ENGROSSED
COMMITTEE SUBSTITUTE
FOR
H. B. 2292
(By Delegates
Gallagher, Collins, Manuel,
Riggs and Compton)
(Originating in the House Committee on the Judiciary)
[February 28, 1995]
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, relating to the regulation of
persons who offer preneed funeral contracts; legislative
policy and intent; definitions; requirement of certificate
of authority from the consumer protection division of the
office of the attorney general for persons controlling funds
paid pursuant to a preneed funeral contract and for persons
who offer preneed funeral contracts; application for
certificate; biennial renewal; certificate fees;
establishment of preneed burial contract regulation fund;
other information to be submitted with application; biennial
report; temporary certificate and fee therefor; issuance of certificate; records of certificate holder; license for
agents and employees of preneed funeral contract sellers;
fee and requirements for license; deduction of overhead
costs from preneed funeral contract proceeds; required
deposit of preneed funeral contract proceeds or insurance
premiums covering the same; restrictions on management of
proceeds; review of accounts by division of banking;
promulgation of legislative rules by the consumer protection
division of the office of the attorney general; disbursement
of proceeds; authority to provide services or goods after
death of contract beneficiary; refund of proceeds;
cancellation of contract; immunity from civil liability;
interest on proceeds; unenforceable contracts and recovery
of proceeds; trustees and fidelity bond for trust funds;
investment standards; irrevocable contracts; contract
recording requirements and fee; division of recording fee
between preneed burial contract regulation fund and preneed
guarantee fund; payment of lost benefits from preneed
guarantee fund on pro rata basis; performance and
fulfillment of contract; transfer and assignment of
contract; credit life insurance; sale of business; forms;
limitation of solicitation of contracts; prohibited acts; proceedings, actions and remedies upon occurrence of
prohibited acts; statutory lien for claim against contract
provider; liability of certificate holder for acts and
omissions of employees and agents; specific civil actions
against contract providers; award of punitive damages and
attorney fees and deposit thereof into preneed burial
contract regulation fund; severability clause; and 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 to read as follows:
ARTICLE 14. PRENEED FUNERAL 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
consumer protection
division of the office of the attorney general.
(6) "Funds" means moneys or other consideration,
other than premiums for insurance policies or annuities paid to a life
insurance company, 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
licensed funeral
service licensee establishment or
director, 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
therein.
(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.
The term "trustee" does not include an insurance company
licensed pursuant to chapter thirty-three of this code.
§47-14-3. Certificate of authority required; fees to go to
division; 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
or life insurance companies licensed pursuant to the
provisions of chapter thirty-three of this code 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 division, 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, in
the case of a funeral service provider, 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
per each entity, payable to the "Preneed Burial Contract
Regulation Fund" established by this section.
(e) Each certificate of authority holder shall file with the
department division an annual a biennial 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
by the parties, the names of all parties involved in such
contracts or having any right thereunder, including, but not
limited to, the
contract 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 such insurance policy or annuity, and the present value of
each such 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
the name and address of the
present depository or holder of such funds
, and a statement of
all 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 with or without
a certificate of authority is required to file a biennial report
with the division as prescribed in this subsection. Beginning
with the year one thousand nine hundred ninety-five, the
reporting period for which a biennial report is to be made
pursuant to this section shall be a calendar year ending on the
thirty-first day of December every other year. All such reports shall be filed with the division no later than the thirty-first
day of March of the year following the reporting period.
(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 reporting 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
division 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
contract 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 the division 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 benefit 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.
Upon
retaining such amount, no further deduction from any sums
collected pursuant to the contract for such purposes shall be
made by any such seller or person or their assignees or
transferees. 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 as the result
of a preneed funeral contract shall, within thirty days after
receipt thereof by such a person, be deposited 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 an insurer licensed pursuant to the
provisions of chapter thirty-three of this code.
(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 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 party obligated to provide the
funeral services, funeral goods or burial goods under the
contract shall have authority to
expend one hundred percent of
the amount placed in the trust account and paid on the contract
in any general locality within or outside of this state, which
shall be the burial location of the contract beneficiary provide
such services or goods despite the desires to the contrary
expressed by such heirs or personal representative. 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
credit
of the individual account
of such contract 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 division 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 subject to the provisions
of this article
are subject shall comply with 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 of this state.
Irrevocable preneed contracts may
be transferred pursuant to the provisions of 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
contract recording 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
and a copy of the
contract to the
department division within ten days after
its
execution
of the preneed funeral contract. The
contract shall be
recorded in the department division shall record the contract.
Within ten days after receiving the fee, the
department division
will notify the contract
purchaser buyer, by mail, of the recording.
The Forty percent of the contract recording fees fee
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.
For fiscal years beginning
after the thirtieth day of June, one thousand nine hundred
ninety-six, no expenditures or disbursements may be made from the
"Preneed Burial Contract Regulation Fund" and the "Preneed
Guarantee Fund" created in this article except by appropriation
by the Legislature. 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
contract buyer of any preneed funeral
contract is unable to receive the benefits of
his the contract,
or to receive the funds due by reason of his cancellation
thereof, such buyer may apply
therefor 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 judgment resulting
therefrom shall, to the extent that it is for amounts paid from
the "Preneed Guarantee Fund", be ordered payable to the
"Preneed
Burial Contract Regulation Fund" established in section three of
this article "
Preneed Guarantee Fund"..
(g) Notwithstanding
the provisions any other provision of
subsection (f), section five of this article
to the contrary,
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 from further liability under such contract.
Nothing in this article or in any preneed
funeral 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) may be taken against any
person holding a certificate of authority or license pursuant to this article No person shall:
(1)
Violating Violate any provisions of this article;
(2)
Attempting Attempt to procure or
procuring procure a
certificate of authority or license under this article by bribery
or fraudulent misrepresentation;
(3)
Having Have 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 Have been convicted or found guilty of a crime in
any jurisdiction which directly relates to the sale of preneed
funeral contracts;
(5)
Making or filing Make or file a report required by this
article which the certificate holder knows to be false or
knowingly
failing fail to make or file a report required by this
article;
(6)
Advertising Advertise goods or services in a manner
which is fraudulent, false, deceptive or misleading in form or
content;
(7)
Engaging Engage in fraud, deceit or misrepresentation in
the conduct of business
of the certificate holder governed by the provisions of this article;
(8)
Failing Fail 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 Fail to maintain the funds received
under the contracts as required by this article;
(11)
Failing Fail 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 Fail to renew or qualify for renewal of its
certificate of authority or license;
(13)
Failing Fail to produce records in connection with the
certificate holder's business or
has otherwise
failed fail to
comply with the provisions of this article or any rule
promulgated by the
department division pursuant to this article;
or
(14)
Soliciting Solicit 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 division may institute
revocation proceedings regarding a license to operate a funeral
home establishment or a certificate of authority
or license to
sell preneed funeral contracts, or both the license and the
certificate of authority
or license, 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
or license to sell preneed funeral contracts, or both the license
and the certificate should not be revoked
or the person should
not be enjoined from engaging in business governed by the
provisions of this article.
(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
or license to sell
preneed funeral contracts, or the revocation of both the license
and the certificate of authority
or license, or permanently
enjoining the person from engaging in business governed by the
provisions of this article until its requirements are met. The
court shall have the authority to order the liquidation of the
business upon a finding that the person engaged therein is in
violation of any provision of this article.
(3) In any such order of liquidation or in any order or
orders thereafter entered, the court shall provide a notice to
creditors
, for the filing of claims and
otherwise direct all
other
details matters necessary and essential to
govern an estate in receivership.
(c) When the
department division finds
that any
certificate
holder or licensee guilty of any of the acts set forth in person
has violated the provisions of 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 required 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
the division, 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.
(a) Any person who willfully and knowingly conceals or embezzles any funds paid as the result of a preneed funeral
contract is guilty of a felony and, upon conviction thereof,
shall be imprisoned in the penitentiary for a definite term of
not less than three years and fined not more than ten thousand
dollars.
(b) Except as provided by subsection (a) of this section,
Any 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 violates any
of the provisions provision of this
article or the
legislative rules
and regulations promulgated
hereunder is guilty of a misdemeanor 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 confined in
the county jail for a term
not to exceed one year
, or both fined and
imprisoned confined.
§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.