later than the thirty-first day of March of
the following year.
(f) An original certificate of authority expires on the
thirty-first day of December following its issuance. Beginning
with the calendar year one thousand nine hundred ninety-five, the
certificate of authority shall expire on the thirtieth day of
June following its issuance: Provided, That a temporary
certificate of authority may be issued by the division for a
period not to exceed six months for purposes of implementing the
change in the certificate of authority period for the year one
thousand nine hundred ninety-five. The fee for such temporary
certificate shall be one hundred dollars.
(g) Every application, request for renewal and statement
filed with the division either of the foregoing shall be sworn to
by the applicant or certificate holder. If the certificate
holder is a partnership, it shall be sworn to by each member
thereof. If the certificate holder is a corporation, it shall be
sworn to by the president and secretary thereof.
(h) Upon the department's being satisfied that the statement
and matters which may accompany it meet satisfaction of the
division, based upon the application statements and any other
information that the applicant meets the requirements of this
article and of the rules promulgated by the division its rules and regulations and, if by upon investigation by the department
division of the principals, including directors, officers,
stockholders, employees and agents of such person, nothing is
found to warrant denial of the certificate, the department shall
issue to such person the certificate of authority or renewal
thereof.
(i) (1) The certificate holder shall keep accurate accounts,
books and records in this state of all transactions, copies of
all contracts, dates and amounts of payments made and accepted
thereon, the name and address of each contract buyer, the name of
the beneficiary as to of each contract, the name of the trustee
holding trust funds received under each contract and such other
records as the department division may require to enable it to
determine whether such certificate holder is complying with the
provisions of this article. Such records must be kept until for
twelve months after the date of termination of the applicable
preneed contract.
(2) The certificate holder shall make all books and records
pertaining to preneed funeral contracts available to the
department division for examination. The department division may
not more frequently than once in any calendar year, unless pursuant to an order of court for good cause shown, during
ordinary business hours, cause to be examined the books, records
and accounts of the certificate holder with respect to funds
received by said certificate holder and for that purpose may
require the attendance of and examine, under oath, all persons
whose testimony he may require.
(3) The certificate holder shall pay for the cost of any
examination which is not the first one in that calendar year,
including the salary and traveling expenses paid to the person
making the examination during the time spent in making the
examination and in traveling to and returning from the point
where the records are kept and all other expenses necessarily
incurred in the examination. The department division shall
assess and collect a fee for each such examination, based on the
certificate holder's total outstanding preneed funeral service
contracts and the cost of such examination, but the cost to the
person being audited shall not be more than a total cost of five
hundred dollars for each such examination. This fee shall be
payable to the "Preneed Burial Contract Regulation Fund"
established in this section.
§47-14-4. Agents and employees; licenses required; fee to go to
division.
No agent or employee of a contract seller may sell preneed
funeral contracts in this state without having first obtaining
obtained a license from the department division. a license for
such purpose. The fee for such license and the annual renewal
thereof shall be is twenty-five dollars. These fees shall be
payable to the "Preneed Burial Contract Regulation Fund"
established by section three of this article. The department
division shall not issue such license without requiring an
applicant for the license, or if the applicant is a corporation,
its individual agents, to provide proof to warrant its issuance
by presenting with the application affidavits from his employer
stating that, to the employer's best information, knowledge and
belief the applicant merits a license. The acts of the agent
shall be considered acts of the employer. The department
division may require the applicant to pass a written examination
to ascertain if the applicant has sufficient knowledge of the
industry and the provisions of this article to properly carry
on engage in the business governed covered by the provisions of
this article.
§47-14-5. Disposition of proceeds; trusts; procedure for administration, division to promulgate rules.
(a) All sums paid or collected on such preneed funeral
contracts entered into after the seventh day of June, one
thousand nine hundred eighty-three effective date of this
article shall be handled in the following manner:
(1) The contract seller or other person collecting the funds
may retain for his own use and benefits and for the purpose of
covering his selling expenses, servicing costs and general
overhead, an amount not to exceed ten percent of the total
original amount agreed to be paid by the contract buyer as
reflected in the original preneed funeral contract. Such ten
percent may be retained one time only whether at the time the
contract is made, transferred, canceled or performed. Such ten
percent or other amount is exempt from the trust and refunding
provisions of this article;
(2) All of the funds collected under the contract, less the
amount authorized to be deducted under subdivision (1) of this
subsection, shall be deposited under the provisions of
subdivision (3) hereof;
(3) Unless otherwise specifically exempt under this article,
all funds paid to or collected by any person from a preneed funeral contract shall, within thirty days after receipt thereof
by such a person, be deposited in an account located within in
this state: (i) In the name of a trustee who is a contract
seller, provider or person making the preneed funeral contract
available, in a state or federally chartered and insured bank,
savings institution, building and loan institution located in
this state or in a state or federally chartered credit union
located in this state; or (ii) under the terms of a trust
instrument entered into with a national or state bank having
trust powers or a trust company located in this state. In the
event a preneed funeral contract is funded by the purchase of an
insurance policy or an annuity, the premiums paid on such
insurance policy or annuity shall be deposited with a licensed
insurer subject to the provisions of chapter thirty-three of this
code. The insurer accepting payments on such an insurance policy
or annuity shall serve as the trustee for such funds unless it
elects to enter into an agreement with a bank, trust company,
savings and loan association or credit union having trust powers
or a trust company located in this state whereby such entity
agrees to serve as the trustee.
(b) The funds to be deposited from more than one preneed funeral contract may at the option of the recipient thereof or
the certificate of authority holder, be placed in a common or
commingled trust fund in this state under a single trust
instrument.
(c) All deposits, other than for insurance policies or
annuities, shall be placed in an account with a trustee in the
name of the contract seller, provider or person making the
contract available, as set forth in the contract, to whom the
contract buyer makes payment. Records shall be maintained Each
trustee shall maintain records showing the trust's investment
and, as to each contract showing the amount paid, the amount
deposited of interest earned and the amount invested current
balance with respect to any particular buyer's contract.
(d) All funds required to be deposited and covered by this
article shall remain in accounts located within this state.
(e) All accounts of money deposited in any bank, savings
institution, building and loan association or credit union in
accordance with the provisions of this article are subject to
periodic examination by the department division of banking of
this state.
(f) The department division shall promulgate legislative rules and regulations in accordance with the provisions of
chapter twenty-nine-a of this code for the purpose of
administering the provisions of this article.
§47-14-6. Withdrawal of funds.
(a) Disbursements of funds discharging any preneed funeral
contract shall be made by the trustee to the person named in the
contract upon receipt of a certified photostatic copy of the
death certificate of the contract beneficiary and evidence
satisfactory to the trustee that the preneed funeral service or
preneed burial supply contract has been fully performed. In the
event that, after the death of the contract beneficiary, the
contract services or goods are not provided because they are not
desired by the heirs or by the personal representative of the
contract beneficiary, the trustee funeral home obligated to
perform the contract shall have authority to expend one hundred
percent of the amount placed in the trust account and paid on the
contract perform the contract by expending all of the funds held
on deposit, in any general locality within or outside of this
state, which shall be the burial location of the contract
beneficiary. If the service and goods are not provided upon the
death of the contract beneficiary because of actions of the seller, provider or person making the preneed funeral contract
available, then all of the funds held on deposit shall in ten
days be refunded to the contract buyer or his legal
representative who also has available any other remedy set forth
in this article.
(b) Any contract buyer or legally authorized person, acting
in his behalf, may cancel a preneed funeral contract prior to the
death of the contract beneficiary by notifying in writing the
contract seller or present obligor of the provisions thereof, if
a different person, of such desire to cancel. The seller or
obligor shall, in ten days after receipt of such notice, notify
the trustee of such cancellation and the trustee shall within
thirty days after receipt of written notification pay to the
contract buyer, or his legal representative all funds placed in
the trust account and paid on the contract.
(c) If the contract buyer is more than one hundred eighty
days in default with respect to any payment or installment due on
or pursuant to the preneed funeral contract, the contract seller
or provider may, on ten days' prior written notice, cancel the
contract. All funds in the trust account shall be refunded to
the contract purchaser or to the estate of the contract beneficiary.
(d) The seller of a preneed funeral contract may not cancel
the contract unless the contract is in default as to the buyer's
obligations.
(e) Payment by any depository or any trustee made in good
faith pursuant to the terms of this section shall forever relieve
such depository or trustee, as such, for any further liability
for such funds under the contract and in law.
§47-14-7. Income on trust accounts.
(a) Whether the payments on a preneed funeral contract are
placed in a bank, savings institution, building and loan
association, credit union or in a common trust fund as permitted
in this article, or are part of a commingled common trust fund
as permitted in this article, the income from a contract deposit,
except as otherwise provided herein, shall accrue to the
individual account until such time as the burial goods, funeral
goods and funeral services for the contract beneficiary are
required to be delivered and returned by reason of such
beneficiary's death.
(b) Upon the death of such contract beneficiary, the total
amount in the trust account attributable to the contract beneficiary shall be disbursed as follows:
(1) If the cost of the goods and services contracted for at
the time of such beneficiary's death exceeds the amount paid
under the contract, then the provider may have and use the
principal and so much of the interest as may be necessary to
defray such additional cost over and above the contract cost:
Provided, That to the extent that the cost of goods and services
provided exceeds the principal and interest thereon, the provider
shall provide and make available the goods and services
contracted for at no additional cost to the contract purchaser or
to the heirs or personal representative of the contract
beneficiary;
(2) To the extent the principal and interest thereon exceed
the cost of the goods and services contracted for, then the
provider may retain only so much of the principal and interest
necessary to defray the total of such cost and the balance shall
be returned to the estate of the contract beneficiary or to the
contract buyer as may be proper under the provisions of this
article or the legislative rules and regulations of promulgated
by the department division.
(c) The trustee for the trust shall make annual valuations of assets held in trust. No person may withdraw income from the
trust, except for the purpose of executing the terms of the
contract, disbursing the trust proceeds as provided in this
article and paying costs incidental to the trust, including, but
not limited to, reasonable trust fees and tax assessments.
§47-14-8. Limitations on enforcement of contract; appointment
and removal of trustees; standards for
administration of trusts; contracts may be
irrevocable; "Preneed Guarantee Fund" established;
assignment of contract allowed; credit life
insurance allowed; successor in interest defined.
(a) A contract seller, provider or person making the preneed
funeral contract available may not enforce a preneed funeral
contract made in violation of this article, but a contract buyer
or his heirs or legal representative may recover all amounts
paid under his contract and all accrued income on such amount
where the contract seller, provider or person making the preneed
funeral contract available has violated the provisions of this
article as to such contract. The right of such recovery is in
addition to the remedy provided for in section twelve of this
article.
(b) A contract seller, provider or person making the preneed
funeral contract available may appoint a board of at least three
individual trustees under a trust instrument, if the trustee is
other than a chartered state or national bank or trust company
under the supervision of the department division of banking of
this state, to serve as trustees of its trust funds. Each
individual trustee shall be a resident of this state and shall
hold office subject to the direction of the seller. Not more
than one member of the board of trustees of a trust fund may have
a proprietary interest in the seller appointing trustees or in
any certificate of authority holder who is placing funds in such
trust.
Individual trustees of a trust fund established under the
provisions of this article shall file a fidelity bond with a
corporate surety thereon which is licensed to do business in
this state with the department in an amount equal to the funds
in trust, guaranteeing payment of damages occasioned by breach
of the trustees' fiduciary duties. The trustees of one or more
trust funds need file only one such bond. The aggregate
liability of the surety shall in no case exceed the face amount
of the bond. The department division or any aggrieved person claiming against any bond required by this section may maintain
an action against the trustee and the surety. Individual
trustees shall take no action respecting trust funds unless
there is on file with the department division a bond as required
by this section. If the trustees are individuals, the department
division may suspend the certificate of authority of any
contract seller, provider or person making the preneed funeral
contract available having trust funds with respect to which
there is no bond on file with the department division as
required by this section.
(c) All trustees under the terms of this article are subject
to the following investment standards: In acquiring, investing,
reinvesting, exchanging, retaining, selling and managing property
for the benefit of others, trustees have the responsibilities
which customarily attach to such offices and to the type of
estates entrusted to their care and shall exercise the judgment
and care under the circumstances then prevailing which men of
prudence, discretion and intelligence exercise in the management
of their own affairs, not in regard to speculation but in regard
to the permanent disposition of their funds, considering the
probable income as well as the probable safety of their capital.
(d) No preneed funeral contract may restrict any contract
buyer who may make his or her contract irrevocable in accordance
with the laws and regulations of this state. Irrevocable preneed
contracts may be transferred pursuant to this section.
(e) All preneed funeral contracts must be in writing and no
contract form may be used without prior approval of the
department division.
(f) Each contract buyer shall pay a fee of five dollars to
the contract seller. Beginning on the first day of July, one
thousand nine hundred ninety-five, the contract buyer shall pay
a fee of ten dollars to the contract seller. Beginning on the
first day of January, one thousand nine hundred ninety-six, the
contract buyer shall pay a fee of fifteen dollars to the contract
seller. Beginning on the first day of January, one thousand nine
hundred ninety-seven, the contract buyer shall pay a fee of
twenty dollars to the contract seller. The contract seller is to
who in turn will forward such sum to the department within ten
days after execution of the preneed funeral contract. The
contract shall be recorded in the department division. Within
ten days after receiving the fee, the department division will
notify the contract purchaser, by mail, of the recording. The Forty percent of the contract recording fees shall be placed by
the department division in an account under the department's
division's control entitled "Preneed Guarantee Fund," and the
income thereon shall accrue to the fund. The department division
may use such income, if necessary in its discretion, to enforce
this article. The remaining sixty percent of the contract
recording fee shall be placed by the division in the "Preneed
Burial Contract Regulation Fund" as provided in section three of
this article.
In the event any buyer of any preneed funeral contract is
unable to receive the benefits of his contract, or to receive
the funds due by reason of his cancellation thereof, such buyer
may apply to the department division on a form supplied by the
department division. Upon the finding of the department division
that said benefits or return of payment is not available to the
buyer, the department division will cause to be paid to the said
buyer from the "Preneed Guarantee Fund" the amount actually paid
by the buyer under his or her the contract to the extent funds
are available in the "Preneed Guarantee Fund". In the event
multiple claims are made and there are insufficient funds in the
"Preneed Guarantee Fund" to satisfy all claims in full, payments from the "Preneed Guarantee Fund" shall be made on a pro rata
basis. If the seller's liability for default is subsequently
proven, any award made by a court of law shall be made payable
to the "Preneed Guarantee Fund" as provided in this section.
"Preneed Burial Contract Regulation Fund" established in section
three of this article.
(g) Notwithstanding the provisions of subsection (f),
section five of this article, delivery of funeral or burial goods
prior to the death of the person for whose benefit they are
purchased does not constitute performance or fulfillment, either
wholly or in part, of any preneed contract or series of
contracts.
(h) The contract buyer may, on acceptance in writing by a
transferee, transfer the obligations of the seller, provider or
person making the preneed funeral contract available to other
persons within or without this state. The funds on deposit for
the contract on and any future payments, if any, by the contract
buyer shall then be transferred to and deposited under applicable
state law, if any, in the state wherein the contract buyer
resides or to a state where the obligations of the provider of
the funeral service and goods will be fulfilled.
Upon such transfer, the contract buyer and transferee shall,
in writing, release the contract seller, provider or person
making the preneed funeral contract available and the trusts, as
applicable, for any further liability under such contract.
Nothing in this article or in any preneed contract may limit
the right of a contract buyer to assign such a contract to any
person whomsoever except as specifically provided herein and
except that if the assignee is a resident of this state or the
contract is to be fulfilled by the assignee in this state, the
assignee must hold a certificate of authority under this article.
If the contract is to be fulfilled in another state, the assignee
must in all respects be in compliance with the preneed funeral
law of that state, if any.
(i) Notwithstanding any other law of this state, a contract
seller, provider or person making the preneed funeral contract
available may, if requested by the contract buyer where the
contract is to be paid in installments, provide for the sale of
credit life insurance on the life of the contract beneficiary in
order to have the funds necessary to make payment in full under
the contract if the beneficiary should die prior to completing
all the payments due. The seller shall disclose all costs of such insurance in clear language and shall inquire of the buyer
whether he understands the terms of the insurance contract and
is aware of the total cost of the insurance.
(j) In the event any certificate of authority holder or
anyone in violation of the article who has outstanding preneed
funeral contracts and is not the current holder of a certificate
of authority sells its business, through the sale of assets or
stock, which is involved in the fulfillment of obligations under
preneed funeral contracts, the buyer of such business is a
"successor in interest" and is covered not only by this article
but shall assume the obligations of seller under seller's
outstanding preneed funeral contracts regardless of whether
seller made known to buyer the existence of such contract or
contracts.
§47-14-9. Forms and rules.
The administration and enforcement of the provisions of this
article are vested in the department division. The department
division shall prepare and furnish all forms necessary under this
article, including forms for applications for certificates of
authority, for renewals thereof, for annual statements, for other
required reports and for preneed funeral contracts. The department division shall promulgate, in accordance with the
provisions of chapter twenty-nine-a of this code, such
legislative rules and regulations as may be necessary to
effectuate the purpose of this article.
§47-14-10. Solicitation.
(a) Any contract seller or agent or employee or person
acting in behalf of any such person may not:
(1) Directly or indirectly call upon individuals or persons
in hospitals, rest homes, nursing homes or similar institutions
for the purpose of soliciting preneed funeral contracts or making
funeral or final disposition arrangements without first having
been specifically requested by such person to do so;
(2) Directly or indirectly employ any agent, assistant,
employee, independent contracting person or any other person to
call upon individuals or persons in hospitals, rest homes,
nursing homes or similar institutions for the purpose of
soliciting preneed funeral contracts or making funeral or final
disposition arrangements without first having been specifically
requested by such person to do so;
(3) Solicit relatives of persons whose death is apparently
pending or whose death has recently occurred for the purpose of providing funeral services, final disposition, burial or funeral
goods for such person;
(4) Solicit or accept or pay any consideration for
recommending or causing a dead human body to be provided funeral
services and funeral and burial goods by specific persons, or the
services of a specific crematory, mausoleum or cemetery except
where such arrangement is the subject of a preneed funeral
contract;
(5) Solicit by telephone call or by visit to a personal
residence, unless such solicitation has been previously requested
by the person solicited or by a family member residing at such
residence.
(b) Notwithstanding any other provision of law to the
contrary, nothing in this article shall be construed to restrict
the right of a person to lawfully advertise, to use direct mail
or otherwise communicate in a manner not within the above
prohibition of solicitation or to solicit the business of anyone
responding to such communication or otherwise initiating
discussion of the goods or services being offered.
(c) Nothing herein shall be construed to prohibit general
advertising.
(d) Anyone making a personal or written solicitation for a
preneed funeral contract shall, at the very first instance,
divulge the real reason for the contract or solicitation.
(e) The department division may adopt promulgate legislative
rules regulating the solicitation of preneed contracts by
certificate holders or registrants to protect the public from
solicitation practices which utilize undue influence or which
take undue advantage of a person's ignorance or emotional
vulnerability.
§47-14-11. Disciplinary proceedings; revocation of license or
certificate; liquidation upon violation.
(a) The following acts constitute grounds for which the
disciplinary actions in subsection (b) of this section may be
taken against any person holding a certificate of authority or
license pursuant to this article or any person engaged in the
sale of preneed funeral contracts without a certificate of
authority or license pursuant to the provisions of this article:
(1) Violating any provisions of this article;
(2) Attempting to procure or procuring a certificate of
authority or license under this article by bribery or fraudulent
misrepresentation;
(3) Having had any certificate of authority or license to
sell preneed funeral contracts revoked, suspended or otherwise
acted against, including denial of licensure, by a licensing
authority of another jurisdiction;
(4) Being convicted or found guilty of a crime in any
jurisdiction which directly relates to the sale of preneed
funeral contracts;
(5) Making or filing a report required by this article which
the certificate holder knows to be false or knowingly failing to
make or file a report required by this article;
(6) Advertising goods or services in a manner which is
fraudulent, false, deceptive or misleading in form or content;
(7) Engaging in fraud, deceit or misrepresentation in the
conduct of business of the certificate holder;
(8) Failing to comply with a lawful order of the department
division;
(9) Knowingly making any false or misleading statement, oral
or written, directly or indirectly, regarding the sale of
services or merchandise in connection with the conduct of the
certificate holder's business;
(10) Not maintaining the funds received under the contracts as required by this article;
(11) Failing to cancel a preneed funeral contract upon
proper request and refund that portion of the amount paid on such
a contract as required by this article;
(12) Failing to renew or qualify for renewal of its
certificate of authority or license;
(13) Failing to produce records in connection with the
certificate holder's business or has otherwise failed to comply
with the provisions of this article or any rule promulgated by
the department division pursuant to this article; or
(14) Soliciting by the certificate holder, its agents,
employees or representatives through the use of fraud, undue
influence, misrepresentation or overreaching or other forms of
vexatious conduct as defined by law, this article or the
legislative rules and regulations of promulgated by the
department division. as to preneed funeral contracts.
(b) Upon the violation of any of the provisions of this
article, determined in an administrative hearing after notice and
an opportunity to be heard, the department may institute
revocation proceedings regarding a license to operate a funeral
home or a certificate of authority to sell preneed funeral contracts, or both the license and the certificate of authority
or file a complaint in a court of competent jurisdiction setting
forth the relevant facts and praying for the issuance of an order
to show cause why the license to operate a funeral home or the
certificate of authority to sell preneed funeral contracts, or
both the license and the certificate should not be revoked.
(1) Upon application for such rule to show cause, the court
may, in its discretion, issue an injunction restraining the
defendant from transacting further business until further order
of the court.
(2) Upon return of such order to show cause, the court shall
hear and try the issue forthwith. If the court determines that
the person so charged as defendant in such proceeding has not
been guilty of the omission, failure or violation alleged in the
complaint by the department division, the court shall dismiss
such complaint. If the court finds that the charges of the
department division are supported by the evidence, it may enter
an order directing the revocation of a license to operate a
funeral home or of a certificate of authority to sell preneed
funeral contracts, or the revocation of both the license and the
certificate of authority.
(3) In any such order of liquidation or in any order or
orders thereafter entered, the court shall provide a notice to
creditors, filing of claims and all other details necessary and
essential to an estate in receivership.
(c) When the department division finds any certificate
holder or licensee guilty of any of the acts set forth in
subsection (a) of this section after an administrative hearing,
or finds that any funeral services or funeral or burial goods are
offered for sale when the offer is not a bona fide offer to sell
such services or goods, it may enter an order imposing one or
more of the following penalties:
(1) Denial of an application for a certificate of authority
or license, including a renewal;
(2) Revocation or suspension of a certificate of authority
or license;
(3) Imposition of an administrative fine not to exceed one
thousand dollars for each county where there are separate
violations;
(4) Issuance of a reprimand; or
(5) Placement of the licensee or certificate holder on
probation for a period of time and subject to such conditions as the department division may specify.
(d) All preneed funeral contract buyers have a priority in
claims against the provider, to the extent that their interest is
set forth in this article. Such priority constitutes a statutory
lien at the time the contract was executed to the extent payments
on the contract were made and interest has accrued.
(e) For purposes of this section, the acts or omissions of
any person employed by or under contract to or on behalf of the
certificate holder shall be treated as acts or omissions of the
certificate holder.
(f) Subject to the provisions of subsection (b), section
seven of this article, all prices or quotations of prices
contained in any preneed funeral contract shall be fully and
clearly stated.
§47-14-12. Civil action; attorney's fees.
(a) The failure of a certificate holder, or a licensee or of
any other person engaged in the sale of preneed funeral contracts
without a certificate of authority or license issued pursuant to
the provisions of this article to comply with the provisions of
this article gives rise to a civil cause of action in favor of
any aggrieved consumer, contract guarantor or contract purchaser. Upon entry of a judgment for damages in favor of the plaintiff,
the trial court shall award punitive damages in the amount of
three times the actual damages awarded in the judgment.
(b) The prevailing party, after judgment in trial court and
exhaustion of all appeals, if any, shall receive reasonable
attorney's fees and costs from the nonprevailing party.
(c) The attorney for the prevailing party shall submit a
sworn affidavit of his time spent on the case and his costs
incurred for all the motions, hearings and appeals to the trial
judge who presided over the civil case.
(d) The trial judge shall award the prevailing party the sum
of reasonable costs incurred in the action, plus a reasonable
legal fee for the hours actually spent on the case as sworn to in
an affidavit.
(e) Any award of attorney's fees or costs shall become part
of the judgment and subject to execution as the law allows.
(f) The division shall deposit any penalties or attorney's
fees recovered by the division in the "Preneed Burial Contract
Regulation Fund" for the purpose of administering and enforcing
the provisions of this article.
§47-14-13. Penalty.
Any person who receives, holds, manages or controls any
funds or proceeds realized from the writing and issuing of a
preneed funeral contract or who disburses such funds or proceeds
in any manner other than as authorized or required by this
article or who has violated any of the provisions of this article
or the legislative rules and regulations promulgated hereunder is
guilty of a misdemeanor felony, and, upon conviction thereof,
shall be punished by a fine of not less than one five hundred nor
more than one five thousand dollars for each occurrence, or
imprisoned in the appropriate regional county jail for a term not
to exceed less than one year or both fined and imprisoned.
§47-14-14. Severability.
If any section, subsection, subdivision, subparagraph,
sentence or clause of this article is adjudged to be
unconstitutional or otherwise invalid, such invalidation shall
not affect the validity of the remaining portions of this
article, and, to this end, the provisions of this article are
hereby declared to be severable.
NOTE: The purpose of this bill is to clarify the type of
contract covered by this article, increase the fees for new
certificates of authority issued under this article, and clarify the applicability of enforcement powers against noncertificate
holders. It also simplifies the annual reporting requirements so
that insurance companies holding moneys paid in a preneed funeral
contract need only provide the information necessary for the
annual report to the funeral establishment this avoiding
duplication of filing. It also creates a reporting period that
follows traditional financial accounting procedures.
It protects purchasers of preneed funeral contracts who
finance such contracts with insurance or annuities by requiring
the insurer to be licensed and subject to the jurisdiction of the
West Virginia Insurance Commissioner.
In the event the beneficiary or personal representative of
the beneficiary of a preneed funeral contract does not want the
services covered by the contract, this bill permits a funeral
director to perform the contract as the deceased intended.
The Bill increases the funds paid to the "Preneed Guarantee
Fund" so a greater amount of moneys are available to cover
losses. It also clarifies that claims against the "Preneed
Guarantee Fund" can only be made to the extent funds are
available and that payments from the "Preneed Guaranteed Fund"
must be paid on a pro rata basis if funds are insufficient to
cover all claims.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.