Chapter 0362

Chapter 362 Oregon Laws 2003

AN ACT

SB 200

Relating to providers of prepaid funeral services; amending ORS 97.923, 97.927, 97.933, 97.935, 97.945, 97.947, 97.948, 97.949 and 97.994.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 97.923 is amended to read:

97.923. As used in ORS 97.923 to 97.949 and 97.994 unless the context requires otherwise:

(1) “Beneficiary” means the person, if known, who is to receive the funeral and cemetery merchandise, funeral and cemetery services or completed interment, entombment or cremation spaces.

(2) “Certified provider” means any person certified under ORS 97.933 to sell or offer for sale prearrangement sales contracts or preconstruction sales contracts.

(3) “Delivery” occurs when:

(a) Physical possession of the funeral and cemetery merchandise is transferred to the purchaser;

(b) Title to the funeral and cemetery merchandise has been transferred to the purchaser, has been paid for, and is in the possession of the seller, who has placed it, until needed, for storage on the seller’s premises; or

(c) The merchandise has been identified for the purchaser or the beneficiary and held by the manufacturer for future delivery.

(4) “Depository” means a financial institution or trust company, as those terms are defined ORS 706.008, that is authorized to accept deposits in this state or to transact trust business in this state.

(5) “Director” means the Director of the Department of Consumer and Business Services.

(6) “Funeral and cemetery merchandise” includes nonperishable items of personal property customarily sold by funeral service establishments, cemeteries, crematoriums and monument companies, including, but not limited to, caskets, burial vaults, memorials, markers and foundations, but shall not include rights of interment or entombment in a cemetery section, lawn crypt section, mausoleum or columbarium that is in existence at the time of initial payment on the contract.

(7) “Funeral and cemetery services” includes all services customarily performed:

(a) By a funeral service practitioner, embalmer, funeral service establishment, cemetery or crematorium licensed under ORS chapter 692;

(b) In conjunction with an interment, entombment or cremation; and

(8) “Guaranteed contract” means a written preconstruction sales contract or prearrangement sales contract that guarantees the beneficiary the specific undeveloped space or spaces or funeral and cemetery merchandise or funeral and cemetery services contained in the contract and under which no charges other than the sales price contained in the contract shall be required upon delivery or performance of the funeral and cemetery services.

(9) “Master trustee” means an entity appointed by a certified provider to administer moneys received from the certified provider under ORS 97.941 who acts independently from any certified provider and who is not also a certified provider under ORS 97.923 to 97.949. “Master trustee” does not include a financial institution, as defined in ORS 706.008, that acts solely as a depository under ORS 97.923 to 97.949.

(10) “Nonguaranteed contract” means a written preconstruction sales contract or prearrangement sales contract that guarantees the beneficiary the specific undeveloped space or spaces or funeral and cemetery merchandise or funeral and cemetery services contained in the contract and under which additional charges other than the sales price contained in the contract may be required at the time of delivery or performance of the funeral and cemetery services.

(11) “Preconstruction sales” or “preconstruction sales contract” means any sale made to a purchaser, which has as its purpose the furnishing of undeveloped interment, entombment or cremation spaces and where the sale terms require payment or payments to be made at a currently determinable time.

(12) “Prearrangement sales” or “prearrangement sales contract” means any sale, excluding the sale and contemporaneous or subsequent assignment of a life insurance policy or an annuity contract, made to a purchaser, that has as its purpose the furnishing of funeral and cemetery merchandise or funeral and cemetery services in connection with the final disposition or commemoration of the memory of a dead human body, for use at a time determinable by the death of the person or persons whose body or bodies are to be disposed and where the sale terms require payment or payments to be made at a currently determinable time.

(13) “Provider” means any entity that sells and offers for sale funeral and cemetery merchandise or funeral and cemetery services.

(14) “Purchaser” means a beneficiary or a person acting on behalf of a beneficiary who enters into a prearrangement sales contract or a preconstruction sales contract with a certified provider under which any payment or payments made under the contract are required to be deposited in trust under ORS 97.941.

(15) “Salesperson” means an individual registered under ORS 97.931 and employed by a certified provider to engage in the sale of prearrangement or preconstruction sales contracts on behalf of the certified provider.

(16) “Sales price” means the gross amount paid by a purchaser for a prearrangement sales contract or preconstruction sales contract, excluding sales taxes, credit life insurance premiums and finance charges.

(17) “Trust” means an express trust created under ORS 97.941 whereby a trustee has the duty to administer the amounts specified under ORS 97.941 received under a prearrangement sales contract or a preconstruction sales contract for the benefit of the purchaser of a prearrangement sales contract or preconstruction sales contract.

(18) “Undeveloped interment, entombment or cremation spaces” or “undeveloped spaces” means any space to be used for the reception of human remains that is not completely constructed or developed at the time of initial payment.

SECTION 2. ORS 97.927 is amended to read:

97.927. (1) Except as provided in this section, ORS 97.923 to 97.949, 97.992, 97.994 and 692.180 apply to all certified providers, master trustees and salespersons who sell or offer for sale prearrangement sales contracts or preconstruction sales contracts.

(2) ORS 97.923 to 97.949, 97.992, 97.994 and 692.180 do not apply to:

[(1)] (a) Agreements to sell or sales made by endowment care cemeteries under ORS 97.929; or

[(2)] (b) Any nonprofit memorial society charging less than a $100 membership fee.

SECTION 3. ORS 97.933 is amended to read:

97.933. (1) A provider[, as defined in ORS 97.923,] may not engage in prearrangement sales or preconstruction sales unless the provider is certified by the Director of the Department of Consumer and Business Services. The director shall:

(a) Establish procedures for issuing certificates required by this section.

(b) Establish standards for determining whether a certificate should be issued.

(d) Require annual renewal of certification.

(e) Establish standards for rules of conduct of certified providers.

(2) The fees described in this section shall be reasonable and shall defray the costs associated with the administration of ORS 97.923 to 97.949.

(3)(a) Every certified provider shall file an annual report with the director on forms provided by the director. The annual report shall contain any information reasonably considered necessary by the director, including but not limited to:

(A) A disclosure of changes in trust deposits;

(B) The number of consecutively numbered prearrangement or preconstruction sales contracts sold during the reporting period; and

(b) If the annual report is not filed or is filed and shows any material discrepancy, the director may take appropriate action and send notification of the matter to the State Mortuary and Cemetery Board.

(c) The director may relieve a certified provider of the duty to file the annual report upon a determination that the certified provider has performed all obligations under the prearrangement sales contract or preconstruction sales contract, or that such obligations lawfully have been assumed by another or have been discharged or canceled.

(4) The director may audit the records of a certified provider that relate to prearrangement sales or preconstruction sales, as the director may consider appropriate. The director may refer any matter outside of normal auditing procedures to the office of the Attorney General for investigation and send notification of the referral to the State Mortuary and Cemetery Board.

(5) The conduct of individuals, including salespersons as defined in ORS 97.923, employed by a certified provider is the direct responsibility of the certified provider.

SECTION 4. ORS 97.935 is amended to read:

97.935. (1) A person may not operate as a master trustee[, as defined in ORS 97.923,] unless [that] the person is registered with the Director of the Department of Consumer and Business Services. The director shall:

(a) Establish procedures for registering persons under this section.

(b) Establish standards for master trustees.

(d) Establish standards for rules of conduct of master trustees.

(2)(a) Every master trustee shall file an annual report with the director on forms provided by the director. The annual report shall contain any information reasonably considered necessary by the director, including but not limited to:

(A) A disclosure of changes in trust deposits; and

(B) A list of all certified providers for which the master trustee holds funds and the total amount of funds held for each certified provider.

(b) The director may take appropriate action under ORS 97.948 and 97.949 if a master trustee fails to file the annual report or the report contains any material discrepancy.

(c) The director may relieve a master trustee of the duty to file the annual report upon a determination that the master trustee has performed all obligations under the trust agreement with each certified provider, or that the master trustee’s obligations have been lawfully assumed by another person or have been discharged or canceled.

[(2)] (3) The director may conduct an annual audit of a master trustee. The director shall prescribe the form of audits under this section.

[(3)] (4) A master trustee who is audited under this section shall pay all expenses and costs incurred by the director in conducting the audit.

[(4)] (5) The director shall adopt rules necessary to administer this section. The rules shall identify the specific trust provisions that are the subject of an audit conducted under this section.

SECTION 5. ORS 97.945 is amended to read:

97.945. (1) Every prearrangement sales contract or preconstruction sales contract seller shall pay to the Director of the Department of Consumer and Business Services a $5 fee for each prearrangement sales contract or preconstruction sales contract entered into, to be paid into a special income earning fund in the State Treasury, separate from the General Fund, known as the Funeral and Cemetery Consumer Protection Trust Fund. The fees shall be remitted to the director [semiannually] annually within 30 days after the end of [June and] December for all contracts that have been entered into during the [six-month] 12-month period.

(2) Except as provided in this section, the fund shall be used solely for the purpose of providing restitution to purchasers who have suffered pecuniary loss arising out of prearrangement sales contracts or preconstruction sales contracts. The fund may be used for payment of actual administrative expenses incurred in administering the fund. All moneys in the Funeral and Cemetery Consumer Protection Trust Fund are appropriated continuously to the director for the payment of restitution under this section and the payment of expenses incurred in performing the duties and functions of the director required under ORS 97.923 to 97.949, 97.992, 97.994 and 692.180.

(3) The director shall administer the fund and shall adopt rules governing the payment of restitution from the fund.

(4) Payments for restitution shall be made only upon order of the director where the director determines that the obligation is noncollectible from the certified provider. Restitution shall not exceed the amount of the sales price paid plus interest at the statutory rate.

(5) The fund shall not be applied toward any restitution for losses on a prearrangement sales contract or preconstruction sales contract entered into prior to September 27, 1987.

(6) The fund shall not be allocated for any purpose other than that specified in ORS 97.923 to 97.949, 97.992, 97.994 and 692.180.

(7) If the director proposes to deny an application for restitution from the fund, the director shall accord an opportunity for a hearing as provided in ORS 183.310 to 183.550.

(8) Notwithstanding any other provision of this section, the payment of restitution from the fund shall be a matter of grace and not of right and no purchaser shall have vested rights in the fund as a beneficiary or otherwise.

(9) The status of the fund shall be reviewed annually by the director. If the review determines that the fund together with all accumulated income earned on the fund is sufficient to cover costs of potential claims against the fund and that the total number of outstanding claims filed against the fund is less than 10 percent of the fund’s current balance, then payments to the fund shall be adjusted accordingly at the discretion of the director.

SECTION 6. ORS 97.947 is amended to read:

97.947. (1) Each certified provider or master trustee is subject to the examination of the Director of the Department of Consumer and Business Services. The director may conduct examinations of the conditions and resources of each certified provider or master trustee, including a review of sales contracts used by the certified provider or master trustee, to determine whether the certified provider or master trustee is complying with the requirements of ORS 97.923 to 97.949, the laws of this state and the rules of the director. The director may require certified providers or master trustees to pay the actual and reasonable costs of the examination.

(2) For the purpose of an examination under this section, the director may administer oaths and affirmations, subpoena witnesses and compel their attendance, take evidence and require the production of books, papers, correspondence, memoranda, agreements or other documents or records that the director considers relevant or material to the examination.

(3) If a certified provider or master trustee fails to comply with a subpoena issued under this section or a party or witness refuses to testify on any matter, the judge of the circuit court for any county, on the application of the director, shall compel obedience by proceedings for contempt as in the case of disobedience of the requirements of a subpoena issued from the court or a refusal to testify on a matter before the court.

(4) Each witness who appears before the director under a subpoena issued under this section shall receive the fees and mileage provided for witnesses in ORS 44.415 (2), except that a witness subpoenaed at the instance of parties other than the director or an examiner may not be compensated for attendance or travel unless the director certifies that the testimony of the witness was material to the matter investigated.

(5) During the course of any examination, the director may cause the depositions of witnesses to be taken in the manner prescribed by law for like depositions in civil suits in the circuit court.

SECTION 7. ORS 97.948 is amended to read:

97.948. (1) The Director of the Department of Consumer and Business Services may discipline as provided in this section any certified provider[,] or master trustee, or person acting as a certified provider or master trustee without a certification or registration, who has been found by an audit or examination conducted by the director:

(a) To be in violation of one or more of the provisions of ORS 97.923 to 97.949;

(b) To be insolvent because the certified provider’s or master trustee’s liabilities exceed the certified provider’s or master trustee’s assets;

(c) The certified provider or master trustee cannot meet obligations as they come due; or

(d) The certified provider or master trustee is in such financial condition that the certified provider or master trustee cannot adequately protect the interests of the certified provider’s or master trustee’s customers.

(2) In disciplining a certified provider, master trustee or person acting as a certified provider or master trustee without a certification or registration as authorized by subsection (1) of this section, the director may take any or all of the following actions:

(a) Impose probation.

(b) Suspend the certificate or registration.

(d) Place limitations on the certificate or registration.

(e) Refuse to issue or renew a certificate or registration.

(f) Take such other disciplinary action as the director in the director’s discretion finds proper, including assessment of the costs of the investigation and disciplinary proceedings and assessment of a civil penalty not to exceed $10,000 per violation.

(3) If the certificate or registration of a certified provider or master trustee is suspended under this section, the holder of the certificate or registration may not engage in the activities allowed by the certificate or registration during the term of suspension. Upon the expiration of the term of suspension, the director shall reinstate the certificate or registration if the conditions for which the certificate or registration was suspended no longer exist.

(4) The director shall enter each case of disciplinary action on the records of the Department of Consumer and Business Services.

(5) Civil penalties under this section may be imposed as provided in ORS 183.090.

(6) If the director takes disciplinary action under this section, the director [shall] may send a notice of the action to the State Mortuary and Cemetery Board and to the Attorney General.

SECTION 8. ORS 97.949 is amended to read:

97.949. (1) If the Director of the Department of Consumer and Business Services has reason to believe that a person has violated any provision of ORS 97.923 to 97.949, the director [shall] may give the information relative to the violation to the appropriate federal, state or local law enforcement officer having jurisdiction over the violation.

(2) If the director, in the course of taking an action against a certified provider, master trustee or person acting as a certified provider or master trustee without a registration or certification, finds that a salesperson or person acting as a salesperson has violated any provision of ORS 97.923 to 97.949, the director shall provide the State Mortuary and Cemetery Board with a copy of the findings and the order of the director. The board shall, upon receipt of such information, discipline the salesperson or person acting as a salesperson [according to established procedures] as required by law.

SECTION 9. ORS 97.994 is amended to read:

97.994. [Any certified provider or salesperson violating] Violation of any of the provisions of ORS 97.931, 97.933, [or] 97.941 or 97.943 is [guilty of] punishable as a Class [C] Misdemeanor.

Approved by the Governor June 13, 2003

Filed in the office of Secretary of State June 13, 2003

Effective date January 1, 2004

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