MISSISSIPPI LEGISLATURE
2005 Regular Session
To: Insurance
By: Representative Chism
AN ACT TO AMEND SECTION 75-63-53, MISSISSIPPI CODE OF 1972, TO DEFINE CERTAIN TERMS UNDER THE PRE-NEED CEMETERY AND FUNERAL REGISTRATION ACT; TO AMEND SECTION 75-63-55, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR COMBINATION OF TRUST AND INSURANCE FUNDED PRE-NEED CONTRACTS; TO AMEND SECTION 75-63-57, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR BOOKS AND RECORDS REQUIREMENTS; TO AMEND SECTION 75-63-59, MISSISSIPPI CODE OF 1972, TO INCREASE THE AMOUNT IN TRUST IF THE PRE-NEED CONTRACT IS FUNDED BY A TRUST; TO AMEND SECTION 75-63-65, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR RENEWAL OF REGISTRATION OF ESTABLISHMENTS AND PERSONS ENGAGED IN THE BUSINESS OF SELLING PRE-NEED CONTRACTS; TO AMEND SECTION 75-63-67, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR AN ANNUAL REPORT FEE; TO AMEND SECTION 75-63-69, MISSISSIPPI CODE OF 1972, TO INCREASE THE MAXIMUM ADMINISTRATIVE AND CIVIL PENALTY TO TWENTY-FIVE THOUSAND DOLLARS; TO AMEND SECTION 75-63-71, MISSISSIPPI CODE OF 1972, TO AUTHORIZE DISCLOSURE OF INFORMATION IN THE INTEREST OF INFORMING THE PUBLIC; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 75-63-53, Mississippi Code of 1972, is amended as follows:
75-63-53. As used in this article, unless the context requires otherwise:
(a) "Agent" means the person who sells the pre-need contract on behalf of a contract provider.
(b) "Business entity" includes domestic and foreign corporations; not-for-profit corporations; profit and not-for-profit unincorporated associations; partnerships; sole proprietorships; trusts; and city, county, state and United States government.
(c) "Buyer" means the person who purchases the pre-need contract.
(d) "Cash advance item" means any item of service or merchandise described to a purchaser as a "cash advance," "accommodation," "cash disbursement" or similar term. A cash advance item is also any item obtained from a third party and paid for by the funeral provider on the purchaser's behalf. Cash advance items may include, but are not limited to: cemetery or crematory services; pallbearers; public transportation; clergy honoraria; flowers; musicians or singers; nurses; obituary notices; gratuities and death certificates.
(e) "Cemetery" means an organization as defined in Section 41-43-33, Mississippi Code of 1972.
(f) "Contract insured" means the person upon whose death will initiate the performance of a pre-need contract.
(g) "Contract provider" means the funeral home, cemetery or other providers of merchandise and/or service in a pre-need contract that will be responsible for performing a pre-need contract.
(h) "Establishment" means any business entity that sells pre-need merchandise or services, or both.
(i) "Financial institution" means a bank, trust company, savings bank, or savings and loan association chartered and authorized to do business in this state.
(j) "Funeral home" means a business licensed under Section 73-11-55, Mississippi Code of 1972.
(k) "Inflation proof contract" means a pre-need contract that establishes a fixed price for funeral services and merchandise without regard to future price increases.
(l) "Insurance" means a life insurance policy or a Class A or Class B burial insurance policy.
(m) "Merchandise" means personal property associated with the disposal of or memorializing a deceased human being, including, but not limited to, a casket, burial vault, burial clothes, urn or monument.
(n) "Pre-need contract" means any contract, agreement or any series or combination of contracts or agreements, whether funded by trust deposits or insurance, or any combination thereof, which has for a purpose the furnishing or performance of funeral services, or the furnishing or delivery of merchandise, of any nature in connection with the final disposition of a dead human body, to be furnished or delivered at a time determinable by the death of the person whose body is to be disposed of but shall not mean the furnishing of a cemetery lot, crypt, niche or mausoleum.
(o) "Seller" means the person who sells a pre-need contract.
(p) "Services" means services of any nature in connection with the final disposition of a dead human body.
(o) "Standard contract" means a pre-need contract that applies the trust funds or insurance proceeds to the purchase price of specific funeral services and specific merchandise at the time of death of the contract insured without a guarantee against future price increases.
(r) "Trust" means an express trust created by a trust instrument whereby a trustee has the duty to administer a trust asset for the benefit of a named pre-need contract insured.
(s) "Trustee" means an individual or legal entity whether an original, added or successor trustee and, in the case of a corporate trustee, includes its successor by merger or consolidation.
SECTION 2. Section 75-63-55, Mississippi Code of 1972, is amended as follows:
75-63-55. (1) No person, firm, partnership, association or corporation may directly or indirectly, or through an agent, engage in the sale of pre-need contracts except as authorized under this article. All pre-need contracts sold shall be evidenced in writing on forms registered with the Secretary of State. These forms shall clearly indicate the names and addresses of the buyer, contract insured, contract provider and seller.
(2) The contract shall clearly indicate all merchandise covered by the contract and the total cost of all merchandise covered by the contract. The contract shall list all services covered by the contract and the total cost for all services covered by the contract. The contract shall list all cash advance items covered by the contract and the total cost for all cash advance items covered by the contract.
(3) All pre-need contracts sold shall be funded by trust or insurance, or a combination thereof, as defined in this article or evidenced by a warehouse receipt, as contemplated in Uniform Commercial Code-Documents of Title, Section 75-7-101 et seq.
(4) If the pre-need contract is funded by a policy of insurance, as defined by Section 83-5-5, a copy of the insurance policy shall be furnished to the insured within fifteen (15) days of issue. Such insurance shall be subject to the insurance laws of the state.
The insured shall be furnished the following:
(a) A list of the merchandise and services which are applied or contracted for in the pre-need contract and all relevant information concerning the price of the funeral services, including an indication that the purchase price is either guaranteed at the time of purchase or to be determined at the time of need;
(b) All relevant information concerning what occurs and whether any entitlements or obligations arise if there is a difference between the proceeds of the life insurance policy and the amount actually needed to fund the pre-need contract; and
(c) Any penalties or restrictions, including, but not limited to, geographic restrictions or the inability of the provider to perform, on the delivery of merchandise, services or the pre-need guarantees.
If the pre-need contract is not funded by a policy of insurance, as defined by Section 83-5-5, a copy of the pre-need contract shall be furnished to the contract insured within fifteen (15) days of purchase.
(5) If the pre-need contract is funded by trust, the contract shall indicate the name, address and telephone number of the trustee; the amount to be paid; the frequency of payment; and the length of time payments will be paid into the trust. In addition, the contract should clearly indicate any exclusions or limitations of the pre-need contract including, but not limited to, any additional payments that may be owed if the contract insured dies before the agreed upon payment period is completed.
(6) The pre-need contract shall indicate whether it is a standard contract or an inflation proof contract, and whether it is revocable or irrevocable. The contract shall clearly indicate which merchandise and services are guaranteed as to price.
(7) The pre-need contract shall contain the address and phone number of the Secretary of State with instructions that consumer complaints may be filed with the Secretary of State.
(8) If the pre-need contract is paid in multiple payments, the contract should indicate the amount, frequency and duration of the payments and the amount of any interest charged. The contract shall also include the impact on the contract if payments are not made.
(9) Any use of any oral pre-need contract, or any written contract in a form not registered by the Secretary of State, shall be a violation of this article.
SECTION 3. Section 75-63-57, Mississippi Code of 1972, is amended as follows:
75-63-57. The contract provider or its successor shall maintain true and correct books and records of all pre-need activities as prescribed by rules adopted by the Secretary of State for a period of the lifetime of each contract and for two (2) years after the death of a contract insured. All such books and records shall be open to inspection at all reasonable times by the Secretary of State or his duly authorized representatives.
SECTION 4. Section 75-63-59, Mississippi Code of 1972, is amended as follows:
75-63-59. (1) If the contract is funded by trust, the Secretary of State shall be given a copy of the trust document and shall be informed in writing as to how the assets of the trust are held. In the event of any change in the investments of the assets of the trust, or change in the trustee or trust institution, the Secretary of State shall be informed not less than thirty (30) days after the time such change occurs.
(2) No trustee, other than a financial institution, shall * * * be the contract provider, the seller, or an officer or director of the contract provider if the contract provider is a corporation.
(3) Within twenty (20) days from the end of the month in which the funds were received, the contract seller shall place in a trust account in a financial institution as defined by this article at least one hundred percent (100%) of the funds received. * * * The pre-need contract shall fully disclose to the contract purchaser the amount deposited in trust.
(4) Reasonable annual trust fees including any income taxes owed to the State of Mississippi and/or the United States Treasury may be withheld from the earnings of the trust.
(5) At the time of death, if the contract provider provides the merchandise and services indicated in the contract, the contract provider shall furnish to the trustee a copy of the buyer's death certificate or proof of death and a letter of performance indicating that the contracted merchandise and services were provided by the contract provider to the contract insured. Upon receipt of the letter of performance and death certificate, or proof of death, the trustee shall pay to the contract provider all funds.
(6) If the contract provider does not furnish merchandise and services as provided in the pre-need contract, the trustee shall pay to the estate of the contract insured or the substitute provider not less than the amount deposited in trust, within ten (10) days from notification of the death of the contract insured.
SECTION 5. Section 75-63-65, Mississippi Code of 1972, is amended as follows:
75-63-65. (1) Any establishment or organization which engages in the business of selling pre-need merchandise and/or services shall register with the Secretary of State and shall pay a registration fee. A separate registration is required for each separate corporation or business entity. The establishment or organization shall pay to the Secretary of State for the registration of the main establishment or organization a fee of Two Hundred Fifty Dollars ($250.00). Such registration shall remain in effect for one (1) year, unless renewed by the filing of forms as prescribed by the Secretary of State and upon payment of a renewal fee of One Hundred Dollars ($100.00).
(2) Any person who engages in the business of selling pre-need contracts shall register with the Secretary of State and shall pay a registration fee of Fifty Dollars ($50.00). Such registration shall remain in effect for one (1) year, unless renewed by the filing of forms as prescribed by the Secretary of State and upon payment of a renewal fee of Fifty Dollars ($50.00).
(3) The Secretary of State shall establish regulations to register each establishment or organization selling pre-need merchandise or services. No funeral home shall be registered to sell pre-need merchandise or services that the funeral home cannot lawfully provide * * *. The Secretary of State shall also maintain a record of all individuals who are registered to sell pre-need merchandise or services through the registered establishment.
(4) The Secretary of State shall establish regulations to register each person selling pre-need contracts, including the establishment through which the seller will be selling. No person shall be registered to sell pre-need contracts without indicating the establishment for which he or she is selling.
(5) The Secretary of State shall develop and furnish the forms necessary for the registration of establishments and individuals selling pre-need contracts.
SECTION 6. Section 75-63-67, Mississippi Code of 1972, is amended as follows:
75-63-67. Every registered pre-need establishment shall annually submit a written report to the Secretary of State of its pre-need contract sales and performance of such contracts. This report shall be filed on or before March 31 of each year for the calendar year ending the preceding December 31 or within ninety (90) days of the end of the establishment's fiscal year. The Secretary of State shall adopt regulations concerning the content and filing procedure of this report. The establishment shall pay to the Secretary of State an annual report fee of Fifty Dollars ($50.00).
SECTION 7. Section 75-63-69, Mississippi Code of 1972, is amended as follows:
75-63-69. (1) Whenever it appears to the Secretary of State that any person has engaged, or is about to engage, in any act or practice constituting a violation of any provision of this article or any rule or order hereunder, he may, in his discretion, seek any or all of the following remedies:
(a) Issue a cease and desist order with or without a prior hearing against the person or persons engaged in the prohibited activities directing them to cease and desist from further illegal activity;
(b) (i) Issue an order in the case of any person, partnership or, if a corporation, the officers and directors who sell or offer to sell pre-need contracts, or other person who violated this article, imposing an administrative penalty up to a maximum of Twenty-five Thousand Dollars ($25,000.00) for each offense and each violation shall be considered as a separate offense in a single proceeding or a series of related proceedings, * * * to be paid to the Secretary of State and requiring reimbursement to the Secretary of State for all costs and expenses incurred in the investigation of the violation(s) and in the institution of administrative proceedings, if any, as a result thereof;
(ii) For the purpose of determining the amount or extent of a sanction, if any, to be imposed under paragraph (b)(i) of this subsection, the Secretary of State shall consider, among other factors, the frequency, persistence and willfulness of the conduct constituting a violation of this article or a rule promulgated thereunder, or an order of the Secretary of State, the number of persons adversely affected by the conduct and the resources of the person committing the violation;
(c) Bring an action in chancery court to enjoin the acts or practices to enforce compliance with this article or any rule or order hereunder. Upon a proper showing, a permanent or temporary injunction, restraining order or writ of mandamus shall be granted and a receiver or conservator may be appointed for the defendant or the defendant's assets. In addition, upon a proper showing by the Secretary of State, the court may enter an order of rescission or restitution directed to any person who has engaged in any act constituting a violation of any provision of this article or any rule or order hereunder, or the court may impose a civil penalty up to a maximum of Twenty-five Thousand Dollars ($25,000.00) for each offense and each violation shall be considered as a separate offense in a single proceeding or a series of related proceedings * * *. The court may not require the Secretary of State to post a bond.
(2) The Secretary of State may, with a prior hearing, suspend or revoke any pre-need establishment or salesperson registration for violation of statutes or regulations established under this article.
(3) Any person, partnership or, if a corporation, the officers and directors who sell or offer to sell a pre-need contract with a suspended or revoked registration shall be guilty of a misdemeanor and, upon conviction thereof, shall be punishable by a fine not less than Two Hundred Dollars ($200.00) nor more than Five Hundred Dollars ($500.00) or by imprisonment for a term of not more than one (1) year, or both fine and imprisonment.
(4) Any person, partnership or, if a corporation, the officers and directors who embezzle or fraudulently or knowingly and willfully misapply or convert pre-need funds shall, upon conviction, be punished by imprisonment in the custody of the Mississippi Department of Corrections for a term of not more than ten (10) years, or be fined not less than One Thousand Dollars ($1,000.00) and imprisoned in the county jail not less than one (1) year, or both fine and imprisonment. Each such violation shall constitute a separate offense.
(5) Upon reasonable belief that a person or corporation is acting in violation of the portions of this article requiring fines or imprisonment, the Secretary of State shall immediately report this violation accompanied by all relevant records to the Insurance Integrity Enforcement Bureau within the Office of Attorney General created in Section 7-5-301.
(6) No final order shall be entered under this section without the following:
(a) An appropriate prior notice to the applicant or registrant;
(b) An opportunity for a hearing; and
(c) Written findings of fact and conclusions of law.
SECTION 8. Section 75-63-71, Mississippi Code of 1972, is amended as follows:
75-63-71. The information contained in or filed with any registration, statement, application or report may be made available to the public under such rules as the Secretary of State prescribes. Information in the possession of, filed with or obtained by the Secretary of State in connection with any investigation or examination under this article shall be confidential, privileged and exempt from the requirements of the Mississippi Public Records Act of 1983. No such information may be disclosed by the Secretary of State, or any of his officers or employees, unless necessary or appropriate in connection with a particular investigation or proceeding under this article or for any law enforcement purpose or in the interest of informing the public.
SECTION 9. This act shall take effect and be in force from and after July 1, 2005.