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President's Letter:
Dodd's Bill Is a Call For Action
By William L. Wright, CCE
Bill Wright, ICFA president for 2002-2003, is a cemeterian and licensed funeral director. He is vice president of Fairlawn Burial Park and Heritage Funeral Home in Hutchinson, Kansas, which are owned and operated by his family. He can be reached at heritage@msinter.net.
Well, it has happened: Sen. Christopher Dodd (D-CN) and Congressman Mark Foley (R-FL) have introduced the long-awaited bill that, if enacted, will make sweeping changes in the way our industry is regulated. Let me urge you to click here and read for yourself the statement Sen. Dodd issued on the Senate floor when he introduced his legislation. Those who thought that nothing like this was going to happen, or that the issue would simply go away, well, guess again.
So I hope that now everyone will sit up, pay attention and mobilize. At no time in our history as an association have we had to confront anything close to what we are now facing. Likewise, at no other time has the ICFA been in more need of your support. In the coming months, the ICFA's staff and leadership will be establishing and formulating our response to these events, and I will be asking for your support. This is serious business. The association's leadership and staff will not run and hide. I do not expect that you will either, so let us work together to effectively address the issues presented by the Dodd legislation.
With this said, I am going to share with you my take on Sen. Dodd's statements. You can disagree with them if you wish -- in fact, I want your opinions, so please send me your comments. I will be making references to Sen. Dodd's statements several times, so you may want to go to the Web site and read it for yourself.
In the second and third paragraphs, he says, "the purchase of funeral services is most often done under intense emotional duress." Is this anything close to the situation you find in your own business? Ninety-six percent of the people we bury at our cemetery own their property before they die. Eighty-seven percent own burial vaults and 70 percent have purchased their memorial before they die. The families I serve save money, make decisions with full disclosure (nothing hidden) and when the time comes for us to deliver, they receive everything they paid for. The reason? The practice of prefunding.
For years, people have been coming to grips with reality and making these purchases preneed. As a result, when a death occurs, families are able to grieve and share fellowship with friends and relatives without the burden of making these decisions at such an emotional time. It is a fact that when given the choice to prefund, the overwhelming majority of people will
provide their families with this protection.
Now, I will admit that cemeteries, by and large, are way ahead of funeral homes as it relates to accepting prefunding as a way of life. History is rife with examples of funeral directors lobbying lawmakers to restrict not only open competition but also prefunding through legislation that removes the business incentive to provide that service. I respectfully suggest that Sen. Dodd's bill has provisions that, if left unchallenged, would severely restrict our ability to share the prefunding message with the public. Therefore, the only option for the public would be at-death purchases. I do not feel this would be a good result.
As you read the fourth paragraph of Sen. Dodd's statement, don't take solace in the fact that he proclaims that most of us who work in this profession are honest and trustworthy. I know and you know that this is true, but nevertheless, his bill would drop a big sledgehammer on our heads as a result of the actions of a few. So beware! In addition, the Noble, Georgia, case and the others mentioned are being dealt with by the courts, as they should be. If these situations can be dealt with by current state laws, why do we need federal legislation?
Well, in the fifth paragraph, Sen. Dodd suggests that one law or a group of regulations, "one size fits all," is the way to proceed, because the "character of the industry has changed." It is my contention that when problems come up, the government of the state where it occurs is better equipped than the national government to address the concerns of its citizens. It has been my experience, and no doubt yours, that when bad things happen, the state steps in to rectify the situation and should be allowed to do so without interference or a federal mandate. I would guess that most states are now reviewing all laws that pertain to our industry and will act appropriately.
In addition, I would argue that the industry is not as "large and diverse" as the senator suggests. He bases his assumption on revenues and not rooftops, properties or services being offered. There are not a large number of new cemeteries being developed, and the new funeral homes being established are simply addressing the needs of a growing population, inner city demographics and the natural needs of successful businesses to expand. Some choices such as cremation are being offered more now than in the past, but the choices available are still basically as they have been. All that has occurred is that we have allowed ourselves to be more flexible and have educated ourselves in better addressing the wants and needs of the families we serve.
Sen. Dodd says this is an industry that "generates annual revenues of over $15 billion." I respectfully suggest that this is the biggest reason he wants more regulation, since in paragraph three he says that people now must trust service providers to provide "fair prices." Ask yourself, does this sound like code for introducing price controls? I do not know if the $15 billion figure is right or not, but he does not seem to be considering our expenses involved in providing products and services. If he did, he would discover that most of us who operate cemeteries and funeral homes would be happy to make 10 percent at the end of the year.
The senator goes on to state in paragraph five that the "business has become increasingly complex" because of our mobile society, and that many people die far from their birthplace. This may be true, but the industry and the marketplace as a whole have addressed the issues involved. The advent of state-licenced embalming services, industry-specific transportation companies and special insurance products to cover the additional expense of travel for those who die far from home have made the transport of bodies from one locality to another easier, not "more complex."
In the sixth paragraph, the senator mentions the fact that the crematory in Noble, Georgia, was statutorily exempt from inspection. This is absolutely true, and, in my opinion, was wrong. The idea that whether or not a crematory does business directly with the public should be the deciding factor in whether to regulate it is ludicrous. But as I said before, I believe that as a result of the Noble case, all states have examined or will examine their laws and regulations without the help of the federal government.
Paragraph seven mentions the Funeral Rule being 20 years old, but its age does not automatically mean it needs to be modified. I have to ask by what measure does the rule not keep up with, as he put it, "the nature of the business"? The ICFA is not afraid of new laws, but we are afraid of bad laws. The FTC has investigated Funeral Rule expansion and will continue to explore this option in the years ahead. The FTC's procedural safeguards protect us from a regulatory overreaction whenever a news story breaks somewhere. Furthermore, the ICFA has developed model guidelines for state laws that address many, if not all, the issues of governance that Dodd mentions in paragraph eight, as well as guidelines for the regulation of prepaid contracts. The guidelines are not written in statutory language, but are suggestions to help with the drafting of state laws and regulations.
With all due respect to Sen. Dodd, paragraph eight strongly suggests that he has listened more to industry critics than to the industry itself. The entire bill reads like a wish list by industry critics. Title one of the bill would provide federal dollars for training inspectors, but the persons assigned to mediate complaints would be consumer advocates. I rest my case. As far as giving consumers the right to "take legal action," don't they have that right now?
It seems to me that since the GAO is investigating the industry as I write this message, it would be advisable to wait for that report. If the GAO finds that state governments need to do a better job in regulating our industry, let the states find a way to improve. I just think sweeping changes via federal law are way too drastic. By the way, Sen. Dodd has every intention of including "all segments of the industry" -- religious and nonprofit cemeteries and, it seems, casket manufacturers, as he states in paragraph seven. I wonder if vault and memorial manufacturers are next. Maybe the preneed insurance companies should be nervous.
The final paragraph of the senator's statement, in which Sen. Dodd says he and Rep. Foley plan to pursue the issue when Congress reconvenes, should alert us that this piece of legislation, though introduced too late to be considered in 2002, is not going away. It will be brought up again in some form during the 108th Congress. Friends, we could have a long haul and a tough road ahead.
For better or for worse, these are my thoughts. I look forward to hearing from you.
Copyright ICFA 2003
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