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Indicates Matter Stricken
Indicates New Matter
Indicates Matter Stricken
Indicates New Matter
RECALLED
May 29, 2003
H. 3617
Introduced by 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
S. Printed 5/29/03--S.
Read the first time May 27, 2003.
EXPLANATION OF IMPACT:
Although the bill allows the fund to support certain administrative expenditures, the Board of Financial Institutions indicates there will be no fiscal impact on the General Fund of the State or on federal and/or other funds.
Approved By:
Don Addy
Office of State Budget
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.
Be it enacted by the General Assembly of the State of South Carolina:
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 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."
SECTION 2. Section 32-7-45 of the 1976 Code is amended to read:
"Section 32-7-45. (A) If the a provider goes out of business or the provider's license issued by the Funeral Services Board is cancelled or the license to sell preneed funeral contracts is cancelled and application for a replacement license has not been filed, it the provider shall negotiate with the purchaser to transfer the trust fund to a provider of the purchaser's choice 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 Funeral Services Board is cancelled or the license to sell preneed funeral contracts is cancelled and an application for a replacement license has not been filed."
SECTION 3. Section 32-7-50(A) of the 1976 Code is amended to read:
"(A) No person may, Without first securing a license from the board a license, a person may not accept or hold payments made on a preneed funeral contract, except financial institutions. The Funeral Services Board shall revoke the license of a funeral home or funeral director, or both, accepting funds for a preneed funeral contract or other prepayment of funeral expenses without a license to sell preneed funeral contracts or for failure of a licensee to deposit these funds in trust in a federally insured account as required by Section 32-7-20(H). Application for a license must be in writing, signed by the applicant and duly 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. Any A license issued pursuant to the application must be is valid only at the address stated in the application for the applicant or at a new address approved by the board."
SECTION 4. This act takes effect upon approval by the Governor.
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