SB-0513, As Passed Senate, June 19, 2003
SUBSTITUTE FOR
SENATE BILL NO. 513
<<A bill to amend 1968 PA 251, entitled
"Cemetery regulation act,"
by amending the title and sections 2, 8, 9, 10, 12, 12a, 13, 15,
16, 18, 19, and 21 (MCL 456.522, 456.528, 456.529, 456.530,
456.532, 456.532a, 456.533, 456.535, 456.536, 456.538, 456.539,
and 456.541), the title and sections 2, 8, 12, 12a, 13, 15, 16,
18, 19, and 21 as amended by 1982 PA 132, section 9 as amended by
2002 PA 550, section 10 as amended by 1982 PA 289, and by adding section 16a.>>
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 TITLE
2 An act to regulate the creation and management of
3 cemeteries; to
regulate the sale of cemetery services and
4 merchandise; to provide for a cemetery commissioner, and to
5 prescribe the powers and duties of the commissioner; to require
6 the registration and audit of cemeteries; to provide for
1 long-term care of certain cemeteries; to regulate persons selling
2 burial, entombment, or
columbarium rights; , cemetery services,
3 or cemetery
merchandise; and to prescribe remedies
and
4 penalties.
5 Sec. 2. As used in this act:
6 (a) "Cemetery" means 1 or a combination of more than 1 of the
7 following:
8 (i) A burial ground for earth interments.
9 (ii) A mausoleum for crypt entombments.
10 (iii) A crematory for the cremation for human remains.
11 (iv) A columbarium for the deposit inurnment
of cremated
12 remains.
13 (b) "Interment" means the disposition of human remains by
14 earth interment, entombment, or inurnment.
15 (c) "Burial right" means a right of earth interment.
16 (d) "Entombment right" means the right of crypt entombment in
17 a mausoleum or in an aboveground vault.
18 (e) "Columbarium right" means the right of inurnment in a
19 columbarium for cremated remains.
20 (f)
"Mausoleum" means a structure used, or intended to be
21 used, for the
entombment in a crypt or crypts in the structure of
22 the remains of
deceased persons building or
other aboveground
23 structure that is affixed to land and is a permanent repository
24 for human remains.
25 (g) "Crypt" means a chamber in a mausoleum of sufficient size
26 to entomb the uncremated remains of a deceased person.
27 (h)
"Columbarium" means a structure or room or other space
1 in a building or other aboveground structure used
or intended
2 to be used for the
inurnment or deposit of that is
affixed to
3 land and is a permanent repository for cremated human remains.
4 (i) "Crematory" means a building or structure, within which
5 the remains of deceased persons are or are intended to be
6 cremated.
7 (j) "Cremation" means the incineration of the body of the
8 deceased person.
9 (k)
"Cemetery services" means all services offered to the
10 public, including
grave opening, closings, and foundation
11 installation.
12 (l) "Cemetery merchandise" means all
merchandise sold to the
13 public by a cemetery,
including vaults, concrete boxes,
14 monuments, memorials,
and foundations.
15 (k) (m) "Cemetery
commissioner" or "commissioner" means the
16 director of licensing
and regulation the department of consumer
17 and industry services or a designee of the director.
18 (l) "Municipal corporation" means that term as defined in
19 section 1 of 1927 PA 10, MCL 456.181.
20 (m) "Person" means an individual, group of individuals, sole
21 proprietorship, partnership, limited liability company,
22 association, corporation, government agency, cemetery, or a
23 combination of these legal entities.
24 Sec. 8. The commissioner may promulgate rules in accordance
25 with and subject to Act
No. 306 of the Public Acts of 1969, as
26 amended, being
sections 24.201 to 24.315 of the Michigan Compiled
27 Laws the administrative procedures act of 1969, 1969 PA
306, MCL
1 24.201 to 24.328, to implement and administer this act, including
2 rules regarding all of the following:
3 (a) The maintaining
maintenance of records relative to the
4 financial aspects of cemeteries.
5 (b) Requirements for applications for the granting of permits
6 and registrations required under this act.
7 (c) The formal and informal procedures governing the conduct
8 of contested cases under this act before the commissioner or an
9 authorized hearing officer.
10 (d) Requirements
for the establishment and maintenance of
11 special trust funds to
provide for the future performance
12 obligations and
special care or decoration obligations of
13 cemeteries.
14 Sec. 9. (1) The commissioner may hold administrative
15 hearings, administer oaths, take testimony under oath, and
16 request in writing the appearance and testimony of witnesses,
17 including the production of books and records pursuant to the
18 administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
19 24.328. Upon the refusal of a witness to appear, testify, or
20 submit books and records after a written request, the
21 commissioner or a party to a contested case may apply to the
22 circuit court for Ingham county for a subpoena or a subpoena
23 duces tecum. The court shall issue a subpoena when reasonable
24 grounds are shown.
25 (2) When If
it appears to the commissioner that a person or
26 registrant has violated this act or a rule promulgated or order
27 issued under this act, the commissioner may do 1 or more of the
1 following:
2 (a) Issue a cease and desist order.
3 (b) Accept an assurance of discontinuance.
4 (c) Bring an action in the circuit court for the county in
5 which the person resides or in the circuit court for the county
6 of Ingham, to enforce compliance with this act or a rule
7 promulgated or order issued under this act.
8 (3) Upon a proper showing regarding an action brought under
9 subsection (2)(c), a permanent or temporary injunction or a
10 restraining order may be granted and a receiver or conservator
11 may be appointed by the court. A receiver or conservator
12 appointed by the court may take possession of the assets and may
13 sell, assign, transfer, or convey the cemetery to a municipal
14 corporation or other person other than the holder of a license
15 for the practice of mortuary science or a person who owns,
16 manages, supervises, operates, or maintains, either directly or
17 indirectly, a funeral establishment, under conditions prescribed
18 by the court , in
order to discharge outstanding contractual
19 obligations. A receiver appointed under this section has all the
20 powers, authority, and remedies of an assignee for the benefit of
21 creditors under chapter 52 of the revised judicature act of 1961,
22 1961 PA 236, MCL 600.5201 to 600.5265. The court may allow the
23 receiver or conservator to file for protection under the
24 bankruptcy code.
25 (4) In the order of sale of the cemetery, the court shall
26 make provision for notice to creditors and the filing of claims
27 against the receivership or conservatorship. Any remaining funds
1 held by the cemetery in escrow under this act belong to the
2 contract buyers or beneficiaries of the contract buyers and shall
3 not be distributed to the general creditors of the cemetery.
4 This section does not prohibit the court from allowing the sale
5 of the cemetery to a person other than the holder of a license
6 for the practice of mortuary science or a person who owns,
7 manages, supervises, operates, or maintains, either directly or
8 indirectly, a funeral establishment, or to a municipal
9 corporation.
10 (5) In addition to an action taken under this section, the
11 commissioner may deny an application or may suspend or revoke a
12 permit or registration after a hearing as set forth in this act.
13 (6) As used in
this section, "municipal corporation" means
14 that term as defined
in section 1 of 1927 PA 10, MCL 456.181.
15 Sec. 10. (1) The commissioner shall institute and maintain
16 a system of auditing trust funds required by this act and of
17 registering each cemetery authorized to be created, maintained,
18 and operated under Act
No. 12 of the Public Acts of 1869, as
19 amended, being
sections 456.101 to 456.119 of the Michigan
20 Compiled Laws 1869 PA 12, MCL 456.101 to 456.119, and Act
21 No. 87 of the Public
Acts of 1855, as amended, being sections
22 456.1 to 456.36 of the
Michigan Compiled Laws 1855
PA 87, MCL
23 456.1 to 456.36, and conducting sales under the prepaid funeral
24 and cemetery sales act, 1986 PA 255, MCL 328.211 to 328.235, as
25 well as any other cemetery operating under state law or local
26 ordinance. A cemetery
owned and operated by a municipality
27 municipal corporation,
church, or religious institution shall
1 be is exempt from this act. However, a municipality
municipal
2 corporation may pass ordinances necessary for regulating that
3 municipality's municipal corporation's cemeteries.
4 (2) A cemetery for earth interment of 10 acres or less in
5 size, which is owned and operated entirely and exclusively by an
6 existing nonprofit entity and in which a burial has taken place
7 before September 15, 1968, shall
be is exempt from the fee
8 provisions of this act,
. That cemetery shall have its the
9 trust fund required by this act audited at the discretion of the
10 commissioner, .
It shall also be and is exempt from the
11 endowment care trust
fund requirements of section 16, except as
12 to the care fund for the report requirements if the cemetery
13 maintains care or memorial funds.
14 (3) On a periodic basis determined appropriate by the
15 commissioner but not less than once every 3 years, the commission
16 shall inspect the facilities and grounds of a cemetery. The
17 commission may charge the cemetery for the actual expenses for
18 the inspection but not more than $1,000.00.
19 Sec. 12. (1) A
person or business entity shall not
20 establish a cemetery without a valid permit or operate an
21 existing cemetery except under a valid registration issued under
22 this act.
23 (2) If a person or
business entity proposes to purchase or
24 otherwise acquire a controlling interest in an existing cemetery
25 company, that person or
business entity shall first make
26 application apply to the commissioner for a certificate of
27 approval of a proposed change of control of a cemetery company.
1 The application shall contain the name and address of the
2 proposed new owner or operator and other information as the
3 commissioner requires. The commissioner shall issue a
4 certificate of approval only after he or she is satisfied that
5 the proposed new owner is qualified by character, experience, and
6 financial responsibility to control and operate the cemetery in a
7 legal and proper manner, and that the interest of the public
8 generally will not be jeopardized by the proposed change in
9 ownership and management. The application for a purchase or
10 change of control must be accompanied by an initial filing or
11 investigation fee of
$500.00. As used in this section,
12 "controlling
interest" means the capability to decide the
13 operating and
financial policies of the cemetery company or to
14 select a majority of
the officers or directors of the cemetery
15 company. In deciding
whether a person or business entity has or
16 proposes to acquire a
controlling interest, the percentage of the
17 stock, assets, or
other indicia of ownership which a person or
18 business entity
acquires or proposes to acquire need not be the
19 only factor considered
by the commissioner. If a person or
20 business entity fails to comply with this section, the
21 commissioner shall order
that a an administrative hearing be
22 held. If a transfer of controlling interest is found to have
23 taken place without prior commissioner approval, the commissioner
24 in his or her
discretion may suspend or revoke the
registration
25 of the cemetery or take
other appropriate action to insure
26 until it demonstrates compliance with this section.
27 (3) As used in this section, "controlling interest" means the
1 capability to decide the operating and financial policies of the
2 cemetery company or to select the officers or directors with
3 majority control of the cemetery company.
4 Sec. 12a. (1) The commissioner or an examiner,
5 investigator, or other person the commissioner may appoint, may
6 visit and examine the
affairs of any cemetery or business
7 entity person required to register under this act and
shall have
8 free access to the books, papers, records, and documents that
9 relate to the business of
the cemetery corporation, business
10 entity person, or agent acting on its behalf.
11 (2) The books, papers, records, and documents shall be
12 available for inspection or audit at any time during regular
13 business hours with reasonable notice. One or more qualified
14 person persons shall conduct the audit whose services
shall be
15 charged to and paid by the cemetery at the rate of $10.00 per
16 hour, but not more than $100.00
$1,000.00 total.
17 Sec. 13. (1)
Any person or business entity desiring to
18 establish a cemetery shall file with the commissioner, on forms
19 furnished by the commissioner, an application for a permit to
20 establish a cemetery. The application shall be accompanied by an
21 investigation fee of $500.00.
22 (2) After a receipt of an application, the commissioner shall
23 make conduct an investigation pertaining to the
physical plans,
24 the community need for the planned cemetery, and pertinent
25 information pertaining to the applicant's experience, financial
26 stability, ability, and
integrity. If the applicant is other
27 than not a natural person, the same investigation
shall be made
1 of the general manager and principal owners.
2 Sec. 15. (1)
Each individual or business entity person
3 operating a cemetery shall register the cemetery by filing with
4 the commissioner a registration application before June 2 of each
5 year, on a form furnished by the commissioner, and accompanied by
6 the registration fee. Registrations
shall expire A
7 registration expires on July 1 of each year.
8 (2) If the commissioner intends to deny registration, the
9 procedure set forth in section 19 shall be followed. The
10 commissioner may impose a late penalty filing fee of $10.00 per
11 day on an individual
or business entity a person which filed a
12 registration application
after June 1. or on an individual or
13 business entity which
files a trust fund report after the due
14 date set forth in this
act.
15 Sec. 16. (1) The commissioner shall require each cemetery
16 to establish and maintain an irrevocable endowment care fund as
17 required by section 35a
of Act No. 87 of the Public Acts of
18 1855, being section
456.35a of the Michigan Compiled Laws 1855
19 PA 87, MCL 456.35a, or
section 7a of Act No. 12 of the Public
20 Acts of 1869, as
amended, being section 456.107a of the Michigan
21 Compiled Laws 1869 PA 12, MCL 456.107a, and to report
annually
22 before July 1 of each year, on forms approved and furnished by
23 the commissioner, care fund information required to be reported
24 to the commissioner by other statutes and information regarding
25 the funds as the commissioner considers pertinent in the public
26 interest. A cemetery applying to the commissioner as authorized
27 by other statutes for a care fund deposit modification or waiver
1 shall be assessed the actual expenses for an examination or
2 investigation by the commissioner. The commissioner shall
3 require each person engaged as agent or seller, as a means of
4 livelihood either part time or full time, in the selling of
5 burial rights, entombment rights, or columbarium rights owned by
6 a party other than a cemetery or corporation subject to the care
7 fund requirements of other laws, to deposit 15% of all gross
8 proceeds received from the sales of those rights into the
9 irrevocable care fund of the cemetery in which the rights are
10 located if an irrevocable care fund exists for that cemetery.
11 Excess sums on deposit in the fund can be applied by a cemetery
12 against future deposits. A deposit required to be made by those
13 persons shall be modified or waived if the cemetery has received
14 a care fund deposit modification or waiver approved by the
15 commissioner. The total deposit for a single adult burial right
16 sale or assignment shall not be less than $20.00.
17 (2) A cemetery
which is required to register pursuant to
18 this act and an agent
which is authorized by a cemetery or acting
19 on its behalf under an
agreement or sales contract to sell
20 cemetery merchandise
or cemetery services shall establish a
21 merchandise trust
account and deposit a percentage of the gross
22 proceeds received from
the sales as determined by the
23 commissioner. The
merchandise trust account shall be maintained
24 exclusively for the
deposit of the money into a bank or trust
25 company located in
this state under the terms of a written trust
26 agreement approved by
the commissioner. The funds shall be
27 deposited not later
than the month following their receipt.
1 (3) The total
deposits to a merchandise trust for the sale of
2 cemetery burial vaults
or other outside containers, other than
3 crypts installed underground
and sold as part of a cemetery lot,
4 shall at all times be
not less than the greater of $100.00 per
5 vault or outside
container or 130% of the total costs of the
6 containers covered by
the trust. Money deposited in connection
7 with a sale shall be
repaid within 30 days upon written demand of
8 purchaser. A burial
vault shall be installed only at need or by
9 separate written
authorization of the purchaser. The cemetery
10 shall have the right
to withdraw the amount on deposit for the
11 delivered vault or
outside container.
12 (4) A contract or
agreement made with a purchaser of cemetery
13 merchandise and
services shall contain a complete description of
14 the cemetery
merchandise purchased and of the services to be
15 rendered.
16 (2) (5) The
commissioner shall require each cemetery or
17 agent authorized by it acting on its behalf to report annually
18 before July 1 of each year on forms provided by the
19 commissioner. The reports shall contain information as the
20 commissioner considers necessary to ascertain that this act is
21 being implemented.
22 (3) (6) If,
after an audit by the commissioner's staff, a
23 deficit in the amount of required deposits to the trust funds is
24 found, the commissioner may assess a penalty not to exceed 10% of
25 the amount of the deficit. The cemetery or entity of a cemetery
26 may request a an
administrative hearing before the commissioner
27 within 30 days after being notified of a deficit by the
Senate Bill No. 513 as amended June 18, 2003 (1 of 2)
1 commissioner. If, following the administrative hearing, the
2 commissioner determines that a deficit does exist, an additional
3 penalty not to exceed 1.5% may be assessed each month on the
4 unpaid monthly balance until the deficit is paid in full.
5 (4) (7) All
fees, charges, and penalties collected under
6 this act, other than fines prescribed in section 21, shall be
7 paid to the commissioner. Upon receipt, the commissioner shall
8 remit funds received to the department of treasury for deposit in
9 the general fund of the state.
<<Sec. 16a. A person shall not develop or build a mausoleum or columbarium and engage in preconstruction sales of crypts or niches in a mausoleum or columbarium unless that person does both of the following:
(a) Agrees to complete the mausoleum or columbarium within 4 years after the date of the first sale of an entombment or inurnment right in the proposed mausoleum or columbarium or, if construction is not completed within that time and upon the request of the purchaser, agrees to offer to the purchaser a refund of 100% of the purchase price with interest calculated at the rate of 4% per annum.
(b) Agrees that if the person for whom the entombment or inurnment right in the proposed mausoleum or columbarium dies before completion of the mausoleum or columbarium, an alternative disposition of the remains shall be provided until completion of the mausoleum or columbarium or until a refund is made of 100% of the purchase price with interest calculated at the rate of 4% per annum.>>
10 Sec. 18. (1) The commissioner may deny an application filed
11 under this act and refuse to issue a permit or registration, or
12 may suspend or revoke a permit or registration, or may reprimand,
13 place on probation, or take other disciplinary action against the
14 applicant if the commissioner's investigation reveals facts
15 which, with reference to the establishment of a cemetery, show
16 inappropriate physical plans; lack of community need; inadequate
17 experience, financial stability, or integrity to protect the
18 public welfare; or when the commissioner finds that the applicant
19 or its officers or general manager has done 1 or more of the
20 following:
21 (a) Made a false statement of a material fact in the
22 application.
23 (b) Not complied with this act.
24 (c) Been guilty of a
an unlawful or fraudulent act in
25 connection with selling
or otherwise dealing in cemetery lots ,
26 and burial rights , regulated
by this act or funeral or
27 cemetery merchandise and
services of a type required to be
1 registered under this regulated by the prepaid funeral and
2 cemetery sales act, 1986 PA 255, MCL 328.211 to 328.235.
3 (d) Been guilty in the judgment of the commissioner of other
4 conduct whether of the same or different character than specified
5 in this act which constitutes dishonest and unfair dealing.
6 (e) Violated article 18 of the occupational code, 1980 PA
7 299, MCL 339.1801 to 339.1812.
8 (f) (e) Violated
the terms of an assurance of
9 discontinuance entered into with the commissioner pursuant to
10 section 9(2).
11 (g) Violated the prepaid funeral and cemetery sales act, 1986
12 PA 255, MCL 328.211 to 328.235.
13 (h) Failed to comply with section 2080 of the insurance code
14 of 1956, 1956 PA 218, MCL 500.2080.
15 (i) (f) Adopted,
enforced, or attempted to enforce a
16 regulation of the
cemetery which that prohibits the
17 installation of a grave memorial or burial vault unless the grave
18 memorial or burial vault was purchased from the cemetery.
19 However, this This subdivision shall does
not prohibit a
20 cemetery from adopting and enforcing consistent rules and
21 regulations to be followed by both the cemetery and outside
22 vendors as to the quality, size, shape, type, installation, and
23 maintenance of the grave memorial or burial vault.
24 (2) If the commissioner denies an application for a permit or
25 registration, or suspends or revokes an existing permit or
26 registration required by this act, the denial, revocation, or
27 suspension shall revoke the cemetery operation as to the sale or
1 assignment of burial rights, entombment rights, or columbarium
2 rights, cemetery merchandise, or cemetery services after the date
3 of the suspension, revocation, or denial. The corporation shall
4 fulfill all contractual obligations and agreements entered into
5 before the date of the suspension, revocation, or denial, and
6 shall make required interments for the owners of burial rights,
7 entombment rights, or columbarium rights purchased before the
8 date of suspension, revocation, or denial.
9 (3) The commissioner may impose an administrative fine of not
10 more than $5,000.00 for each separate violation of this act.
11 Sec. 19. If the commissioner intends to deny an application
12 for a permit to establish a cemetery, to refuse registration of
13 an existing cemetery, or to suspend or revoke a registration, the
14 commissioner shall give
written notice to the person or
15 business involved of that intent. The notice shall state a
time
16 and a place for hearing before the commissioner or a designated
17 hearing officer, and a summary statement of the reasons for the
18 proposed action. The notice of intent shall be mailed by
19 certified mail to the applicant at least 15 days before the
20 scheduled hearing date. The commissioner shall hold a hearing
21 pursuant to the notice in
the manner required by Act No. 306 of
22 the Public Acts of
1969, as amended, being sections 24.201 to
23 24.315 of the Michigan
Compiled Laws administrative
procedures
24 act of 1969, 1969 PA 306, MCL 24.201 to 24.328, and the rules of
25 procedure adopted by the
commissioner. , and The commissioner
26 shall make issue
a written decision.
27 Sec. 21. (1)
A person , firm, partnership, association, or
1 corporation who violates this act is guilty of a misdemeanor,
2 and, if a natural person, the first offense shall be punishable
3 by a fine of not more than $100.00 or imprisonment for not more
4 than 90 days, and a second offense shall be punishable by a fine
5 of not more than $500.00 or imprisonment for not more than 1
6 year, or both.
7 (2) If the violator is other than a natural person, the first
8 offense shall be punishable by a fine of not more than $100.00
9 and the second offense shall be punishable by a fine of not more
10 than $1,000.00.
11 Enacting section 1. This amendatory act does not take
12 effect unless Senate Bill No. 512 of the 92nd Legislature is
13 enacted into law.