$18M Paid Out in Prepaid Funeral Suit

February 7, 2011
Advertisement

imageAn $18 million settlement to partially cover losses in prepaid funeral plans has been distributed to Illinois funeral directors after being tied up in a lawsuit for nearly two years.

The state Department of Insurance announced the distribution Friday, but its news release did not mention that the settlement terms had been changed.

The original settlement in May 2009 called for Merrill Lynch & Co. to pay $18 million to resolve allegations that it did not properly supervise one of its insurance agents who was a financial adviser to the Springfield-based Illinois Funeral Directors Association. The trade group managed a trust that was supposed to safeguard consumers who bought prepaid funeral plans.

Advertisement

But a state audit in 2005 revealed that the trust was underfunded by as much as $50 million and found other irregularities, such as excessive management fees.

The deficit meant that funeral directors could lose money on the prepaid plans, and consumers who bought non-guaranteed contracts also could suffer harm. Some consumers and funeral homes sued Merrill Lynch and its financial advisers.

To receive the proceeds, funeral directors had to release Merrill Lynch from any legal claims. Some objected and sued the insurance department and comptroller?s office, which regulates prepaid funeral contracts.

A year ago, a Cook County judge ruled that the department of insurance acted beyond the scope of its statutory authority to condition the distribution of the settlement funds on a broad release. The insurance department amended the settlement to exclude the release.

The judged entered her final order in November.

?The distribution of the $18 million will help funeral directors honor commitments made to Illinois families and will further support the essential services provided by funeral homes around the state,? Insurance Director Michael McRaith said in a statement.

At least two suits are pending against Merrill Lynch.

Source

CDFuneralNews

ConnectingDirectors.com is the leading online daily publication for funeral professionals with a reader base of over 45,000 of the most elite and forward-thinking professionals in the profession. With ConnectingDirectors.com we have created a global community through an online platform allowing funeral professionals to Stay Current. Stay Informed and Stay Elite.
Advertisement

You may be interested

Jobs
2 views

Sales Professional – North FL/Georgia

CDFuneralNews - August 17, 2017

Wilbert Funeral Services Inc. is a wholesale product and service provider to the funeral industry. Our manufactured products include burial…

On Our Soapbox: The Truth About Cremation | FUNERAL nation 085
FUNERAL Nation
153 views
FUNERAL Nation
153 views

On Our Soapbox: The Truth About Cremation | FUNERAL nation 085

CDFuneralNews - August 16, 2017

Cremation truth and Social Media Screwup: Watch Ryan & The Commander tell it like it is on their soapbox! (more…)

How Watching Movies In a Cemetery Became an L.A. Summer Staple
Cemetery
54 views
Cemetery
54 views

How Watching Movies In a Cemetery Became an L.A. Summer Staple

CDFuneralNews - August 14, 2017

The often sold-out Hollywood Forever Cemetery screenings have cemented themselves as a seasonal institution in the Southland, drawing scores of fans and A-listers.

Comments