October 23, 2003, Introduced by Rep. LaSata and referred to the Committee on Commerce.
A bill to amend 1986 PA 255, entitled
"Prepaid funeral contract funding act,"
by amending sections 4, 5, 6, 8, 11, and 20 (MCL 328.214,
328.215, 328.216, 328.218, 328.221, and 328.230).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 4. (1)
"Depository" means a state or national bank
2 which is a member of
the federal deposit insurance corporation, a
3 state or federal
savings and loan association which is a member
4 of the federal savings
and loan insurance corporation, or a state
5 or federally chartered
credit union which is insured by the
6 national credit union
administration, or a trust company
7 authorized to do
business in this state nationally
chartered
8 bank or state or federally chartered savings and loan
9 association, savings bank, or credit union whose deposits are
10 insured by an agency of the United States government under the
1 laws of this state or the United States. Depository includes the
2 trust department, if any, of an entity referred to in this
3 subsection.
4 (2) "Designee" means an employee of the registrant who is
5 authorized to receive principal and income held by the escrow
6 agent on behalf of the registrant.
7 (3) (2) "Escrow
agent" means a person who holds, invests,
8 and disburses principal and income from the funds received under
9 a prepaid funeral contract.
10 (4) (3) "Funds"
means all money or other consideration
11 actually received from a contract buyer by a contract seller or
12 provider or an assignee from
of the contract buyer in
13 connection with any aspect of the sale of a prepaid funeral
14 contract including
finance charges. , but does Funds do not
15 include late payment penalties, payments required to be made to a
16 governmental agency at the time the contract is entered into, or
17 a commission authorized by section 12(1).
18 (5) (4) "Funeral
goods" means items of merchandise sold or
19 offered for sale or lease
to consumers which that will be used
20 in connection with a funeral or an alternative to a funeral or
21 final disposition of
human remains including and include, but
22 are not limited to, caskets, combination units, and catafalques.
23 Funeral goods shall do
not include land the following:
24 (a) Land or interests in land, crypts, lawn crypts, mausoleum
25 crypts, or niches that
are sold by a cemetery which that
26 complies with the endowment care fund requirements of the
27 cemetery regulation act, Act
No. 251 of the Public Acts of 1968,
1 being sections 456.521
to 456.543 of the Michigan Compiled Laws
2 1968 PA 251, MCL 456.521 to 456.543. In addition, funeral goods
3 shall not include
cemetery
4 (b) Cemetery burial vaults or other outside containers,
5 markers, monuments, urns,
and or merchandise items used for the
6 purpose of memorializing a decedent and placed on or in proximity
7 to a place of interment or entombment of a casket, catafalque, or
8 vault or to a place of
inurnment which are sold by a cemetery
9 which deposits at
least 130% of the cost of these items in a
10 merchandise trust
account established and operated and
deposited
11 in a trust account in accordance with the cemetery regulation
12 act, Act No. 251 of
the Public Acts of 1968, being sections
13 456.521 to 456.543 of
the Michigan Compiled Laws 1968
PA 251,
14 MCL 456.521 to 456.543.
15 (6) (5) "Funeral
services" means services customarily
16 performed by a mortuary science licensee who is licensed pursuant
17 to sections 1801 to
1812 article 18 of the occupational code,
18 Act No. 299 of the
Public Acts of 1980, being sections 339.1801
19 to 339.1812 of the
Michigan Compiled Laws 1980 PA
299, MCL
20 339.1801 to 339.1812. Further,
funeral Funeral services
21 includes include, but is are not
limited to, the care of dead
22 human remains, embalming, preparation of dead human remains for
23 final disposition, professional services relating to a funeral or
24 an alternative to a funeral or final disposition of dead human
25 remains, transportation of dead human remains, limousine
26 services, use of facilities or equipment for viewing dead human
27 remains, visitation,
memorial services, or services which that
1 are used in connection with a funeral or an alternative to a
2 funeral, coordinating or conducting funeral rites or ceremonies,
3 and other services provided in connection with a funeral,
4 alternative to a funeral, or final disposition of dead human
5 remains.
6 (7) (6) "Guaranteed
price contract" means a prepaid funeral
7 contract under which funds received are held pursuant to an
8 escrow agreement. The
A guaranteed price contract has a
9 guaranteed fixed price for which specified funeral goods or
10 funeral services are required to be sold to or made available
11 for to a contract buyer or for a contract
beneficiary,
12 regardless of the cost or value of the funeral goods or funeral
13 services at the time of death of the contract beneficiary. Under
14 the guaranteed price
contract, additional consideration shall
15 is not be charged
for the originally contracted for those
16 funeral goods and funeral
services. at the time of delivery of
17 the funeral goods and
funeral services contracted for.
18 (8) (7) "Income"
means the money earned by the investment
19 of the principal, including, but not limited to, interest,
20 dividends, and gains or losses on the sale of, deposit of, or
21 exchange of, property using invested principal amounts.
22 Sec. 5. (1) "Nonguaranteed price contract" means a prepaid
23 funeral contract under which funds received are held pursuant to
24 an escrow agreement between a contract seller or provider and a
25 contract buyer. Under
the terms of this a nonguaranteed price
26 contract, a contract seller or provider agrees to apply the
27 principal and income to the cost of the funeral goods or funeral
1 services which
funeral goods and funeral services that may be
2 selected by the contract buyer at the time the contract is signed
3 or as selected by a person legally authorized to procure funeral
4 goods and funeral services at the time of death of the contract
5 beneficiary. However,
this A nonguaranteed price contract
6 shall does not obligate the contract beneficiary's
estate or
7 the person who is legally
entitled to make funeral arrangements
8 for a deceased contract beneficiary to purchase specific goods
9 and services which
were selected before the contract
10 beneficiary's death ,
nor shall this contract and does not
11 obligate either the contract beneficiary's estate or the person
12 who is legally entitled to make funeral arrangements
for a
13 deceased contract beneficiary to expend a specific amount of
14 money on funeral goods or funeral services.
15 (2) "Person" means an individual, group of individuals, sole
16 proprietorship, partnership, association, limited liability
17 corporation, corporation, a governmental agency, or a combination
18 of these legal entities.
19 (3) "Prepaid funeral contract" means a contract requiring
20 payment in advance for funeral services or for funeral goods,
21 physical delivery and retention of which would occur after death
22 of the contract beneficiary under a guaranteed price contract or
23 a nonguaranteed price
contract. Prepaid funeral contracts
24 shall contract does not include a contract for the
sale of
25 funeral goods or funeral
services which is entered into after
26 the death of the person
for whose benefit the goods or services
27 are acquired contract beneficiary.
1 (4) "Principal" means the money, finance charges, or other
2 consideration actually deposited in the escrow accounts required
3 by section 12.
4 (5) "Provider" means any person who furnishes or agrees to
5 furnish funeral goods or funeral services pursuant to a prepaid
6 funeral contract, whether or not that person is the contract
7 seller. In the case of
funeral goods, provider shall mean
8 means the person who arranges for delivery of the funeral goods
9 at the time of the death of the contract beneficiary and does not
10 include the manufacturer of the funeral goods. In the case of
11 funeral services,
provider shall mean means a person licensed
12 pursuant to section 1806(3)
1806 of the occupational code, Act
13 No. 299 of the Public
Acts of 1980, being section 339.1806(3) of
14 the Michigan Compiled
Laws 1980 PA 299, MCL 339.1806.
15 (6)
"Registrant" means a person who has registered with the
16 department pursuant to section 6.
17 (7) "Successor" means the succeeding registrant who has
18 agreed to accept the assignment of prepaid funeral contracts
19 written under the previous registration.
20 Sec. 6. (1) A person shall not sell, provide, or agree to
21 provide funeral goods or funeral services pursuant to a prepaid
22 funeral contract unless that person is registered with the
23 department as provided in this section and has received a
24 certificate of registration.
25 (2) A person
desiring to To receive a certificate of
26 registration under this
section, a person shall make application
27 upon apply on forms provided by the department and
pay an
1 application fee of $120.00. The original registration may be
2 renewed. A
certification of registration shall be valid for 3
3 years from the date of
its issuance. A registration
expires on
4 September 30 and is valid for a 3-year period. An application
5 form for original registration or renewal shall contain the
6 following:
7 (a) The name and
business address of the entity registering
8 person applying for registration.
9 (b) The names and addresses of persons owning 10% or more
10 interest in the entity
person applying for registration.
11 (c) The business address where books and records pertaining
12 to prepaid funeral
contracts shall be are maintained for
13 inspection by the department.
14 (d) A list of the names and addresses of any escrow agents
15 in which with whom funds have been deposited or
will be
16 deposited by the
registrant. which after registration shall be
17 constantly updated. The registrant shall constantly update the
18 list and shall inform the department of any change in this list
19 within 30 days of after
the change by adding to the list the
20 name and address of any new escrow agent or by deleting from the
21 list an escrow agent whose services are no longer being used by
22 the registrant.
23 (e) A sworn
statement made under oath indicating that the
24 registrant has an
agreement with each escrow agent with which
25 whom it has deposited
funds which that complies with the
26 requirements of section 7.
27 (3) An application shall be accompanied by the appropriate
1 ownership documentation as required by the department.
2 (4) (3) The
department shall renew the registration of a
3 person who applies for renewal upon a form provided by the
4 department and pays
an does the following:
5 (a) Pays the renewal
application fee of $30.00. provided
6 that the person has
submitted the
7 (b) Submits a
sworn statement as required by this section
8 and the subsection (2)(e).
9 (c) Submits a special report or sworn statement as required
10 by section 8 at least
60 days prior to the expiration date
11 printed on the
certificate of registration 8(4)
or (8).
12 (5) The certificate of registration of a person who fails to
13 file the sworn statement
or special report required by this
14 section shall expire subsection (4) expires on the date printed
15 on the certificate of registration. A registrant may reinstate
16 the registration within 60 days of its expiration by submitting
17 the sworn statement or special report and paying a renewal fee of
18 $120.00 $30.00 and a late fee of $20.00. A
registrant may
19 reinstate the registration within 60 days after its expiration by
20 submitting a special report and paying an application fee of
21 $120.00 and a $20.00 late fee.
22 (6) (4) The
department may deny the registration of a
23 person if it determines any of the following:
24 (a) That the person was previously registered with the
25 department and that registration was revoked or suspended within
26 2 years prior to before
the date of the current application.
27 for registration.
1 (b) That the person was or is presently an owner with a
2 substantial interest in the entity, partner, or employee of a
3 person whose registration was revoked or suspended within 2 years
4 prior to before the date of the current application for
5 registration and the person engaged or participated in or
6 authorized the misconduct which was the basis for the revocation
7 or suspension.
8 (c) That the person has violated this act or article 18 of
9 the occupational code, 1980 PA 299, MCL 339.1801 to 339.1812, or
10 has a license that has been suspended or revoked.
11 (7) (5) An
applicant who registers with the The department
12 shall not receive issue
a certificate of registration unless
13 the to an applicant complies who fails
to comply with the
14 conditions in this section.
15 (8) (6) A
person who is denied registration by the
16 department pursuant
to under the grounds described in this
17 section may petition request
the department for
18 reconsideration to reconsider the denial. A person seeking
19 requesting
reconsideration shall be is entitled to a hearing
20 conducted in compliance with the administrative procedures act of
21 1969, Act No. 306 of
the Public Acts of 1969, being sections
22 24.201 to 24.328 of the
Michigan Compiled Laws 1969 PA
306, MCL
23 24.201 to 24.328.
24 Sec. 8. (1) A
registrant shall keep, maintain in this
25 state , accurate
accounts, books, and records of all
26 transactions and accounts
regulated by this act. Records shall
27 include copies of all
prepaid funeral contracts, the dates and
1 amounts of payments
made and accepted under these contracts, the
2 name and address of
each contract buyer, the name and address of
3 the contract
beneficiaries, the name and address of each escrow
4 agent, and any other
records as the department may require to
5 enable it to determine
whether the registrant is complying with
6 the requirements of
this act. Records Beginning
January 1,
7 2004, the registrant shall keep copies of all prepaid funeral
8 contracts and the numbers of those contracts, which shall be
9 sequential, including all prepaid funeral contracts that have not
10 been fully executed, prepaid funeral contracts that have been
11 canceled, and prepaid funeral contracts that have been revoked.
12 Beginning January 1, 2004, the registrant shall establish and
13 maintain a record for each prepaid funeral contract sold that
14 includes the following:
15 (a) The name and address of the buyer.
16 (b) The name and address of the contract beneficiary.
17 (c) The name of the escrow agent.
18 (d) The date the funds are received for funeral goods and
19 funeral services.
20 (e) The date the funds are deposited into escrow.
21 (f) The contract number with a description of whether the
22 contract is guaranteed or nonguaranteed.
23 (g) The contract's total price exclusive of commission.
24 (h) The total commission charged on the contract.
25 (i) The date the contract is performed, canceled, or
26 revoked.
27 (j) The amount of the refund paid to the contract buyer if
1 canceled or revoked and the date of the refund.
2 (2) Beginning January 1, 2004, the registrant shall also
3 establish and maintain a receipts journal that includes the
4 following relative to the funds received by the registrant:
5 (a) A chronological sequence regarding funds received.
6 (b) The date funds are received.
7 (c) The amount of funds received for funeral goods and
8 funeral services.
9 (d) The date funds are deposited into escrow.
10 (e) The name of the contract buyer.
11 (f) The contract number.
12 (3) The registrant
shall be kept maintain the records
13 described in subsections (1) and (2) for at least 36 months after
14 performance of all obligations of each prepaid funeral contract
15 or for at least 36
months after the filing of the final special
16 report which that
includes a contract which has all prepaid
17 funeral contracts that have been performed.
18 (4) (2) A
least once every 3 years Beginning July 1, 2004
19 and not later than July 1 of each succeeding year, a registrant
20 which that serves as an escrow agent or which that
has
21 deposited funds with an escrow agent pursuant to section 12 shall
22 secure a special
report of limited review prepared by a licensed
23 independent certified
public accountant pertaining to prepaid
24 funeral contract
funds. The special report shall be on forms
25 provided by the
department or in any other format considered
26 appropriate by the
independent certified public accountant. The
27 special report shall
be prepared and dated within 90 days before
1 the expiration of the
registrant's certificate of registration
2 and shall be furnished
to the department with the registrant's
3 application for
renewal or, if an application for renewal is not
4 filed, before the
expiration of the certificate of registration.
5 In preparing the
special report, the independent certified public
6 accountant shall not
be required to review all prepaid funeral
7 contracts, escrow
agreements, escrow accounts, or records of the
8 registrant, nor shall
the independent certified public accountant
9 be required to review
any receipts or deposits by the registrant
10 of prepaid funeral
contract funds. The special report of the
11 independent certified
public accountant shall provide the
12 following assurances submit a special report on a form provided
13 by the department. The special report shall contain all of the
14 following:
15 (a) That, based
either upon a review of the registrant's
16 agreements with escrow
agents or depositories which limit
17 investments of the
escrow funds by the escrow agents or
18 depositories to those
investments permitted by this act, or upon
19 a review of the
investments of the escrow accounts, the
20 investment
requirements of section 12(4) have been complied
21 with. Information necessary to determine compliance with
the
22 requirements of this act regarding the escrowing of funds.
23 (b) In the case
of escrow accounts where the registrant
24 serves as the escrow
agent, that withdrawals, as detailed in the
25 periodic statements of
the depositories in which the escrow
26 accounts are
maintained, have been made in accordance with this
27 act. The names and address of the depositories into
which the
1 funds are deposited, the account numbers, and escrow dates.
2 (c) That no
matters have come to the attention of the
3 independent certified
public accountant during the review of
4 escrow account
investments and withdrawals that gave cause to
5 believe that the
registrant has not complied with this act, or if
6 any matters have come
to his or her attention, the independent
7 certified public
accountant shall include an explanation of the
8 matters which caused
the belief that the registrant has not
9 complied with this
act. A signed statement of a
licensed
10 independent certified public accountant providing reasonable
11 assurance that the escrow information contained in the special
12 report is fairly presented based upon tests of the records and
13 such other procedures as the independent certified public
14 accountant considers necessary under the circumstances.
15 (5) If an application for renewal is not filed, a registrant
16 shall submit the report before the expiration of the certificate
17 of registration.
18 (6) (3) The
department may shall examine each special
19 report required by this
section and if subsection (4). If the
20 department determines on the basis of its review that there is
21 reason to believe the registrant or its agent has not held or
22 invested funds in accordance with the requirements of this act or
23 has failed to file a special report as required by subsection
24 (4), the department shall audit the report in question. If the
25 department determines from that audit that a registrant has
26 violated this act, the department shall take any appropriate
27 corrective administrative or penal action authorized by this
1 act.
2 (7) (4) The
department may, at any time and for any reason,
3 examine, review, or audit the books and records of a contract
4 seller or provider pertaining to funds received in payment for
5 prepaid funeral contracts. An audit may include an examination
6 of the books and financial records of the registrant as well as
7 books and financial records of escrow agents used by the
8 registrant. A registrant shall authorize escrow agents to open
9 their records of the registrant accounts to the department upon
10 request.
11 (8) (5)
For the purposes of complying with the requirements
12 of this section, a A registrant who has not sold, provided, or
13 agreed to provide funeral
goods or funeral services in
14 accordance with under a prepaid funeral contract and who has
no
15 obligations with respect to an outstanding prepaid funeral
16 contract may submit a sworn statement that a prepaid funeral
17 contract has not been sold, provided, or agreed to and that there
18 are no obligations
outstanding. This The department shall
19 accept this sworn
statement shall be accepted in lieu instead
20 of the special report under subsection (4).
21 (9) A registrant whose books and records have been audited by
22 the department shall reimburse the department for the actual cost
23 of any audit, examination, or review of books and records
24 conducted under this act.
25 Sec. 11. (1) A guaranteed and nonguaranteed price contract
26 shall designate a provider who has agreed to furnish the funeral
27 goods or funeral services specified in the contract upon the
1 death of the contract beneficiary. If the provider designated is
2 not the contract seller of the contract, the provider shall have
3 previously contracted with the contract seller to provide the
4 goods and services specified in the contract and the contract
5 shall indicate this contractual relationship or the provider
6 shall be made a party to the contract before any consideration is
7 paid and the contract shall not be binding on the contract buyer
8 until the provider has been made a party to the contract.
9 (2) In addition to the registration otherwise required by
10 the terms of this act,
the provider which that has agreed to
11 furnish funeral goods or funeral services pursuant to a
12 guaranteed price contract shall, at the time the contract is
13 entered into, possess any license required in order to provide
14 funeral goods or funeral
services, pursuant to sections 1801 to
15 1812 article 18 of the occupational code, Act
No. 299 of the
16 Public Acts of 1980,
being sections 339.1801 to 339.1812 of the
17 Michigan Compiled Laws
1980 PA 299, MCL 339.1801 to
339.1812.
18 Sec. 20. (1) Upon a
complaint made by any a person, or
19 upon its own initiative,
the department may investigate alleged
20 violations of this act or rules promulgated under this act
21 alleged to have been committed by a registrant or any other
22 person. The department may examine books, records, contracts,
23 and other documents in possession of or under the control of
24 any a registrant with or without the consent of
that registrant
25 and with or without a warrant authorizing the examination, or of
26 any other person if that person consents to an examination or if
27 the department obtains a warrant authorizing an examination. If
1 the department determines that reasonable cause exists to believe
2 that a violation has occurred, it shall do 1 of the following:
3 (a) If the alleged violation was committed by a person other
4 than a registrant, the department shall refer the matter to the
5 attorney general or a prosecuting attorney for criminal or civil
6 action as provided in sections 23 and 24.
7 (b) If the alleged violation was committed by a registrant,
8 the department shall do either of the following:
9 (i) Refer the matter to the attorney general for civil or
10 criminal prosecution or enforcement.
11 (ii) Institute administrative proceedings in
compliance
12 with under the administrative procedures act of
1969, Act
13 No. 306 of the Public
Acts of 1969, being sections 24.201 to
14 24.328 of the Michigan
Compiled Laws 1969 PA 306, MCL
24.201 to
15 24.328.
16 (iii) Issue a cease and desist order.
17 (2) If, after a hearing, the department determines that a
18 registrant has violated
the provisions of this act or any a
19 rule promulgated pursuant
to under this act, the department
20 shall do 1 or more of the following:
21 (a) Suspend or revoke the registration.
22 (b) Impose a
civil an administrative fine not to exceed
23 $5,000.00 for each
violation. and The department may suspend
24 the registration until the administrative fine is paid.
25 (c) Require restitution of funds paid pursuant to a prepaid
26 funeral contract. and
restitution The department may include
27 suspending suspend the registration until restitution is
made.
1 (d) Impose a period of probation during which the registrant
2 is required to comply with additional conditions imposed by the
3 department in lieu of or in addition to the imposition of other
4 sanctions or penalties provided
available under this act.
5 (e) Impose restrictions upon the registrant's prepaid funeral
6 business activities which
that require additional
7 accountability to the department.
8 (f) Issue a written warning to the registrant.
9 Enacting section 1. This amendatory act takes effect
10 January 1, 2004.