Bill Text: NY S05677 | 2019-2020 | General Assembly | Amended


Bill Title: Relates to financial liability and disclosure for funeral homes and requires an audit of accounts related to preneed agreements.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2019-12-12 - SIGNED CHAP.642 [S05677 Detail]

Download: New_York-2019-S05677-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         5677--A

                               2019-2020 Regular Sessions

                    IN SENATE

                                      May 10, 2019
                                       ___________

        Introduced  by  Sen.  COMRIE -- read twice and ordered printed, and when
          printed to be committed to the Committee  on  Consumer  Protection  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee

        AN ACT to amend the general business law and the public health  law,  in
          relation to financial liability and disclosure for funeral homes

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Paragraph (a) of subdivision 1 and subdivisions 8 and 10 of
     2  section 453 of the general business law, paragraph (a) of subdivision  1
     3  as  amended by chapter 557 of the laws of 2001, subdivision 8 as amended
     4  by chapter 529 of the laws of 1993, and subdivision 10 as added by chap-
     5  ter 279 of the laws of 2007 are amended and three new  subdivisions  12,
     6  13, and 14 are added to read as follows:
     7    (a)  Any  and  all  moneys  paid  to a funeral firm, funeral director,
     8  undertaker, cemetery, or any other person, firm or corporation, under or
     9  in connection with an agreement, or any option to enter into  an  agree-
    10  ment, for the sale of merchandise to be used in connection with a funer-
    11  al  or  burial,  or for the furnishing of personal services of a funeral
    12  director or undertaker, wherein the merchandise is not  to  be  actually
    13  physically  delivered  or  the  personal services are not to be rendered
    14  until the occurrence of the death of the person  for  whose  funeral  or
    15  burial  such  merchandise or services are to be furnished shall continue
    16  to be the money of the person making such payment and shall be  held  in
    17  trust for such person by the funeral firm, funeral director, undertaker,
    18  cemetery  or  any other person, firm or corporation to whom such payment
    19  is made and shall, within ten business days of receipt, be deposited  in
    20  an  interest  bearing  account in a bank, national bank, federal savings
    21  bank, federal savings and loan association, savings  bank,  savings  and
    22  loan association, credit union, or federal credit union within the state
    23  and  duly  authorized  to  receive deposits in the state of New York and

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11658-02-9

        S. 5677--A                          2

     1  which shall earn interest at a rate which shall be at not less than  the
     2  prevailing rate of interest earned by other such deposits in such banks,
     3  savings  banks,  savings  and  loan associations, or credit unions under
     4  this  section,  or  shall  be placed in a trust company in an investment
     5  backed by the government of the United States and shall not  be  commin-
     6  gled  with other moneys of the funeral firm, funeral director, undertak-
     7  er, cemetery, or other person, firm or corporation or become  the  funds
     8  of  the  funeral  firm, funeral director, undertaker, cemetery, or other
     9  person, firm or corporation, and shall be so held on  deposit,  together
    10  with  any  interest thereon with interest earned being accrued daily and
    11  credited monthly, until said merchandise has  been  actually  physically
    12  delivered  and  said personal services have been rendered, unless sooner
    13  repaid, in whole or in part. No funeral firm, funeral  director,  under-
    14  taker,  cemetery  or  any  other  person,  firm  or  corporation,  shall
    15  discharge the obligation established under this section  to  deposit  or
    16  place  money  with  a bank, national bank, federal savings bank, federal
    17  savings and loan association, savings bank,  savings  and  loan  associ-
    18  ation,  credit  union,  federal credit union or trust company within the
    19  state through  a  surety  bond  or  other  financial  instrument  unless
    20  expressly provided under this section.
    21    8.  Records  required by this section to be maintained and true copies
    22  of agreements shall be retained for four years following the  provisions
    23  of  funeral merchandise and services or, if a preneed administrator, for
    24  four years after final payment is disbursed pursuant to  the  agreement.
    25  In  the  event  the  funds  are returned to the person who deposited the
    26  money or their representative, such records,  including  the  record  of
    27  return  of  funds shall be retained for a period of four years after the
    28  sale, transfer, termination, cessation of operation or discontinuance of
    29  the funeral.  For purposes of this section, records shall  include,  but
    30  not  be  limited  to, a copy of the agreement, a death certificate and a
    31  copy of the check or other  payment  made  pursuant  to  the  agreement.
    32  Copies  of such records shall be made available for inspection and shall
    33  be made available during ordinary business hours for copying upon  writ-
    34  ten  request  by  any  state agency regulating the funeral firm, funeral
    35  director, undertaker, cemetery or  other  person,  firm  or  corporation
    36  which received such money or enforcing the requirements of this section,
    37  provided  a  complaint, either oral or written, has been received, or an
    38  inspector has grounds to believe that serious or  repeat  violations  of
    39  this section have occurred.
    40    10. For the purposes of [subdivision eleven of] this section, "preneed
    41  administrator"  means  any  person, partnership, firm, limited liability
    42  company or corporation, which is either domiciled in or  doing  business
    43  in  the  state  of  New  York,  and which has received money under or in
    44  connection with an agreement executed  pursuant  to  this  section;  and
    45  "county"  shall  refer  only to a county located within the state of New
    46  York. For the purposes of subdivision five  of  this  section,  "preneed
    47  administrator"  shall also include any successor, assignee or transferee
    48  of funds held pursuant to this section.
    49    12. A preneed administrator operating under this section shall conduct
    50  an audit of all of its accounts relating to preneed agreements as of the
    51  thirty-first of December of each calendar year.  The audit shall:
    52    (a) Be performed by a certified public accountant licensed to practice
    53  in New York state;
    54    (b) Be completed and delivered to the preneed administrator within one
    55  hundred twenty days of the end of such calendar year;

        S. 5677--A                          3

     1    (c) Verify, by way of a representative sample, that the preneed admin-
     2  istrator has a signed copy of the agreement for each account;
     3    (d) Verify, by way of a representative sample, that appropriate income
     4  tax  reports have been sent by the preneed administrator to the owner of
     5  each account;
     6    (e) Verify that the investment of all funds for the agreements  is  in
     7  compliance with this section;
     8    (f)  Verify,  by  an appropriate sampling method, that the earnings on
     9  the investments are being properly applied to each account and that  the
    10  earnings are credited to each account at least monthly;
    11    (g)  Express  an  opinion that the financial statements of the preneed
    12  administrator fairly represent the  financial  condition  of  the  funds
    13  received  in  all  material respects, and that all financial information
    14  distributed by the preneed administrator to consumers, funeral homes  or
    15  other parties is accurate; and
    16    (h)  Verify  that  the  stated  yield credited to the account for that
    17  fiscal year, as announced by the preneed administrator, is accurate.
    18    13. (a) In no event shall the  administrative  fees  charged  under  a
    19  preneed agreement in any calendar year exceed the net income credited to
    20  an  account  for  such calendar year; that is, the account balance shall
    21  never be reduced in any calendar year  because  of  administrative  fees
    22  charged against the account.
    23    (b)  Any  administrative fees otherwise payable in relation to preneed
    24  agreements which are not paid in any calendar year because of the  limi-
    25  tations  in  paragraph (a) of this subdivision shall not be collected in
    26  any subsequent calendar year.
    27    14. A preneed administrator operating under this section shall, at the
    28  end of each calendar year, have  all  assets  valued  and  presented  in
    29  accordance with generally accepted accounting principles.
    30    §  2.  Paragraph  (l)  of  subdivision 1 of section 3450 of the public
    31  health law, as amended by chapter 557 of the laws of 2001, is amended to
    32  read as follows:
    33    (l) has paid, given, has caused to be paid or given or offered to  pay
    34  or  to  give  to any person a commission or other valuable consideration
    35  for the solicitation or procurement, either directly or  indirectly,  of
    36  funeral  patronage, or has accepted any consideration (including without
    37  limitation a commission, rebate, or discount or direct or indirect price
    38  reduction on merchandise from the current value thereof) from any finan-
    39  cial institution or trust company,  or  agent  thereof,  with  whom  the
    40  funeral  director deposits funds paid for funeral services in advance of
    41  need pursuant to subdivision one of section four hundred fifty-three  of
    42  the  general  business  law except that the funeral director may accept,
    43  from the financial institution, trust company or agent  thereof,  up  to
    44  twenty-five  hundredths of one percent of the fee authorized under para-
    45  graph (b) of subdivision three of section four  hundred  fifty-three  of
    46  the  general  business  law  for administrative services provided by the
    47  funeral director, or has accepted any consideration  (including  without
    48  limitation  a  commission or gift) from any insurer or agent thereof, to
    49  sell, offer or promote the sale of  any  policy  of  insurance  payable,
    50  expressly  or  as  marketed,  at the death of the insured for funeral or
    51  burial expenses;
    52    § 3. Paragraph (l) of subdivision 1 of  section  3450  of  the  public
    53  health law, as amended by chapter 560 of the laws of 1998, is amended to
    54  read as follows:
    55    (l)  has paid, given, has caused to be paid or given or offered to pay
    56  or to give to any person a commission or  other  valuable  consideration

        S. 5677--A                          4

     1  for  the  solicitation or procurement, either directly or indirectly, of
     2  funeral patronage, or has accepted any consideration (including  without
     3  limitation a commission, rebate, or discount or direct or indirect price
     4  reduction on merchandise from the current value thereof) from any finan-
     5  cial  institution  or  trust  company,  or  agent thereof, with whom the
     6  funeral director deposits funds paid for funeral services in advance  of
     7  need  pursuant to subdivision one of section four hundred fifty-three of
     8  the general business law except that the funeral  director  may  accept,
     9  from  the  financial  institution, trust company or agent thereof, up to
    10  twenty-five hundredths of one percent of the fee authorized under  para-
    11  graph  (b)  of  subdivision three of section four hundred fifty-three of
    12  the general business law for administrative  services  provided  by  the
    13  funeral director;
    14    §  4.  This  act shall take effect on the ninetieth day after it shall
    15  have become a law, provided that the  amendments  to  paragraph  (l)  of
    16  subdivision  1  of section 3450 of the public health law made by section
    17  two of this act shall be subject to the expiration and reversion of such
    18  paragraph pursuant to section 6 of chapter 557 of the laws of  2001,  as
    19  amended, when upon such date the provisions of section three of this act
    20  shall take effect.
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