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FTC Staff Provides Several Funeral Rule Clarifications in Three Advisory Letters

by T. Scott Gilligan

Craig Tregillus, the Federal Trade Commission's (FTC) Funeral Rule coordinator, issued three Staff Opinion Letters on April 16, 2009, that provided clarification on several previously issued Staff Advisory Letters. While there were no surprises in the new opinions, they do help resolve some lingering questions posed by the earlier letters.

Free and Nominal-cost Funerals
In a Staff Advisory Opinion issued on February 17, 2009, regarding discounted funeral packages that require the purchase of a casket, Tregillus stated, "the Rule requires that all of a funeral provider's clients pay the same basic services fee that is disclosed in its GPL."

NFDA was concerned that this statement could be construed as preventing funeral homes from providing free or discounted funerals to indigent families, special groups or others for whom the funeral home chooses to provide its services at less than its basic services fee.

In Staff Opinion 09-3, Tregillus clarified that the statement regarding the basic services fee being the same for all of a funeral home's clients applies only to the issue of discounted packages. In putting together a package, the funeral provider may discount all of the goods and services comprising the package, except the basic services fee. However, the statement does not apply to other non-package situations, such as reducing a funeral home's prices for an indigent family or a special group. Therefore, funeral homes retain the right to reduce prices or provide funerals for free as they wish.

Service Vehicles
In Staff Advisory Opinion 07-2, it was explained that a funeral home may not have a separate charge on its GPL for "service vehicle to obtain a death certificate" if the funeral home provided this service in virtually all of the dispositions handled by the funeral home. Rather, it should incorporate the cost of the vehicle into its basic services fee because it is a service it is providing to nearly every family it serves.

David Nixon of Nixon Consulting asked why the Rule permits a separate charge for "transfer of remains" and "hearse" but not for a service vehicle. He reasoned that like the service vehicle, these automotive services are also provided in nearly every disposition. The answer, as pointed out by Tregillus in Staff Opinion 09-4, is that unlike the service vehicle, the services of "transfer of remains" and "hearse" are two of the 16 services that must be separately itemized on the GPL and cannot be included in the basic services fee. Therefore, if a funeral home is using the service vehicle in nearly every disposition, it must be included as part of the basic services fee and should not be listed as a separate fee on the GPL.

The opinion did note that there is nothing in the Rule that would preclude a funeral home from charging an additional fee if the service vehicle needs to be used in unusual circumstances. For example, if the funeral home normally makes only one trip to obtain the death certificate, it can list a fee for the service vehicle to make a second trip to obtain a death certificate. It could also list a fee for additional mileage beyond its normal range if the service vehicle has to be used to secure a doctor's signature when that is not the customary practice.

Cemeteries
In Staff Opinion 08-1, the FTC Staff had confirmed that the Funeral Rule would cover crematories that sold funeral goods because they would meet the jurisdictional requirements of selling both funeral goods and services. (The same conclusion had been stated by the FTC Staff in the 1985 Funeral Rule Guidelines.)

Seizing upon that opinion, Selected Independent Funeral Homes (SIFH) asked the FTC Staff to also hold that cemeteries that sold funeral goods would be covered by the Rule since they are also selling funeral services.

In Opinion 09-5, the FTC Staff disagreed with SIFH's position and found that most cemeteries are not engaged in the sale of funeral services. Under the Rule, a business is engaged in the sale of "funeral services" only if it provides both care of the remains and final disposition services. The Staff held that most cemeteries do not care for the remains. Unlike crematories, cemeteries do not refrigerate or hold remains, nor do they remove medical devices and collect and process cremated remains. Therefore, in the Staff's opinion, most cemeteries are not covered by the Rule because they do not offer funeral services.

NFDA members with questions regarding this article may contact T. Scott Gilligan at 513-871-6332.

T. Scott Gilligan serves as NFDA's general counsel and represents NFDA in matters dealing with the FTC Funeral Rule.