The story out of Connecticut this week about the state’s plan to end licensing for funeral homes, funeral directors and embalmers seemed to come out of the blue, or in this case, the red. While somewhat perplexing, it is not shocking since governments on all levels are seeking to reduce costs. It’s another sign of the fiscal times.

In a press release under its slogan “Keeping Connecticut Healthy,” the Connecticut Department of Public Health said it would no longer license funeral homes, funeral directors and embalmers, college infirmaries and certain types of clinics.

Said DPH Commissioner Dr. Jewel Mullen: “We are committed to minimizing the impact of these reductions and ensuring that core public health services continue to be available to people who need them the most. These changes are unfortunate, but DPH is working to be more effective and efficient, focusing our resources on services that best serve the people of Connecticut.”

When asked if he thought that funeral directors and embalmers have much of an impact on the public health, a DPH spokesman, unfortunately, went straight back to the talking points. “None of the cuts that we have put into our plan were easy to make, so what we are trying to do is focus our resources in areas where we feel we can have the greatest impact.”

In the words of Daniel Jowdy, a funeral director and chairman of the state Board of Examiners of Embalmers and Funeral Directors, “Once we lose licensing, we lose the ability to control what occurs.” One consequence of this budgetary strategy would be the elimination of the state’s only funeral home inspector, who would be reassigned to another position within the DPH.

One has to wonder how much thought went into this plan. After all, if this plan goes into effect, it would make the DPH’s own regulations incongruent. It was also unclear as to whether someone who lost their license could re-enter the profession under the new plan. Further, Jowdy noted that if the plan is put into effect, what about the 185 students enrolled in mortuary science programs within the state? Will they be required to graduate? Will funeral directors take six hours of continuing education credits every year?

It is hoped that Connecticut Funeral Directors Association officials will get their meetings with the DPH commissioner. Too bad the press release went out first and the person who could clarify some of these matters was unavailable.

Since governments have recently discovered that spending more than you bring in is bad, their knee-jerk overreactions without considering the consequences could make matters much worse. In the quest for fiscal responsibility, losing sight of what is in the best interest of the public could be just as costly.

When word began to spread about the death of Clarence Clemons, a music icon who was more than just the saxophone player – he was a pillar of Bruce Springsteen’s E Street Band, many gravitated to the music as well as to places associated with the “Big Man.”

Fans flocked to the Stone Pony in Asbury Park, N.J., on Sunday, Father’s Day, to be part of a spontaneous memorial. Flowers, candles and photos were placed along outside walls of the club, and messages were written on the sidewalk around the entrance. The marquis read: “God bless Clarence Clemons.” Dozens of people left their cars running at the intersection of Ocean Avenue and Second Avenue to take pictures of what was happening. Inside the darkened club, photos and flowers occupied the stage and were shown under the club’s bright spotlight as visitors walked past and paused to reflect and then take a picture. Many choked back tears while the music of Bruce Springsteen that featured Clemons’ sax played over the club’s sound system.

Two days later, a private memorial for Clemons was held at Royal Poinciana Chapel in Palm Beach, Florida. About 150 people attended the by-invitation-only service. The printed program for the memorial featured a photo of a laughing Clemons on the front cover with the words:

Celebration of Life

Clarence “Big Man” Clemons

January 11, 1942 – June 18, 2011

“Don’t cry because it’s over, smile because it happened.”

Inside the small but crowded chapel, a large picture of Clemons was placed under the cross at the altar. Other photos and a saxophone were positioned in front. A small performing area was set up to the side where Springsteen and the surviving members of the E Street Band, along with singer-songwriter Jackson Browne, whose duet on “You’re a Friend of Mine” was Clemons’ biggest solo hit, would offer musical tributes. The chapel’s organist performed “Take My Hand Precious Lord,” “How Great Thou Art” and “Amazing Grace,” which featured a saxophone solo by Clemons’ nephew, Jeff.

Today, here in the state of New Jersey, flags will be flown at half-staff in honor of Clemons. Said Gov. Chris Christie: “His partnership with Bruce Springsteen and the rest of the E Street Band brought a great deal of pride to our state and joy to every fan of this music around the world.”

According to the Palm Beach Daily News, a private reception in the chapel’s fellowship hall followed the service. The newspaper also reported Clemons’ last wish. “As last wishes go, Clarence Clemons’ was a doozy,” the paper said. Clemons’ last wish, reportedly, was to have his fifth wife, Victoria, scatter his cremated remains in a spot held dear by the Big Man in Hawaii and to do so with all of the special women in his life in attendance, including his previous wives. The request might be a “doozy,” but it is who he was.

http://flowers.linescale.com/perl/ls/run/s127-99136.pl

Edwards is challenging this decision in an effort to allow his firm to continue offering this process, which undoubtedly will be the source of a series of news articles. With all due respect to the consumer media, the newspaper should not be the forum where the general public finds out about the process. It should be coming from the experts – funeral directors and funeral service suppliers. To be fair, some excellent articles have been written on the subject by ABC News and MSNBC, to name a few.

An article in the March 23 Columbus Dispatch had the unfortunate headline, “State Halts Liquid Cremation,” which is an oxymoron of the “old news” variety. The two processes are not synonymous. (Note: NFDA Public Relations Manager Jessica Koth was misquoted in the Columbus Dispatch article. The reporter inaccurately attributed to her this statement: Unlike cremation, hydrolysis doesn’t pollute the air with mercury from dental fillings. Said Koth: “We never broached the subject of mercury during the call. He never asked about it and I did not bring it up.” A correction has since been printed.)

For consumers who worry that the lye solution will create an environmental hazard, the process was cleared from being hazardous to the sewer system by the Columbus Public Utilities Department. The major source of confusion now is if burial and cremation were the only two approved procedures in Ohio in January, when Edwards received his first permit, then why is he not being issued burial permits now?

Either a mistake was made in January when the first permit was issued or a mistake is being made now. On city burial permits, Edwards was checking the word “other” for his hydrolysis families. Also, considering that Edwards’ first appearance before the Board of Embalmers was seven months ago, one might wonder about the progress in Ohio for getting the laws changed and getting regulations in place.

No one is arguing that there shouldn’t be regulation. There are many areas of concern, such as who can perform this process, what safety precautions must be taken, etc. Edwards himself drafted guidelines modeled on what is being discussed in California. Alkaline hydrolysis isn’t going away, so it would be a good idea for the state that already has completed the first 19 commercial alkaline hydrolysis cases to fast-track appropriate guidelines and regulations. This isn’t the first time that technology has beaten regulation and it won’t be the last.

So far, the alkaline hydrolysis era in funeral service is not off to a good start, but you knew that sooner or later the process would end up in court. As Poul Lemasters said in this week’s issue, “I am curious to where this is going to go, and I want to make sure it goes the right way for the profession.” Don’t we all.

“Our lawyers believe that there are several arguments that can be made during the appeal that may allow for this ruling to be overturned,” said Duane Marsh, IFDA executive director. He noted that the appeal process can take up to 12 months depending upon the court’s schedule.

Read more in this week’s Memorial Business Journal. Call 800-2626332 to subscribe

In March 2009, Federal Insurance Company, which has provided up to $5 million coverage in business insurance, including coverage for directors and officers of IFDA since 2005, filed suit against IFDA stating it should not have to pay the claims associated with the previous two lawsuits — one in Circuit Court of Kane County and the other by the six funeral directors in Cook County, which alleges mismanagement of the Preneed Trust the fund by IFDA that resulted in millions of dollars in losses. The insurer claimed that IFDA did not notify the company of claims in a timely manner.

In the U.S. District Court for the Northern District of Illinois, Judge Samuel Der-Yeghiayan sided with Federal Insurance Company ruling that IFDA failed to give the firm proper notice of claims against it.

Read the full story in this week’s Memorial Business Journal

The indictment states that after taking into account insurance and trust assets expected to be available to pay for future funeral services, and merchandise under prearranged funeral contracts sold by National Prearranged Services, Inc. (NPS), the loss to purchasers, funeral homes and state insurance guarantee associations will range from $450,000,000 to $600,000,000.

According to the indictment, individuals who purchased a prearranged funeral contract from NPS signed contracts which set forth the terms of that contract.  The total price for the funeral services and merchandise was agreed upon, and would remain constant regardless of when the funeral services and merchandise would be needed.  The purchaser could pay the agreed upon price either in full or by periodic installments.  NPS agreed to arrange for the funeral with the funeral home designated in the agreement upon the death of the person for whom the contract was purchased.  In order to secure the performance of the prearranged funeral contract, a third party received the deposited funds. In Missouri, the purchaser and NPS agreed that the payments made under the contract after the initial 20 percent were to be deposited into a trust with a financial institution, such as a bank, as trustee.  The seller of a contract was permitted to retain for its own use the initial 20 percent deposited by the purchaser.  In other states, such as Ohio, Illinois, and Tennessee, the purchaser and NPS agreed that the purchaser would apply for a life insurance policy which would fund the prearranged funeral contract when the funeral services were needed.  Beginning in 1983, NPS entered into agreements with several financial institutions to act as trustees of the various trusts which were established to hold the funds paid by the purchasers located in Missouri.

The indictment alleges that instead of making the required deposits into trust or forwarding the insurance premiums as paid, NPS obtained insurance in a manner that allowed it to retain money received from purchasers that should have been deposited into trust or paid as a premium to an insurance company.  Since NPS and the insurance companies from whom policies were obtained were controlled by the defendants, NPS was able to pay substantially less than the amounts which should have either been deposited into the trusts or to the insurance companies.

According the indictment, NPS borrowed large amounts of the cash surrender values of the insurance policies.  NPS had no right to borrow the cash surrender values of these policies. These loans reduced the death benefits which would be available to pay for funeral services after the deaths of the purchasers.   Additionally, the indictment alleges that the defendants concealed this practice from insurance regulators.  In some instances, the defendants used money obtained from new purchasers to pay premiums of insurance policies on the lives of previous purchasers and also to reimburse funeral homes for the cost of funeral services for the earlier purchasers.

The indictment states that the defendant removed large amounts of money from prearranged funeral trusts established by NPS.   This money was allegedly used to enable Doug Cassity to purchase residential real estate; to finance business projects for affiliated companies; to purchase a New York insurance company, Professional Liability Insurance Company of America (PLICA) and to pay personal expenses of Doug Cassity and his family.

Finally, count 49 charges Doug Cassity with insurance fraud for his participation in the insurance business, after being previously convicted of a felony, which prohibits him from engaging in the insurance business.  Count 50 charges Randall Sutton, Brent Cassity and Howard Wittner with permitting Doug Cassity to engage in the insurance business.

“IRS Criminal Investigation is committed to investigating individuals who allegedly use their businesses as personal piggy banks,” said Toni Weirauch, Special Agent in Charge of IRS-Criminal Investigation, St. Louis Field Office.

“The effects of this are not just felt by consumers who bought the policies, but also by local funeral homes who are often small, family-owned businesses,” said J.R. Ball, AIC for the St. Louis Field Office of the U.S. Postal Inspection Service.  He continued, “Any time the mail is trusted to exchange correspondence, Postal Inspectors will aggressively investigate those who use the mail to engage in fraud.”

“It doesn’t matter if a fraud scheme is simple or, as in this case, elaborate and complex,” said Dennis L. Baker, Special Agent in Charge of the FBI St. Louis Division.  “It will be investigated regardless of resources needed, in a cooperative team as shown in this case.”
 
In addition to the fraud charges, upon a finding of guilt, the defendants will be subject to a forfeiture allegation, which will require them to forfeit to the government all money derived from their illegal activity.

Individuals indicted:

• RANDALL K. SUTTON, Chesterfield, Missouri
• SHARON NEKOL PROVINCE, Ballwin, Missouri
• DOUG CASSITY, Clayton, Missouri
• BRENT DOUGLAS CASSITY, Clayton, Missouri
• HOWARD A. WITTNER, Chesterfield, Missouri
• DAVID R. WULF, St. Louis County

If convicted, the maximum penalty ranges for each of these charges range from five to 30 years in prison and/or from $250,000 to $1,000,000.

This case was investigated by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation and the Postal Inspection Service.  Assistant United States Attorneys Steven Muchnick, Charles Birmingham, Stephen Casey and Michael Reap are handling the case for the U.S. Attorney’s Office.

Check back for additional developments.

It stands to reason that 60 Minutes might have been on the trail of one or more of several high profile funeral service stories that have been making the rounds in the consumer media.

The first was the very high profile rumblings in the U.S. House of Representatives on H.R. 3655, the Consumer’s Bill of Rights, which was voted out of committee and on to the full House of Representatives for consideration. As we know, the bill would direct the Federal Trade Commission (FTC) to issue a rule regulating cemeteries, crematories and all third-party sellers that sell funeral or burial goods or services to the public. The bill grew out of scandal at the Burr Oak Cemetery in Alsip, Ill., in 2009, where four former employees allegedly dug up remains and dumped the bodies in order to resell the plots. The bill seems to be playing out a losing battle of legislative Beat the Clock with this Congress. While a vote on the bill is possible during the lame duck session after the mid-term elections, the lack of activity on the measure in the Senate seems to indicate that the bill will have to go back to the starting blocks next year.

More recently, the U.S. District Court for the Southern District of Texas, Houston Division, dismissed a five-year-old antitrust lawsuit filed against Service Corporation International, Alderwoods Group (which has since been acquired by SCI), Batesville Casket and Stewart Enterprises. I am sure that the combination of the words “funeral service” and “anti-trust law suit” might have been of interest to the news services.

And then there is the latest news out of Arizona. OK, so the skulls and bones left exposed in a pit in Memory Gardens Cemetery might not have been from the traditional funeral –the fact is they were body parts entrusted to a funeral director for cremation and disposition by a medical research firm – but they were still someone’ loved ones. And regardless, they were still left exposed in a cemetery where people were in a position to stumble upon them — fortunately in this case it was figuratively not literally. According to published reports, the woman who discovered the pits were 15 yards from the marker she was looking for. All of which has the makings of a sensational TV news report.

While this case apparently does not run afoul of the letter of the law (police in Bisbee have said that no laws were broken here), but the one rule that was indisputably broken is one that I call the Axiom of Obvious. In this case, the Axiom of Obvious states that once a story such as this is made public, is starts to erode the public’s opinion of funeral service as a whole. Of course, this leaves all of us to ponder one question: How could anyone think that leaving an open pit of bones and skulls in a cemetery under any circumstances would be a good idea?

Meantime the watch is ticking.

Budzinski stated, “After completing my 20th year of employment in January 2010 … I realized that if I was ever going to do anything else for a living, this would be the year to make the decision. We have accomplished some great things in this association, and I have the highest regard for all the staff and volunteers who made that happen, so it is not an easy decision to make. But we only get one shot at life and it is time for me to try something different. … There is no association in our industry that can match ICCFA for its nimbleness, entrepreneurial spirit and progressive attitude. You truly have a bright future.”

In accepting Budzinski’s resignation, President Kevin R. Daniels, CCE, stated, “Over the past 20 years you have made incredible contributions and improvements to the association. You have put in place a very professional and competent staff and have improved the overall strength of our association. There is no doubt in my mind that the association is in much better shape today than it was when you assumed the role of Internal Chief Operating Officer. I express my gratitude for all your contributions and hard work over the last many years with special recognition for the past 10 years when you and I have worked very closely together on many projects. On behalf of the Board of Directors of the association and the entire membership, as President, I thank you for all you have done and wish you the very best success and happiness in all your future endeavors.”

A search committee has been organized to develop criteria for the position and to interview prospective candidates. In the meantime, Robert M. Fells, Esq., External Chief Operating Officer and General Counsel, will serve in the capacity of acting executive director.

Colson served as director of sales for Batesville Casket Company from 1988-2004. He joined Wilbert in April 2008 after two years as vice president and general manager of Pella Window & Door Corporation. Colson had also been a consultant for Legacy Management Partners in 2005-06.

While the industry expects to hear more about Genesis, Dan Isard, president of The Foresight Companies, Phoenix, commented on Colson’s former company. “I think that Wilbert has the best product distribution system in the industry.  They have blended a quality product with quality installation and have built relationships with their funeral homes that are extremely valuable,” said Isard. “Unfortunately they are being squeezed equally as the casket companies are squeezed, as every time a casket is not used a vault is not used. In fact, since many caskets are rented or cremated, this puts the vault in third place (behind the service fees and caskets).

Isard added that Wilbert has successfully aligned itself with entrepreneurial regional partners, whereas many of the casket companies are distributing via employees. “They have promoted their partners to create other services (such as retort operations) and have attempted to get involved in the casket distribution,” he said. “At the same time, Batesville has moved forth to the vault business on a trial basis.”