SB-0512, As Passed Senate, February 18, 2004
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 512
A bill to amend 1986 PA 255, entitled
"Prepaid funeral contract funding act,"
by amending the title and sections 1, 3, 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, 15, 16, 18, 19, 20, 21, 22, 23, and 24 (MCL 328.211,
328.213, 328.214, 328.215, 328.216, 328.217, 328.218, 328.219,
328.220, 328.221, 328.222, 328.223, 328.225, 328.226, 328.228,
328.229, 328.230, 328.231, 328.232, 328.233, and 328.234),
section 19 as amended by 2002 PA 325.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 TITLE
2 An
act to regulate the sale and providing of certain
3 funeral goods or
funeral and cemetery merchandise and services
4 and other related interests; to regulate the use of funds
5 received by sellers and
providers of funeral goods or certain
6 merchandise, funeral and cemetery services, land or interests in
1 land, and related other interests; to prescribe certain powers
2 and duties of the certain
departments of licensing and
3 regulation, mental
health, and social services and
certain other
4 state and local officers; to provide for the promulgation of
5 rules and establishment
of fees; and to provide certain for
6 penalties and remedies.
7 Sec. 1. This act shall be known and may be cited as the
8 "prepaid funeral contract
funding and cemetery sales act".
9 Sec. 3. (1) As
used in this act:
10 (a) "Burial right" means a right of earth interment.
11 (b) "Casket" means any box or container consisting of 1 or
12 more parts in which a
dead human body is placed prior to before
13 interment, entombment, or
cremation which that may or may not
14 be permanently interred, entombed, or cremated with the dead
15 human body. A Casket
includes a permanent interment or
16 entombment receptacle which
is designed or intended for use
17 without a vault. shall
also be considered a casket.
18 (c) (2) "Catafalque"
means an ornamental or decorative
19 object or structure which
is placed beneath, over, or around a
20 casket, vault, or a dead
human body prior to before final
21 disposition of the dead human body.
22 (d) "Cemetery" means 1, or a combination of more than 1, of
23 the following:
24 (i) A burial ground for earth interments.
25 (ii) A mausoleum for crypt entombments.
26 (iii) A crematory for the incineration of human remains.
27 (iv) A columbarium for the inurnment of cremated remains.
Senate Bill No. 512 (H-3) as amended February 12, 2004
1 (e) (3) "Cemetery
burial vault or other outside container"
2 means a box or container which
is used solely at the place of
3 interment to permanently surround or enclose a casket and to
4 support the earth above the casket after burial. Cemetery burial
5 vault or other outside
container shall does not include a
6 catafalque, a combination
unit, or any product which is
7 designed or intended to be used with a catafalque or combination
8 unit. If a cemetery
burial vault or other outside container is
9 intended for use as a
permanent burial receptacle for the remains
10 of an adult human
body, its inside dimensions shall be at least
11 28 inches wide by 82
inches long by 24 inches high.
12 (f) "[Cemetery] merchandise" means merchandise described in
13 section 4(1)(k)(i).
14 (g) "Cemetery services" means cremations, grave openings and
15 closings, and installation of grave memorials.
16 (h) "Columbarium" means a building or other aboveground
17 structure that is affixed to land and is a permanent repository
18 for cremated human remains.
19 (i) (4) "Combination
unit" means any product consisting of
20 a unit or a series of
units which are designed or intended to
21 be used together as both a casket and as a permanent burial
22 receptacle.
23 (j) (5) "Consideration"
or "contract price" means money and
24 other property to be paid as total compensation to a contract
25 seller or provider for
the funeral or cemetery services and
26 funeral goods or merchandise, or both, to be performed or
27 furnished under a prepaid
funeral contract, but does not
1 include finance
charges, late payment penalties,
payments
2 required to be made to a governmental agency at the time the
3 contract is entered into, and income earned on the funds.
4 Further,
consideration or contract price shall not include a
5 commission as
authorized by section 12(1). Money
paid for the
6 services to be performed
under a prepaid funeral contract may
7 be paid in a lump sum or in installments.
8 (6)
"Contract" means a written, prepaid funeral contract and
9 all documents
pertinent to the terms of the contract under which,
10 for consideration paid
to a contract seller or a provider by or
11 on behalf of a
contract buyer prior to the death of the contract
12 beneficiary, a person
promises to furnish, make available, or
13 provide funeral
services or funeral goods after the death of a
14 contract beneficiary.
15 (k) (7) "Contract
beneficiary" means an individual
16 specified or implied in a
prepaid funeral contract for whom the
17 funeral or cemetery
services or funeral goods merchandise shall
18 be performed or furnished after death.
19 (l) (8) "Contract
buyer" means an individual, including a
20 contract beneficiary, who
purchases funeral goods merchandise
21 or funeral or cemetery
services pursuant to a prepaid funeral
22 contract.
23 (m) (9) "Contract
seller" means a person who sells, makes
24 available, or provides
prepaid funeral contracts.
25 (n) "Crypt" means a chamber in a mausoleum of sufficient size
26 to entomb the uncremated remains of a deceased person.
27 (o) (10) "Department"
means the department of licensing
1 and regulation labor and economic growth.
2 Sec. 4. (1) As used in this act:
3 (a) "Depository"
means a state or national bank which is a
4 member of the federal
deposit insurance corporation, a state or
5 federal savings and
loan association which is a member of the
6 federal savings and
loan insurance corporation, or a state or
7 federally chartered
credit union which is insured by the national
8 credit union
administration, or a trust company authorized to do
9 business in this state
nationally chartered bank or
state or
10 federally chartered savings and loan association, savings bank,
11 or credit union whose deposits are insured by an agency of the
12 United States government under the laws of this state or the
13 United States. Depository includes the trust department, if any,
14 of an entity referred to in this subsection.
15 (b) "Detroit consumer price index" means the index for all
16 urban wage earners for the Detroit statistical area from the
17 United States department of labor, bureau of labor statistics.
18 (c) (2) "Escrow
agent" means a person who holds, invests,
19 and disburses principal and income from the funds received under
20 a prepaid funeral contract.
21 (d) (3) "Funds"
means all money or other consideration
22 actually received from a contract buyer by a contract seller or
23 provider or an assignee from the contract buyer in connection
24 with any aspect of the
sale of a prepaid funeral contract,
25 including finance charges, but does not include late payment
26 penalties, payments required to be made to a governmental agency
27 at the time the contract is entered into, or a commission
1 authorized by section 12(1).
2 (4) "Funeral
goods" means items of merchandise sold or
3 offered for sale or
lease to consumers which will be used in
4 connection with a
funeral or an alternative to a funeral or final
5 disposition of human
remains including, but not limited to,
6 caskets, combination
units, and catafalques. Funeral goods shall
7 not include land or
interests in land, crypts, lawn crypts,
8 mausoleum crypts, or
niches that are sold by a cemetery which
9 complies with the
endowment care fund requirements of the
10 cemetery regulation
act, Act No. 251 of the Public Acts of 1968,
11 being sections 456.521
to 456.543 of the Michigan Compiled Laws.
12 In addition, funeral
goods shall not include cemetery burial
13 vaults or other
outside containers, markers, monuments, urns, and
14 merchandise items used
for the purpose of memorializing a
15 decedent and placed on
or in proximity to a place of interment or
16 entombment of a
casket, catafalque, or vault or to a place of
17 inurnment which are
sold by a cemetery which deposits at least
18 130% of the cost of
these items in a merchandise trust account
19 established and
operated in accordance with the cemetery
20 regulation act, Act
No. 251 of the Public Acts of 1968, being
21 sections 456.521 to
456.543 of the Michigan Compiled Laws.
22 (e) (5) "Funeral
services" means services customarily
23 performed by a mortuary science licensee who is licensed pursuant
24 to sections 1801 to
1812 article 18 of the occupational code,
25 Act No. 299 of the
Public Acts of 1980, being sections 339.1801
26 to 339.1812 of the
Michigan Compiled Laws 1980 PA
299,
27 MCL 339.1801 to 339.1812.
Further, funeral Funeral services
1 includes include, but is are not
limited to, care of dead
2 human remains, embalming, preparation of dead human remains for
3 final disposition, professional services relating to a funeral or
4 an alternative to a funeral or final disposition of dead human
5 remains, transportation of dead human remains, limousine
6 services, use of facilities or equipment for viewing dead human
7 remains, visitation, memorial services, or services which are
8 used in connection with a funeral or alternative to a funeral,
9 coordinating or conducting funeral rites or ceremonies,
10 cremations, and other services provided in connection with a
11 funeral, alternative to a funeral, or final disposition of dead
12 human remains.
13 (f) "Grave memorial" means a stone or other structure or item
14 used for the purpose of memorializing a decedent and placed on or
15 in proximity to a place of burial, interment, or entombment of a
16 casket, catafalque, or vault or on or in proximity to a place of
17 inurnment.
18 (g) (6) "Guaranteed
price contract" means a prepaid
19 funeral contract under which funds received are held pursuant
20 to an escrow agreement. The
A guaranteed price contract has a
21 guaranteed fixed price
for which specified funeral goods
22 merchandise or funeral or cemetery services are required to be
23 sold to or made available for a contract buyer or for a contract
24 beneficiary, regardless
of the cost or value of the funeral
25 goods merchandise or funeral or cemetery
services at the time of
26 death of the contract beneficiary. Under the guaranteed price
27 contract, additional
consideration shall is not be charged
1 for the originally
contracted for funeral goods and merchandise
2 or funeral or cemetery services at the time of delivery of the
3 funeral goods and merchandise or funeral and cemetery
services.
4 contracted for.
5 (h) (7) "Income"
means the money earned by the investment
6 of the principal, including, but not limited to, interest,
7 dividends, and gains or losses on the sale of, deposit of, or
8 exchange of, property using invested principal amounts.
9 (i) "Interment" means the disposition of human remains by
10 earth interment, entombment, or inurnment.
11 (j) "Mausoleum" means a building or other aboveground
12 structure that is affixed to land and is a permanent repository
13 for human remains.
14 (k) Subject to subsection (2), "merchandise" means both of
15 the following:
16 (i) Cemetery burial vaults or other outside containers, grave
17 memorials, and urns.
18 (ii) Items of merchandise sold or offered for sale or lease
19 to consumers that will be used in connection with a funeral or an
20 alternative to a funeral or the final disposition of human
21 remains, including, but not limited to, caskets, combination
22 units, and catafalques.
23 (2) Merchandise does not include land, interests in land, or
24 interests in mausoleums or columbariums that are sold by a
25 cemetery that complies with the endowment care trust fund
26 requirements of the cemetery regulation act, 1968 PA 251, MCL
27 456.521 to 456.543.
1 Sec. 5. (1) As
used in this act:
2 (a)
"Nonguaranteed price contract" means a prepaid funeral
3 contract under which funds received are held pursuant to an
4 escrow agreement between a contract seller or provider and a
5 contract buyer .
Under the terms of this contract, a contract
6 seller or provider
agrees to apply the principal and income and
7 are applied to the cost
of the funeral goods merchandise or
8 funeral or cemetery
services, which funeral goods and
9 merchandise or funeral or cemetery services may be selected by
10 the contract buyer at the time the contract is signed or as
11 selected by a person
legally authorized to procure funeral goods
12 and merchandise or funeral or cemetery
services at the time of
13 death of the contract
beneficiary. However, this A
14 nonguaranteed price
contract shall does not obligate the
15 contract beneficiary's estate or the person who is legally
16 entitled to make funeral or cemetery arrangements for a deceased
17 contract beneficiary to
purchase specific goods and merchandise
18 or funeral or cemetery services which were selected before the
19 contract beneficiary's
death , nor shall this contract and does
20 not obligate either the contract beneficiary's estate or the
21 person who is entitled to make funeral or cemetery arrangements
22 for a deceased contract beneficiary to expend a specific amount
23 on funeral goods merchandise
or funeral or cemetery services.
24 (b) (2) "Person"
means an individual, group of individuals,
25 sole proprietorship, partnership, limited liability company,
26 association, corporation,
a governmental government agency,
27 cemetery, or a combination of these legal entities.
1 (c) "Physical delivery and retention" means actual control
2 and possession of merchandise that has been permanently
3 relinquished by a contract seller or a provider, or the agent of
4 either, to the contract buyer or the contract beneficiary. In
5 the case of a grave memorial or urn, physical delivery and
6 retention means that the grave memorial or urn has been
7 permanently inscribed with the name of the person being
8 memorialized. Physical delivery and retention does not occur if
9 the contract seller or provider takes either of the following
10 actions:
11 (i) Arranges or induces the buyer to arrange for the storage
12 or warehousing of merchandise ordered pursuant to a prepaid
13 contract, with or without evidence that legal title has passed.
14 (ii) Acquires or reacquires actual or constructive possession
15 or control of merchandise after initial delivery to the contract
16 buyer or contract beneficiary.
17 (d) (3) "Prepaid
funeral contract" means a contract
18 requiring payment in advance for funeral or cemetery services or
19 for funeral goods merchandise, physical delivery and retention
20 of which would occur after death under a guaranteed price
21 contract or a
nonguaranteed price contract. Prepaid funeral
22 contracts shall do
not include a contract for the sale of
23 funeral goods merchandise or funeral or cemetery
services
24 which is entered into after the death of the person for
whose
25 benefit the goods or
services are acquired contract
26 beneficiary.
27 (e) (4) "Principal"
means the money , finance charges, or
1 other consideration actually deposited in the escrow or trust
2 accounts required by section
12 this act.
3 (f) (5) "Provider"
means any person who furnishes or agrees
4 to furnish funeral
goods merchandise or funeral or cemetery
5 services pursuant to a
prepaid funeral contract, whether or not
6 that person is the
contract seller. In the case of funeral
7 goods merchandise, provider shall mean means
the person who
8 arranges for delivery of
the funeral goods merchandise at the
9 time of the death of the contract beneficiary and not the
10 manufacturer of the goods
merchandise. In the case of funeral
11 services, provider shall
mean means a person licensed pursuant
12 to section 1806(3) of
the occupational code, Act No. 299 of the
13 Public Acts of 1980,
being section 339.1806(3) of the Michigan
14 Compiled Laws who possesses all licenses necessary to perform
15 the funeral services specified in the prepaid contract. In the
16 case of cemetery services, provider means a person who possesses
17 all licenses and registrations necessary to provide the cemetery
18 services specified in the prepaid contract.
19 (g) (6) "Registrant"
means a person who has registered with
20 the department pursuant to section 6.
21 (h) "Urn" means a container used to preserve the ashes of a
22 dead human body.
23 Sec. 6. (1) A person shall not sell, provide, or agree to
24 provide funeral goods
merchandise or funeral or cemetery
25 services pursuant to a
prepaid funeral contract unless that
26 person is registered with the department as provided in this
27 section and has received a certificate of registration.
1 (2) A person desiring to receive a certificate of
2 registration under this
section shall make application apply
3 upon forms provided by the department and pay an application fee
4 of $120.00. The original registration may be renewed. A
5 certification of
registration shall be is valid for 3 years
6 from the date of its issuance. An application form for original
7 registration or renewal shall contain the following:
8 (a) The name and
business address of the entity person
9 registering.
10 (b) The names and addresses of persons owning 10% or more
11 interest in the entity applying for registration.
12 (c) The business address where books and records pertaining
13 to prepaid funeral contracts
shall be maintained for inspection
14 by the department.
15 (d) A list of the names and addresses of any escrow agents in
16 which funds have been or will be deposited by the registrant
17 which after
registration as well as copies of
all escrow or
18 trust agreements between a registrant and an escrow agent. The
19 list and copies required by this subdivision shall be constantly
20 updated. The registrant shall inform the department of any
21 change in this list within 30 days of the change by adding to the
22 list the name and address of any new escrow agent or by deleting
23 from the list an escrow agent whose services are no longer being
24 used by the registrant.
25 (e) A statement made under oath that the registrant has an
26 agreement with each escrow agent with which it has deposited
27 funds which complies with the requirements of section 7, or if
1 the registrant is or intends to be an escrow agent for funds
2 received in connection with a nonguaranteed price contract, a
3 statement that the registrant will comply with the requirements
4 of section 7.
5 (3) The department shall renew the registration of a person
6 who applies for renewal upon a form provided by the department
7 and pays an application fee of $30.00 provided that the person
8 has submitted the sworn statement as required by this section and
9 the special report or sworn statement as required by section 8 at
10 least 60 days prior
to before the expiration date printed on
11 the certificate of registration. The certificate of registration
12 of a person who fails to file the sworn statement or special
13 report required by this section shall expire on the date printed
14 on the certificate of registration. A registrant may reinstate
15 the registration within 60 days of its expiration by submitting
16 the sworn statement or special report and paying a fee of
17 $120.00.
18 (4) The department may deny the registration of a person if
19 it determines any of the following:
20 (a) That the person was previously registered with the
21 department and that registration was revoked or suspended within
22 2 years prior to before
the date of the current application for
23 registration.
24 (b) That the person was or is presently an owner with a
25 substantial interest in the entity, partner, or employee of a
26 person whose registration was revoked or suspended within 2 years
27 prior to before the date of the current application for
1 registration and the person engaged or participated in or
2 authorized the misconduct
which that was the basis for the
3 revocation or suspension.
4 (c) That the person lacks good moral character as defined and
5 determined under 1974 PA 381, MCL 338.41 to 338.47.
6 (d) That the person has violated this act, article 18 of the
7 occupational code, 1980 PA 299, MCL 339.1801 to 339.1812, or the
8 cemetery regulation act, 1968 PA 251, MCL 456.521 to 456.543.
9 (5) An applicant who registers with the department shall not
10 receive a certificate of registration unless the applicant
11 complies with the conditions in this section.
12 (6) A person who is denied registration by the department
13 pursuant to this section may petition the department for
14 reconsideration. A
person seeking reconsideration shall be is
15 entitled to a hearing conducted in compliance with the
16 administrative procedures
act of 1969, Act No. 306 of the Public
17 Acts of 1969, being
sections 24.201 to 24.328 of the Michigan
18 Compiled Laws 1969 PA 306, MCL 24.201 to 24.328.
19 Sec. 7. A registrant who deposits funds with an escrow
20 agent pursuant to under
this act shall have in effect at all
21 times an agreement under which the escrow agent has, under the
22 following circumstances, agreed to allow inspection and copying
23 of records maintained by it pertaining to funds held or managed
24 by it:
25 (a) Upon the request by the department, to inspect or copy
26 records pertaining to any or all funds held or managed by the
27 escrow agent.
1 (b) Upon the request of the registrant or its agent, to
2 inspect or copy records pertaining to any or all funds deposited
3 by the registrant with the escrow agent.
4 (c) Upon the request of a contract buyer or a contract
5 beneficiary to inspect or copy records pertaining to funds held
6 or managed by the escrow
agent pursuant to a prepaid funeral
7 contract to which the contract buyer is a party or for whose
8 benefit it was entered into.
9 (d) Upon order of a
court of proper competent
10 jurisdiction.
11 Sec. 8. (1) A registrant shall keep, in this state,
12 accurate accounts, books, and records of all transactions and
13 accounts regulated by this act. Records shall include copies of
14 all prepaid funeral contracts,
the dates and amounts of
15 payments made and accepted under these prepaid contracts, the
16 name and address of each contract buyer, the name and address of
17 the contract beneficiaries, the name and address of each escrow
18 agent, the date and amount of each deposit made to an escrow
19 agent, the total price of each contract exclusive of commission,
20 any commission received for each contract, the date each contract
21 is performed, canceled, or revoked, the date and amount of any
22 refund paid to the contract buyer, and any other records as the
23 department may require to enable it to determine whether the
24 registrant is complying with the requirements of this act.
25 Records shall be kept for at least 36 months after performance of
26 all obligations of each
prepaid funeral contract or after the
27 filing of the final
special report which that includes a
Senate Bill No. 512 (H-3) as amended February 12, 2004
1 prepaid contract which
that has been performed. Beginning on
2 April 1 [, 2006 and each year thereafter], a registrant shall have available for
3 examination by the department a statement, current as of the
4 preceding December 31, disclosing the following information as to
5 each unperformed prepaid funeral contract:
6 (a) The date of the contract and, if available, the contract
7 number.
8 (b) The names of the contract buyer and the contract
9 beneficiary.
10 (c) The face value of the contract. If the registrant is
11 allowed to deposit less than the face value, the statement shall
12 include the amount required to be on deposit with the escrow
13 agent.
14 (d) Whether the contract is a guaranteed or nonguaranteed
15 contract.
16 (e) Complete information on the means, provision, trust, or
17 other vehicle that will assure fulfillment of all obligations,
18 stating ledger and market values of the vehicle, its location,
19 nature of investments and trustees including fees paid to
20 trustees. A registrant who has placed funds in a commingled
21 escrow account may satisfy this requirement by identifying the
22 name of the escrow agent and the particular investment account or
23 accounts in which the funds have been placed.
24 (2) At least once
every 3 years Annually, a registrant
25 which serves as an escrow agent or which has deposited funds with
26 an escrow agent pursuant
to section 12 shall secure a special
27 report of limited
review prepared by a Michigan licensed
1 independent certified public accountant pertaining to prepaid
2 funeral contract funds. The special report shall be on forms
3 provided by the
department. or in any other format considered
4 appropriate by the
independent certified public accountant. The
5 special report shall be prepared and dated within 90 days
6 before the expiration
of the registrant's certificate of
7 registration and shall
be furnished to the department with the
8 registrant's
application for renewal or, if an application for
9 renewal is not filed,
before the expiration of the certificate of
10 registration on or before July 1 of the year following the
11 calendar year for which the report is prepared. In preparing the
12 special report, the independent Michigan licensed
certified
13 public accountant shall not be required to review all prepaid
14 funeral contracts, escrow agreements, escrow accounts, or
15 records of the
registrant, nor shall the independent Michigan
16 licensed certified public accountant be required to review any
17 receipts or deposits by
the registrant of prepaid funeral
18 contract funds. The special report of the independent
19 Michigan licensed certified public accountant shall provide the
20 following assurances:
21 (a) That, based either upon a review of the registrant's
22 agreements with escrow agents or depositories which limit
23 investments of the escrow funds by the escrow agents or
24 depositories to those investments permitted by this act, or upon
25 a review of the investments of the escrow accounts, the
26 investment requirements
of section 12(4) 12 have been complied
27 with.
1 (b) In the case of escrow accounts where the registrant
2 serves as the escrow agent, that withdrawals, as detailed in the
3 periodic statements of the depositories in which the escrow
4 accounts are maintained,
have been made in accordance
5 compliance with this act.
6 (c) In the case of escrow accounts where the registrant does
7 not serve as the escrow agent, that, based upon a representative
8 test sample selected upon the basis of the professional judgment
9 of the Michigan licensed certified public accountant after
10 considering all risks, funds have been deposited with and held by
11 the escrow agent in accordance with this act.
12 (d) (c) That
no matters have come to the attention of the
13 independent Michigan licensed certified public accountant
14 during the review of escrow account investments and withdrawals
15 that gave cause to believe that the registrant has not complied
16 with this act, or if any matters have come to his or her
17 attention, the independent
Michigan licensed certified public
18 accountant shall include an explanation of the matters which
19 caused the belief that the registrant has not complied with this
20 act.
21 (3) The department
may examine each special report required
22 by this section and if the department determines on the basis of
23 its review that the registrant or its agent has not held or
24 invested funds in accordance with the requirements of this act or
25 has failed to file a special
report as required, the department
26 shall take any appropriate corrective or penal action authorized
27 by this act.
1 (4) The department may examine, review, or audit the books
2 and records of a contract seller or provider pertaining to funds
3 received in payment for prepaid
funeral contracts. An audit
4 may include an examination of the books and financial records of
5 the registrant as well as books and financial records of escrow
6 agents used by the registrant. A registrant shall authorize
7 escrow agents to open their records of the registrant accounts to
8 the department upon request. The department may charge the
9 registrant for the actual expenses of the examination, review, or
10 audit but not more than $1,000.00.
11 (5) For the purposes of complying with the requirements of
12 this section, a registrant who has not sold, provided, or agreed
13 to provide funeral
goods merchandise or funeral or cemetery
14 services in accordance
with a prepaid funeral contract and who
15 has no obligations with respect to an outstanding prepaid
16 funeral contract may submit a sworn statement that a prepaid
17 funeral contract has not been sold, provided, or agreed to and
18 there are no obligations
outstanding. This The department
19 shall accept the
statement shall be accepted in lieu of the
20 special report.
21 (6) Any books or records regarding any prepaid contract
22 entered into before the effective date of the amendatory act that
23 added this subsection that were in compliance with applicable law
24 are considered in compliance with this act.
25 Sec. 9. A
registrant who discontinues its business
26 operations shall
notify the department and the contract buyer of
27 each existing prepaid
funeral contract and shall provide written
1 documentation that it
has arranged for an assignment of these
2 contracts to another
provider who satisfies the requirements of
3 section 6. The purchaser or assignee of a registrant's
business
4 operations shall notify the department and the contract buyers of
5 the purchase or assignment of the prepaid contracts.
6 Sec. 10. All prepaid
funeral contracts provided for under
7 this act shall be either a nonguaranteed price contract or a
8 guaranteed price contract and shall be made and executed pursuant
9 only to this act.
10 Sec. 11. (1) A guaranteed price contract shall designate a
11 provider who has agreed
to furnish the funeral goods
12 merchandise or funeral or cemetery services specified in the
13 contract upon the death of the contract beneficiary. If the
14 provider designated is not the prepaid contract seller of the
15 contract, the
provider shall have previously contracted with the
16 contract seller to
provide the goods and services specified in
17 the contract and the
contract shall indicate this contractual
18 relationship or the provider shall be made a party to the
19 prepaid contract before any consideration is paid and the prepaid
20 contract shall is
not be binding on the contract buyer until
21 the provider has been made a party to the prepaid contract.
22 (2) In addition to the registration otherwise required by the
23 terms of this act, the
provider which has agreed to furnish
24 funeral goods provide merchandise or funeral or cemetery
25 services pursuant to a guaranteed price contract shall, at the
26 time the prepaid contract is entered into, possess any license or
27 registration required in
order to provide the funeral goods or
1 funeral or cemetery services, pursuant to sections
1801 to
2 1812 article 18 of the occupational code, Act
No. 299 of the
3 Public Acts of 1980,
being sections 339.1801 to 339.1812 of the
4 Michigan Compiled Laws
1980 PA 299, MCL 339.1801 to
339.1812, or
5 the cemetery regulation act, 1968 PA 251, MCL 456.521 to
6 456.543. If a provider is required to possess a license or
7 registration to provide the services included in a prepaid
8 contract, a contract seller who does not possess a license or
9 registration to provide the services must disclose to the
10 contract buyer or prospective contract buyer that it cannot
11 perform those activities required to be registered or licensed.
12 Sec. 12. (1) All
Except as otherwise provided in
13 subsection (2), all funds received in connection with a prepaid
14 funeral contract shall be held in escrow by an escrow agent
for
15 the benefit of the person
for whom the funeral goods or funeral
16 services have been
purchased contract beneficiary.
However, a
17 (2) Funds received by a cemetery registered under the
18 cemetery regulation act, 1968 PA 251, MCL 456.521 to 456.543, for
19 cemetery merchandise may, in lieu of subsection (1), be escrowed
20 as follows:
21 (a) For the first 12 months after the effective date of the
22 amendatory act that added this subdivision, 60% of the funds
23 received during that period from the sale of cemetery merchandise
24 pursuant to prepaid contracts.
25 (b) For the thirteenth through twenty-fourth month after the
26 effective date of the amendatory act that added this subdivision,
27 65% of the funds received during that period from the sale of
1 cemetery merchandise pursuant to prepaid contracts.
2 (c) For the twenty-fifth through the thirty-sixth month after
3 the effective date of the amendatory act that added this
4 subdivision, 70% of the funds received during that period from
5 the sale of cemetery merchandise pursuant to prepaid contracts.
6 (d) For the thirty-seventh through the forty-eighth month
7 after the effective date of the amendatory act that added this
8 subdivision, 75% of the funds received during that period from
9 the sale of cemetery merchandise pursuant to prepaid contracts.
10 (e) For the forty-ninth month after the effective date of the
11 amendatory act that added this subdivision and thereafter, 80% of
12 the funds received from the sale of cemetery merchandise pursuant
13 to prepaid contracts.
14 (3) A prepaid funeral
contract may authorize the contract
15 seller or provider to charge an additional commission of not more
16 than 10% of the contract price which shall not be subject to the
17 depository requirements of this section. If the contract price
18 is paid in installments, the commission retained by the contract
19 seller or the provider shall not exceed the rate of the
20 commission charged in the prepaid contract for each installment.
21 A contract buyer upon
cancellation shall be is entitled to a
22 refund as provided in section 13(1) or (2).
23 (4) (2) Only
the following persons may serve as the escrow
24 agent of prepaid
funeral funds:
25 (a) If the prepared
funeral prepaid contract is a
26 nonguaranteed price contract, the contract seller or provider of
27 that nonguaranteed price
contract. , or in
1 (b) In the case of either a guaranteed or nonguaranteed price
2 contract, a state or
national bank, a state or federal savings
3 and loan association,
a state or federally chartered credit
4 union depository, a trust company, or a Michigan
nonprofit
5 corporation or association, in which the majority interest is
6 held by 250 or more
funeral establishments licensed pursuant to
7 sections 1801 to 1812
of the occupational code, Act No. 299 of
8 the Public Acts of
1980, being sections 339.1801 to 339.1812 of
9 the Michigan Compiled
Laws under article 18 of the
occupational
10 code, 1980 PA 299, MCL 339.1801 to 339.1812, or a Michigan
11 nonprofit corporation or association, in which the majority
12 interest is held by 250
30 or more cemeteries licensed
13 registered and operated pursuant to the cemetery regulation act,
14 Act No. 251 of the
Public Acts of 1968, being sections 456.521
15 to 456.543 of the
Michigan Compiled Laws 1968 PA
251,
16 MCL 456.521 to 456.543.
If the prepaid funeral contract is a
17 guaranteed price contract, the contract seller or the provider
18 shall not serve as the escrow agent.
19 (5) (3) If
the escrow agent is not the contract seller or
20 provider of a nonguaranteed price contract, the escrow agent
21 shall be selected as follows:
22 (a) If the prepaid contract is a nonguaranteed price
23 contract, the escrow agent may be selected by either the contract
24 seller or the provider.
25 (b) If the prepaid contract is a guaranteed price contract,
26 the escrow agent shall be selected by the provider who has been
27 designated to furnish the
funeral goods or funeral services.
1 If the prepaid contract does not include funeral services, the
2 escrow agent shall be selected by any provider.
3 (6) (4) If
the escrow agent is a person other than the
4 person to whom the funds have been paid by the contract buyer,
5 the funds shall be deposited with the escrow agent within 30 days
6 after the receipt by the person to whom the funds are paid.
7 (7) (5) Funds
held by an escrow agent shall be held and
8 invested only as specified in the prepaid contract. A prepaid
9 contract may authorize investments only as follows:
10 (a) If the prepaid contract is a nonguaranteed price
11 contract, the funds shall
be invested in 1 or more federally
12 insured interest-bearing accounts in a depository.
13 (b) If the prepaid contract is a guaranteed price contract,
14 the principal and income may be invested only in accordance with
15 Act No. 177 of the
Public Acts of 1937, being sections 555.201
16 to 555.203 of the
Michigan Compiled Laws section
7302 of the
17 estates and protected individuals code, 1998 PA 386,
18 MCL 700.7302, except that funds shall not be invested in a
19 company owned or by,
operated by, or affiliated in any way with
20 a contract seller or provider or their authorized agents, or in
21 loans to any person directly connected with or employed by a
22 contract seller or provider or their authorized agents.
23 (8) (6) Income
shall be held and invested by the escrow
24 agent in the same manner as the principal except that the income
25 may be utilized to pay reasonable fees and expenses of the escrow
26 agent in addition to other costs specifically authorized by this
27 act. The expenses and fees paid to the escrow agent shall not
Senate Bill No. 512 (H-3) as amended February 12, 2004
1 exceed 1% of the aggregate balance of principal and prior earned
2 income from each account annually. If a fee is charged for
3 reasonable expenses for the administration costs under an escrow
4 agreement, the amount may be paid to the escrow agent
5 periodically or may be accumulated in the account and paid at the
6 time of death or upon cancellation of the contract. A cemetery
7 that has elected the escrowing option for cemetery merchandise
8 provided in subsection (2) may provide by written agreement with
9 the escrow agent to be paid accumulated income [generated solely by the investment of funds received for the cemetery merchandise]. Such payments to
10 a cemetery may not be made more frequently than once in a
11 12-month period and shall not exceed the net amount of income
12 earned in the previous 12 months less any amounts paid to the
13 escrow agent for expenses and fees described in this subsection
14 and an amount equal to any increase in the Detroit consumer price
15 index.
16 (9) (7) Amounts
of principal and income held by an escrow
17 agent other than the contract seller or provider of a
18 nonguaranteed price contract may be commingled with principal and
19 income derived from other
prepaid funeral accounts. However, a
20 separate accounting of principal and income shall be maintained
21 for each prepaid funeral
contract under the name of the
22 contract beneficiary.
23 (10) (8) The
contract buyer escrow agent shall be sent
24 send to the contract buyer a notice stating the date, amount of
25 the deposit, and the name of the escrow agent with whom the funds
26 are deposited.
27 (11) (9) Upon
the death of the contract beneficiary and
1 upon performance by the provider of its obligation to furnish
2 funeral goods and merchandise or funeral or cemetery
services
3 pursuant to the prepaid funeral
contract, funds held by the
4 escrow agent shall be disbursed as follows:
5 (a) If the prepaid funeral
contract is a nonguaranteed
6 price contract, the principal and income shall first be disbursed
7 by the escrow agent to
the provider of the funeral goods
8 merchandise or funeral or cemetery services in payment of all
9 reasonable charges. Thereafter, not less than 90% of the
10 remaining balance of principal and income, if any, shall be
11 disbursed to the person, other than the provider or the contract
12 seller, designated in the prepaid contract or authorized by law
13 to receive the surplus, and the remainder, if any, shall be
14 disbursed to the provider as final compensation for its
15 services. The amount paid to the person entitled to receive the
16 surplus shall be as follows:
17 (i) If no commission has been charged pursuant to this
18 section, at least 90% of the remaining balance of principal and
19 income in the escrow account.
20 (ii) If a commission of 5% or less of the contract price has
21 been charged, at least 95% of the remaining principal and income
22 in the escrow account.
23 (iii) If a commission of greater than 5% of the contract
24 price has been charged, 100% of the remaining principal and
25 income in the escrow account.
26 (b) If the prepaid funeral
contract is a guaranteed price
27 contract, the principal and income held by the escrow agent shall
1 be disbursed to the provider, its designee, or its successor.
2 (c) If the escrow agent is notified that there is a dispute
3 as to whether the provider has performed all its obligations
4 under the prepaid funeral
contract, the escrow agent shall file
5 an action for interpleader or shall obtain an impartial
6 arbitrator to determine the rights of the parties. Expenses of
7 arbitration shall be shared equally by the parties unless
8 otherwise ordered by the arbitrator.
9 (12) (10) A
Michigan nonprofit corporation or association,
10 in which the majority interest is held by 250 or more funeral
11 establishments or by 250
30 or more cemeteries registered and
12 operated under the cemetery regulation act, 1968 PA 251, MCL
13 456.521 to 456.543, may be designated as the escrow agent only if
14 the contract buyer has
expressly authorized such that
15 designation in writing. If the contract buyer authorizes the
16 appointment as escrow
agent of any such a Michigan nonprofit
17 corporation or
association in the prepaid funeral contract, the
18 authorization shall be set forth in a separate paragraph which
19 shall not be effective unless separately signed or initialed by a
20 contract buyer and which shall state that the contract buyer may
21 elect to require that a state
or national bank, or state or
22 federal savings and
loan association, a state or federally
23 chartered credit
union, depository or a trust
company be
24 designated as the escrow agent.
25 (13) (11) If
a prepaid contract is canceled, the escrow
26 agent shall disburse the principal and income in accordance with
27 section 13.
1 (14) (12) At
least annually, unless waived in writing by a
2 contract buyer, a contract buyer shall be furnished a statement
3 indicating the current
balance, the income earned since the last
4 statement, the fees or expenses charged since the last
5 statement, the amount of the refund to which a buyer is entitled
6 in the event the contract is canceled, and the name and address
7 of the person escrow
agent from whom additional information may
8 be obtained relative to the account. The cost of the statement
9 required by this subsection may be paid from the income and may
10 be in addition to any other fee or charge authorized by this
11 act.
12 Sec. 13. (1) A contract buyer may cancel a prepaid
13 funeral contract at any time before the death of the
contract
14 beneficiary upon 30 days' prior written notice to the contract
15 seller of a nonguaranteed price contract or to the provider
16 designated to furnish funeral
goods merchandise or funeral or
17 cemetery services pursuant to a guaranteed price contract. The
18 contract seller or provider shall promptly notify the escrow
19 agent of the cancellation and of its effective date, if the
20 escrow agent is other than the contract seller or the provider.
21 After receipt of the notice of cancellation, except as otherwise
22 provided in subsection (2), the escrow agent shall disburse not
23 less than 90% of the principal and income in the escrow account
24 to the contract buyer pursuant to this subsection and shall
25 disburse the remainder of the principal and income, if any, to
26 the contract seller or
the provider. The amounts disbursed
27 refund to the contract buyer shall be determined as follows:
1 (a) If no commission has been charged pursuant to section
2 12(1), at least 90% of the remaining balance of principal and
3 income in the escrow account or held by the trustee.
4 (b) If a commission of 5% or less of the contract price has
5 been charged, at least 95% of the remaining principal and income
6 in the escrow account.
7 (c) If a commission of greater than 5% of the contract price
8 has been charged, 100% of the remaining principal and income in
9 the escrow account.
10 (2) In the case of funds received for cemetery merchandise by
11 a cemetery that has elected the escrowing option in section
12 12(2), the escrow agent shall disburse the principal and income
13 in the account to the cemetery and the cemetery shall disburse to
14 the contract buyer 100% of the amount of the contract price paid
15 by the contract buyer plus an amount equal to any increase in the
16 Detroit consumer price index since the contract was executed.
17 (3) (2) A
contract seller of a nonguaranteed price contract
18 or a provider designated
to furnish funeral goods merchandise
19 or funeral or cemetery services pursuant to a guaranteed price
20 contract may cancel a
prepaid funeral contract only if the
21 contract buyer of a guaranteed price contract is more than 90
22 days delinquent in making any installment payment or partial
23 payment, or the contract buyer is otherwise in default as to any
24 other obligation under the contract. Upon cancellation, the
25 contract buyer shall receive a refund as determined pursuant to
26 subsection (1).
27 (4) (3) After
the death of the contract beneficiary, if
Senate Bill 512 (H-3) as amended February 12, 2004
1 the escrow account
established pursuant to a prepaid funeral
2 contract is not used
by persons legally entitled to make funeral
3 arrangements for the contract
beneficiary, the escrow agent shall
4 disburse the principal
and income in the escrow account pursuant
5 to subsection (1) the contract buyer or the contract buyer's
6 estate may cancel the prepaid contract only where there are no
7 remains of the deceased; where the remains of the deceased cannot
8 be recovered; or where [a prepaid contract was not utilized due to] lack of knowledge by the person
9 or persons entitled to make funeral arrangements of the existence
10 of the prepaid contract. After such a cancellation, the contract
11 buyer or the contract buyer's estate shall receive a refund in
12 accordance with subsection (1) or (2) within 30 days after
13 receipt by the contract seller or the provider of a request for
14 payment from the
contract seller of a nonguaranteed price
15 contract, or the
provider designated to furnish funeral goods or
16 funeral services
pursuant to a guaranteed price contract, or the
17 contract buyer or the contract buyer's estate. Contracts may be
18 upgraded after the death of the contract beneficiary by a person
19 on behalf of the contract beneficiary's estate or by a person
20 entitled to make funeral or cemetery arrangements. This
21 subsection does not prevent the transfer of a contract from 1
22 provider to another provider upon the request of those entitled
23 to make funeral arrangements.
24 (5) Prior to the death of the contract beneficiary and in the
25 case of a prepaid contract or multiple prepaid contracts
26 containing any of the merchandise or services escrowed under
27 section 12(1) together with cemetery merchandise escrowed under
1 section 12(2), the buyer may cancel that portion of the contract
2 pertaining to the cemetery merchandise alone, without canceling
3 the remaining portions. Such cancellation is subject to refund
4 pursuant to section 13(2).
5 (6) (4) A
contract seller or a provider which that
6 assigns or transfers its
obligations under a prepaid funeral
7 contract to another provider shall notify the contract buyer of
8 the assignment in writing. If the contract buyer cancels the
9 contract within 30 days of the notification of the assignment,
10 the buyer shall be entitled to a refund of 100% of the remaining
11 principal and income plus the commission, if any, charged in
12 accordance with section 12(1) or (2). An assignment or transfer
13 of a provider's
obligations under a prepaid funeral contract
14 which that is made in connection with the sale of a
business
15 shall be is subject to this subsection only if more
than 50% of
16 the ownership interest in the business is transferred to another
17 person or persons within
a 12-month period. Nothing in this
18 Upon sale of the business, the notice requirement of this
19 subsection is the responsibility of the purchaser. This
20 subsection shall does
not apply to an assignment of a financial
21 interest in an installment contract to a financial institution.
22 At the time that the contract seller or provider receives payment
23 in exchange for selling or assigning its financial interest in an
24 installment contract to a financial institution, the contract
25 seller or provider shall
be required to place in escrow the full
26 contract price amount required by this act. This
subsection
27 does not apply to burial rights or other land interests, crypts,
1 inscribed grave memorials, or niches, for which no refunds are
2 available.
3 Sec. 15. (1) All prices or quotations of prices contained
4 in a prepaid funeral contract,
offer, or solicitation shall be
5 stated in compliance with applicable federal and state laws and
6 regulations. In
addition, a person who offers either funeral
7 goods merchandise or funeral or cemetery
services for sale
8 before the death of
the intended user or contract beneficiary on
9 a preneed or at-need basis shall comply with the price disclosure
10 rules of the federal trade commission, code of federal
11 regulations, 16 C.F.R., part 453, whether or not the rules by
12 their own terms apply to
the offering. Nothing in this This
13 subsection shall does
not apply to the sale of any interest in
14 land covered by the endowment care trust
requirements of
15 section 35a of Act
No. 87 of the Public Acts of 1855, being
16 section 456.35a of the
Michigan Compiled Laws the
cemetery
17 regulation act, 1968 PA 251, MCL 456.521 to 456.543.
18 (2) A person who sells or offers to sell both funeral goods
19 or services and nonfuneral goods or services as part of the same
20 transaction or series of transactions shall not manipulate the
21 relative prices of the goods or services so as to allocate a
22 disproportionate share of the total price to nonfuneral property
23 or services.
24 (3) All prepaid funeral
contracts shall provide that a
25 contract buyer may revoke the prepaid contract within 10 business
26 days after entering into the prepaid contract and that upon
27 revocation, all funds paid to the contract seller or provider
1 shall be refunded. This provision shall be conspicuously set
2 forth in the prepaid contract at a place immediately before the
3 place where the contract buyer is to sign his or her name.
4 (4) A prepaid funeral
contract shall disclose the contract
5 buyer's right to cancel the prepaid contract and the amount of
6 the refund to which the contract buyer or that person's estate is
7 entitled upon cancellation. The disclosure shall be stated
8 substantially as follows:
9 "This contract may be canceled either before death or after
10 death by the buyer or, if the buyer is deceased, by the person or
11 persons legally authorized to make funeral or cemetery
12 arrangements. If the contract is canceled, the buyer or the
13 buyer's estate is entitled to receive a refund of ____% of the
14 contract price and any
income earned from investment of the
15 principal less
administrative or escrow fees as
required by
16 law."
17 In addition, if a commission is charged pursuant to section 12,
18 the amount of the commission and the fact that it is a charge
19 which is in addition to the contract price shall be stated in the
20 prepaid funeral contract. If a printed contract form is used,
21 the disclosures required by this subsection shall be stated in
22 bold-faced boldfaced type.
23 (5) Nothing in
this This act shall does not authorize a
24 contract seller or provider to perform or offer to perform
25 services for which a mortuary science license or funeral
26 establishment licensed is
required by sections 1801 to 1812
27 article 18 of the
occupational code, Act No. 299 of the Public
1 Acts of 1980, being
sections 339.1801 to 339.1812 of the Michigan
2 Compiled Laws 1980 PA 299, MCL 339.1801 to 339.1812, unless
that
3 person holds the required
license or licenses . However, this
4 act shall and does not be construed as requiring require
a
5 contract seller or a provider to possess this license or any
6 other license to engage in an activity covered under this act for
7 which a license is not required by any other act.
8 (6) A prepaid funeral
contract shall provide that the
9 contract buyer may designate a new contract beneficiary any time
10 before the death of the contract beneficiary originally specified
11 in the prepaid funeral
contract by providing written notice to
12 the contract seller of a nonguaranteed price contract or the
13 provider designated to
furnish funeral goods merchandise or
14 funeral or cemetery services pursuant to a guaranteed price
15 contract. Notwithstanding any other provisions of law, a
16 contract buyer may designate the estate of a deceased person as
17 the contract beneficiary, or provide that the contract
18 beneficiary shall be is
the first of 2 or more designated
19 persons to die.
20 (7) A prepaid funeral
contract that is a nonguaranteed
21 price contract shall have it indicated clearly on the prepaid
22 contract that it is a nonguaranteed price contract and that the
23 actual costs of the funeral
goods and merchandise or funeral or
24 cemetery services delivered at the time of death may be greater
25 or less than the amount of principal and income in the escrow
26 account, and that the buyer, the buyer's estate, or the person or
27 persons legally entitled to make funeral or cemetery
1 arrangements, or both, are not obligated to purchase specific
2 goods merchandise and services which were selected
before the
3 death of the contract beneficiary or to expend a specific amount
4 on funeral goods merchandise
or funeral or cemetery services.
5 Sec. 16. (1) All
A prepaid funeral contracts contract
6 that is not in writing are
is voidable by any party to the
7 prepaid contract.
8 (2) A prepaid funeral
contract made in violation of this
9 act or with a person who is not registered pursuant to section 6
10 shall be is voidable by the contract buyer or by a
personal
11 representative of the contract beneficiary.
12 (3) The parties to a
prepaid funeral contract may agree in
13 writing for the payment of a rate of interest not to exceed 10.5%
14 per annum with the following conditions:
15 (a) A prepaid funeral
contract made under this act shall
16 not provide for a rate of interest added or deducted in advance.
17 Interest shall be computed from time to time only on the basis of
18 unpaid balances.
19 (b) A prepaid funeral
contract made under this act shall
20 not provide that the rate of interest initially effective may be
21 increased for any reason.
22 (c) A contract seller shall not impose any fees or charges in
23 addition to interest in connection with the financing of a
24 prepaid funeral contract.
25 (4) A contract seller shall not offer financing or offer to
26 obtain financing of a
prepaid funeral contract under terms and
27 conditions other than allowed by this section.
1 Sec. 18. (1) Notwithstanding any other law to the contrary,
2 a contract seller,
provider, agent, employee, or person acting
3 on behalf of a
contract seller or provider, person
selling or
4 offering to sell merchandise or funeral or cemetery services,
5 whether a registrant or not, shall not do any of the following:
6 (a) Solicit a specific person for the purpose of providing
7 funeral goods merchandise or funeral or cemetery
services for a
8 prospective contract beneficiary knowing that the death of the
9 prospective contract beneficiary has already occurred or is
10 probably imminent.
11 (b) Make a false or misleading statement, oral or written,
12 regarding the sale of funeral
goods merchandise or funeral or
13 cemetery services
pursuant to a prepaid funeral contract or
14 regarding the rights or obligations of any party or prospective
15 party to a prepaid funeral
contract for the purpose of inducing
16 a person to purchase the funeral
goods merchandise or funeral
17 or cemetery services or a
prepaid funeral contract.
18 (c) Advertise or
offer funeral goods merchandise or funeral
19 or cemetery services for sale before the death of a prospective
20 contract beneficiary in a manner which is false, misleading,
21 deceptive, or unfair.
22 (d) Fail to refund principal or principal and income paid for
23 a prepaid funeral contract
in violation of this act.
24 (e) Refuse the use of merchandise bought from another vendor
25 or discriminate by price, burial fee, or otherwise for not
26 purchasing merchandise from or under the direction of the funeral
27 establishment or cemetery. This subdivision does not prohibit a
1 cemetery from adopting and enforcing consistent rules and
2 regulations to be followed by both the cemetery and outside
3 vendors as to the quality, size, shape, type, installation, and
4 maintenance of a grave memorial or a cemetery burial vault or
5 other outside container or urn, except that such regulations may
6 not limit as to supplier or vendor.
7 (f) Require the purchase of a cemetery burial vault or other
8 outside container from a particular person as a condition to
9 burial in a cemetery in this state. However, this subsection
10 does not limit the right of a cemetery to require the use of a
11 cemetery burial vault or other outside container.
12 (g) (e) Violate
this act or rules promulgated under this
13 act.
14 (2) Further, a A
registrant or a person acting on behalf of
15 a registrant, including an agent or employee of a registrant,
16 shall not do any of the following:
17 (a) Practice fraud, or deception in obtaining registration.
18 (b) Refuse to disclose books and records required to be
19 maintained and disclosed under this act.
20 (3) The director of the department may promulgate rules
21 regulating the
solicitation of prepaid funeral contracts by
22 registrants to protect against solicitations which are
23 intimidating, vexatious,
fraudulent, or misleading , or which
24 take unfair advantage of a person's ignorance or emotional
25 vulnerability.
26 (4) Any administrative action brought under this act shall be
27 handled pursuant to in compliance with the administrative
1 procedures act of 1969,
Act No. 306 of the Public Acts of 1969,
2 being sections 24.201
to 24.328 of the Michigan Compiled laws
3 1969 PA 306, MCL 24.201 to 24.328.
4 Sec. 19. (1) A
prepaid funeral contract may be made with
5 an applicant for or recipient of assistance under the social
6 welfare act, 1939 PA 280, MCL 400.1 to 400.119b, or a patient or
7 a legal guardian of a patient in a community health care facility
8 under the jurisdiction of the department of community health. If
9 the family independence agency or department of community health
10 determines that the contract is a fully paid guaranteed price
11 contract, which when
added to and that the proceeds of the
12 contract and the amount
of a any death benefit from an
13 insurance policy or
annuity contract , the proceeds of which
14 have that has been assigned pursuant to section
2080(6) of the
15 insurance code of 1956, 1956 PA 218, MCL 500.2080, as payment for
16 funeral goods merchandise or funeral or cemetery
services for
17 the contract beneficiary that
are not more than that amount
18 allowed under section 2080(6)(g) of the insurance code of 1956,
19 1956 PA 218, MCL 500.2080, plus $2,000.00, exclusive of income,
20 and that the state will
not be liable for the funeral goods
21 merchandise or funeral or cemetery services, excluding an outside
22 receptacle when required by the chosen cemetery, of the applicant
23 for or recipient of assistance or patient allowable under
24 contracts under this act,
the prepaid funeral contract shall be
25 made irrevocable a the request of the applicant for or recipient
26 of assistance, or the patient or a legal guardian of a patient.
27 Nothing in this section shall be construed as increasing the
1 amount of excludable burial assets for family independence agency
2 or medicaid program eligibility above that allowed under existing
3 family independence agency standards, including any increases
4 therein in those standards. The family independence
agency or
5 department of community health shall advise the applicant for or
6 recipient of assistance, or the patient or a legal guardian of a
7 patient that additional funeral
goods merchandise or funeral or
8 cemetery services subject to contract under this act will not be
9 paid by the family independence agency or department of community
10 health but shall not specify or require approval of particular
11 funeral goods merchandise or funeral or cemetery
services
12 selected by the applicant for or recipient of assistance, or
13 patient or a legal guardian of a patient.
14 (2) A prepaid funeral
contract approved by the family
15 independence agency or department of community health shall not
16 be revoked or canceled by the contract seller, contract provider,
17 contract buyer, or their successors, or the estate of the
18 contract beneficiary either before or after the death of the
19 contract beneficiary. This subsection does not prevent those
20 legally entitled to make arrangements for a contract beneficiary
21 from reallocating the amount paid under the prepaid contract to
22 different funeral or
cemetery services and funeral goods
23 merchandise. A contract seller or provider shall assign an
24 irrevocable prepaid funeral
contract to another provider upon
25 the written request of the contract beneficiary, his or her
26 successor, or those legally entitled to make arrangements for the
27 contract beneficiary so long as the written request is received
1 before a provider's obligations have been performed. An
2 irrevocable contract shall not be considered in determining the
3 eligibility of an applicant or recipient for assistance given
4 under the social welfare act, 1939 PA 280, MCL 400.1 to
5 400.119b. An irrevocable
prepaid funeral contract made under
6 this section is not subject to the cancellation provision of
7 section 13 or to the
provisions of section 15(5) 15(6).
8 (3) Notwithstanding any other provisions of this act, funds
9 paid in connection with
an irrevocable prepaid funeral contract
10 may, at the option of the provider, be held and deposited in the
11 manner prescribed for a nonguaranteed price contract.
12 (4) The family independence agency and department of
13 community health may promulgate rules under the administrative
14 procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, to
15 provide for the uniform administration of this section.
16 Sec. 20. (1) Upon complaint made by any person, or upon its
17 own initiative, the department may investigate alleged violations
18 of this act or rules promulgated under this act by a registrant
19 or any other person. The department may examine books, records,
20 contracts, and other documents in possession of or under the
21 control of any registrant with or without the consent of that
22 registrant and with or without a warrant authorizing the
23 examination, or of any other person if that person consents to an
24 examination or if the department obtains a warrant authorizing an
25 examination. If the department determines that reasonable cause
26 exists to believe that a violation has occurred, it shall do 1 of
27 the following:
1 (a) If the alleged violation was committed by a person other
2 than a registrant, the department shall refer the matter to the
3 attorney general or a prosecuting attorney for criminal or civil
4 action as provided in sections 23 and 24.
5 (b) If the alleged violation was committed by a registrant,
6 the department shall do either of the following:
7 (i) Refer the matter to the attorney general for civil or
8 criminal prosecution or enforcement.
9 (ii) Institute proceedings in compliance with the
10 administrative procedures
act of 1969, Act No. 306 of the Public
11 Acts of 1969, being
sections 24.201 to 24.328 of the Michigan
12 Compiled Laws 1969 PA 306, MCL 24.201 to 24.328.
13 (2) The department or the department of the attorney general
14 may petition a court of competent jurisdiction for issuance of a
15 subpoena requiring the person subpoenaed to appear to testify or
16 produce relevant documentary material for examination at a
17 proceeding conducted under subsection (1)(a) or (b).
18 (3) (2) If,
after a hearing, the department determines that
19 a registrant has violated the provisions of this act or any rule
20 promulgated pursuant to this act, the department shall do 1 or
21 more of the following:
22 (a) Suspend or revoke the registration.
23 (b) Impose a civil fine not to exceed $5,000.00 for each
24 violation and may suspend the registration until the fine is
25 paid.
26 (c) Require restitution of funds paid pursuant to a prepaid
27 funeral contract. and restitution Restitution
may include
1 suspending the registration until restitution is made.
2 (d) Impose a period of probation during which the registrant
3 is required to comply with additional conditions imposed by the
4 department in lieu of or in addition to the imposition of other
5 penalties provided under this act.
6 (e) Impose restrictions upon the registrant's prepaid
7 funeral business activities which require additional
8 accountability to the department.
9 (f) Issue a written warning to the registrant.
10 Sec. 21. A violation of this act by a person who is
11 licensed pursuant to under
article 18 of the occupational code,
12 Act No. 299 of the
Public Acts of 1980, being sections 339.1801
13 to 339.1812 of the
Michigan Compiled Laws 1980 PA
299,
14 MCL 339.1801 to 339.1812,
or the cemetery regulation act, Act
15 No. 251 of the Public
Acts of 1968, being sections 456.521 to
16 456.543 of the
Michigan Compiled Laws, shall also constitute
17 1968 PA 251, MCL 456.521 to 456.543, is considered a violation of
18 the respective licensing
act, and the violator shall be is
19 subject to penalties available under those acts.
20 Sec. 22. (1) A person who converts funds paid pursuant to a
21 prepaid funeral contract
to his or her own use or benefit ,
22 other than as authorized
by this act , shall be or who fails to
23 escrow or trust funds according to this act is guilty of a felony
24 , punishable by a fine of $5,000.00 , or
imprisonment of not
25 more than 5 years, or both, for each violation.
26 (2) A person who violates any other provision of this act
27 shall be is guilty of a misdemeanor , punishable
by a fine of
1 not more than $1,000.00 ,
or imprisonment for not more than 1
2 year, or both, for each violation.
3 Sec. 23. If the department determines that a registrant has
4 not complied with the investment and depositing requirements of
5 this act and that insufficient funds are available in trust or
6 escrow accounts to meet
the obligations of prepaid funeral
7 contracts, the department may petition the circuit court of the
8 county of the registrant's principal place of business or the
9 county of Ingham for appointment of a receiver. After notice to
10 the registrant and a hearing and upon its concurrence in the
11 findings of the department, the court shall appoint a qualified
12 person as a receiver.
who shall, under conditions as may be
13 prescribed by the
court, take into possession the assets of the
14 registrant for the
purpose of liquidation. In the order of
15 liquidation, the court
shall make provision for notice to
16 creditors, filing of
claims, and all other details necessary for
17 an estate in
receivership. A receiver appointed
under this
18 section has all the powers, authority, and remedies of an
19 assignee for the benefit of creditors under chapter 52 of the
20 revised judicature act of 1961, 1961 PA 236, MCL 600.5201 to
21 600.5265. Any remaining funds held in escrow pursuant to this act
22 shall be regarded as belonging to contract buyers or contract
23 beneficiaries according to their interests and shall be
24 distributed to these entities pro rata on the basis of the amount
25 of funds paid by the contract buyers and shall not be available
26 to general creditors of the estate. Under appropriate
27 circumstances, the receiver may file for protection under the
1 bankruptcy code.
2 Sec. 24. The department or any other person, in order to
3 force compliance with this act, may bring an action in a circuit
4 court in any county in which the registrant or any other person
5 has solicited or sold
prepaid funeral contracts, whether or not
6 that person has purchased
a prepaid funeral contract or is
7 personally aggrieved by a violation of this act. The court may
8 award damages, and
issue equitable orders in accordance with
9 the Michigan court rules to restrain conduct in violation of this
10 act, and award reasonable attorney fees and costs to a prevailing
11 party.
12 Enacting section 1. This amendatory act does not take
13 effect unless Senate Bill No. 513 of the 92nd Legislature is
14 enacted into law.
15 Enacting section 2. This amendatory act takes effect
16 January 1, 2005.