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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.
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Code: 
wr122005