RULES AND REGULATIONS
Title 49--PROFESSIONAL AND VOCATIONAL STANDARDS
STATE BOARD OF FUNERAL DIRECTORS
[ 49 PA. CODE CH. 13 ]
[38 Pa.B. 3794]
[Saturday, July 12, 2008]
The State Board of Funeral Directors (Board) amends §§ 13.204 and 13.224 (relating to written agreement; and funding and reporting of prepaid burial contracts) to read as set forth in Annex A.
Description and Need for the Rulemaking
Currently, §§ 13.204 and 13.224 set forth requirements for contracts typically used by licensees in providing, or agreeing to provide, funeral goods and services. Under § 13.204(a), a licensee must use a form agreement or statement of funeral goods and services that has been reviewed and approved by the Board. Likewise, § 13.224(f) requires a licensee to use a form prepaid burial contract or preneed contract form that has been reviewed and approved by the Board. However, the existing provisions do not state the basis upon which the Board may disapprove a form submitted to it. In implementing the existing sections, the Board has refused to approve form contracts or agreements that include a term prohibited by the Funeral Director Law (act) (63 P. S. §§ 479.1--479.20) or Board regulations, or form contracts or agreements that do not include a term required by the act or Board regulations. However, in the absence of express language in its regulations, the Board has not questioned whether the enforcement of any contractual provision of the form would lead to a violation of a provision of the act or Board regulations and accordingly has not disapproved any form agreements on that basis.
By this final-form rulemaking, the Board makes clear that it will refuse to approve a form that does not comply with the act or Board regulations or if the enforcement of any of terms of the form would result in a violation of the act or the regulations.
Summary of Comments and Responses to Proposed Rulemaking
The Board published notice of proposed rulemaking at 37 Pa.B. 1867 (April 21, 2007) with a 30-day public comment period. The Board received written comments from the following members of the public: James J. Kutz, Esquire, on behalf of AmeriServe Trust and Financial Services Co. and others; and John Eirkson, executive director of the Pennsylvania Funeral Directors Association (PFDA).
On June 6, 2007, the House Professional Licensure Committee (HPLC), as part of its review of proposed rulemaking under the Regulatory Review Act (71 P. S. §§ 745.1--745.12a), notified the Board that the HPLC had no comments and would take no formal action on the proposed rulemaking until final promulgation. The Board received no comments from the Senate Consumer Protection and Professional Licensure Committee (SCP/PLC) as part of its review of proposed rulemaking under the Regulatory Review Act. On June 20, 2007, the Independent Regulatory Review Commission (IRRC), as part of its review of proposed rulemaking under the Regulatory Review Act, notified the Board that IRRC had no objection, comments or recommendations to offer on the proposed rulemaking.
James Kutz first commented that he saw no reason, let alone a compelling reason, to promulgate a regulation which informs the licensee that the Board will not approve any prepaid burial contract or statement of funeral goods and services that violates the act or Board regulations. According to James Kutz, it should go without saying that the Board is not in the business of approving illegal agreements. As a corollary, James Kutz also questioned whether the Board ''has had a policy of approving agreements that violate the law and if so, what is the explanation for that troublesome fact?'' As indicated previously, in the absence of regulatory language on this point, in reviewing form agreements the Board has not looked beyond those terms required or permitted by the existing regulations. The Board could simply delete from its regulations the obligation to review and approve form agreements, thereby avoiding any questions of estoppel and trusting its licensees to comply with the licensure law until shown otherwise. However, doing so would simply be abdicating the important consumer protection function of verifying in advance that the form agreements the licensee presents to a customer comply with the act and regulations. James Kutz next suggested that the proposed amendments would ''create more confusion than clarity'' by not further addressing who will make any determination of whether the form agreement violated the act or regulations. The regulatory amendments place licensees on notice of what the Board will consider in reviewing the licensees' form agreements. It goes without saying that the Board will conduct that review in a way that fully comports with the licensee's procedural due process rights. Also, James Kutz asserts that, because the Board is separately proposing additional regulations also related to preneed funeral arrangements, these proposed amendments were ''simply the forerunner for anticipated prosecution by the Board in the event it is successful in securing approval of its more comprehensive regulations [that James Kutz believes] are intended to effectively blunt the affect (sic) of the Federal court decision in Walker v. Flitton,'' 364 F. Supp. 2d 503 (U.S.D.C. M.D. Pa. 2005). While the merits of any other proposed rulemaking will be addressed in that rulemaking, these regulatory amendments simply set forth the scope of Board review of form agreements and do not set forth the basis for any prosecution. Finally, James Kutz went on to opine that the industry would be better served by a single comprehensive statutory proposal to modernize the law applicable to the funeral industry. The Board can only promulgate regulations that are authorized by the act, that is, regulations needed to implement and enforce the act; the Board cannot act outside the scope of its authority under the act and cannot revise or repeal the act.
PFDA first noted its agreement with the proposed amendments. However, PFDA suggested that the Board go further in reviewing not just the licensee's form agreement with the customer, but also the licensee's master trust agreement with the financial institution in which the licensee will place the customer's prepaid funds. The Board has neither the expertise nor the statutory authority to consider terms of banking arrangements. Section 13(c) of the act (63 P. S. § 479.13(c)) requires a funeral director who has received preneed money to ''either deposit the same in an escrow account in, or transfer the same in trust to, a banking institution in this Commonwealth.'' By enacting this requirement, the General Assembly made clear that the Department of Banking, though its authority to regulate banking institutions, would assure the integrity of that money. The Board's obligation was only to assure that the money would be held by a banking institution. Subsequent to the close of the public comment period, PFDA additionally commented that, in addition to the Board, the Department of Banking, the Insurance Department and the State Securities Commission should review form agreements of funeral directors. While that additional review may be beneficial and authorized in the other agencies' enabling statutes, the Board through its rulemaking cannot obligate these other agencies to review licensee forms.
In conclusion, the Board has not revised its proposed rulemaking in response to the comments that it received.
Fiscal Impact and Paperwork Requirements
The final-form rulemaking will have no adverse fiscal impact on the Commonwealth or its political subdivisions and will impose no additional paperwork requirements upon the Commonwealth, political subdivisions or the private sector.
The final-form rulemaking will become effective upon publication in the Pennsylvania Bulletin.
The final-form rulemaking is authorized under section 16(a) of the act (63 P. S. § 479.16(a)).
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 11, 2007, the Board submitted a copy of the notice of proposed rulemaking, published at 37 Pa.B. 1867, to IRRC and the Chairpersons of the HPLC and the SCP/PLC for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC, the HPLC and the SCP/PLC were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Board has considered all comments received from IRRC, the HPLC, the SCP/PLC and the public.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on April 7, 2008, the HPLC approved the final-form rulemaking. On June 4, 2008, the SCP/PLC was deemed to have approved the final-form rulemaking. Under section 5(g) of the Regulatory Review Act (71 P. S. § 845.5(g)), the final-form rulemaking was deemed approved by IRRC effective June 4, 2008.
Persons who require additional information about the final-form rulemaking should submit inquiries to Heidy Weirich, Administrator, State Board of Funeral Directors, P. O. Box 2649, Harrisburg, PA 17105-2649, or st-funeral@ state.pa.us.
The Board finds that:
(1) Public notice of proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) and regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law and all comments were considered.
(3) There are no amendments to this final-form rulemaking that would enlarge the scope of proposed rulemaking published at 37 Pa.B. 1867.
(4) The final-form rulemaking adopted by this order is necessary and appropriate for the administration of the act.
The Board, acting under its authorizing statute, orders that:
(a) The regulations of the Board, 49 Pa. Code Chapter 13, are amended, by amending §§ 13.204 and 13.224 to read as set forth in Annex A.
(b) The Board shall submit this order and Annex A to the Office of Attorney General and the Office of General Counsel for approval as required by law.
(c) The Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) The final-form rulemaking shall take effect upon publication in the Pennsylvania Bulletin.
MICHAEL J. YEOSOCK,
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 38 Pa.B. 3461 (June 21, 2008).)
Fiscal Note: Fiscal Note 16A-4813 remains valid for the final adoption of the subject regulations.
TITLE 49. PROFESSIONAL AND VOCATIONAL STANDARDS
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL AND OCCUPATIONAL AFFAIRS
CHAPTER 13. STATE BOARD OF FUNERAL DIRECTORS
STANDARDS OF PRACTICE AND CONDUCT
§ 13.204. Written agreement.
(a) A written agreement form, either for at need or preneed, statement of funeral goods and services approved by the Board, containing the name and address of the funeral director, the date the arrangements were made, the name of the deceased and the date of death, a specific listing of professional services, merchandise, facilities and equipment to be supplied by the funeral director for the preparation and burial, cremation or other disposition of the deceased as outlined in subsection (c); an itemized statement of cash advances and expenditures as explained in subsection (d); and the total cost, signed by the funeral director, shall be given to the family representative or agency official arranging for the funeral at the time of arrangements which must be prior to the disposition of the deceased. The forms or statements used by licensees in this Commonwealth must conform with the requirements imposed by the Federal Trade Commission under 16 CFR Part 453 (relating to funeral industry practices).
(b) A specific listing of professional services, merchandise, facilities and equipment to be supplied by the funeral director for the preparation and burial, cremation or other disposition of the deceased as specified in subsection (a) shall be completely spelled out as to what is included. Examples are as follows:
(1) Professional services include, if provided, funeral counseling, available on a 24-hour basis; arrangements for funerals and interments; preparation and local removal; obituary information to newspapers; filing of necessary forms; handling of flowers; direction of the funeral service; and presence at cemetery for interment services.
(2) Merchandise includes, if provided, a casket, including space for a description; an outer case or vault, including space for a description; memorial cards, prayer cards and acknowledgement cards, indicating the amount; candles; a register book; temporary grave marker; and pallbearer gloves.
(3) Facilities and equipment shall include, if provided, reposing rooms, chapel facilities, lounges, reception areas, parking, drape decoration or fern decoration, necessary religious equipment such as prayer rails and mass card holder, hearse (local), vehicle for removal (local), family car, flower transportation vehicle, clergy vehicle and pallbearer vehicle, if applicable.
(c) The written agreement form shall include a specific listing of cash advances paid for by the funeral director as a convenience to the family when the advances are dollar-for-dollar exchanges and not a part of the normal services and merchandise rendered by the licensee.
(d) The written agreement form must also include a specific listing of additional items of service and merchandise not covered by subsection (c) and differing from cash advances as explained in subsection (d).
(e) Interest on delinquent accounts, if charged, shall be listed and conform with State and Federal laws and regulations.
(f) A copy of the written agreement, signed by the family representative or agency official as well as the funeral director, shall be retained by the funeral director along with the records of the transaction for 6 years.
(g) If a family member or representative is located where a signature on an agreement is impossible, a fax, a telex, a telegram or a mailgram authorizing the procedure or arrangements will be acceptable. For the purpose of this subsection, the fax, telex, telegram or mailgram is to be used for ''ship in'' or ''ship out'' accommodations.
(h) The Board will not approve a form statement of funeral goods and services that does not comply with the act or this chapter, or the enforcement of any term of which would result in the violation of the act or this chapter.
PREPAID BURIAL CONTRACTS
§ 13.224. Funding and reporting of prepaid burial contracts.
(a) A funeral director shall deposit in escrow or transfer in trust to a banking institution in this Commonwealth, the entire amount of monies received by the funeral director under a prepaid contract for funeral services or merchandise, including additional service fees or arrangement fees.
(b) In regard to prepaid contracts entered into by funeral directors after November 4, 1989, a funeral director shall file a report with the Board within 90 days containing the information specified in subsection (c) with respect to each prepaid contract for funeral services and merchandise. Forms for the reports, including the report required under subsection (d), will be provided by the Board.
(c) A funeral director shall file a report with the Board on a form provided by the Board, certifying as true and correct, the following information with respect to each prepaid contract for funeral services and merchandise entered into:
(1) The date of the prepaid contract and the name and address of the purchasers under the contract.
(2) The name and address of the banking institution in which 100% of the money received by the funeral director on account of the contract has been deposited.
(3) The account number, account registration title--name and persons for whom the account is established--and the date the account was established.
(4) In installment contracts, if the entire amount of the contract has not been paid, the report must expressly indicate the fact that an installment contract is involved, and the total amount of installments received by the funeral director and deposited in escrow or in trust.
(d) A funeral director shall report within 30 days all fulfilled prepaid contracts, including the following:
(1) The name of the deceased.
(2) The date of the death.
(3) The account number.
(4) The name of the banking institution.
(e) The report required in subsection (c) is not a public record under the act of June 21, 1957 (P. L. 390, No. 212) (65 P. S. §§ 66.1--66.4), known as the Right-to-Know Law. The report will be available to the following:
(1) Parties privy to the contract.
(2) Heirs of the deceased.
(3) Executors or administrators of the estate of the deceased.
(4) Courts of competent jurisdiction.
(5) The Board.
(f) Form prepaid burial contracts or form preneed contracts to be used by a funeral director shall be reviewed and approved by the Board and should reflect whether or not an additional service fee or arrangement fee is charged. Form prepaid burial contracts or form preneed contracts used by a funeral director may not incorporate a contract for funeral merchandise entered into by a person or entity other than a funeral director. The Board will not approve a form prepaid burial contract or preneed contract that does not comply with the act or this chapter, or the enforcement of any term of which would result in the violation of the act or this chapter.
[Pa.B. Doc. No. 08-1288. Filed for public inspection July 11, 2008, 9:00 a.m.]
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