South Carolina General Assembly
115th Session, 2003-2004

Download This Bill in Microsoft Word format

A188, R215, H3617

STATUS INFORMATION

General Bill
Sponsors: Reps. Sandifer, Bailey, Frye, Cato, E.H. Pitts, Cotty, J.H. Neal, J. Brown, Anthony, Ceips, Duncan, Freeman, Mahaffey, McCraw, Ott, Phillips, M.A. Pitts, Stille, White and Whitmire
Document Path: l:\council\bills\swb\5183cm03.doc

Introduced in the House on February 13, 2003
Introduced in the Senate on May 27, 2003
Last Amended on February 25, 2004
Passed by the General Assembly on February 25, 2004
Became law without Governor's signature, March 17, 2004

Summary: Preneed funeral home loss reimbursement fund established; preneed burial contracts

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
   2/13/2003  House   Introduced and read first time HJ-27
   2/13/2003  House   Referred to Committee on Labor, Commerce and Industry 
                        HJ-27
   5/21/2003  House   Committee report: Favorable Labor, Commerce and Industry 
                        HJ-3
   5/22/2003  House   Read second time HJ-18
   5/22/2003  House   Unanimous consent for third reading on next legislative 
                        day HJ-19
   5/22/2003          Scrivener's error corrected
   5/23/2003  House   Read third time and sent to Senate HJ-2
   5/27/2003  Senate  Introduced and read first time SJ-20
   5/27/2003  Senate  Referred to Committee on Judiciary SJ-20
   5/29/2003  Senate  Recalled from Committee on Judiciary SJ-5
   5/29/2003  Senate  Read second time SJ-5
   5/29/2003  Senate  Ordered to third reading with notice of amendments SJ-5
   1/14/2004  Senate  Amended SJ-36
   1/14/2004  Senate  Read third time and returned to House with amendments 
                        SJ-36
   1/15/2004          Scrivener's error corrected
   1/21/2004  House   Debate adjourned on Senate amendments until Wednesday, 
                        January 28, 2004 HJ-17
   1/28/2004  House   Non-concurrence in Senate amendment HJ-20
    2/3/2004  Senate  Senate insists upon amendment and conference committee 
                        appointed Alexander, Pinckney and Cromer SJ-23
    2/4/2004  House   Conference committee appointed Reps. Sandifer, Bales and 
                        Richardson HJ-2
   2/25/2004  House   Conference report received and adopted HJ-16
   2/25/2004  Senate  Conference report received and adopted SJ-21
   2/26/2004  House   Ordered enrolled for ratification HJ-3
    3/2/2004          Scrivener's error corrected
   3/10/2004          Ratified R 215
   3/17/2004          Became law without Governor's signature
   3/29/2004          Copies available
   3/29/2004          Effective date 03/17/04
    4/5/2004          Act No. 188

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

2/13/2003
5/21/2003
5/22/2003
5/29/2003
1/14/2004
1/15/2004
2/25/2004
3/2/2004


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A188, R215, H3617)

AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 32-7-60 SO AS TO CREATE THE PRENEED FUNERAL LOSS REIMBURSEMENT FUND AND TO PROVIDE FOR THE PURPOSE AND USES OF MONIES IN THE FUND; TO AMEND SECTION 32-7-45, RELATING TO THE TRANSFER PROCEDURES FOR TRUST FUNDS HELD PURSUANT TO PRENEED BURIAL CONTRACTS, SO AS TO REVISE THESE PROCEDURES; AND TO AMEND SECTION 32-7-50, RELATING TO LICENSURE REQUIREMENTS TO OFFER AND ENTER INTO PRENEED BURIAL CONTRACTS, SO AS TO PROVIDE A PENALTY FOR ENTERING INTO SUCH CONTRACTS WITHOUT BEING LICENSED, TO PROVIDE THAT A LICENSEE WHO CANCELS HIS LICENSE AND LATER APPLIES FOR A NEW LICENSE, MUST HAVE HIS BOOKS, RECORDS, AND ACCOUNTS INVESTIGATED BY THE FUNERAL SERVICES BOARD TO DETERMINE WHETHER HE HAS VIOLATED CERTAIN PROVISIONS, TO REQUIRE A PERSON WHO SELLS PRENEED FUNERAL CONTRACTS TO PROVIDE THE BOARD WITH A LISTING OF EACH CONTRACT SOLD, TO PROVIDE A CIVIL PENALTY OF TEN DOLLARS TO BE ASSESSED A PERSON WHO SELLS PRENEED FUNERAL CONTRACTS WHO DOES NOT REPORT SERVICE CHARGES OR A CONTRACT LISTING TO THE BOARD IN A TIMELY MANNER AND PROVIDE THAT THE PENALTY MUST BE DEPOSITED IN THE PRENEED FUNERAL LOSS REIMBURSEMENT FUND, TO PROVIDE THAT THE BOARD MUST INVESTIGATE A PERSON'S BOOKS, RECORDS, AND ACCOUNTS IF IT BELIEVES THAT SERVICE CHARGES ARE BEING COLLECTED AND ARE EITHER NOT BEING REMITTED OR NOT TIMELY REMITTED, TO PROVIDE THE MAXIMUM AMOUNT THAT A SERVICE CHARGE FOR EACH CONTRACT MAY NOT EXCEED AND TO PROVIDE FOR ITS DISBURSEMENT, AND TO PROVIDE THAT THE BOARD MUST KEEP A RECORD OF EACH PRENEED FUNERAL CONTRACT FOR WHICH IT RECEIVES A SERVICE CHARGE; TO AMEND SECTION 32-7-70, RELATING TO REQUIRING A PROVIDER OF PRENEED FUNERAL CONTRACTS TO KEEP ACCURATE ACCOUNTS, BOOKS, AND RECORDS OF TRANSACTIONS, AGREEMENTS, AND OTHER INFORMATION, AND MAKE ALL BOOKS AND RECORDS PERTAINING TO TRUST FUND AVAILABLE TO THE STATE BOARD OF FINANCIAL INSTITUTIONS FOR EXAMINATIONS, SO AS TO REQUIRE THE BOARD TO INVESTIGATE A PROVIDER'S BOOKS, RECORDS, AND ACCOUNTS IF THE BOARD BELIEVES OR HAS RECEIVED A COMPLAINT ALLEGING THAT THE PROVIDER HAS VIOLATED CERTAIN PROVISIONS; TO AMEND SECTION 32-7-110, RELATING TO THE ENFORCEMENT OF THE PROVISIONS THAT GOVERN THE ADMINISTRATION OF PRENEED FUNERAL CONTRACTS, SO AS TO PROVIDE FOR THE INVESTIGATION OF ANY FUNERAL HOME, FUNERAL DIRECTOR, OR BUSINESS THAT IS BELIEVED TO BE ACTING AS A PROVIDER OF PRENEED FUNERAL CONTRACTS; TO AMEND SECTION 40-19-110, AS AMENDED, RELATING TO CERTAIN UNPROFESSIONAL CONDUCT THAT RESULTS IN THE NONISSUANCE, NONRENEWAL, SUSPENSION, REVOCATION OF A LICENSE OF A FUNERAL DIRECTOR OR EMBALMER OR THE PLACEMENT OF A FUNERAL DIRECTOR OR EMBALMER ON PROBATION SO AS TO MAKE A TECHNICAL CHANGE; TO AMEND SECTION 40-19-290, AS AMENDED, RELATING TO A FUNERAL ESTABLISHMENT'S DISCLOSURE OF EXPENSES IN CONNECTION WITH AVAILABLE SERVICES, SO AS TO MAKE A TECHNICAL CHANGE, AND TO PROVIDE THAT THE STATE BOARD OF FINANCIAL INSTITUTIONS MUST UNDERTAKE INVESTIGATIONS AND CONDUCT HEARINGS TO DETERMINE WHETHER PAYMENTS RECEIVED BY FUNERAL ESTABLISHMENTS FOR FUNERAL MERCHANDISE THAT IS PURCHASED ARE BEING RECEIVED IN VIOLATION OF THE PROVISIONS THAT REGULATE PRENEED FUNERAL CONTRACTS; AND TO PROVIDE THAT THE POWERS AND DUTIES OF THE STATE BOARD OF FINANCIAL INSTITUTIONS RELATING TO PRENEED CONTRACTS AND INSTALLMENT PLANS WILL BE TRANSFERRED TO THE DEPARTMENT OF CONSUMER AFFAIRS ON JULY 1, 2006.

Be it enacted by the General Assembly of the State of South Carolina:

Preneed Funeral Loss Reimbursement Fund

SECTION    1.    Chapter 7, Title 32 of the 1976 Code is amended by adding:

"Section 32-7-60.    (A)    There is established the Preneed Funeral Loss Reimbursement Fund which must be administered by the board. The purpose of the fund is to reimburse the estates, or in the absence of an estate filing, the purchaser or applicant with payment jointly to the funeral home providing services or merchandise, or both, of beneficiaries of preneed funeral contracts who have suffered financial loss as a result of the misfeasance, fraud, default, failure, or insolvency of a South Carolina funeral home or South Carolina funeral director.

(B)    From the service charge for each preneed contract as required by Section 32-7-50 (C), the board shall deposit into the fund that portion of the charge as established by the board. The board may suspend or resume deposits into the fund at any time and for any period to ensure that a sufficient amount is available to meet likely disbursements and to maintain an adequate reserve. The maximum amount of the service charge to be allocated to the Preneed Funeral Loss Reimbursement Fund as required by Section 32-7-50(C)(2) must not exceed the amount of five dollars per each preneed contract. The maximum amount of the fund is to be five hundred thousand dollars with a five percent adjustment compounded annually.

(C)    All sums received by the board pursuant to this section must be held in a separate account maintained by the Office of State Treasurer to be used solely as provided in this section. All interest or other income earned on the fund must be retained by the fund.

(D)    Reimbursements from the fund must not exceed the total payment made for preneed funeral services or merchandise, or both. No interest or future graduated insurance benefits may be reimbursed. Upon the death of the beneficiary and the applicant's compliance with all applicable rules of the board, reimbursement from the fund may be made to the estate of the beneficiary, the purchaser, or applicant with payment jointly to the funeral home providing services or merchandise, or both, only to the extent to which losses are not bonded or otherwise covered. If the board makes payments from the fund under this section, the board is subrogated in the reimbursed amount and may bring an action against a person, including a preneed licensee. The board may enforce claims it may have for restitution or otherwise and may employ and compensate from the fund consultants, legal counsel, accountants, and other persons it considers appropriate to assure compliance with this statute.

(E)    The board shall investigate all applications made and may reject or allow claims in whole or in part. Payment must be made to the extent that monies become available in the fund. Reimbursements for completed claims must be processed in the order in which they are received subject to availability of monies in the fund. The board has complete discretion to determine the order and manner of payment of approved applications. All payments are a matter of privilege and not a right, and no person has a right in the fund as a third party beneficiary or otherwise.

(F)    The board shall furnish a form of application for reimbursement which shall require the following minimum information:

(1)    the name and address of the applicant;

(2)    the name and address of the funeral service or funeral director, or both, who caused the loss;

(3)    the amount of the alleged loss for which application for reimbursement is made;

(4)    a copy of a preneed funeral contract or written agreement which was the basis of the alleged loss;

(5)    a copy of payment receipts or cancelled checks, or both;

(6)    a copy of the death certificate;

(7)    a general statement of facts relative to the application;

(8)    supporting documents, including copies of court proceedings and other papers indicating the efforts of the applicant to obtain reimbursement from the provider, insurance companies, or others;

(9)    documentation of any receipt of funds in partial payment of the loss;

(10)    name and address of the funeral home that provided services or merchandise, or both.

(G)    This fund and all interest earned may be used only as prescribed in this section and may not be used for any other purposes. The board may expend monies from the fund to:

(1)    make reimbursements on approved applications;

(2)    purchase insurance to cover losses and board liability as considered appropriate by the board and not inconsistent with the purpose of the fund;

(3)    invest portions of the fund as are not currently needed to reimburse losses and maintain adequate reserves, as are permitted to be made by fiduciaries under state law;

(4)    pay the expenses, other than normal operating expenses, of the board for administering the fund, including employment of legal counsel, accountants, consultants, and other persons the board considers necessary to assure compliance with this section.

(H)    No person may make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, poster or over any radio station or television station, or in any other way, any advertisement, announcement, or statement which uses the existence of the fund for the purpose of sales, solicitation, or inducement to purchase any form of preneed contract covered under this chapter.

(I)    The board may establish procedures and promulgate regulations it determines necessary to implement the purposes of the section."

Preneed Funeral Contract providers

SECTION    2.    Section 32-7-45 of the 1976 Code is amended to read:

"Section 32-7-45.    (A) If a provider goes out of business or the provider's license issued by the State Board of Funeral Service is cancelled or the license to sell preneed funeral contracts is cancelled and application for a replacement license has not been filed, the provider shall within thirty days submit to the board a complete listing of names and addresses of all active contracts in its possession. The provider shall also notify all contract purchasers in writing that their contracts are to be transferred to another licensed provider of the purchaser's choice. The former licensee shall then transfer the contracts and notify the board of the providers selected within sixty days of the cancellation of the preneed license. All contracts funded by burial insurance or trust funds together with interest are to be transferred. The selling provider forfeits its right to any monies it otherwise would be entitled to. If the provider fails to provide for the transfer of contracts within sixty days, the purchasers may directly request the financial institution to transfer the account balance to another provider selected by the purchaser with payment jointly to the provider and its financial institution. The purchaser may also request that an insurance company assign another provider as beneficiary for the insurance policy.

(B)    The board has jurisdiction over the provider and the burial insurance policy or trust funds together with interest of all active contracts and has the authority to accomplish the necessary transfer of preneed funeral contracts in all cases in which the purchaser has failed to effectuate the transfer to a licensed provider within six months of the date the provider's license issued by the State Board of Funeral Service is cancelled or the license to sell preneed funeral contracts is cancelled and an application for a replacement license has not been filed."

Preneed Funeral Contract

SECTION    3.    Section 32-7-50 of the 1976 Code is amended to read:

"Section 32-7-50.    (A)    Without first securing a license from the board a person may not accept or hold payments made on a preneed funeral contract, except financial institutions.

(1)    The State Board of Funeral Service must revoke the license of a funeral home or funeral director, or both, if the funeral home or funeral director: (a) accepts funds for a preneed funeral contract or other prepayment of funeral expenses without a license to sell preneed funeral contracts, or (b) is licensed to sell preneed funeral contracts and fails to deposit the funds collected in trust in a federally insured account as required by Section 32-7-20(H).

(2)    Application for a license must be in writing, signed by the applicant and verified on forms furnished by the board. Each application must contain at least the following: the full name and address, both residence and place of business, of the applicant and every member, officer, and director of it if the applicant is a firm, partnership, association, or corporation. A license issued pursuant to the application is valid only at the address stated in the application for the applicant or at a new address approved by the board.

(3)    If a licensee cancels the license and later applies for a new license, the board must investigate the applicant's books, records, and accounts to determine if the applicant violated the provisions of this chapter during the time he did not have a license.

(B)    Upon receipt of the application, a one-time payment of a license fee, and the deposit in an amount to be determined by the board of the security or proof of financial responsibility as the board may determine, the board shall issue a license unless it determines that the applicant has made false statements or representations in the application, or is insolvent, or has conducted his business in a fraudulent manner, or is not duly authorized to transact business in this State, or if, in the judgment of the board, the applicant should be denied a license for some other good and sufficient reason.

(C)    A person selling a preneed funeral contract shall collect from each purchaser a service charge, and all fees collected must be remitted by the person collecting them to the board at least once each month.

(1)    With the fees collected, the person also must provide the board with a listing of each contract sold. If the listing or fees collected are not sent to the board within sixty days of the last day of the month when the contract was sold, the board must assess a civil penalty of ten dollars for each contract not reported to the board. The monies collected as civil penalties must be deposited in the Preneed Funeral Loss Reimbursement Fund. Upon its own initiative or upon complaint or information received, the board must investigate a person's books, records, and accounts if the board has reason to believe that fees are being collected and either not remitted or not timely remitted.

(2)    The service charge for each contract must not exceed a total of thirty dollars, twenty-five dollars for the board to use in administering the provisions of this chapter and five dollars to be allocated to the Preneed Funeral Loss Reimbursement Fund.

(3)    The board must keep a record of each preneed funeral contract for which it receives a service charge."

Preneed Funeral Contract provider

SECTION    4.    Section 32-7-70 of the 1976 Code is amended to read:

"Section 32-7-70.    (A)    The provider must keep accurate accounts, books, and records in this State of all transactions, copies of all agreements, dates, and amounts of payments made and accepted on them, the names and addresses of the contracting parties, the persons for whose benefit funds are accepted, and the names of the depositories of the funds. The provider must make all books and records pertaining to the trust funds available to the board for examination.

(B)    The board may at any reasonable time and must at least once every two years investigate the books, records, and accounts of each provider with respect to its trust funds and for that purpose may require the attendance of and examine under oath all persons whose testimony it may require. The board must investigate a provider's books, records, and accounts if the board has reason to believe or has received a complaint alleging that the provider has violated the provisions of this chapter."

State Board of Financial Institutions

SECTION    5.    Section 32-7-110 of the 1976 Code is amended to read:

"Section 32-7-110.        (A)    The board shall enforce the provisions of this chapter and has the power to make investigations, subpoena witnesses and documents, require audits and reports, and conduct hearings as to violations of any provisions, and to promulgate such regulations as are necessary to carry out the provisions of this chapter.

(B)    Upon its own initiative or upon receipt of a complaint, the board must investigate any funeral home, funeral director, individual, or business the board has reason to believe is acting as a provider without a license. In order to conduct its investigation, the board must review the books, records, and accounts of: (1) any funeral home or funeral director licensed by the State Board of Funeral Service even if the funeral home or funeral director is not licensed to sell preneed funeral contracts, or (2) any individual or business the board has reason to believe is acting as a provider without a license. If the board discovers that a violation of this chapter has occurred by any funeral home, funeral director, individual, or business that is not licensed to sell preneed funeral contracts, the board must report the violation to the State Board of Funeral Service or to the Attorney General, a circuit solicitor, or an appropriate law enforcement agency."

Unprofessional conduct

SECTION    6.    Section 40-19-110(3) of the 1976 Code, as amended by Act 322 of 2002, is further amended to read:

"(3)    soliciting dead human bodies or soliciting the sale of funeral merchandise by a licensee or an agent, assistant, or employee of a licensee or of any establishment licensed or permitted under this chapter, whether the solicitation occurs after death or while death is impending, but not including general advertising;"

Funeral service establishment

SECTION    7.    Section 40-19-290 of the 1976 Code, as last amended by Act 322 of 2002, is further amended to read:

"Section 40-19-290.    (A)    The personnel of a funeral establishment or crematory shall make every reasonable attempt to fulfill the desires of the deceased and persons making arrangements both as to services and merchandise, and a full disclosure of all its available services and merchandise must be made before selection of the casket. Before the arrangements are completed, the licensee of the funeral service firm shall disclose fully what is included in the funeral and identify other related expenses such as cemeteries and florists.

(B)    Statements of legal requirements or statements relative to the conditions under which embalming is required or advisable must be complete and factual. Representations as to legal requirements for embalming, the use of a casket or other receptacle, and the necessity, if any, of an interment receptacle in connection with a funeral must be truthful, and all legal or cemetery interment requirements must be disclosed.

(C)    A funeral service establishment, crematory, or retail sales outlet shall have a card or brochure with each piece of funeral merchandise stating the price of the merchandise.

(D)    The funeral establishment or crematory shall provide to the persons making the arrangements, at the time the arrangements are completed and before the time of rendering the service, a written statement signed by a representative of the funeral home and by the person authorizing the services showing to the extent then known:

(1)    the price of the service that the persons have selected and what is included in the service;

(2)    the price of each of the supplemental items of service and merchandise requested;

(3)    the amount involved for each of the items for which the funeral service firm shall advance monies as an accommodation to the family; and

(4)    the method of payment.

(E)    All payments received by any establishment licensed under this chapter for funeral merchandise being purchased must be placed in a trust account in a federally insured institution until the merchandise is delivered for use as provided in the contract in accordance with the sales agreement. Upon its own initiative or upon receipt of a complaint, the State Board of Financial Institutions must undertake investigations; review the books, records, and accounts of any establishment licensed under this chapter; subpoena witnesses; require audits and reports; and conduct hearings to determine if payments are being received in violation of the provisions of Chapter 7 of Title 32."

SECTION    8.    On July 1, 2006, the powers and duties of the State Board of Financial Institutions relating to preneed contracts and installment plans pursuant to Chapter 7 of Title 32 and Section 40-19-290 are hereby transferred to the Department of Consumer Affairs unless the General Assembly prior to that date provides otherwise.

SECTION    9.    This act takes effect upon approval by the Governor.

Ratified the 10th day of March, 2004.

Became law without the signature of the Governor -- 3/17/04.

__________

This web page was last updated on Monday, December 7, 2009 at 10:27 A.M.