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Washington Report

      

Washington Report 012001

Date Published: 
012001
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Lawsuit Alleges Harassment by Funeral Directors Association in Pennsylvania 

 
by Robert M. Fells, Esq., general counsel 
 
A private lawsuit filed in U.S. District Court in Pennsylvania alleges that the Pennsylvania Funeral Directors Association (PFDA) and a number of individuals violated the Constitution and antitrust law by engaging in harassment, malicious prosecution and other alleged acts of misconduct in order to prevent competition in the sale of prepaid funeral services through life insurance.
 
The plaintiffs, Robert Rae and his company, Commonwealth Funeral Consultants Inc., claim that defendants' actions have had a devastating effect on their business operations. Plaintiffs seek millions of dollars in compensatory damages plus punitive damages. The nine-count complaint filed on November 16 in the federal district court for the Middle District of Pennsylvania alleges that individual defendants would threaten to impose state funeral board actions, including investigations and litigation, against various persons and companies if these entities did not stop selling preneed funerals through insurance.
 
Earlier litigation is making its way through the state court system to determine the meaning of Pennsylvania's funeral law, including whether the statute actually prohibits the sale of prepaid funerals through insurance. ICFA members will be kept informed of important developments involving these issues. 
Code: 
wr012001

Washington Report 112000

Date Published: 
112000
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Nonprofit Cemeteries and the Funeral Rule 

 
by Robert M. Fells, Esq., general counsel 
 
Some time ago, a "Washington Report" column in this magazine noted that Federal Trade Commission (FTC) staff had said that tax exempt, nonprofit cemeteries would not be covered under the Funeral Rule even if the rule were expanded to include other sellers. That report stirred some controversy on Internet message boards and elsewhere. Somebody even circulated a rumor that this writer had been admonished by FTC staff for claiming that nonprofit cemeteries would be exempt from the Funeral Rule. Of course, nothing of the kind ever occurred and we stand by our earlier report.
 
Yet a variety of interested parties are urging the FTC, under the ongoing Funeral Rule review proceedings, to expand the rule to all sellers in the industry including nonprofit and religious cemeteries. So for this issue's column only, we depart from our traditional objective viewpoint to subjectively examine some of the factual and legal realities of covering nonprofit cemeteries under the Funeral Rule.
 
A Brief History of the Funeral Rule
To understand where we are today, we need to look back at the history and development of the Funeral Rule. The rule was the product of what might be called the "go-go" years at the FTC. This era occurred in the early to mid 1970s when it appeared to some observers that the commission had all but declared war on American businesses. A number of trade regulations were proposed and many enacted, including the Funeral Rule. FTC staff reports from that time clearly indicated that funeral homes were the focus of the rule although staff were well aware that other entities, including cemeteries, competed with funeral homes in the sale of some items such as outer burial containers. FTC staff determined that the most serious consumer abuses involved funeral homes and therefore geared the rule to these entities.
 
This historical fact is important today because, during the current Funeral Rule review proceedings, some groups are claiming that cemeteries and other sellers were omitted from the rule's coverage due to a "mistake," or an "oversight," or more suspiciously, a "loophole." The facts indicate otherwise. The Funeral Rule went into effect in 1984, although the first enforcement efforts did not occur until about 1987. Through the years FTC staff have published a number of different guidelines and booklets to help funeral homes comply with Rule requirements.
 
Funeral Rule Requirements
The requirements of the Funeral Rule seem almost like common sense practices that any legitimate business would follow on its own. The rule requires funeral homes to break out package plans to allow consumers to pick and choose only the items and services they want. Because the package plans are "unbundled," each of the goods or services must be separately priced or itemized. That requirement led to the need for a GPL, or General Price List, and separate price lists for caskets and outer burial containers. The price lists must be given to anybody who inquires in person at the funeral home. Prices must also be given over the phone on request. The rule lists 16 goods and services that must appear on the price list if the funeral home sells any of them.
 
The rule also prohibits the misrepresentation of legal or cemetery requirements, such as claiming that embalming is a legal requirement if it's not or claiming that a cemetery requires an outer burial container if it doesn't. Please understand that I am simplifying the rule's requirements for purposes of this column, so don't rely on my thumbnail description for compliance purposes. By now, you're probably asking yourself, "What's so bad about requiring sellers to give out price lists?" Of course, nothing is wrong with it and most sellers in any type of business will be happy to give consumers their prices without mandates from the government. The problem is that the Funeral Rule is not merely a recommended business practice. If that were the case, the ICFA would sign on the dotted line today as an endorser of its principles. In fact, we have incorporated the concepts of the rule into the ICFA Code of Ethics.
 
The problem with the Funeral Rule is that violations -- and I don't mean a total refusal to comply but technical infractions and paperwork violations -- are punishable by civil fines of $11,000 per violation (increased to $12,000 effective November 20). That's quite a bite from Uncle Sam, especially when you realize that most funeral homes are small, family-owned businesses.
 
To be fair, the FTC staff has worked hard to provide plain-language, user friendly compliance guides to help funeral homes avoid fines. For example, a recently published FTC compliance manual is available that is easy-to-read and provided free of charge. The problem is that the manual is about 46 pages long. Should it really take 46 pages to tell somebody how to give out a price list? Perhaps now you can understand some of the ICFA's concerns over expanding the Funeral Rule.
 
Funeral Providers Covered by the Rule
Even something as basic as who is covered under the Funeral Rule is not so simple. Although the admitted focus of the rule was funeral homes, the rule was written about 20 years ago, long before the trend of government plain-language documents became fashionable. As a result, the drafters of the Funeral Rule developed a convoluted definition to describe who is covered under the rule. Instead of simply stating that the Funeral Rule covers funeral homes, sometimes known as mortuaries, the staff coined a term that no one had ever heard of before. The term was "funeral provider" and it came with a three-part definition to explain what it meant.
 
Let's take the explanation of "funeral provider" directly out of the 46-page plain language FTC compliance manual. You are a funeral provider if you sell or offer to sell both funeral goods and funeral services to the public. That begs two questions: First, what are funeral goods? Second, what are funeral services?
 
Funeral goods are defined as all products sold directly to the public in connection with funeral services. Funeral services are defined as 1) Services used to care for and prepare bodies for burial, cremation, or other final disposition; and 2) services used to arrange, supervise, or conduct the funeral ceremony or final disposition of human remains. The FTC manual carefully explains that you are a funeral provider under the Funeral Rule only if you sell funeral goods and both types of funeral services.
 
All of this is a long-winded way of saying that the Funeral Rule applies to funeral homes, sometimes known as mortuaries. However, some other types of entities ended up under the rule because of the convoluted definition. For example, crematories that deal directly with the public and sell urns satisfy the definition of funeral provider. Likewise, cemeteries that are operated as part of a funeral home-cemetery combined operation would come under the Rule, at least to the extent of the 16 goods and services listed in the Funeral Rule. The list excludes cemetery items such as lots, crypts, markers and monuments, and grave opening/closing services.
 
Expanding the Funeral Rule to Cemeteries
This definition of funeral provider also explains why stand-alone cemeteries do not come under the Funeral Rule currently -- because they don't sell both funeral goods and funeral services, which include preparing the remains. However, in the ongoing Funeral Rule review proceedings, consumer groups and most industry trade associations are urging the FTC to expand the scope of the rule to include all sellers including cemeteries. The calls for rule expansion from consumer advocacy organizations such as AARP should not be surprising. Sadly, these groups never met a law or a proposed law they didn't like. Their philosophy seems to be that if one law is good, three laws must be three times as good. It is interesting to speculate that if just once, AARP said, "You know, we think this proposal imposes too many burdens on businesses for the limited benefits that consumers receive, so we're not in favor of it," a whole new era of cooperation would be launched.
 
More distressing are the funeral trade groups that are urging rule expansion. If you were to ask these groups if they favored the expansion of federal regulation of the death care industry, they would quickly answer no. I believe there is a consensus that the regulation of our industry is more effectively and efficiently handled at the state and local levels. However, when you ask these same industry associations if they favor expanding the Funeral Rule, they will say yes, apparently not realizing that they are supporting the expansion of federal regulation. It's really the same question, but few see the big picture.
 
As the proverbial lone voice in the wilderness, the ICFA opposes the expansion of the Funeral Rule. Critics claim that the ICFA is against giving consumers price information, but that's a red herring argument. In fact, the ICFA requires price information to be given to consumers as a condition of membership through our Code of Ethics. The real issue is the liability, the tens of thousands of dollars in fines levied against small businesses for technical violations. The concept behind the Funeral Rule is a good one, but it shouldn't be enforced with a sledgehammer.
 
The ICFA's opposition to Rule expansion is based upon the FTC's own procedures. According to the FTC, a trade regulation such as the Funeral Rule is presumed to be legally valid in its present form. In order to amend the rule, three factors must be proved. First, there must be substantial evidence that consumers are suffering harm from sellers not under the Funeral Rule. Second, the harm must be prevalent and widespread. Third, the harm would be remedied by the Funeral Rule. Throughout the Funeral Rule review, which began in May 1999, the ICFA believes that there has been no showing that consumers are suffering widespread harm from cemeteries that would be remedied if cemeteries were covered under the rule.
 
Nonprofit Cemeteries Under the Rule
However, the Funeral Rule review is ongoing and the calls for expansion have not been limited to for-profit cemeteries but extend to nonprofit cemeteries in general, and Catholic cemeteries in particular. So the key question today is: Can the FTC regulate nonprofit and religious cemeteries under the Funeral Rule? The quick answer is no, but that could change over time. Here are the safeguards and the reasons why they could change.
 
The FTC's jurisdiction is defined by the FTC Act, a 1914 law that provides for the regulation of any corporation or association, among other entities, organized "to carry on business for its own profit or that of its members." This definition would appear to exclude tax-exempt, nonprofit cemeteries, but a number of federal court rulings have made it clear that the FTC Act's definition does not refer to a business' tax status. For example, a recent U.S. Supreme Court decision in California Dental Association v. FTC found that a nonprofit trade association came under FTC jurisdiction because it contributed to the profit of its members, which were for-profit companies.
 
However, the Supreme Court in California Dental did not decide whether a nonprofit organization that had no ties to for-profit entities could be subject to FTC regulation. Instead, the high court went out of its way to leave the door open to that scenario. Specifically, the court stated, "We do not, and indeed, on the facts here, could not, decide today whether the commission has jurisdiction over nonprofit organizations that do not confer profit on for-profit members but do, for example, show annual income surpluses, engage in significant commerce, or compete in relevant markets with for-profit players. We therefore do not foreclose the possibility that various paradigms of profit might fall within the ambit of the FTC Act." In other words, stay tuned for further developments.
 
Congress and Nonprofit Organizations
Congress passed the FTC Act, and Congress can amend it. For many years, lawmakers on Capitol Hill have received complaints from various types of for-profit businesses that nonprofit organizations, because they pay no taxes, are unfairly competing with them. Even the U.S. Small Business Administration has recommended the revocation of tax exemptions for nonprofit organizations that compete with for-profits. This issue has been evolving for years and is further fueled by the unending search for new sources of tax revenue.
 
With respect to cemeteries, a certain amount of lobbying has already taken place urging members of Congress to enact legislation that would require the FTC to expand the Funeral Rule to all cemeteries, including nonprofits. Although the congressional leadership seems content to allow the FTC to do its job and make its own determinations, this scenario could change in the future.
 
Constitutional Guarantees for Nonprofit Religious Cemeteries
Another line of defense to specifically protect religious types of nonprofit cemeteries from FTC regulation is provided by the First Amendment to the U.S. Constitution -- in particular, the freedom of religion from government intrusion and the separation of church and state. However, is the constitutional argument really an impregnable line of defense or is it more like the Maginot Line? World War II history fans will know that the Maginot Line was France's so-called impregnable line of defense against an invasion by the German army. It turned out that the Germans didn't need to storm the Maginot Line in order to invade France; they simply went around it.
 
Could Congress, the courts or the FTC itself subject religious cemeteries to federal regulation without violating the constitutional guarantees of the First Amendment, by turning it into a sort of a legalistic Maginot Line? Nobody can say for certain, but there are some straws in the wind. For example, a few years ago a New York state court held that because the Catholic Church does not require Catholics to be buried in a Catholic cemetery, the selling of burial spaces by Catholic cemeteries should be considered a business and not a religious activity. This type of thinking could have consequences for all religious cemeteries.
 
It is important to note that the New York opinion was not a final adjudication and does not settle this issue by any means. However, the point is that even the First Amendment may not necessarily insulate the activities of religious cemeteries from government regulation by the FTC or other agencies.
 
The Future of the Funeral Rule Review
At this point in time, the FTC staff is expected to issue a report on the Funeral Rule review proceedings based on public comments submitted to the commission last summer and also on a public workshop conference held at the FTC in Washington, D.C., last November. The staff report may contain a series of recommendations for future proceedings, including the possible announcement of an Advance Notice of Proposed Rulemaking. If this occurred, the FTC staff would propose a number of amendments to the rule, which may include expansion to other sellers not covered, and would solicit public comments on the proposals. It is also possible that the report could recommend keeping the Funeral Rule in its present form without amendment. It is also possible, theoretically at least, that FTC staff could recommend repealing the Funeral Rule.
 
Whatever occurs next, the review process is not expected to be concluded for another two years or more. Unless the rule is repealed, yet another review proceeding will be initiated in a few years, perhaps before the end of the decade. Therefore, an active and sustained form of involvement is required by any organization and its members concerned with the growth of the Funeral Rule. Unfortunately, like most federal regulations and programs, the natural momentum of the Funeral Rule is geared toward expansion in one sense or another.
 
In closing, perhaps we should recall former President Ronald Reagan's observation when he said, "A government program is the nearest thing we'll ever see to eternal life on earth." 
Code: 
wr112000

Washington Report 102000

Date Published: 
102000
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Federal Court Rules Tennessee Casket Law Unconstitutional 

 
by Robert M. Fells, Esq., general counsel 
 
In late August, the U.S. District Court for the Eastern District of Tennessee held that the state law restricting the retail sale of caskets exclusively to licensed funeral directors was unconstitutional. Specifically, the court ruled that the Tennessee law violated the due process and equal protection clauses of the 14th Amendment to the U.S. Constitution by denying the plaintiffs, third-party retail casket sellers, the freedom to sell caskets to the public. This lawsuit marks the first time that a federal court has invalidated a state law regulating the sale of caskets and was the subject of a column by George Will, reprinted in the August-September issue of ICFM.
 
Plaintiffs filed the litigation as a civil rights case challenging a section of the state statute that permits only licensed funeral directors to engage in “funeral directing,” defined in part as the selling of funeral merchandise such as caskets. None of the plaintiffs held a funeral director's license and had been ordered by the state funeral board to stop selling caskets until they had obtained a license. According to the court, Tennessee provides two methods of becoming a licensed funeral director: 1) complete a course of study at an approved mortuary school and undergo a one-year apprenticeship, or 2) complete a two-year apprenticeship program and assist in at least 25 funerals. Only one mortuary school, which costs between $10,000 to $12,000 for its 16-month program, is approved within the state.
 
The court acknowledged that the state had a right to regulate casket sales provided such regulation is “rationally related to legitimate government interests.” The state claimed that it had two purposes in requiring that only licensed funeral directors may sell funeral merchandise. “The first purpose is 'protecting the vulnerable funeral consumer and insuring competency in the funeral services profession.' The second is to 'protect the public health, safety and welfare of the public.' These are clearly legitimate governmental interests. ... However, the mere assertion of a legitimate government interest has never been enough to validate a law.”
 
The court noted that “the key issue in this case is whether the funeral merchandise sales licensure requirement is a rational means of achieving these purposes. This court holds that it is not. The requirement has nothing to do with public health and safety. A casket is nothing more than a container for human remains. ... In those rare instances where human remains (before burial) might present a public health concern, funeral directors do not rely on caskets to negate the threat. Instead, they rely on embalming, adjustments to the funeral arrangements, and other arrangements such as the use of plastic encasements for the body.”
 
Health and Safety Not Involved
“The evidence also shows that Tennessee does not really believe that caskets play any role in the promotion of public health and safety. The State does not require the use of caskets in human burials. ... Moreover, the Federal Trade Commission ('FTC') requires funeral directors to accept caskets provided by third parties.
 
“Caskets, whether purchased from a funeral director or from an independent retailer, are not intended to prevent the spread of communicable diseases. ... Such being the case, the purpose of promoting public health and safety is not served by requiring two years of training to sell a box. Moreover, none of the training received by licensed funeral directors regarding caskets has anything to do with public health or safety.”
 
The state argued that the funeral law incorporates the FTC Funeral Rule written price disclosures into its requirements but that independent retailers were not covered by the Funeral Rule, thereby leaving the public unprotected. However, the court distinguished the need for the Funeral Rule to cover funeral directors while not obligating third-party sellers. “The FTC issued the Rule to prevent funeral directors from selling preselected packages of goods to consumers so that consumers were forced to purchase goods and services they did not want. Funeral providers were 'bundling' the cost of funerals; hence, the need to have these costs separated for consumers.”
 
The court went further in holding that “requiring the disclosure of casket costs by independent retailers is unnecessary. The plaintiffs, as independent casket retailers, do not provide funeral services; they only sell caskets, urns, and other funeral-related merchandise. Independent retailers do not need to be compelled to disclose prices. Like any other retailers, if they fail to disclose their prices, they will do no business.”
 
This decision, Craigmiles v. Giles, can be contrasted to a decision by an Oklahoma state court two years ago, State v. Stone Casket Co., that upheld a similar law restricting casket sales to licensed funeral directors. The Stone Casket opinion was relatively brief, offered little analysis of the issues, and merely concluded that “a casket is part of the funeral service business and cannot be separated as an independent item.” By comparison, the Craigmiles opinion is lengthy and seems written by the federal district court to withstand scrutiny on appeal. At this point, it is not known whether the decision will be appealed. ICFA members who would like copies of the Craigmiles decision should call ICFA headquarters at 1-800-645-7700. 
Code: 
wr102000

Washington Report 082000

Date Published: 
082000
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Part of Symposium on Deathcare as Consumer Issue 

 
by Robert M. Fells, Esq., General Counsel 
 
On May 24, the North American Cemetery Regulators Association (NCRA), the AARP and the Consumer Federation of America combined their sponsorships to hold the First National Symposium on Deathcare as a Consumer Issue at AARP headquarters in Washington, D.C.
 
This event was the third in a historic trilogy of public meetings of consumer groups, industry trade associations and government agencies held within six months. The first two meetings occurred at the Federal Trade Commission (FTC) Funeral Rule workshop conference in November 1999 (see the January Washington Report) and the Senate Special Committee on Aging hearings in April (see the April/May Washington Report). Many of the same individuals represented the various organizations at all three meetings, but the symposium provided the participants with an opportunity to discuss issues out of the glare of television lights and cameras and without court reporters transcribing their statements.
 
Three panels made presentations: an industry panel consisting of representatives from the ICFA, NFDA, CANA, the Monument Builders of North America and the National Casket Retailers Association; a consumer panel with staff from AARP, FAMSA/Funeral Consumers Alliance, NCRA and the National Cooperative Business Alliance; and a panel of government and regulatory agencies from the FTC, NCRA, the National Association of Consumer Agency Administrators and the U.S. Senate Special Committee on Aging. The symposium was organized as "a meaningful forum for sharing information about consumer education, consumer protection and the deathcare industry" rather than as a confrontational airing of complaints that characterized the first two meetings. Attendance was by invitation only to health care, hospice, nursing home and related agencies.
 
The ICFA was represented by Past President Robert A. Gordon Sr, CCFE, Eternal Hills Memorial Gardens and Funeral Home, Klamath Falls, Oregon, who is chairman of the Inter-Allied Committee and also chairs the Certification Board. Gordon gave a strong endorsement of prefunding prearrangements. "Planning to use insurance or savings to pay funeral and burial expenses at the time of need may sound like a good idea," Gordon observed, "but in many cases that money is used to pay medical bills resulting from the final illness." He also discussed the various ICFA Programs for assisting and educating consumers, including handouts that were distributed to attendees. Also participating from the ICFA were Past President Robert "Ted" Nuckolls, CCE; General Counsel Bob Fells; and ICFM Managing Editor Susan Loving.
 
CANA Executive Director Jack Springer noted that the average wedding costs $17,000 and the average car $22,000. By comparison, Springer noted, funerals are significantly less expensive. He observed that the rise in the cremation rate stems from the fact that cremation gives people more time for planning a meaningful service and memorialization. "People aren't necessarily trying to spend less money," Springer said, "they simply want to spend meaningful money." He pointed out that the cremation rate has increased from 12 percent 18 years ago to about 25 percent today.
 
Iowa regulator Dennis N. Britson, who serves as executive director of NCRA, provided an overview of his association's activities, including the development of model policy statements. He noted that cemeteries and funeral homes have traditionally been regulated through separate statutes and regulatory agencies but this approach may be changing. Maryland Office of Cemetery Oversight Director Steven V. Sklar discussed his newly formed agency and the fact that many complaints are resolved by a simple exchange of phone calls. FTC attorney Alan Hile outlined the ongoing Funeral Rule review proceedings, and Lauren Fuller, chief investigative counsel with the Senate Aging Committee, reviewed the recent hearings and possible follow-up.
 
Almost all of the participants respected the "no accusations" theme of the meeting and focused on the issues that consumers and their families need to consider when making funeral and burial arrangements. As a result, the symposium provided attendees with some constructive networking opportunities to informally discuss issues of mutual concern. A second symposium is anticipated for sometime in the spring of 2001 and the ICFA has indicated its willingness to participate. 
Code: 
wr082000

Washington Report 042000

Date Published: 
042000
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Testifies at Senate Committee Hearings on Funeral/Burial Industry 

 
by Robert M. Fells, Esq., General Counsel 
 
On April 10 and 11, the Senate Special Committee on Aging held hearings to explore the practices of funeral homes, cemeteries, and preneed sellers. This occasion apparently marked the first time since the 1960s that a Congressional committee has investigated funeral-related industries through public hearings. Consumer witnesses and industry critics testified during the first day. They were followed on the second day by a Federal Trade Commission representative, a California state regulator, NFDA and the ICFA. The hearings were broadcast over cable television by C-Span and can be downloaded on the Aging Committee's website.
 
The ICFA staff worked closely with committee staff and our association was represented by Paul Elvig, ICFA secretary and board member, State Legislation and Association Committee chairman, and vice president with Evergreen-Washelli Memorial Park and Funeral Home, Seattle, Washington. Elvig's testimony is reviewed below. The Committee on Aging is chaired by Sen. Charles E. Grassley (R-Iowa), working together with ranking member Sen. John Breaux (D-Louisiana) in a bipartisan manner. Grassley stated that the hearing was not a "gotcha" type of event and noted the high level of cooperation the industry provided. Sens. Grassley and Breaux were cordial to all witnesses and industry representatives.
 
Consumer Testimony
The first witness, Irwin Karp, was a convicted felon who had sold preneed cremation services and testified via video conferencing from a California prison. Karp discussed what he saw as several shortcomings that existed in California law circa 1990. He seemed unaware that since that time most of these issues had been addressed and enforcement efforts increased. The consumer witnesses offered detailed accounts of various problems, including a crypt leaking fluids in a Pennsylvania mausoleum, a California cemetery that illegally disinterred remains and resold the lots, and an elderly Florida woman (as told by an independent funeral director) who had signed a series of preneed agreements totaling $132,000.
 
The industry critics included Darryl Roberts; Father Henry Wasielewski; Lamar Hankins, president of the Funeral and Memorial Societies of America (FAMSA); and former AARP Board Chairman Dr. Robert Shreve. After reading his testimony, Roberts did not remain for questioning. Father Wasielewski alleged, among other things, the prevalence of what he termed "clergy-mortuary bribery." Many of the FAMSA and AARP remarks were anticipated and rebutted by the ICFA's written testimony. Under questioning, AARP's Shreve agreed with the ICFA position that the FTC Funeral Rule is an inappropriate regulatory vehicle to apply to cemeteries, although he believed that all sellers should be federally regulated.
 
Government and Industry Testimony
On the second day of the hearings, the FTC's Eileen Harrington, associate director of marketing practices, gave an overview of the commission's consumer protection activities through the FTC Act and the Funeral Rule. Harrington chaired the Funeral Rule Review Public Workshop last November (see the January "Washington Report" column for details). G.V. Ayers, California Department of Consumer Affairs, discussed his agency's enforcement efforts and the benefits of one agency having oversight of funeral homes, cemeteries and crematories.
 
The NFDA witness, Jay U. Jacobson, was an Iowa funeral director apparently personally acquainted with Senator Grassley. Jacobson criticized the committee and said he was "shocked by the lack of credible funeral service professionals invited here to give testimony." Later, in response to a question by Grassley, Jacobson criticized Sen. Grassley and the committee personally for not defending the industry. An obviously angry Sen. Breaux responded a few minutes later saying that he was offended by the remarks and that Jacobson did not serve his association or his industry well by such an attack. "You just don't speak for yourself, but for 14,000 funeral directors," Breaux said. "Four to five people say they have complaints and now it's your day" to respond. Breaux stated, "You can't say the only people we should have at the hearing are funeral home owners."
 
ICFA Testimony
The ICFA was the final witness and Paul Elvig provided positive, proactive testimony. Elvig complimented the senators and said "we're proud of what you're doing here today." He urged state regulation over federal intervention and, picking up on Grassley's idea about developing model rules for the states, discussed the ICFA Model Guidelines for State Laws and Regulations. Elvig responded to the issue of making preneed contracts portable, discussing the complexities and comparing it to transferring airline tickets from one carrier to another. He pledged that the ICFA will work with the committee on this issue.
 
Elvig strongly advocated the use of prearrangements and prefunding "to assure consumers that they can control the events around them." He took "strong exception to the notion that people won't complain" if they have experienced a problem with an industry member and pointed to the fact that the committee received "testimony from a man behind bars says the system works." The FTC's Harrington agreed that there are few consumer complaints when compared to other professions and industries.
 
In addition, the ICFA's written testimony discussed the findings of the U.S. General Accounting Office's 1999 investigative report of the industry, particularly the finding of low numbers of consumers complaints. The ICFA stated that "consumer education is the key to consumer protection. There exists a wide variety of options and price ranges for consumers to consider.... This information is widely disseminated by industry members, consumer groups, memorial societies and, increasingly, through the internet. The types of arrangements selected will vary according to each individual based on his or her personal preferences, ethnic background, and religious beliefs. Obviously, these decisions should not be made under the stress and bereavement of a death, or even an imminent death, in the absence of adequate thought and planning. The greatest challenge confronting the goal of consumer protection is the necessity for consumers to explore their options before the need arises."
 
The ICFA submitted a number of exhibits with its written testimony, including consumer and state law surveys. The testimony concluded by stating, "ICFA encourages states to develop uniform laws through its Model Guidelines and works actively with federal, state and consumer organizations, such as the Better Business Bureau, to quickly resolve consumer complaints and to prevent problems from occurring. Indications from all reliable sources, including the GAO investigative report, show persuasively that consumer problems are low in volume and are efficiently resolved."
 
While it is premature to speculate on any follow-up action by the Aging Committee, the ICFA has submitted comments discussing various issues raised during the hearings. The committee is expected to publish a report and recommendations within the next few months.
Code: 
wr042000

Washington Report 092002

Date Published: 
092002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Online Casket Sales Are Focus of New FTC Hearings

 
by Robert M. Fells, Esq., general counsel
 
In late July, the Federal Trade Commission announced it would convene a public workshop conference on October 8-11, in Washington, D.C., titled "Possible Anticompetitive Efforts to Restrict Competition on the Internet."
 
According to the FTC announcement, "The workshop will focus on how certain state regulation may have anticompetitive effects, and how certain business practices may raise antitrust concerns, in the context of business-to-consumer e-commerce."
 
Of particular interest to industry members, this workshop marks the first time the FTC is focusing on efforts to restrict the online Internet sales of caskets to consumers.
 
The workshop is designed "to enhance the commission's understanding of particular practices and regulations" and panels will "address certain specific industries including retailing, automobiles, real estate/mortgages, health care/pharmaceuticals/telemedicine, wine sales, auctions, contact lenses, and funerals (caskets)."
 
The FTC announcement observed that each of these industries has experienced "some growth in commerce via the Internet, but according to various commentators, each also may have been hampered by anticompetitive state regulation or business practices. ... In addition, these industries involve goods and services that comprise a very large portion of a consumer's budget, such as homes, cars, schools and health care."
 
The FTC intends that each industry panel "have at least one independent analyst or academic, and also have a representative from the affected industries (on both sides of the issue). Where appropriate, the panel will also include a representative from a government agency, including (where appropriate) representatives from different states."
 
The FTC stated that it hoped that "each panel will provide all sides of the issue, including perspectives of industry, intermediaries, consumers, and regulators."
 
With respect to online casket retailing, the FTC indicated that it wants to explore the following areas:
 
  • What types of state regulations limit online casket sales?
  • What are the costs to the consumers?
  • What are the pro-consumer rationales for such regulations, particularly in light of recent controversies?
  • Are there less restrictive means of achieving the same goals?
  • What is the status and focus of current litigation?
 
The ICFA has notified FTC staff to express its interest in participating in the upcoming workshop and to submit written testimony.
 
Members will be updated as plans for the workshop are finalized.
 
 
 

Court Blocks Injunction Prohibiting Cemetery from Removing Flags 

 
A Massachusetts appeals court vacated a lower court's preliminary injunction that had prohibited a cemetery from removing American flags placed on grave sites.
 
In Westfield Veterans Council v. Diocese of Springfield, St. Mary's Cemetery in Springfield, Massachusetts, has a policy of allowing flags to be placed on graves for seven days prior to and following Memorial Day and Veterans Day.
 
A local veterans group objected to the removal of the flags after seven days, alleging that such a policy violated constitutional rights of free expression. The cemetery cited maintenance and safety concerns to justify the regulation. However, the lower court granted the veterans group a preliminary injunction prohibiting the cemetery from removing any of the flags on the 1,600 grave sites until trial.
 
In vacating the injunction, the appellate judge noted that "the laws governing cemeteries and burials ... distinguish between private cemeteries and public cemeteries." The court held that a private cemetery "may limit what is said in a grave marker, what sort of grave markers are used, and what is acceptable as grave decor. In the absence of a right of expression by family members in connection with the graves of their loved ones, there is no basis for this injunction. There is no need to consider the reasonableness of the regulation, the rights of religious organizations to manage their own affairs, the reasonableness of the Diocese's rule, nor the balance of harms."
 
Interestingly, the court noted that "an appellate court, let alone a single justice of one, will not interfere with a preliminary injunction if there is a supportable basis for the trial court's action, even if, on final analysis it may prove to be mistaken. For the reasons stated, I do not think there is a supportable basis for the preliminary injunction."
 
The veterans group has filed an appeal to restore the injunction.
Code: 
wr092002

Washington Report 082005

Date Published: 
082005
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA analyzes funeral-related complaints filed with FTC

 
by ICFA General Counsel Robert M. Fells, Esq.
 
Since 1998, the ICFA has analyzed funeral-related complaints consumers have filed with the Federal Trade Commission by letter, phone, fax and, more recently, e-mail. The FTC does not publish these complaints and inquiries but makes them available to interested parties who file requests through a federal disclosure law known as the Freedom of Information Act.
 
General complaints involving consumer fraud alone accounted for more than 635,000 complaints filed with the FTC in 2004. By contrast, the total number of funeral-related consumer complaints filed with FTC during the two-year period beginning January 2003 and ending December 2004 is 571, or approximately 24 complaints per month on a nationwide basis. To further place these figures into context, there were approximately 2.4 million deaths during each of the two years under review.
 
It is important to note that FTC staff cautions that the "complaints have not necessarily been verified by the FTC. Therefore, you should make your own judgment about relying on the information provided." In addition, not all complaints were filed by customers of the businesses subject to the complaint.
 
The ICFA's analysis of the complaints indicates that a fair number were filed by competitors or former employees of the businesses named in the complaints. One complainant filed a series of complaints against individual funeral homes owned by the same company. However, the majority of complaints appear to be filed by consumers who were dissatisfied with their experience.
 
Of the 571 complaints provided by the FTC, 409, or approximately 70 percent, involved funeral homes. A slight majority of the funeral home complaints, 238, or 58 percent, dealt with potential violations of the FTC Funeral Rule. The most common allegations involved the lack of itemization or not providing a general price list, imposing additional charges when the casket was purchased from another provider or charging fees that had not been previously disclosed.
 
Complaints not relating to the Funeral Rule involving funeral homes focused on allegations such as rude or insensitive conduct, not providing copies of the death certificate, mistakes in the obituary and incidents where the remains would not be released for burial until the bill was paid.
 
Perhaps the most bizarre complaint involved an allegation where the funeral director threatened to disinter the deceased and return the remains to the mortuary until the family signed certain papers.
 
Complaints filed against third-party sellers
 
After funeral homes, the highest number of complaints involved third-party entities such as casket retailers, monument companies, cremation services, telemarketers and casket and vault manufacturers. These complaints totaled 78, or approximately 14 percent of the 571. Only three of the third-party complaints appeared to be Funeral Rule-related. For purposes of this review, complaints were considered related to the Funeral Rule regardless of whether the particular business is technically considered a "funeral provider" under the current definition in the Funeral Rule. For example, casket stores are not covered under the Funeral Rule, but where a complaint alleged that a casket store did not provide a written price list, the complaint would be considered Funeral Rule-related.
 
Complaints filed against cemeteries
 
The third largest category of complaints involved cemeteries. Seventy-five complaints, approximately 13 percent of the total, alleged a variety of cemetery misconduct, including added charges when a customer purchased a marker or vault from another provider, inability to obtain a refund when cemetery property is no longer wanted and late delivery or delayed installation of a marker.
 
Eight of the cemetery complaints appeared to be Funeral-Rule related. Perhaps as an indication of the rise of third-party sellers in recent years, this 2003-2004 survey of consumer complaints marks the first time there have been more complaints against third parties than against cemeteries, though the difference is a marginal three complaints.
 
Rounding out the total number of complaints, eight were filed against combined funeral home-cemetery operations, and only one complaint was lodged specifically against a crematory.
 
The ICFA understands that the 571 complaints received by the FTC during 2003 and 2004 do not represent the total number of complaints in the United States that may exist against the cemetery and funeral profession for that time period.
 
However, the ICFA believes it is reasonable to interpret this data as an important representative sampling, on a national level, of the types of problems that consumers and others, such as third parties and competitors, are experiencing.
 
This data will be particularly helpful when the FTC resumes its Funeral Rule review proceedings, which are expected to begin by the end of the year. ICFA members will be kept informed of significant developments.
Code: 
wr082005

Washington Report 082004

Date Published: 
082004
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Behind the Scenes: How the ICFA Takes Its Stand on the Issues

 
by Robert M. Fells, Esq., general counsel
 
Since this issue of our magazine is dedicated to the annual review of government and legal affairs subjects, this column will discuss how the ICFA determines its position on the major issues confronting the cemetery and funeral service profession. Taking the "correct" stand on a given issue involves many hours of review, discussion and drafting of testimony by our volunteers and staff, work that few members are probably aware of. This column will go behind the scenes to show exactly how the ICFA develops a position on a new issue.
 
Taking a Position
 
The Government and Legal Affairs Committee is responsible for reviewing new issues such as proposed federal regulations, Congressional legislation and litigation having the potential to affect a significant number of ICFA members. The committee is relatively small-it has never had more than 12 members. (A list of members is at the end of this column.) Nine committee members are from independent firms (not affiliated with the public companies), including nonprofit entities. Information, such as the substance of a proposed regulation, is circulated to committee members by fax or, in the case of lengthier documents, by overnight mail. Committee members are asked to provide feedback to chairman Irwin Shipper by phone, fax or e-mail. Conference calls are scheduled where needed as a follow-up.
 
When a consensus on a given issue is reached, the chairman notifies the ICFA president and Executive Committee of the recommended position. In unusual situations, the entire Board of Directors (33 members) may be consulted, but in most cases the Executive Committee is authorized to approve the association's position on an emerging issue. (The Executive Committee includes the president-elect; immediate past president, currently Carol Caunter; treasurer and president and past president appointees, currently Edward C. Laux, CCE, and Richard T. Sells, CCE.) The ICFA's positions on longstanding issues are also periodically reviewed by the Government and Legal Affairs Committee in light of new developments and information. This intensive procedure to develop and adopt an official position on a new issue is usually completed in a few days. When time is of the essence, decisions might be made in hours.
 
Communicating With ICFA Members
 
Although a position on a new issue, i.e., to support or to oppose a proposed regulation or bill, may be reached quickly, the arguments in support of the position may take longer to fully develop. The Government and Legal Affairs Committee circulates news to the ICFA membership and solicits comments and feedback. In recent years, news has been quickly disseminated to a large portion of the membership through the ICFA WIRELESS e-mail newsletter, published every other Tuesday. More recently, the ICFA Network has been used to seek feedback from the membership. Members provide helpful feedback on the practical consequences, good or bad, a proposal could have on their business operations. 
 
Some of this information is included in testimony or comments filed by the ICFA with government agencies, Congressional committees or the courts. The ICFA also recruits members to provide firsthand testimony at public hearings. Legislators and regulators give more weight to carefully documented testimony than to sweeping claims such as, "If this bill passes, I'll go out of business." Seeking comments from members also provides a "backstop" to the Government and Legal Affairs Committee to assure them that their consensus on an issue reflects the opinions of the general membership.

Building Coalitions
 
Since the cemetery and funeral service profession is comparatively small, the ICFA sometimes seeks out potential allies to strengthen its ability to succeed on a given issue. For example, when the Clinton Administration published onerous ergonomics regulations late in 2000, the ICFA joined forces with the National Coalition on Ergonomics, which was coordinated by the U.S. Chamber of Commerce. The ICFA thereby served its members by channeling resources into a large coalition, rather than attempting to carry the flag on this issue by itself. The coalition successfully persuaded Congress to repeal the Clinton ergonomics program in early 2001.
 
In response to the Dodd/Foley bills that were introduced into Congress late in 2002, the ICFA identified state and national trade associations, regulators and even a consumer advocate who felt that the proposals were counterproductive and unnecessary. Tax proposals often find the ICFA joining with financial group coalitions. For example, when Congress decided to perform a major overhaul of the Internal Revenue Code in 1986, all trust fund deductions were initially eliminated, including the cemetery care fund deduction under IRC section 642(i) that the ICFA had obtained a few years earlier. The ICFA worked with banking associations and the cemetery trust deduction was restored.
 
Multi-State Coalitions
 
While the ICFA seeks coalitions for its primary area of concern, the federal level, an increasing number of state governments are joining together in coalitions of their own in order to propose model laws or regulations for adoption by each individual state.
 
A few years ago, an organization of state tax departments called the Multistate Tax Commission advanced a model law for taxing the earnings of funeral trusts that many ICFA members found objectionable. The ICFA intervened in the project and persuaded the commission to adopt a fairer approach. Today, the ICFA is involved with the Streamlined Sales Tax Project, another coalition of state tax departments developing "simplified" state sales tax model laws that may become complicated for cemeteries, funeral homes and other members that deliver contracts across state lines.
 
Some Key Position Summaries
 
Legislative and regulatory proposals can change over time, so the ICFA's support or opposition to a measure is never carved in stone. The following are summaries of current key positions: Dodd/Foley Bill: Currently only the House version of the Federal Death Care Disclosure Act is pending, with no action scheduled at the time of this writing. The ICFA is opposed to this legislation because the bill does not identify consumer problems or provide any solutions. Instead, the bill, H.R. 4112, seeks to establish a new federal bureaucracy with an annual budget of $5 million to specifically regulate the operations of funeral homes, cemeteries, crematories, monument retailers and related businesses. The bill also provides a private right of action whereby individuals can sue funeral-related businesses and obtain minimum damages of $5,000 per violation.
 
 
 
  • FTC Funeral Rule: The ICFA views the expansion of the Funeral Rule as the expansion of the federal regulation of the entire funeral services profession. The ICFA supports the FTC's procedures that require proof of substantial evidence of consumer harm in order to justify expansion of the rule. To date, this burden of proof has not been met.
  • Federal Anti-Spam Commercial E-mail Restrictions: The ICFA supports the development of federal regulations through the FTC to restrict unsolicited commercial e-mail. However, current rulemaking by the FTC suggests that legitimate e-mail communications between businesses and their customers may also be restricted. The ICFA opposes such restrictions and has urged the FTC to develop practical regulations to exempt e-mail where an existing business relationship has been established.
 
Finally, this brief look behind the scenes would not be complete without mentioning the public relations aspect of developing ICFA's positions. No matter how much the membership may agree with a position taken by their association, should the media interpret it as "anti-consumer," the ICFA runs the risk of seriously harming the perception of its members with the public.
 
This risk is especially apparent in the case of so-called "consumer protection" legislation. The skill required to articulate a consumer-sensitive position that takes issue with consumer legislation is a continuing challenge facing the Government and Legal Affairs Committee.
 
 

Robert M. Fells, Esq., is ICFA general counsel. He can be reached at 1-800-645-7700.
 
 
 
ICFA Legal & Legislative Affairs Committee, 2004-2005
 
  • Chairman Irwin Shipper, CCE, Rose Hills Memorial Park, Putnam Valley, New York
  • William B. Addison Jr., Evergreen Mortuary, Cemetery & Crematory, Tucson, Arizona
  • Gregory J. Easley, CCE, Westlawn-Hillcrest Memorial Park, Funeral Home & Crematory/Stewart Enterprises, Nebraska
  • Paul M. Elvig, Evergreen-Washelli Funeral Home & Cemetery, Washington
  • Andrew Gauntley, Alderwoods Group, British Columbia, Canada
  • Caressa Hughes, Service Corporation International, Texas
  • Keenan L. Knopke, CCE, Curlew Hills Memory Gardens, Florida
  • Edward C. Laux, CCE, cemetery consultant, Arizona and New Jersey
  • John F. Llewellyn, CCE, Forest Lawn Memorial-Parks and Mortuaries, California
  • Mark J. Revitz, Vista Memorial Gardens and Funeral Home/Pershing Industries, Florida
  • Gregg A. Strom, Cornerstone Family Services, Pennsylvania
  • William L. Wright, CCE, Fairlawn Burial Park/The Heritage Funeral Home, Kansas
Code: 
wr082004

Washington Report 082003

Date Published: 
082003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

FCC Will Use FTC Telemarketing 'Do Not Call' Registry for Intrastate Calls

 
by Robert M. Fells, Esq., general counsel
 
As previously reported, the Federal Communications Commission (FCC) has been considering whether to establish its own national Do Not Call registry to allow residential telephone subscribers to opt out of receiving intrastate telemarketing calls.
 
In March, Congress approved the Do-Not-Call Implementation Act authorizing funding for the Federal Trade Commission (FTC) to establish its own Do Not Call registry, which would apply only to interstate calls. However, Congress also directed the FCC to work with the FTC to apply the Do Not Call list to intrastate calls as well. Effective October 1, telemarketers must delete from their calling lists any phone number registered through the FTC/FCC Do Not Call list or risk fines up to $11,000 per violation.
 
ICFA members who engage in any type of telemarketing, even if limited to setting appointments for a face-to-face meeting, should carefully review the new rules by both the FTC and the FCC to determine if they are affected.
 
While the regulations from both agencies are similar, they are not identical and contain some important differences. The FTC enforces the Telemarketing Sales Rule (TSR), originally enacted in 1995, that requires certain disclosures to be made by telemarketers including prices, cancellation and refund policies for interstate calls, that is, calls from one state to another. The ICFA successfully obtained an exemption to the TSR for appointment-type calls that seek only a meeting with the consumer.
 
The FCC enforces the Telephone Consumer Protection Act of 1991 (TCPA), which requires, among other things, that telemarketers maintain an in-house, company-specific Do Not Call list for consumers who ask not to be called again. The TCPA contains no appointment call exemption to this requirement and applies both to interstate and intrastate phone calls.
 
Both FTC and FCC laws also regulate the use of autodialers, caller ID, call abandonment, unsolicited faxes, calling time restrictions and related issues.
 
The new national Do Not Call registry contains no appointment call exemption but does create a number of other exemptions:
 
• the consumer has given prior express permission to be called;
 
• there is an "established business relationship" between the seller and the consumer; • there is a personal relationship between the caller and the consumer (e.g., the caller is a relative or friend); or
 
• the caller is a tax-exempt, nonprofit organization. If a nonprofit company hires a third-party telemarketing firm to place the calls, the nonprofit exemption will apply to the telemarketing firm under both the FTC and FCC regulations, although the FTC requires the third-party firm to honor consumer requests to be placed on the company-specific Do Not Call list for interstate calls.
 
The FCC states that "prior express permission" must be based on a signed agreement, including the phone number to be called, between the consumer and the seller stating that the consumer agrees to be contacted by that particular seller. Permission can be revoked when the consumer asks to be placed on the company-specific Do Not Call list.
 
 
The FCC defines an "established business relationship" as "a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a residential subscriber with or without consideration, on the basis of the subscriber's purchase or transaction with the entity within the eighteen (18) months immediately preceding the date of the phone call or on the basis of the subscriber's inquiry or application regarding products or services offered by the entity within the three (3) months immediately preceding the date of the call." 
 
Access to the national database will be available to telemarketers by September on an area code basis. There is no fee for businesses purchasing up to five area codes in the database (33 states currently have five or fewer area codes) and the FTC has proposed that sellers be charged $29 annually per area code beyond the first five with a maximum annual fee of $7,250 for access to the entire national database.
 
Telemarketers will be required to update their lists every three months, and the area codes provided to an entity cannot be shared with others. For example, a telemarketing firm must pay a fee for each entity on whose behalf it is making calls even if the same area code databases are used for each of its clients.
 
According to FTC and FCC staff, sellers who place calls solely intrastate are not covered by the FTC Telemarketing Sales Rule and would be required to comply only with the FCC regulations, assuming that none of the exemptions apply.
 
For more information, check the FTC Web page at www.ftc.gov and the FCC Web page at www.fcc.gov. ICFA members with specific questions can also contact me for assistance.
Code: 
wr082003

Washington Report 082001

Date Published: 
082001
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Submits Comments as OSHA Develops New Ergonomics Program

 
by Robert M. Fells, Esq., general counsel 
 
This summer, the Bush administration initiated a new review for an ergonomics workplace safety program in the wake of the onerous plan implemented by the Clinton administration but repealed by act of Congress earlier this year (see the June column for details). Public forums were held during July in Washington, D.C.; Chicago, Illinois; and Stanford, California.
 
The new approach outlined by Labor Secretary Elaine Chao stresses a "common sense" method for preventing musculoskeletal disorders (MSDs) through cooperation between OSHA (Occupational Safety and Health Administration) and employers. The hearings were not specifically structured but instead were designed to solicit ideas about the best method of developing an ergonomics program. The ICFA submitted comments outlining its concerns with any program, especially the effect on small businesses.
 
The ICFA comments were submitted by Past President Edward C. Laux, CCE, who noted there are at least 100,000 cemeteries and approximately 22,000 funeral homes in the United States. "The vast majority of cemeteries and funeral homes, approximately 87 percent, are small businesses and family-owned operations. The owners of these small businesses wear a number of hats, including that of legal compliance officer for the many governmental regulations they face, both state and federal, including existing OSHA standards. We urge the department to bear these factors in mind when developing 'user friendly' regulations that can be easily understood and implemented by individuals who may have little formal training in comprehending the language of government regulations."
 
Laux commented on the historically low injury rate of cemetery and funeral home workers, rates that are confirmed by OSHA's own statistics. "Based on my own personal experiences of over 40 years in this industry, I have found that our members have more often been fined for paperwork violations than for any injuries sustained by their workers due to an unsafe worksite. More importantly, many of the MSDs that potentially would be covered in an ergonomics program involve activities whereby cemetery and funeral home workers use tools, power lifts and other equipment that significantly reduce the potential for injury. For example, the mechanical backhoe has virtually eliminated the hand-digging of graves and consequential back injuries."
 
The ICFA urged the Labor Department to establish a threshold rate based on actual reported injuries as "a practical method of determining which businesses should be covered by an ergonomics program in the first place."
 
The ICFA comments also suggested that alternative approaches be explored to encourage workplace safety, such as qualifying specific MSDs under state workers compensation laws. "Under this approach, the insurance industry will have strong incentives to develop prevention programs to keep the number of claims down. Businesses will likewise have every incentive to adopt such prevention programs to keep their insurance premiums at a minimum. We feel this approach creates a more positive environment for worker safety than the 'carrot-and-stick' approach of threatening ruinous fines in order to obtain compliance with regulations that are subjective in terms of measuring compliance."
 
The Labor Department plans to issue a report in September, taking into account comments submitted, to identify a course of action for proposing a new ergonomics program.
 
In a related development, the Mayo Clinic recently published a study indicating that heavy computer use does not increase the likelihood of carpal tunnel syndrome, an MSD involving the wrist. In creating a program for ergonomics injuries, a National Academy of Sciences report issued earlier this year noted that, "No single strategy is or will be effective for all types of industry."
 
The ICFA supports the National Ergonomics Coalition, a broad-based group of trade associations and industries advocating practical prevention for MSDs.
 
Members will be kept informed of important developments.
Code: 
wr082001

Washington Report 082008

Date Published: 
082008
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Mass fatalities planning: Private sector, federal agencies meet in D.C.

 
The U.S. Department of Homeland Security recently convened a workshop conference in Washington to discuss with private sector representatives in the death care industry various initiatives to ensure adequate planning for mass fatalities and community needs.
 
Discussions at this meeting, held June 13, focused on methods to alert other sectors to the need to coordinate and prioritize services, including transportation, energy, chemical, banking and financial, and communications, among other industries.
 
The ICCFA was represented by General Counsel Bob Fells; other organizations represented were the Cremation Association of North America, the National Funeral Directors Association, the National Funeral Directors and Morticians Association, the Casket and Funeral Supply Association and the Dodge Co.
 
The main focus of the planning sessions that the ICCFA has participated in over the past two years is how to protect operations in the 18 sectors that comprise the "critical infrastructure and key resources" (CIKR). There was a consensus among the group at the June 13 meeting that in the first 24 to 72 hours following a disaster, whether caused by a flu pandemic, natural catastrophe or terrorist attack, localities would be on their own to cope with the consequences and that federal agencies could not be viewed as the "cavalry" coming to the rescue.
 
Losses to the workforce are generally estimated at between 25 and 40 percent, either as casualties or as caregivers, and emergency business plans should be developed by all companies in order to remain operational for CIKR purposes. The group is currently drafting sector-specific issues and needs for distribution to sectors having an impact on mass fatalities management.
 
 
 

Pet cremations: A cautionary tale 

 
Funeral homes and cemeteries that may be considering pet cremations should be aware of a recent incident whereby the U.S. Department of Defense (DOD) canceled a contract with a crematory because it also processed animal remains, though in a separate chamber.
 
According to The Washington Post, since 2001 DOD has cremated some remains of U.S. military personnel killed in Iraq and Afghanistan in a Delaware crematory that also cremates pets.
 
An officer who traveled to the crematory to attend the cremation of a friend discovered signage that indicated pets were also cremated at the facility. Defense Secretary Robert Gates was quoted as saying that he found "the site and signage insensitive and entirely inappropriate for the dignified treatment of our fallen. ... The families of the fallen have the secretary's deepest apology."
 
Though no misconduct in the handling of the remains seems to have occurred, the government announced that it would "cease using the off-site crematory, use only crematory facilities that are co-located with licensed funeral homes, and have a military presence during the off-base process at the funeral home facilities."
 
Code: 
wr082008

Washington Report 082007

Date Published: 
082007
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Court rules that burial insurance policy limited to face amount 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
On May 22, the Louisiana Supreme Court waded into a controversial area of insurance by deciding whether a funeral home's burial insurance policy obligates it to provide all of the funeral services and merchandise contracted under the policy regardless of the policy's face value.
 
In Sims v. Mulhearn Funeral Home Inc., the court decided the funeral home's obligation to perform the contract was limited to the face amount of the policy, under the facts in this particular case.
 
The decedent purchased two policies in 1958 and 1963, respectively, each with a face amount of $500. "Both policies provided that upon the death of the insured, funeral benefits in the face amount of the policies will be furnished, which shall include the following: casket and outside case, burial garments if requested, preparation of the body, funeral coach, arrangement and transportation of flowers, conducting of the funeral, furnishing information to newspapers, cemetery equipment, chairs, use of funeral home ... ."
 
Following the insured's death in 2003, his widow presented the policies to the funeral director, who applied the total $1,000 in benefits to offset the total cost of the funeral of $5,998.39.
 
The widow sued the funeral home in a class action for breach of contract and infliction of emotional distress, claiming the entire funeral contract should have been performed for the face value of the policies. The court analyzed the policies using basic contract law stating, "An interpretation of the policies to provide for a complete funeral, at no additional expense, regardless of the amount of coverage purchased, is not reasonable and would lead to absurd consequences."
 
The plaintiff also challenged as unconstitutional a 2004 state law that clearly limits the liability of burial policies to their stated face amounts. However, the court reasoned that it was unnecessary to review the statute for its constitutionality due to the clear language in the policies at issue in the case.
 
 
 

Procedural vote kills union bill-for now 

 
The controversial Employee Free Choice Act (H.R. 800/S. 1041), a bill that would abolish secret ballot elections for workers in deciding whether or not to unionize, was "killed" for the time being in the U.S. Senate. Following vigorous debate over the bill on June 25 and 26, a vote was taken to close debate. This procedure, known as cloture, is necessary in order to allow the bill to be brought to a vote and requires 60 votes. Otherwise, debate will continue or, as is usually the case, the bill is tabled for future consideration.
 
The cloture vote failed 51-48 and further consideration of the bill was tabled. Observers believe the bill will not be considered again until next year at the earliest. H.R. 800 was quickly approved by the House of Representatives on March 1, by a vote of 241-185. (See the Irwin Shipper interview on page 12 for more information on this legislation)
 
 
 

Court: University not obliged to track donated bodies 

 
In the second decision in as many years on the issue of bodies donated to science, the California state appeals court ruled that the University of California's "willed body program" had no responsibility to keep track of the bodies donated to it nor to return the cremated remains to the family.
Unlike the liability in the private sector, the state university is specifically exempted from charges of mishandling a corpse.
 
The court explained the distinction by stating: [Private sector] funeral-related services are principally for the comfort of the living, having as their aim the consolation of the leading mourners. The expectations of the survivors, and 'the essence of the contract for such services is a reasonable expectation of dignity, tranquility and personal consolation.'
 
"In contrast, the mission of UCI's WBP [University of California's Willed Body Program] is to obtain cadavers for study and dissection by medical students. In recognition of this distinction, the Legislature specifically exempted public institutions, hospitals, and medical schools from the Funeral Directors and Embalmers Law."
 
This decision, Conroy v. Regents of the University of California, is consistent with an earlier decision by the court in the Bennett case decided in 2005.
 
These decisions suggest that individuals and families donating bodies to science should carefully review the written agreements with the institution in question prior to signing.
 
Under the agreement, families may be waiving their expectation of having the remains treated in a dignified manner and returned for interment or memorialization.

 

Code: 
wr082007

Washington Report 082002

Date Published: 
082002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Recent Court Decisions Highlight Operational Issues 

 
by Robert M. Fells, Esq., general counsel 
 
Individuals and companies involved in business disputes concerning funeral homes and cemeteries seem to be increasingly turning to the courts to resolve their differences. This month's column focuses on three recent cases where the lower courts' initial decisions may have serious implications for the entire industry. At this point, we assume that the decision in each case will be appealed.
 
* * *
 
In North Carolina Board of Mortuary Science v. Crown Memorial Park, the state superior court considered whether a cemetery was acting in the capacity of an unlicensed funeral home by providing funeral services and merchandise to consumers. Specifically, the court held that unless the cemetery defendant, Crown Memorial Park, is duly licensed as a funeral establishment, it was prohibited from: offering to sell or arrange cremation services;
 
transporting or arranging to transport human bodies and cremated remains; and
 
advertising that it can make all necessary funeral arrangements. However, the court held that the cemetery could sell burial urns to the public, either at need or preneed, “without interference by the North Carolina Board of Mortuary Science.”
 
 
 
The most important aspect of the court's ruling concerned whether Crown Memorial Park could sell its “casket system” without licensure by the state board. On this issue, the court found that “certain parts” of the funeral licensing statute “violate the due process and equal protection clauses of the 14th Amendment to the Constitution of the United States and also violate the provisions of Sections 1 and 19 of the Constitution of the State of North Carolina, because they unreasonably deprive Crown of the right to engage in business and they impermissably discriminate against Crown.
 
“The restriction of preneed casket sales to licensed funeral establishments and their employees bears no rational relationship to the State's legitimate interest in protecting its citizens who purchase caskets in advance of death. There is no reasonable distinction between the preneed sale of caskets by licensed funeral establishments and the preneed sale of caskets by licensed cemeteries that are willing to be licensed for preneed sales and to submit to regulation of such sales.”
 
A statement published by the state board in late June indicates it is seeking support from the Legislature to amend the current statute by requiring the licensing by the board of all preneed sellers of merchandise. The decision is the latest in a series of court rulings during the last 12 months in Mississippi, Tennessee and Louisiana holding that laws restricting the sale of caskets to licensed funeral directors are unconstitutional.
 
* * *
 
In Westfield Veterans Council v. Diocese of Springfield, a Massachusetts superior court prohibited a cemetery from removing American flags from grave sites. The court order is in the form of a temporary injunction that leaves the flags in place until the case has gone to trial. According to briefs filed in the case, the defendant cemetery permits the flying of American flags at veterans' graves for “seven days before and seven days after Memorial Day and Veterans Day.”
 
The cemetery argued that its regulation was reasonable because, “If the flags were left in place all summer, each flag would have to be moved by hand in order to mow around or over the stones, or each veteran's grave would have to be trimmed by hand. ... If a mower were to hit a flag holder or a flag, the object would become a projectile and could cause injury to the operator or cemetery visitors.”
 
The veterans council plaintiff argued that the cemetery's reasoning might justify an absolute year-round ban on the flags but not the current restriction to the two legal holiday time frames. In the preliminary ruling prior to trial, the court found the plaintiff's argument “compelling.” The court held, “It is beyond question that the flying of the United States flag in this manner constitutes an expression that is protected by the First Amendment.” The plaintiff also alleged “severe emotional distress” on families of the decedents caused by the cemetery's policy, which affects approximately 1,600 veterans' graves on the grounds.
 
The cemetery defendant is St. Mary Cemetery, a Catholic cemetery maintained by the Diocese of Springfield, Massachusetts. Courts generally have given a wide latitude to the rules of religious cemeteries, so this decision is unusual for its adjudication of such regulations. The ruling would also seem to apply to secular or non-denominational cemeteries under a similar fact pattern in the court's jurisdiction.
 
* * *
 
The third court decision involves the requirement to arbitrate disputes in lieu of litigation concerning sales and marketing services provided by a third-party company on behalf of a cemetery owner. In The Redemptorists v. Coulthard Services Inc., a Maryland Court of Special Appeals decided whether certain claims in a lawsuit filed by the cemetery owner against a marketing firm defendant had to be dismissed, or at least postponed, due to an agreement to arbitrate any disputes.
 
Plaintiff alleged that defendants had breached their contract by a failure to pay $800,000 based on a percentage of the gross sales, and thereafter plaintiff terminated the contract and filed the litigation. The defendant company argued that the lawsuit should be dismissed because disputes arising under the contract were to be submitted to arbitration as specified under the provisions of the contract.
 
The appeals court held that “the arbitrable issue, namely the alleged withholding of funds representing the 'cause for termination' is at the heart of each of the six counts featured in The Redemptorists' complaint ... such that it cannot be severed from them.” The court ordered the issue to proceed to arbitration and stayed the litigation pending the outcome. “Should the arbitrator conclude that there was no material withholding of funds, this finding would be binding on the parties to the arbitration in the litigation of all six counts, so that there would be no need to litigate them.” This ruling suggests that even “standard” arbitration clauses in service contracts can be subject to controversy.
 
In sum, the three cases indicate a potential trend for business disputes in the funeral services, interment and memorialization industries to more frequently turn to litigation when the parties fail to settle their disagreements between themselves. However, unlike private settlements, court decisions can affect hundreds and thousands of businesses under their jurisdiction.
Code: 
wr082002

Washington Report 072008

Date Published: 
072008
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICCFA participates in briefing by President Bush to promote tax cuts

 
On June 2, the ICCFA participated in an economic briefing convened at the White House regarding the expiring "Bush tax cuts" that lowered tax rates beginning in 2001 and 2003. The cuts included repeal of the estate tax from 55 percent to zero.
 
These rate reductions will expire at the end of 2010, including restoration of the estate tax, unless Congress approves an extension or makes the tax cuts permanent. The ICCFA was represented by Bob Fells, external chief operating officer and general counsel. Near the conclusion of the briefing, President Bush unexpectedly joined the meeting and discussed the importance of maintaining the tax rate reductions.
 
(To view President Bush's remarks, go to the White House Web page at www.whitehouse.gov/news/releases/2008/06/20080602-2.html.)
 
Data offered in support of cuts
Among the financial data presented, the following highlight some areas of concern. If the 2001 and 2003 tax cuts expire in 2010:
 
  • 27 million small business owners will face an average tax increase of $4,066;
  • 18 million seniors will face an average tax increase of $2,181;
  • 12 million single women with dependents will face an average tax increase of $1,091;
  • 48 million married couples will face an average tax increase of $3,007, due in part to the restoration of the "marriage penalty" tax;
 
A typical family of four earning $50,000 will face a tax increase of more than $2,100.
 
The briefing was convened by the Council of Economic Advisors and the National Economic Council, which limited invitations to approximately 150 members of the Tax Relief Coalition. ICCFA was apparently the only organization in attendance that represented the funeral and cemetery professions.
 
Key findings of the National Economic Council:
 
1. The 2001 and 2003 tax cuts have substantially reduced the tax burden on labor and capital income, thereby increasing the rewards from working, saving and investing; and
 
2. If the tax cuts were made permanent and financed by reductions in government spending, long-run economic output could be expected to increase substantially.
 
Due to the tax cuts, the individual income tax rate is highly progressive. For example, in 2005, the top 5 percent of taxpayers paid more than one-half (59.7 percent) of all individual taxes, and the top 1 percent paid 39.4 percent. Taxpayers who rank in the top 50 percent of taxpayers by income pay virtually all individual income taxes. In 2005, they paid 96.9 percent of all individual income taxes.
 
Business owners also have benefited from the tax cuts. Approximately 70 percent or 1 million of the 1.4 million tax returns that benefit from lowering the top two tax brackets from 39.6 percent to 35 percent, and from 36 percent to 33 percent, are flow-through business owners.
 
A number of informational handouts were provided at the June 2 White House briefing. To view these and other relevant documents, go to www.taxreliefcoalition.org.
 
 
 

VA announces 'Second Headstone' policy 

 
On May 13, the U.S. Department of Veterans Affairs amended policy so that a government-furnished headstone or marker may be provided for a veteran's grave even if it is located in a private cemetery and is already marked.
 
Previously, the VA could not provide a marker in cases where the grave already had one. This "Second Headstone" policy is now permanent and also retroactive to eligible veteran deaths occurring on or after November 1, 1990, when Congress abolished the marker cash allowance benefit.
 
The announcement points out that the "VA does not pay the cost to install a government headstone or marker in a private cemetery, nor does VA have jurisdiction over policies established by private cemeteries."
 
"Therefore, the applicant must obtain certification on VA Form 40-1330 from a cemetery representative that the type and placement of the government-furnished headstone or marker requested adheres to the policies and guidelines of the private cemetery where the grave is located."
Code: 
wr072008

Washington Report 072007

Date Published: 
072007
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Capitol Hill roundup: Bills that could impact your business 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
As the first session of the 110th Congress has reached its halfway point, several bills are pending in the House of Representatives or the Senate that are relevant to funeral homes, cemeteries and related businesses. The following bills will remain in play until the end of 2008, when the second session of this Congress adjourns.
 
S. 989-Introduced by Sen. Blanche Lincoln (D-AR), this bill seeks to amend Title XVI of the Social Security Act to clarify that the value of certain funeral and burial arrangements are not to be considered resources for purposes of qualifying for the supplemental security income program.
 
Specifically, the bill would codify into federal law the current policy of the Social Security Administration that excludes funds paid by individuals under an irrevocable preneed contract, when the funds are placed into an irrevocable trust with the funeral provider as the named beneficiary of the trust.
 
This legislation has been introduced into previous Congresses and has been referred to the Finance Committee. There are currently no co-sponsors. A companion bill, H.R. 1629, has been introduced in the House.
 
S. 1334-Known as "the other Dodd bill," this legislation has been introduced by Sen. Christopher Dodd (D-CT) and seeks to make permanent the VA's "second marker" pilot program. This recent burial benefit authorizes the VA to furnish a government marker for a veteran's grave in a private cemetery where the burial site has already been memorialized.
 
Previously, the VA would not provide a marker if the gravesite were already marked. Applicants must confirm that the second marker will be placed on or near the grave or as close as practicable. The pilot program is due to expire by December 31, but the legislation would extend the program indefinitely.
 
The bill has six co-sponsors, including Sens. John Kerry (D-MA) and Robert Byrd (D-WV), and has been referred to the Committee on Veterans Affairs.
 
S. 1326-The Comprehensive Veterans Benefits Improvements Act of 2007 would, among other things, increase the veterans funeral and burial allowance from $300 to $1,270, and increase funeral and burial expenses from $2,000 to $4,100. The plot allowance would also be increased from $300 to $745 and generally apply to veterans buried in private cemeteries. The bill is sponsored by freshman Sen. Bernard Sanders (I-VT) and referred to the Committee on Veterans Affairs. There are currently no co-sponsors.
 
H.R. 1264-This bill would repeal the dollar limitation on funeral trusts organized as "qualified funeral trusts" or QFTs under section 645
 
of the Internal Revenue Code. In these types of preneed trusts, the trustee elects to pay the federal income tax on trust earnings in lieu of the pur-chaser. However the dollar limit of such trusts is capped to a maximum of $8,000 (indexed annually for inflation) per contract.
 
This legislation, introduced by Rep. Ron Kind (D-WI), has 17 co-sponsors and was referred to the Ways and Means Committee. Something of a perennial piece of legislation, this bill has been introduced in the last few Congresses.
 
H.R. 1273-Introduced by Rep. Shelley Berkley (D-NV) at the request of the ICCFA, this bill would restore the plot and marker cash allowances for veterans who opt for burial in private or religious cemeteries. The original benefits were eliminated by Congress in 1990. The bill has been referred to the House Committee on Veteran Affairs and has no co-sponsors to date. The ICCFA anticipates a multiple-year effort to secure passage of this legislation.
 
H.R. 800-The so-called "Employee Free Choice Act" has been extensively reported on in previous editions of ICCFA WIRELESS and in the March issue of ICCFA Magazine. The misnamed bill would eliminate employees' right to vote by secret ballot for union representation, require binding arbitration for a first contract and impose substantial new fines on employers. The actual purpose of the bill is to increase union membership.
 
The bill was approved in the House on March 1 by a vote of 241-185, divided mainly along party lines. A Senate companion bill was introduced on March 29 by Sen. Edward M. Kennedy (D-MA) with 46 co-sponsors. The bill is currently pending in the Committee on Health, Education, Labor and Pensions, which is chaired by Sen. Kennedy.
 
The ICCFA will continue to follow these bills and also monitor any additional legislation that may be introduced in future months.
Code: 
wr072007

Washington Report 072005

Date Published: 
072005
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Antitrust suits target Big 3, casket companies

 
by ICFA General Counsel Robert M. Fells, Esq.
 
As widely reported in the national news media in early May, Funeral Consumer Alliance, a consumer advocacy group, together with several individuals, filed a private antitrust lawsuit in a northern California federal district court against Service Corporation International, Alderwoods, Stewart Enterprises and Hillenbrand Industries/Batesville Casket Co.
 
The litigation seeks standing as a class action on behalf of consumers throughout the United States who were allegedly overcharged for caskets during the last four years. Plaintiffs claim that defendants violated federal and state antitrust laws through alleged price- fixing agreements and group boycotts and by engaging in an alleged conspiracy to monopolize the casket market to the detriment of consumers and independent casket dealers.
 
The complaint also identifies alleged "co-conspirators" that have not thus far been named as defendants in the litigation, including Aurora Casket Co., The York Group and the National Funeral Directors Association. The complaint's only reference to the ICFA was to note its open competition policy, stating that the ICFA criticizes state laws that limit casket sales exclusively to licensed funeral directors.
 
Plaintiffs seek a permanent injunction to restrain alleged illegal conduct, and treble damages plus interest as compensation for overcharges, among other forms of relief. Typically, antitrust litigation of this scope proceeds slowly over a long period with a number of procedural challenges to be decided by the court prior to focusing on the issues. Such challenges include whether the plaintiffs have standing to sue and whether the complaint should be dismissed for a failure to state a claim upon which relief can be granted.
 
A second private antitrust lawsuit involving similar issues was subsequently filed in a Tennessee federal district court by different plaintiffs, listed as, "Ralph L. Fancher on Behalf of Himself and All Others Similarly Situated." The defendants were the same as those named in the California litigation, with the addition of the York Group Inc. and Aurora Casket Co.
 
 
 

Decision in favor of cemetery stands

 
The Indiana Supreme Court voted 3-2 against reviewing the appeals court decision in SCI Indiana Services Inc. v. D.O. McComb & Sons Inc., a case that challenged a cemetery's policy of limiting to itself or its agents the right to open and close graves, as well as the constitutionality of the state law that authorized the cemetery policy.
 
The appeals court had ruled in favor of the cemetery, currently owned by SCI, which had claimed that it was not bound under a contract made by the previous owner to allow a third-party, McComb, to open and close graves in the cemetery.
 
The appeals court also upheld the state law as necessary to maintain public health, safety and welfare.
 
The ICFA, together with the Indiana Cemetery Association, filed an amicus curiae or "friend of the court" brief with the state supreme court, urging it to affirm the lower court decision. The case is of interest to cemeteries in several states outside of Indiana because other jurisdictions have enacted similar laws. The 1997 Indiana statute, titled the Exclusive Rights Act, states in part, "Because the owner of a cemetery is responsible for the performance of the care and maintenance of the cemetery, the cemetery owner has the exclusive right to: 1) open and close a grave or grave space, burial space, crypt or niche in a cemetery. … This exclusive right may also be exercised by the authorized representative of the cemetery owner."
 
Despite the clear language of the statute allowing a cemetery to hire an agent to perform the work, McComb's "friend of the court" parties filed briefs arguing that the law prohibited cemeteries from hiring agents if they lacked the staffing.
 
The state supreme court declined to consider the appeals court decision by noting that "the Court has reviewed the decision of the Court of Appeals. Any record on appeal that was submitted has been made available to the Court for review, along with any and all briefs that may have been filed in the Court of Appeals."
 
As a result of the supreme court's denial of petition, the appeals court decision is a final adjudication and ends this litigation. To the best of our knowledge, this case represents the first time any "grave opening/closing" legislation has been scrutinized by a court of law.
 
 
 

Positive IRS ruling

 
The Internal Revenue Service recently made public a private letter ruling, PLR 200518081, which examines whether a cemetery exempt from federal taxation under section 501(c)(13) can own and operate a for-profit subsidiary company that sells "final expense" insurance products. The IRS also ruled whether dividends from the subsidiary would be taxable to the cemetery as unrelated business income.
 
According to the fact situation, the insurance subsidiary would have a board separate from the cemetery, though two of the five board members would be from the cemetery, and the subsidiary would maintain its own financial system, among other points.
 
The IRS held that the insurance subsidiary was engaged in a business purpose not attributed to the cemetery, nor did the cemetery control the day-to-day operations of the subsidiary. Therefore, the IRS found that the creation, ownership and operation of the subsidiary by the cemetery would not cause the cemetery to lose its tax-exempt status. Also, the IRS held that the subsidiary's dividends are excluded from the computation of unrelated business income tax by the cemetery.
 
Private letter rulings are directed only to the organizations requesting them and may not be used or cited by others as precedent. However, private letter rulings are useful as an indication of the IRS's thinking on an issue.
 
ICFA members who would like a copy of PLR 200518081 should contact Bob Fells at 1.800.645.7700.
Code: 
wr072005

Washington Report 072004

Date Published: 
072004
Original Author: 
Leslie J. Schneider
Original Publication: 
ICCFA Magazine

New IRS Procedure Allows Tax Deferrals On Prepaid Funeral, Cemetery Contracts

 
by Leslie J. Schneider, CPA, guest columnist
 
The Internal Revenue Service's recently announced Revenue Procedure 2004-34 offers accrual-basis cemeteries and funeral homes the opportunity to defer for one year prepayments (outside of trust) toward services to be performed in a future year.
 
The IRS has had a long-standing policy, embodied in Rev. Proc. 71-21, of allowing accrual-basis taxpayers to defer progress or installment payments from inclusion in income where the payments related to services to be performed in a future taxable year.
 
However, Rev. Proc. 71-21 allowed deferral only when the cemetery or funeral home was required to perform all of the services covered by advance payments by the end of the year following the year in which it received the money. Thus the typical preneed funeral services contract, as well as preneed cemetery merchandise contracts also covering services such as grave opening and closing, did not qualify for deferrals.
 
Rev. Proc. 2004-34 eliminates this requirement, though it continues to restrict the deferral option to one year following the year the advance payments were received.
 
The new revenue procedure might apply in the following typical circumstances for a cemetery or funeral home:
 
Example 1: An accrual-basis funeral home or combo operator enters into a preneed funeral service contract to provide funeral services upon the client's death.
 
The client funds the contract through yearly installments paid over five years. The funeral home deposits 80 percent of each installment payment in a preneed trust and retains the balance for operations. In year six, after the contract is fully paid, the client dies.
 
Under these circumstances, the 80 percent of the annual payments deposited in trust would not be taxed until the client died and services were provided by the funeral home. Rev. Proc. 2004-34 would not change anything with regard to this money placed in trust.
 
However, in the past, the funeral home had to report as taxable income-in the year received-the portion of the payments not placed in trust (in this example, 20 percent of the money).
 
Under Rev. Proc. 2004-34, the funeral home is eligible for a one-year tax deferral on the non-trusted portion of each installment payment. In this example, that means 20 percent of each installment payment is eligible for a tax deferment until the next taxable year. As noted above, the 80 percent of each installment payment deposited in a preneed trust is unaffected, because such amounts are not taxable to the funeral home until the client dies.
 
Example 2: An accrual-basis cemetery enters into a preneed cemetery merchandise contract with a client to provide a casket, a liner, a marker and grave opening and closing services upon the client's death. The client funds the contract through yearly installments paid over five years. The cemetery retains each installment payment for its operations. Ninety percent of each installment is allocated to the casket, liner and marker and 10 percent is allocated to the grave opening and closing services. In year six, after the contract is fully paid, the client dies.
 
In these circumstances, the portion of the installment payments allocated to merchandise (i.e., 90 percent) would be eligible for tax deferral until the client dies, pursuant to the provisions in Reg. §1.451-5.
 
However, prior to the issuance of Rev. Proc. 2004-34, the cemetery would have been required to report the 10 percent of each installment payment allocated to opening and closing services as taxable income in the year received. Under the new procedure, the portion of the installment payment allocated to opening and closing services may be deferred until the year after it is received, giving the cemetery a one-year deferral on paying taxes on that portion of each installment.
 
The portion of the installment payments allocated to merchandise will not be affected by the new procedure, but it is already eligible for deferral under Reg. §1.451-5 until the merchandise is provided to the client.
 
Some additional points are worth noting. In both examples above, deferral also would be available even if the contracts had been fully prepaid at their inception. However, in that case, deferral for one year would probably leave the cemetery with a much longer period between the recognition of the prepaid income and the delivery of the cemetery services than in the case of an installment sale.
 
Another significant point is that deferral under Rev. Proc. 2004-34 is only needed when the advance payments would otherwise have been taxable to the funeral home or cemetery upon receipt. When advance payments are placed in the type of trust that prevents them from being taxable to the funeral home or cemetery, Rev. Proc. 2004-34 is not needed and should not be elected.
 
Also, Rev. Proc. 2004-34 conditions deferral for tax purposes on financial statement conformity. A funeral home or cemetery cannot defer paying taxes on these payments unless its financial statements show that it deferred recognizing the revenue from those payments.
 
In most cases, if a cemetery or funeral home's financial statements show it is deferring the revenue, the company can qualify for the tax deferral under "automatic consent accounting method" procedures, which simply involve filing a Form 3115 with its federal income tax return. The company would also have to file a copy of Form 3115 with the IRS national office.
 
A company qualified for tax deferrals under this automatic consent accounting method procedure might even be able to qualify retroactively for the 2003 tax year.
 
The only instance where this might not be the case is when the installment payments were for a combination of goods and services and the contract did not break down how much of the payment is for goods and how much is for services. In such cases, the funeral home or cemetery would have to file a "regular method" change request for 2004 with the IRS national office. The IRS would then review how the funeral home or cemetery allocated the advance payments between goods and services.
 
In conclusion, Rev. Proc. 2004-34 may present a valuable opportunity for a limited tax deferral in situations common to the cemetery and funeral home professions. However, the timing is such that companies will need to act promptly if they wish to take advantage of this opportunity for the 2003 tax year. Otherwise, they can wait and make the change for 2004.
 
 

Leslie J. Schneider is a partner in the Washington, D.C., law firm of Ivins, Phillips & Barker and has represented members of the cemetery and funeral profession for many years on tax accounting matters. He can be reached at (202) 393-7600 or lschneider@ipbtax.com.
Code: 
wr072004

Washington Report 072003

Date Published: 
072003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Joins Elder Justice Coalition in Support of Congressional Legislation

 
by Robert M. Fells, Esq., general counsel
 
On behalf of the association, the ICFA Government and Legal Affairs Committee has accepted an invitation from the U.S. Senate Special Committee on Aging staff to join the Elder Justice Coalition in support of Senate Bill 333, the Elder Justice Act. The bill, introduced in February by Sens. John Breaux (D-LA) and Orrin Hatch (R-UT), seeks to develop programs to combat the growing problem of neglect, abuse and exploitation of senior citizens. S. 333 has more than 23 sponsors in the Senate, and a companion bill is expected to be introduced in the House of Representatives in the near future. In joining the Elder Justice Coalition, the ICFA made a $2,500 contribution through its Government and Legal Fund to support efforts to enact the bill.
 
Among the bill's proposals is a program of grants targeting "coroners and funeral home operators," among others, for training to improve the detection and reporting of suspected abuse. The coalition said that although the elderly population is growing and an estimated 500,000 to 5 million older Americans are abused every year, the funding for related programs is disproportionately low. Federal funding for programs addressing elder abuse totals approximately $153.5 million annually, compared with $520 million on programs combating violence against women and $6.7 billion on child abuse prevention efforts. "Perhaps the greatest barrier to addressing elder abuse is the relatively low profile of the issue among the general public and the health-care community. While both child abuse and domestic violence are now discussed regularly in the media, elder abuse has trailed in both public discussion and overall awareness."
 
S. 333 would create the Offices of Elder Justice at the Department of Health and Human Services and the Justice Department to provide programs, grants and policy and technical assistance to elder justice issues. In addition, the bill would establish a public-private coordinating council to coordinate the activities of all relevant federal agencies, states, communities and private and not-for-profit entities, plus a consistent funding stream and national coordination for Adult Protective Services. The program would also review model state laws and practices relating to elder justice.
 
The Senate Special Committee on Aging held a series of hearings in recent years focusing on "abuse in institutional settings such as nursing homes and related issues such as background checks for caregivers, equity predators, fraud and abuse in digital commerce, consumer fraud in the funeral and dietary supplement industries, living trust scams that fleece the elderly of their assets and estates, physical and sexual abuse in nursing homes, and preventing elder abuse, neglect and exploitation in general." ICFA members will recall the Senate Aging Committee's public hearings held April 10-11, 2000, and broadcast over C-SPAN to explore funeral industry sales practices.
 
According to the coalition, "There are many promising practices around the country working to eliminate elder abuse, neglect and exploitation. Many of these involve multi-disciplinary teams made up of professionals from the fields of social work, health care, law enforcement, financial services and others. ... The Louisiana group includes assistant U.S. attorneys, the state Medicaid Fraud Control Units, prosecutors, an FBI agent, the state inspector general, the state survey agency, the state long-term care ombudsman, the state Department of Labor and the state Department of Health and Hospitals."
 
The Elder Justice Coalition currently has 154 members, including AARP, Americans for Better Care of the Dying, Eldercare America, Gray Panthers, Heart and Hand Inc., the National Council on Aging and the Center for Social Gerontology Inc. Though funding estimates for S. 333 have been in the $65 million range, coalition staff believe the program could operate successfully with less funding.
 
For more information about the problem, visit www.elderabusecenter.org.
Code: 
wr072003

Washington Report 072001

Date Published: 
072001
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Beware the Fine Print in The Tax Relief Act

 
by Robert M. Fells, Esq., general counsel 
 
On June 7, President Bush signed into law the largest federal tax cut in 20 years. Officially known as "The Economic Growth and Tax Relief Reconciliation Act of 2001," the new law contains many complicated tax breaks for individuals and businesses that becomeeffective over the next 10 years.
 
An immediate benefit involves the reduction in the personal tax rate from 15 percent to 10 percent for the first $6,000 earned by an individual, or the first $12,000 for couples, retroactive to January 1 of this year. Taxpayers are scheduled to receive advance refund checks for up to $300 (individuals), $500 (head of household) and $600 (married filing jointly) during the fall. However, trusts and estates are not eligible for the advance refund. Most tax reductions are phased in gradually through 2010 and the so-called "repeal" of the estate tax actually does not occur until 2010, then expires at the end of that year unless Congress acts to extend it (see below).
 
Personal tax rates will be substantially lowered compared to the average corporate rates, a development that may cause businesses currently organized as C corporations to reorganize as sole proprietorships, partnerships and S corporations. Under the lowered rates, tax-exempt investments may seem less competitive unless they generate higher yields for investors. Some financial planners are also suggesting that the benefits of operating a business as a tax-exempt organization could be reduced due to the lowered tax rates.
 
The federal estate tax rate is reduced and the dollar exemption is increased beginning in 2002. Currently, estates valued over $675,000 are subject to federal tax at the 55 percent rate. Next year, the exempt amount will increase to $1 million with the top rate at 50 percent. The tax rate gradually declines to 45 percent by 2007 with a maximum exemption of $2 million, which will be increased to $3.5 million by 2009. In 2010, the estate tax is repealed but only for that year. Without Congressional action to extend the repeal after 2010, the 55 percent top rate for amounts in excess of $1 million will automatically return in 2011. 
 
However, upon repeal of the estate tax, the basis of assets transferred from the estate to beneficiaries will increase because the value must be determined as a carry-over on the decedent's basis, not on the stepped-up market value basis as currently determined at the time of decedent's death.
 
Two exceptions will ease this income tax crunch provided adequate planning has been made: 1) $1.3 million of basis can be added to certain assets; and 2) $3 million of basis can be added to assets transferred to a surviving spouse. For example, tax planners are suggesting that real estate or other assets that remain in a family for generations will require generations of accurate records of basis. Without accurate basis records kept over the decades, the IRS can claim a lack of documentation and keep the asset basis low in order to tax the assets at an artificially high level.
 
Also, the state death tax credit allowed against the federal estate tax will be reduced by 25 percent in 2002, by 50 percent in 2003, by 75 percent in 2004, and then totally repealed and replaced by a deduction for state death taxes thereafter.
 
With regard to retirement plans, the new law raises the limits on an employer's deduction for contributions to certain types of defined contribution plans to 25 percent of compensation, and streamlines the pension laws to encourage small businesses to offer pension plans. The IRA contribution limits (both traditional and Roth) will increase from the current $2,000 annual limit to $5,000 by 2008. Taxpayers who are 50 and over can "catch up" with contributions to IRAs with additional amounts up to $500 in 2002-2005, and $1,000 in 2006 and thereafter.
 
Clearly, many of the new tax benefits will require both businesses and individuals to consult knowledgeable tax planners and preparers in order to properly use the provisions. A number of other benefits that were not included in the new tax relief law are likely to be enacted later this year. These issues include a reduction in the capital gains rate, alternative minimum tax relief, and more small business tax breaks. ICFA members will be kept informed of important legislation as events develop.
Code: 
wr072001

Washington Report 062004

Date Published: 
062004
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Files Comments On Proposed Anti-Spam Rules

 
by Robert M. Fells, Esq., general counsel
 
The Federal Trade Commission has announced a new rulemaking proceeding to restrict commercial e-mail, including a study of the feasibility of a "National Do Not E-mail" registry similar to the Do Not Call list that the FTC enacted against telemarketers last year.
 
The rulemaking is the result of a new law recently passed by Congress, "Controlling the Assault on Non-Solicited Pornography and Marketing Act," or the CAN SPAM Act for short. In particular, the FTC is seeking comments to define whether "the primary purpose" of an e-mail involves "a commercial advertisement or promotion of a commercial product or service." Such types of e-mail would be subject to the requirements and restrictions of the act.
 
However, the FTC is also seeking comments for e-mails that are "transactional or relationship messages" that would be exempt from most of the provisions of the act.
 
The ICFA subsequently filed comments with the FTC regarding these issues as they may affect cemeteries, funeral homes and related businesses. Noting that the regulations would restrict unsolicited e-mail where the "primary purpose" is commercial, the ICFA stated its concern "that the unique relationship between cemeteries and funeral homes, and the families they serve is taken into consideration in the regulations developed by FTC.... For example, family members who own cemetery property or have loved ones interred at a cemetery will have an ongoing relationship with that cemetery for decades and such relationships are often multi-generational. Obviously, this is not the typical relationship between a business and its customers."
 
The ICFA explained, "Cemeteries will alert families to special events or observances, changes in the cemetery rules, or simple reminders of the rules to avoid misunderstandings.... The ICFA believes that the intent of provisions of the CAN SPAM Act were never intended to restrict these types of electronic communications...."
 
The ICFA also concurred with comments submitted by the Office of Advocacy, U.S. Small Business Administration, and with comments submitted by the American Society of Association Executives. Our members will be kept informed of developments in this rulemaking. More information on the CAN SPAM rulemaking can be found on the FTC Web site at www.ftc.gov/opa/2004/04/canspam.htm.
 
In a related development, and a signal that it intends to move rapidly on this rulemaking, the FTC announced adoption of a rule under the CAN SPAM Act that requires sexually oriented e-mail spam to contain a warning in the subject line stating, "SEXUALLY EXPLICIT" (capitalization in original). This warning must be included by May 19, 2004, on all such e-mail spam. More details on this new requirement can be found at www.ftc.gov/opa/2004/04/adultlabel.htm.
 
 
 
 

Cremation Containers Affected By New Airline Security Regulations

 
The Transportation Security Administration has contacted the ICFA for assistance in circulating information on new security regulations at U.S. airports concerning cremation containers that passengers wish to bring onboard as carry-on baggage.
 
The TSA allows the containers, "but it MUST pass through the X-ray machine. If the container is made of a material that generates an opaque image and prevents the security screener from clearly being able to see what is inside, then the container will not be allowed through the security checkpoint. In respect to the deceased, under NO circumstances will a screener open the container at any time, even if the passenger requests that this be done" (capitalization in the original).
 
Containers that cannot be X-rayed will be checked as baggage and placed in the cargo section of the plane following tests for explosive devices. To avoid this result, TSA "strongly recommends that you suggest to your patrons planning on traveling with an urn that they purchase a temporary crematory container made of material that CAN be successfully X-rayed, such as wood, plastic or NON-lead lined ceramic. Even if they want to purchase a permanent metal or lead lined urn, they MUST have a temporary container that can be X-rayed for air travel."
Code: 
wr062004

Washington Report 062003

Date Published: 
062003
Original Author: 
Patrick Downey
Original Publication: 
ICCFA Magazine

Perspective on Preneed: Be Careful What You Wish For—You Just Might Get It

 
by Patrick R. Downey, CCE, , ICFA President-Elect
 
Editor’s note: Due to the increasing debate in industry trade publications concerning possible federal legislation to address preneed issues, President-Elect Patrick R. Downey, CCE, offers this thoughtful essay.
 
First it was the horseless carriage, then microwave ovens and now preneed. Somebody stop the madness! Recently, various and sundry funeral industry publications have included articles decrying preneed planning for cemetery and funeral expenses as nothing short of greedy profiteering. "Evil" say some. "Unnecessary" say others. Why this sudden cacophony of criticism?
 
Is there any merit to be found within this symphony of specious spin? Or are we merely witnessing a new manifestation of the same pious "progressaphobia" that led to shouts of "Get a horse!" and "It’ll never fly!" in days gone by?
 
Timing is everything. Could it be that the sudden groundswell of disdain for a concept that consumers overwhelmingly embrace coincides with recent scrutiny of the death care industry by the federal government? And if so, to what end? An interesting notion to consider while The Pharisees of Funeraldom await the return of reverence for the rituals (and margins) of old is that current consumer trends point to a more urgent question: Can this profession afford not to encourage preneed?
 
Perhaps you may have noticed a family or two in your arrangement rooms who have just been "through the mill" of abject shock and estate liquidation caused by years of assisted care, nursing homes and hospital bills. Perhaps your directors have wondered about the indignation these people have shown for your General Price List. Why in the world would they forgo a fine ritual and a cameo rose for an immediate burial or direct cremation? Some might say they were not "educated."
 
I would submit that they are inundated and exasperated and we (the funeral home or cemetery) are last in line at the pay window. Their response to yet another expenditure they don’t fully comprehend: "We just want something simple and inexpensive."
 
Is this because they don’t wish to honor Mom’s or Dad’s wishes? Are they fundamentally opposed to a nicer funeral? No. More likely they are simply "tapped out," emotionally and financially. Ann Bastianelli of Anthology Consulting, also a researcher at Indiana University, estimates that as many as one-third of the families we see making funeral arrangements at time of need today have just gone through such an experience and this number is likely to increase steadily in the future.
 
As Don Potter observes in his perceptive book, "The 50+ Boomer":"This young-thinking ‘I can always make more money’ crowd is transitioning from being the ‘sandwich generation’ to that of the ‘caught in a vise generation.’ They don’t want to hear about not being ready for what may lie ahead, but they certainly need help with understanding, planning and implementing programs that can contribute to a more secure future."
 
So, what does this have to do with the "evils of preneed"? We need to realize that:
• the anxiously awaited "boomer boom" for the funeral industry hasn’t materialized due to an outbreak of health and longevity;
• the members of this group are less accepting of traditionalism and ritual; and
• they are likely to freak out as they watch their parents’ savings evaporate in the wake of retirement and health care expenses.
 
When we connect the dots, we may see that the future may bring—dare I say it—drastically lower funeral averages nationwide. Picture funeral director George Bailey from "It’s a Wonderful Life" running frantically down the streets of Pottersville searching for the now nonexistent spacious funeral chapel, pounding on the front door of Potter’s Cremation Nook and wondering where his familiar world has gone. OK, so that’s a little far-fetched, but the aforementioned trends are real.
 
In consideration of this likely future reality, wouldn’t it be comforting to have a vast majority of your future clients’ funerals already on file, fully funded, with expressed wishes for a fitting final tribute clearly spelled out and with monies structured in such a way as to be secure and protected until the day they are needed? So that on that day a confident and caring professional at the funeral home or the cemetery can smile reassuringly and say "It’s all taken care of."
 
Impossible, you say? Not at all. The fact is that thousands of honest, ethical and highly skilled professionals help hundreds of thousands of well-informed families design that experience for their loved ones every year. The ratio of unresolved complaints incurred from this service is minimal compared to that of other proud professions such as lawyers and doctors. Every day in America, funerals take place just as they were planned.
 
Recent anti-preneed articles seem to take the position that there is no such thing as "ethical" preneed, suggesting that the practice should be restricted or prohibited by law. The facts show that such a position is really a disservice to the public we serve and their best interests, in addition to ours.
 
So, if your business won’t offer preneed until pigs fly, you may miss the fact that it might save your bacon.
Code: 
wr062003

Washington Report 052003

Date Published: 
052003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Establishes Federal Political Action Committee

 
by Robert M. Fells, Esq., general counsel
 
Among the highlights at the 2003 ICFA Annual Convention & Exposition, President Bill Wright, CCE, announced establishment of an ICFA federal political action committee (PAC). The purpose of the ICFA PAC is to "promote effective political relationships with members of Congress," according to its mission statement. The PAC directly supports a specific goal of the ICFA mission statement, which calls for "pro-active leadership on legislative, regulatory and legal issues."
 
An initial contribution to the ICFA PAC has been given by the Service Corporation International PAC, which donated $5,000, the maximum amount allowed by law. A PAC Fundraising Committee has been established and is chaired by ICFA Past President Arlie T. Davenport Jr. and includes many prominent ICFA members. More details will be provided as the committee's work progresses.
Code: 
wr052003

Washington Report 052008

Date Published: 
052008
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

FTC leaves Funeral Rule alone

 
On March 10, the Federal Trade Commission announced its decision to close the Funeral Rule review proceedings leaving the rule unchanged, including not expanding it to cemetery practices. This action concluded a review process that began almost 10 years ago and had been dormant since late 1999. The ICCFA stated that it was gratified by the FTC decision because it vindicated our longstanding position that there was insufficient evidence to justify expansion of the rule.
 
Members may recall that the ICCFA stood alone among all the funeral service organizations in opposing rule expansion. Our reasons were straightforward and factual:
 
1. There was no evidence in the record of widespread cemetery abuses to justify rule expansion.
 
2. Most cemeteries are nonprofit and the FTC cannot regulate nonprofit entities. Making only for-profit cemeteries subject to regulation would confuse the public.
 
3. Calls for expanding the Funeral Rule to "create a level playing field" were unjustified because the playing field already was level: Anybody who sold both funeral goods and funeral services were covered under the rule.
 
The FTC staff published a 59-page report to explain their actions and a few excerpts are worth quoting. Beginning on page 18, the FTC stated: ""Indeed, according to a survey presented by the [ICCFA], some states including New York, New Jersey, Massachusetts, Wyoming, Connecticut and Maine prohibit for-profit cemeteries. ..
 
"The lopsided application of the rule to some, but not all, cemeteries would likely prove unduly costly. There would be confusion among the general public as to what type of information they could expect to receive and what rights they have to purchase from third parties." (p. 22)
 
Even the FTC took notice of ICCFA's solitary stand: "Nearly all of the funeral providers, trade organizations representing funeral homes, third-party sellers of funeral or burial goods, regulators and consumers commenting on this issue advocated expansion of the rule to cover cemetery practices." (p. 19) A supporting footnote lists dozens of organizations and individuals that demanded rule expansion to cemeteries" to level the playing field."
 
The FTC responded to this argument pointedly: "Inasmuch as the rule defines 'funeral providers' to include 'any person, partnership or corporation that sells or offers to sell funeral goods and funeral services to the public,' the playing field is level. ... The rule is broad enough to encompass commercial cemeteries, crematories, or other businesses that market funeral goods and both types of funeral services to the public." (p. 19-20)
 
Our association's success was the result of teamwork through the Government and Legal Affairs Committee in the development of strategy based on the FTC procedures and evidentiary standards. Special thanks are owed to Chairman Irwin Shipper, CCE, who refused to be intimidated by the storm of criticism the ICCFA received in the trade press for not backing rule expansion, and to Immediate Past President Paul Elvig, who went into the lion's den on November 18, 1999, as the lone witness at the FTC public hearing to testify against rule expansion.
 
Finally, it is worth noting that all FTC trade regulations undergo periodic review. In other words, we have not heard the last of the Funeral Rule review. For details on the FTC ruling, visit http://ftc.gov/opa/2008/03/funeral.shtm.
 
 
 

ICCFA Team Visits Capitol Hill

From March 10 to12, selected ICCFA members joined then-President Paul Elvig to call on key Congressional members in Washington, D.C. The purpose of the visits was to renew constituent relationships; gauge the perception of the cremation, cemetery and funeral service industry from Capitol Hill; and to promote support for our bill, H.R. 1273, which would restore the plot and marker cash allowances to veterans choosing interment in private and religious cemeteries.
 
Meetings were held with Sens. Bill Nelson (D-FL), Herb Kohl (D-WI) and Russ Feingold (D-WI), and legislative assistants for Hillary Clinton (D-NY); and Reps. Kenny Marchant (R-TX), Shelley Berkley (D-NV), Ed Towns (D-NY), Joe Crowley (D-NY), Anthony Weiner (D-NY) and Carolyn Maloney (D-NY), among many others. Rep. Jane Harman (D-CA) hosted a luncheon for the ICCFA team in the Capitol Dining Room. The ICCFA Capitol Hill team also dropped in on dozens of Congressional offices and spoke with many staffers. Details on the visits with photos will be published in the August-September issue of the ICCFA Magazine.
Code: 
wr052008

Washington Report 052007

Date Published: 
052007
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

House bill would restore VA plot and marker allowances 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
 
ICCFA members asked to help find House co-sponsors, Senate sponsors At the request of the ICCFA, U.S. Rep. Shelley Berkley (D-NV) has introduced H.R 1273, a bill to restore the veterans plot allowance eligibility and the headstone/ marker allowance for use in private and religious cemeteries. These two cost-effective burial benefits were popular for many years with veterans and their families who preferred interment in non-government cemeteries for personal, ethnic or religious reasons.
 
The ICCFA is organizing a campaign among its members to seek co-sponsors for the bill in the House and the introduction of a companion bill in the Senate. For more information, contact General Counsel Bob Fells at 1.800.645.7700.
 
Some history: In 1990, Congress suddenly curtailed the eligibility of wartime veterans to receive the plot allowance unless they were receiving VA compensation or pension benefits, or died of service-connected injuries.
 
At the same time, Congress abolished the marker allowance that provided a cash reimbursement, based on the government's wholesale costs of furnishing markers, to veterans and their families who preferred to purchase their own marker or headstone for placement in a private cemetery.
When the VA's National Cemetery Administration was formally organized in 1973 as the result of Public Law 93-43, Congress implicitly acknowledged that national cemeteries did not operate in a vacuum, that private, religious and municipal cemeteries are part of the mix.
 
The ICCFA was instrumental in having included in the law a provision authorizing a plot allowance (then $150) to benefit the majority of veterans and their families who preferred interment in non-government cemeteries.
 
This plot allowance was also viewed as a means to offset demands on national cemeteries and as a recognition of the personal, religious and ethnic preferences of veterans. Subsequent legislation established additional forms of burial assistance, such as the marker allowance, to further avoid a forced reliance on national cemeteries.
 
Since the November 1990 repeal of the marker allowance and the curtailment of the plot allowance, the VA eligibility requirements to receive forms of burial benefits have been inconsistent. The wholesale availability of national cemetery interment to virtually all veterans and their immediate families contrasts sharply with the restricted benefits for veterans who wish to be buried in private cemeteries.
 
In that sense, Congress actually legislated against wartime veterans by cutting burial benefits to this group. The ICCFA has estimated that as many as 70 percent of the veterans previously entitled to burial benefits in non-government cemeteries were made ineligible through Congressional actions.
 
For example, in October 1981, P.L. 97-35 was enacted, disqualifying wartime veterans from receiving the non-service connected basic burial allowance (then $300) in the absence of additional criteria.
 
In November 1990, as mentioned above, Congress again discriminated against wartime veterans by restricting the plot allowance and eliminating the marker allowance. These modest, one-time payments not only honored the wishes of veterans but also resulted in long-term cost savings, since every additional burial in a national cemetery adds to the expense of maintaining graves in those cemeteries in perpetuity. It appears those advantages were not sufficiently regarded at the time.
 
In April 2005, the ICCFA brought to the attention of the House VA Subcommittee on Memorial Affairs the inequities of abolishing these two burial benefits. Almost a generation has passed since the plot and marker allowances were in effect, so it is not surprising that many younger members of Congress are unaware that those benefits ever existed.
 
Speaking on behalf of the association, Paul Elvig (now ICCFA president) alerted committee members to the staggering costs of maintaining national cemeteries in the future, and lamented the rescission of the plot and marker allowances that could have reduced those maintenance expenses. Bipartisan support was immediately expressed to restore these two benefits.
 
Since that time, the association has been working with Congresswoman Berkley's office to develop legislation addressing the restoration of these important benefits. The bill, which was introduced on March 1, will be pending over the next two years until the 110th Congress adjourns in late 2008.
Code: 
wr052007

Washington Report 052005

Date Published: 
052005
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA comments on proposed Pa. Funeral Board rules

 
by ICFA General Counsel Robert M. Fells, Esq.
 
The Pennsylvania State Board of Funeral Directors invited public comment regarding its proposed regulations defining acts by its licensees as professional misconduct. In response to a request by the Pennsylvania Cemetery and Funeral Association, the ICFA filed comments in which it shared the concerns expressed by the PCFA.
 
The ICFA stated: "We note that the purpose of the proposed rulemaking is to define acts of misconduct that will subject board licensees to disciplinary action. However, the language is so vaguely worded and overly broad that the practical application of these proposals is problematic."
 
For example, the ICFA pointed out one proposal that discussed "Retaining funds intended to pay for funeral goods and services when the funeral director and establishment have not provided any funeral goods and services or when the amount of funds retained is in excess of the value of the funeral goods and services actually provided" as being "quite cryptic in its meaning and intent." The ICFA expressed its concern that "neither board licensees nor the general public will be able to decipher the subsection's actual purpose based on its current wording."
 
The board proposals also modify the legal requirement contained in the FTC Funeral Rule concerning permission to embalm, claiming that such modifications are "consistent with" the FTC Funeral Rule. Yet the ICFA questioned whether the board has conferred with FTC staff "to ascertain whether the commission in fact will consider the requirements of the proposed subsection as being consistent with the requirements of the Funeral Rule. Otherwise, licensees may risk liability for violation of the Funeral Rule by complying with the proposed subsection, or vice versa."
 
 
 
 

ICFA submits brief in grave opening/closing litigation

 
by ICFA General Counsel Robert M. Fells, Esq.
 
Following up on our column in the previous issue, the ICFA has submitted to the Indiana Supreme Court an amicus curiae or "friend of the court" brief in the case of SCI Indiana Funeral Services Inc. v. D.O. McComb & Sons Inc.
 
This litigation challenges, among other things, the constitutionality of a state law giving cemeteries or their agents the exclusive right to open and close all graves within their boundaries. The lower appeals court upheld the state law as constitutionally valid to protect the public health, safety and welfare. However, plaintiff McComb has asked the state supreme court to review and reverse the appellate court decision. Since a number of states in addition to Indiana have similar laws, an adverse decision in this state could have potential consequences elsewhere. As a result, the ICFA decided to file a friend of the court brief in support of the lower court decision and was joined in the brief by the Indiana Cemetery Association.
 
Following the appellate court's ruling in January, plaintiff McComb filed a petition to transfer, which in effect asks the state supreme court to review the decision. Three area funeral homes and one cemetery filed an amicus brief in support of the McComb petition claiming that if the appellate court's decision is not reversed, small cemeteries will be prohibited from contracting out the opening and closing services to third parties.
 
The 1997 statute, the Exclusive Rights Act, states, in part, "Because the owner of a cemetery is responsible for the performance of the care and maintenance of the cemetery, the cemetery owner has the exclusive right to: 1) open and close a grave or grave space, burial space, crypt or niche in the cemetery …. This exclusive right may also be exercised by the authorized representative of the owner of the cemetery."
 
The McComb amici question whether the appellate court ruling would bar and criminalize "third parties who perform the services set forth in this statute, though not employees or agents of the cemetery owners or otherwise under their direct control, but who act in accordance with the cemetery's rules and regulations."
 
In response, the ICFA/ICA brief states that the McComb parties seek "to blur the distinction between a cemetery hiring a third party to open/close graves on the cemetery's behalf, and the unprecedented, if not unique, demands of the McCombs who wish to open and close graves on behalf of themselves and use the cemetery property as if they were the owners without the long-term obligations of cemetery ownership… . The Exclusive Rights Act does permit opening/closing to 'be exercised by the authorized representative of the owner of the cemetery.' It does not, however, shift the responsibility … for care and maintenance of the cemetery to such representative."
 
The ICFA/ICA brief points out, "There is no risk that the Court of Appeals' opinion will subject cemetery owners to criminal prosecution merely because they contract with third parties to open and close graves unless such owners seek to evade their unique responsibility to lot owners for the care and maintenance of their cemeteries."
 
In its decision, the appeals court rejected McComb's contention that it was SCI's authorized representative due to years of McComb's nonperformance under an agreement with the cemetery's previous owner and the fact that McComb and SCI have been adversaries in this litigation for the past five years. Under the circumstances, the appellate court found that McComb "did not fit this description" of an authorized representative.
 
At this writing, the state supreme court is considering the briefs. 
Code: 
wr052005

Washington Report 052004

Date Published: 
052004
Original Author: 
Bill Wright and Paul Elvig
Original Publication: 
ICCFA Magazine

The Gathering Storm

 
by Bill Wright, CCE
 
The fact that Congressman Mark Foley (R-FL) recently introduced H.R. 4112, calling for the federal regulation of our businesses, should come as no surprise to any ICFA member who has been following events during the last few years.
 
Make no mistake, there is indeed a gathering storm approaching, and I fear that too many of our colleagues have been much too complacent about responding to it. This is one reason the ICFA established its Political Action Committee, ICFA PAC, last year. This fund will ensure that our voices will be heard as the members of Congress consider the Foley bill and other proposed legislation to regulate us in the future.
 
The ICFA PAC Disbursement Committee will soon be making donations to select members of Congress. If you would like to learn more about ICFA PAC, call me at (620) 662-3431 and I will be delighted to discuss the issues with you personally. There is a gathering storm, so let us work together as industry members to ensure positive outcomes.

Bill Wright, CCE, is vice president of Fairlawn Burial Park and Heritage Funeral Home, Hutchinson, Kansas, and a past president of the ICFA. He can be reached at heritage@msinter.net or (620) 662-3431.
 
 
 
 

Congressman Submits Federal Death Care Disclosure Act

 
by Paul M. Elvig, guest columnist
 
On April 1, U.S. Rep. Mark Foley (R) of West Palm Beach, Florida, introduced H.R. 4112-the "Federal Death Care Disclosure Act." Foley had announced plans to regulate the funeral/cemetery/memorial industry at the national level, and this bill represents his second attempt to do so. The Foley bill appears to be the old "Dodd/Foley bill" which was introduced in November 2002, during the closing days of the previous session of Congress, minus provisions to create a "funeral czar" and other adventuresome federal oversights. Whether or not Sen. Christopher Dodd (D-Connecticut) will introduce a bill identical to Foley's remains to be seen at press time.
 
In a nutshell, what does H.R. 4112 do? First, the Federal Trade Commission loses its role of determining whether the Funeral Rule should be expanded or if it is even needed. The bill would codify the present Funeral Rule into a federal statute and expand its coverage to ALL sellers without any evidentiary basis for such action, and regulate preneed contracts by making, among other things, all such contracts cancelable by the purchaser at any time with a full refund (including accrued interest). The FTC would be directed to enforce the new law. The bill provides the FTC with an annual budget of $5 million through 2010 to "carry out the act." That's a lot of taxpayer money to handle what the FTC has considered a low number of consumer complaints.
 
As noted, Foley's bill would bring ALL funeral service providers under the new law. The term "funeral provider" is defined as funeral directors, morticians, cemeterians, cremationists and memorial retailers. There are no exemptions for nonprofit or religious entities. This is a major overreach from the existing FTC Funeral Rule.
 
And that's not all! H.R. 4112 establishes a "private right of action" clause through which, "...a person who is injured by a violation of this act may commence a civil action against the funeral provider." That person shall "...be entitled to recover the greater of actual damages or $5,000 for each violation proved by a preponderance of the evidence." WOW! It's open season!
 
In my opinion, should the "private action" clause be enacted we could well expect to see "bounty hunting" for the unsuspecting funeral home and cemetery. Trip up-and there are those who specialize in tripping up others-and you could see considerable cash paid to private parties, not government agencies, for infractions of the law. Agency warnings and fines are gone; civil actions take center stage.
 
Back when the FTC promulgated its Funeral Rule, much emphasis was placed on consumer awareness through shopping and taking time to know in advance what costs and needs might be. H.R. 4112 just about kicks that concept out the window. In addition to regulating preneed contracts and how they are administered, H.R. 4112 comes close to shutting down preneed marketing. It labels as a "deceptive trade practice" making "unsolicited telephone offers to sell" any funeral, crematory, burial or memorial products and services. No door-to-door sales either. Just how consumers are encouraged to check out costs and what their needs might be is anybody's guess. Foley's bill does not address that question.
 
Members of the ICFA Government and Legal Affairs Committee, chaired by Irwin Shipper, CCE, have reviewed the text of H.R. 4112 and are preparing political battlefield strategies to stop what amounts to a federal takeover of the funeral, cemetery and memorialization industry. As one reads H.R. 4112's "definitions list," defining what the industry does and what its services and products are, the obvious becomes clear. It would take Congressional action to add or subtract from the list. As the reader well knows, new products and service concepts evolve over the years in response to consumer demands and needs. This bill would require Congressional action, hearings and a presidential signature to change the list.
 
And there is more, much more, in this bill. You may read H.R. 4112 in its entirety on the ICFA Web page, www.icfa.org. The bill has been referred to the House Committee on Energy and Commerce, but as of this writing hearings have not been set. ICFA members will be kept informed of important developments through our association Web page, the ICFA WIRELESS e-mail newsletter and this magazine.
 
If you are not a member of the ICFA, this is the time to join! If you know of funeral homes and cemeteries that are not members, now is the time to act on membership. Our united voices, in larger numbers, will be critical in stopping a federal takeover of our industry. The battle raises an age-old question. How much government do we need? Can the case be made for federal oversight? Will we lose our ability to approach the FTC with concerns and issues if Congress mandates FTC action? Will it take "an act of Congress" to get things done? Stay tuned. Get involved.
 
Paul M. Elvig is vice president of administration for Evergreen-Washelli Memorial Park & Funeral Home, Seattle, Washington, and is an ICFA vice president. He can be reached at pelvig@washelli.com or (206) 362-5200.

 

Code: 
wr052004

Washington Report 052003

Date Published: 
052003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Establishes Federal Political Action Committee

 
by Robert M. Fells, Esq., general counsel
 
Among the highlights at the 2003 ICFA Annual Convention & Exposition, President Bill Wright, CCE, announced establishment of an ICFA federal political action committee (PAC). The purpose of the ICFA PAC is to "promote effective political relationships with members of Congress," according to its mission statement. The PAC directly supports a specific goal of the ICFA mission statement, which calls for "pro-active leadership on legislative, regulatory and legal issues."
 
An initial contribution to the ICFA PAC has been given by the Service Corporation International PAC, which donated $5,000, the maximum amount allowed by law. A PAC Fundraising Committee has been established and is chaired by ICFA Past President Arlie T. Davenport Jr. and includes many prominent ICFA members. More details will be provided as the committee's work progresses.
 
 
 

Labor Department Proposes Revisions To Overtime Pay and Exemptions

 
For the first time in over 50 years, the U.S. Department of Labor (DOL) has proposed revisions to the Fair Labor Standards Act of 1938 under which some workers must receive overtime pay while certain types of occupations, often referred to as "white collar" jobs, are exempt from overtime compensation.
 
Of particular interest to ICFA members are proposed changes in classifications that would affect licensed funeral directors. DOL states that "We invite comments on occupations the exempt status of which has been the subject of confusion and litigation including but not limited to pilots, athletic trainers, funeral directors, insurance salespersons. ... "
 
The category most likely to apply to funeral directors is the standard for "Learned Professional Employees." Under the proposed standard, the employee must earn at least $425 per week and have the "primary duty of performing office or non-manual work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction, but which may also be acquired by alternative means such as an equivalent combination of intellectual instruction and work experience."
 
Since the proposed standards use several vague "terms of art," the DOL regulations provide definitions for clarification. For example, the phrase "knowledge of an advanced type" is defined as "knowledge that cannot be attained at the high school level." The phrase "field of science or learning" distinguishes the learned professions from the mechanical arts, "where in some instances the knowledge is of a fairly advanced type, but not in a field of science or learning."
 
The DOL regulations also provide examples of professions that the department has found to "generally meet the primary duty requirement for learned professionals." These include registered or certified medical technologists "who have successfully completed three academic years of pre-professional study in an accredited college or university plus a fourth year of professional course work in (an approved) school of medical technology." Other fields include registered nurses, dental hygienists, physician assistants, accountants and chefs. In general, all these fields require at least the equivalent of four years of college study.
 
However, the proposed regulations acknowledge that "the areas in which professional exemptions may be available are expanding. As knowledge is developed, academic training is broadened and specialized degrees are offered in new and diverse fields, thus creating new specialists in particular fields of science and learning. When a specialized degree has become a standard requirement for a particular occupation, that occupation may have acquired the characteristics of a learned profession."
 
For many years, the U.S. Chamber of Commerce and a number of industries have sought revisions to the antiquated job catergories that define workers who either must receive or are exempt from overtime compensation. A number of jobs have become extinct since the old regulations were written in 1949. These positions include key punch operators, straw bosses, leg men and gang leaders. In the meantime, many new jobs have been created that were unheard of a half century ago.
 
The DOL will be accepting written comments on the proposed standards through June 30. For more information, visit the U.S. Department of Labor Web page at www.dol.gov.
 
At this time, no action on the bill has been announced.
Code: 
wr052003

Washington Report 052002

Date Published: 
052002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Submits Comments on FTC Telemarketing Sales Rule 

 
by Robert M. Fells, Esq., general counsel 
 
In response to a public solicitation by the Federal Trade Commission for comments on its proposed amendments to the Telemarketing Sales Rule (TSR), the ICFA submitted remarks focusing on the "face-to-face" exemption from the TSR's requirements.
 
"The ICFA has supported the FTC Telemarketing Sales Rule since its promulgation in 1995 as an effective regulation that protects the public from abusive and fraudulent telemarketers without imposing unreasonable burdens on legitimate businesses. We believe that the existing rule achieves an appropriate balance between enabling consumers to avoid unwelcomed calls while safeguarding the constitutional rights of commercial free speech to businesses. ... Our comments are specifically addressed to Sec. 310.6(c) of the rule that exempts 'Telephone calls in which the sale of goods or services is not completed and payment or authorization of payment is not required, until after a face-to-face sales presentation by the seller.' The ICFA advocated this exemption during the original 1995 rulemaking proceeding and we believe that it has worked well."
 
Based on its January 30 Notice of Proposed Rulemaking, the FTC has recommended the retention of the face-to-face exemption in its TSR. However, the commission also proposed five amendments to this exemption that can be divided into three categories. The ICFA stated its concern within each category. The two proposals in the first category -- a company-specific "do not call" list and prohibiting calls between the hours of 9 p.m. and 8 a.m. -- prompt the ICFA to question why the commission wishes to needlessly impose existing federal law on businesses already required to comply with similar regulations under the Telephone Consumer Protection Act (TCPA) enforced by the Federal Communications Commission. While the commission seems to anticipate this concern in its notice, the issue remains unanswered and seems to be a case of excessive and duplicative regulation. The ICFA urges the commission to work closely with the FCC to assure full enforcement of the TCPA and to delete these two proposed amendments, at least as applied to the face-to-face exemption.
 
"The two proposals in the second category -- prohibiting intimidation, obscene language, and blocking caller ID -- appear reasonable on a practical level. Indeed, a caller hoping to make an appointment with a consumer at a mutually convenient time would not be motivated to use such tactics in the first place. However, the ICFA is concerned that certain terminology potentially determinative of whether a violation has occurred has not been defined in the proposed TSR. For example, the term, 'intimidation,' is not listed among the TSR's definitions. We are concerned that a consumer could potentially claim to have been 'intimidated' simply because a preneed caller suggested meeting to discuss funeral arrangements. So while these amendments are not unreasonable, the ICFA is not in a position to endorse them until the commission has clarified certain terms, at least by referencing them through existing definitions in specific statutes.
 
"The third category of proposed amendments to the exemption raises the most serious concerns by the ICFA -- a proposed national 'do not call' registry administered by the FTC. The proposed national registry as applied to the face-to-face exemption would, for all practical purposes, eliminate the distinction between defined 'telemarketing' under the TSR, where the purpose of the call is to sell something by phone, and the face-to-face exemption, whereby nothing is sold by phone. In addition, preneed callers must already maintain internal 'do not call' lists under the TCPA, and perhaps ultimately under the TSR as well. Since funeral homes and cemeteries function almost entirely on a local basis in their communities, a consumer potentially will be contacted only by a small number of these entities and can easily eliminate their calls by placing his or her number on the company-specific list. In other words, if consumers wish to eliminate preneed calls, resorting to a national registry will be unnecessary for them and burdensome for the businesses involved."
 
The ICFA also expressed its concern with "the lack of substantial evidence in the TSR rulemaking record to justify implementing the proposed amendments. ... As applied to the five proposed amendments to the TSR section 610.6(c) exemption, the ICFA is compelled to draw the commission's attention to the absence of substantial evidence in the rulemaking record demonstrating that preneed callers are engaging in unfair or deceptive acts or practices, or that such acts or practices are prevalent. As comments filed by interested parties are placed on the public record by the commission, the ICFA will continue to analyze the record for evidence that would justify imposing any of the five proposed amendments on preneed callers representing funeral homes and cemeteries."
 
The ICFA also filed its notification of interest to participate in the FTC public workshop conference, June 5-7, to discuss the proposed amendments. 
Code: 
wr052002

Washington Report 042002

Date Published: 
042002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Responds to U.S. News & World Report Article About Cemeteries 

 
by Robert M. Fells, Esq., general counsel 
 
The March 11 issue of U.S. News & World Report contained an article titled "Burial Plots: Cemetery Abuses Mean Your Loved Ones May Not Be Resting Where You Think." Claiming that "abuse of the dead is nowhere near as rare" as the Georgia cremation case suggests, the story alleged that a national scandal exists and "authorities say there is no way to even guess how many bodies may be misburied or otherwise mistreated."
 
In response, the ICFA immediately dispatched a letter to the editor, which states in part, "It is with regret we note that 'Yellow Journalism' is alive and well in the pages of your publication. The article ... juxtaposes some highly anecdotal accounts with some general comments by state regulators and -- presto -- a national scandal is fabricated." Pointing out that the ICFA has been in the vanguard of proactive industry regulation through its Model Guidelines for State Laws and Regulations, the letter concludes, "The difference between our respective publications is that ours advocates solutions, yours promotes fear-mongering. Your readers deserve better than that." 
 
 
 

Georgia Cremation Scandal Prompts Consideration of Federal Oversight 

 
In the wake of the Tri-State Crematory scandal in Noble, Georgia, a few members of Congress have called for a review of the effectiveness of state-level regulations and the potential for federal oversight of crematories, funeral homes and cemeteries. The ICFA has responded by supporting an objective investigation to explore incidents of misconduct and has pledged its full support of any congressional probe.
 
Three years ago, the U.S. General Accounting Office, the investigative arm of Congress, investigated consumer complaints about funeral service and found a low volume of complaints, especially when compared with other professions and industries. Currently, there are two members of Congress requesting that the GAO conduct a new investigation.
 
Congressman Mark Foley (R-FL) initially wrote to U.S. Attorney General John Ashcroft and Federal Trade Commission Chairman Timothy Muris on December 21 requesting legal opinions and guidance on a highly-publicized class action lawsuit alleging grave desecration in Palm Beach County, Florida. The FTC responded by saying it does not have jurisdiction over the case. The Justice Department has not responded to Foley to date. Subsequently, on March 1, Foley contacted the GAO to request a study of the Florida and Georgia cases "to determine whether existing state laws are adequate to prosecute those responsible. ... If deemed inadequate, I ask the GAO to recommend what role the federal government could play in this matter."
 
Sen. John Breaux (D-LA), chairman of the Special Committee on Aging, said the committee is considering hearings on the related issues. In a news release, Breaux called for "increased disclosure of funeral practices, including independent observers at cremations and expansion of the so-called 'Funeral Rule.'" As of this writing, the Aging Committee has not announced a date for hearings, but staff has assured the ICFA that the association will be invited to testify should hearings be held. The ICFA participated in Aging Committee hearings on April 10-11, 2000.
 
Sen. Chris Dodd (D-CT) is the third member of Congress to call for a review. In a February 26 letter to the GAO, Dodd stated: "I have been troubled by recent reports of misleading marketing, price gouging, fraud and violations of health standards. ... There are more than 1,600 crematories and nearly 23,000 funeral homes in the United States. The funeral industry provides services to 2 million American families each year. While 90 percent of the funeral homes in America are still independently owned and locally operated, there have nonetheless been significant changes in the industry in recent years." Dodd asked the GAO as part of its report to consider that "given recent changes in the marketplace, should the federal government take a more active role in regulating the funeral industry?" At this point, the GAO has not publicly announced its plans.
 
The ICFA has publicly supported an impartial and objective inquiry to explore allegations of misconduct. ICFA President Gregory J. Easley, CCE, stated, "Given the emotionally charged atmosphere caused by the Georgia scandal, a fair and impartial investigation at this time will help address the concerns of the public." Easley said that the GAO "is perhaps the best resource for conducting an investigation, given its reputation for objective fact-finding." With reference to the 1999 GAO report on funeral service practices, Easley observed, "We believe that if a similar high standard of objectivity is practiced today, all parties will be satisfied."
 
The latest breaking news on this emerging development will be sent via the ICFA WIRELESS, the association's biweekly e-mail newsletter, to all members in good standing who have provided ICFA headquarters with their e-mail address. 
 
Code: 
wr042002

Washington Report 042001

Date Published: 
042001
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

IRS Private Letter Rulings Surprise Industry

 
by Robert M. Fells, Esq., general counsel 
 
The Internal Revenue Service (IRS) responded to requests from two different taxpayers with surprising private letter rulings (PLRs). One ruling discussed the circumstances under which a funeral home would not have to issue information returns for cash advances, and the second dealt with the conditions under which a church can sell caskets tax-free.
 
PLR No. 200106032 dealt with a company operating funeral homes called "X" (IRS does not identify the parties) that makes cash advances on its customers' behalf for "gratuities to clergy, special music, death notices, hairdressers or barbers, florists, transportation, long distance telephone charges, copies of certified documents and professional fees to other funeral directors." If cash advances are made, they are listed separately on the funeral home contract, which states that the mortuary does not profit from the cash advance and is reimbursed dollar-for-dollar.
 
Internal Revenue Code section 6041(a) provides that businesses making payment of income to others of $600 or more annually must issue an information return, i.e., Form 1099. Certain exceptions are made "for payment of bills for merchandise, telegrams, telephone, freight, storage and similar charges." However, in October 2000, the IRS initiated a Notice of Proposed Rulemaking to develop so-called "middleman" regulations whereby a business that makes payments on behalf of others must issue an information return if it: 1) "Performs management or oversight functions (i.e., performs more than mere administrative or ministerial functions) in connection with payment; or 2) has a significant economic interest in the payment."
 
According to the PLR, "X," the funeral home company in question, "performs no oversight function. By its very nature, the majority of services rendered for a funeral must be completed before or at the time of the funeral service and burial. X neither directs nor inspects the quality of the work provided. X does not select the providers, negotiate the price for services, order or direct provision of the third party services. ... The standard funeral contract reflects that X has no significant economic interest in these payments."
 
The PLR concluded that section 6041-3(d) excludes telephone, freight and similar charges from the reporting requirements. "As to cash advances for clergy, special music, death notices, hairdressers or barbers, florists, copies of certified documents and professional fees to other funeral directors, X performs no management or oversight function and has no significant economic interest. ... Accordingly, X is not required to issue information returns to service providers for those payments made on behalf of a family" pursuant to the funeral home's contract with the family.
 
It should be noted that an IRS private letter ruling applies only to the taxpayer requesting it and may not be cited as precedent by others. However, PLRs are useful because they indicate IRS thinking on a particular issue.
 
Church Selling Caskets
The second PLR, No. 200033049, involves a tax-exempt monastery, "X," part of "Z" church (again, the IRS does not identify the parties), that proposes to sell caskets to its practicing members and their relatives, to alumni of religious schools it operates, and to the general public. The wooden caskets, which will be manufactured according to monastic specifications, will not be sold through funeral homes and funeral directors. The caskets will have a base price of $1,750 and are expected to sell at approximately 20 percent lower than the national average cost for caskets.
 
The IRS letter ruling states that the sale of caskets to be used in burial ceremonies of the church, or "at burial services at which one of the church's ordained clergy or those under vows will preside or participate will be substantially related to ... religious and charitable purposes under section 501(c)(3) of the Code ... and, thus, income generated by the sale of such caskets will not be subject to tax under section 511."
 
However, the IRS ruling specified that the "sale of caskets that will not be used in ceremonies or services of the church as described above, will not be substantially related to ... religious and charitable purposes ... and, thus, income generated by the sale of such caskets will be subject to tax under section 511." Again, the PLR is directed only to the party requesting it and may not be cited as precedent.
 
Members who would like copies of either or both PLRs should contact the ICFA offices, 1-800-645-7700, ext. 211.
Code: 
wr042001

Washington Report 032002

Date Published: 
032002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

President Bush's 2003 Budget Proposes More National Cemeteries 

by Robert M. Fells, Esq., general counsel
 
The proposed fiscal year 2003 budget unveiled by President Bush following his State of the Union Address includes $88 million for new national cemeteries under the U.S. Department of Veterans Affairs’ (VA) National Cemetery Administration.
 
According to VA statistics, approximately 100,000 veterans and their eligible independents are interred each year in 120 national cemeteries and the 40 VA-funded state cemeteries, or approximately 3 to 4 percent of the annual deaths in the United States. The VA states that it has not decided where new cemeteries should be built or how many will be required, but the proposed budget seeks funding for construction in the vicinity of Miami, Florida, and Pittsburgh, Pennsylvania.
 
The VA projects that veterans’ deaths will peak in three years, during 2005, then decline thereafter. Historically, a new national cemetery requires between four to five years to open after funding has been proposed; therefore, cemeteries currently proposed would not become operational until the number of veterans’ deaths are in decline.
 
However, virtually all military and veterans programs are receiving increased funding from Congress in the wake of the September 11 attacks and the war on terrorism. For fiscal year 2002, the VA is projected to spend $51.5 billion, of which the National Cemetery Administration budget accounts for approximately $120 million, or less than one-quarter of 1 percent of the VA budget.
 
Code: 
wr032002

Washington Report 032003

Date Published: 
032003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Update on the Dodd Bill 

 
by Robert M. Fells, Esq., general counsel
 
The ICFA has continued to pursue discussions with the staff of Sen. Christopher Dodd (D-CT) who introduced a bill in the closing days of the 107th Congress to regulate the death care industry. Although the bill, S. 3168, and its House companion, H.R. 5743, expired when Congress adjourned in November, the ICFA understands that Dodd is planning to reintroduce the bill in the near future.
 
Regardless of its provisions, the ICFA has stated that the introduction of any federal legislation is premature until the General Accounting Office, the investigative arm of Congress, has published its report and recommendations. (See the November Washington Report for more information.)
 
Among other things, the Dodd bill creates a private right of action for individuals to sue funeral homes, cemeteries, crematories, monument retailers and others; prohibits any form of telemarketing and door-to-door selling; and provides unlimited cancellation rights with full refunds, plus interest, on prepaid contracts. The bill also seeks to codify the FTC Funeral Rule, thereby politicizing it and taking control of it away from the commission.
 
 
 

Amended Telemarketing Sales Rule 

 
On January 29, the Federal Trade Commission announced that its amended Telemarketing Sales Rule (TSR) would become effective on March 31. However, the effective dates of two provisions in the TSR were delayed. The requirement that telemarketers use caller ID to identify themselves has been delayed for a year.
 
More importantly, the requirement to use the new national "Do Not Call" registry has been delayed pending funding authorization from Congress, followed by at least seven months until the system is operational. (See the February Washington Report for more information on the amended TSR.) The FTC will announce specific compliance dates concerning these two provisions in the future.
 
The TSR applies only to phone calls made interstate, though another agency, the Federal Communications Commission, is considering a "Do Not Call" list that could cover intrastate calls as well.
 
The ICFA has been instrumental in obtaining and preserving an exemption in the TSR for appointment calls that are followed by face-to-face meetings. However, in deciding to maintain the face-to-face exemption, the FTC added several conditions, including the "Do Not Call" list and Caller ID requirements and prohibitions against using threats, intimidation and profane/obscene language; annoying or harassing individuals by continuous or repeating calling; blocking caller ID; and calling before 8 a.m. or after 9 p.m. local time.
 
For complete details on TSR compliance, check the FTC Web site at www.ftc.gov.
Code: 
wr032003

Washington Report 032005

Date Published: 
032005
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Court rules on grave opening/closing rights

by ICFA General Counsel Robert M. Fells, Esq.

A recurring question in cemetery law involves the issue of whether a cemetery may reserve to its own staff the exclusive right to perform all grave openings and closings within its grounds.

A number of states have enacted statutes specifically granting cemeteries such rights, but none of these laws, to our knowledge, has been tested by the courts until now.

In January, the Indiana Court of Appeals published its decision in SCI Indiana Funeral Services Inc. v. D.O. McComb & Sons Inc., which held that a 1997 state statute establishing that cemeteries may exclusively open and close graves is reasonably necessary to protect public health, safety and welfare.

The case involved the issue of whether a settlement agreement entered into by a cemetery's previous owner with a third party also bound the new owner to the terms of the agreement with that third party.

The settlement ended litigation in 1993 wherein the third party, D.O. McComb & Sons Inc., had challenged Highland Park Cemetery's policy of exclusive grave openings and closings.

The agreement provided, among other things, that McComb's employees could sell and open/close graves at the cemetery. According to the court, subsequent to the agreement McComb took no steps to file any documentation with the county recorder to make the agreement a matter of public record, nor did McComb actually open or close any graves at Highland Park.

In 1997 two events occurred that resulted in the current litigation. First, McComb was notified that the cemetery was being sold to SCI and that the new owner would no longer comply with the agreement. Second, the Indiana legislature enacted the Exclusive Rights Act that provided in part: "Because the owner of a cemetery is responsible for the performance of the care and maintenance of the cemetery, a cemetery owner has the exclusive right to [among other things] open and close a grave or grave space, burial space, crypt, or niche in the cemetery." Violations of the act would result in criminal prosecution under the Indiana code.

In 2000, McComb filed a complaint against SCI alleging breach of the agreement, intentional interference with a contractual relationship, damages and injunctive relief to compel compliance with the terms of the agreement.

The trial court ruled in McComb's favor by interpreting the Exclusive Rights Act as protecting only a limited group of citizens who have deceased relatives buried at Highland Park, and not the general public.

SCI appealed on the basis that the settlement agreement violated the Exclusive Rights Act, which did reasonably protect the public interest. Therefore, SCI's appeal said, complying with the agreement would subject the company "to the neverending possibility of criminal prosecution.

The appeals court reversed the trial court by stating that the lower court erroneously interpreted the Exclusive Rights Act.

According to the appeals court, "In our view, the Exclusive Rights Act seeks to limit potential problems, such as damage to existing gravesites, by limiting the right to open and close graves to the cemetery owner...The trial court did not recognize that the number of people affected by the decision will continually expand so long as Highland Park remains in operation. Hence, the Exclusive Rights Act is, indeed, reasonably necessary for the protection of the health, safety and welfare of the general public, and the trial court erred in finding to the contrary."

The case was remanded back to the trial court with instructions that summary judgment should be granted to SCI.

 

Courts to Funeral Service: Don't Litigate, Legislate

 
by Robert M. Fells, Esq., general counsel
 
From mid-December to early February, four courts handed down decisions in which they refused to overturn state laws affecting funeral and burial services that were alleged to be anti-competitive and anti-consumer.
 
The message from each court, two federal and two state, was clear: These laws may not be wise, but ask your legislators to change them, not us. This month's column will briefly highlight each of the decisions that suggest that ICFA members may want to consider new strategies when challenging unfair laws and regulations.
 
Singling Out For-Profit Cemeteries
 
In the first decision, Georgia Cemetery Association v. Cox, (353 F.3d 1319), the U.S. Court of Appeals for the 11th Circuit affirmed a lower federal court ruling that upheld a cemetery law passed by the Georgia legislature in 2000 imposing regulations on for-profit cemeteries but exempting religious, fraternal and municipal cemeteries.
 
The cemetery association, which the ICFA Government and Legal Fund had financially assisted in the case, argued that the law should be invalidated because public hearings conducted by the secretary of state "revealed complaints mostly about church operated-and not privately owned-cemeteries. Georgia Cemetery [Association] also points to further record evidence revealing that 50-60 percent of the church owned cemeteries are abandoned and in complete disrepair. The secretary of state argued that a purpose behind the regulation of private cemeteries is the legislature's belief that churches and other fraternal organizations are more likely to care for their cemetery grounds and have a closer relationship with their consumers, which generally precludes concern about fraud."
 
The appeals court stated that in order to find the new law constitutionally valid, "all there need be is a conceivable rational basis for the legislation. ... Under this standard, two things become irrelevant to the inquiry [italics in the original]. First: whether the conceived reason was in fact the reason for the legislation. ... Second: ... even if the legislation is based on 'faulty premises,' so long as there is any 'conceivable rational basis' to differentiate between cemeteries...the court cannot become involved in an evidentiary contest as to whether this is an actual rational basis for such differentiation."
 
In other words, even if the claims asserted by the association are accepted by the court, it still must uphold the law.

Regulating Preneed Casket Sales
 
In the second case, the North Carolina state appeals court came to a similar conclusion on January 20 in Board of Mortuary Science v. Crown Memorial Park, 590 S.E. 2d 467, involving a state law that limited the preneed sale of caskets to licensed funeral directors. The trial court had found the statute invalid as violating the due process and equal protection clauses of the U.S. and North Carolina constitutions, but the appeals court reversed the decision.
 
Among other issues, Crown Memorial stated that "the statutory restrictions are premised upon an ulterior motive to protect licensed funeral establishments from legitimate competition in an 'anti-consumer' fashion."
 
The court disagreed, noting, "Even if we interpret the surrounding circumstances as capable of supporting defendant's assertion that there was an ulterior motivation so as to make the statute otherwise unconstitutional, we would be constrained from doing so."
 
Here the court cited cases that held "statutes enacted by the legislature are presumed constitutional and will be upheld as such unless the party challenging the legislation shows unmistakably, clearly and positively that it is unconstitutional" and "where a statute is susceptible to two interpretations, one constitutional and one unconstitutional, the court should adopt the interpretation resulting in a finding of constitutionality."
 
The court therefore concluded that "there is a rational relationship between consumer protection and limiting the preneed sale of funeral merchandise to licensed funeral home directors."
 
Regulating Preneed Cremation Sales
 
In the third case, the Pennsylvania Supreme Court echoed the same thinking on January 22 in Cornerstone Family Services v. Bureau of Professional and Occupational Affairs, No. 106 MAP 2002. Cornerstone appealed an adverse lower court decision upholding the state funeral board's determination that only licensed funeral directors can sell preneed cremation services.
 
The lower court held that Cornerstone must exhaust its administrative remedies with the board prior to appealing to the courts. In a per curiam ruling, that is, a ruling without an explanation or opinion, the state supreme court denied Cornerstone's motion to change the lower court's ruling.
 
The ICFA had submitted a "friend of the court" brief urging the court to open competition in preneed marketing and, in an interesting sidelight, the state funeral board and the state funeral directors association filed motions to strike and suppress the ICFA brief. The court ruled against these motions.
 
The Associated Press ran a story on the decision headlined, "Cremation costs may rise after court's ruling."
 
Restricting Combination Operations
 
The fourth decision was published by the U.S. District Court for the Northern District of New York on February 4 in New York State Association of Cemeteries Inc. v. Richard Fishman, et al., No. 99-CV-00664. In this case, the state association challenged the constitutionality of a 1998 law that prohibits cemetery-mortuary combinations, prohibits cemeteries over 30 acres from selling upright monuments and prohibits cross-marketing, among other restrictions.
 
The ICFA Government and Legal Fund provided financial assistance to the state association and also filed a "friend of the court" brief in support of the association's pro-competitive efforts.
 
The state agency argued that the law "is in the public interest and a valid exercise of the state's police powers to regulate cemeteries." The federal district court quoted the U.S. Supreme Court stating that courts should not act as "a super legislature to judge the wisdom or desirability of legislative policy determinations made in areas that neither affect fundamental rights nor proceed along suspect lines. ... The fact that in an individual case the statute operates in a burdensome manner against persons acting in good faith is not grounds for its invalidation."
 
Most tellingly, the court noted that, "Courts do not use due process to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident or out of harmony with a particular school of thought." A state statute "may be wise or unwise; relief, if any be needed, lies not with the courts but the body constituted to pass laws for the state. The existence of facts supporting the legislative judgment is to be presumed."
 
While this decision is hardly a vote of confidence in the New York statute, the court's ruling is consistent with the three earlier opinions that urge parties to seek legislation, not litigation, to amend laws having anti-competitive consequences.
 
The ICFA Government and Legal Affairs Committee will be discussing the impact of these court rulings during its general session presentation at the ICFA Annual Convention & Exposition in Nashville.
Code: 
wr032005

Washington Report 032003

Date Published: 
032003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Bill Encourages Preneed Planning

 
by Robert M. Fells, Esq., general counsel
 
Sen. Blanche Lincoln (D-AR) has introduced S. 166 to amend the Social Security Act by clarifying that the value of certain irrevocable funeral and burial arrangements are not to be considered available resources in order to obtain benefits under the Supplemental Security Income (SSI) program.
 
Lincoln explained the reasons behind her proposed legislation: "Irrevocable funeral trusts ... cannot be accessed until after the owner's death. Until recently, these trusts were not included in SSI resource calculations, but an administrative misinterpretation in 2001 dropped this important exclusion. This misinterpretation has since been corrected, but it had serious repercussions for many senior citizens while it was in effect. ... I am introducing this bill to codify the exclusion to give senior citizens certainty that future administrations will not be able to misinterpret Congressional intent."
 
The Social Security Act already excludes the value of burial spaces or agreements to purchase spaces. However, the recent administrative rulings referred to by Sen. Lincoln sought to disqualify prepaid funeral/burial goods and services as excludable resources.
 
During the introduction of S. 166 on January 15, Lincoln noted, "In the past, Congress has recognized the value of funeral planning as good social policy. We have encouraged consumers to engage in 'preneed' funeral planning in a number of ways. This legislation will encourage people to engage in preneed planning. It will codify the existing practice of excluding irrevocable funeral trusts from SSI calculations and ensure that future misinterpretations are avoided. We must ensure that people will not be penalized for providing for their own funerals."
 
The ICFA has contacted Sen. Lincoln's office and the Senate Finance Committee, where the bill was referred, to discuss the wording of the proposal. Although the bill's language clearly states that it excludes "certain funeral and burial arrangements" as resources, the proposed wording to amend the Social Security Act refers only to "funeral goods and services for a funeral." The ICFA is recommending further clarification by adding the term "burial" to the statutory reference to "goods and services."
 
At this time, no action on the bill has been announced.
Code: 
wr032003

Washington Report 032008

Date Published: 
032008
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

The view on Capitol Hill for 2008

As the 110th Congress moves into its second and final session, the ICCFA continues to follow a number of pending bills that could affect our members' businesses. ICCFA members will be meeting with key Congressional legislators in March during the association's second annual Capitol Hill visit. Here's a recap of some of the proposed legislation we are watching:
 
H.R. 3970: Tax Reduction and Reform Act of 2007. Introduced by Rep. Charles Rangel (D-NY), the powerful chairman of the House Ways and Means Committee, this bill seeks a substantial overhaul of many areas in the federal tax code. Among the more problematic proposals in the bill, a 4 percent tax surcharge would be imposed on individual filers with incomes greater than $150,000 annually, and on couples with incomes greater than $200,000. Together with expiring tax cuts that Congress has failed to act on so far, the marginal tax rates for individuals and small businesses would increase from the current top rate of 35 percent to 44.2 percent. Also, the LIFO (last-in-first-out) inventory method would be repealed and the estate tax would be restored from 0 to 55 percent. The ICCFA has joined the Tax Reform Coalition to oppose this legislation.
The coalition represents over 1,000 trade associations, business organizations and corporations. Check its Web site at www.taxreliefcoalition.org.
 
H.R. 800/S. 1041: Employee Free Choice Act. This misnamed bill seeks to repeal employees' right to vote by secret ballot for union representation. The proposal would require binding arbitration for a first contract where an arbitrator, not management and the union, could decide the terms of the labor contract. The bill also would impose substantial new fines on employers. As bad as this bill sounds, it quickly passed the House of Representatives in March by a vote of 241-185, divided mainly along party lines. The Senate companion bill, S. 1041, was introduced with 46 co-sponsors but a vote on the legislation was tabled in late June. Conventional wisdom suggests that this bill will remain tabled for this session of Congress, but will be re-introduced early in 2009 where its proponents predict swift passage and enactment by the new president. Labor unions currently seek to unionize businesses with as few as three employees, so the bill should be of concern to small business owners. The ICCFA opposes this legislation and has joined the Coalition for a Democratic Workplace at www.myprivateballot.org.
 
H.R. 1273: Restoration of the Veterans Plot and Marker Cash Allowances in Private Cemeteries. At the request of the ICCFA, Rep. Shelley Berkley (D-NV) introduced this bill to restore the popular VA plot and marker allowances that benefited veterans and their families who chose interment in private or religious cemeteries. These two burial benefits were curtailed by Congress in 1990; the ICCFA has estimated that up to 70 percent of veterans who were eligible to receive these benefits were disqualified as a result. In July, the ICCFA testified at a hearing on the bill, which was supported by various veterans organizations, including the Veterans of Foreign Wars, the American Legion and the Paralyzed Veterans of America. 
 
H.R. 1264: To Remove Dollar Cap on Qualified Funeral Trusts. This bill has become something of a perennial piece of legislation being introduced in the last few Congresses. The bill seeks repeal of the dollar limitation on funeral trusts organized as "qualified funeral trusts" or QFTs under section 645 of the Internal Revenue Code. In these types of preneed trusts, the trustee elects to pay the federal income tax on trust earnings in lieu of the purchaser. However, there is a dollar limit for such trusts that is indexed annually for inflation; for 2007, the dollar limitation is $8,800. This legislation, introduced by Rep. Ron Kind (D-WI), has 17 co-sponsors and was referred to the Ways and Means Committee. A companion bill, S. 1743, is pending in the Senate Finance Committee. For more information on using IRS Form 1041 QFT, check www.irs.gov/pub/irs-pdf/f1041qft.pdf.
 
S. 989: To Codify Exclusions from Assets for Irrevocable Funeral/Burial Contracts. Another perennial bill in Congress, this bill was introduced by Sen. Blanche Lincoln (D-AR), and seeks to amend Title XVI of the Social Security Act to clarify that the value of certain funeral and burial arrangements are not to be considered resources for purposes of qualifying for the supplemental security income program. Specifically, the bill would codify into federal law the current policy of the Social Security Administration that excludes funds paid by individuals under an irrevocable preneed contract, when the funds are placed into an irrevocable trust with the funeral provider as the named trust beneficiary. The bill has been referred to the Finance Committee. A companion bill, H.R. 1629, has been introduced in the House. Finally, it may be almost as important to note legislation that has not been introduced to date. Proposals by Sen. Chris Dodd (D-CT) were introduced twice in past years seeking the federal regulation of funeral homes, cemeteries, crematories and related businesses. No similar legislation is currently pending, but the fallout from the Clayton Smart investigations in Tennessee and Michigan could serve as a catalyst for renewed Congressional oversight of the profession. The ICCFA remains vigilant.
Code: 
wr032008

Washington Report 032007

Date Published: 
032007
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

EPA won't regulate crematories 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
In late January, the U.S. Environmental Protection Agency announced its "Notice of Final Action on Reconsideration" in which it confirmed a December 2005 decision not to regulate human crematories under the federal Clean Air Act.
 
As previously reported, at issue was whether crematories should be regulated under the category of "Other Solid Waste Incinerators" (OSWI) in the Clean Air Act regulations. During the rulemaking proceedings, two persons objected to exempting crematories because they claimed that "the incineration of human bodies emits significant quantities of mercury and other hazardous air pollutants." It was also claimed that human bodies were classified as "discarded solid waste" under government regulations.
 
However, the EPA disagreed with these claims and found that the regulatory definitions of "discarded" and "solid waste" do not apply to nonhazardous substances such as human remains. The agency concluded that "the human body should not be labeled or considered 'solid waste'... and [crematories] are not a subcategory of OSWI for regulation." The EPA did leave the door open to potential future regulation by either the states or &other authorities."
 
In its most recent ruling, the EPA denied a request to reconsider human crematories in the OSWI rules. The EPA findings were primarily based on the result of stack testing conducted by the Cremation Association of North America and EPA, to which the ICCFA was a financial contributor.
 
 
 

Union bill introduced in House 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
Following up on last issue's "Washington Report" column, the Employee Free Choice Act was introduced into the U.S. House of Representatives by Rep. George Miller (D-CA) on February 6. The bill, H.R. 800, is co-sponsored by a whopping 230 House members, more than a majority, making an actual vote on the legislation a mere formality.
 
The proposal seeks to eliminate the secret ballot vote whereby employees may confidentially indicate whether or not they want a particular union representation. The bill also mandates binding arbitration where a collective bargaining process has not produced a first contract within 90 days, among other things. Ultimately, an arbitrator can impose terms of a labor contract over the objections of both the employer and the union.
 
Rep. Miller stated that "the current process for forming unions is badly broken and so skewed in favor of those who oppose unions, that workers must literally risk their jobs in order to form a union. ... Sadly, many employers resort to spying, threats, intimidation, harassment and other illegal activity in their campaigns to oppose unions. … Even when employers don't break the law, the process itself stacks the deck against union supporters."
 
Miller also stated that the bill is "bipartisan, " although support has apparently divided mostly along party lines. The legislation has been referred to the House Education and Labor Committee, where a hearing was scheduled for February 8.
 
The senior ranking Republican on the House Education and Labor Committee, Rep. Howard "Buck" McKeon (CA), stated that the bill creates a "double standard" whereby employees no longer have the right to vote in private on whether to unionize, but the bill ironically preserves the secret ballot when workers seek to decertify a union. According to McKeon, unions insist on using the "card check" method of indicating workers' support for unionizing while claiming that the secret ballot must be preserved for decertifying a union as "imperative to preserving privacy and independence."
 
"If a card check is good enough for workers to organize a union in a workplace," McKeon concluded, "it should be good enough to allow them to break ties with that same union if they are not satisfied with the way it's representing them. ... Even though current law allows for unions to organize through either a federally supervised private ballot election or a card check, proponents of the card check bill (H.R. 800) are widely viewed as pushing for intimidation-prone card checks that make a workers' personal vote completely public."
 
The Coalition for a Democratic Workplace, a business lobbying group organized under the U.S. Chamber of Commerce to oppose H.R. 800, has invited the ICCFA to add its support. Members of the coalition include the National Retail Federation, the National Association of Manufacturers, the National Restaurant Association, the National Federation of Independent Business and the American Hotel and Lodging Association, among other organizations.
 
Significant developments will be reported as they occur. Due to the fast-track attention this legislation is receiving, at least in the House, members should check the ICCFA Wireless, the association's biweekly electronic newsletter, for the latest updates.
Code: 
wr032007

Washington Report 032002

Date Published: 
032002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

FTC Proposes Amendments to The Telemarketing Sales Rule 

 
by Robert M. Fells, Esq., general counsel 
 
On January 30, the Federal Trade Commission (FTC) officially published a Notice of Proposed Rulemaking in the Federal Register concerning its review of the Telemarketing Sales Rule (TSR). This rule was enacted in 1995 by congressional mandate and requires telemarketers to disclose the nature of the call, the products and services offered, prices and cancellation and refund policies prior to making a sale, among other requirements.
 
The ICFA was instrumental in obtaining an exemption for “appointment” calls, typically made by preneed sellers, where nothing is sold but the caller seeks to meet with the consumer for a face-to-face presentation. Under the proposed amendments, the FTC has recommended retaining the “face-to-face” exemption in the TSR, but wants to add five amendments to the exemption whereby preneed callers would be prohibited from contacting consumers who placed their numbers on a national “Do Not Call” registry, among other things.
 
The five proposed amendments to the face-to-face exemption can be divided into three categories:
 
1) Two amendments duplicate existing requirements under the Telephone Consumer Protection Act (TCPA), a federal law enforced by the Federal Communications Commission with which telemarketers have had to comply since 1992. These requirements involve maintaining a company-specific “Do Not Call” list, and the prohibition against calling residences between 9 p.m. and 8 a.m.
 
2) Another two of the five amendments require compliance with TSR provisions that prohibit the use of threats, intimidation or use of profane or obscene language, and prohibit the blocking or circumventing a consumer’s “caller ID” system.
 
3) The fifth and most controversial proposal in the entire notice, prohibits calls to consumers who place their numbers on the FTC national “Do Not Call” registry. The FTC states that it has no idea how much the proposed “Do Not Call” registry will cost or who will pay for it.
 
Despite these proposed conditions, qualifying telemarketers would still be exempt from the TSR requirements concerning deceptive practices and recordkeeping, and from various oral disclosures.
 
Public comments on the FTC proposed amendments are due at the commission by March 29. At the time of filing comments, parties are also required to state their interest in participating in the upcoming FTC public forum on the Telemarketing Sales Rule amendments scheduled for June, 5, 6 and 7 in Washington, D.C.
 
The ICFA anticipates submitting comments stating its concerns with some of the proposals. ICFA members wanting more information should visit the FTC Web site at www.ftc.gov and click on the Consumer Protection icon.
 
Code: 
wr032002

washington Report 112000

Date Published: 
112000
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Second Federal Court Invalidates State's Casket Law 

 
by Robert M. Fells, Esq., general counsel 
 
Following up on the October "Washington Report" column concerning a federal court in Tennessee striking down that state's law restricting casket sales exclusively to licensed funeral directors, the U.S. District Court for the Southern District of Mississippi has made a similar ruling. According to the decision in Casket Royale Inc. v. State of Mississippi, et al., the casket manufacturer plaintiff alleged that the Mississippi law restricting casket retail sales only to licensed funeral directors violated the Due Process and the Equal Protection Clauses of the 14th Amendment to the U.S. Constitution. The court agreed.
 
Defendants claimed that the state government had a legitimate interest in the prompt disposition of human remains, but the court held that the statute in question "does not advance this interest as nothing inherent in the licensing requirement, at least in regard to a coffin, would offer a quicker burial or cremation."
 
Regarding consumer protection claims to justify the licensing requirement, the court held that the requirement "not only fails to advance the interest of Mississippi in consumer protection, it actually diminishes it. As a result of this requirement, consumers in Mississippi are offered fewer choices when it comes to selecting a casket. Consequently, there is less price competition among the sellers of caskets. Ultimately, the consumer is harmed by this regulation as one is forced to pay higher prices in a far less competitive environment."
 
ICFA members who would like a copy of the Mississippi decision should call association headquarters at 1-800-645-7700. 
Code: 
wr112000

Washington Report 062000

Date Published: 
062000
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA Submits Comments on Telemarketing Sales Rule 

 
by Robert M. Fells, Esq., General Counsel 
 
Similar to its review of the Funeral Rule, the Federal Trade Commission (FTC) is soliciting public comments as part of its review of the Telemarketing Sales Rule. The ICFA recently submitted comments to the FTC urging retention of the existing exemption for preneed-type phone calls.
 
"The ICFA supports the FTC Telemarketing Sales Rule as an effective regulation that protects the public from abusive and fraudulent telemarketers without imposing unreasonable burdens on legitimate businesses. We believe that the existing rule achieves an appropriate balance between enabling consumers to avoid unwelcomed calls while safeguarding the constitutional rights of commercial free speech to businesses.
 
"Our comments are specifically addressed to §310.6(c) of the rule that exempts 'Telephone calls in which the sale of goods or services is not completed and payment or authorization of payment is not required, until after a face-to-face sales presentation by the seller.' The ICFA advocated this exemption during the original 1995 rulemaking proceeding and we believe that it has worked well for the following reasons.
 
"Typically, members of the funeral home and cemetery profession do not sell property, merchandise or services over the phone. Telemarketing is used to determine the level of interest by consumers in making prearranged funeral and burial plans, then establishing appointments with prospective customers at a mutually agreeable time in order to make an in-person or face-to-face 'preneed' sales presentation.
 
"The FTC Request for Public Comments specifically asks, 'Is the exemption for 'face-to-face' transactions still appropriate? If not, why not, and how should this exemption be changed?' The ICFA is not aware of abuses to the §310.6(c) exemption by funeral-related sellers and the required 'face-to-face' component of the exemption is a significant safeguard to prevent potential abuses. Industry members know from experience that it is difficult, if not impossible, to sell various types of merchandise such as caskets, monuments, vaults, cemetery lots or mausoleum crypts sight unseen by telephone. In the absence of a personal examination of these items or through viewing representations such as models, photographs or drawings during a face-to-face presentation, a purchase decision will not be made by consumers.
 
"The ICFA urges the Commission to retain the §310.6(c) exemption as a commonsense method of applying the Telemarketing Sales Rule only to those entities that actually attempt to sell goods and services over the telephone. Application of the rule to businesses that solely make appointments with prospective purchasers is unreasonable and unduly burdensome, offering no additional level of consumer protection. Furthermore, consumers are protected from potential fraudulent or high-pressure sales tactics of face-to-face presentations through the FTC Three-Day Cooling Off Rule and other federal and state laws."
 
Public comments may be viewed on the FTC Web site at www.ftc/gov by clicking on "Consumer Protection" and following the prompts to "Telemarketing Rule Review." Important developments will be reported as they occur. 
 
 
 

ICFA Testifies Against Ergonomics Proposal 

 
On May 9, ICFA Past President Edward C. Laux, CCE, testified on behalf of the association before the U.S. Department of Labor public hearings in Washington, D.C., on the proposed ergonomics program standard. The standard was developed by the Occupational Safety and Health Administration to reduce repetitive stress injuries, known as musculoskeletal disorders (MSDs), in the workplace. However, OSHA has stirred considerable controversy in the business community with its 300-page proposal requiring employers in manufacturing and manual handling operations to initiate a number of activities when an employee reports an OSHA-recordable MSD injury. The standard affects cemeteries, funeral homes and related facilities and contains no small business exemption.
 
Laux stated: "The ICFA supports efforts to identify and eliminate musculoskeletal disorders or MSDs in the workplace. However, we believe that the proposed ergonomics program standard is both vague and unduly complicated, especially in its application to small businesses in the cemetery and funeral home industries. Statistically, there are at least 100,000 cemeteries in the United States, although the U.S. Geological Survey estimates that this number could be as high as 200,000. Many cemeteries operate through volunteer boards of directors and one or two employees. There are also at least 22,000 funeral homes, and the vast majority of cemeteries and funeral homes, approximately 87 percent, are small businesses and family-owned operations. The owners of these small businesses wear a number of hats, including that of legal compliance officer for the many governmental regulations they face, including existing OSHA standards."
 
The ICFA acknowledged that the proposed ergonomics standard has made some effort to accommodate the 1.3 million small businesses OSHA believes will be affected. However, Laux pointed out that "we are concerned that many owners will feel unqualified to implement the mandated requirements. OSHA has suggested that small businesses adapt the guidelines contained in its publication for meatpacking plants, an approach that we believe is inappropriate for cemeteries and funeral homes, to say the least.
 
"More importantly, cemeteries and funeral homes in compliance with existing OSHA safety standards have found these regulations workable because they define the potential hazard and then identify appropriate remedies. By contrast, the ergonomics proposal would require employers to become MSD experts in identifying and rectifying potential hazards on their own.
 
"After the fact, OSHA personnel would inspect the worksite, in effect second-guessing the employer, to determine compliance. We know of no other OSHA standards that place businesses in such a vulnerable position. Although OSHA claims that small businesses would not need to hire expensive consultants to comply, we strongly disagree. The threat of costly fines for technical infractions will force many small business owners, in our opinion, to retain ergonomics consultants to advise them."
 
The ICFA pointed out that cemeteries and funeral homes have a documented history of few worker injuries and this fact should be recognized in applying the ergonomics standard to these operations. Laux stated, "Statistically, the cemetery and funeral home industries have recorded low injury rates and, based on my own personal experiences, industry members have more often been fined for paperwork violations than for any injuries sustained by their workers due to an unsafe worksite. The MSDs covered by the ergonomics proposal involve activities whereby tools, power lifts and other equipment have significantly aided workers and reduced the potential for injury.
 
"For example, the mechanical backhoe has eliminated the hand-digging of graves and consequential back injuries. However, the ICFA is alarmed that implementation of the proposed ergonomics program will launch yet another series of costly paperwork penalties against small businesses that yield little, if any, countervailing benefits to worker safety.
 
"For these reasons, the ICFA supports the use of an alternative threshold test to trigger coverage under the ergonomics program for cemeteries and funeral homes. The requirements would become effective whenever two adjudicated workers compensation MSD claims are handled within a three-year time period. This accommodation would recognize the historically low injury rate in our industries and allow small businesses to make adjustments where a problem has been detected without risking potentially costly fines for non-compliance.
 
"In addition, we understand that many MSDs are the result of repetitive motion tasks throughout the workday. Cemeteries and funeral homes are unique among small businesses because of the wide spectrum of tasks performed by their workers. A constant variety of office activities and field work, often by the same worker, are performed every day and eliminate the potential for repetitive motion injuries. In my opinion, it is rare for a cemetery or funeral home worker to perform only one or two tasks that would place the person at risk of sustaining a repetitive motion-type of MSD."
 
The ICFA shared the witness table with representatives from the National Funeral Directors Association and the National Funeral Directors and Morticians Association. The three associations coordinated their testimony and agreed to support a "two-MSD" threshold test in presenting their views to the Department of Labor.
 
Briefly, the ergonomics standard would require employers to establish: 1) Management leadership and employee participation programs; 2) Hazard information and reporting; 3) Job hazard and analysis control; 4) Training; 5) MSD (medical) management; and 6) Program evaluation. In addition to the vague provisions and substantial fines for non-compliance, there is considerable disagreement over the costs to American businesses. OSHA claims that the program will cost businesses approximately $4 billion annually, but the U.S. Small Business Administration argues that the cost could be 15 times higher. Adding to the controversy, OSHA refused to wait until the conclusion of a Congressionally-funded study by the National Academy of Sciences into the causes and extent of MSDs in the workplace. OSHA hopes to implement the new program before the end of this year.
 
The ICFA is currently drafting post-hearing comments to persuade the Department of Labor that accommodations for cemeteries and funeral homes are justified and necessary. The ICFA has partnered with the U.S. Chamber of Commerce and the National Coalition on Ergonomics (NCE) to oppose enactment of the ergonomics standard in its present form. For more information, the NCE Web site can be accessed on the internet at www.ncergo.org. The OSHA Web site also contains information relating to the standard, including transcripts of the public hearings at www.osha.gov. ICFA members will be kept informed of developments. 
 
Code: 
wr062000

Washington Report 022003

Date Published: 
022003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Oklahoma Federal Court Upholds State Casket Law Restriction 

 
by Robert M. Fells, Esq., general counsel
 
A U.S. district court in Oklahoma held that the state law restricting casket sales solely to licensed funeral directors was constitutional. This decision is a departure from other rulings, most recently by the U.S. Court of Appeals for the Sixth Circuit in Craigmiles v. Giles, which held that such laws are unconstitutional. The Oklahoma decision, Powers v. Harris, held that while the state law may be "unwise" and "paternalistic," the restriction was rationally related to the state's interest in protecting the public and thus constitutional.
 
Specifically, the judge in Powers stated, "The legislature may determine, without interference from the Due Process Clause [of the U.S. Constitution], that protection of the consumer lies in the creation of a cartel-like scheme for the protection of an industry."
 
The federal appeals court decision in Craigmiles held that there was no rational basis for the state of Tennessee to impose a similar restriction in its law. While the judge in the Oklahoma decision acknowledged the findings by the appeals court in Tennessee, he criticized the higher court's decision by claiming that it took "a less-than-disciplined approach" in striking down the Tennessee law.
 
Attorneys for the casket retailers in Oklahoma have said they plan to appeal the lower court's decision to the 10th U.S. Circuit Court of Appeals.
Code: 
wr022003

Washington Report 022004

Date Published: 
022004
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

US Tax Court: Preneed Funds Not Taxable Until Contract Is Performed

 
by Robert M. Fells, Esq., general counsel
 
Recently, the U.S. Tax Court published its decision in Perry Funeral Home Inc. v. Commissioner of Internal Revenue, T.C. Memo.2003-340. The court held, based on the facts involved, that preneed funds are not taxable as income until the contract is performed.
 
The IRS argued that the funds are taxable when received by the funeral home because, under a previous U.S. Supreme Court ruling, where the seller has "dominion and control" over the funds, the proceeds are taxable when received. The accrual basis funeral home recognized the preneed funds it received from purchasers only when the contracts were performed.
 
An important fact that influenced the Tax Court's decision involved the requirement under state law that all preneed funeral contracts are cancellable by the purchaser at any time prior to performance, and the purchaser must receive a full refund. The funeral home did not deposit the funds into a trust but placed them into investment plans instead.
 
The court ruled that the lack of a trust did not alter its conclusion that the purchaser, and not the seller, had "dominion and control" over the funds because it was the purchaser who ultimately determined whether the funeral home would keep the funds.
 
Therefore, the court rejected the IRS arguments and held that the funds received by the funeral home are taxable only when the funeral home has performed its obligations under the contract and was entitled to keep the funds.
 
It is important to note that Tax Court decisions apply only to the taxpayer involved and cannot be cited as precedent for other parties. In addition, the IRS may appeal this decision. Tax Court decisions are useful for highlighting the thinking of the court and for use in other cases with similar fact patterns.
Code: 
wr022004

Washington Report 062001

Date Published: 
062001
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Law School Professor Slated as New FTC Commissioner 

 
by Robert M. Fells, Esq., general counsel 
 
Timothy Muris, a law professor at George Mason University in Arlington, Virginia, has been selected by President Bush to become the new chairman of the Federal Trade Commission. Muris was a director at the FTC during the Reagan Administration in the 1980s and is known for his pro-business views on competition.
 
Senate confirmation of Muris' appointment is expected. The current FTC chairman, Robert Pitofsky, has announced his resignation effective in early June, regardless of whether or not Muris has been confirmed at that time. A number of projects at the FTC are on hold pending the arrival of Muris and the anticipated new direction some FTC programs may take. At this time, it is uncertain what effect, if any, the new chairman may exert over the Funeral Rule review, which has been under way since May 1999.
 
An FTC staff report on the Funeral Rule has been expected since spring of last year, but FTC staff are unable to estimate at this point when the report will be published.
 
ICFA members will be kept informed of all important developments. 
 
 
 

Onerous OSHA Ergonomics Program Repealed

 
The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) made it official on April 23. Effective that day, the complicated ergonomics program hurriedly promulgated by OSHA in the last weeks of the Clinton administration, over the loud objections of business leaders, was officially invalidated. This action resulted because both houses of the newly convened 107th Congress got together in early March to abolish the ergonomics program under the Congressional Review Act. The ergonomics regulations have the distinction of being the first federal agency regulations abolished under that act. As he had promised, President Bush signed the legislation into law with little fanfare on March 20.
 
The ICFA was part of a broad-based coalition of industries that fought the ergonomics proposal and testified before the Department of Labor last year in opposition to the plan. Briefly, the ergonomics standard would have required employers to establish: 1) management leadership and employee participation programs; 2) hazard information and reporting; 3) job hazard and analysis control; 4) training; 5) Musculoskeletal Disorder ("MSD" -- such as Carpal Tunnel Syndrome and back injuries) management; and 6) program evaluation. In addition to the vague provisions and substantial fines for noncompliance, there was considerable disagreement over the costs to American businesses. OSHA claimed the program would cost businesses approximately $4 billion annually, but the U.S. Small Business Administration predicted the cost could be 15 times higher.
 
Adding to the controversy, OSHA refused to wait until the conclusion of a Congressionally funded study by the National Academy of Sciences into the causes and extent of MSDs in the workplace. Instead, OSHA vowed to implement the new program before the end of the Clinton administration, which it did. However, even before the ergonomics program was rescinded, the National Coalition on Ergonomics, which the ICFA supported, sought an injunction in federal court to stop the program from being implemented. Fortunately, the injunction became unnecessary and the court presumably will dismiss the lawsuit seeking it.
 
The ICFA testimony before the Department of Labor last spring, presented by Past President Edward C. Laux, CCE, stressed the difficulties in understanding the requirements of the ergonomics standard because "cemeteries and funeral homes in compliance with existing OSHA safety standards have found these regulations workable because they define the potential hazard and then identify appropriate remedies. By contrast, the ergonomicsproposal would require employers to become MSD experts in identifying and rectifying potential hazards on their own."
 
The Bush administration's new secretary of labor, Elaine Chao, has said her department intends to develop more practical, and less complex, guidelines to reduce MSD-related injuries. The U.S. Chamber of Commerce believes development of new worker safeguards will be conducted in an atmosphere less hostile to businesses than was the case during the Clinton administration. ICFA members will be kept informed of new developments. 
Code: 
wr062001

Washington Report 022001

Date Published: 
02001
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Congressionally Funded Study Supports OSHA Ergonomics Program 

 
by Robert M. Fells, Esq., general counsel 
 
A Congressionally funded study by the National Academy of Sciences focusing on musculoskeletal disorders (MSDs) in the workplace, particularly back and joint injuries, surprised the business community by supporting the need for ergonomic regulations. While not directly endorsing the massive regulations recently issued by the U.S. Department of Labor's Occupational Safety and Health Administration (OSHA), the study recommends implementing &quota variety of strategies that may involve the worker, the workforce and management. These strategies fall within the categories of engineering controls, administrative controls and worker-focused modifiers.&quot
 
The Ergonomics Program became effective on January 16, although enforcement efforts by OSHA are not scheduled until October 15. OSHA published its controversial ergonomics regulations during the closing weeks of the Clinton administration despite Congressionally approved legislation, awaiting the president's signature, to prohibit OSHA from spending funds to implement the program. The regulations are supported by labor unions but opposed by management organizations that contend the OSHA program is too complicated and will cost tens of billions of dollars for compliance.
 
Basically, the Ergonomics Program requires all employers, except those in the construction, maritime, agriculture and railroad industries, to identify all MSD hazards in the workplace, to educate workers to report MSD risks and injuries and to provide compensation for MSD-related injuries. There is no small business exemption. The full OSHA report runs 300 pages but a 23-page question-and-answer summary of the requirements can be viewed and downloaded at www.osha.gov.
 
The National Academy of Sciences study noted that activities outside the workplace could play a role in reported MSDs. However, since 80 percent of the adult population in the United States is in the workforce, efforts to distinguish between work-related and nonwork-related MSD injuries would be unreliable. &quotThe panel concludes that there is a clear relationship between back disorders and physical load; that is, manual material handling, load movement, frequent bending and twisting, heavy physical work and whole body vibration. For disorders of the upper extremities, repetition, force and vibration are particularly important work-related factors.&quot
 
The study continued, &quotThere are significant data to show that both low back and upper extremity musculoskeletal disorders can be attributed to workplace exposures. Based on the pattern of evidence considered across epidemiological, biological, biomechanical, basic science and intervention studies, the panel concludes, with a high degree of confidence, that there is a strong relationship between certain work tasks and the risk of musculoskeletal disorders.&quot
 
The study noted that data from the Bureau of Labor Statistics estimated 846,000 lost-workday cases of MSDs in private industry. "Manufacturing was responsible for 22 percent of sprains/strains, carpal tunnel syndrome, or tendinitis, while service industry accounted for 26 percent.&quot According to survey data from the National Center for Health Statistics as referenced in the study, &quotAmong men, the highest-risk industries were lumber and building material retailing, crude petroleum and natural gas extraction and sawmills/planing mills/millwork. Among women, the highest-risk industries were nursing and personal care facilities, beauty shops and motor vehicle equipment manufacturing."
 
OSHA had been urged by the business community to delay issuance of the Ergonomics program until the National Academy of Sciences study had been published and reviewed. However, OSHA determined that it had received sufficient data to proceed with the new regulations without waiting for the study. It is important to note the study recommendation that, "Because of limitations in the scientific literature, a comprehensive and systematic research program is needed to further clarify and distinguish the features that make interventions effective for specific musculoskeletal disorders."
 
 
The U.S. Chamber of Commerce and the National Coalition on Ergonomics, of which the ICFA is a member, are urging the Bush administration to delay or rescind the OSHA regulations Litigation against the Ergonomics Program is also proceeding. 
Code: 
wr022001

Washington Report 022008

Date Published: 
022008
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICCFA joins tax relief coalition 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
The ICCFA has joined a coalition representing over 1,000 trade associations, business organizations and corporations to oppose the expiration of certain beneficial tax rates and a proposed tax code overhaul in Congress. The consequences of these two events would raise personal income tax rates, restore the estate tax from zero to 55 percent and abolish the LIFO (Last-In-First-Out) method of accounting for inventory, among many other issues. Some of these tax increases will occur simply because of the expiration of current tax rates in 2010 unless Congress acts to extend them.
 
In addition, a tax code overhaul proposal currently being considered by the House Ways and Means Committee would impose a 4 percent tax surcharge on individual filers with incomes greater than $150,000 and on couples with incomes greater than $200,000. According to the coalition, the combination of the proposed tax surcharge and the expiring tax cuts could raise marginal tax rates for individuals and small businesses from the current top rate of 35 percent to 44.2 percent.
 
Members of the Tax Relief Coalition include the U.S. Chamber of Commerce, the American Bankers Association, the Latin American Management Association, Exxon-Mobil and the Direct Marketing Association, among hundreds of other organizations and companies. The ICCFA appears to be the only association in the cemetery and funeral profession to partner with the Coalition.
 
For more information on the coalition, check www.taxreliefcoalition.org.
 
 
 

U.S. District Court clarifies funeral home ownership decision 

 
In December, the U.S. District Court in Maryland ruled on a motion submitted by plaintiffs in Brown v. Hovatter that requested an amendment of the court's earlier decision in October. The ICCFA had intervened in the case as a friend of the court. As previously reported in the December Washington Report, the federal court had ruled that the section of the state Morticians Act "which prohibits corporate ownership in Maryland with indefinite exemptions for corporations holding licenses existing as of June 1, 1945, violates the dormant Commerce Clause of the United States Constitution." However, the court upheld the section of the Morticians Act "which establishes a licensing scheme for the operation of funeral homes in Maryland." Uncertain of how the court's decision should be applied as a practical matter, the plaintiffs asked the court to amend its ruling. Instead of doing so, the court offered clarification.
 
Specifically, plaintiffs asked if the court's ruling "extend[ed] to non-mortician entrepreneurs and companies the same general right to own corporate-licensed funeral homes that was previously available only to those lucky few able to acquire one of Maryland's 58 'grandfathered' corporate funeral homes" or only "enjoined Maryland from denying corporate ownership to Maryland- licensed morticians." The court stated, "The latter is the holding of the case."
 
The court explained that its "prior ruling held that anyone capable of owning a funeral home in Maryland may do so in corporate form. ... However, defendants may, but are not obligated to, require that a licensed individual own or co-own a funeral home." Interestingly, the defendants, members of the Maryland Board of Morticians, "state in their response that they will not require that a licensed individual own or co-own a corporate funeral home, despite this Court's ruling that doing so was permissible under [the Constitution]."
 
 
 

AARP Magazine attacks prepaid funerals 

 
The current issue (Jan-Feb 2008) of AARP's magazine contains a lengthy article criticizing prepaid funeral contracts and contains cartoonish photographs with actors posing as greedy preneed salespersons stealing money. The article, ""R.I.P. Off," initially focuses on the Clayton Smart investigations in Tennessee and Michigan, but ultimately urges readers not to prepay any funeral arrangements: "Both AARP and the Funeral Consumer Alliance advise against pre-need contracts in most cases."
 
This article is similar to a story published in AARP's magazine about eight years ago, and even reuses the same title. AARP also invites readers to share their preneed funeral experiences, good or bad, on its message board. AARP states that it has over 39 million members age 50 and older. To date, a review of its message board indicates relatively few complaints from AARP members while offering a number of positive experiences with prepaid funeral arrangements. 
 
The article can be viewed on the AARP Web site at www.aarpmagazine.org/money/funeral_rip_off.html.
Code: 
wr022008

Washington Report 022007

Date Published: 
022007
Original Author: 
Robert M. Fells & Michael Pepperman
Original Publication: 
ICCFA Magazine

ICCFA Reps Attend Meeting on "Free Choice" Proposal

On January 10, the U.S. Chamber of Commerce hosted a meeting at its Washington, D.C. headquarters to discuss the Employee Free Choice Act, and the formation of the Coalition for a Democratic Workplace to oppose the legislation. Among the standing room-only crowd in attendance were ICCFA General Counsel Bob Fells and Special Labor Law Counsel Mike Pepperman, apparently the only funeral service representatives among the approximately one hundred organizations present. 
 
Spokespersons were quick to point out that the Chamber is "neither pro- nor anti-union" but was opposed to union corporate campaigns that forced unionization without a fair election among workers. Union membership among American workers is currently less than 8 percent, down from its all time peak in 1955 of 35 percent. 
 
In addition to eliminating the employee's secret ballot, the bill would have the Government set contracts terms that neither the employer nor the union might agree on, and can dispense with allowing workers to vote on the proposed contract. When the bill was proposed in the 109th Congress, it had 215 co-sponsors in the House (out of 435 House members) which included 200 of the 204 House Democrats, and 15 Republicans.
 
Members of the Coalition for a Democratic Workplace include, the National Retail Federation, the National Association of Manufacturers, the National Restaurant Association, the National Federation of Independent Business, the American Hotel and Lodging Association, and the U.S. Chamber of Commerce. The ICCFA has been invited to join the Coalition's Steering Committee and, at this writing, has the offer under consideration.
 
 
 

ICCFA Alarmed at Congressional Proposal to End Employee "Secret Ballot" in Labor Union Elections 

 
By Michael S. Pepperman, Esq., Guest Columnist 
 
An employee's right to a secret-ballot election as a way to determine whether or not to have union representation has long been at the heart of American labor law. However, efforts are currently underway in Congress to curtail this right, making it the most radical change in labor law in the past fifty years. Proposed legislation would strip employees of the democratic rights and protections provided by the secret-ballot election and could cause employers to lose control over what goes on in their own workplace. The bill, misnamed the "Employee Free Choice Act," was introduced in 2005 in both the House (H.R. 1695) by Rep. George Miller (D-CA) and in the Senate (S. 842) by Sen. Edward Kennedy (D-MA). Since all pending bills expired when the 109th Congress adjourned in December, this legislation will likely be re-introduced in the 110th Congress during the next few months. In fact, House Speaker Nancy Pelosi (D-CA) has stated that action would be taken on this bill in early 2007.
 
Since 1935, employees in the United States have had the right to form or join a union to collectively bargain with their employer under the National Labor Relations Act. To protect employees against undue coercion, typically a union must demonstrate it has the support of a majority of the employees through a democratically-conducted election process, supervised by the National Labor Relations Board. This "secret ballot" process is the same process used in all national and local elections throughout the country.
 
However, the Employee Free Choice Act seeks to abandon this democratic process and instead focuses more heavily on the "card-check" method of organizing. Specifically, the Act would require employers to recognize a union when a majority of workers sign cards authorizing union representation-replacing the traditional secret ballot vote with a simple collection of employee signatures. The selection of a bargaining representative exclusively through this card check process causes employees not only to lose privacy, but could also subject them to peer pressure, misleading information, and even intimidation. The democratic secret ballot election, governed by strict, time-tested procedures is set up to preclude such interference with employee "free" choice by both unions and employers. Using the card check method also allows union organizers to obtain representation before an employer has the chance to tell their side of the story to the workers.
 
The changes do not end there. This "anti-election" bill also provides for mandatory mediation and arbitration if the union and employer do not agree on terms of a first collective bargaining agreement after 90 days of bargaining. The mandatory arbitration part of the bill is unprecedented and would result in contract terms (e.g., wages, benefits, etc.) being involuntarily thrust upon employers. The bill further seeks to significantly increase penalties imposed on employers for violations of the National Labor Relations Act during organizing campaigns. If passed, the Employee Free Choice Act would mandate an award of three times the amount of back pay for certain violations that occur during efforts to organize or when workers are seeking a first contract, and provide for penalties up to $20,000 per violation against employers found to have committed other violations of the National Labor Relations Act.
 
The bottom line is that workers should be free to decide whether they want union representation without experiencing coercion, indoctrination or misinformation. Additionally, employers should be given the opportunity to present their side of the issues and arguments. If enacted, the Employee Free Choice Act would fundamentally change the law, permanently deny employees their right to a secret ballot, and force compulsory arbitration and punitive damages on employers.

Michael S. Pepperman is a member of the firm of Obermayer Rebmann Maxwell & Hippel LLP, Philadelphia, PA, and serves as the ICCFA Special Labor Law Counsel.
 
Code: 
wr022007

Washington Report 022005

Date Published: 
022005
Original Author: 
Robert Topp
Original Publication: 
ICCFA Magazine

Lobby now for changes in streamlined sales tax Cemeteries and funeral homes will have to track point of ‘final delivery’

by guest columnist Robert Topp
 
This month’s column provides an important update on the status of the Streamlined Sales Tax Act, discusses the potentially adverse impact it may have on the business operations of ICFA members and recommends that members contact their respective state associations and state legislators to express their concerns.
 
In an earlier column (January 2004) I discussed the status of the Streamlined Sales Tax Project, which currently involves 42 states and the District of Columbia. As of April 2004, 20 states have enacted all or parts of the act. The project is now completing a review process to verify compliance, with the expectation that the act will become effective as of October 1.
 
The most egregious provision impacting funeral homes and cemeteries is the manner in which transactions are to be sourced. Under the act, sourcing occurs at the point of final delivery. Final delivery will determine the taxability of sales as well as the proper sales tax rate to charge.
 
Historically, most funeral and cemetery transactions have viewed the location of the funeral home or cemetery making the sale as the point of final delivery. This has provided consistent reporting that is simple to compute, explain to customers and report to the taxing jurisdiction(s).
 
That simple, easy life is about to change—and change for the worse. As currently interpreted, future transactions will consider the point of final delivery to be:
 
• Morgue, hospital, nursing home or residence for pick-up of deceased.
 
• Cemetery for sales of vaults, markers, monuments, etc.
 
• Crematory for crematory services occurring at a crematory remote from your funeral home or cemetery.
 
• Mailing address for any miscellaneous items delivered via shipment.
 
• Remote funeral home for ship-outs.
 
• Remote funeral home for caskets sold without services.
 
This means that for the above transactions, businesses will be required to track the zip+4 associated with the point of final delivery, which will be used to determine taxability and sales tax rates for future transactions. If the point of final delivery occurs in another state, county or city, the seller will be required to know and understand how those rules apply to the transactions.
 
Because the act is still being interpreted, our members have a significant opportunity to influence its application to cemeteries and funeral homes. I implore you to take a moment and become an advocate for your profession. Contact your state association and/or your state legislators and:
 
1. complain about the fact that The Streamlined Sales Tax Act is going to adversely effect your business;
 
2. explain that current interpretations of the Streamlined Sales Tax Act unnecessarily complicate your business and will confuse your customers;
 
3. say that a special rule should be enacted that recognizes that funeral and cemetery sales are delivered at the funeral home or cemetery location; and
 
4. ask that they contact their delegate(s) to the Streamlined Sales Tax Implementing States to request that cemeteries and funeral homes be given a special rule that more reasonably interprets the act.
 
Robert Topp is the ICFA representative to the Streamlined Sales Tax Project. He is available to answer questions or to discuss these issues with you, your state associations or your advisors. Topp’s previous column on this topic is available by clicking here. Topp can be reached at 713.525.5571. 

 

Code: 
wr022005

Washington Report 022004

Date Published: 
022004
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

FTC Consumer Complaints: Low Volume, Many Funeral Rule Related

 
by Robert M. Fells, Esq., general counsel
 
The ICFA has concluded its investigation of funeral-related complaints filed by consumers with the Federal Trade Commission from January 2001 through May 2003. The FTC reportedly receives approximately 60,000 total consumer complaints annually through its e-mail and toll-free telephone system, but only a few hundred are funeral-related.
 
There are approximately 2.3 million deaths each year in the United States, which extrapolates into nearly the same number of funerals/burials, or over 190,000 per month. For the 29 months under review, consumers filed 549 complaints against funeral homes, cemeteries and third-party retailers, or an average of about 19 complaints per month on a national basis. Approximately 4 percent of the complaints filed either contained no information or were requests for information rather than complaints per se.
 
Seventy-one percent of the total, or 391 complaints, involved funeral homes, which on average generated about 13 complaints per month. Of that number, 55 percent or 216 complaints related to alleged violations of the FTC Funeral Rule. The most common rule violations alleged were a lack of written price disclosures and the imposition of casket handling fees or the refusal to provide services if the casket was not purchased from the funeral home in question.
 
Eleven percent of the total, or 62 complaints, involved cemeteries. Of that number, eight related to alleged violations of the Funeral Rule. On average, there were two complaints per month about cemeteries.
 
Another 11 percent of the total, or 58 complaints (an average of two per month), involved third-party retailers such as casket stores and monument sellers. Of that number, six complaints related to alleged violations of the Funeral Rule.
 
Three percent of the total, or 16 complaints (one every other month), involved combined cemetery-mortuary operations. Of that number, three complaints related to alleged violations of the Funeral Rule.
 
Consistent with a 1999 investigation by the U.S. General Accounting Office, the investigative arm of Congress, overall complaint levels remain low for all segments of the funeral services profession. However, the new tabulation confirms the ICFA's long-held position that consumers experience only isolated incidents of potential Funeral Rule violations by sellers such as cemeteries that are not covered under the rule.
 
The ICFA investigation also provides an important perspective that was absent from the recent GAO investigation, published in September 2003, which omitted any effort to review consumer complaints.
 
Finally, the complaint tabulation establishes that consumers will file complaints when they believe they have been treated unfairly by industry members, contrary to assertions by industry critics that "consumers don't complain." The ICFA will be forwarding its analysis to the FTC staff.
 
 
 

US Tax Court: Preneed Funds Not Taxable Until Contract Is Performed

 
Recently, the U.S. Tax Court published its decision in Perry Funeral Home Inc. v. Commissioner of Internal Revenue, T.C. Memo.2003-340. The court held, based on the facts involved, that preneed funds are not taxable as income until the contract is performed.
 
The IRS argued that the funds are taxable when received by the funeral home because, under a previous U.S. Supreme Court ruling, where the seller has "dominion and control" over the funds, the proceeds are taxable when received. The accrual basis funeral home recognized the preneed funds it received from purchasers only when the contracts were performed.
 
An important fact that influenced the Tax Court's decision involved the requirement under state law that all preneed funeral contracts are cancellable by the purchaser at any time prior to performance, and the purchaser must receive a full refund. The funeral home did not deposit the funds into a trust but placed them into investment plans instead.
 
The court ruled that the lack of a trust did not alter its conclusion that the purchaser, and not the seller, had "dominion and control" over the funds because it was the purchaser who ultimately determined whether the funeral home would keep the funds.
 
Therefore, the court rejected the IRS arguments and held that the funds received by the funeral home are taxable only when the funeral home has performed its obligations under the contract and was entitled to keep the funds.
 
It is important to note that Tax Court decisions apply only to the taxpayer involved and cannot be cited as precedent for other parties. In addition, the IRS may appeal this decision. Tax Court decisions are useful for highlighting the thinking of the court and for use in other cases with similar fact patterns.
Code: 
wr022004

Washington Report 022003

Date Published: 
022003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Oklahoma Federal Court Upholds State Casket Law Restriction 

 
by Robert M. Fells, Esq., general counsel
 
A U.S. district court in Oklahoma held that the state law restricting casket sales solely to licensed funeral directors was constitutional. This decision is a departure from other rulings, most recently by the U.S. Court of Appeals for the Sixth Circuit in Craigmiles v. Giles, which held that such laws are unconstitutional. The Oklahoma decision, Powers v. Harris, held that while the state law may be "unwise" and "paternalistic," the restriction was rationally related to the state's interest in protecting the public and thus constitutional.
 
Specifically, the judge in Powers stated, "The legislature may determine, without interference from the Due Process Clause [of the U.S. Constitution], that protection of the consumer lies in the creation of a cartel-like scheme for the protection of an industry."
 
The federal appeals court decision in Craigmiles held that there was no rational basis for the state of Tennessee to impose a similar restriction in its law. While the judge in the Oklahoma decision acknowledged the findings by the appeals court in Tennessee, he criticized the higher court's decision by claiming that it took "a less-than-disciplined approach" in striking down the Tennessee law.
 
Attorneys for the casket retailers in Oklahoma have said they plan to appeal the lower court's decision to the 10th U.S. Circuit Court of Appeals.
 
 
 

Amended FTC Telemarketing Sales Rule Retains 'Appointment Call' Exemption, Adds 'No Call' List

 
In mid-December, the Federal Trade Commission published a 272-page report announcing its long-awaited amendments to the Telemarketing Sales Rule (TSR). When the TSR was first enacted in 1995, the ICFA was instrumental in obtaining an exemption for preneed "appointment" calls where nothing is sold over the phone, but where the purpose of the call is to gauge interest in arranging a face-to-face meeting at a convenient time. The FTC added this exemption for face-to-face meetings but later questioned whether it should be retained when the rule was reviewed in 2000.
 
The ICFA urged retention of the exemption due to the absence of consumer complaints or industry misconduct, but the Funeral Consumers Alliance and the National Funeral Directors Association both urged the FTC to exclude cemeteries and funeral homes from the exemption. The ICFA, represented by Vice President Paul M. Elvig, subsequently testified at an FTC public hearing in Washington, D.C., last summer.
 
As expected, the FTC announced that it would maintain the face-to-face exemption without excluding cemeteries or funeral homes. However, the FTC added some conditions to the exemption, the most significant being the requirement for callers not to phone consumers who have added their home numbers to a national Do Not Call registry the FTC proposes to launch in the next few months.
 
The ICFA had objected to this requirement as applied to the face-to-face exemption because preneed callers are already required to maintain a company-specific Do Not Call list under the Telephone Consumer Protection Act enforced by the Federal Communications Commission. The ICFA pointed out that the FTC rule distinguished between calls made for the purpose of selling goods or services by phone and appointment calls where nothing is sold over the phone. The ICFA argued that by requiring preneed callers to comply with the Do Not Call list, the FTC was blurring the distinction between the two types of phone calls. However, as a practical matter, the FTC Rule applies only to interstate, not in-state, calls.
 
Other conditions the FTC attached to the face-to-face exemption are more practical in nature. Callers are prohibited from using threats, intimidation and profane/obscene language; annoying or harassing individuals by continuous or repeated calling; blocking caller ID; and calling before 8 a.m. or after 9 p.m. local time. Complete details of the TSR requirements can be found at www.ftc.gov.
 
Telemarketing firms and some of their trade associations have announced their intention to litigate against the FTC over the constitutionality of the Do Not Call list requirement. Prior to implementing the registry, the FTC must first obtain funding authorization from Congress and estimates operating costs at $16 million annually. These costs will eventually be defrayed by telemarketers, who must obtain the lists from the FTC and update them every three months.
 
ICFA members will be kept informed of important developments. For the most timely news, check the biweekly ICFA WIRELESS e-mail newsletter.
Code: 
wr022003

Washington Report 022002

Date Published: 
022002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

VA now can furnish second marker in private cemeteries 

 
by Robert M. Fells, Esq., general counsel 
 
President Bush gave veterans and private cemeteries a Christmas present on December 27 when he signed into law P.L. 107-103, the Veterans Education and Benefits Expansion Act of 2001, which provides a series of improved veterans benefits. Among other items, the U.S. Department of Veterans Affairs (VA) may now furnish a government marker to private cemeteries where the grave has already been memorialized by a privately purchased marker or headstone. Similar to the current law providing government markers, the benefit is subject to the cemetery's rules and regulations.
 
For many years, both the families of veterans and private cemeteries have been frustrated by the VA's refusal to furnish a government marker if the veteran's grave site already had a marker. This new benefit is a five-year pilot program that will be reviewed by February 1, 2006, to determine how well the program has been received. 
 
 
 

ICFA files brief in Florida Supreme Court on cemetery marker restrictions 

 
On January 8, the ICFA filed an amicus curiae or "friend of the court" brief with the Florida Supreme Court in support of a cemetery's authority to restrict markers and memorials in a memorial park to horizontal, ground-level designs. The litigation, Warner, et al. v. City of Boca Raton, involves an appeal from a 1999 federal district court decision that ruled in the cemetery's favor.
 
At issue is whether the Boca Raton Municipal Cemetery, an ICFA member, can legally prohibit lot owners from erecting vertical markers and religious objects, such as crucifixes and the Star of David, on grave sites in a memorial park that specifically bans such items in its rules and regulations. The outcome of this appeal could dramatically affect the rulemaking authority of municipal cemeteries in particular, and potentially all cemeteries in general.
 
Plantiffs are lot owners who have family members buried in the cemetery and who have installed upright markers, religious objects and, in some cases, scalloped borders around the grave and covered the sod on top of the grave with gravel and bushes. The lower federal court decision has been appealed to the U.S. Court of Appeals for the 11th Circuit, which in turn certified a question concerning the Florida Religious Freedom statute to the state supreme court.
 
Plaintiffs, who are supported by the American Civil Liberties Union, claim that their constitutional freedom of religious expression is being violated by the cemetery's regulation banning upright markers. Plaintiffs objected to the ICFA filing its brief and attempted to persuade the court to block the filing. However, the court ruled in the ICFA's favor.
 
The ICFA brief states: "The issues raised in this litigation challenge this long-established and accepted authority and threaten to undermine the ability of publicly operated cemeteries to manage their properties in an orderly, fair and fiscally sound manner for the common good of those who have purchased spaces in the expectation that established cemetery rules will be followed." Citing a long history of court decisions, the ICFA pointed out that "Cemetery regulations, by their very nature, are a series of restrictions and prohibitions over the activities permitted by lot owners, next of kin, heirs, and even visitors to the cemetery. Since the 19th century, American courts have upheld various restrictions when they were reasonable in nature and fairly administered. ... While some individual lot owners may believe that their respective 'rights' have been diminished, courts uphold restrictions that contribute to the sound operation of the cemetery as anticipated by the majority of lot owners."
 
The brief discussed the history and development of the memorial park concept, noting that "central to this concept is the restriction that no vertical markers or similar fixtures may be installed on any grave site in order to preserve the park-like atmosphere which is at the core of its aesthetic. Consumers who purchase burial sites in memorial parks do so with the understanding and expectation that the horizontal, borderless design will be maintained and enforced in the future. The design also impacts a memorial park's long-term fiscal planning, and the expenses incurred by the lot purchasers. Deposits to care trust funds are calculated on the less maintenance-intensive demands of ground-level markers, and compliance with worker safety regulations such as the OSHA standards are simplified in memorial parks. ... The importance of maintaining the aesthetic of the memorial park is underscored by the fact that memorial parks even forego financial benefits they could receive if they sold the more expensive vertical monuments.
 
"The ICFA is concerned that a finding adverse to the appellee City of Boca Raton in the present case would severely undermine the authority of municipal cemeteries in Florida (and ultimately nationwide) to assure consumers who purchase burial spaces in memorial parks that the concept and design of such burial grounds will be maintained." With reference to the plaintiffs, the ICFA noted: "While these individuals were apparently motivated by sincerely held religious beliefs, their actions deprived the majority of other lot owners and their families the type of cemetery they purposefully selected. The city's cemetery regulations ... are content-neutral. They do not single out religious objects or decorations, but prohibit all above-ground items of any nature. Purchasers in memorial parks rely upon the cemetery's authority to enforce these restrictions without regard to the ethnic customs or religious beliefs of the lot owners and such rules have been upheld by the courts for decades."
 
The ICFA concluded by urging the court to rule in favor of the city cemetery. "If individual lot owners become entitled to ignore cemetery regulations to do whatever they wish in the name of religious beliefs, they would effectively disenfranchise the rights of all the other lot owners and undercut the cemetery's ability to properly manage its grounds, resulting in a chaotic cemetery environment." The ICFA brief may be viewed and downloaded at the association's Web page at www.icfa.org/government.htm. Members will be kept informed of important developments in this litigation. 

 

Code: 
wr022002

washington Report 122008

Date Published: 
122008
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Business lawyers expect more laws, regulation from new Congress 

 
In a survey published shortly before Election Day, six out of 10 corporate attorneys said they expected the presidential election to have an impact on labor and employment laws at their companies. In-house legal counsel identified the most time-consuming legal tasks as workplace discrimination, family and medical leave, wage and hour and employee benefits, in that order. The survey was conducted by the Association of Corporate Counsel.
 
The survey results indicated that "looking forward to this year’s presidential election, 60.5 percent of the ... respondents believe the election outcome would affect labor and employment laws. ... Among the potential changes cited by respondents were the possibility of increased costs for health benefits and mandatory paid sick days; a resurgence of workplace regulation generally; and passage of the Employee Free Choice Act [EFCA], which would eliminate secret ballots in union organizing drives and strengthen labor’s hand in negotiations over union representation."
 
The ICCFA has opposed enactment of the EFCA and is a member of the Coalition for a Democratic Workplace. A recent article in The Wall Street Journal suggests that passage of the EFCA could occur within the first 100 days of the new Congress in 2009, especially if Demo- cratic gains were substantial. For more informa- tion on this issue and on the Coalition, please check www.myprivateballot.com.
 
 
 

New Americans with Disabilities Act requirements take effect January 1 

 
New workplace legal requirements are already on the way, since President Bush recently signed into law the ADA Amendments Act of 2008, significantly modifying the original Americans with Disabilities Act signed into law by the president’s father, George H.W. Bush, in 1990. The new provisions expressly overturn sev- eral landmark U.S. Supreme Court decisions that narrowly interpreted the definition of "disability" and will make disposing of ADA cases prior to trial more difficult for employers. The new law takes effect January 1.
 
Among the many provisions, the new law states that the existing definition of a "disability" now "shall be construed in favor of broad coverage of individuals... to the maximum extent per- mitted by the terms of [the ADA]." The new law "lowers the standard to prove an employer discriminated against an individual whom it ‘regarded as’ having a disability. However, such ‘regarded as’ claims cannot be based on ‘transitory and minor impairments where the impairment is ex- pected to last less than six months. Also, employers are not required to provide a reasonable accommodation to individuals who are regarded as disabled, an issue over which the federal courts were previously split.’"
 
It is recommended that employers take the time now to review existing procedures for ADA compliance at "every stage including hiring, medical testing, accommodation, leave and determination." Job descriptions should also be reviewed because they are often a starting point for an individualized assessment.
 
For more information on the new ADA amendments, check the Web site of the law firm Jackson Lewis at www.jacksonlewis.com/ legalupdates/article.cfm?aid=1507.
 
 
 

Nonprofits take note: New Form 990 requirements from IRS

 
Any organizations required to file Form 990 with the Internal Revenue Service should be aware of new disclosure provisions on the tax form. In particular, a nonprofit organization is required to answer questions on whether or not it has instituted a policy on document retention and destruction, a conflict of interest policy for board members and a whistle-blower protection policy for staff. Some of these requirements were initiat- ed in the Sarbanes-Oxley Act to make publicly traded companies more accountable. Ironically, the document retention and whistle blower policy requirements seem to extend to all businesses, whether organized as for-profit or nonprofit enti- ties.
 
For more information, check the IRS Web site, www.irs.gov. Also, sample language for the document retention/destruction policy, whistle- blower protection policy and conflict of interest policy can be obtained from the ICCFA by calling General Counsel Bob Fells at 1.800.645.7700.
Code: 
wr122008

Washington Report 122007

Date Published: 
122007
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Survey finds fewer funeral complaints submitted to Federal Trade Commission 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
The ICCFA has published the results of its survey of funeral-related consumer complaints filed with the Federal Trade Commission from January 1, 2005, through December 31, 2006. A total of 522 complaints were submitted to the FTC during this two-year period, compared to a total of 571 complaints filed during 2003-2004.
 
These figures represent a drop in complaints of close to 10 percent in the comparable time frames. The decrease is especially surprising considering that more people have gone online in the past two years, making the filing of FTC complaints through e-mail (and toll-free phone numbers) more convenient.
 
In addition, 331 inquiries were submitted (for a combined total of 853), primarily requests for FTC publications on funerals and on the Funeral Rule.
 
Three hundred and fifty-eight complaints, or 68.5 percent, involved funeral homes. Most complaints alleged violations of the Funeral Rule, such as not providing a general price list, charging a casket handling fee or refusing to accept a third-party casket. Third parties, including casket retailers and monument companies, comprised the second largest group, with 80 complaints, or 15.3 percent of the total. Seventy-six complaints (14.5 percent of the total number) were filed against cemeteries. Five complaints were filed against combination operations, and three against crematories. The commission staff said the complaints "have not necessarily been verified by the FTC. Therefore, you should make your own judgment about relying on the information provided."
 
The ICCFA survey report contains brief descriptions of each complaint and identifies the state where each originated. As in past years, a number of complaints were filed by businesses against their competitors; that information is noted in the description. Also, the FTC internal reference number specifically identifies each complaint and inquiry.
 
The survey is useful in determining areas of concern for consumer protection and whether new issues are emerging.
 
 
 

Court's Maryland funeral decision confusing 

 
On October 17, the U.S. District Court for Maryland issued its decision in Brown v. Hovatter, a case involving Maryland's longtime prohibition on the corporate ownership of funeral homes. The only exceptions to this prohibition are 58 corporate licenses that were grandfathered into the law in 1945. The ICCFA submitted a friend of the court brief last spring stating that the existing law is anti-competitive and anti-consumer.
 
The court's 31-page opinion may have confused the issue more than anything else. The court ruled that the section of the Morticians Act "which prohibits corporate ownership in Maryland with indefinite exemptions for corporations holding licenses existing as of June 1, 1945, violate the dormant Commerce Clause of the United States Constitution. Defendants and their successors are hereby enjoined from prohibiting or limiting the corporate ownership of funeral homes in Maryland."
 
However, the court upheld the section of the Morticians Act "which establishes a licensing scheme for the operation of funeral homes in Maryland, [because it] is rationally related to a legitimate state interest and does not violate the Due Process and Equal Protection Clauses of the Fourteenth Amendment. The licensing requirement may be imposed upon corporate and non-corporate owners of funeral homes in Maryland."
 
It is interesting to note that the court refers twice to the Pennsylvania corporate licensing statute for funeral homes that allows corporations to own mortuaries, but requires that all shareholders of the corporation must be licensed funeral directors or members of the immediate family of a licensed funeral director. The court may be hinting that Maryland should look at Pennsylvania's approach to enacting a restrictive corporate licensing statute.
 
The Institute for Justice, which represented the plaintiffs in this case, is planning to file a motion asking the court to clarify its decision. It is also possible that the state of Maryland will file an appeal to reverse the decision.
 
 
 
 

New ICCFA benefit: Cremation legal advice 

 
The ICCFA has retained Poul H. Lemasters, Esq., Rosenacker & Associates Ltd., Cincinnati, Ohio, an attorney and licensed funeral director, to serve as our special cremation legal counsel.
 
This member benefit, which is already in effect, is being made available courtesy of the ICCFA Government and Legal Fund.
 
ICCFA members in good standing may telephone Lemasters at 1.800.221.2889 to discuss cremation-related legal issues for up to 20 minutes at no charge to the member. The association pays for this service via a retainer.
 
The association also offers legal help on human resources and management questions from attorney Michael Pepperman and advice on tax issues from attorney and CPA Leslie Schneider.
Code: 
wr122007

Washington Report 122006

Date Published: 
122006
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Michigan monument builders class action suit dismissed 

 
On October 27, the U.S. District Court in Michigan dismissed all allegations in the amended complaint by the Michigan Division of the Monument Builders of North America and individual plaintiffs against 20 cemetery companies and the Michigan Cemetery Association. Plaintiffs sought certification as a class action and alleged that the named defendants as a class represented all cemeteries located in the state of Michigan.
 
The complaint alleged that defendants illegally tied the sale of cemetery lots to the sale and installation of monuments, and also of monument-related services. The complaint also alleged that defendants illegally conspired to restrain trade and attempted to monopolize in violation of the Sherman Antitrust Act. Finally, the complaint alleged violation of the state preneed statute.
 
The court held that "a plaintiff must show the defendant has market power in the relevant product and geographic market to prove an antitrust violation…. Plaintiffs, however, do not allege that any of those 3,800 cemeteries [in the state] have market power in any geographic area broader than its own individual cemetery…. While a given defendant may not compete with every other cemetery in Michigan, it undoubtedly competes with at least other cemeteries in the city or county in which the cemetery is located." Thus, the court concluded that plaintiffs' alleged geographic market is too narrow as a matter of law.
 
Perhaps of greater importance, the court noted that a recent U.S. Supreme Court decision rejected the contention that the uniqueness of land confers market power. Noting the long history of related lawsuits since the 1980s, the court observed, " Despite the apparent high volume of antitrust actions filed by monument dealers against cemeteries over the past 20 years, plaintiffs are unable to cite a single case wherein the court has concluded that a bare allegation of market power based on the uniqueness of cemetery property, with no allegation respecting a defendant's share of the tying market, is sufficient to state an antitrust claim." Accordingly, the court dismissed the tying allegations on these grounds.
 
Also, the conspiracy allegations were dismissed on additional grounds based on plaintiffs' argument that " no cemetery in Michigan competes with any other cemetery because each has its own relevant geographic market over which it has monopoly power. Defendants assert that if the cemeteries do not compete with each other… there is no economic incentive for them to combine with each other to force out independent sellers of monuments because such sellers could already be excluded by unilateral decision of each cemetery. The court agrees that plaintiffs' conspiracy claims are practically and economically implausible."
 
Finally, with the federal claims dismissed, the court declined to exercise supplemental jurisdiction over the sole remaining state claim. Therefore, the court granted defendants' motions to dismiss and ordered plaintiffs' complaint to be dismissed in its entirety. 
Code: 
wr122006

Washington Report 122005

Date Published: 
122005
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

'Cash Advance' Disclosure Litigation

by Robert M. Fells, Esq., general counsel
 
As previously reported, an El Paso, Texas, county court ruled that certain funeral home defendants owned by Service Corporation International had breached their contracts with a purchaser because they failed to provide disclosures required under Texas state law and under the FTC Funeral Rule.
 
Specifically, the court interpreted the "cash advance" disclosure provisions of the Funeral Rule as requiring funeral providers not only to disclose if a service charge has been added to the price of the cash advance item or service, but also to disclose the actual amount of the charge. In addition, the court held that anything a funeral provider obtains from a third party, such as caskets or vaults, should be considered a cash advance item and the price markup should therefore be disclosed.
 
The ICFA quickly decided to file a third-party "friend of the court" brief advising the court that its interpretation of the Funeral Rule was erroneous and that the FTC itself had never interpreted the rule in such manner. (The ICFA brief can be viewed at www.icfa.org/pdf/hijarnationalamicusfinal.pdf.) Additional third-party briefs on behalf of the defendants were also filed by the NFDA, the Alderwoods Group, Stewart Enterprises and Carriage Services, among other interested parties.
 
On October 12, the court in this case, Hijar v. SCI Texas Funeral Services Inc., ruled on defendants' motion to reconsider its decision and upon the plaintiff's motion to strike the briefs submitted by the ICFA and the other third parties. The court denied the motion to reconsider, which in effect confirms its original decision, and granted plaintiff's motion to strike from the record all third-party "friend of the court" briefs.
 
The court must still determine the amount of monetary damages awarded to plaintiff before the case can be appealed to the state appellate court for review. The potential consequences of this decision could eventually impact the entire funeral service profession. ICFA members will be kept informed of significant developments. 
 
 
 

Why we must lobby: More truths

(Part 2 of 2) 
 
Back in the early 1980s, President Reagan proposed deregulating the trucking and airline industries as part of his stated goal to "get big government off the backs of the people." To his surprise, the major companies in both industries objected strenuously to such deregulation. Though these same industries had resisted regulation originally, it turned out that these businesses had discovered over the years that regulations could work to their benefit, especially in terms of requiring standards that perhaps their new competitors could not meet.
 
#5: Nobody really wants a level playing field
 
So the fifth truth of dealing with big government could be expressed as this: Nobody really wants a level playing field. They want a playing field tilted to their advantage and new laws and regulations are the most publicly condoned way of doing it. Look at it this way: Consumer advocacy groups always want new laws regulating businesses; businesses assign the costs associated with new legal requirements to purchasers; purchasers cannot escape the increased costs because all businesses must comply; and potential new competitors may be thwarted by these increased compliance requirements. In other words, between the politicians in Congress who view their careers as a business and the businesspeople in the private sector who view political activity as part of their careers, a relationship has evolved that, as Humphrey Bogart said to Claude Rains in "Casablanca," has become "a beautiful friendship."
 
The only flies in the ointment are some captains of industry, including captains of small businesses, who are relying on old paradigms and say in effect, "I don't want to play." In today's business climate, that's like saying, "I'm running a business but I don't want to be very successful." Obviously, if our own competitors are of this mindset, by all means we will encourage them to continue to think this way so they may cease to be our competitors down the road. Less cynically, it is important for all our colleagues to make their voices heard in order to maximize our collective chances of success.
 
Remember, as we have noted, politicians can count. This brings us to the sixth and seventh truths.
 
#6: Effective lobbying has to be an ongoing effort
 
Lobbying is an ongoing activity and cannot be used just for a limited or short-term project, or it will be a waste of time, effort and, most certainly, money.
 
For example, a few years ago the National Highway Traffic Safety Administration proposed that anchors for child restraint seats must be installed on all passenger vehicles. A manufacturer of funeral coaches or hearses contacted this federal agency to lobby that the restraint seat anchor requirement made no sense when applied to hearses, and therefore hearses should be exempt. Agency representatives said they would take the manufacturer's comments into consideration when publishing the final regulation.
 
A few years passed and the final rule was announced-with no exemption for hearses. So the manufacturer, believing its lobbying effort at the agency had failed, began to spend thousands of dollars to bring its vehicles into compliance. Eventually, somebody in the agency recalled the manufacturer's comments and amended the regulation to exempt funeral hearses. The agency said that it had always agreed with the manufacturer's viewpoint but it had forgotten about this issue with the press of other business. The hearse manufacturer made a big mistake by not following up with its agency contacts to remind them of the issue.
 
In other words, if you start to lobby, you should continue your efforts, because the people you are trying to influence may forget about your issue even if they fully agree with you. While lobbying a regulatory agency is different than lobbying an elected official, the underlying principle is the same.
 
Is there is a time when we can safely stop lobbying? Yes: When they stop holding elections and stop proposing new laws and regulations, then we can stop lobbying.
 
#7: Lobbying is marketing
 
The seventh truth is related to the sixth and supports it: Lobbying is the original form of preneed marketing. By this I mean that lobbying is simply another form of marketing, whether to support or to oppose legislation, and a coordinated plan is required. We said last month that "money talks," but not every person needs to contribute in the same way.
 
For example, if money is tight in terms of making a PAC contribution, a person can donate time-sometimes time is more valuable than money—to make phone calls or help coordinate activities. Many of our colleagues who do not participate in government relations activities have the misguided belief that they either should not or cannot. This is particularly true in the nonprofit area and especially in the religious sector.
 
In fact, everybody lobbies, even where there are legal restrictions on doing so, such as on lobbying by charities, the section 501 (c)(3) organizations in the Internal Revenue Code. The restrictions just mean that charities are limited in how much time and resources they can devote to lobbying activities. For example, after Sen. Christopher Dodd (D-CT) first introduced his Federal Death Care Disclosure bill, several representatives from Catholic cemeteries met with Dodd and his staff in March 2003 to discuss obtaining an exemption for religious organizations. I understand that Dodd agreed to the exemption and said he would include such language when he reintroduced the bill into the new Congress at some point in the future. However, when Dodd finally reintroduced his bill in November 2004, it contained no religious exemption. So what happened? Did Dodd change his mind or did he simply forget about the exemption?
 
This incident illustrates two points with our sixth and seventh truths. First, religious organizations certainly can and do lobby when proposed legislation or regulations affect them. Second, as with the funeral hearse issue, even where an agreement has apparently been reached, communication should be maintained until the legislation or regulation is a done deal. I happen to know that Dodd's staff person on the death care legislation eventually resigned, and it is possible the person replacing him knew nothing about the March 2003 meeting and the agreement that resulted from it.
 
#8: In politics, an incoming tide does not raise all boats
 
You don't have to be a sailor to understand the eighth truth regarding government relations. Unlike in sailing, in politics an incoming tide does not raise all boats. For example, everybody knows a business colleague who has developed a close relationship with a political leader. This fact sometimes leads to the delusion that because "Bob," let's call him, has a close relationship with Senator So-and-so, I don't need to bother. If a legislative or regulatory issue comes up, I can rely on Bob to use his clout with the senator to get the problem taken care of.
 
#9: People put their own interests before that of the industry as a whole
 
The reason this belief is false brings us swiftly to the ninth truth, which may sound rather cynical, but I challenge anyone to tell me it's not true: People don't spend their personal time, effort and money to develop a close political relationship solely for the good of the industry or profession. They do it for their own purposes, which may or may not coincide with the needs of the industry.
 
Stated another way, I may be good friends with Senator So-and-so, but I know I can only go to him so often for help, so I'm going to be very careful how and when I use that access. If my professional colleagues are facing a legislative problem that doesn't particularly affect me, I am going to be hesitant to call on my friend the senator because next time I may need a favor just for myself. Besides, my business colleagues could have done just what I did by developing a relationship with this same influential senator. As the saying goes, it's a free country. So I'm not going to feel bad that I know the senator and they don't.
 
#10: Don't wait for a crisis to start your lobbying effort 
 
The tenth and final truth is aimed directly at those people who do not believe in the previous nine truths: Everybody knows the story of the emperor who has no clothes-just makes sure that you're not the emperor.
 
By that, I mean, don't wait until there is a legislative or regulatory crisis to realize that you are politically naked. That people you thought would handle the situation aren't interested. That elected officials who could be helpful to you don't even know who you are. That individuals and organizations that might be allies with you on this issue are strangers to you.
 
I know of cemetery owners and managers in an entire state who let their legislative connections dry up over a period of years until they were sandbagged by sweeping legislative reform that literally changed the way they had to do business. They didn't know anybody in the state house and nobody knew them. The new law was enacted over their protests and they eventually sued in federal court to try to get the law struck down as being unconstitutional. The court upheld the law, saying it might not be a good one, but it wasn't unconstitutional. Ironically, the court tried to be helpful by suggesting that industry members should try lobbying to change the law.
 
This ironic court decision highlights the challenge for those of us who are actively involved in government relations in trying to impress the importance of such work on our colleagues who either are not involved or who don't think they need to be involved in the process. Perhaps some of the ideas presented here will help persuade our colleagues out there that in politics, numbers count, and we need to count on them.
Code: 
wr122005

Washington Report 122004

Date Published: 
122004
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICFA PAC Builds Relationships

 
by Robert M. Fells, Esq., general counsel
 
The 2004 national elections marked the debut of the ICFA PAC as a fledgling but decidedly growing player on the Washington political scene. Significantly, the re-election of President George W. Bush to a second term and the increased majority control by the Republican Party in both the Senate and the House of Representatives will result in maintaining the status quo of the past four years for the foreseeable future. That prospect provides both challenges and opportunities.
 
Senior Democrats in both houses will again be denied the chairmanship of committees and with it the power to establish agendas and convene public hearings concerning issues of their choosing. As a practical matter, this means that neither house in Congress is likely to pursue passage of the Dodd/Foley bill that seeks to regulate funeral homes, cemeteries, and related businesses. However, this "back burner" treatment of the Dodd/Foley proposal may continue only in the absence of a "major event" involving the funeral services profession (see the October"Washington Report" column for details). In the event of a headline-grabbing development concerning funeral service, the Dodd/Foley bill may then receive front burner status with bipartisan appeal.
 
The 2004 election marked the first time that the newly established ICFA PAC made contributions to Congressional candidates and key leaders. A total of $23,000 in contributions was made by ICFA PAC in $1,000 amounts to 23 members of Congress in both houses and from both parties. Of those seeking re-election, all ICFA-supported candidates were successful in their bids except Tom Daschle (D-SD), the powerful minority leader of the Senate.
 
It is worth noting that the ICFA PAC Disbursement Committee made decisions on which Congressional members to support based on each member's key position on Congressional committees or in the leadership of the House and Senate, rather than on personal likes or dislikes. Both Sen. Christopher Dodd (D-CT) and Rep. Mark Foley (R-FL) were up for re-election this year and both won impressive victories. In Connecticut, Dodd received 66 percent of the popular vote, easily winning a fifth term, while Foley won a sixth term in the House, receiving 68 percent of the vote. Another ICFA-supported candidate, Sen. Charles Grassley (R-IA), who chaired two days of public hearings on funeral industry sales practices in April 2000, also won re-election with an astounding 70 percent of the popular vote. The increasing seniority these three men continue to gain means that they will be important players whenever funeral- and cemetery-related issues are considered by Congress.
 
The ICFA PAC contributions initiated relationships with select members of Congress to ensure that the voice of the ICFA membership will be heard and that the association will receive a fair hearing as issues affecting our members' businesses develop in the future. Finally, it should be noted that despite the Republican victory in the 2004 election, in a mere two years from now one-third of all senators and all members of the House of Representatives will be up for re-election. 
 
 
 

'Cash Advance' Disclosure Litigation

 
As previously reported, an El Paso, Texas, county court ruled that certain funeral home defendants owned by Service Corporation International had breached their contracts with a purchaser because they failed to provide disclosures required under Texas state law and under the FTC Funeral Rule.
 
Specifically, the court interpreted the "cash advance" disclosure provisions of the Funeral Rule as requiring funeral providers not only to disclose if a service charge has been added to the price of the cash advance item or service, but also to disclose the actual amount of the charge. In addition, the court held that anything a funeral provider obtains from a third party, such as caskets or vaults, should be considered a cash advance item and the price markup should therefore be disclosed.
 
The ICFA quickly decided to file a third-party "friend of the court" brief advising the court that its interpretation of the Funeral Rule was erroneous and that the FTC itself had never interpreted the rule in such manner. (The ICFA brief can be viewed at www.icfa.org/pdf/hijarnationalamicusfinal.pdf.) Additional third-party briefs on behalf of the defendants were also filed by the NFDA, the Alderwoods Group, Stewart Enterprises and Carriage Services, among other interested parties.
 
On October 12, the court in this case, Hijar v. SCI Texas Funeral Services Inc., ruled on defendants' motion to reconsider its decision and upon the plaintiff's motion to strike the briefs submitted by the ICFA and the other third parties. The court denied the motion to reconsider, which in effect confirms its original decision, and granted plaintiff's motion to strike from the record all third-party "friend of the court" briefs.
 
The court must still determine the amount of monetary damages awarded to plaintiff before the case can be appealed to the state appellate court for review. The potential consequences of this decision could eventually impact the entire funeral service profession. ICFA members will be kept informed of significant developments. 
Code: 
wr122004

Washington Report 122003

Date Published: 
122003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

FTC Staff Reconsidering Nonprofits' Exemption From 'Do Not Call' Rule

 
by Robert M. Fells, Esq., general counsel
 
Despite their assurances this past summer (see the August/ September "Washington Report") that nonprofit organizations are not covered under the new Do Not Call regulations for interstate telemarketing calls, Federal Trade Commission staff members recently contacted the ICFA to say they are reconsidering whether nonprofits are exempt from the regulations.
 
It is important to note that the FTC Do Not Call provisions affect telemarketing calls made interstate, that is, from one state to another. The FTC does not have jurisdiction over intrastate calls, that is, calls made and received from within the same state. Such intrastate calls are regulated by the Federal Communications Commission (FCC), which has its own Do Not Call regulations that specifically exclude "tax exempt, nonprofit organizations" as well as for-profit telemarketing firms employed by such entities.
 
Confusingly, both the FCC and the FTC have jurisdiction over interstate calls and it is unclear how they will divide enforcement responsibilities. Since new details are emerging from both federal agencies, ICFA members are urged to check these agencies' Web pages for updates at www.ftc.gov and www.fcc.gov.
 
Many nonprofit organizations have opted to use the FTC Do Not Call registry simply to maintain good public relations with consumers. However, this new development could require nonprofit groups, including religious organizations, that sell products and services to comply with the FTC regulations for interstate calls or risk fines of $11,000 per call.
 
The ICFA Government and Legal Affairs Committee met on October 28 to discuss this issue and is studying the several options it may pursue.
 
A Denver federal district court finding that the new FTC Do Not Call regulations are unconstitutional because they favor political and charitable calls had initially stopped the rules from going into effect October 1.
 
The effect of that ruling in Mainstream Marketing Services Inc. v. FTC was stayed pending an appeal by the FTC to the 10th Circuit, and the new regulations belatedly became effective on October 17. Oral arguments on the appeal took place in November. The ICFA believes this court decision may have caused FTC staff to reconsider its treatment of nonprofit organizations.
 
The commission's jurisdictional limits are contained in a 1914 federal statute known as the FTC Act. Under this law, the commission has jurisdiction over "persons, partnerships or corporations."
 
A nonprofit qualifier added in 1938 extends FTC jurisdiction to any "association, incorporated or unincorporated, which is organized to carry on business for its own profit or that of its members." The issue of what constitutes "profit" has been the subject of interpretation over the years on a case-by-case basis.
 
For example, a 1999 U.S. Supreme Court decision in California Dental Association v. FTC held that the commission had jurisdiction over a nonprofit professional association because the group existed "in substantial part for the pecuniary benefit of its for-profit members."
 
The tax-exempt status, the disbursement of funds, and whether revenue is insufficient to meet expenses are among the factors used by the FTC to determine the jurisdictional status of a nonprofit organization.
 
ICFA members will be informed of significant developments as they occur.
 
 
 

Senate Increases Its Funeral Benefit Allowance

 
Perhaps as an unintended endorsement of traditional funerals and burials, effective November 1, the U.S. Senate has increased the amount of payments for the funerals of its deceased members.
 
Added to the existing provisions is an increase from $2,000 to $5,000 for a burial vault and casket, and an increase from $1,000 to $2,000 for the cost of "one burial plot."
 
Reflecting the rising cremation rate, provisions include payment of "ordinary and necessary expenses" for "cremation fees, including urn."
 
Existing provisions continue to include payment for the transportation of remains to the mortuary; complete preparation and care of the remains; limousine service for the immediate family, pall bearers and the funeral coach; the receipt and care of floral tributes (though not the floral expenses themselves); interment fees for grave services; and miscellaneous expenses directly related to the funeral, such as fees for clergy and musicians, but not food, flowers or cards, in an amount not to exceed a total of $2,500.
 
However, permanent grave markers and headstones are excluded from covered expenses because these items are considered personal in nature.
Code: 
wr122003

Washington Report 122002

Date Published: 
122002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Funeral home owner and ICFA Board Member Mark Krause testifies at the Federal Trade Commission office in Washington, D.C.

 

ICFA Testifies at FTC Public Workshop on Internet Casket Sales

 
by Robert M. Fells, Esq.
 
Signaling the federal government's increasing concerns with electronic commerce over the Internet, or "e-commerce," the Federal Trade Commission convened a first-of-its-kind public workshop to investigate possible anticompetitive restrictions in state laws and industry practices affecting online sales.
 
The workshop was held over three days, October 8-10, with various panels discussing the Internet sale of a variety of products, including caskets. The ICFA participated in the casket sales panel and was represented by Mark Krause, a funeral director and member of the ICFA Board of Directors. Krause also operates a casket store in a Milwaukee, Wisconsin, shopping mall.
 
The FTC staff asked whether any states prohibit casket sales over the Internet and whether there are any studies documenting the volume of online caskets sales. The panelists agreed that Internet casket sales are such a new and emerging area that studies are not available. On behalf of the ICFA, Mark Krause said there appear to be no state laws restricting online casket selling, but approximately 14 states have laws allowing only licensed funeral directors to sell caskets. While these restrictions may not extend to out-of-state online casket sellers, the existence of these laws may have a chilling effect on Internet sellers.
 
The ICFA raised concerns that casket retailers that are neither funeral homes nor cemeteries but sell caskets preneed would not be subject to the trust fund requirements most states have to assure delivery of goods and services. "The ICFA strongly recommends that reasonable trust deposit requirements in an amount sufficient to defray the casket provider's costs should be mandatory for all casket retailers, whether through online or 'brick and mortar' selling."
 
Other panelists represented the National Funeral Directors Association, the National Casket Retailers Association, the Maryland Office of Cemetery Oversight and an attorney for the Institute for Justice, which has filed litigation in federal courts to overturn state laws allowing only licensed funeral directors to sell caskets.
 
Independent casket retailers claimed that unfair trade practices by funeral homes and casket manufacturers were undermining their ability to compete. Krause said that his casket store would be financially unprofitable if its merchandise were not supplemented by the funeral services from his nearby funeral home. Later, Krause said two other funeral homes that operate casket stores in different market areas experienced the same problem. The ICFA urged the FTC to study the economic model under which independent casket sellers operate in order to determine whether the merchandise offered is too narrow in scope to defray operating expenses and be profitable.
 
Another panelist, an economics professor, discussed a survey he did of state casket laws, saying that states that allow only licensed funeral directors to sell caskets have lower cremation rates than states with no such restrictions. In post-hearing comments, the ICFA suggested the survey results may be skewed because the study specifically ignored religious and socioeconomic factors in determining consumer cremation preferences. For example, the Wirthlin surveys commissioned by industry trade associations, including the ICFA, found that consumers with higher income and educational levels prefer cremation.
 
NFDA recommended that all Internet casket sellers be covered by the FTC Funeral Rule. Both the ICFA and the independent casket retailers questioned whether there are enough consumer complaints related to online casket sales to justify expansion of the rule.
 
The NFDA's written comments quoted the Tennessee Funeral Board's position that only licensed funeral directors should sell caskets, apparently in agreement with that viewpoint. In a related development, the FTC had filed a "friend of the court" brief in an Oklahoma federal court stating that the Funeral Rule was not intended to restrict casket sales only to licensed funeral directors.
 
FTC staff is currently reviewing the public workshop testimony, and it is unclear what further action the commission may take in the future. Comments filed by the public and by all the parties to the casket panel discussion can be viewed on the FTC Web page. The ICFA's post-hearing comments to the FTC can be viewed by clicking here.
Code: 
wr122002

Washington Report 122001

Date Published: 
122001
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

OSHA Postpones Parts of Injury/Illness Reporting Form, Expands Exemptions

 
by Robert M. Fells, Esq., general counsel 
 
The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) has delayed the effective date of three provisions in its new Occupational Injury and Illness Recording And Reporting Rule issued earlier this year. The overall rule becomes effective on January 1, but OSHA has decided to postpone by a year three key provisions: 1) defining musculoskeletal disorders (MSD), currently the subject of new ergonomics rulemaking proceedings; 2) checking an MSD column on the report form; and 3) changing the determination of work-related hearing loss. These requirements are postponed until January 1, 2003. However, implementation of the new OSHA Form 300, "Log of Work-Related Injuries and Illnesses," which replaces the current Form 200, and related forms 300A and 301, becomes effective January 1, 2002.
 
According to OSHA, the new Form 300 simplifies reporting by using a question-and-answer format with flowcharts and check lists. Small employers (with 10 or fewer employees) continue to be exempt from the recordkeeping requirements and additional exemptions affecting many industries, regardless of size, have been made. Businesses in exempted categories are not required to keep injury and illness records unless specifically requested to do so by the Bureau of Labor Statistics or by OSHA.
 
Among the industries listed as exempt from most of the recordkeeping requirements, by SIC codes, are 653: Real Estate Agents and Managers, an area that includes cemetery management services, and 726: Funeral Service and Crematories. However, cemetery "upkeep" operations listed under SIC code 078 continue to be covered. Also, the exemption from the recordkeeping requirements do not relieve employers from compliance with additional OSHA standards such as the hazard communication, formaldehyde, or excavation standards, among others.
 
In addition, 25 states or territories operate their own OSHA-approved programs, which may provide somewhat different requirements from the federal OSHA. Industry members in those states or territories should check for any additional regulations. They are Alaska, Arizona, California, Connecticut (public sector only), Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New Jersey (public sector only), New Mexico, New York (public sector only), North Carolina, Oregon, Puerto Rico, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington and Wyoming.
 
Businesses required to comply with the OSHA injury/illness reporting regulations must continue reporting all injuries that may be considered MSDs throughout 2002. The postponement means only that employers are not required to categorize an injury as MSD-related. Likewise, work-related hearing loss should be reported under the old criteria of 25 decibels hearing loss in either ear. The new standard proposed to reduce the reportable amount of hearing loss to 10 decibels, but OSHA has determined that additional study is needed prior to enacting the lower threshold. The MSD requirements are being developed in a separate OSHA proceeding on ergonomics. During the summer, the agency held public hearings in three cities to obtain public testimony on developing simple, cost-effective ergonomics regulations.
 
A complicated and expensive ergonomics program was rushed into effect during the last weeks of the Clinton administration earlier this year, only to be repealed by Congress in a historic first-of-its-kind action. President Bush promptly signed the legislation into law in March, promising to develop more reasonable and cost-effective ergonomic regulations. The ICFA had testified in opposition to the Clinton administration plan and submitted comments in July to guide to Bush administration proceedings. Secretary of Labor Elaine Chao had announced that a report on a proposed ergonomics standard would be published in September, but the department postponed its report due to the September 11 terrorist attacks.
 
ICFA members seeking more information on the new OSHA work-related injury/illness reporting requirements and exemptions should check the OSHA Web site at www.osha.gov for details, including forms 300, 300A and 301, logs and summary sheets.
Code: 
wr122001

Washington Report 112008

Date Published: 
112008
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Some cemeteries, funeral homes may be affected by ‘red flag’ rules 

 
Effective November 1 new federal regula- tions to fight identity theft, called "red flag" requirements, are mandatory for financial institutions and also for creditors. As defined under the regulations, the term "credi- tors" may include funeral homes and cemeter- ies.
 
The regulations require covered businesses to have developed and implemented a written identity theft prevention program by November 1 for the identification, detection and response to patterns, practices or specific activities (known as red flags) that could indicate identity theft.
 
Cemeteries or funeral homes that help cus- tomers arrange for credit or arrange for cus- tomers to pay in multiple installments or multi- ple insurance premiums may be considered creditors under the regulations.
 
According to the Federal Trade Commission, "A creditor is any entity that reg- ularly extends, renews or continues credit; any entity that regularly arranges for the extension, renewal or continuation of credit; or any assignee of an original creditor who is involved in the decision to extend, renew or continue credit.
 
Accepting credit cards as a form of pay- ment does not in and of itself make an entity a creditor. Creditors include finance companies, automobile dealers, mortgage brokers, utility companies and telecommunications companies. Where non-profit and government entities defer payment for goods and services, they too, are to be considered creditors."
 
The ICCFA is developing compliance infor- mation and members with questions should call general counsel Bob Fells at 1.800.645.7700.
 
More detailed information on complying with the red flag regulations will also be forth- coming from the FTC.
 
Additional FTC information can be obtained at www.ftc.gov/bcp/edu/pubs/business/alerts/ alt050.shtm.
 
 
 

Navigating the economic crisis: Use CDARS for protection above $100,000 

 
For over 75 years, depositors have been assured that their funds are safe from bank failures through the Federal Deposit Insurance Corporation. The FDIC protects depositors from losses up to $100,000 per customer per financial institution for savings, checking accounts and on certificates of deposits. It is important to note that various accounts owned by the same customer at the same bank are combined to determine the $100,000 limit. Today, both individuals and small businesses can easily exceed the $100,000 insured maxi- mum and risk losing, at least theoretically, amounts in excess of that limit.
 
Two solutions to this risk: Open accounts at several different FDIC-insured financial institutions (a potentially cumbersome approach), or enroll in a Certificate of Deposit Account Registry Service (CDARS) at one FDIC-insured financial institution.
 
An increasing number of banks are offering CDARS, which entail no charges or fees to the customer.
 
Basically, the customer indicates how much of his or her money should be placed in CDARS (some banks require a $100,000 mini- mum) and the bank arranges to place those funds (known as "pass-through deposits") with other FDIC-insured institutions.
 
The term of investment is selected by the cus- tomer and typically ranges from four weeks to several years.
 
Monthly statements are provided to the depositor with the benefit that none of the cus- tomer’s accounts at any of the institutions exceed the $100,000 limit (principal plus interest) and all are insured under the FDIC program.
 
For more information on CDARS, check the FDIC webpage at www.fdic.gov or ask your local banker.
Code: 
wr112008

Washington Report 112007

Date Published: 
112007
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Mass fatalities group meets with feds to plan for the unthinkable 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
 
 
On September 18 and 19, representatives from the funeral industry's leading trade associations met near Washington, D.C., as part of an ongoing series of planning sessions to advise federal agencies on fatalities management in the event of a manmade or natural disaster.
 
The Mass Fatalities Management Services Sub-Council, part of the Healthcare Sector Coordinating Council, is co-chaired by NFDA's John Fitch and ICCFA's Bob Fells, and includes active representation from the Catholic Cemetery Conference, the Casket and Funeral Supply Association and Matthews Cremation, among others.
 
During the first day of the conference, the private sector entities in the healthcare sector met on their own without their government counterparts. There was general frustration that recommendations and suggestions made by the private sector to government agencies are being ignored or, at least, not being responded to.
 
In particular, there was a consensus by the nine Healthcare Sub-Councils, which include Medical Materials, Occupational Health, Pharmaceuticals/ Biotechnology and Medical Treatment, among other areas, that the issue of mass fatalities management is being ignored in the federal government planning documents.
 
The second day, the Sub-Council co-chairs met with the representatives of various federal agencies, including Homeland Security, Department of Defense, and Health and Human Services, which are part of the Government Coordinating Council. Given the complex structure of the federal government, the sub-council expressed its frustration that key decision-makers were not involved in the meetings nor were state agencies represented. In addition, the private sector representatives repeated their concerns that federal planning documents, such as the National Response Framework, barely mention mass fatalities management despite efforts by the Mass Fatalities Management Services Sub-Council to add relevant materials to these documents.
 
The joint private sector-government sector meeting also included a tabletop exercise based on a hypothetical hurricane scenario severely damaging the Houston, Texas, area. Discussions focused on the role of the federal government interacting with state and local resources who would most likely be first responders in an emergency event.
 
While the discussions were useful, they highlighted an operational division in the thinking between the government and the private sector. Government agencies appear more focused on process, the private sector on results.
 
The members of the Mass Fatalities Management Services Sub-Council agreed to initiate contacts with other private-sector councils such as transportation, energy and emergency services, and to seek coordination with state and local agencies that have developed specific plans already in place.
 
Meanwhile, discussions continue with federal government representatives to develop a national perspective on fatalities management. For more information, contact Bob Fells at 1.800.645.7700
Code: 
wr112007

Washington Report 112005

Date Published: 
112005
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Why we must lobby: 10 truths of dealing with Big Government

 
by ICFA General Counsel Robert M. Fells, Esq.
 
 
 
By the time this issue is published in November, the first session of the 109th Congress probably will have adjourned for the year. This momentary pause in the relentless pursuit of an ever-growing body of legislation and regulation provides an opportunity to reflect on common falsehoods that many cemetery and funeral home professionals harbor about government relations.
 
Unfortunately, such reliance on these falsehoods will hurt their businesses and thereby hinder their ability to prosper in the years ahead. Such reliance also weakens the united front that every industry or profession must achieve if it is to be successful in its government relations efforts. To counter these falsehoods, this special "Washington Report" series will discuss what might be called "10 truths in government relations and how to make them work for you."
 
As background, let's return to the evening of January 23, 1996, when President Bill Clinton delivered his annual State of the Union address before both houses of Congress, the justices of the U.S. Supreme Court, his Cabinet secretaries representing the federal regulatory agencies, generals and other high ranking military officers comprising the Joint Chiefs of Staff and of course the national and international media.
 
In front of that august assembly, President Clinton made a statement that would be quoted the following day in front-page headlines around the world. Clinton announced,
 
"The era of big government is over." Cynics would point out that the president would be running for re-election later that year, and observers who listened carefully to that particular State of the Union address noted that before the president was finished speaking, he had proposed six or seven new big government programs!
 
To nobody's surprise, the size of the federal government was larger when Clinton left office than when he entered it. But to be fair, the same can be said of his predecessors, whether Democrat or Republican, going back at least to Lyndon Johnson in the 1960s, and really beginning with Franklin Roosevelt in the 1930s. Even Ronald Reagan, who famously stated, "The best government is the least government," left office after eight years with a larger federal government than when his administration began.
 
The government grows no matter who is in charge
 
Today, the federal government continues to expand under President George W. Bush, even with his fellow Republicans having majorities in both houses of Congress. This reality brings us an unavoidable question: What consequences does an expanding federal government have for cemeteries, funeral homes and related businesses? And more important, are we relying on assumptions or even delusions to assure ourselves that we have everything under control?.
 
To place the issue of big government into perspective, let's recall Winston Churchill's observation about our particular form of government. Never a man to mince his words, Churchill said that democracy is the worst form of government - except for all the others. Unlike the Founding Fathers, many of today's members of Congress occupy lifetime positions there. For example, Sen. Christopher Dodd (D-CT), author of the proposed Federal Death Care Disclosure and Inspection Act, first came to Congress at the age of 19 as a page, and never left. Today, Dodd has been a senator for over a quarter century after first being elected a Congressman and serving in the House. And this senator's longevity in the halls of Congress is more the rule than the exception.
 
So it is important to understand that Sen. Dodd and his 534 colleagues who make up the U.S. Congress are businesspeople just like we are. Their business is government, and they, like us, want to see their business grow. So one falsehood we should identify is that politicians are somehow "different" from the rest of us and, specifically, they don't understand "business."
 
On the contrary, using the government as a business model, politicians know very well that their "employer" rewards success and punishes failure, and that they must always be looking for new customers in order to survive in their chosen field. 
 
However, this lifelong career attitude by many members of Congress does not entirely explain why the federal government continues to expand regardless of which political party is in charge. We should be honest enough to assign the responsibility to where it belongs. The only reason our government has gotten such a far reach into our lives today is because we the people, whether we live in the blue states or the red states, have come to accept such intervention as normal.
 
The perception seems to be that the American people today almost instinctively respond to any given problem by thinking, "Well, what's the government going to do about it?" This attitude is music to the ears of our politicians and suggests that, if only by default, we are happy to become their customers. Even the Internal Revenue Service has picked up on this mindset by referring to the taxpayers it audits as "customers."
 
Having established that regardless of who is in power, the national government keeps growing bigger, let's talk about the implications of that fact.
 
#1: We can have an impact
 
The first truth we should identify, and it is very good news, is that our form of government depends on the active participation of interested parties in order for it to work to our advantage. These parties—by that I mean us—can and do have a great influence on the outcome of legislation and regulation.
 
Cynics like to condescendingly brand such interested parties as "special interest groups," but in fact everyone is a member of a special interest group. Some of us are even members of more than one group. If you belong to AARP, you're a member of a special interest group. If you belong to the American Legion, you're a member of a special interest group. So don't let the label fool you. If you know anybody who is not a member of a special interest group, he or she is probably dead.
 
#2: Many choose not to make their voices heard
 
It is surprising to see how many people choose to abstain from voicing their views to their elected leaders, especially when the issue involves their livelihood. This leads us to the second truth in government relations. ICFA President Ray Frew summed up the problem effectively in his letter in the August-September issue of ICFM (INCLUDE LINK) when he said that when it comes time to communicate our views to our elected leaders, too many of our colleagues are "abdicating" instead of "advocating." Sadly, that is true.
 
Most politicians will readily admit that they know little or nothing about our businesses. All they know about us is what interested parties choose to tell them. So if the only interested parties they hear from are our critics, who say that we are dishonest and should be intensely regulated, can we blame our elected officials if they believe it? Most "abdicators" among our colleagues will console themselves with the thought that some of their ICFA colleagues are speaking up for them, so they don't have to bother. But politicians are very good at counting votes. So if a lot of people call us dishonest and just a few voices discuss our integrity, guess who wins?
 
Therefore, the second truth is that in lobbying, 100 people who let one person express their views will not be as persuasive as 10 people who each do their own talking. Professional lobbyists are very good at providing opportunities to voice our concerns by opening doors for us, but we have to walk through those doors.
 
This brings to mind the old expression, "Money talks." That's also true in lobbying efforts, but not for the reasons many may think. Experienced lobbyists tell us money can't "buy" a vote, but it can provide access to an elected member of Congress or of the state house. There is nothing sinister in this, yet the connotation that this practice somehow smacks of "dirty politics" conveniently provides a rationale for some businesspeople to avoid politics like the plague. 
 
#3: Campaign contributers are choice 'customers'
 
Ask yourself this simple question: If you had time to see only one person, who would you choose, a good customer who brings you business or a complete stranger who may or may not become a customer in the future? Politicians think the same way.
 
Waging an effective campaign for office takes a great deal of financial support. When we contribute to a politician's election campaign, we in effect become one of his or her customers. As with your own customers, this entitles us to a certain access to that individual or to a responsible staff person, but it does not entitle us to demand things any more than we would agree to demands made from our own customers. And that's the third truth: just as you make time to meet with your established customers, so do politicians.
 
Our businesses are undergoing a major transition of consumer preferences from what we have known in the past, but many of our colleagues seem to be in denial about it. And many of us who understand what's going on may be uncertain of what exactly to do about it. To illustrate the point, let me refer to an incident that actually happened right in the offices of the ICFA not long ago.
 
We sometimes contact members who live within driving distance of our conferences. If nearby members have not yet signed up for the conference, ICFA staff gives them a call shortly before the meeting to invite them to attend. One of our staff called a cemetery manager and told him about a particular conference which featured new speakers and examined new trends. The member on the phone listened politely and then said, "Look, I've been running this cemetery for 25 years now, and if you can tell me how burying a body has changed in the last 25 years, maybe I'll come to your meeting."
 
The gentleman obviously missed the point. He was correct that burying a body hasn't changed in 25 years, but the public's need for burying, due to the rise in the popularity of cremation in particular, is changing dramatically. And that fact will significantly affect this man's business and may even drive him out of business if he doesn't wake up to this fact.
 
The number of registered lobbyists in our nation's capital had more than doubled, from 16,000 to over 34,000 during the last five years. But even more surprising, most of these lobbyists are being hired by businesses, and not to oppose anti-business legislation, as we might reasonably assume, but to promote legislation of their own making. In other words, the business community has transitioned from lobbying only when necessary to defend itself against objectionable legislation or regulations to drafting and advocating new laws they want enacted to help their businesses grow. 
 
#4: We need Laws R Us to deal with Government Inc.
 
This brings me to the fourth truth: If today's politicians can be considered businesspeople running an entity called "Government Inc.," then traditional businesspeople, including funeral directors and cemeterians, must increasingly start behaving like politicians by running a subsidiary called "Laws R Us."
 
Actually, many funeral directors and their trade associations have pro-actively lobbied for new laws to benefit their businesses for decades. But this activity had been primarily confined to the state level; today the business community has moved en masse to the federal level. This shift did not happen overnight; it has been in the works for decades.
Code: 
wr112005

Washington Report 112004

Date Published: 
112004
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Florida Supreme Court Says Cemetery's Marker Regulations Do Not Violate Religious Freedom Law

 
by Robert M. Fells, Esq., general counsel
 
In a long-awaited decision, the Supreme Court of Florida announced that a cemetery's regulations that restrict the type of grave markers and memorials permitted did not violate the state's freedom of religion statute. The case, Warner v. City of Boca Raton, involved the city's municipal cemetery that permitted only flat, ground-level markers and decorations.
 
A group of lot owners brought an action in federal district court claiming that the cemetery's restrictions against upright or vertical memorials violated their state and federal rights to freedom of expression, freedom of speech and due process of law. The federal District Court found in favor of the city cemetery in its 1999 decision. The lot owners appealed to the U.S. Court of Appeals for the 11th Circuit.
 
The federal appellate court certified two questions to the Florida Supreme Court concerning whether the cemetery regulations on markers violated the Florida Religious Freedom Restoration Act of 1998. At that point, the ICFA intervened as a third party by filing an amicus curiae or "friend of the court" brief with the state Supreme Court in support of the cemetery's legal right to generally regulate the type and size of markers, memorials and monuments it permits in its cemetery, regardless of whether the requirements favor flat, vertical or some combination of these types of memorials.
 
The ICFA brief urged the court to uphold the cemetery's regulations, stating: "If individual lot owners become entitled to ignore cemetery regulations to do whatever they wish in the name of religious beliefs, they would effectively disenfranchise the rights of all the other lot owners and undercut the cemetery's ability to properly manage its grounds, resulting in a chaotic cemetery environment."
 
Subsequently, the court's ruling held that the cemetery regulations "on the manner in which religious decorations may be displayed merely inconvenience the plaintiffs' practice of marking graves. ... The prohibition on vertical grave decorations does not substantially burden the plaintiffs' exercise of religion within the meaning of the Florida [law]."
 
Although the case will be returned to the federal Appeals Court where, presumably, the state court's decision will be followed, plaintiffs have a motion with the Florida Supreme Court asking it to reconsider its decision. The federal Appeals Court must still determine whether the plaintiffs' federal constitutional rights have been violated by the cemetery regulations.
 
To read the state Supreme Court's decision and the ICFA amicus brief, go to http://www.iccfa.com/files/amicus_brief.pdf. 
 
 
 

Virginia State Funeral Board Settles Restraint of Trade Charges With FTC

 
The Federal Trade Commission voted in early October to finalize a consent order it had announced during the summer with the Virginia Board of Funeral Directors and Embalmers.
 
The board agreed to settle charges that it violated federal law and restrained trade by prohibiting funeral directors licensed in Virginia from advertising discounts for preneed funeral plans. The FTC alleged that the board's regulation
 
"1) deprived consumers of truthful information about prices for funeral services;
 
2) prevented funeral licensees from disseminating truthful information about the prices;
 
3) deprived consumers of the benefits of price competition among board licensees; and
 
4) resulted in some consumers paying higher prices for funeral services than they would have if the regulation had not been implemented."
 
The board regulation stated in part:"No licensee engaged in the business of preneed funeral planning ... shall advertise discounts; accept or offer enticements, bonuses, or rebates; or otherwise interfere with the freedom of choice of the general public in making preneed funeral plans."
 
The FTC order bars the state board from prohibiting or restricting truthful price advertising and requires the board to publish the FTC's order on its Web site and in its newsletter, and to deliver a copy to each board licensee. For more information, see the FTC Web page at www.ftc.gov/opa/2004/08/vafuneral.htm. 
Code: 
wr112004

Washington Report 112003

Date Published: 
112003
Original Author: 
Robert M. Fells

What the GAO Report Did Not Contain

 
by Robert M. Fells, Esq., general counsel
 
Last month's column reviewed the contents of the investigative report published by the U.S. General Accounting Office requested by Sen. Christopher Dodd (D-CT) and Rep. Mark Foley (R-FL). The 62-page report, "Death Care Industry: Laws Vary by State and by Industry Segment," can be viewed on the ICFA Web page (www.icfa.org) together with a summary and excerpts. Since the report was first made public on September 11, both Dodd and Foley have stated their intentions of introducing legislation into Congress during the next few months to regulate funeral homes, cemeteries, crematories and related sellers.
 
Of particular interest to ICFA members is a statement from Rep. Foley that was published in an Associated Press story. According to the AP, Foley claimed, in an apparent reference to the GAO report, "Inconsistent [state] laws and poor enforcement have allowed grave desecration to become a national epidemic. This atrocity must stop now." This remark is puzzling because the GAO report did not discuss grave desecration, nor did the report make any claim concerning the extent of the issue.
 
More importantly, the GAO report failed to address two key issues that both Dodd and Foley asked the agency to evaluate:
 
1) whether state laws and their enforcement adequately protect consumers; and
 
2) if the states are not doing an adequate job, the GAO was requested to recommend what role, if any, the federal government should play in protecting consumers making funeral- and cemetery-related purchases.
 
A thorough review of the GAO report indicates that there is no determination or even an expression of opinion by the agency concerning the effectiveness of state regulation and enforcement. The report states that laws vary from state to state, with funeral homes being the most frequent target of enforcement actions.
 
Fewer enforcement actions are brought against cemeteries, crematories, preneed funeral plans and third-party sellers, but the GAO made this important admission: "It must be noted that a low number of enforcement actions taken by a state may not be indicative of lax enforcement efforts, but rather could be reflective of a general lack of problems involving the death care industry in that state." In addition, the GAO made no reference to the need for federal regulation.
 
The GAO report also did not review any complaint data to even attempt to determine the number and types of consumer complaints lodged against funeral homes, cemeteries, crematories and related sellers. Instead, the GAO dismissed this important issue by observing that its complaint data was not comprehensive "because 1) complaint data are not systematically gathered within states or across states, 2) there is no central repository for death care industry complaint data, 3) not all consumers who experience problems in their death care transactions file complaints and 4) some consumers may file the same complaint with more than one organization."
 
However, this does not explain why no complaint data were reviewed or commented upon in the GAO report. In particular, the Federal Trade Commission maintains a huge database of consumer complaints publicly available through Freedom of Information Act requests and therefore accessible to GAO investigators. The fact no complaint information was discussed in the GAO report, except for the quote given above, limits the usefulness of the report, especially in regard to proposing federal legislation.
 
The ICFA has requested a meeting with Dodd and Foley's staffs and all major stakeholders in the GAO report.
 
ICFA members will be kept informed of significant developments through this column and through the biweekly ICFA WIRELESS e-mail newsletter.
 
 
 

Telemarketers Should Comply With "Do Not Call"

 
At this writing, a federal appeals court in Colorado has permitted the Federal Trade Commission to implement its national Do Not Call registry while the FTC is appealing the lower court decision that held the registry unconstitutional.
 
The Federal Communications Commission, which shares enforcement responsibilities for the Do Not Call Registry with the FTC, is not affected by the court ruling and announced that it would enforce its own regulations as scheduled beginning October 1.
 
ICFA members who may be affected by the new regulations should regularly check the FTC Web page and the FCC Web page for the latest developments.
 
Regardless of the court decision, other provisions of the FTC's amended Telemarketing Sales Rule are in effect, including prohibitions against harassing calls and blocking Caller ID.
Code: 
wr112003

Washington Report 112002

Date Published: 
112002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Dodd Plans to Introduce Historic Legislation to Regulate Industry

 
by Robert M. Fells, Esq.
 
Sen. Christopher Dodd (D-CT) plans to introduce a bill that for the first time would establish federal regulation of the death-care industry, including cemeteries, funeral homes, crematories, monument retailers and any business that sells funeral-related goods or services.
 
Tentatively titled, "The Federal Death Care Inspection and Disclosure Act of 2002," the proposal would regulate industry members in addition to existing state laws. ICFA staff has been working with Dodd's staff since the senator announced his intentions last spring of introducing legislation. The ICFA Government and Legal Affairs Committee has also filed comments expressing its concerns with drafts of the proposed legislation and, in particular, opposing the concept of codifying the FTC Funeral Rule into federal law as discussed below.
 
An unpublished draft bill runs 35 pages in length and is divided into two parts, or titles. Title I would establish a new "Office of Funeral, Burial and Disposition Services" within the U.S. Department of Health and Human Services. The director of the office would develop standards for registering and inspecting "funeral homes, cemeteries, crematories and other death-care providers." A grant program would also be established whereby individual states could apply for funding to enforce federal standards that include hiring and training funeral home, cemetery and crematory inspectors and hiring and training "consumer advocates to resolve disputes between consumers and death care providers," among other things.
 
Title II of the draft bill would basically codify the Federal Trade Commission's Funeral Rule into a federal statute and extend the rule's coverage to all death-care providers, including the sale of interment rights, opening and closing charges and monuments, markers and memorials. Title II also would prohibit all telemarketing and door-to-door solicitation, and most important, would establish a private right of action for individuals to sue cemeteries, funeral homes and other providers for violations under a codified Funeral Rule. Plaintiffs could receive the greater of actual damages or $5,000 per violation.
 
As previously reported, the U.S. General Accounting Office (GAO), the investigative arm of Congress, is conducting a study to determine the effectiveness of state funeral and cemetery laws to protect consumers. The ICFA announced its support of the GAO investigation in February and has met with GAO investigators. The association believes that the introduction of any legislative proposals is premature until the GAO has reported its findings and recommendations. However, Dodd's staff has told the ICFA that the senator prefers not to wait for the GAO report. While the concept of providing federal grants to assist state governments in the enforcement of state laws is a promising idea, the ICFA had notified Dodd since last May of its opposition to efforts to codify the Funeral Rule.
 
The ICFA is concerned that codification of the Funeral Rule by Congress would politicize the rule by taking control of it away from the FTC's procedural safeguards. If it becomes a federal statute, any one of the 535 members of Congress will be able to introduce amendments in response to local problems and, given the highly emotional nature of funeral-related complaints, proposed amendments could be quickly approved by Congress without a sufficient factual basis for federal action. By contrast, the FTC requires a documented record of prevalent consumer injury in order to amend the Funeral Rule.
 
At this writing, Congress has recessed for the November 5 elections but is subject to recall before year's end. Although a bill could be introduced at any point prior to Congress' adjournment, the bill would expire as of adjournment. In that case, Dodd's staff has told the ICFA that the bill or a revised version of it would be introduced into the new Congress in January. ICFA members should check the association's Web page, www.icfa.org, for updates, in addition to staying current with the ICFA WIRELESS, the bi-weekly electronic newsletter sent to all members with e-mail addresses.
Code: 
wr112002

Washington Report 112001

Date Published: 
112001
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Consumer Cemetery Complaints Indicate No Funeral Rule Violations

 
by Robert M. Fells, Esq., general counsel 
 
The Federal Trade Commission (FTC) has been heavily promoting its consumer hotline whereby the public can file complaints against businesses by calling a toll-free 800 number or by e-mailing the FTC Consumer Protection Division, in addition to sending complaints by traditional "snail mail." In 1999, the FTC stated that it was receiving over 60,000 complaints annually. At that time, the ICFA filed a Freedom of Information Act (FOIA) request with the Commission to determine how many complaints were cemetery-related. Although the ICFA sought four years' worth of data in its April 1999 request, FTC staff could only check back to September 1997. The ICFA eventually received summaries of 26 complaints, none of which would have involved violations of the FTC Funeral Rule had cemeteries been covered under the rule, as several organizations have advocated. This summer, the ICFA filed a second FOIA request with the FTC for consumer complaints involving cemeteries from October 1999 through August 2001. Although three times the number of complaints were received compared to the first FOIA request, once again none were related to the Funeral Rule.
 
The increased number of complaints suggest that consumers are contacting the FTC with increasing frequency, thereby giving commission staff a better idea of problem areas. However, the grounds for the complaints are extremely varied and not focused on any particular issues. For example, complaints involved the failure to promptly install a marker, driving a backhoe over a grave, requiring permission to disinter remains, questioning whether remains are buried in the correct grave and a cemetery's refusal to sell a lot. Other complaints were actually inquiries asking whether the FTC regulated the size of headstones in cemeteries or if cremation services can be arranged through a cemetery. Complaints involving pricing data indicated that price information was being disclosed to consumers in a timely manner. Such complaints tended to focus on the amount of the price being charged, not the lack of price disclosure.
 
A small number of complaints were filed by competitors of the cemetery cited rather than by consumers. One funeral director complained of area cemeteries' policies of opening and closing graves only by their own staffs. Ironically, the complainant had litigated this issue with the same cemeteries some years ago and had settled out of court. This fact was apparently omitted in the complaint. Other cemetery competitors complained of vault inspection fees, suggesting that, similar to the casket handing fee prohibited by the Funeral Rule since 1994, the vault inspection fee should likewise be prohibited. However, the Funeral Rule does not specifically prohibit a casket handling fee. Instead, the rule permits only one non-declinable professional service fee to be charged to customers. Funeral homes customarily assess a service fee to cover their costs associated with overhead. However, since cemeteries generally do not charge a service fee, a vault inspection fee could be considered an equivalent of the service fee permitted under the Funeral Rule.
 
The Funeral Rule is currently under review by the FTC to determine whether any amendments or modifications in its provisions are required. The rule's current definition of "funeral provider" applies almost exclusively to funeral homes, but many organizations have urged the commission to expand the rule's coverage to all sellers of funeral goods or services. Under the FTC rules of procedure, the Funeral Rule cannot be amended unless substantial evidence exists in the rulemaking record to justify such amendment. In order to expand the rule's coverage to include cemeteries and other sellers, there should be evidence that 1) consumers are suffering harm from sellers not covered by the Funeral Rule; 2) the harm is prevalent and not merely anecdotal; and 3) the rule would prevent or remedy the harm suffered.
 
To date, there is no evidence to suggest that consumers are experiencing rule- related harm from cemeteries or other sellers not currently included under the Funeral Rule. However, the ICFA remains the only national industry trade association to actively oppose the expansion of the Funeral Rule. The rule review proceedings were initiated in May 1999 but have been on hold since November 1999. The proceedings are expected to resume at some point in 2002. ICFA members will be updated on all important developments.
Code: 
wr112001

Washington Report 102008

Date Published: 
102008
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICCFA alerts private sector partners about planning for mass fatalities 

 
The ICCFA has published an informational alert to government entities and to the pri- vate sector in the August 2008 edition of The Critical Infrastructure Protection (CIP) Report, published by George Mason University School of Law.
 
The CIP Report is part of the ongoing efforts of the university and its partners to prepare the nation for catastrophes, either natural (hurricanes, pandemics) or man-made (terrorism). This monthly report is widely circulated throughout academia, the private sector, federal and state government agencies and Congress.
 
The article, "Mass Fatalities Management in the Context of Disaster Planning," focuses on the work of the Mass Fatalities Management (MFM) Services Sub-Council, which functions in con- junction with the Departments of Homeland Security and Health and Human Services.
 
An ongoing challenge for the sub-council is to convince other stakeholders, including govern- ment agencies and other private sector groups such as transportation, energy, chemical, banking and finance, that they will be affected by MFM, or the lack thereof. Therefore, it has become cru- cial to raise the awareness level of other stake- holders to participate and coordinate their emer- gency responses to include MFM needs.
 
The MFM Sub-Council is one of nine sub- councils developed under the Healthcare Sector Coordinating Council, the private sector counter- part of the Government Healthcare Coordinating Council. Members on the MFM Sub-Council represent “the full spectrum of personnel and services needed after death, including medical examiners, coroners, funeral directors, cremation- ists, cemeterians, clergy and manufacturers and distributors of funeral, memorial and cremation supplies. Major trade associations in the death care industry are also represented on the MFM.” The sub-council has established several pri- mary goals through partnering with the federal and state governments. “First, the sub-council’s position is that a Mass Fatalities Management Component should be developed and incorporat- ed into the National Response Framework and all other federal agency response plans and policies.
 
"These plans should include policies and pro- cedures dealing with the dignified recovery, stor- age, identification and processing of remains as well as the timely issuance of death certificates and the orderly conduct of the funeral and final disposition." The article in the CIP Report also discusses the sub-council’s other goals.
 
A major project for the Sub-Council is to "coordinate with fellow sectors whose goods and services are integral to the success of comprehen- sive mass fatalities management services. For example, the transportation sector will affect the supply chain; the chemical sector supplies em- balming supplies and disinfectants; water avail- ability is critical for the mortuary and cremation processes; and food and agriculture could assist with a need for refrigerated trucks and facilities if needed." The article was authored by ICCFA General Counsel Bob Fells, who co-chairs the MFM Sub-Council. Anyone interested in obtain- ing more info about CIP or in subscribing to the report (free of charge), should go to http://cipp.gmu.edu.
 
 
 

Dollar limit on qualified funeral trust is repealed 

 
President Bush recently signed into law H.R. 6580, known as the Hubbard Act.
 
Although the law's main purpose is to pro- vide veterans’ benefits to members of the Armed Forces who are discharged early from the service because they are the sole surviving support of their family (only about 20 individuals annually are expected to benefit from this law), the expen- ses incurred under the law will be defrayed by the additional revenue to the U.S. Treasury from repeal of the dollar limits on Qualified Funeral Trusts (QFTs).
 
The QFT election gives the trustee of a pre- need funeral trust the option to pay the tax on trust earnings in lieu of the owner of the funds paying the tax, i.e., the customer. However, QFTs had a dollar limit, currently $9,000. Beyond that amount, the election could not be made for more expensive contracts and the customer was res- ponsible for the tax. The repeal contained in H.R. 6580, section 9, means that trustees may opt for QFT treatment regardless of the dollar amount.
 
The effective date for the repeal of the dollar limit is "taxable years beginning after the date of the enactment of this act." This has been interpreted to mean for taxable years beginning in 2009.
Code: 
wr102008

Washington Report 102007

Date Published: 
102007
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

ICCFA testifies before Congress for restoration of burial benefits 

 
by ICCFA General Counsel Robert M. Fells, Esq.
 
 
 
On July 31, the ICCFA testified before the U.S. House of Representatives Committee on Veterans Affairs, Subcommittee on Disability Assistance and Memorial Affairs, to urge swift Congressional action on H.R.1273.
 
This bill was introduced by Rep. Shelley Berkley (D-NV), at the ICCFA's request, to restore the plot allowance and marker cash reimbursement allowance for veterans who choose interment in private, religious and municipal cemeteries. ICCFA General Counsel Bob Fells represented the association as its witness. The bill is now supported by various veterans service organizations, including the Veterans of Foreign Wars, the American Legion and the Paralyzed Veterans of America.
 
When the VA's National Cemetery Administration was formally organized in 1973 as the result of Public Law 93-43, Congress implicitly acknowledged that national cemeteries did not operate in a vacuum but complemented other forms of burial that used resources in private, religious and municipal cemeteries.
 
The ICCFA was instrumental in having that law include a provision authorizing a plot allowance (then $150) to benefit the majority of veterans and their families who preferred interment in non-government cemeteries. This plot allowance was also viewed as a means to offset demands on national cemeteries and as recognition of the personal, religious and ethnic preferences of veterans.
 
Subsequent legislation established additional forms of burial assistance, such as the marker allowance, to further avoid a forced reliance on national cemeteries. The popular and cost-effective plot and marker burial benefits were used by the majority of veterans and their families from the mid-1970s until 1990, when Congress abruptly curtailed the plot allowance and eliminated the marker allowance. The ICCFA estimated that up to 70 percent of the veterans who were eligible to receive these two benefits were disqualified when Congress changed the requirements in 1990.
 
Since then, the ICCFA believes, many veterans have been forced to opt for interment in national or state veterans' cemeteries when they would have preferred burial in non-governmental cemeteries for personal, religious or ethnic reasons.
 
The plot and marker allowances also resulted in long-term cost savings for taxpayers by eliminating the ongoing costs of maintaining the graves in national cemeteries in perpetuity when veterans opt for burial elsewhere. Unlike the private sector, national cemeteries do not have care and maintenance trust funds but rely on annual appropriations by Congress to meet their needs.
 
The ICCFA urges members to contact their congressional representatives and ask them to support H.R. 1273 by becoming bill co-sponsors.
Code: 
wr102007

Washington Report 102005

Date Published: 
102005
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

FTC corrects 'cash advance' ruling

 
by ICFA General Counsel Robert M. Fells, Esq.
 
 
 
In early July, the Federal Trade Commission published an eagerly anticipated advisory opinion letter that responded to the question of whether a Texas trial court is correct in ruling that "all goods or services purchased from a third-party vendor, even though not included on the contract, are cash advances" under the Funeral Rule. The court's ruling has the potential for making all funeral home contracts unlawful if they are inconsistent with the court's interpretation. The FTC letter emphatically advised that the court's interpretation of cash advances "is incorrect" and "sweeps far too broadly."
 
In the litigation, Hijar v. SCI Texas Funeral Services Inc., an El Paso circuit court held that all goods or services obtained by a funeral home from a third party must be treated as "cash advance items" under the Funeral Rule, and the markup for each item must also be disclosed (see the December 2004 Washington Report).
 
The items the court held to be cash advance items when purchased from a third party and resold to persons arranging funerals include "direct cremation; immediate burial; forwarding remains; receiving remains; embalming; refrigeration; other preparation; transportation; casket/cremation casket; alternative container; outside enclosure; clothing/shroud; memorial booklet; service folders/prayer cards; acknowledgement cards; flowers; shipping container; crematory services; crucifix; escorts; certified copies; public transportation; outside funeral director's expense; vault installation; clergy/religious facility; musicians or singers; hairdressing; and permits."
 
The FTC said it "believes the court is incorrect in ruling that all goods or services purchased from a third-party vendor are cash advance items. This interpretation sweeps too far broadly, potentially bringing within its scope every component good or service that comprise a funeral. This was not and is not the commission's intention in the 'cash advance' provisions of the rule. In our opinion, the term 'cash advance item' in the rule applies only to those items that the funeral provider represents expressly to be 'cash advance items' or represents by implication to be procured on behalf of a particular customer and provided to that customer at the same price the funeral provider paid for them."
 
The FTC advisory opinion further stated that the provisions of the Funeral Rule "require a funeral provider who is charging a customer more for a cash advance item than the funeral director paid for it to disclose that material fact (i.e., the existence of a markup, but not the amount) to the customer on the statement of funeral goods and services selected by the customer. ... The commission believes that reasonable consumers generally understand that the price charged by a retail seller-including funeral providers-includes profit."
 
In discussing the issue of disclosing the funeral provider's markup, the FTC advisory opinion stated: "It is worth noting that the text and structure of the rule overall reflect the fundamental distinction between cash advance items and non-cash items. For items that are typically non-cash advance items, the rule requires disclosure of the retail price of specified goods and services offered for sale by a funeral provider. An obvious example is the rule's treatment of caskets, for which it requires a separate price list containing only the funeral provider's retail price."
 
In other words, the Funeral Rule requires only the disclosure of the retail price of non-cash advance items, and only a disclosure if a service fee has been added to a cash advance item-not the amount of the fee itself. The FTC advisory opinion affirms the funeral profession's longtime understanding that in no instance does the Funeral Rule require the disclosure of the amount of the markup added to any goods or services.
 
The ICFA has been the most proactive among the national trade associations in urging the FTC to clarify the requirements of the "cash advance" provisions of the Funeral Rule, not only due to the Texas litigation, but also as the result of three class action lawsuits filed in California alleging the same erroneous interpretation of the Funeral Rule. The complete text of the FTC advisory opinion can be viewed on the FTC Web page at www.ftc.gov/os/2005/07/050707funeralruleadvoopin.pdf.
 
 
 

New junk fax law helps businesses

 
On July 9, President Bush signed into law S. 714, the Junk Fax Prevention Act of 2005, which blocks new regulations by the Federal Communications Commission that would have prohibited businesses from sending fax messages to their customers without prior written permission.
 
Under the new law, unsolicited fax messages may be sent when the there is an "existing business relationship" between the parties, a term broadly interpreted. However, the fax message must also contain a conspicuous notice on its first page stating that the recipient may request not to be sent any additional faxes. Opting out must be "cost free" and businesses must be able to receive opt-out requests 24 hours a day, seven days a week. Once notified, an organization is prohibited from sending unsolicited faxes to a party that has opted out.
 
In addition, fax numbers must be obtained either directly from the recipient or from a published directory, advertisement or Internet site where the recipient has listed his or her fax number. The FCC regulations, first proposed in 2003, were opposed by a broad range of over 600 businesses and trade associations, including the ICFA, which joined the "Fax Ban Coalition" to reverse the FCC regulations.
 
It is important to note that sending unsolicited faxes to parties where there is no business relationship is still illegal under the Telephone Consumer Protection Act of 1991. The new law requires the FCC to report annually to Congress regarding complaints, and permits the FCC to initiate a rulemaking proceeding to establish time limits on the definition of the "established business relationship" exemption.
Code: 
wr102005

Washington Report 102004

Date Published: 
102004
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

What Happened to the Dodd/Foley Bills?

 
by Robert M. Fells, Esq., general counsel
 
As the 108th Congress nears adjournment, cemetery and funeral service professionals may well ask, "What happened to the Dodd/Foley bills that were supposed to establish the federal regulation of our businesses?" Discussions with Congressional staffers tell us both men fully intend to pursue their legislation but are waiting for a new funeral-related "event" to ignite their push toward enactment.
 
To review, Sen. Christopher Dodd (D-CT) and Rep. Mark Foley (R-FL) introduced legislation into the Senate and House of Representatives, respectively, in November 2002. The companion bills, titled the Federal Death Care Inspection and Disclosure Act, were 33 pages long and sought to establish operating standards for funeral homes, cemeteries, crematories and related businesses through the U.S. Department of Health and Human Services. A new office would also be created in HHS with a "coordinator of funeral, burial and disposition services," dubbed by some pundits as "the Death Czar." In addition, the legislation would drastically expand the FTC Funeral Rule by converting the agency regulation into a federal statute covering all funeral-related sellers and, among other things, establishing a private right of action whereby individuals could sue funeral providers and collect a minimum of $5,000 per alleged violation.
 
The Dodd/Foley bills were extraordinary because they marked the first time Congressional legislation was introduced to regulate the funeral services profession. Indeed, they marked the first time any licensed profession was proposed to come under federal oversight. The catalyst? Two unusual and highly publicized events in early 2002 involving Menorah Gardens in Florida and Tri-State Crematory in Georgia. Both Dodd and Foley immediately ordered the General Accounting Office, the investigative arm of Congress, to review the effectiveness of state laws and their enforcement in protecting funeral consumers, broadly suggesting that the federal government needed to move into this area of regulation. In addition, Dodd held a public hearing in April 2002 where he criticized the FTC for not expanding the Funeral Rule. FTC staff rebutted the criticism, saying there was insufficient evidence to justify rule expansion.
 
Both Dodd and Foley stated their intention to pursue federal legislation as quickly as possible and a staffer in Dodd's office told the ICFA that they wanted "to strike while the iron was hot," that is, while the Menorah Gardens and Tri-State Crematory stories were still making national headlines.
 
The ICFA came to an arrangement with Dodd's office to review and comment on drafts of the proposed legislation during the summer and fall of 2002. The ICFA expressed concern that the bills neither identified consumer problems nor proposed remedies, but merely established a new bureaucracy focused on undefined issues. The association also criticized the timing of the proposals by noting that the GAO had not yet made its report and there existed no documentation that state regulation was seriously ineffective. Other funeral associations such as the NFDA also expressed similar views. Nevertheless, the bills were introduced in the closing days of the previous Congress with the assurance that they would be reintroduced when the new Congress convened in January 2003.
 
The GAO (now called the Government Accountability Office) issued its report in September 2003, finding that state laws and their enforcement vary in effectiveness. However, the report made no recommendation concerning federal oversight. The report also contained the interesting admission that "a low number of enforcement actions taken by a state may not be indicative of lax enforcement efforts, but rather could be reflective of a general lack of problems involving the death care industry in that state." The GAO report was viewed as neither an indictment nor exoneration of state regulation.
 
In any event, no bills were introduced into the 108th Congress until April 1, when Rep. Foley introduced H.R. 4112, a somewhat shortened version of the 2002 bills, titled the Federal Death Care Disclosure Act. Provisions dealing with the HHS "Death Czar" and operating standards were deleted and the new bill was limited to the codification of an expanded FTC Funeral Rule into a federal statute, appropriation of $5 million a year for FTC enforcement, and a number of controversial provisions, including the private right of action. The bill was referred to the House Energy and Commerce Committee, where no action has taken place to date.
 
In speaking with ICFA members and other funeral service professionals recently, I have found a general mood that "the crisis has passed." However, direct talks with their staffs reveal that both Dodd and Foley remain committed to bringing "the death care industry" under direct federal regulation but realize that the momentum created by the Menorah Gardens/Tri-State headlines has faded. It appears they are biding their time, waiting for the "next big problem" to erupt before moving ahead with a full-court press to pass their proposals.
 
Irwin W. Shipper, CCE, chairman of the ICFA Government and Legal Affairs Committee, said, "The door to federal legislation has been opened and it will remain open from now on. Nobody should be lulled into a false sense of security just because the Foley bill has not been a priority in Congress so far. All ICFA members should remain in 'a heightened state of alert' and be aware that Sen. Dodd and Rep. Foley have positioned themselves to move quickly the next time a funeral-related issue becomes a national story. The ICFA has also positioned itself to move quickly, but we need the support of all of our members and, frankly, I believe that complacency is our worst obstacle."
Code: 
wr102004

Washington Report 102003

Date Published: 
102003
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine
Dodd Releases GAO Report on State
Death Care Regulation, Enforcement
 
by Robert M. Fells, Esq., general counsel
 
The long-awaited investigative report by the U.S. General Accounting Office, the investigative arm of Congress, was released on September 11 by Sen. Christopher Dodd (D-CT). The study was commissioned by Sen. Dodd and by Rep. Mark Foley (R-FL) in early 2002 and was publicly supported by the ICFA. To nobody's surprise, the 62-page report found that "states vary in their approach to regulating the various segments of the death care industry. ... The majority of states regulate funeral homes, crematories, cemeteries and preneed sales of funeral plans, although the specific licensing requirements vary across the states. Fewer states regulate third-party sales of funeral goods," which the GAO interpreted as including those made by monument retailers. In addition, the GAO stated, "Most states also require inspections of funeral homes and crematories, but fewer states require inspection of cemeteries."
 
With regard to enforcement actions, the GAO report states that since January 1, 2000, "a majority of states have taken enforcement actions against funeral homes, funeral directors, or embalmers for violations of a variety of state rules or regulations. Fewer states, however, have taken such action against other industry segments." The GAO points out that "not all cemeteries are regulated. ...Cemeteries operated by municipalities or religious organizations are exempt from regulation in many states."
 
The following GAO findings are of particular importance to industry professionals:
 
1) "It must be noted that a low number of enforcement actions taken by a state may not be indicative of lax enforcement efforts, but rather could be reflective of a general lack of problems involving the death care industry in that state"; and
 
2) "Today, a growing number of consumers who purchase funeral and cemetery goods and services have shopped around in advance."
 
The report includes nine appendices that compare regulation in six key states: California, Florida, Georgia, Hawaii, New York and Texas. Other appendices discuss the consolidation of the death care industry, the interstate transit of human remains and resources available to assist consumers in death-care transactions. Among the several organizations listed as offering information resources to the public, only the ICFA was identified as providing consumer complaint mediation services, through the Cemetery Consumer Service Council.
 
Sen. Dodd was quoted by the Associated Press as stating that the GAO report "helps shine a light on an industry that impacts millions of Americans, and will hopefully weed out [the] bad apples." The AP story can be viewed on the ICFA Web site by clicking here.
 
ICFA Government and Legal Affairs Committee Chairman Irwin W. Shipper, CCE, stated: "This new report is not dissimilar to the 1999 report where the GAO found a low volume of complaints, especially cemetery complaints. We have been monitoring consumer complaints received by the Federal Trade Commission over the last few years and I think it's fair to say that there are no emerging patterns of industry misconduct that have not already been addressed by the FTC Funeral Rule in its present form or that otherwise would require congressional oversight. It would be difficult to claim that the new GAO report supports federal intervention in the regulation of our industry."
 
At this point, it is not certain what follow up action will be taken by Sen. Dodd or Rep. Foley. ICFA members willbe updated on all important developments.
 
Code: 
wr102003

Washington Report 102002

Date Published: 
102002
Original Author: 
Robert M. Fells
Original Publication: 
ICCFA Magazine

Seven Steps to Building a Relationship With Your Congressional Delegation

 
by Paul M. Elvig, ICFA vice president, industry relations
 
(Note: As reported previously, Sen. Christopher Dodd (D-CT) is drafting a bill for the federal regulation of the death care industry that he plans to introduce into Congress in the near future. A rough "discussion draft" of the bill that has recently been shared with ICFA staff by Dodd's office contains provisions that would have a substantial impact on ICFA members if approved. For this reason alone, members are encouraged to act on the following course of action ASAP.)
 
Congress will soon adjourn for the election campaign. Early in January when Congress reconvenes we could be faced with all kinds of "good ideas" on how to fix the funeral and cemetery industries. They will come fast, first in committees and hearings, then possible floor action, and finally on to the White House. As sure as death and taxes, the calls will go out: "Call your congressman; call your senator!"
 
Trouble is, too few cemeterians and funeral home operators know a congressman or senator on a first-name basis. In fact, many can't even tell you their own congressman or senators' names, nor in what congressional district they live.
 
With the so-called "off-year election" season at hand, it's a great time to personally get to know those who will write laws, vote on laws and promote laws that could touch your business sooner than you think. Candidates are hungry to make friends, even hungrier for campaign contributions. This is your chance. Here are seven simple steps for "getting to know you":
 
1. Find out what congressional district you are in. In many states, your voter registration card lists the district number. We are talking congressional district, not legislative/assembly district.
 
2. Who is your incumbent congressman or woman? Who are your U.S. senators? Each congressional district has one member in the House of Representatives and each state has two senators. Learn what district your cemetery or funeral home is in -- it might be different from yours at home. All members of the House of Representatives are up for election this year; one-third of the Senate stands for election. Get to know them. Are they running for re-election?
 
3. Pick a candidate to support. It can be an incumbent or a challenger -- pick one. Same song, second verse, if a senator is up for election. If you already know this individual, great! If not, pick up the phone and introduce yourself. How do you do that? You can contact them at their campaign headquarters; learn the phone number by calling information or checking with party political headquarters.
 
Be straightforward: "Hi, I am your friendly cemeterian/funeral director and I would like to work on your campaign. I would like to have your sign in my yard/field/building I own. I like your record (in the case of challengers, 'your campaign issues') and want to donate $200." Believe you me, you will become friends fast. Contributions to federal races -- House and Senate races -- must be made with personal, not corporate, checks.
 
4. Ask to have lunch, breakfast or coffee with the candidate. When you do, talk about the candidate, the candidate's family, life and political goals, etc. Don't start lobbying -- save that for another day. Invite the candidate to visit your cemetery or funeral home to see the veterans' area, public assistance area or a special feature or anything else he or she might find interesting, something they might feel a connection with. Talk of people problems, not business problems.
 
5. "I would like to introduce you to some of my friends during your campaign. Would you be interested in a social hour in my home/cemetery/funeral home?" This is sure to get a quick response. If you are opening a new facility or presenting the public with a new feature, ask your member of congress to cut the ribbon or make the dedication speech. Whatever the case, be sure the candidate is your guest, not the guest of a committee or group that uses your cemetery.
 
6. Help with the campaign. Write a letter to the editor supporting the candidate. Send support cards to people on your Christmas list. Sign endorsement ads. If you really want to impress the candidate, offer to go doorbelling with or for the candidate -- it's fun, it really is! For lots of fun, offer to go sign-waving during rush hour. Be sure you are standing by the candidate.
 
7. If you are part of the candidate's campaign team (any of the above ideas will make you so), ask to attend the candidate's election night victory celebration. If he/she wins, your candidate will never forget your victory hug.
 
Sound simple? It is! Whatever your party leanings or activities, pick your candidate accordingly -- don-t be phony or try to be something you are not. Let your politics hang out -- the candidate will love it.
 
Now you are ready to pick up the phone when things go south in the next session of Congress. This will be the decade of congressional activism regarding our industries. Are you ready? Go for it!
Code: 
wr102002