STATE BOARD OF FUNERAL DIRECTORS
[ 49 PA. CODE CH. 13 ]
Preneed Activities of Unlicensed Employee
[37 Pa.B. 5257]
[Saturday, September 29, 2007]
The State Board of Funeral Directors (Board) proposes to amend § 13.1 (relating to definitions) and to add § 13.206a (relating to utilization of unlicensed employees by a funeral entity), to read as set forth in Annex A.
The amendments will be effective upon publication of the final-form rulemaking in the Pennsylvania Bulletin.
The amendments are authorized under sections 11, 13, 15 and 16(a) of the Funeral Director Law (act) (63 P. S. §§ 479.11, 479.13, 479.15 and 479.16(a)).
Background and Need for the Amendment
Section 13(c) of the act (63 P. S. § 479.13(c)) provides, ''No person other than a licensed funeral director shall, directly or indirectly, or through an agent, offer to or enter into a contract with a living person to render funeral services to such person when needed.'' In Ferguson v. State Bd. of Funeral Directors, 768 A.2d 393, 400 (Pa. Cmwlth. 2001), appeal denied, 566 Pa. 670, 782 A.2d 549, the court affirmed the Board's conclusion that an insurance agent who identified herself as working with a funeral director and, equipped with the funeral director's price lists and other literature, counseled the preneed selection of funeral goods and services, even though the funeral director later met with each customer and had the customer sign a statement of funeral goods and services prepared by the funeral director on the basis of the insurance agent's worksheets, offered to enter into a contract with the insured for funeral goods and services when needed without being licensed to practice funeral directing (in violation of section 13(c) of the act). The court also held that by doing so the insurance agent made arrangements for funeral services and sold funeral merchandise to the public incidental to the funeral services and therefore engaged in the practice of funeral directing without a license (in violation of section 13(a) of the act). Id. at 399-400. By doing that and entering into a life insurance contract to fund the preneed arrangements, which the funeral director had already agreed to accept as payment in full, the insurance agent also made financial arrangements for the rendering of funeral services and sale of merchandise incidental to the services and therefore engaged in the practice of funeral directing without a license (in violation of section 13(a) of the act). Id. However, in Walker v. Flitton, 364 F.Supp.2d 503 (U.S.D.C. M.D. Pa. 2005), a case involving commercial free speech rights under the First Amendment of the Federal constitution, the court ordered that the Board ''shall not prohibit agents or employees of specific licensed funeral directors from providing accurate information to consumers regarding the sale of preneed funeral plans and services. This interaction shall include, but shall not necessarily be limited to, the distribution of accurate price lists to consumers, but under no circumstances may unlicensed individuals contract with consumers for the sale of preneed funerals, nor may they act as a 'funeral director' as defined in [the act.]'' The court indicated that it did not intend to alter the Pennsylvania substantive law set forth in Ferguson. Id. at 513.
The Board has determined that its regulations need to address what unlicensed employees of a funeral establishment may do concerning preneed sales. See, Walker at 525-26 (''as a result of the [Board's] considered failure to enact a clarification of [its] interpretation of [the act], both consumers and the funeral industry in Pennsylvania have been forced to speculate as to precisely what conduct by unlicensed individuals is permissible''). The court ''strongly urge[d] the Board members to fulfill their mandate by giving prompt attention to the goal of resolving all of the unclarity which has attended the sale and marketing of preneed funerals and life insurance polices to fund them in Pennsylvania.'' Id. at 529. The Board intends in this proposed rulemaking to be responsive to the court's mandate while remaining true to the act as previously construed.
This proposed rulemaking addresses only preneed activities and not actions after a death has occurred. In the event the licensed funeral director is temporarily absent, an unlicensed member of the funeral home staff may make tentative funeral arrangements after a death has occurred. See section 13(d) of the act (63 P. S. § 479.13(d)). Making tentative arrangements does not include offering to enter into a contract with a living person to render funeral services to the person when needed, and does not include making arrangements for funeral services and selling merchandise incidental to the service and does not include making financial arrangements for the rendering of funeral services and sale of merchandise incidental to the services. See 49 Pa. Code § 13.205 (relating to tentative agreements) tentative arrangements means contacting a licensed funeral director for the embalming operation, obtaining and placing obituary notices, setting a service time with the clergyperson and cemetery official and making an appointment for the family with a licensed funeral director for the selection of merchandise.
Description of the Proposed Amendments
In § 13.1 (relating to definitions), the term ''preneed activity'' would be defined as activity concerning the provision of funeral merchandise and services upon the death of a specifically identified person living at the time of the activity, and the term ''preneed funeral contract'' would be defined as an agreement under which a funeral entity promises or agrees to provide funeral merchandise and render services upon the death of a person living at the time the contract is made. These definitions are consistent with section 13(c) of the act.
Proposed § 13.206a would address the use of unlicensed employees of the funeral entity concerning preneed activity. Proposed § 13.206a(a) would set forth standards for the relationship between the funeral director or entity and the unlicensed employee. Proposed § 13.206a(a)(1) would make clear that the funeral director and funeral entity are professionally responsible for the actions of the unlicensed employee. See, Walker at 515 (funeral director is exposed to sanction by Board for improper action of unlicensed employee). Proposed § 13.206a(a)(2) would require the funeral director to closely supervise the unlicensed employee. See, Walker at 527 (Board may require close supervision by funeral director of unlicensed employees interacting with customers concerning preneed sales). Proposed § 13.206a(a)(3) would prohibit the funeral director from paying any commission to the unlicensed employee for soliciting business. See, section 11(a)(8) of the act (63 P. S. § 479.11(a)(8)) (Board may take disciplinary action against a funeral director who ''solicit[s] patronage . . . by paying a commission or agreeing to pay a commission to any person or persons for soliciting or for business secured, or paying any gratuity to any person with the intent to have such person aid in securing business''). By prohibiting the unlicensed employee from being paid based upon how much preneed business the employee brings into the funeral home, this provision is intended to reduce the employee's incentive to persuade a customer to select funeral services and merchandise whether or not that selection would be in the customer's interest. Proposed § 13.206a(a)(4) would require the funeral director to meet face-to-face with the customer before entering into the contract, and proposed § 13.206a(a)(5) would require that any document presented to a customer by the unlicensed employee must include a notice that the document will not be binding and that a licensed funeral director must meet with the customer before entering into any contract. See, Walker at 527 (unlicensed individual may not contract with customer, and Board may require licensed funeral director to consult face-to-face with preneed customer before the customer's proposed contract is signed by the funeral director).
In Walker, supra, at pages 526-27, the court noted the responsibility of the Board to delineate with precision what conduct by unlicensed persons is permissible. Proposed § 13.206a(b) and (c) would set forth those actions of unlicensed employees that would be permitted or prohibited, respectively. Proposed § 13.206a(b)(1) would specifically authorize an unlicensed employee to distribute general price lists of the employing funeral entity, and proposed § 13.206a(b)(2) would authorize an unlicensed employee to provide general assistance to the employing funeral entity by engaging in activities not otherwise prohibited. These provisions are intended to allow funeral entities enough latitude to be responsive in allowing unlicensed employees to communicate with consumers with regard to preneed activity without violating the act, while being responsive to the mandate of the court in Walker.
Proposed § 13.206a(c) would prohibit an unlicensed employee from engaging in certain actions concerning preneed activities. Proposed § 13.206a(c)(1) would prohibit an unlicensed employee from being associated with any other funeral entity. See, Walker at 506, n. 17 at 520 (court need not address unlicensed person not trained by and acting on behalf of specified funeral director, because plaintiffs are fulltime employees of funeral home trained and supervised by licensed funeral director). Being restricted to a single funeral entity, the unlicensed employee would be acting only on behalf of the funeral director and funeral entity responsible for the unlicensed employee's actions who also have presumably trained the unlicensed employee. Additionally, if an unlicensed employee were to work for more than one funeral entity, the various funeral directors may be less likely to closely supervise the unlicensed employee, because each funeral director might tacitly assume that all work away from that funeral entity would be supervised by the funeral directors at other funeral entities, and the unlicensed employee might not be closely supervised at all.
Because the Board cannot authorize unlicensed employees of a funeral entity to practice funeral directing, proposed § 13.206a(c)(2) and (3) would prohibit an unlicensed employee from preparing worksheets, proposals or other presentations for funeral services or to engage in discussions or other communications with customers regarding the actual selection of funeral services and merchandise incidental to those services. See, Ferguson at 400 (counseling selection of preneed funeral services is making arrangements for funeral service and selling funeral merchandise incidental to the services and is therefore engaging in the practice of funeral directing). Similarly, proposed § 13.206a(c)(4) would prohibit an unlicensed employee from making financial arrangements for the rendering of funeral services and merchandise incidental to such services. See, Walker at 527 (under no circumstances may unlicensed individual act as a funeral director as defined in section 2(1) of the act); section 2(1) of the act (term ''funeral director'' includes ''a person who makes arrangements for funeral service and who sells funeral merchandise to the public incidental to such service or who makes financial arrangements for the rendering of such services and the sale of such merchandise); see also, Ferguson at 400 (entering into contract for life insurance to fund funeral and effectuating the assignment of the policy to the funeral director as previously agreed constitutes making financial arrangements for funeral services and merchandise). Because these actions by the unlicensed person constituted the unlicensed practice of funeral directing in Ferguson, the Board must make clear that an unlicensed person cannot practice funeral directing by engaging in these actions.
Proposed § 13.206a(c)(5) would prohibit an unlicensed employee from offering to or entering into a preneed funeral contract with any customer on behalf of the funeral entity. See, Walker at 527 (under no circumstances may unlicensed individual contract with consumer for sale of preneed funeral). Section 13(c) of the act, as construed in Ferguson, makes it clear that only a licensed funeral director may enter into a preneed contract. This proposed provision is necessary to maintain that limitation. Proposed § 13.206a(c)(6) and (7) would prohibit an unlicensed employee from engaging in any activity that would cause a customer to believe that the unlicensed employee is skilled in the knowledge, science or practice of funeral directing or to engage in any activity that constitutes the practice of funeral directing under the act. See, Walker at 527 (under no circumstances may unlicensed individuals act as a funeral director as defined in section 2(1) of the act); section 15(1) of the act (person is deemed to be practicing as a funeral director under the act if he ''holds himself out to the public in any manner as one who is skilled in the knowledge, science and practice of funeral directing, embalming or undertaking''). These prohibitions of proposed § 13.206a(c) are intended to protect the public by clearly defining what an unlicensed employee of a funeral entity may not do in regard to preneed activity consistent with the act as construed in Ferguson and in accordance with the judicial mandate in Walker.
Finally, proposed § 13.206a(d) would make clear that the Board's rulemaking is not intended to affect the scope of practice of insurance agents licensed by the Insurance Department.
In November, 2005, the Board solicited input from and provided an exposure draft of this proposed rulemaking to funeral directors and organizations as required. The Board held a public hearing on the exposure draft on December 12, 2005. At a public meeting in March 2006, a committee of the Board discussed the various comments and prepared a revised draft of this proposed rulemaking, which the Board subsequently approved. The Board prepared an alternate version of this proposed rulemaking, which would permit unlicensed employees to engage in a greater range of activities. In January 2007, the Board provided to interested parties this alternative exposure draft and solicited comments. In response to extensive comments from the regulated community, the Board determined that it should proceed with the proposed rulemaking in substantially the same form as previously approved. In addition, the Board considered the impact the rulemaking would have on the regulated community and on public health, safety and welfare.
Fiscal Impact and Paperwork Requirements
The proposed rulemaking will have no adverse fiscal impact on the Commonwealth or its political subdivisions. The rulemaking will impose no additional paperwork requirements upon the Commonwealth, its political subdivisions or the private sector.
The Board continuously monitors the cost effectiveness of its regulations. Therefore, no sunset date has been assigned.
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on September 19, 2007, the Board submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the Senate Consumer Protection and Professional Licensure Committee and the House Professional Licensure Committee. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations of objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections shall specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Board, the General Assembly and the Governor of comments, recommendations or objections raised.
Interested persons are invited to submit written comments, suggestions or objections regarding this proposed rulemaking to Michelle T. Smey, Administrative Officer, State Board of Funeral Directors, P. O. Box 2649, Harrisburg, PA 17105-2649, within 30 days of publication of this proposed rulemaking in the Pennsylvania Bulletin. Please reference No. 16A-4816 (Preneed activities of unlicensed employees), when submitting comments.
Fiscal Note: 16A-4816. No fiscal impact; (8) recommends adoption.
TITLE 49. PROFESSIONAL AND
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL
AND OCCUPATIONAL AFFAIRS
CHAPTER 13. STATE BOARD
OF FUNERAL DIRECTORS
§ 13.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
* * * * *
Preneed activity--Any activity on behalf of a funeral entity concerning the provision of funeral service or merchandise upon the death of a specifically identified person living at the time of the activity.
Preneed funeral contract--An agreement under which a funeral entity promises or agrees to provide funeral merchandise or render services upon the death of a person living at the time the contract is made, whether or not the funeral entity receives preneed funeral funds.
* * * * *
§ 13.206a. Utilization of unlicensed employees by a funeral entity.
(a) A licensed funeral director or funeral entity may permit an unlicensed employee of the funeral entity to interact with customers concerning preneed activity in accordance with this section.
(1) The funeral director or funeral entity utilizing an unlicensed employee shall be professionally responsible for the actions of the unlicensed employee.
(2) The unlicensed employee shall operate only under the close supervision of a licensed funeral director.
(3) The funeral director or funeral entity may not pay or agree to pay a commission to the unlicensed employee for soliciting business or for business secured by the unlicensed employee.
(4) A licensed funeral director of the funeral entity employing an unlicensed employee in this capacity shall consult face-to-face with each customer before entering into or offering to enter into a preneed funeral contract.
(5) Any document presented by the unlicensed employee to the customer for signature or acknowledgment must bear in 20-point or larger print the following notice completed with the name of the funeral entity:THIS DOCUMENT DOES NOT CONSTITUTE A CONTRACT OR AN OFFER TO CONTRACT. THIS DOCUMENT IS NOT BINDING ON YOU (THE CUSTOMER) OR [name of funeral entity], BUT IS MERELY FOR INFORMATION PURPOSES TO INFORM YOU OF THE SERVICES AND MERCHANDISE AVAILABLE AND THE COST THEREOF, AS WELL AS FUNDING OPTIONS. ANY NEGOTIATIONS WITH A VIEW TO ENTERING INTO A CONTRACT WITH [name of funeral entity] MUST TAKE PLACE IN A FACE-TO-FACE MEETING WITH A LICENSED FUNERAL DIRECTOR OF [name of funeral entity].
(b) An employee not licensed under the act acting in accordance with this section may:
(1) Distribute general price lists of the employing funeral entity only.
(2) Provide general assistance to the employing funeral entity by engaging in activities, including communications with customers, not otherwise prohibited by the act or this chapter.
(c) An employee not licensed under the act who engages in the activity described in this section may not:
(1) Be associated with any other funeral entity.
(2) Prepare worksheets, proposals or other presentations for funeral services.
(3) Engage in discussions or other communications with customers regarding the actual selection of funeral services and merchandise incidental to the services.
(4) Make financial arrangements for the rendering of funeral services and merchandise incidental to the services.
(5) Offer to or enter into a preneed funeral contract with any customer on behalf of the funeral director or funeral entity.
(6) Engage in any activity that would cause a customer to believe that the unlicensed employee is skilled in the knowledge, science or practice of funeral directing.
(7) Engage in any activity that constitutes the practice of funeral directing under the act.
(d) Nothing in this section shall be construed to alter the scope of practice of a licensed insurance agent acting under licensure from the Insurance Department, so long as the insurance agent is not acting as a funeral director or practicing funeral directing.
[Pa.B. Doc. No. 07-1793. Filed for public inspection September 28, 2007, 9:00 a.m.]
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