Judge’s Ruling Could Increase Funeral Home Competition in Minnesota
A St. Paul funeral director prevailed in a lawsuit that said requiring embalming rooms at new locations was a barrier to competition.
As a young funeral home director, Verlin Stoll, 28, knew that one way to compete with well-established funeral homes is on price. But the requirement that every funeral home in Minnesota have a specially equipped embalming room, costing $30,000 to $50,000, limited his ability to do that.
That’s why Stoll, owner of Crescent Tide Funeral and Cremation in St. Paul, decided to fight the rule. Last March, he became the lead plaintiff in a lawsuit filed against the Minnesota Department of Health, which regulates funeral homes in the state.
He believed the embalming-room requirement was a competitive barrier because Minnesota funeral home directors aren’t required to actually use the rooms. Indeed, funeral home owners with more than one location will often use just one for embalming work, and some even hire third-party companies to do such preparations.
On Wednesday, Stoll won his case. Ramsey County District Judge John Guthmann struck down the law, and Stoll can now expand without the expense of an embalming room at each location. “This will open the door to those who want to expand the lower-cost funeral model,” he said.
The Department of Health is reviewing the ruling to determine its implications and next steps, said Scott Smith, a department spokesman.
In his ruling, Guthmann wrote, “The embalming room requirement, which would require Stoll to expend $30,000 or more to build a preparation and embalming room at any funeral establishment where no preparation and embalming is performed, constitutes an irrational exercise of the state’s police power.”
Last year, a federal judge in Pennsylvania struck down a similar requirement for embalming rooms in all funeral homes, a ruling that Guthmann referred to in his decision.
At the time the suit was filed, Stoll was hoping to expand his business with a second location in St. Louis Park. That space is no longer available, but Stoll still hopes to add locations consistent with his lower-cost model. In a 2013 price survey conducted by Funeral Consumers Alliance of Minnesota, a consumer advocacy organization, Stoll’s price for a full-service funeral ($2,180) was the lowest of more than 60 Twin Cities funeral homes, with most homes charging $4,000 or more.
Some Minnesota funeral directors opposed a change in the regulation and actively lobbied against it at the Legislature, said Katelynn McBride, lead attorney for the Institute of Justice, which teamed up with Stoll to challenge it in court. The law kept young entrepreneurs out of the business because they couldn’t afford the $30,000 embalming room at each new location, she said. “Established funeral homes wanted to be protected from younger competitors that undercut their prices,” she said.
Michael Dahl, president of the Minnesota Funeral Directors Association, said an embalming room is a small part of the overall cost of a funeral home. “I’m not sure the cost of a preparation and embalming room is a deciding factor to expand,” he said.
Currently, 20 states require each funeral home to have an embalming room even if it is never used, 14 states have no embalming room requirement unless embalming is performed on the premises, and 13 states require an embalming room in a funeral home’s first facility but not at additional locations, with certain exceptions.
The Minnesota Department of Health has 60 days to decide whether to file an appeal, and funeral homes are waiting for clarification from the Department of Health about the impact to their business, Dahl said.
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