If you have already purchased a guaranteed-price plan—which leaves you with the feeling that you’ve got a great deal because the local funeral home will take care of everything—then what?
It’s a situation that invites abuse. The daughter of one Vermont woman, who a few years earlier had paid $3,000 for her funeral, was billed for an additional $1,000 service charge by the funeral home’s new owner.
How else can the undertaker make up for funeral inflation on a prepaid contract? “Cash Advance” items—cost of the obituary (if there is a fee), the death certificate, flowers, or cemetery expenses—will not have been included in your funeral package. An SCI-owned funeral home charged a Denver husband $200 to fax four copies of his wife’s obituary to area newspapers—where the obits ran for free. A New York widow was told, “We’ll take care of everything.” The mortician charged her $175 to have her husband’s date of death inscribed on the existing family monument. Actual cost of the inscription? $75.
Among the creative ideas currently favored by the industry, none is more profitable, nor more subject to abuse, than its appropriation of the legal fiction of “constructive delivery.” Prepayment laws in most states require that prepaid funds be placed in trust. California, for example, requires 100 percent trusting, but, like many states, has a loophole wide enough to accommodate a Cadillac hearse. It exempts from the trust requirement monies paid in advance for the prepurchase of goods such as burial plots, vaults, markers, and so on—the bulk of the cost of burial—provided that the prepurchased items are stored or warehoused for the customer’s future use. Constructive delivery is in reality no delivery, and it is the rare consumer who will have the wit to even try to ascertain whether or where the prepaid goods are being stored, let alone have the persistence to demand a glimpse of the items he or she presumably owns.
Neptune Society provides an instructive example of the invitation to large-scale fraud afforded by constructive delivery. A recent release by the California Department of Consumer Affairs announced that three of Neptune’s eleven locations (San Pedro, Burbank, and Santa Barbara) were charged with “unprofessional conduct” for allegedly failing to place $12.6 million into a trust fund “or to maintain sufficient merchandise to match purchases.” For this egregious fraud, Neptune must have been delighted to receive no more than the customary slap on the wrist in the form of three years’ probation, during which they were permitted to remain in business. There is also an order to pay $55,000 to reimburse the department for costs, but nothing is said about reimbursing the consumer $12.6 million for the apparently misappropriated boodle.
Of the $12.6 million, $9 million was allegedly for the sale of caskets and urns. This is odd, because Neptune, numero uno in the for-profit cremation business, well knew that caskets are not required, nor are urns. Karen Leonard, however, has the videotape of a “Dateline NBC” program in which she participated, on which one of Neptune’s top salespeople explained, in an expansive mood, that the law requires a casket (cost: $400), while in practice bodies are cremated in a shroud. This avid seller likewise explained that an urn is required by law (cost: $75), whereas a $2 cardboard box is used.
One of the biggest problems—and greatest opportunities for mischief—may be the choice of casket. Like automobiles, casket styles change often, sometimes as frequently as every six months. If your pre-need agreement specifies the “Tuscany H66813D” and the Tuscany H66813D is no longer available, your survivors may be asked, for an added fee, to select a different box.
A legal action now pending in Louisiana suggests that there may be far more serious problems in obtaining the benefits of a pre-need plan.
E. J. Ourso sold his fifteen funeral homes and funeral insurance company, Security Industrial, to Loewen in 1996 for a reported $180 million. One can only speculate on how the value of these properties was broken down in the negotiations over price, but it seems reasonable to guess that the funeral homes were worth no more than $3 million apiece, on average, or $45 million total. Given that assumption, Loewen paid about $135 million for the funeral insurance company.
Why would Loewen pay that much money to take over liability for funeral insurance policies—many of which were sold decades ago for $300 or less—guaranteeing to provide a funeral which today would cost many times that amount? Wouldn’t they expect to lose a lot of money when people cash in the policies? Are these people saints? One can only guess, but it seems likely that Loewen expects to sell a lot of “extras” to the survivors.
At this writing, a class action has been filed. Undoubtedly, many versions of the “facts” will be argued before it is resolved. In the meantime, Peggy Porter of Baton Rouge—whose father is a claimant in the suit—wrote a lengthy letter to her state representative, describing the ordeals her family went through with an insurance policy that had promised to fully cover her mother’s funeral. The letter is quoted in abridged form below:
Dear Mr. Dardenne,
Please accept this letter as a formal request to personally meet with you to discuss a matter of great importance to the elderly and the “baby boomers” of Louisiana….
Hopefully, you won’t send me a form letter telling me that another department handles such matters. I have tried them all. Earlier, I wrote to the La. State Insurance Commission, La. State Board of Embalmers and Funeral Directors, La. State Attorney General’s Office, Jefferson Parish Attorney General’s Office, New Orleans Better Business Bureau, Funeral Service Consumer Assistance Program and the Federal Trade Commission….
The La. State Insurance Commission, although they are investigating my complaint, say that they do not have jurisdiction over such matters. They say the La. Board of Embalmers and Funeral Directors has control. This involves an insurance policy which should be under the control of the insurance commission. Pam Williams has said that because there have been so many complaints, there has been a task force set up to investigate these matters. This has been happening for more than 20 years. How long and how many complaints does it take to get action and restitution? Mr. and Mrs. Schwartz and my father are in their eighties. Time is running out.
The La. Board of Embalmers and Funeral Directors replied to my complaint by saying, in a “unanimous decision they found no apparent violation of the statutes, rules and/or regulations under which the board is empowered to operate.” They also stated that the Board has no jurisdiction over “insurance” policies. I wasn’t given the opportunity to appear and speak before this board made this decision. The La. Board of Embalmers and Funeral Directors is a farce. According to its Rules and Regulations, this board is made up of seven members appointed by the Governor. Six of those members are either embalmers or funeral directors and one is a consumer that must be at least 65 years old. A consumer doesn’t have a chance….
The Attorney General’s Office says they are without jurisdiction over this matter, that all insurance matters are subject to regulation by the La. Insurance Commission and that these transactions are specifically exempted from the Unfair Trade Practices Act and Consumer Protection Law. How can such matters, which will at some time in their life affect almost every consumer, be exempt from the Unfair Trade Practices Act and Consumer Protection Law?
…In June 1942, my father purchased a funeral policy from Tharp-Sontheimer Life Insurance Company for my mother, Liberty Lemoine Feldheim, as well as one for himself. Later, in 1943 & 1945, he purchased one for each of his three daughters at a cost of approximately $218 per policy. Two hundred eighteen dollars does not seem like much, but in the 1940s, when your annual salary was approximately $3,000, it was quite a lot. As you can see, the policy included just about everything needed for a complete funeral. This policy was not purchased through a fast-talking salesman but from my grandfather, his father. I feel confident that my grandfather would not have sold these policies to family members and friends if he had known that it was a scam or fraudulent.
On April 15, 1996, my mother died. On April 16, 1996, my father and two sisters met with David Rogers with Tharp-Sontheimer, 1600 N. Causeway Boulevard, Metairie, La. In going over the arrangements they were shown one casket that he said was included in the policy. It looked as if it was covered in a felt material that resembled carpet padding (bits and pieces glued together) and that it might fall apart from the weight of a body. My father asked if he could pay extra for a better casket. They refused and said ANY changes in the casket voided the policy, but they would give a credit of $300 toward the cost of a more expensive funeral. This seems like the old “Bait and Switch” scam so widely used to swindle people.
