Legislator looking to boost regulation in funeral industry

Bruce Rushton

A Bloomington funeral home director-turned-legislator is rattling an industry already rocked by huge losses in a pre-need funeral fund.

State Rep. Dan Brady, R-Bloomington, is sponsoring a bill that would increase regulation of pre-need funeral sellers, while he opposes a measure to boost state compensation to funeral home directors who take care of the indigent.

Under Brady’s pre-need funeral bill (House Bill 815), anyone who sells pre-need funeral contracts would have to be licensed by the state Department of Financial and Professional Regulation and complete 24 hours of education every two years. In addition, contract sellers would have to give purchasers the choice of putting their money in a bank, a trust fund or some other place for safekeeping.

The measure is aimed at contract sellers who work on commission, said Brady, a former McLean County coroner who has kept his funeral home director’s license. Funeral home directors must be licensed by the state comptroller’s office, he said, but there are no licensing requirements for salespeople. He says his bill is aimed at protecting consumers.

“One would think the funeral home directors association would be supportive,” Brady said Thursday. “I don’t know why they’re against this stuff.”

Duane Marsh, executive director of the Illinois Funeral Directors Association, said his group isn’t necessarily against the bill, but it needs work. For one thing, the association wants to be sure pre-need contract sellers, not just funeral homes, would still be allowed to sell contracts. The association also isn’t certain purchasers of guaranteed pre-need contracts should have the power to say how their money would be invested, Marsh said.

Under guaranteed contracts, funeral home directors are obligated to provide services regardless of what happens to investments made with money from consumers. With non-guaranteed contracts, consumers — or their loved ones — can be required to add more money when services come due if the cost of services exceeds amounts on deposit. Since funeral home directors assume the risk with guaranteed contracts, Marsh said directors should decide how money is invested.

Brady didn’t consult with IFDA before filing the bill, Marsh said. The funeral directors association is now considering how it should be amended.

“The bill is a good idea,” Marsh said. “We’ve just had some concerns with the language.”

The bill comes against a backdrop of financial disaster in the state’s funeral industry. A pre-need funeral trust once administered by the IFDA has plummeted in value, sparking lawsuits from funeral home directors and consumers who allege the trust was mismanaged. The state comptroller’s office stripped the IFDA of its power to administer the fund in 2007 after discovering the fund had a deficit of $39 million. The fund’s value was written down by $59 million, or 25 percent, last fall.

A separate bill to hike state payments to funeral homes that provide services to the indigent stalled Wednesday after Brady told a House committee now is not the time to increase subsidies for funerals for the poor.

House Bill 2436 would give funeral home directors $103 more to perform each funeral service for the indigent and increase payments for burials or cremation by $52 apiece. Funeral home directors now receive $1,000, and cemeteries or crematoriums get $500. The House Executive Committee declined to move the bill forward after Brady spoke up.

“To me, that just doesn’t make a lot of sense,” said Brady, who pegs the increased cost to the state at $2.7 million.

In an interview, Brady called the bill a bailout for funeral parlors. Instead of asking for more money, he said, funeral home directors who now wait months for reimbursement should be demanding that the state promptly pay funeral bills.

Rep. Robert Rita, the bill’s sponsor, said his proposal is about families, not funeral homes. Even if his measure passes, the state still wouldn’t cover the full cost of funerals, he said.

“What happens is these (funeral) directors are reluctant to take these cases because it ends up costing them money,” said Rita, a Democrat from Blue Island. “Every family deserves to bury their loved one with dignity.”

IFDA supports Rita’s bill. Marsh says the issue is a “humanitarian thing,” but funeral home directors will still help the indigent.

“Funeral home directors are going to continue to provide the service no matter what,” Marsh said.

Capitol Bureau chief Ryan Keith contributed to this report. Bruce Rushton can be reached at (217) 788-1542.