Funeral Industry News

Lawmakers Seek Repeal of Ban on Pre-paid Funeral Discounts

March 14, 2012

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Lawmakers Seek Repeal of Ban on Pre-paid Funeral Discounts

NASHVILLE — Over the objections of some in the funeral home industry, two Knoxville legislators are proposing the repeal of a 1959 state law that prohibits discounting funeral costs to those who pay in advance.

Sen. Becky Massey and Rep. Ryan Haynes, both Knoxville Republicans, are sponsoring SB1286 at the behest of a group called Tennesseans for Funeral Reform, which is headed by Fred Berry III, manager of Berry Funeral Home in Knoxville.

It is scheduled for votes in committees of both the House and Senate this week. In January, state Attorney General Bob Cooper issued a legal opinion declaring the law in question is valid. Cooper was responding to a Haynes question on constitutionality of the statute.

Berry, whose grandfather served 16 years as a Republican senator from Knoxville, told the Senate Commerce Committee last week that the law was not really enforced until about two years ago. Since then the state’s funeral regulatory board, housed under the Department of Commerce and Insurance, has been inspecting contracts and imposing fines for violations.

Berry said that allowing discounts in the sale of “pre-need” funerals would save consumers money and encourage more people to make arrangements in advance. He said Tennessee is the only state in the nation with such a prohibition — a point disputed by those opposing the repeal bill.

Representatives of the Tennessee Funeral Directors Association and the Tennessee Funeral Home Directors and Morticians Association testified against the bill, contending that current law protects consumers and should not be changed.

The critics also characterized the dispute as “Wall Street versus Main Street” because those pushing the repeal are primarily large, multistate corporations and opponents are primarily smaller, independent funeral homes. Berry Funeral Home is owned by Houston-based Services Corp. International.

Spokesmen for the associations said problems develop when the person buying a pre-need funeral moves or when the company selling it goes out of business or relocates.

State law otherwise requires that funds from pre-need sales be held in trust, but opponents said funeral homes not a party to the original agreement can turn down a bereaved family seeking funeral services — and sometimes do — when the money in trust is not enough to cover their costs. That means the family often winds up paying more; and, if discounts are allowed, the problem would be exacerbated.

Berry told lawmakers the present law amounts to “price fixing.” The attorney general’s opinion says that, while similar bans might violate antitrust laws in other situations, federal statutes and court rulings have viewed such restrictions as a legitimate exercise of state authority in the pre-need funeral industry.

That is because, the opinion said, pre-need funeral sales “present opportunities for fraud and frequently cater to vulnerable populations.”