|7106 Alderney Dr.
Houston, TX 77055
July 9, 1999
The Honorable Donald S. Clark
RE: 16 CFR Part 453; Comments Concerning Trade Regulation Rule on Funeral Industry Practices.
Dear Secretary Clark:
One of the recognized "essential purposes of the Funeral Rule [was] to ensure that consumers receive information necessary to make informed purchasing decisions . . ." 47 FR 42260 All too often, consumers continue to be forced to make major financial commitments with inadequate, incorrect or fraudulent information concerning the legal requirements for and prices of funeral goods and services, and the benefits available under pre-need funeral policies. The Commission should enhance the requirements for the delivery of consumer information, enhance policing and enforcement efforts, and increase the penalties for Funeral Rule offenders.
Although broadly supporting more proactive regulation of funeral providers, I specifically want to address the questions [29 and 30] by the Commission concerning pre-need funeral arrangements. The disparity of benefits promised under pre-need funeral arrangements and the actual benefits delivered at-need, are a continuing source of consumer fraud and deception. The Commission is requested to conduct an investigation of the benefits delivered under pre-need funeral service policies by funeral service providers in south Louisiana.
Recently, I assisted in making final funeral arrangements for my mother-in-law, Mrs. Audrey LeBlanc. We made a claim for benefits under a pre-need funeral policy, but the funeral provider refused to supply the funeral benefits contracted for solely because we desired to upgrade from the unsuitable quality casket offered by the funeral provider. The right to upgrade was guaranteed by Louisiana law, La. R.S. 22:253, and the anti-tying provisions of the Funeral Rule.
Facts Regarding Claim for Lawful Contractual Funeral Services Benefits Under Mothe Pre-Need Funeral Policy Insuring Mrs. Audrey LeBlanc
Mrs. Audrey Perez LeBlanc ceased living on April 26, 1999. At the time of her death, Mrs. Audrey LeBlanc was insured by a pre-need funeral insurance policy, Mothe Policy Number 42835-A, issued on April 6, 1959, and denominated as a "Twenty Pay Funeral Policy," and "Limited Payment Life Contract" ("Funeral Policy" or "Contract"). (Copy attached as Tab "1").
The Funeral Policy provides that, upon the death of Mrs. Audrey LeBlanc, Mothe will furnish a funeral in accordance with the description given below ...
The Funeral Service to be furnished ... will be equal in value to the funeral benefit provided herein, consisting of:
Transferring remains, embalming, bathing, shaving, dressing, casket, veiling, recording doctor's certificate, two local press notices, flower van, grass at grave, funeral coach, limousines (3), burial garment, candelabra, velvet drapes, acknowledgment cards and memorial book, or an allowance equal to the funeral benefit provided herein on any other funeral service selected.
On April 27, 1999, the LeBlanc survivors met with Rudy Tauzin, a Mothe manager, at the Mothe Funeral Home at 1300 Vallette Street, Algiers (New Orleans), Orleans Parish, Louisiana, to make arrangements for Mrs. Audrey LeBlanc's funeral service. A claim for Funeral Service benefits was made under the Mothe pre-need Funeral Policy. The LeBlanc Survivors sought to obtain the same Funeral Service as described in the Contract, but with one change--they sought to upgrade to a casket more reflective of the quality of their memories of Mrs. Audrey LeBlanc. The LeBlanc Survivors selected the Olympia, 20 gauge steel casket, Mothe retail price of $2,010.00, and offered to pay the extra costs for the better quality casket.
The Mothe Funeral Policy did not describe a particular casket. Indeed, Mothe never showed their "insurance casket" to the LeBlanc Survivors. Mothe did not keep its "insurance casket" in the same room as its other retail caskets.(1) Rudy Tauzin stated (and later, Boyd Mothe, Jr. also stated) that the "insurance casket" was kept behind a closed door, in a another room, viewable only upon specific request.
Rudy Tauzin stated that any change of casket from whatever casket that Mothe decided to tie to the Funeral Service would void the pre-need Contract. Rudy Tauzin was asked to point out the particular policy provision stating that an upgrade to a better quality casket would void the Contract, and Rudy Tauzin could not do so. Exactly opposite to Rudy Tauzin's interpretation, the Mothe Contract included a casket as part of the defined funeral service and funeral benefit, and such Contract expressly provided that the insured could receive "an allowance equal to the funeral benefit [e.g., casket] provided herein on any other funeral service [e.g., casket] selected." Although requested, Rudy Tauzin offered no oral or written explanation of why, as he asserted, upgrading to a better quality casket would defeat the Funeral Service benefits. Rudy Tauzin also would not respond to questions about the at-need value of the funeral services described in the Contract.
Rudy Tauzin concluded all funeral arrangements but for the determination of the amount of benefits that were to be allowed under the Mothe Funeral Policy Contract. Rudy Tauzin stated that the LeBlanc Survivors would need to speak the next morning, April 28, 1999, with Boyd Mothe, Jr. in order to obtain any explanation of the Mothe Funeral Policy.
Early on April 28, 1999, the day of Mrs. Audrey LeBlanc's wake, Rudy Tauzin called to say that Boyd Mothe, Jr. was not available, and that any questions concerning the interpretation of the Mothe Contract could be answered by persons at the headquarters office of the Mothe Life Insurance Company, in Gretna, Jefferson Parish, Louisiana. Mrs. Jamie Ragusa and I then drove to the Mothe Gretna offices and advised the representative that questions had arisen with respect to the interpretation of the Mothe Funeral Policy benefits, and that we had been directed to that office in search of someone who explain the coverage. Salvatore De Matteo, Mothe Sales Manager, was produced and he met with Mrs. Ragusa and Mr. Johnson. Salvatore De Matteo stated that such Funeral Policies were "unclear," had "caused a lot of trouble," and "could no longer be sold in Louisiana."(2) Salvatore De Matteo could not explain how the Mothe Contract was voided by a paid upgrade to another casket. Salvatore De Matteo stated that he did not know why we had been sent to the Life Insurance Company's offices because Boyd Mothe and Boyd Mothe, Jr. were the only persons that could explain the Funeral Policy benefits.
Ultimately Mrs. Ragusa and I were finally able to make an appointment with Boyd Mothe, Jr., in our attempt to understand the Funeral Benefits and to finalize any financial arrangements. For the third (3rd) time, we asked to upgrade the casket from the one offered by Mothe without forfeiting the remaining contractual funeral services specifically enumerated in the policy. Boyd Mothe, Jr. refused. Boyd Mothe, Jr. would only allow the use of an upgraded casket only if the Funeral Policy was surrendered for $700.00, an amount only twenty percent (20%) of the at-need value (calculated later to be $3,432.83) of the funeral service benefits that Melvin and Audrey LeBlanc had contracted for. For the right or privilege to use an upgraded casket, Boyd Mothe, Jr. demanded the surrender of the Funeral Policy contractual benefits, valued at time of need to be $3,432.83, in exchange for a mere $700.00 cash payment.
Although Mrs. Audrey LeBlanc's wake was to begin in four (4) hours, Mothe had never given any oral or written explanation of why, as they asserted, a casket upgrade required the forfeiture of the remaining contractual funeral services. Having no alternatives at the time, I agreed to pay the balance of the monies claimed to be due for the funeral service, and Mrs. Ragusa agreed to sign the Statement of Goods and Services Selected. Mrs. Ragusa had no choice but to accept the conditions forced upon her by Mothe. Because of Mothe's failure to provide any explanation, as to why, as they asserted, the contract required the forfeiture of the funeral service benefits upon the selection of an upgraded casket, Mrs. Ragusa wrote "Under Protest" on the Statement of Goods and Services Selected, prior to subscribing her name thereto.
Although requested, Mothe never provided the at-need value of the funeral benefits under the pre-need Contract. The at-need value of the funeral benefits under the Contract is calculated to be $3,432.83, using prices from the Mothe Funeral Home General Price List in effect in April 1999, and other prices on the Statement of Goods and Services Selected for the Funeral Services for Audrey LeBlanc.
Traditional Standard Service Package $2,210.00
Casket (lowest price on Mothe General Price List) 450.00
Limousines (3) (@ $125.00 each) 375.00
Newspaper Notices (2) (@125.00 each) 250.00
Sales Tax (@ 4.5%) 147.83
At-Need Value, Mothe Funeral Policy,
Mrs. Audrey LeBlanc, April 26, 1999 $3,432.83
Because of the substitution of the upgraded casket, and other fees for church services (organist and cantor), coffee service, police escorts and copies of death certificates, Mothe determined that the at-need value of the Mrs. Audrey LeBlanc's funeral, as delivered, was $5,021.95. Such an amount is shown on the Statement of Good and Services Selected (see Tab "2").
Mothe, by its failure to follow Louisiana Insurance Law, and by its making false and fraudulent statements, misappropriated, converted and took $2,824.33, from Geralyn and Robert Johnson, and the LeBlanc Survivors, as described below.
At-Need Value of Mrs. Audrey LeBlanc's Funeral Services, as delivered $5,021.95
Mothe Funeral Policy 42835-A, At-Need Value ($ 3,432.83)
Mothe Whole Life Industrial Policy Number C64144-A ( 1,000.00)
Cashier's Check No. 22162, Remitter: Robert Johnson ( 3,321.95)
Credit Card Cash Advance Fees and Interest Expense ( 91.50)
Misappropriation, Conversion and Taking by Mothe $2,824.33
At no time did any agent of Mothe reveal any information concerning Act. 949 (1997 Reg. Session, H.B. 616) (see Tab "3"). Act 949 had been the law in Louisiana for almost two (2) years at the Funeral Service benefits were claimed for Mrs. Audrey LeBlanc. Act 949 is specifically relevant to the claim for benefits herein. Act 949 reenacts Louisiana Insurance Code, R.S. 22:253(B)(2) (see Tab "4"), to provide:
Without being aware of La. R.S. 22:253(B)(2), the LeBlanc Survivors asked every Mothe representative presented--Rudy Tauzin, Salvatore De Mateo, and Boyd Mothe, Jr.--to agree to substitute a casket for the casket Mothe offered and which casket was not described in the Mothe Funeral Policy; the exact right provided by the statute. Each representative of Mothe indicated that any substitution of the "insurance casket" would cause a forfeiture of the remaining contractual benefits in the policy. And, in fact, Mothe prepared and presented a Statement of Goods and Services Selected, a Truth in Lending Act Statement, and a third statement of account, each of which reflected a forfeiture of the remaining contractual funeral services specifically enumerated in the pre-need policy.(3)
Breaches of Duties Under Federal Trade Commission Funeral Rule
Mothe has apparently committed various acts designated as "unfair or deceptive acts or practices" by the Federal Trade Commission.
A. Mothe failed to provide accurate price information.
Unfair or deceptive acts or practices. In selling or offering to sell funeral goods or funeral services to the public, it is an unfair or deceptive act or practice for a funeral provider to fail to furnish accurate price information . . . to persons inquiring about the purchase of funerals. 16 C.F.R. § 453.2(a).
Mothe failed to give accurate price information because, in contradiction to Louisiana law, La. R.S. 22:253, and the terms of the Funeral Policy, Mothe forced the surrender of the contractual funeral service benefits because of a request to upgrade or substitute the casket. Mothe's inaccurate price information caused the LeBlanc Survivors to pay thousands of dollars more for the same funeral services benefits previously purchased in their pre-need contract. Additionally, Mothe never furnished the LeBlanc Survivors a casket price list--the Funeral Rule's preventative measure with respect to accurate price information. 16 C.F.R. § 453.2(b)(2).
B. Mothe misrepresented the legal requirements for funeral goods and services.
Deceptive acts or practices. In selling or offering to sell funeral goods or funeral services to the public, it is a deceptive act or practice for funeral providers to represent that federal, state, or local laws . . . require the purchase of any funeral goods or funeral services when such is not the case. 16 C.F.R. § 453.3(d).
Mothe misrepresented that an upgrade of a casket required the forfeiture of the remaining contractual funeral service benefits in contradiction to federal and state law, including La. R.S. 22:253.
C. Mothe unlawfully conditioned the receipt of funeral services upon the acceptance of an inferior casket.
Other required purchases of funeral goods or funeral services--(1)Unfair or deceptive acts or practices.
In selling or offering to sell funeral goods or funeral services, it is an unfair or deceptive act or practice for a funeral provider to:
(i) Condition the furnishing of any funeral good or funeral service to a person arranging a funeral upon the purchase of any other funeral good or funeral service, except as required by law or as otherwise permitted by this part.
(ii) Charge any fee as a condition to furnishing any funeral goods or funeral services to a person arranging a funeral, other than the fees for: (1) Services of funeral director and staff, permitted by § 453.2(b)(4)(111)(c); (2) other funeral services and funeral goods selected by the purchaser; and (3) other funeral goods or services required to be purchased, as explained on the itemized statement in accordance with § 453.3(d)(2).
(2)Preventive requirements. (i) To prevent these unfair or deceptive acts or practices, funeral providers must:
16 C.F.R. § 453.4(b).
Mothe conditioned receipt of the insured funeral service benefit upon the acceptance of an inferior casket -- the "insurance casket" that Mothe choose to tie to the pre-need funeral policy. (Mothe stated such "insurance casket" was provided only in connection with claim for benefits under a funeral policy--Mothe indicated that it did not and would not "sell" such "insurance casket.") Mothe stated that the insured funeral service benefit was "voided" by the LeBlanc Survivors desire to purchase an acceptable casket, even though they agreed to pay the difference in the cost of the acceptable casket.
D. Mothe misrepresented that cash advance purchases are the same as the cost to the funeral provider when such is not the case.
Mothe apparently committed deceptive acts or practices with respect to cash advanced. Although "two (2) local press notices" were included as a part of Mothe Funeral Policy, because Mothe refused to honor its policy, the LeBlanc Survivors made arrangements with Rudy Tauzin to have a notice published in the New Orleans Times Picayune. The Statement of Goods and Services Selected, prepared by Mothe, indicates a fee of $125.00 for a notice appearing only one day. It is a deceptive act or practice to "[f]ail to disclose to persons arranging funerals that the price being charged for a cash advance item is not the same as the cost to the funeral provider for the items when such is not the case." 16 C.F.R. § 453.3(f). The Times Picayune charges $3.12 per agate line for death notices. The cash advance amount was not the same as the amount charged Mothe by the Times Picayune for publishing the death notice. Note further, "two local press notices" was one of the defined contractual benefits of Mrs. Audrey LeBlanc's Funeral Policy, which Mothe refused to honor.
E. Mothe prepared and delivered false statements of account.
Mothe is obligated to render a true and lawful accounting by (i) federal regulation, (ii) state law, (iii) federal law, and (iv) the common law as found by the Louisiana Supreme Court. Mothe is required to provide an itemized written statement to each person who arranges a funeral listing the funeral goods and services selected and their cost, and cash advance items. 16 C.F.R. § 453.2(b)(5).(4)
Pursuant to lawful obligations, as defined by federal regulation, state law, and federal law, and its fiduciary duty, as found by the Louisiana Supreme Court, Mothe prepared and rendered three (3) financial statements of accounts: (i) a Statement of Goods and Services Selected, (ii) a Truth in Lending Act statement, and (iii) a statement mailed to Mr. Melvin LeBlanc at his residence. Each of the three (3) statements rendered by Mothe was false because Mothe failed to properly account for funeral benefits as required by La. R.S. 22:253(b)(2).
Widespread Unfair or Deceptive Trade Practices
The experience of the LeBlanc Survivors in attempting to obtain Mrs. Audrey LeBlanc's Funeral Service Benefits are not unique. Mothe acted to deny pre-need funeral services benefits in a similar manner that has caused it and other Louisiana funeral homes and industrial life insurance companies to be sued, including those acts set forth in Michael A. Chatelain and Alvin Hindelang, v. Mothe Funeral Homes, Inc., Mothe Life Insurance Company and Boyd Mothe, Jr., Cause No. 517076-L, Twenty-fourth Judicial Dist. Court, Jefferson Parish (Nov. 13, 1997) (see Tab "5"), and in the matter of Elmer C. Feldheim, Peggy F. Porter, Henry J. Guidry, Bonnie F. Lonegras and a Class of Similarly Situated Individuals and/ Entities v. SI-SIFH Corp. SI-SI Insurance Company, Inc., Loewen Louisiana Holding, Inc and the Loewen Group International, Inc. (see Tab "6", also included under that tab is a letter from Ms. Peggy Feldheim Porter, pertaining to the same incidents). In the reported appellate case of Rabenhorst Funeral Home, Inc. v. Tessler, 674 So. 2d 1164 (La. App. 1st Cir. 1996) (see Tab "7"), a Louisiana court construed a funeral service insurance benefit contract remarkably similar to Mothe's, and found no language in the contract that provided for the forfeiture of the contractual funeral service benefits upon the selection of an upgraded casket. Id. at 1167. The Rabenhorst court concluded that the parties did not intend that the decedent's heirs suffer a complete forfeiture of the value of goods and services upon the substitution of a casket.
Mothe's handling of the claim for Mrs. Audrey LeBlanc's pre-need funeral service benefits are more egregious than any in the above lawsuits because Mothe's acts occurred after the August 1, 1997, effective date of Act 949 (1997 Res. Session, H.B. 616), which law was specifically enacted to reform the very abuses herein complained of in the denial of contractual funeral service benefits under industrial life (funeral) insurance policies. See the two newspaper articles attached as Tab "8".
Mothe's counsel, Daniel A. Ranson, has indicated to me that Mothe has, in every claim for pre-need funeral services after the August 15, 1997, effective date of La. R.S. 22:253, refused to permit a beneficiary to upgrade or substitute an alternate casket and still receive the contractual benefits under the pre-need policy. Many consumers have lost many thousands of dollars of benefits each. Moreover, Mothe has not even admitted of any duty to inform persons making final arrangements under pre-need policies of La. R.S. 22:253.(5)
Enforcement Actions Needed In South Louisiana
I believe the facts herein concerning the failed attempt to receive the contractual benefits of Mrs. Audrey LeBlanc's pre-need funeral policy, and the similar facts recited in the lawsuits and letters attached at Tabs 5, 6 and 7 demonstrate a routine patterns of Funeral Rule violations by certain southern Louisiana funeral providers. The Commission has undertaking investigations of Funeral Rule compliance and enforcement actions in various regions of the nation. I have not located any information on any investigations or enforcement actions in Louisiana. The Commission is encouraged to investigate and institute appropriate enforcement actions in south Louisiana, including, in particular, Mothe Funeral Homes, Inc., to further compliance with the Funeral Rule and prevent consumer fraud.
I thank the Commission for the opportunity to provide comments on the Funeral Rule. If you have any questions, I may be reached at:
7106 Alderney Dr.
Robert R. Johnson
Mr. David Griggs, Dallas Regional Office, Federal Trade Commission, 1999 Bryan Street, Suite 2150, Dallas, TX 75201
Ms. Laurie Meehan, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, Washington, D.C. 20580
Federal Trade Commission
1. The lowest priced casket shown by Mothe in its open casket display room was described as "Light Grey Cloth Covered Wood -- Standard Perfection Cut -- White Interior," #750, and was priced (February 1, 1999 rev. date) at $910.00. The General Price List indicated that Mothe sold caskets for as little as $450.00, however, the least expensive casket shown was $910.00. Mothe did not provide any of the LeBlanc Survivors with a casket price list, which "list must contain at least the retail prices of all caskets, . . . enough information to identify each, and the effective date of the price list." 16 C.F.R. § 453.2(b)(2).
2. There can be no reasonable doubt that any funeral home, funeral home director, or pre-need funeral benefits salesman or agent in Louisiana is not aware of H.B. 616 (Act 949, 1997 Reg. Session), which is relevant to Mothe's conduct herein. Salvatore De Matteo admitted to knowledge of one provision of H.B. 616, banning the sale of certain funeral service policies effective August 1, 1997. Significantly, Salvatore De Matteo failed to inform Mrs. Ragusa or Mr. Johnson of the more relevant portion of H.B. 616 which provides beneficiaries under funeral policies with three options, including the right to buy a more expensive casket without losing other contractual funeral benefits.
3. These statements are termed "mandatory disclosures," and are required by federal and state laws and regulations.
4. Mothe is also required to provide such a statement of account pursuant to State law, Louisiana Admin. Code 46:XXXVII.111; and the federal Truth in Lending Act, 15 U.S.C. 1601 et. seq. Additionally, Mothe, in advertising its Standards of Conduct, admits, claims and professes: "We acknowledge our fiduciary relationship to the families that we serve . . . ." The Louisiana Supreme Court has held, "The duty imposed on a fiduciary embraces the obligation to render a full and fair disclosure to the beneficiary of all facts which materially affect his rights and interests." Plaquemines Par. Com'n Council v. Delta Dev. Co. Inc., 502 So. 2d 1034, 1041 (La. 1987).
5. A demand letter concerning the events herein was sent to Mothe. Mothe has refused to take any action and Daniel Ranson has stated that "I guess you will have to file a lawsuit." No lawsuit has yet been filed for the pre-need funeral service benefits due Mrs. Audrey LeBlanc.