Senate Bill No. 148
(By Senators Ross, Love, Miller, Plymale and Sharpe)
__________
[Introduced January 23, 1995; referred to the
Committee on the Judiciary.]
__________
A BILL to amend and reenact article fourteen, chapter
forty-seven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, all
relating to the regulation of preneed burial
contracts; and providing for and increasing
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, and reenacted are to read as follows:
CHAPTER 47. REGULATION OF TRADE.
ARTICLE 14. PRENEED BURIAL CONTRACTS.
§ 47-14-1. Declaration of policy; legislative intent.
It is contrary to public policy for any
person to receive, hold, control or manage funds or
proceeds received from the sale of, or from a contract
to sell, funeral services, funeral goods, burial goods
or any one or combination of them, where payments for
the same are made either outright or on an installment
basis, prior to the death of the person or persons so
purchasing them, or for whom they are purchased, unless
that person holds, controls or manages those funds
subject pursuant to the limitations
and regulations
prescribed by this article
and the legislative rules
promulgated pursuant thereto.
It is the legislative intent that the provisions
of this article shall be construed as a limitation upon
the manner in which a person is permitted to accept
funds in prepayment of funeral services to be performed
in the future, or funeral or burial goods to be used in
connection with the funeral or final disposition of
human remains, so that at all times members of the
public may have an opportunity to arrange and pay for funerals for themselves and their families in advance
of need while at the same time providing all possible
safeguards whereunder such prepaid funds cannot be
dissipated, whether intentionally or not, in order that
such funds are available for the payment of funeral
services so arranged. Further, it is the legislative
intent that no person may offer, sell or negotiate for
the sale of a preneed funeral service contract through
anyone who is not licensed
pursuant to the provisions
of under this article.
§ 47-
14-
2. Definitions.
As used in this article, unless the context otherwise
requires:
(1) "Burial goods" means all merchandise
supplied in regard to burial, or entombment in a
mausoleum or inurnment in a columbarium, but does not
include those services actually performed by a cemetery
acting only as such, or the sale by any person of
cemetery lots, land or interests therein, services
incidental thereto, or the sale by any person of markers, memorials, monuments, equipment, crypts, urns,
burial vaults or vaults constructed or to be
constructed in a mausoleum or columbarium.
(2) "Contract beneficiary" means any person
specified or implied in a preneed funeral contract,
upon whose death funeral services, funeral goods or
burial goods
shall are to be performed, provided or
delivered.
(3) "Contract buyer" means any person,
whether or not a contract beneficiary, who purchases
goods or services pursuant to a preneed funeral
contract but
shall does not include any person other
than a natural person.
(4) "Contract seller" or "seller" means a
person, his agent or his employee, who sells, makes
available or provides preneed funeral contracts.
(5) "Department" means the office of the
attorney general.
(6) "Funds" means moneys or other
consideration received pursuant to the sale of a preneed funeral contract, including interest accrued or
earned thereon.
(7) "Funeral goods" means those items of
merchandise sold or offered for sale directly to the
public by any person which will be used in connection
with a funeral or alternative for final disposition of
human remains, but does not include those services
actually performed by a cemetery acting only as such,
or the sale by the cemetery of cemetery lots, land or
interest therein, services incidental thereto, or the
sale by any person of markers, memorials, monuments,
equipment, crypts, urns, burial vaults or vaults
constructed or to be constructed in a mausoleum or
columbarium.
(8) "Funeral services" means those services
usually performed by a funeral service licensee,
including, but not limited to, care and preparation of
human remains and coordinating rites and ceremonies in
connection with the disposition of human remains
carried out at the request of any individual responsible for funeral and disposition arrangements.
(9) "Person" means a natural person,
partnership, firm, association or corporation,
including any agent or employee thereof residing in or
doing business in this state who is engaged in the
selling of, making available of or providing of
"preneed funeral contracts,"
as defined herein, or
who
is the recipient of funds paid for such purpose.
(10) "Person who makes a preneed funeral
contract available" means a person who, while not
directly selling the contents of a preneed funeral
contract to the public through his efforts, makes such
contracts available to the public, but
shall does not
include manufacturers of funeral goods or burial goods.
(11) "Personal residence" means any
residential building in which one temporarily or
permanently maintains his abode including, but not
limited to, hotels, motels, apartments, nursing homes,
convalescent homes, homes for the aged and public and
private institutions.
(12) "Preneed funeral contract" means any
contract, agreement, mutual understanding, series or
combination of contracts, agreements and mutual
understandings,
other than a contract of insurance,
including a contract that is financed by the purchase
of an insurance policy or annuity, under which, for a
specified consideration paid in advance of death in a
lump sum or by installments, a person promises to
furnish or make available or provide funeral services,
funeral goods or burial goods for use at a time
determinable by the death of the "contract beneficiary"
who is either named or implied.
(13) "Provider" means a person who, though
not
necessarily a party to a preneed funeral contract
does, through his efforts, make makes the services or
goods referred to in such a contract available to the
public pursuant to such a contract.
(14) "Trustee" means any natural person,
partnership or corporation, including any bank, trust
company, savings and loan association or credit union, which receives money pursuant to any agreement or
contract made pursuant to the provisions of this
article.
§ 47-14-3. Certificate of authority required; fees to
go to department of labor; special account established
created; 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:
Provided, That no
bank, trust company, savings and loan association or
other financial institution regulated by this state or
insured by an agency of the United States federal
government is required to obtain a certificate of
authority.
(b) No person may sell, make available or be
a provider of a preneed funeral contract unless such
person has obtained a certificate of authority or
renewal thereof from the department.
(c) Any person desiring to obtain a
certificate of authority shall file with the
department, upon forms provided by the department, a
completed application, together with a
one
two hundred dollar application fee for
his the original
certificate of authority. The fee shall be payable to
a special revenue account to be known as the "Preneed
Burial Contract Regulation Fund"
to be used for the
purpose of administering the provisions of this
article. The original application or a renewal
application shall contain at least the following
information:
(1) The name and address of each person
owning ten percent or more interest in the applicant;
(2) The experience of the applicant;
(3) Such other information as the department
may require to determine to its satisfaction that the
applicant possesses the ability, experience, financial
stability and integrity to
deal in negotiate preneed
funeral contracts
and to provide the funeral services, funeral goods or burial goods as specified therein; and
(4) The types of preneed funeral contracts
proposed to be written or otherwise
dealt in used and
copies of any writings used pursuant thereto; and if a
person is a party to or bound by any such contract, an
itemization of all outstanding preneed funeral
contracts, the dates upon which such contracts were
entered into, the names of all parties involved in such
contracts or having any right thereunder, the amount
paid toward each contract and, if payments are not
completed, the amounts owing on each contract and the
present depository or holder of all such funds.
(d) Each certificate of authority holder
shall renew its certificate of authority according to
the schedule established by this article. The fee for
renewal shall be two hundred dollars, payable to the
"Preneed Burial Contract Regulation Fund" established
by this section.
(e) Each certificate of authority holder
shall file with the department an annual report with its request for renewal which shall contain the
following:
(1) An identification of all outstanding
preneed funeral contracts, the dates upon which the
contracts were entered
into, the names of all parties
involved in such contracts or having any right
thereunder, including, but not limited to, the
beneficiary, the amount paid
and interest earned on
each contract and, if payments are not completed, the
amounts owing and the present balance of funds
applicable to each such contract.
(2) The date on which any insurance policy or
annuity was purchased to fund a preneed funeral
contract, the amount paid for each insurance policy or
annuity, and the value of each insurance policy or
annuity.
(2)(3) The name of the contract seller and
the name of the provider of the services and goods and
a statement that the provider has sufficient funds
available to perform all of its obligations under its contracts.
(3) (4) A statement that the contract seller
and the person receiving funds paid thereunder have
complied with the trust requirements of this article
and of the present depository or holder of such funds
and a statement of the amounts thereof itemized as to
each such contract.
(4) (5) Any changes or amendments in any
contracts or obligations of the seller and provider
that which have occurred since the date of the last
report.
(5) (6) Such other information as may be
considered necessary by the department in order to meet
its responsibilities under this article.
This annual report shall also be required of Any person
who sells, provides or makes preneed funeral contracts
available or receives moneys or other consideration
therefor from the public
or who otherwise holds or
performs such contracts without a certificate of
authority is also required to file an annual report with the department as prescribed in this subsection.
Beginning with the year one thousand nine hundred
ninety-five, the reporting year for an annual report
shall end on the thirty-first day of December, and all
reports are to be filed with the department no later
than the thirty-first day of March of the following
year.
(f) An original certificate of authority
expires on the thirty-first day of December following
its issuance, Beginning with the calendar year one
thousand nine hundred ninety-five, the certificate of
authority shall expire on the thirtieth day of June
following its issuance: Provided That, a temporary
certificate of authority may be issued by the
department for a period not to exceed six months for
purposes of implementing the change in the certificate
of authority period for the year one thousand nine
hundred ninety-five. The fee for such temporary
certificate shall be one hundred dollars.
(g) Every application, request for renewal and statement filed with
the department 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 department, 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 department its
rules and regulations and, if
by upon investigation by
the department of the principals, including directors,
officers, stockholders, employees and agents of such
person, nothing is found to warrant denial of the
certificate, the department shall issue
to such person
the certificate of authority or renewal thereof.
(i) (1) The certificate holder shall keep accurate accounts, books and records in this state of
all transactions, copies of all contracts, dates and
amounts of payments made and accepted thereon, the name
and address of each contract buyer, the name of the
beneficiary
as to of each contract, the name of the
trustee holding trust funds received under each
contract and such other records as the department 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 for examination.
The department may not more frequently than once in any
calendar year, unless pursuant to an order of court for
good cause shown, during ordinary business hours, cause
to be examined the books, records and accounts of the
certificate holder with respect to funds received by said certificate holder and for that purpose may
require the attendance of and examine, under oath, all
persons whose testimony he may require.
(3) The certificate holder shall pay for the
cost of any examination which is not the first one in
that calendar year, including the salary and traveling
expenses paid to the person making the examination
during the time spent in making the examination and in
traveling to and returning from the point where the
records are kept and all other expenses necessarily
incurred in the examination. The department 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 department.
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.
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 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 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, department to promulgate rules.
(a) All sums paid or collected on such
preneed
funeral contracts entered into after the
seventh day of
June, one thousand nine hundred eighty three effective
date of this article shall be handled in the following
manner:
(1) The contract seller or other person
collecting the funds may retain for his own use and
benefits and for the purpose of covering
his selling
expenses, servicing costs and general overhead, an amount
not to exceed ten percent of the total
original amount
agreed to be paid by the contract buyer as reflected in
the
original preneed funeral contract.
Such ten percent
may be retained one time only whether at the time the
contract is made, transferred, cancelled or performed.
Such ten percent or other amount is exempt from the trust
and refunding provisions of this article;
(2) All of the funds collected under the
contract, less the amount authorized to be deducted under
subdivision (1) of this subsection, shall be deposited
under the provisions of subdivision (3) hereof;
(3) Unless otherwise specifically exempt under
this article, all funds paid to or collected by any
person from a preneed funeral contract shall, within
thirty days after receipt thereof by such a person, be
deposited
in an account located within in this state (i)
in the name of a trustee who is a contract seller,
provider or person making the preneed funeral contract
available, in a state or federally chartered and insured
bank, savings institution, building and loan institution
located in this state or in a state or federally
chartered credit union located in this state, or (ii)
under the terms of a trust instrument entered into with
a national or state bank having trust powers or a trust
company located in this state.
In the event a preneed
funeral contract is funded by the purchase of an
insurance policy or an annuity, the premiums paid on such insurance policy or annuity shall be deposited with a
licensed insurer subject to the provisions of chapter
thirty-three of this code. The insurer accepting
payments on such an insurance policy or annuity shall
serve as the trustee for such funds unless it elects to
enter into an agreement with a bank, trust company,
savings and loan association or credit union having trust
powers or a trust company located in this state whereby
such entity agrees to serve as the trustee.
(b) The funds to be deposited from more than
one preneed funeral contract may, at the option of the
recipient thereof or the certificate of authority holder,
be placed in a common or commingled trust fund in this
state under a single trust instrument.
(c) All deposits
, other than for insurance
policies or annuities, shall be placed in an account with
a trustee in the name of the contract seller, provider or
person making the contract available, as set forth in the
contract, to whom the contract buyer makes payment.
Records shall be maintained Each trustee shall maintain records showing the trust's investment and, as to each
contract, showing the amount paid, the amount
deposited
of interest earned and the
amount invested current
balance with respect to any particular buyer's contract.
(d) All funds required to be deposited and
covered by this article shall remain in
accounts located
within this state.
(e) All accounts of money deposited in any
bank, savings institution, building and loan association
or credit union in accordance with the provisions of this
article are subject to periodic examination by the
department of banking of this state.
(f) The department shall promulgate
legislative
rules
and regulations in accordance with
the provisions
of chapter twenty-nine-a of this code for the purpose of
administering the provisions of this article.
§ 47-14-6. Withdrawal of funds.
(a) Disbursements of funds discharging any
preneed funeral contract shall be made by the trustee to the person named in the contract upon receipt of a
certified photostatic copy of the death certificate of
the contract beneficiary and evidence satisfactory to
the trustee that the preneed
funeral service or preneed
burial supply contract has been fully performed. In
the event that, after the death of the contract
beneficiary, the contract services or goods
are not
provided because they are not desired by the heirs or
by the personal representative of the contract
beneficiary, the
trustee funeral home obligated to
perform the contract shall have authority to
expend one
hundred percent of the amount placed in the trust
account and paid on the contract perform the contract
by expending all of the funds held on deposit, in any
general locality within or outside of this state, which
shall be the burial location of the contract
beneficiary. If the service and goods are not provided
upon the death of the contract beneficiary because of
actions of the seller, provider or person making the
preneed funeral contract available, then all of the funds held on deposit shall in ten days be refunded to
the contract buyer or his legal representative who also
has available any other remedy set forth in this
article.
(b) Any contract buyer or legally authorized
person, acting in his behalf, may cancel a preneed
funeral contract prior to the death of the contract
beneficiary by notifying in writing the contract seller
or present obligor of the provisions thereof, if a
different person, of such desire to cancel. The seller
or obligor shall, in ten days after receipt of such
notice, notify the trustee of such cancellation and the
trustee shall within thirty days after receipt of
written notification pay to the contract buyer, or his
legal representative all funds placed in the trust
account and paid on the contract.
(c) If the contract buyer is more than one
hundred eighty days in default with respect to any
payment or installment due on or pursuant to the
preneed funeral contract, the contract seller or provider may, on ten days' prior written notice, cancel
the contract. All funds in the trust account shall be
refunded to the contract purchaser or to the estate of
the contract beneficiary.
(d) The seller of a preneed funeral contract
may not cancel the contract unless the contract is in
default as to the buyer's obligations.
(e) Payment by any depository or any trustee
made in good faith pursuant to the terms of this
section shall forever relieve such depository or
trustee, as such, for any further liability for such
funds under the contract and in law.
§ 47-
14-
7. Income on trust accounts.
(a) Whether the payments on a preneed funeral
contract are placed in a bank, savings institution,
building and loan association, credit union or in a
common trust fund as permitted in this article, or are
part of a commingled common trust fund as permitted in
this article, the income from a contract deposit, except
as otherwise provided herein, shall accrue to the individual account until such time as the burial goods,
funeral goods and funeral services for the contract
beneficiary are required to be delivered and returned by
reason of such beneficiary's death.
(b) Upon the death of such contract
beneficiary, the total amount in the trust account
attributable to the contract beneficiary shall be
disbursed as follows:
(1) If the cost of the goods and services
contracted for at the time of such beneficiary's death
exceeds the amount paid under the contract, then the
provider may have and use the principal and so much of
the interest as may be necessary to defray such
additional cost over and above the contract cost:
Provided, That to the extent that the cost of goods and
services provided exceeds the principal and interest
thereon, the provider shall provide and make available
the goods and services contracted for at no additional
cost to the contract purchaser or to the heirs or
personal representative of the contract beneficiary;
(2) To the extent the principal and interest
thereon exceed the cost of the goods and services
contracted for, then the provider may retain only so
much of the principal and interest necessary to defray
the total of such cost and the balance shall be returned
to the estate of the contract beneficiary or to the
contract buyer as may be proper under the provisions of
this article or the
legislative rules
and regulations of
promulgated by the department.
(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; 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 department of banking of this
state, to serve as trustees of its trust funds. Each individual trustee shall be a resident of this state and
shall hold office subject to the direction of the seller.
Not more than one member of the board of trustees of a
trust fund may have a proprietary interest in the seller
appointing trustees or in any certificate of authority
holder who is placing funds in such trust.
Individual trustees of a trust fund established
under the provisions of this article shall file a
fidelity bond with a corporate surety thereon which is
licensed to do business in this state with the
department in an amount equal to the funds in trust,
guaranteeing payment of damages occasioned by breach of
the trustees' fiduciary duties. The trustees of one or
more trust funds need file only one such bond. The
aggregate liability of the surety shall in no case exceed
the face amount of the bond. The department 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 a bond as required by this section. If the
trustees are individuals, the department 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 as required by this
section.
(c) All trustees under the terms of this
article are subject to the following investment
standards: In acquiring, investing, reinvesting,
exchanging, retaining, selling and managing property for
the benefit of others, trustees have the responsibilities
which customarily attach to such offices and to the type
of estates entrusted to their care and shall exercise the
judgment and care under the circumstances then prevailing
which men of prudence, discretion and intelligence
exercise in the management of their own affairs, not in
regard to speculation but in regard to the permanent
disposition of their funds, considering the probable
income as well as the probable safety of their capital.
(d) No preneed funeral contract may restrict
any contract buyer who may make his or her contract
irrevocable in accordance with the laws and regulations
of this state.
Irrevocable preneed contracts may be
transferred pursuant to this section.
(e) All preneed funeral contracts must be in
writing and no contract form may be used without prior
approval of the department.
(f) Each contract buyer shall pay a fee of five
dollars to the contract seller.
Beginning on the first
day of July, one thousand nine hundred ninety-five, the
contract seller shall pay a fee of ten dollars to the
contract seller. Beginning on the first day of January,
one thousand nine hundred and ninety-six, the contract
buyer shall pay a fee of fifteen dollars to the contract
seller. Beginning on the first day of January of one
thousand nine hundred and ninety-seven, the contract
buyer shall pay a fee of twenty dollars to the contract
seller. The contract seller is to who in turn will
forward such sum to the department within ten days after execution of the preneed funeral contract. The contract
shall be recorded in the department. Within ten days
after receiving the fee, the department will notify the
contract purchaser, by mail, of the recording.
The Forty
percent of the contract recording fee
s shall be placed by
the department in an account under the department's
control entitled "Preneed Guarantee Fund," and the income
thereon shall accrue to the fund. The department 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 department in the
"Preneed Burial Contract Regulation Fund" as provided in
section three of this article.
In the event any buyer of any preneed funeral
contract is unable to receive the benefits of his
contract, or to receive the funds due by reason of his
cancellation thereof, such buyer may apply to the
department on a form supplied by the department. Upon the
finding of the department that said benefits or return of
payment is not available to the buyer, the department will cause to be paid to the said buyer from the "Preneed
Guarantee Fund" the amount actually paid by the buyer
under
his or her the contract
to the extent funds are
available in the "Preneed Guarantee Fund".
In the event
multiple claims are made and there are insufficient funds
in the "Preneed Guarantee Fund" to satisfy all claims in
full, payments from the "Preneed Guarantee Fund" shall be
made on a pro-rata basis. If the seller's liability for
default is subsequently proven, any award made by a court
of law shall be made payable to the
"Preneed Guarantee
Fund" as provided in this section. "Preneed Burial
Contract Regulation Fund" established in section three of
this article.
(g) Notwithstanding the provisions of
subsection (f), section five of this article, delivery of
funeral or burial goods prior to the death of the person
for whose benefit they are purchased does not constitute
performance or fulfillment, either wholly or in part, of
any preneed contract or series of contracts.
(h) The contract buyer may, on acceptance in writing by a transferee, transfer the obligations of the
seller, provider or person making the preneed funeral
contract available to other persons within or without
this state. The funds on deposit for the contract
on and
any future payments, if any, by the contract buyer shall
then be transferred
to and deposited under applicable
state law, if any, in the state wherein the contract
buyer resides or to a state where the obligations of the
provider of the funeral service and goods will be
fulfilled.
Upon such transfer, the contract buyer and
transferee shall, in writing, release the contract
seller, provider or person making the preneed funeral
contract available and the trusts, as applicable, for any
further liability under such contract.
Nothing in this article or in any preneed contract
may limit the right of a contract buyer to assign such a
contract to any person whomsoever except as specifically
provided herein and except that if the assignee is a
resident of this state or the contract is to be fulfilled by the assignee in this state, the assignee must hold a
certificate of authority under this article. If the
contract is to be fulfilled in another state, the
assignee must in all respects be in compliance with the
preneed funeral law of that state, if any.
(i) Notwithstanding any other law of this state, a
contract seller, provider or person making the preneed
funeral contract available may, if requested by the
contract buyer where the contract is to be paid in
installments, provide for the sale of credit life
insurance on the life of the contract beneficiary in
order to have the funds necessary to make payment in full
under the contract if the beneficiary should die prior to
completing all the payments due. The seller shall
disclose all costs of such insurance in clear language
and shall inquire of the buyer whether he understands
the terms of the insurance contract and is aware of the
total cost of the insurance.
(j) In the event any certificate of authority holder
or anyone in violation of the article who has outstanding preneed funeral contracts and is not the current holder
of a certificate of authority sells its business, through
the sale of assets or stock, which is involved in the
fulfillment of obligations under preneed funeral
contracts, the buyer of such business is a "successor in
interest" and is covered not only by this article but
shall assume the obligations of seller under seller's
outstanding preneed funeral contracts regardless of
whether seller made known to buyer the existence of such
contract or contracts.
§
47-14-9. Forms and rules.
The administration and enforcement of the
provisions of this article are vested in the department.
The department 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
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 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
or any
person engaged in the sale of preneed funeral contracts without a certificate of authority or license pursuant to
the provisions of this article:
(1) Violating any provisions of this article;
(2) Attempting to procure or procuring a
certificate of authority or license under this article by
bribery or fraudulent misrepresentation;
(3) Having had any certificate of authority or
license to sell preneed funeral contracts revoked,
suspended or otherwise acted against, including denial of
licensure, by a licensing authority of another
jurisdiction;
(4) Being convicted or found guilty of a crime
in any jurisdiction which directly relates to the sale of
preneed funeral contracts;
(5) Making or filing a report required by this
article which the certificate holder knows to be false or
knowingly failing to make or file a report required by
this article;
(6) Advertising goods or services in a manner
which is fraudulent, false, deceptive or misleading in form or content;
(7) Engaging in fraud, deceit or
misrepresentation in the conduct of business of the
certificate holder;
(8) Failing to comply with a lawful order of
the department;
(9) Knowingly making any false or misleading
statement, oral or written, directly or indirectly,
regarding the sale of services or merchandise in
connection with the conduct of the certificate holder's
business;
(10) Not maintaining the funds received under
the contracts as required by this article;
(11) Failing to cancel a preneed funeral
contract upon proper request and refund that portion of
the amount paid on such a contract as required by this
article;
(12) Failing to renew or qualify for renewal of
its certificate of authority or license;
(13) Failing to produce records in connection with the certificate holder's business or has otherwise
failed to comply with the provisions of this article or
any rule promulgated by the department pursuant to this
article; or
(14) Soliciting by the certificate holder, its
agents, employees or representatives through the use of
fraud, undue influence, misrepresentation or overreaching
or other forms of vexatious conduct as defined by law,
this article or the
legislative rules
and regulations of
promulgated by the department.
as to preneed funeral
contracts.
(b) Upon the violation of any of the provisions
of this article, determined in an administrative hearing
after notice and an opportunity to be heard, the
department may institute revocation proceedings regarding
a license to operate a funeral home or a certificate of
authority to sell preneed funeral contracts, or both the
license and the certificate of authority or file a
complaint in a court of competent jurisdiction setting
forth the relevant facts and praying for the issuance of an order to show cause why the license to operate a
funeral home or the certificate of authority to sell
preneed funeral contracts, or both the license and the
certificate, should not be revoked.
(1) Upon application for such rule to show
cause, the court may, in its discretion, issue an
injunction restraining the defendant from transacting
further business until further order of the court.
(2) Upon return of such order to show cause,
the court shall hear and try the issue forthwith. If
the court determines that the person so charged as
defendant in such proceeding has not been guilty of the
omission, failure or violation alleged in the complaint
by the department, the court shall dismiss such
complaint. If the court finds that the charges of the
department are supported by the evidence, it may enter an
order
directly directing the revocation of a license to
operate a funeral home or of a certificate of authority
to sell preneed funeral contracts, or the revocation of
both the license and the certificate of authority.
(3) In any such order of liquidation or in any
order or orders thereafter entered, the court shall
provide a notice to creditors,
the filing of claims and
all other details necessary and essential to an estate in
receivership.
(c) When the department finds any certificate
holder or licensee guilty of any of the acts set forth in
subsection (a) of this section after an administrative
hearing, or finds that any funeral services or funeral or
burial goods are offered for sale when the offer is not
a bona fide offer to sell such services or goods, it may
enter an order imposing one or more of the following
penalties:
(1) Denial of an application for a certificate
of authority or license, including a renewal;
(2) Revocation or suspension of a certificate
of authority or license;
(3) Imposition of an administrative fine not to
exceed one thousand dollars for each county where there
are separate violations;
(4) Issuance of a reprimand; or
(5) Placement of the licensee or certificate
holder on probation for a period of time and subject to
such conditions as the department may specify.
(d) All preneed funeral contract buyers have a
priority in claims against the provider, to the extent
that their interest is set forth in this article.
Such
priority constitutes a statutory lien at the time the
contract was executed to the extent payments on the
contract were made and interest has accrued.
(e) For purposes of this section, the acts or
omissions of any person employed by or under contract to
or on behalf of the certificate holder shall be treated
as acts or omissions of the certificate holder.
(f) Subject to the provisions of subsection
(b), section seven of this article, all prices or
quotations of prices contained in any preneed funeral
contract shall be fully and clearly stated.
§
47-14-12. Civil action; attorney's fees.
(a) The failure of a certificate holder
, or a licensee
, or of any other person engaged in the sale of
preneed funeral contracts without a certificate of
authority or license issued pursuant to the provisions of
this article to comply with the provisions of this
article gives rise to a civil cause of action in favor of
any aggrieved consumer
, contract guarantor, or contract
purchaser. Upon entry of a judgment for damages in favor
of the plaintiff, the trial court shall award punitive
damages in the amount of three times the actual damages
awarded in the judgment.
(b) The prevailing party, after judgment in
trial court and exhaustion of all appeals, if any, shall
receive reasonable attorney's fees and costs from the
nonprevailing party.
(c) The attorney for the prevailing party shall
submit a sworn affidavit of his time spent on the case
and his costs incurred for all the motions, hearings and
appeals to the trial judge who presided over the civil
case.
(d) The trial judge shall award the prevailing party the sum of reasonable costs incurred in the action,
plus a reasonable legal fee for the hours actually spent
on the case as sworn to in an affidavit.
(e) Any award of attorney's fees or costs shall
become part of the judgment and subject to execution as
the law allows.
(f) The department shall deposit any penalties
or attorney's fees recovered by the department in the
"Preneed Burial Contract Regulation Fund" for the purpose
of administering and enforcing the provisions of this
article.
§ 47-14-13. Penalties.
Any person who receives, holds, manages or
controls any funds or proceeds realized from the writing
and issuing of a preneed funeral contract or
who
disburses such funds or proceeds in any manner other than
as authorized or required by this article or who has
violated any of the provisions of this article or the
legislative rules
and regulations promulgated hereunder
is guilty of a
misdemeanor felony, and, upon conviction thereof, shall be punished by a fine of not less than
one
five hundred nor more than
one five thousand dollars for
each occurrence, or imprisoned in the
appropriate
regional county jail for a term not
to exceed less than
one year or both fined and imprisoned.
§ 47-14-14. Severability.
If any section, subsection, subdivision,
subparagraph, sentence or clause of this article is
adjudged to be unconstitutional or
otherwise invalid,
such invalidation shall not affect the validity of the
remaining portions of this article, and, to this end, the
provisions of this article are hereby declared to be
severable.
NOTE: The purpose of this bill is to
clarify the type of contract covered by this article,
increase the fees for new certificates of authority
issued under this article, and clarify the applicability
of enforcement powers against noncertificate holders. It
also simplifies the annual reporting requirements so that
insurance companies holding monies paid in a preneed
funderal contract need only provide the information
necessary for the annual report to the funeral
establishment this avoiding duplication of filing. It
also creates a reporting period that follows traditional
financial accounting procedures.
It protects purchasers of preneed funeral
contracts who finance such contracts with insurance or
annuities by requiring the insurer to be licensed and
subject to the jurisdiction of the West Virginia
Insurance Commissioner.
In the event the beneficiary or personal
representative of the beneficiary of a preneed funeral
contract does not want the services covered by the
contract, this bill permits a funeral director to perform
the contract as the deceased intended.
The Bill increases the funds paid to the "Preneed
Guarantee Fund" so a greater amount of monies are
available to cover losses. It also clarifies that claims
against the "Preneed Guarantee Fund" can only be made to
the extent funds are available and that payments from the
"Preneed Guaranteed Fund" must be paid on a pro rata
basis if funds are insufficient to cover all claims.
Strike-throughs indicate language that would be
stricken from the present law, and underscoring indicates
new language that would be added.
This bill was recommended for passage at the 1995
Regular Session by the Joint Committee on the Judiciary.