MISSISSIPPI LEGISLATURE

1999 Regular Session

To: Insurance

By: Representative Taylor

AN ACT TO AMEND SECTIONS 75-63-3, 75-63-11, 75-63-15, 75-63-17, 75-63-18 AND 75-63-23, MISSISSIPPI CODE OF 1972, TO REQUIRE ANY BUSINESS THAT SELLS CEMETERY MERCHANDISE ON A PRE-NEED BASIS TO DEPOSIT ONE HUNDRED PERCENT OF THE CONTRACT VALUE OF THE MONEY IT RECEIVES FROM SUCH SALES INTO A TRUST FUND OR, IN LIEU THEREOF, TO DEPOSIT FIFTY PERCENT OF SUCH MONEY INTO A TRUST FUND AND EXECUTE A SURETY BOND TO SECURE THE PERFORMANCE OF SUCH CONTRACTS; TO AUTHORIZE THE COMMENCEMENT OF COURT PROCEEDINGS TO ENFORCE THE OBLIGATIONS OF SUCH BONDS; TO PROVIDE THAT ALL CONTRACTS FOR THE PRE-NEED SALE OF CEMETERY MERCHANDISE SHALL CONTAIN A PROMISE BY THE SELLER TO DELIVER AT THE TIME OF DEATH ALL SUCH MERCHANDISE FOR WHICH THE PURCHASER CONTRACTED THAT IS USED IN ACTUAL BURIAL; TO REQUIRE THE TRUSTEE OF A CEMETERY MERCHANDISE TRUST FUND AND THE SELLER OF CEMETERY MERCHANDISE TO KEEP BOOKS AND RECORDS AND ACCOUNT ANNUALLY FOR SURETY BONDS EXECUTED TO SECURE THE PERFORMANCE OF CONTRACTS FOR THE PRE-NEED SALE OF CEMETERY MERCHANDISE; TO PROVIDE THAT THE CHANCERY COURT SHALL HAVE JURISDICTION FOR THE ENFORCEMENT OF SUCH SURETY BONDS; TO PROVIDE THAT THE ATTORNEY GENERAL MAY INVESTIGATE COMPLAINTS AND ASSIST PROSECUTORS IN PROSECUTIONS FOR VIOLATIONS OF THE LAWS RELATING TO THE PRE-NEED SALE OF CEMETERY MERCHANDISE; TO AMEND SECTION 73-11-55, MISSISSIPPI CODE OF 1972, TO REQUIRE APPLICANTS FOR FUNERAL ESTABLISHMENT LICENSES TO PROVIDE THE STATE BOARD OF FUNERAL SERVICE WITH CERTAIN INFORMATION RELATING TO THE PRE-NEED SALE OF CEMETERY MERCHANDISE AT THE TIME OF MAKING APPLICATION FOR OR RENEWING A LICENSE; TO AMEND SECTION 73-11-57, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT FAILURE OF SUCH APPLICANT TO FURNISH SUCH INFORMATION, TO ESTABLISH AND MAINTAIN A TRUST ACCOUNT OR TO OBTAIN AND MAINTAIN A BOND TO SECURE THE PERFORMANCE OF PRE-NEED CEMETERY MERCHANDISE SALES SHALL CONSTITUTE GROUNDS FOR THE BOARD TO REFUSE TO ISSUE OR RENEW A LICENSE AND TO TAKE DISCIPLINARY ACTION AGAINST THE FUNERAL ESTABLISHMENT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 75-63-3, Mississippi Code of 1972, is amended as follows:

75-63-3. (1) Any person, firm, corporation, association or partnership entering into any such contract as the seller or the party responsible for providing such services shall deposit an amount of money equal to one hundred percent (100%) of the value of such property or services as stated in the contract, into a trust fund established for that purpose. Such deposit shall be made not later than forty-five (45) days after the end of the month in which such contract is executed; except if that payment for the property and/or service is made by the consumer in installments, one hundred percent (100%) of each installment payment shall be deposited to the trust within forty-five (45) days of the last day of the month within which such payment was made.

(2) Each initial deposit as to each contract into the trust fund shall be identified by the seller by furnishing the trustee with the name of the purchaser, a copy of the contract containing a statement of the value of such property or services and a description of the personal property and/or services to be furnished or provided by the seller thereunder. Nothing therein contained shall prohibit the trustee from commingling the deposits in any such trust fund for purposes of the management thereof and the investment of funds therein.

(3) In lieu of depositing into the trust fund one hundred percent (100%) of the contract value of the property or services or one hundred percent (100%) of the contract installment payments as provided in subsection (1) of this section, the seller or party responsible for providing such property or services, at the time as provided in subsection (1) of this section, shall deposit into the trust fund an amount of money equal to not less than fifty percent (50%) of the contract value of the property or services or, in the case of installment payments, fifty percent (50%) of each contract installment payment, and shall execute and enter into a surety bond with some insurance company or surety company licensed and doing business in the State of Mississippi. The bond shall be in an amount not less than the total amount of the contract value of all cemetery merchandise property and services sold on a pre-need basis during the one-year period immediately preceding the calendar year in which the bond is executed. The bond shall be made payable to the trustee for the benefit of all persons with whom the seller has contracted for the pre-need sale of cemetery merchandise and shall be conditioned upon delivery of such merchandise at the time and in accordance with the terms as prescribed in such contracts. The term of such bonds shall be not less than two (2) years. The original bond or a certified copy thereof shall be deposited with the trustee and shall be kept by the trustee until expiration or until replaced by a subsequent bond that meets the requirements of this subsection unless before such time the chancery court orders the insurance company or surety company to forfeit the bond.

SECTION 2. Section 75-63-11, Mississippi Code of 1972, is amended as follows:

75-63-11. If for any reason the seller, who has entered into a contract for the sale of such personal property and/or the performing of such services and has made the deposit herein required to be made, cannot or does not perform all provisions of said contract promptly as to delivery of the property covered by said contract after request to do so, the family, legal representative or next of kin of the purchaser shall be entitled to receive from the trustee the amount of money on deposit to the credit of that particular contract, including interest, and, if necessary, shall be entitled to have the trustee to commence proceedings in the chancery court to require payment on any bond that the seller has deposited with the trustee. An affidavit of the family, legal representative or next of kin to that effect, delivered to the trustee, shall be sufficient authority to the trustee to make * * * payment of money deposited by the seller in the trust fund without any liability to the person making the deposit of such money into the trust fund or to any other person; however, any bond of the seller may not be forfeited unless ordered by the chancery court. Nothing herein contained shall relieve the seller under any such contract of his liability for nonperformance. Each contract covered by this chapter shall provide that in the event that the retail consumer, his family, legal representative or next of kin requests the seller to deliver the property or provide the service described in the contract to or at a location which is more than fifty (50) miles from the location where the contract was executed by the purchaser and which is deemed by the seller to be impractical for the seller to deliver the property or provide the services, then the seller shall return to the retail consumer, his family, legal representative or next of kin all sums, including interest, paid by the consumer for such property and/or services. Each contract also shall contain an unconditional promise of the seller to deliver at the time of death, and upon demand of the family, legal representative or next of kin of the purchaser, the casket, vault, liner and all other merchandise for which the purchaser contracted that are used in actual burial.

SECTION 3. Section 75-63-15, Mississippi Code of 1972, is amended as follows:

75-63-15. (1) Every trustee of a cemetery merchandise trust fund shall annually prepare and file with the cemetery merchandise business a detailed accounting and report of such fund on or before March 31 of each year for the calendar year ending the preceding December 31 or within ninety (90) days after the end of the fiscal year of the trust agreement, which report shall include, among other things, properly itemized, the securities in which monies in the fund are invested and the amount of any bond that the seller has in effect to secure performance of pre-need sale contracts.

(2) Every seller shall keep accurate books of account and records of all transactions concerning merchandise funds and sellers' bonds to secure pre-need sales, and a copy of all agreements made in connection with merchandise funds and sellers' bonds to secure pre-need sales. Such records shall be kept and be available for inspection and copy by any purchaser, or the purchaser's family, legal representative or next of kin, at the usual place of the seller's business, for at least one (1) year after the termination of the agreement which they evidence.

SECTION 4. Section 75-63-17, Mississippi Code of 1972, is amended as follows:

75-63-17. All trusts created pursuant to this chapter shall have corporate entities as trustees. The trust fund established under the provisions of this chapter and bonds executed by sellers to secure performance of pre-need sale contracts shall be administered under the jurisdiction of the chancery court of the chancery court district wherein the seller is located or if the seller be located outside of the State of Mississippi then in the chancery court of the chancery court district wherein the purchaser resides. The chancery courts so having jurisdiction shall have full jurisdiction over the reports and accounting of trustees, amount of surety bond required by trustees, the amount and sufficiency of bonds executed by sellers to secure performance of pre-need sale contracts, and investment of trust funds. The courts may waive the trustee's surety bond and control over investments in the case of trusts placed with an established bank or corporate trustee.

SECTION 5. Section 75-63-18, Mississippi Code of 1972, is amended as follows:

75-63-18. (1) Within thirty (30) days after the end of the calendar or the business' fiscal year, each cemetery merchandise business shall file with the clerk of the chancery court having jurisdiction over the administration of its merchandise trust fund and with the State Board of Funeral Service an annual account, which account shall contain the following information:

(a) The name of the business, the date of incorporation, if incorporated, and the location of such business or businesses;

(b) The amounts of sales of all property and services for which payment has been made in full during the preceding calendar or fiscal year;

(c) The amount of sales of all property and services during the preceding calendar or fiscal year for which payment is to be made on an installment basis;

(d) The amounts paid into the merchandise trust fund, and the income earned therefrom during the preceding fiscal year; * * *

(e) The face amount of any bond in effect and obtained by the seller to secure performance of the pre-need sale of cemetery merchandise; and

(f) The names and addresses of the owners of the business and, if incorporated, its officers and directors, and any change of control which has occurred during the past fiscal or calendar year.

(2) Within forty-five (45) days after the time by which the trustee's accounting and report is required to be filed with the cemetery merchandise business, as provided by Section 75-63-15, the business shall file a copy of such accounting and report with the clerk of the chancery court having jurisdiction thereof.

(3) As a condition to the transfer of any merchandise trust fund monies from one trust institution to another, the business for which such fund is maintained shall, not less than thirty (30) days prior to the time when such transfer is to occur, file with the chancery clerk a written notice of intent to transfer accompanied with a letter of intent to receive such trust fund monies from the trust institution to which such trust fund monies are to be transferred. Such fund monies shall be transferred directly from the existing trust institution to the receiving trust institution.

(4) Prior to any sale or transfer of any cemetery merchandise business or a controlling interest therein, an independent audit of the merchandise trust fund shall be performed at the expense of the seller and/or buyer or transferor and transferee and filed with the chancery clerk. Such audit shall be current within thirty (30) days of the proposed sale or transfer.

(5) Each chancery clerk shall maintain a properly indexed book in which there shall be kept, preserved and open for public inspection a copy of each record, report and notice required to be filed with the chancery clerk under the provisions of this chapter. For filing and indexing the records, reports and notices under this chapter, the chancery clerk shall be authorized to charge such fees as are provided in Section 25-7-9 for the recording and indexing of deeds.

(6) The clerk of the chancery court having jurisdiction shall, upon the failure to timely receive any of the records, reports or notices provided for under this chapter, immediately give notice by registered letter to the owner or owners of such business, or, if incorporated, its officers and directors at its or their last-known address, that such records, reports or notices have not been received. Failure of such persons to file such records, reports or notices within fifteen (15) days after such registered letter is mailed shall, in the absence of clear justification or excuse, constitute a misdemeanor and each owner and, if incorporated, its officers and directors, shall be subject to the penalties provided for in Section 75-63-23.

(7) Whenever it reasonably appears to the court upon complaint filed with the chancery court having jurisdiction thereof by any purchaser, or the family, legal representative or next of kin of any such purchaser, of any property or services contracted for under the provisions of this chapter that (a) such business is insolvent or about to become insolvent; or (b) * * * no merchandise trust fund has been established for such business or, if established, the trust fund does not contain such funds as are required to be contained therein; or (c) such business has not obtained and have in effect a sufficient bond as required under subsection (3) of Section 75-63-3 to secure performance of pre-need sale contract, the court shall order a private audit and examination of any merchandise trust fund of such business and of all the books, records and papers employed in the transaction of such business.

In the event that such audit and examination shows that the business is insolvent or is about to become insolvent or that a sufficient trust fund or bond has not been established or is not being maintained for such business, the court shall exercise such jurisdiction and make and issue such orders and decrees as may be necessary to correct and enforce compliance with the provisions of this chapter and all such other orders and decrees as shall be just, equitable and in the public interest, including the appointment of receivers to continue or terminate the operation of such business.

(8) All the necessary expenses of any examination or audit performed or court proceedings conducted under the provisions of subsection (7) of this section shall be paid by the owner or owners of such business or, if incorporated, its officers and directors, and in the event that a sale of any such business is ordered by the court, the proceeds of such sale shall first be applied to the costs expended under the provisions of subsection (7) of this section.

SECTION 6. Section 75-63-23, Mississippi Code of 1972, is amended as follows:

75-63-23. (1) Any person, partnership, corporation or organization violating the provisions of this chapter shall be punished by a fine of not less than One Hundred Dollars ($100.00) nor more than One Thousand Dollars ($1,000.00) or confined in the county jail for a period not exceeding one (1) year, or both. If the person violating the provisions of this chapter is a corporation or association, any prison term imposed shall be upon the officer responsible for the violation.

(2) The Office of the Attorney General may investigate complaints and assist county prosecuting attorneys and district attorneys in prosecutions for violations of this chapter.

SECTION 7. Section 73-11-55, Mississippi Code of 1972, is amended as follows:

73-11-55. (1) No person or party shall conduct, maintain, manage or operate a funeral establishment or branch thereof unless a license for each such establishment has been issued by the board and is conspicuously displayed in such funeral establishment. In case of funeral services held in any private residence, church, cemetery, cemetery chapel, cemetery facility, or lodge hall, no license shall be required.

(2) To be licensed as a funeral establishment, a place or premise must be at a fixed and specified address or location and must be used for immediate post-death activities, whether used for the custody, shelter, care, preparation and/or embalming of the human dead. Every funeral establishment shall be under the charge and personal supervision of a Mississippi funeral director licensee or a Mississippi funeral service licensee. The licensee in charge and the licensee with personal supervisory responsibilities need not be the same licensee. Each licensed funeral establishment shall be inspected at least once during each licensing period. Such inspections may be unannounced.

(3) For the purposes of this section:

(a) A funeral establishment must contain a preparation and/or embalming room, adequate casket vault selection room, and holding facilities or proper room or rooms in which rites and ceremonies may be held.

(b) A branch is a funeral establishment that is part of a multi-unit enterprise within this state. A branch establishment need not meet all requirements specified in paragraph (a) of this subsection and need not be under the personal supervision of a Mississippi funeral director licensee or a Mississippi funeral service licensee if the branch is within seventy (70) miles of the headquarters' location.

If the branch meets all requirements of a funeral establishment as specified in paragraph (a) of this subsection, such establishment must be under the charge and personal supervision of a Mississippi funeral director licensee or a Mississippi funeral service licensee.

(c) A commercial mortuary service is a funeral establishment that embalms and transports for licensed funeral establishments and does not sell any services or merchandise directly or at retail to the public.

(4) Applications for funeral establishment licenses, branch establishment licenses or commercial mortuary service licenses shall be made on blanks furnished by the board and shall be accompanied by a fee in an amount fixed by the board pursuant to Section 73-11-56. All establishment licenses shall be issued for a period of two (2) years, except initial licenses may be prorated from the date of issuance to the next renewal date.

Renewal funeral establishment applications and license fees shall be due and payable to the board on or before the expiration date of the license. The board shall mail a notice of the due date for payment of the renewal fee at least thirty (30) days prior to the license expiration date.

(5) If the renewal fee is not paid on or before the date that it is due, a late fee, as prescribed by Section 73-11-56, shall be added to the renewal fee. A period of thirty (30) days shall be allowed after the expiration of a license, during which time the funeral establishment, branch establishment or commercial mortuary service license may be renewed on the payment of the renewal fee plus the applicable late fee. If the license is not renewed during the aforesaid thirty-day period, such license shall by operation of law automatically expire and become void without further action of the board. All establishments whose licenses have expired under this section may be reinstated by filing with the board an application for reinstatement, submitting to an inspection during which time the licensee in charge of such establishment shall be interviewed by the board or its designee and by paying all renewal fees in arrears, late fees, a reinstatement fee and an inspection fee.

(6) A license for each new establishment, change of location, change of ownership, or reinstatement of an establishment shall not be issued until an inspection has been made, license and inspection fees have been paid, and the licensee in charge of such establishment has been interviewed by the board or its designee.

(7) No operator of a funeral establishment shall allow any person licensed for the practice of funeral service or funeral directing, as the case may be, to operate out of such funeral establishment unless such licensee is the operator of or an employee of the operator of a funeral establishment which has been issued a license by the board.

(8) The board is authorized to establish rules and regulations for the issuance of a special funeral establishment work permit.

(9) Each applicant for a funeral establishment license or for renewal of a funeral establishment license shall provide with its application, in addition to such other information as the board may require, the following information:

(a) The total contract value of cemetery merchandise sold by the applicant during each of the last two (2) twelve-month periods immediately preceding the date of its current application for a funeral establishment license;

(b) The total amount of money collected from the pre-need sale of cemetery merchandise, including money actually collected pursuant to installment contracts, during each of the last two (2) twelve-month periods immediately preceding the date of its current application for a funeral establishment license;

(c) The total amount of money deposited into the trust fund required to be established under Chapter 63 of Title 75, Mississippi Code of 1972, during each of the last two (2) twelve-month periods immediately preceding the date of its current application for a funeral establishment license; and

(d) The face amount of any bond that it has in effect to secure the performance of pre-need cemetery merchandise sales as required under subsection (3) of Section 75-63-3. The applicant shall also provide the board with a certified copy of such bond.

SECTION 8. Section 73-11-57, Mississippi Code of 1972, is amended as follows:

73-11-57. (1) The board may refuse to examine or to issue or renew, or may suspend or revoke, any license, or may reprimand or place the holder thereof on a term of probation, after proper hearing, upon finding the holder of such license to be guilty of acts of commission or omission including the following: (a) the employment of fraud or deception in applying for a license or in passing the examination provided for in this chapter; (b) the erroneous issuance of a license to any person; (c) the conviction of a felony by any court in this state or any federal court or by the court of any other state or territory of the United States; (d) the practice of embalming under a false name or without a license for the practice of funeral service; (e) the impersonation of another funeral service or funeral directing licensee; (f) the permitting of a person other than a funeral service or funeral directing licensee to make arrangements for a funeral and/or form of disposition; (g) violation of any provision of this chapter or any rule or regulation of the board; (h) having had a license for the practice of funeral service or funeral directing suspended or revoked in any jurisdiction, having voluntarily surrendered his license in any jurisdiction, having been placed on probation in any jurisdiction, having been placed under disciplinary order(s) or other restriction in any manner for funeral directing and/or funeral service, or operating a funeral establishment (a certified copy of the order of suspension, revocation, probation or disciplinary action shall be prima facie evidence of such action); (i) solicitation of dead human bodies by the licensee, his agents, assistants or employees, whether such solicitation occurs after death or when death is imminent; however, this shall not be deemed to prohibit general advertising; (j) employment directly or indirectly of any apprentice, agent, assistant, employee, or other person, on a part-time or full-time basis or on commission, for the purpose of calling upon individuals or institutions by whose influence dead human bodies may be turned over to a particular funeral establishment; or (k) the failure of a funeral establishment that sells cemetery merchandise on a pre-need basis (i) to establish and maintain a trust account and to obtain and maintain a bond to secure the performance of pre-need cemetery merchandise sales as required under Chapter 63 of Title 75, Mississippi Code of 1972; or (ii) to furnish with his application for license issuance or renewal the information required under subsection (9) of Section 73-11-55.

(2) The board may, upon satisfactory proof that the applicant or licensee has been guilty of any of the offenses above enumerated, refuse to examine or issue a license to the applicant, or may refuse to renew or revoke or suspend the license of the licensee, or place on probation or reprimand him, upon a majority vote of the board members, after a hearing thereon. The board is hereby vested with full power and authority to hold and conduct such hearings, compel the attendance of witnesses and the production of books, records and documents, issue subpoenas therefor, administer oaths, examine witnesses, and do all things necessary to properly conduct such hearings. The board may waive the necessity of a hearing if the person accused of a violation admits that he has been guilty of such offense. Any person who has been refused a license or whose license has been revoked or suspended may, within thirty (30) days after the decision of the board, file with the board a written notice stating that he feels himself aggrieved by such decision and appeals therefrom to the circuit court. Upon the filing of such notice, the secretary of the board shall transmit to the clerk of the circuit court the records and findings of such proceedings. The circuit court shall hear and determine as to whether the action of the board was in accord or consistent with law, or was arbitrary, unwarranted or in abuse of discretion. An appeal from the circuit court judgment or decree may be reviewed by the Supreme Court as is provided by law for other appeals.

(3) In a proceeding conducted under this section by the board for the revocation or suspension of a license, the board shall have the power and authority for the grounds stated for such revocation or suspension, and in addition thereto or in lieu of such revocation or suspension may assess and levy upon any person licensed under this chapter, a monetary penalty, as follows:

(a) For the first violation of any of the subparagraphs of subsection (1) of this section, a monetary penalty of not less than Fifty Dollars ($50.00) nor more than Five Hundred Dollars ($500.00).

(b) For the second violation of any of the subparagraphs of subsection (1) of this section, a monetary penalty of not less than One Hundred Dollars ($100.00) nor more than One Thousand Dollars ($1,000.00).

(c) For the third and any subsequent violation of any of the subparagraphs of subsection (1) of this section, a monetary penalty of not less than Five Hundred Dollars ($500.00) and not more than Five Thousand Dollars ($5,000.00).

(d) For any violation of any of the subparagraphs of subsection (1) of this section, those reasonable costs that are expended by the board in the investigation and conduct of a proceeding for licensure revocation or suspension, including but not limited to the cost of process service, court reporters, expert witnesses and investigators.

(4) The power and authority of the board to assess and levy such monetary penalties hereunder shall not be affected or diminished by any other proceeding, civil or criminal, concerning the same violation or violations except as provided in this section.

(5) A licensee shall have the right of appeal from the assessment and levy of a monetary penalty as provided in this section under the same conditions as a right of appeal is provided elsewhere for appeals from an adverse ruling, order or decision of the board.

(6) Any monetary penalty assessed and levied under this section shall not take effect until after the time for appeal shall have expired. In the event of an appeal, such appeal shall act as a supersedeas.

(7) A monetary penalty assessed and levied under this section shall be paid to the board by the licensee upon the expiration of the period allowed for appeal of such penalties under this section or may be paid sooner if the licensee elects.

With the exception of subsection (3)(d) of this section, monetary penalties collected by the board under this section shall be deposited to the credit of the General Fund of the State Treasury. Any monies collected by the board under subsection (3)(d) of this section shall be deposited into the special fund operating account of the board.

(8) When payment of a monetary penalty assessed and levied by the board against a licensee in accordance with this section is not paid by the licensee when due under this section, the board shall have power to institute and maintain proceedings in its name for enforcement of payment in the chancery court of the county and judicial district of residence of the licensee, and if the licensee be a nonresident of the State of Mississippi, such proceedings shall be in the Chancery Court of the First Judicial District of Hinds County, Mississippi.

(9) In addition to the reasons specified in subsection (1) of this section, the board shall be authorized to suspend the license of any licensee for being out of compliance with an order for support, as defined in Section 93-11-153. The procedure for suspension of a license for being out of compliance with an order for support, and the procedure for the reissuance or reinstatement of a license suspended for that purpose, and the payment of any fees for the reissuance or reinstatement of a license suspended for that purpose, shall be governed by Section 93-11-157 or 93-11-163, as the case may be. Actions taken by the board in suspending a license when required by Section 93-11-157 or 93-11-163 are not actions from which an appeal may be taken under this section. Any appeal of a license suspension that is required by Section 93-11-157 or 93-11-163 shall be taken in accordance with the appeal procedure specified in Section 93-11-157 or 93-11-163, as the case may be, rather than the procedure specified in this section. If there is any conflict between any provision of Section 93-11-157 or 93-11-163 and any provision of this chapter, the provisions of Section 93-11-157 or 93-11-163, as the case may be, shall control.

SECTION 9. This act shall take effect and be in force from and after July 1, 2000.