Текст книги "The American Way of Death Revisited"
Автор книги: Jessica Mitford
сообщить о нарушении
Текущая страница: 21 (всего у книги 23 страниц)
19. PAY NOW—DIE POORER
“In the Depression years, every community had a form of preneed,” mused North Dakota funeral director Tom Fisher in a poolside chat with the author in 1995. “In my own community we had the Farmers Union Burial Cooperative Society.”
The early funeral and memorial societies—most of them urban—expressed divergent views on the subject of paying for a funeral in advance. Many societies actively promoted “peace of mind by planning ahead,” negotiating for fixed prices with cooperating mortuaries. Not all were willing to part with their money, however. The societies’ Bulletinwarned: “It always pays to plan ahead. It rarely pays to pay ahead.”
Today, the need to shelter assets for Medicaid eligibility is another reason people pay for their funeral in advance. There are now no federal guidelines limiting the amount that may be set aside for a funeral. Many states—exercising their options as administrators of Medicaid—have set their own limits. Connecticut has set its limit at $4,800; California, $10,000. In New Jersey, the sky’s the limit, and it need hardly be said that this is well known by the vendors of funeral services in that state. A hidden-camera “20/20” investigation captured an undertaker offering to accept $20,000 for a future funeral, assuring the client that any “extra” would be returned to the family.
Funeral directors have a strong motivation to sell ahead of time. Each funeral they have under wraps is one less that will go to a competitor. “A well-run, aggressive preneed program will increase a firm’s market share,” writes Thomas Barnard in the NFDA journal The Director. Given a nationwide proliferation of funeral homes, market share is a driving concern. According to the Funeral and Memorial Societies of America, “If people died Monday through Friday with two weeks off for the mortician’s vacation, the death rate in the U.S. could support 9,288 full-time funeral homes. Yet there are more than 22,000 mortuaries in this country. Many get only one or two funerals a week.”
Do people spend more or less when they plan ahead? Prearranged funerals tend to be much less expensive than those arranged by sorrowing survivors, according to some reports. Howard C. Raether took note of this fact long ago at a National Funeral Directors Association convention. He was discussing an analysis of funeral sales: “If it were possible to tabulate all the prearranged funeral services on record, how do you suppose the average of all of them would compare with the average adult figure shown here?” (Average adult figure means average price of an adult’s funeral.) “Are you ready, willing and able to become part of a program that is going to lower the quality of the average funeral service selected to the point where you will find it difficult if not impossible to stay in business rendering the service you now give?” He added, “It is good for those who survive to have the right and duty to make the funeral arrangements. Making such arrangements, having such responsibilities, is essential. It is part of the grief syndrome, part of the therapy of mourning. It is a positive hook upon which the hat of funeral service is hung. Why should we tear it down by saying the funeral is for the deceased, therefore he or she should make the arrangements?… If funeral directors insist on soliciting pre-need funerals, they are in fact prearranging the funeral of their profession.”
More recent developments in the techniques of pre-need selling, a matter of prime importance to the trade, have proved Mr. Raether’s dour prediction wrong. According to Ron Hast, that knowledgeable sage of the industry, people tend to be more gullible when seated comfortably in their own living rooms. “Pictures of beautifully displayed caskets are far less intimidating when shown to the prospect while sitting on the sofa than when they are presented in a mortuary’s casket selection room…. They start to think of them as quality furniture. They will spend more, not less, on a prearranged casket.”
In any case, those gloom and doom predictions on the impact of prearrangement have long since fallen on deaf ears. By 1995 no less than $20 billion was, according to Consumers Digestsenior editor John Wasik, tied down in prepaid funeral and cemetery plans. That estimate, outsized as it seems, is surely on the low side, because SCI alone today lays claim to holdings of $3.2 billion in prepayments.
Today, it is the corporate chains that are doing some of the most aggressive selling. What do they know that the public does not? And what can be wrong with paying in advance to guarantee prices?
Inflation is the bugbear that is used most effectively by the sellers of prepayment plans. In recent years, however, while inflation has been raising the cost of living generally by 2 to 3 percent annually, funeral costs have been increasing by 6 to 7 percent—which is more than the interest the mortuary is pocketing on your prepaid funeral contract. As the numbers pile up, funeral providers are becoming wary of the trap of the guaranteed price. The Midwestern owner of several funeral homes is quoted in the NFDA organ The Directoras predicting: “Ninety-nine percent of the guaranteed preneeds will be performed at a loss.” Likewise aware of the problem, Funeral Service Insideradvises against guaranteeing prices on future contracts, suggesting the following disclaimer: “If the death benefits are less than the current retail price at the time of death, an additional amount of funds will be due.” With an escape clause like that, you—the consumer—have saved no money with a pre-need arrangement. All you’ve done is paid part of the money in advance, and committed your survivors to pay the funeral director whatever he’s charging at the time of death—eliminating the chance that your nearest and dearest will be free to shop around for a better deal.
If you have already purchased a guaranteed-price plan—which leaves you with the feeling that you’ve got a great deal because the local funeral home will take care of everything—then what?
It’s a situation that invites abuse. The daughter of one Vermont woman, who a few years earlier had paid $3,000 for her funeral, was billed for an additional $1,000 service charge by the funeral home’s new owner.
How else can the undertaker make up for funeral inflation on a prepaid contract? “Cash Advance” items—cost of the obituary (if there is a fee), the death certificate, flowers, or cemetery expenses—will not have been included in your funeral package. An SCI-owned funeral home charged a Denver husband $200 to fax four copies of his wife’s obituary to area newspapers—where the obits ran for free. A New York widow was told, “We’ll take care of everything.” The mortician charged her $175 to have her husband’s date of death inscribed on the existing family monument. Actual cost of the inscription? $75.
Among the creative ideas currently favored by the industry, none is more profitable, nor more subject to abuse, than its appropriation of the legal fiction of “constructive delivery.” Prepayment laws in most states require that prepaid funds be placed in trust. California, for example, requires 100 percent trusting, but, like many states, has a loophole wide enough to accommodate a Cadillac hearse. It exempts from the trust requirement monies paid in advance for the prepurchase of goods such as burial plots, vaults, markers, and so on—the bulk of the cost of burial—provided that the prepurchased items are stored or warehoused for the customer’s future use. Constructive delivery is in reality no delivery, and it is the rare consumer who will have the wit to even try to ascertain whether or where the prepaid goods are being stored, let alone have the persistence to demand a glimpse of the items he or she presumably owns.
Neptune Society provides an instructive example of the invitation to large-scale fraud afforded by constructive delivery. A recent release by the California Department of Consumer Affairs announced that three of Neptune’s eleven locations (San Pedro, Burbank, and Santa Barbara) were charged with “unprofessional conduct” for allegedly failing to place $12.6 million into a trust fund “or to maintain sufficient merchandise to match purchases.” For this egregious fraud, Neptune must have been delighted to receive no more than the customary slap on the wrist in the form of three years’ probation, during which they were permitted to remain in business. There is also an order to pay $55,000 to reimburse the department for costs, but nothing is said about reimbursing the consumer $12.6 million for the apparently misappropriated boodle.
Of the $12.6 million, $9 million was allegedly for the sale of caskets and urns. This is odd, because Neptune, numero uno in the for-profit cremation business, well knew that caskets are not required, nor are urns. Karen Leonard, however, has the videotape of a “Dateline NBC” program in which she participated, on which one of Neptune’s top salespeople explained, in an expansive mood, that the law requires a casket (cost: $400), while in practice bodies are cremated in a shroud. This avid seller likewise explained that an urn is required by law (cost: $75), whereas a $2 cardboard box is used.
One of the biggest problems—and greatest opportunities for mischief—may be the choice of casket. Like automobiles, casket styles change often, sometimes as frequently as every six months. If your pre-need agreement specifies the “Tuscany H66813D” and the Tuscany H66813D is no longer available, your survivors may be asked, for an added fee, to select a different box.
A legal action now pending in Louisiana suggests that there may be far more serious problems in obtaining the benefits of a pre-need plan.
E. J. Ourso sold his fifteen funeral homes and funeral insurance company, Security Industrial, to Loewen in 1996 for a reported $180 million. One can only speculate on how the value of these properties was broken down in the negotiations over price, but it seems reasonable to guess that the funeral homes were worth no more than $3 million apiece, on average, or $45 million total. Given that assumption, Loewen paid about $135 million for the funeral insurance company.
Why would Loewen pay that much money to take over liability for funeral insurance policies—many of which were sold decades ago for $300 or less—guaranteeing to provide a funeral which today would cost many times that amount? Wouldn’t they expect to lose a lot of money when people cash in the policies? Are these people saints? One can only guess, but it seems likely that Loewen expects to sell a lot of “extras” to the survivors.
At this writing, a class action has been filed. Undoubtedly, many versions of the “facts” will be argued before it is resolved. In the meantime, Peggy Porter of Baton Rouge—whose father is a claimant in the suit—wrote a lengthy letter to her state representative, describing the ordeals her family went through with an insurance policy that had promised to fully cover her mother’s funeral. The letter is quoted in abridged form below:
Dear Mr. Dardenne,
Please accept this letter as a formal request to personally meet with you to discuss a matter of great importance to the elderly and the “baby boomers” of Louisiana….
Hopefully, you won’t send me a form letter telling me that another department handles such matters. I have tried them all. Earlier, I wrote to the La. State Insurance Commission, La. State Board of Embalmers and Funeral Directors, La. State Attorney General’s Office, Jefferson Parish Attorney General’s Office, New Orleans Better Business Bureau, Funeral Service Consumer Assistance Program and the Federal Trade Commission….
The La. State Insurance Commission, although they are investigating my complaint, say that they do not have jurisdiction over such matters. They say the La. Board of Embalmers and Funeral Directors has control. This involves an insurance policy which should be under the control of the insurance commission. Pam Williams has said that because there have been so many complaints, there has been a task force set up to investigate these matters. This has been happening for more than 20 years. How long and how many complaints does it take to get action and restitution? Mr. and Mrs. Schwartz and my father are in their eighties. Time is running out.
The La. Board of Embalmers and Funeral Directors replied to my complaint by saying, in a “unanimous decision they found no apparent violation of the statutes, rules and/or regulations under which the board is empowered to operate.” They also stated that the Board has no jurisdiction over “insurance” policies. I wasn’t given the opportunity to appear and speak before this board made this decision. The La. Board of Embalmers and Funeral Directors is a farce. According to its Rules and Regulations, this board is made up of seven members appointed by the Governor. Six of those members are either embalmers or funeral directors and one is a consumer that must be at least 65 years old. A consumer doesn’t have a chance….
The Attorney General’s Office says they are without jurisdiction over this matter, that all insurance matters are subject to regulation by the La. Insurance Commission and that these transactions are specifically exempted from the Unfair Trade Practices Act and Consumer Protection Law. How can such matters, which will at some time in their life affect almost every consumer, be exempt from the Unfair Trade Practices Act and Consumer Protection Law?
…In June 1942, my father purchased a funeral policy from Tharp-Sontheimer Life Insurance Company for my mother, Liberty Lemoine Feldheim, as well as one for himself. Later, in 1943 & 1945, he purchased one for each of his three daughters at a cost of approximately $218 per policy. Two hundred eighteen dollars does not seem like much, but in the 1940s, when your annual salary was approximately $3,000, it was quite a lot. As you can see, the policy included just about everything needed for a complete funeral. This policy was not purchased through a fast-talking salesman but from my grandfather, his father. I feel confident that my grandfather would not have sold these policies to family members and friends if he had known that it was a scam or fraudulent.
On April 15, 1996, my mother died. On April 16, 1996, my father and two sisters met with David Rogers with Tharp-Sontheimer, 1600 N. Causeway Boulevard, Metairie, La. In going over the arrangements they were shown one casket that he said was included in the policy. It looked as if it was covered in a felt material that resembled carpet padding (bits and pieces glued together) and that it might fall apart from the weight of a body. My father asked if he could pay extra for a better casket. They refused and said ANY changes in the casket voided the policy, but they would give a credit of $300 toward the cost of a more expensive funeral. This seems like the old “Bait and Switch” scam so widely used to swindle people.
My father then said he would take the original casket with the services offered in the policy and donate the casket to someone’s family who couldn’t afford one and purchase an additional casket. Again they refused. They stated that under a Federal Trade Commission ruling they were not allowed to substitute or upgrade a casket or even separate a casket from the services. (In a recent conversation with the FTC, I have been told there is no such ruling.)
Please note on the enclosed price list of caskets available, there are no Embossed Grey Tharson or Grey Analea Cloth Covered Caskets, as specified on the policy. Since they were not listed, they were not available. Why were they only shown one casket when the policy specifically lists two caskets? How do we know that the one casket offered was one of the two specified in the policy? When asked which one it was, the Tharson or the Analea, they simply say it is the one that goes with the policy. Could it be Tharp-Sontheimer had already made their own substitutions in the caskets when they said they were not allowed to? What gives them the right to make their own substitutions without notification and/or approval of the policyholder?
…After several futile requests were made to have them allow us to pay for a better casket without voiding the rest of the services offered in the policy, my father and sisters, feeling both emotionally and physically drained, did what the funeral homes rely on them to do. They chose a different casket and the services they wished to have and in the end were given an invoice in the amount of $7,916.84 after the $300 credit. The cost of the chosen casket alone was $3,595.00 plus tax. From there they went to see David Rogers’ supervisor and Chairman of the Board, Stephen Sontheimer, at the 4127 S. Claiborne Avenue, New Orleans office to plead their case. Having to deal with my mother’s sudden death combined with five days of little to no sleep while at the hospital, we were all in emotional turmoil. At a time when compassion and understanding were most definitely needed, they found Mr. Sontheimer to be very arrogant, disrespectful and degrading. Mr. Sontheimer refused their repeated request and led them to believe that there was absolutely nothing he could do. Why would the insurance company and/or funeral home not allow you to purchase a different casket without voiding the rest of the benefits of the policy if it were not meant to be a scam of “Bait & Switch” or “Insurance Fraud.” What harm could it do? We are aware of at least one New Orleans funeral home that has allowed such changes.
Enclosed is a copy of the invoice for my mother’s funeral. As you can see, $7,916.84 is a far cry from the $218 he originally paid. There was no credit given for inflation, unless you want to consider the $82 difference in the amount paid and the face value. Do you honestly think that people would have purchased these policies if they would have known that they would be offered inferior merchandise or that all they would have been given was a $300 credit? They could have invested the original $218 in a regular savings account with a minimal interest rate and would have had several thousand dollars after 50 years. If you add the figures for the services originally offered in the policy and their respective costs today, from the Security Funeral Homes price lists and the invoice, the credit figure should have been more like $5,067.00.
My father bought these policies 50 years ago to protect himself and his family from having to face the high costs of funerals and possibly not having the funds to cover them. He did what he thought was right, he bought through an honest agent (his father) and from what he thought was a reputable and trustworthy company, Tharp-Sontheimer. In our extended family alone there are at least eight more of these policies yet to be used.
…Since the purchase of these policies in the ’40s, Tharp-Sontheimer was bought out by Delta Life Insurance, Security Industrial Insurance Company and most recently The Loewen Group for $180 million. It proves that there was and still is definitely a lot of unsuspecting people of Louisiana being swindled out of money. This is very upsetting. Just recently The Advocateand the Times-Picayunepraised E. J. Ourso, who owned Security Industrial Insurance, for his $15 million donation to an LSU Business School to be named in his honor. In one article he was quoted as saying, “I’m not up here through ambition, drive and persistence—two things got me here: her (Marjory’s) fertility and compound interest.” The truth is he was running a scam: Selling preneed burial policies, collecting people’s nickels, dimes or quarters each week and, by his own admission, receiving interest on these monies, sometimes for as long as 50 years. When the time of “need” came there was usually some excuse or reason (usually involving the quality of the casket) which prevented the policy holder or his family from receiving the full benefits of the policy. All he did was pay the $300 or so and just pocketed all the interest….
There was a recent suit between Tessier and Rabenhorst Funeral Home and Insurance where the appeals court ruled in favor of Tessier in a matter very similar to ours. There are also two other families I am aware of that are filing suits. Not everyone has the funds to file civil suits nor the stamina to follow through on their complaints when all they get are reply letters or people telling them that “it’s not my job.” Everyone keeps passing the “Buck.” Most of the complaints have fallen through the cracks of Louisiana politics. When is this going to stop? When are Louisiana politicians going to stop their crooked ways and stand up for the people of Louisiana?
I hope you will use your resources and do a thorough investigation into this matter. You might be surprised how widespread this problem is in Louisiana. It is going to take new state laws governing the insurance and funeral industry to protect the people of Louisiana from these fraudulent activities. Teresa Fox, who lives in Kenner and also has a similar complaint, has been trying to get help for the past two years and has contacted her representative, Glenn Ansardi. Maybe if we all work together, it won’t take another 20 years before changes can be made….
Sincerely yours,Peggy F. PorterEnclosures
This situation in Louisiana may serve as an example of problems elsewhere. Lee Norrgard, consumer affairs analyst for AARP, has been monitoring the problems of prepaid funerals. In Final Choices: Making End-of-Life Decisions(ABC-CLIO, 1992) he writes: “Is there adequate consumer protection for buyers of preneed plans? At this point, the answer is no. Regulations, investigations, and auditing are minimal in most states. In at least one instance, some of the worst abuses surfaced as a result of private legal actions rather than state enforcement activities…. Buyer beware!”
The Consumers Digestarticle reports that “about $50 million in preneed funds was stolen or reported missing nationwide.” As of 1997 only seven states had some sort of guarantee fund to protect consumers against such default: Florida, Indiana, Iowa, Missouri, Oregon, Vermont, and West Virginia.
Anyone who has paid for a funeral—or is thinking about it—should ask, “Where is the money invested and is it safe?” There are several ways to handle funeral financing in advance, some safer than others.
When you make out a check to the mortuary to pay for a pre-need funeral, there is noguarantee that the money will find its way to safekeeping. One funeral director complained that he hadn’t had a funeral in thirteen weeks and was worried about how to meet business obligations. When “Mildred” prepaid for her funeral, he used the money for his mortgage payments, despite the fact that the state required that 100 percent of the funds be placed in a federally insured institution. It’s likely that he had every intention of taking care of Mildred when she died, but when the state finally put him out of business for other misdeeds, officials discovered that $150,000 in prepaid funeral money—including Mildred’s—had vanished.
Few states require that all prepayments be placed in trust. Fewer still do any auditing. This is particularly true of cemetery prepayment and perpetual-care funds. The cemetery owners generally have unrestricted access, which accounts for the scandalously high incidence of misappropriation of endowment care funds. Without conscientious auditing, there can be no assurance that prepaid funds are safe. California, which is one of the few states that require 100 percent trusting of funeral prepayments, also leads the nation in the incidence and the magnitude of the thievery.
Perhaps most at risk are those in small towns—where everyone knows everyone—who place great trust in the local funeral director. In 1977, after receiving an estimate of $587 for the simple funeral she wanted, Annie Patterson sent a note to the man she thought of as “her” funeral director:
I will be sending a little each month as I am living on Social Security.
Annie told her children that “it was all taken care of,” and—because she was a meticulous and responsible person—no one doubted her.
When Annie died almost twenty years later, “her” funeral director had already passed away. A son had taken over the business, but Annie’s family felt comfortable calling the small-town funeral home she had trusted for her final care. The first sign of trouble came when they were told, “You know it will be more than $587, don’t you?” When a final funeral bill was presented for $3,695, there was no mention of the $587 that had been prepaid, let alone any interest that might have accumulated. The family was shocked. A simple cremation and graveside service was all they had arranged. A scramble through Annie’s shoe box of important papers turned up no receipts. Annie had never used checks; she always paid in cash.
Insurance policies generate a relatively low rate of appreciation. The seller gets a commission, and the insurance company pays itself to invest the funds. “Insurance-funded preneed arrangements are the fastest growing preneed product on the market,” says Lee Norrgard. A number of funeral-related companies are getting into the funeral insurance business. “Forethought”—which is sold through funeral homes—is managed by the Batesville Casket Company and guarantees to “freeze” the wholesale price of the casket to your funeral home. But the low rate of growth on the policy—estimated at 3.63 percent—doesn’t match overall funeral inflation. “I can handle that,” said one undertaker, “because my prices are where they should be” (high, one would find) “and I don’t mind guaranteeing the funeral price.” Unless the funeral home chooses to make such a commitment, survivors may be hit with additional costs.
Master trusts set up by morticians’ associations exist in thirty-two states. Only some of your prepaid funeral money may end up in the trust, depending on state law. Colorado, for example, requires a deposit of only 75 percent, allowing the funeral director or other sales agent to pocket a 25 percent commission. State associations that promote these trusts are paid a quarterly fee based on total investment—a strong motivation to push them. Commingled funds can be invested at a high rate of return which allows your account to grow at more than 5 percent on average while still covering the various fees. Some contracts use this growth to guarantee funeral goods and services; some do not. A few states permit a funeral home to withdraw an annual administrative fee, but most mortuaries leave it in the trust to grow, according to Nancy Gorchoff at the Access Financial Group, which manages such accounts for several states. The trust fund group takes care of reporting the interest. How much you get back if you were to cancel your arrangements would vary from state to state. Even the states that require 100 percent trusting permit the undertaker to claim an administrative fee.
A pay-on-death trust account at your local bank will give you the most control and flexibility. Sometimes called a “Totten Trust,” it can be moved easily if you do; it’s as safe as the bank it’s in. Pennsylvania attorney David Morrison, who specializes in elder law, recommends that you name yourself, or a close friend or next of kin—not the mortuary—as the beneficiary.
Whether you choose an irrevocable funeral plan or not will depend on whether you need to shelter assets prior to applying for SSI or Medicaid. Morticians are always eager to sell an irrevocable funeral contract, especially if you have arranged for a rather elaborate exit. Most people think that when it’s “irrevocable,” the body is all but in the hearse, and some funeral directors may use the “irrevocable” ploy to keep the arrangements fixed.
When her father died at a very old age, P.F. decided to opt for an immediate cremation rather than the funeral with viewing for which he had already paid. All her father’s friends had died, and the few scattered relatives would not be able to attend. When the funeral home refused to honor her request to change the plans, she walked out, then transferred the body—and the funeral funds—to another mortuary.
Mrs. S., after hearing a social worker at the senior center advise about protecting funeral money before ending up in a nursing home, promptly visited the local funeral director to make arrangements. She wanted to be embalmed before she was cremated, she said—just to make sure she was dead. The funeral director started adding various other charges to the list on his yellow legal pad (urn, urn vault, tent at the cemetery) until the total was over $3,200. Mrs. S., eager to protect her children from any worry or expense, wrote a check on the spot, made out to the local bank where her trust account would be held. But after a few weeks, she was troubled. She had selected cremation because she wanted to keep the cost down. A bill of $3,200 seemed like too much, so she wrote to the state Funeral Board. There was nothing the board could do, she was told—her plan was “irrevocable.” Only after the intervention of the local memorial society—which pointed out numerous FTC violations in the transaction—and the help of an interested employee in the Department of Banking and Insurance did the funeral home agree to refund her money.
Irrevocable plans can almost always be transferred from one funeral home to another, but few morticians will offer this information. When Mrs. H. moved in, the nursing home insisted that funeral arrangements be made without delay. Her daughter—without any consultation—arranged for a $4,000-plus funeral at the only funeral home in town, written up in an irrevocable funeral contract and paid for from Mrs. H.’s own checking account. It had been difficult for Mrs. H. to manage her affairs—arthritis had taken away her sense of independence and control, and she’d depended on her daughter to write her checks, among other things. But she knew that the $4,000 funeral was not to her liking. With the help of a Senior Law Project attorney, she was able to transfer her “irrevocable” funeral plan to another funeral home. After writing up an irrevocable agreement for a $695 cremation, the new funeral director instructed the bank to refund the difference.
