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The Era of Federal Scrutiny has Begun
And the ICFA is Ready
Irwin Shipper, CCE, chairman of the ICFA Government and Legal Affairs Committee, talks about how regulation, legislation and litigation are affecting the funeral and cemetery profession and explains how the association and its new Political Action Committee are working proactively on its behalf.
Irwin, when we spoke last year at this time, our industry had been shaken by several events—in Georgia, Florida, California and Hawaii—that made national news. A year later, what is the aftermath?
I think we are still living with the aftermath, so let’s say it is a work in progress. ICFA members will remember that the first federal investigation of the funeral services profession by the U.S. General Accounting Office (GAO), the investigative arm of Congress, occurred back in 1999. That report found few consumer complaints but was followed by a fairly high-profile
public hearing by the Senate Special Committee on Aging in April 2000.
No immediate action followed the hearings, so I believe many members of our profession assumed that both the GAO investigation and the Senate hearings were unique, one-of-a-kind events unlikely to have any long-term impact and dismissed them.
Was that being overly optimistic?
I would say so, because once an idea is introduced in Washington, it never really disappears. Last year’s events, especially the cremation scandal in Georgia, reignited the interest of the media and some politicians, resulting in a new GAO investigation and another Senate committee hearing last year. And this time, proposed federal legislation was introduced for the first time in history. That’s why I said this is a work in progress.
Anyone who hopes that federal scrutiny of our profession will just go away is being very naive. We are living in a new era of continued federal scrutiny that may result in Congress enacting laws to regulate our businesses, on top of existing state laws.
What is the status of the second GAO investigation?
In response to the media stories early last year, the ICFA announced that it supported an objective investigation and that the GAO was probably the best agency to do the job. At least two members of Congress, Sen. Christopher Dodd (D-CT) and Rep. Mark Foley (R-FL), requested that the GAO investigate how well existing state laws protect consumers in funeral home, cemetery and crematory transactions and how well these laws are being enforced.
GAO investigators met with ICFA staff last summer at the outset of the project, and we provided them with a great deal of information concerning the extensive state regulation of our profession. The GAO people also met with state trade association leaders in New York, Georgia, Florida, Texas and California, and we were told that these meetings went well, at least in the view of the state association representatives. We know the GAO also conducted interviews with state regulators and consumer groups.
ICFA staff spoke again with GAO investigators only a few weeks ago and learned that the report has been completed and is undergoing a standard internal agency review. It was scheduled to be sent to the members of Congress who requested it, primarily Sen. Dodd and Rep. Foley, by the end of August. The report should become public within 30 days after that.
Do you have any idea what sort of findings and recommendations the GAO may make?
Not specifically, of course, but based on my own knowledge of state laws and their enforcement, I have to assume the GAO report will not contain a “smoking gun.” I believe the report will find that some states could do a better job, but on the whole consumers are adequately protected under the existing framework.
The GAO always makes recommendations, so I am certain there will be several, but the big question is whether the agency will recommend that the federal government become involved in what has historically been the province of state law.
Generally speaking, are there any advantages in having funeral homes, cemeteries, crematories and related businesses regulated by Congress and the federal agencies?
The concept of having a uniform set of laws that do not vary much from state to state has certain advantages, but as a practical matter there is no indication that the states are going to give up their regulation of the funeral services profession or that a federal law would be more effective. Instead, I see a double layer of regulation, with our members having to comply with the requirements of both state and federal laws covering the same issues. We’re already seeing some of that now.
I believe the GAO will find that most states responded promptly in reviewing their existing laws and the level of enforcement. Georgia, for example, quickly enacted a new crematory law that requires state inspection of all crematories. However, the ICFA met with Sen. Dodd's staff and we have learned he is drafting a bill he hopes to introduce into Congress very soon.
What will the Dodd bill regulate?
Based on statements Dodd has made, his bill, among other things would regulate certain as yet undefined areas of preneed plans and provide a grant program to states that inspect crematories, funeral homes and cemeteries.
For example, in Florida, where I live, state law provides for a 30-day “cooling off” period for preneed sales during which purchasers can cancel their contract and receive a full refund. But funeral professionals in Florida also must comply with the FTC three-day “cooling off” rule that allows purchasers to cancel and receive a full refund.
Common sense would suggest that as long as Florida has a 30-day cooling off requirement, let’s forget about the federal three-day rule, but it doesn’t work that way. Funeral professionals must deal with the paperwork for both and risk fines for noncompliance with either the state or federal requirements. So that’s why I say that the prospect of a federal law specifically regulating our businesses will only bring confusion and added costs without any real benefit to the public.
Let’s assume the GAO report is made public by September. What is likely to happen next?
Regardless of what the GAO report actually contains, it will probably be a catalyst for new hearings and Sen. Dodd’s reintroduction of his proposed legislation. The ICFA has continued its discussions with Dodd’s staff and is working with some of the senator’s constituents among our membership. I’m sure most people recall that Dodd introduced a 33-page bill at the very end of the last Congress in November; Foley introduced a similar bill. The bill expired when the 107th Congress adjourned a few days later. We understand the action was symbolic and meant to draw feedback on the bill’s provisions. That said, we were alarmed at the approach it took.
Dodd had said that his bill was meant to address the issues in Florida, Georgia and elsewhere, but in fact his legislation did not identify one consumer problem or provide solutions for those complaints.
Please give us an overview of the Dodd bill.
First, just so I am not misunderstood, let me say that Sen. Dodd is one of the most respected members of the U.S. Senate. However, his bill is an old-fashioned “big government, big spending” type of proposal. We have reason to believe that a lot of the ideas in the bill were suggested by at least one industry critic and that the member of Dodd’s staff who drafted the bill may have assumed that this person was being objective. Obviously, that’s not the case.
As I said, the bill identifies no problems but would establish a new federal program involving hiring government employees to develop some sort of operating standards for funeral home, cemetery and crematory operations.
The new office would be called the Coordinator of Funeral, Burial, and Disposition Services and would be part of the Department of Health and Human Services. This approach seems to me to create a new bureaucracy and then asks the civil servants in this office to go out and justify their own existence. How does that protect consumers?
State governments would then be encouraged to apply for federal grants to enforce these operating standards, including the hiring of inspectors, but the states could not use any of the federal funds to enforce their own laws. Any state that wants to participate in this program must also provide half of the funds to enforce the federal operating standards.
This sounds to me as though states are being asked to divert the limited resources available to enforce their own consumer protection laws in order to enforce these federal standards instead. That just doesn’t make sense to me.
Yet this is not the most controversial part of the Dodd bill?
That’s correct. The second part of the bill would codify the Federal Trade Commission’s Funeral Rule. By that, I mean the FTC’s trade rule would become a federal statute that could only be amended by Congress. Furthermore, the Dodd bill proposes expanding the Funeral Rule to anyone selling funeral goods or funeral services, and that would include grave openings and closings and the sale of monuments and markers.
Would Congress need evidence of widespread complaints to enact a law that includes an expanded Funeral Rule?
No, and that’s our greatest concern. FTC procedures require a finding that consumers are being harmed to expand the Funeral Rule. Congress can enact or amend a law without any real evidence that consumers will benefit.
Needless to say, we find that prospect alarming. Given the emotional nature of the typical consumer complaint, it seems to me that turning the Funeral Rule into a federal statute would deprive our industry of the procedural safeguards we have now with the FTC and would turn the rule itself into a political football. Any one of the 535 members of Congress could introduce a bill to amend such a law, prodded by one unfortunate event in his or her state.
But it’s not really that easy, is it? Introducing a bill—or an amendment to a bill—is one thing, but getting it passed is another. Isn’t mustering the support to enact or amend a bill a cumbersome process?
Given normal circumstances, it is very difficult to obtain a majority vote in both houses of Congress to pass a bill for the president to sign. But given the emotional circumstances of funeral-related problems—and last year’s events in Florida and Georgia proved it—Congress has shown that it can act quickly when it wants to.
This is why I believe that removing the Funeral Rule from FTC control and subjecting it to the political winds of change in Congress will not do anything to protect consumers but will increase the number of regulations with which industry members must comply. For example, the Dodd bill also prohibits door-to-door canvassing and telemarketing, and it creates a private right of action whereby a dissatisfied consumer could sue a cemetery or funeral home
to recover $5,000 per violation or actual damages, whichever is greater.
What is the current status of the Dodd bill?
At the time of this interview (early July), technically there is no Dodd bill, since the legislation introduced last year expired when the 107th Congress adjourned. We understood that Dodd and Foley had planned to reintroduce bills early in the108th Congress that began in January, but that did not happen.
I’d like to think that a number of the bill’s provisions are being reconsidered, especially after discussions with the ICFA and other industry representatives, but it may be that the bill has been placed on a back burner due to the Iraqi war and related events.
We should assume that a bill will be introduced in the near future. As I already mentioned, the publication of the GAO report may provide the catalyst.
Since you mentioned that the ICFA favors leaving control of the Funeral Rule with the FTC, what is the status of that agency’s Funeral Rule review?
I think the fact that the Funeral Rule review proceedings have languished for over three years now suggests that the commission wants to use its resources on issues with a greater impact on consumers. The increasing incidence of Internet fraud, identity theft and telemarketing scams makes the issues addressed by the Funeral Rule seem petty, if not irrelevant.
During the last few years, the FTC has set up a consumer complaint hotline so the public can call a toll-free number or file complaints online. I understand there are thousands of consumer complaints filed every day, and the FTC staff closely monitors them to determine what consumer protection areas require the most attention.
Frankly, funeral home and cemetery-related complaints do not rank very high. The ICFA periodically checks on these complaints through Freedom of Information Act requests we file with the FTC.
I think the Funeral Rule provides one good safeguard by requiring permission to embalm. And while I also firmly believe in the principle of price disclosure, I think the rule is really an anachronism from the 1970s. Today, consumers may complain that funeral and burial prices are too high—in my half-century of experience working in cemeteries, they always have—but it is rare to hear consumers complain that they cannot obtain price information, and that’s the main purpose of the Funeral Rule. We have reason to believe that within the halls of the FTC this fact is generally recognized, but the problem is what to do about the rule.
Will the Funeral Rule ever be repealed or expanded?
As long as there is a perception that the Funeral Rule “does something,” I think the FTC will hesitate to repeal it. The larger question is whether the FTC wants to allocate more funding and staffing to expand the Funeral Rule in the absence of widespread problems and when other consumer protection issues clearly take priority.
I think the national trade associations such as the ICFA and NFDA can be helpful by advocating their own Funeral Rule-like requirements in their codes of ethics and model state law guidelines.
For example, the ICFA Code of Ethics requires as a condition of membership that consumers be provided with useful and accurate price information. We also have a model state law guideline requiring all sellers to provide consumers with written price information prior to a purchasing decision being made. I suspect the more these practices become uniform requirements in trade associations and state laws, the more obsolete the Funeral Rule will become, leading perhaps to its eventual repeal.
Although the ICFA opposes expansion of the Funeral Rule as well as many of the provisions in the Dodd bill, the association recently came out in support of a federal bill. Can you tell us about that?
You’re referring to the Elder Justice Act, S. 333, and its House companion bill, H.R. 2490, which seek to establish programs to combat elder abuse, neglect and exploitation. One of the proposals would train funeral directors to detect evidence of abuse or neglect in the human remains they prepare for final disposition. Some states already have such programs.
The ICFA decided to support this legislation, and to make a $2,500 donation from the ICFA Government and Legal Fund, because it addresses one of a series of issues confronting the growing senior citizen population. It would be a mistake to view making funeral and burial arrangements as isolated activities apart from the broader spectrum of end-of-life issues, and we know we are going to hear more about these various concerns in the future. So it just seems sensible to take a stand on these issues today and to participate in the process.
What’s new in the area of litigation affecting ICFA members?
With the federal courts, it seems to be either feast or famine. We are currently on hold with at least three court decisions that could have a significant impact on our members in at least some states. ICFA members will recall that we filed friend-of-the-court briefs in two courts—a federal district court in New York and the Florida Supreme Court—a few years ago. Believe it or not, the courts have yet to rule in either case.
The Florida case involved whether a municipal cemetery could make rules to regulate the size and type of grave markers permitted without violating the lot owners’ constitutional freedom to religious expression. The ICFA is concerned that a decision adverse to the cemetery could potentially invalidate the legal authority of cemeteries to develop and enforce reasonable rules and regulations.
The New York case involved a 1998 state law that prohibited cemeteries from selling upright markers, and prohibited combined cemetery-mortuary operations, among other things. The ICFA also filed a brief with the Pennsylvania Supreme Court in support of a challenge to the state law that requires a funeral director’s license to sell cremation services.
As I mentioned, all these decisions are pending and will be reported to ICFA
members as soon as they are announced.
In a related development, independent casket retailers have challenged state laws in Tennessee, Mississippi and Oklahoma that prohibit anyone other than licensed funeral directors from selling caskets. While the ICFA has not directly participated in these lawsuits, we have been in contact with the parties and monitored developments.
Members may recall that the federal courts in Tennessee and Mississippi struck down the state laws as being unconstitutional, but a federal district court in Oklahoma upheld a similar law in that state. We understand that the lower court’s decision in Oklahoma is now being appealed to the 10th Circuit federal court.
I believe that the continued litigation in these areas will rapidly change the traditional boundaries of who may sell what in funeral service, resulting in challenges for some in our profession, but also in major opportunities. It is the ICFA’s objective to see that our members know how to regard the changing marketplace as an opportunity for growth.
Speaking of the changing marketplace, the ICFA recently participated in an FTC public hearing concerning online casket sales. Can you tell us about that?
Last October, the FTC held three days of public hearings on the developing area of e-commerce, or selling via the Internet, and the extent to which state laws and industry practices may exert an anticompetitive effect on these new activities. The ICFA was invited to discuss online casket sales together with the NFDA, independent casket sellers and others. While this hearing was a first-time event, clearly it won’t be the last.
The ICFA was represented by board member Mark Krause, a funeral director who also operates a casket store in Wisconsin. We questioned whether the laws in about a dozen states restricting
who may sell caskets could be applied to out-of-state companies who sell caskets in those restrictive states via the Internet. The ICFA also expressed its concern about how online retailers who are not subject to trusting requirements can assure their performance to consumers in the case of preneed casket sales.
As far as I know, no conclusions were reached and this subject will be an ongoing area of inquiry for the FTC due to the anticipated growth of online retailing.
Are state and federal laws having to catch up with online selling?
There’s no question that a lot of consumer protection legislation did not anticipate
e-commerce, and both state and the federal governments are scrambling to catch up.
I hope all ICFA members at least have Web sites and e-mail addresses for their businesses. These need not be expensive, and ICFA staff can make suggestions on how to get started, so I hope anybody who has questions will call ICFA headquarters for assistance.
Another new development is the ICFA Political Action Committee (PAC). Tell us about that.
For many years, the ICFA leadership had considered the establishment of a PAC. For a variety of reasons, it was felt that a PAC would receive limited support from the membership and might even be perceived as competing with state association PACs. Of course, that was the last thing in the world we wanted to do. So the project remained just an interesting idea until last year, when for the first time ever, a federal bill was introduced to specifically regulate our businesses.
In this new climate, some members questioned how we could effectively represent their interests without a PAC, so the project became a no-brainer and we established the ICFA PAC in March.
I am pleased to say that PAC administrative expenses are paid for entirely by the Government and Legal Fund, so every dime received by the PAC goes toward our lobbying efforts on Capitol Hill.
I should mention that the main difference between supporting the ICFA PAC and contributing to the Government and Legal Fund is that the fund can accept corporate contributions, but PAC donations must come from an individual’s personal funds and cannot be reimbursed by the company.
Have you established any fund-raising goals for the ICFA PAC?
Well, let me give credit where it is due. The PAC Committee chairman is my fellow Past President Arlie Davenport Jr., and I understand that Arlie and his committee have identified a select group of ICFA members from whom they will request contributions.
Under the federal law regulating PAC solicitations, Arlie’s committee must obtain an individual’s written permission before that person can be asked to make a contribution. The ICFA has hired an excellent PAC management firm to keep us out of trouble, and I understand that so far progress has been good and the PAC is already in a position to start making disbursements to various members of Congress. This will add a new level to our government relations work, and I am glad we finally launched the ICFA PAC.
Let me ask you to comment on the relationship between the ICFA and AARP.
I believe that during the past year, our associations have made substantial progress in identifying issues of common concern. Members who attended the ICFA convention in March will remember that AARP’s federal lobbyist was on our program and spoke about the new integration between the AARP’s policy and publications staffs.
I think we all remember some of the National Enquirer-type articles that AARP has published about our industry. Well, those pieces were products of the AARP publications staff and, we understand, were published without consultation with the policy staff. Had the policy staff been consulted, we believe these articles would have been toned down.
We are now informed that AARP’s new president has mandated that all staff must coordinate their work to prevent this very type of Jekyll/Hyde work product. I suppose time will tell, but in the meantime AARP has added an ICFA link to the funeral section of its Web site to provide consumers with instant access to the ICFA Web page and its considerable amount of consumer information.
I doubt that AARP will ever favor the prepayment of prearrangements, but I believe that we are slowly persuading the staff, at least at the national level, that a blanket condemnation of prefunding is unfair and counterproductive. We keep working away at these issues and we refuse to become discouraged. In the end, I think that makes the difference.
There’s a lot going on these days that affects ICFA members. How can we stay on top of everything?
In the last couple of years, the ICFA has made it easy and free for members to stay updated on events affecting them. First, I’d recommend that every ICFA member start off each day by checking the News Page on the ICFA Web site, www.icfa.org. Daily news is divided into industry news, national and international news and opinions and editorials. It really is like reading dozens of newspapers a day in a fraction of the time.
Also, every other week on Tuesday afternoon, the ICFA WIRELESS electronic newsletter is sent to all members who have given staff their e-mail addresses. This is another free service to all ICFA members in good standing. It provides the latest industry news, updates on the ICFA’s
government and public relations work and “news you can use.” There really is no reason for ICFA members to be unaware of the latest news and developments that can affect their businesses.
In addition to helping underwrite ICFA WIRELESS, what does the Government and Legal Fund do?
Basically, ICFA’s Government and Legal Fund was established to make funds immediately available to address issues that affect our members. For example, the fund paid for those friend-of-the-court briefs I mentioned earlier. The fund helps defray the cost of monitoring and responding to activities in Congress, federal agencies and the courts.
The fund also supports many other activities. For example, we provide all ICFA members with free telephone legal advice from a labor law attorney; we retain expert legal and tax professionals as needed; and we publish the Guardians newsletter that is circulated to all 535 members of Congress. And, as I mentioned earlier, the fund is now also covering the administrative costs of the ICFA PAC, including the management firm we have retained.
ICFA members have generously supported the Government and Legal Fund with their voluntary contributions, and I have confidence that our members’ support will continue to grow because the ICFA delivers results through the fund.
We traditionally end this interview by asking you to look ahead to the next 12 months. What do you see this time?
We have just come through a tumultuous time unlike any our profession has experienced before. Last year at this time, we didn’t know if there were any more scandals coming down the road. Today, I think we all have a lot more confidence in the state of our profession.
We thought the GAO report would be issued last fall, but now we are expecting it later this summer. We are prepared for the reaction to it, whatever the GAO may recommend.
In the past year, we have organized a number of alliances among trade associations and independent businesses to coordinate our efforts when federal legislation moves forward. So I think we are much better positioned today than we were a year ago to represent our members effectively.
We also realize than some associations have their own agenda and don’t care to work together with the ICFA, despite any lip service they may give to the contrary. These groups are easy to identify: They advocate expansion of the Funeral Rule to “protect” consumers, want the rule codified into federal law and even plan to write their own federal laws.
The ICFA leadership does not believe these organizations represent a significant percentage of the funeral service profession or will be able to translate their plans into votes when the time comes. I know of no licensed profession—the legal profession, medical profession or any other—that is regulated by the federal government, yet the largest funeral directors association is seeking just such regulation for its own members. That’s incomprehensible to me, but as I said earlier, we never give up.
Unlike a year ago, today we know whom we can count on, and I must say that we’ve picked up some unusual alliances as a result. So I am very optimistic that as long as ICFA members participate in the work of their association and answer our calls for assistance, we can meet every challenge ahead. I started out by saying that the age of federal scrutiny has begun. While this presents us with challenges, it also brings opportunities for all of us.
Copyright ICFA 2003
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