ENGROSSED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 148
(By Senators Ross, Love, Miller, Plymale and Sharpe)
__________
[Originating in the Committee on the Judiciary;
reported February 24, 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, sell or negotiate for the sale of
preneed funeral contracts; setting forth 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 contract; application
for certificate; biennial reporting period; renewal of
certificate of authority; providing for a temporary
certificate and establishing a fee therefor; issuance of
certificate; records of certificate holder; license for
agents and employees of preneed funeral contract sellers; fee and requirements for license; limiting authorized
deduction of overhead costs from contract proceeds;
deposit of contract proceeds or insurance premiums;
restrictions on management of proceeds; review of accounts
by division of banking; promulgation of legislative rule
by the consumer protection division of the office of the
attorney general; disbursement of proceeds; authority to
provide services or goods after the death of a 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; allocation of recording fee to 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; limitations on
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; 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 are 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 pursuant to the
limitations 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 contract through
anyone who is not licensed pursuant to the provisions of this
article.
§47-
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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 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 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) "Division" means the consumer protection division in
the office of the attorney general.
(6) "Funds" means moneys or other consideration, other
than premiums for insurance policies or annuities, 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 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
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, 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, 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; regulation fund; 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 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 division.
(c) Any person desiring to obtain a certificate of
authority shall file with the division, upon forms provided by
the division, a completed application, together with a two
hundred dollar application fee for the original certificate of
authority. The fee shall be payable to the division and
deposited in the "Preneed Burial Contract Regulation Fund"
heretofore established by the prior enactments of this section.
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 division may require to
determine to its satisfaction that the applicant possesses the
ability, experience, financial stability and integrity to
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 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 division a biennial report 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.
(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.
(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.
(5) Any changes or amendments in any contracts or
obligations of the seller and provider which have occurred
since the date of the last report.
(6) Such other information as may be considered necessary
by the division in order to meet its responsibilities under
this article.
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) 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 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 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 and, if upon investigation by
the division of the principals, including directors, officers,
stockholders, employees and agents of such person, nothing is found to warrant denial of the certificate, the division shall
issue 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 of each contract, the name
of the trustee holding trust funds received under each contract
and such other records as the division may require to determine
whether such certificate holder is complying with the
provisions of this article. Such records must be kept 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 division for examination. The 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 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 obtained
a license from the division. The fee for such license and the
annual renewal thereof is twenty-five dollars. These fees
shall be payable to the "Preneed Burial Contract Regulation
Fund" established by section three of this article. The
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
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 engage in the business governed 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, 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 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 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) of this subsection;
(3) Unless otherwise specifically exempt under this
article, all funds paid to or collected by any person 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 delivered to 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. Each trustee shall maintain
records showing the trust's investment and, as to each
contract, showing the amount paid, the amount of interest
earned and the 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 division of banking of this state.
(f) The division shall promulgate legislative rules 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 contract has been fully performed. In the event that, after the death
of the contract beneficiary, the contract services or goods are
not desired by the heirs or by the personal representative of
the contract beneficiary, the party obligated to provide the
funeral services, funeral goods or burial goods under the
contract shall have authority to 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
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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 promulgated
by the 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
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8. Limitations on enforcement of contract; appointment
and removal of trustees; standards for administration of
trusts; contracts may be irrevocable; "Preneed Guarantee
Fund"; assignment of contract; credit life insurance
authorized; 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 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 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 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 division a bond as required by this section. If
the trustees are individuals, the 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 division as required by this section.
(c) All trustees subject to the provisions of this article
shall comply with 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
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
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 forward such sum
and a copy of the preneed funeral contract to the division
within ten days after its execution. The division shall record
the contract. Within ten days after receiving the fee, the
division will notify the contract buyer, by mail, of the
recording. Forty percent of the contract recording fee shall
be placed by the division in an account under the division's
control entitled "Preneed Guarantee Fund" and the income
thereon shall accrue to the fund. The 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 a contract buyer of any preneed funeral
contract is unable to obtain the benefits of the preneed
funeral contract or to receive the funds due by reason of
cancellation thereof, such buyer may apply therefor to the
division on a form supplied by the division. Upon the finding
of the division that said benefits or return of payment is not
available to the buyer, the division will cause to be paid to
the said buyer from the "Preneed Guarantee Fund" the amount
actually paid by the buyer under 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 judgment resulting therefrom shall, to
the extent that it is for amounts paid from the "Preneed
Guarantee Fund", be ordered payable to the fund.
(g) Notwithstanding any other provision 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 and any future payments, if any, by the contract
buyer shall then be transferred 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, from any further liability under such contract.
No provision of this article or of 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 division. The 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 division shall
promulgate, in accordance with the provisions of chapter
twenty-nine-a of this code, legislative rules as may be
necessary to effectuate the purpose of this article.
§47-14-10. Solicitation.
(a) No contract seller or agent or employee or person
acting in behalf of any such person shall:
(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 prohibitions 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 division may 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) No person shall:
(1) Violate any provisions of this article;
(2) Attempt to procure or procure a certificate of
authority or license under this article by bribery or
fraudulent misrepresentation;
(3) 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) Have been convicted of a crime in any jurisdiction
which directly relates to the sale of preneed funeral
contracts;
(5) Make or file a report required by this article which
the certificate holder or licensee knows to be false or
knowingly fail to make or file a report required by this
article;
(6) Advertise goods or services in a manner which is
fraudulent, false, deceptive or misleading in form or content;
(7) Engage in fraud, deceit or misrepresentation in the
conduct of the business governed by the provisions of this
article;
(8) Fail to comply with a lawful order of the division;
(9) Knowingly make 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 or licensee's business;
(10) Fail to maintain the funds received under the
contracts as required by this article;
(11) 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) Fail to renew or qualify for renewal of its certificate of authority or license;
(13) Fail to produce records in connection with the
certificate holder's business or otherwise fail to comply with
the provisions of this article or any rule promulgated by the
division pursuant to this article; or
(14) 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 promulgated by the division.
(b) Whenever a person violates any provision of this
article, as determined in an administrative hearing after
notice and an opportunity to be heard, the division may
institute revocation proceedings regarding a license to operate
a funeral 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 the business
governed by the provision 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 division, the court
shall dismiss such complaint. If the court finds that the
charges of the 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 the 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 governed by the
provisions of this article upon a finding that the person
engaged therein has violated 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 matters necessary and essential to govern an estate in
receivership.
(c) When the division finds, after an administrative
hearing, that any person has violated the provision of
subsection (a) of this section, 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 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 of 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) Any penalties or attorney's fees recovered by the
division shall be deposited in the "Preneed Burial Contract
Regulation Fund" and used 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, shall be
punished by a definite term of imprisonment in the penitentiary
which is not more than three years and fined not more than ten
thousand dollars.
(b) Except as provided in subsection (a) of this section,
any person who violates any provision of this article or the
legislative rules promulgated hereunder is guilty of a
misdemeanor, and, upon conviction thereof, shall be punished by
a fine of not less than five hundred nor more than five
thousand dollars for each occurrence, or confined in the county
jail for a term not to exceed one year, or both fined and 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.