Law Office of M.A. Stone
a Limited Liability Company

Phone: 321-443-4643
Email: mstone@maslaw.net


The Funeral Rule

FTC Fines Funeral Providers

Introduction.

Each year, the Federal Trade Commission (the “FTC”) conducts undercover inspections of funeral providers across the country to ensure compliance with the Funeral Rule.  The FTC states that since 1996 it has conducted 2,400 such inspections and found significant violations of the Rule in over 16% of providers inspected. In 2010 alone, the FTC conducted 126 inspections across eight states and found 35 violations. That means that in 2010 the FTC cited over 27% of the funeral providers it inspected with a major Rule violation. In addition to these major violations, a number of minor violations were also uncovered as a result of the FTC’s enforcement efforts. If your business is the target of such an inspection, do you comply with the Funeral Rule?

Recently the FTC settled two complaints filed against funeral providers for those funeral providers’ alleged violations of the Funeral Rule. To avoid severe civil penalties (the Rule provides for penalties of up to $16,000 per violation), each funeral provider should understand what the Rule covers and how to comply.

Recent Enforcement Actions.

In B.K. Henry Funeral Chapel, Inc., et al., Case 1:11-cv-01258, Dist. of Columbia (Consent Decree filed July 20, 2012), the Court enjoined defendants, B.K. Henry Funeral Chapel, Inc., Brian K. Henry, and Lisa Henry, from violating the Rule’s prohibitions against failing to provide inquiring consumers, upon beginning a discussion about such services, (a) a general price list that the consumer can keep; (b) a casket or alternative container price list; and (c) outer burial container offerings price list. Moreover, the Court enjoined the defendants from failing to tell consumers who inquire by telephone the prices of services inquired about or other information to reasonably answer questions and from impermissibly conditioning the furnishing of some funeral services on the purchase of other services, charging impermissible fees and failing to make required disclosures. The B.K. Henry Defendants consented to a civil penalty of Twenty Five Thousand Dollars ($25,000.00) which must be paid in installments over a 13 month period. The Court also put in place various compliance reporting requirements on the Defendants for a three year period and mandated certain record keeping requirements on the Defendants, again for a three year time period. The Court required those records to be retained for a period of five years after their creation. Finally, the Court required distribution of the Consent Decree to various individuals and entities for a three year period.

The situation was much the same in United States v. Harry J. Carter III, individually, and doing business as Carter Funeral Chapels, Ltd., Case 1:11-cv-04801, N.D. Ill. (Consent Decree filed Sept. 11, 2012). The Carter Court enjoined the Mr. Carter from violating any provision of the Rule and ordered him to pay a civil penalty of $64,000.00, but suspended that payment based on the defendant’s inability to pay. The Carter Court also mandated various compliance reporting requirements upon defendant that last for a period of five (5) years from the date of entry of the Carter Consent Decree and required the defendant to create and retain certain business records related to the subject matter of the Consent Decree for a period of eight (8) years from the date the Consent Decree is entered. Finally, the Carter Court required distribution of the Carter Consent Decree to various individuals and other entities for a period of five (5) years from the date of entry of the Consent Decree.

 A Brief Description of the Funeral Rule.

The Funeral Rule covers every person or entity that is a “funeral provider.” Under the Rule, you are a “funeral provider” if you offer to the public both “funeral goods” and “funeral services”, even if you do so from more than one entity.  The Rule sets out various disclosure requirements, including prices, and requires those disclosures to be provided to inquiring consumers at certain times during the inquiry. Failure to comply with the Funeral Rule can be quit costly for a business. The Rule provides for a civil penalty of up to $16,000 per violation. Additionally, those businesses found to be in violation of the Rule often must agree to onerous record keeping requirements as well as instituting and monitoring, with FTC oversight, ongoing future Rule compliance. In all, a one-time violator of the Rule pays quite a price for such noncompliance, in terms of both monetary sanctions as well as FTC oversight of your business for some time period.

You Have Options.

The least expensive, and most short-sighted, alternative is to do nothing and hope for the best. Alternatively, you could attempt to review the Rule and ensure that your business complies. Or, you could consult qualified legal counsel to assist you in reviewing your business practices. 

My practice includes proactively advising you regarding compliance with agency regulations or defending you in the event an agency has contacted you about an alleged violation.  Please contact me by telephone at 321-443-4643 or by email at mstone@maslaw.net or submitting an inquiry to my Firm through this website.

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