HOUSE BILL No. 5834 May 7, 1998, Introduced by Reps. Varga, Alley, Brackenridge, Vaughn and Scranton and referred to the Committee on Regulatory Affairs. A bill to amend 1986 PA 255, entitled "Prepaid funeral contract funding act," by amending sections 4, 5, 6, 8, 12, 13, 15, 18, 19, and 24 (MCL 328.214, 328.215, 328.216, 328.218, 328.222, 328.223, 328.225, 328.228, 328.229, and 328.234) and by adding sections 12a, 12b, 12c, 12d, 12e, and 12f. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 4. (1) "Depository" means a state or national bank 2 which is a member of the federal deposit insurance corporation, a 3 state or federal savings and loan association which is a member 4 of the federal savings and loan insurance corporation, or a state 5 or federally chartered credit union which is insured by the 6 national credit union administration, or a trust company 7 authorized to do business in this state. Depository includes the 05006'97 * LBO 2 1 trust department, if any, of an entity referred to in this 2 subsection. 3 (2) "Escrow agent" means a person who holds, invests, and 4 disburses principal and income from the funds received under a 5 prepaid funeral contract. 6 (3) "Funds" means all money or other consideration actually 7 received from a contract buyer by a contract seller or provider 8 or an assignee from the contract buyer in connection with any 9 aspect of the sale of a prepaid funeral contract including 10 finance charges, but does not include late payment penalties, 11 payments required to be made to a governmental agency at the time 12 the contract is entered into, or a commission authorized by sec- 13 tion 12(1). 14 (4) "Funeral goods" meansitems of merchandise sold or15offered for sale or lease to consumers which will be used in con-16nection with a funeral or an alternative to a funeral or final17disposition of human remains including, but not limited to, cas-18kets, combination units, and catafalques. Funeral goods shall19not include land or interests in land, crypts, lawn crypts, mau-20soleum crypts, or niches that are sold by a cemetery which com-21plies with the endowment care fund requirements of the cemetery22regulation act, Act No. 251 of the Public Acts of 1968, being23sections 456.521 to 456.543 of the Michigan Compiled Laws. In24addition, funeral goods shall not include cemetery burial vaults25or other outside containers, markers, monuments, urns, and mer-26chandise items used for the purpose of memorializing a decedent27and placed on or in proximity to a place of interment or05006'97 * 3 1entombment of a casket, catafalque, or vault or to a place of2inurnment which are sold by a cemetery which deposits at least3130% of the cost of these items in a merchandise trust account4established and operated in accordance with the cemetery regula-5tion act, Act No. 251 of the Public Acts of 1968, being sections6456.521 to 456.543 of the Michigan Compiled Laws.ALL GOODS SOLD 7 TO THE PUBLIC BY A MORTUARY SCIENCE LICENSEE INCLUDING CASKETS, 8 CATAFALQUES, COMBINATION UNITS, OR OTHER FUNERAL RELATED GOODS OF 9 ANY TYPE DIRECTLY OR INDIRECTLY RELATED TO A FUNERAL AND VAULTS 10 OR OTHER OUTSIDE CONTAINERS OF ANY TYPE, MONUMENTS, MARKERS, 11 URNS, CASKETS, CATAFALQUES, CEMETERY MERCHANDISE THAT MAY BE SOLD 12 BY A CEMETERY REGISTERED UNDER THE CEMETERY REGULATION ACT, 1968 13 PA 251, MCL 456.521 TO 456.543, OR ANY OTHER GOODS DIRECTLY OR 14 INDIRECTLY CONNECTED TO THE FINAL DISPOSITION OF DEAD HUMAN 15 REMAINS. 16 (5) "Funeral services" meansservices customarily performed17by a mortuary science licensee who is licensed pursuant to sec-18tions 1801 to 1812 of the occupational code, Act No. 299 of the19Public Acts of 1980, being sections 339.1801 to 339.1812 of the20Michigan Compiled Laws. Further, funeral services includes, but21is not limited to, care of dead human remains, embalming, prepa-22ration of dead human remains for final disposition, professional23services relating to a funeral or an alternative to a funeral or24final disposition of dead human remains, transportation of dead25human remains, limousine services, use of facilities or equipment26for viewing dead human remains, visitation, memorial services, or27services which are used in connection with a funeral or05006'97 * 4 1alternative to a funeral, coordinating or conducting funeral2rites or ceremonies, and other services provided in connection3with a funeral, alternative to a funeral, or final disposition of4dead human remains.ALL SERVICES OFFERED TO THE PUBLIC BY A MOR- 5 TUARY SCIENCE LICENSEE, INCLUDING, BUT NOT LIMITED TO, THE CARE 6 OR PREPARATION OF DEAD HUMAN REMAINS FOR FINAL DISPOSITION, 7 EMBALMING, USE OF FACILITIES OR EQUIPMENT FOR VIEWING DEAD HUMAN 8 REMAINS, VISITATION, MEMORIAL SERVICES, OR SERVICES USED DIRECTLY 9 OR INDIRECTLY IN CONNECTION TO A FUNERAL OR ALTERNATIVE TO A 10 FUNERAL AND GRAVE OPENINGS AND CLOSINGS, CREMATIONS, FOUNDATION 11 INSTALLATIONS, FLOWERS, TRANSPORTATION, AND OTHER SERVICES 12 DIRECTLY OR INDIRECTLY CONNECTED TO THE FINAL DISPOSITION OF DEAD 13 HUMAN REMAINS BY A CEMETERY REGISTERED UNDER THE CEMETERY REGULA- 14 TION ACT, 1968 PA 251, MCL 456.521 TO 456.543. 15 (6) "Guaranteed price contract" means a prepaid funeral con- 16 tract under which funds received are held pursuant to an escrow 17 agreement. The contract has a guaranteed fixed price for which 18 specified funeral goods or funeral services are required to be 19 sold to or made available for a contract buyer or for a contract 20 beneficiary, regardless of the cost or value of the funeral goods 21 or funeral services at the time of death of the contract 22 beneficiary. Under the guaranteed price contract additional con- 23 sideration shall not be charged for the originally contracted for 24 funeral goods and funeral services at the time of delivery of the 25 funeral goods and funeral services contracted for. 26 (7) "Income" means the money earned by the investment of the 27 principal, including, but not limited to, interest, dividends, 05006'97 * 5 1 and gains or losses on the sale of, deposit of, or exchange of, 2 property using invested principal amounts. 3 Sec. 5. (1) "Nonguaranteed price contract" means a prepaid 4 funeral contract under which funds received are held pursuant to 5 an escrow agreement between a contract seller or provider and a 6 contract buyer. Under the terms of this contract, a contract7seller or provider agrees to apply the principal and income to8 AND ARE APPLIED the cost of the funeral goods or funeral services 9, which funeral goods and funeral servicesTHAT may be selected 10 by the contract buyer at the time the contract is signed or as 11 selected by a person legally authorized to procure funeral goods 12 and funeral services at the time of death of the contract 13 beneficiary.However, thisA NONGUARANTEED PRICE contract 14shallDOES not obligate the contract beneficiary's estate or 15 the personwho islegally entitled to make funeral arrangements 16 for a deceased contract beneficiary to purchase specific FUNERAL 17 goods and FUNERAL serviceswhich wereselected before the con- 18 tract beneficiary's death, nor shall this contractAND DOES 19 NOT obligate either the contract beneficiary's estate or the 20 personwho isentitled to make funeral arrangements for a 21 deceased contract beneficiary to expend a specific amount OF 22 MONEY on funeral goods or funeral services. 23 (2) "Person" means an individual, group of individuals, sole 24 proprietorship, partnership, association, corporation, LIMITED 25 LIABILITY COMPANY, a governmental agency, or a combination of 26 these legal entities. 05006'97 * 6 1 (3) BEGINNING THE EFFECTIVE DATE OF THE AMENDATORY ACT THAT 2 ADDED THIS SUBSECTION, "PHYSICAL DELIVERY AND RETENTION" MEANS 3 ACTUAL CONTROL AND POSSESSION OF FUNERAL GOODS THAT HAVE BEEN 4 PERMANENTLY RELINQUISHED BY A CONTRACT SELLER OR A PROVIDER, OR 5 THE AGENT OF EITHER, TO THE CONTRACT BUYER OR THE CONTRACT 6 BENEFICIARY. PHYSICAL DELIVERY AND RETENTION DOES NOT OCCUR IF 7 THE CONTRACT SELLER OR PROVIDER TAKES EITHER OF THE FOLLOWING 8 ACTIONS: 9 (A) ARRANGES OR INDUCES THE BUYER TO ARRANGE FOR THE STORAGE 10 OR WAREHOUSING OF FUNERAL GOODS ORDERED PURSUANT TO A PREPAID 11 FUNERAL CONTRACT, WITH OR WITHOUT EVIDENCE THAT LEGAL TITLE HAS 12 PASSED. 13 (B) ACQUIRES OR REACQUIRES ACTUAL OR CONSTRUCTIVE POSSESSION 14 OR CONTROL OF FUNERAL GOODS AFTER THEIR INITIAL DELIVERY TO THE 15 CONTRACT BUYER OR CONTRACT BENEFICIARY. 16 (4)(3)"Prepaid funeral contract" means a contract 17 requiring payment in advance for funeral services or for funeral 18 goods, physical delivery and retention of which would occur after 19 death OF A CONTRACT BENEFICIARY under a guaranteed price contract 20 or a nonguaranteed price contract.PrepaidA PREPAID funeral 21contracts shallCONTRACT DOES not include a contract for the 22 sale of funeral goods or funeral serviceswhich isentered into 23 after the death of theperson for whose benefit the goods or24services are acquiredCONTRACT BENEFICIARY. BEGINNING THE 25 EFFECTIVE DATE OF THE AMENDATORY ACT THAT ADDED THIS SUBSECTION, 26 PREPAID FUNERAL CONTRACT INCLUDES A CONTRACT WHERE PHYSICAL 05006'97 * 7 1 DELIVERY AND RETENTION OF THE FUNERAL GOODS HAS NOT BEEN MADE 2 BEFORE THE DEATH OF THE CONTRACT BENEFICIARY. 3 (5)(4)"Principal" means the money, finance charges, or 4 other consideration actually deposited in the escrow accounts 5 required by section 12. 6 (6)(5)"Provider" means any person who furnishes or 7 agrees to furnish funeral goods or funeral services pursuant to a 8 prepaid funeral contract, whether or not that person is the con- 9 tract seller. In the case of funeral goods, providershall10meanMEANS the person who arranges for delivery of the funeral 11 goods at the time of the death of the contract beneficiaryand12 BUT DOES not INCLUDE the manufacturer of the FUNERAL goods. In 13 the case of funeral services, providershall meanMEANS a 14 person licensed pursuant to section 1806(3) of the occupational 15 code,Act No. 299 of the Public Acts of 1980, being section16339.1806(3) of the Michigan Compiled Laws1980 PA 299, MCL 17 339.1806. 18 (7)(6)"Registrant" means a person who has registered 19 with the department pursuant to section 6. 20 Sec. 6. (1) A person shall not sell, provide, or agree to 21 provide funeral goods or funeral services pursuant to a prepaid 22 funeral contract unless that person IS OF GOOD MORAL CHARACTER AS 23 DEFINED AND DETERMINED UNDER 1974 PA 381, MCL 338.41 TO 338.47, 24 is registered with the department as provided in this section, 25 and has received a certificate of registration. THIS SUBSECTION 26 DOES NOT REQUIRE REGISTRATION UNDER THIS ACT OF A PERSON SELLING 05006'97 * 8 1 ONLY PREPAID CEMETERY CONTRACTS AND REGISTERED UNDER THE CEMETERY 2 REGULATION ACT, 1968 PA 251, MCL 456.521 TO 456.535. 3 (2) A person desiring to receive a certificate of registra- 4 tion under this section shallmake applicationAPPLY upon forms 5 provided by the department and pay an application fee of 6 $120.00. The original registration may be renewed. A certifica- 7 tion of registrationshall beIS valid for 3 years from the 8 date of its issuance. An application form for original registra- 9 tion or renewal shall contain the following: 10 (a) The name and business address of the entity 11 registering. 12 (b) The names and addresses of persons owning 10% or more 13 interest in the entity applying for registration. 14 (c) The business address where books and records pertaining 15 to prepaid funeral contracts shall be maintained for inspection 16 by the department. 17 (d) A list of the names and addresses of any escrow agents 18 in which funds have been or will be deposited by the registrant 19 which after registration shall be constantly updated. The regis- 20 trant shall inform the department of any change in this list 21 within 30 days of the change by adding to the list the name and 22 address of any new escrow agent or by deleting from the list an 23 escrow agent whose services are no longer being used by the 24 registrant. 25 (e)AIF APPLICABLE, A statement made under oath that the 26 registrant has an agreement with each escrow agent with which it 05006'97 * 9 1 has deposited funds which complies with the requirements of 2 section 7. 3 (3) The department shall renew the registration of a person 4 who applies for renewal upon a form provided by the department 5 and pays an application fee of $30.00 provided that the person 6 has submitted the sworn statement as required bythis section7 SUBSECTION (2)(E) and the special report or sworn statement as 8 required by section 8 at least 60 daysprior toBEFORE the 9 expiration date printed on the certificate of registration. The 10 certificate of registration of a person who fails to file the 11 sworn statement or special report required bythis section shall12expireSUBSECTION (2)(E) EXPIRES on the date printed on the cer- 13 tificate of registration. A registrant may reinstate the regis- 14 tration within 60 days of its expiration by submitting the sworn 15 statement or special report and paying a fee of $120.00. 16 (4) The department may deny the registration of a person if 17 it determines THAT any of the following OCCURRED: 18 (a)That theTHE person was previously LICENSED OR regis- 19 tered with the department UNDER THIS ACT, THE CEMETERY REGULATION 20 ACT, 1968 PA 251, MCL 456.521 TO 456.535, OR ARTICLE 18 OF THE 21 OCCUPATIONAL CODE, 1980 PA 299, MCL 339.1801 TO 339.1811, and 22 that LICENSE OR registration was revoked or suspended within 2 23 yearsprior toBEFORE the date of the current application for 24 registration IF THAT PERSON IS CURRENTLY EMPLOYED BY THE SAME 25 REGISTRANT OR LICENSEE. THE DEPARTMENT SHALL MAKE A SPECIFIC 26 DETERMINATION FOR EACH DENIAL UNDER THIS SUBDIVISION. 05006'97 * 10 1 (b)That theTHE person was or is presently an owner with 2 a substantial interest in the entity, partner, or employee of a 3 person whose LICENSE OR registration was revoked or suspended 4 UNDER THIS ACT, THE CEMETERY REGULATION ACT, 1968 PA 251, MCL 5 456.521 TO 456.535, OR ARTICLE 18 OF THE OCCUPATIONAL CODE, 1980 6 PA 299, MCL 339.1801 TO 339.1811, within 2 yearsprior to7 BEFORE the date of the current application for registration and 8 the person engaged,orparticipated in, or authorized the mis- 9 conduct which was the basis for the revocation or suspension. 10 (5)An applicant who registers with theTHE department 11 shall notreceiveISSUE a certificate of registrationunless12the applicant compliesTO AN APPLICANT NOT IN COMPLIANCE with 13 the conditions in this section. 14 (6) A personwho isdenied registration by the department 15 pursuant to this section maypetitionREQUEST the department 16 for reconsideration. A person seeking reconsiderationshall be17 IS entitled to a hearing conducted in compliance with the admin- 18 istrative procedures act of 1969,Act No. 306 of the Public Acts19of 1969, being sections 24.201 to 24.328 of the Michigan Compiled20Laws1969 PA 306, MCL 24.201 TO 24.328. 21 Sec. 8. (1) A registrant shall keep, in this state, accu- 22 rate accounts, books, and records of all transactions and 23 accounts regulated by this act. Records shall include copies of 24 all prepaid funeral contracts, the dates and amounts of payments 25 made and accepted under these contracts, the name and address of 26 each contract buyer, the name and address of the contract 27 beneficiaries, the name and address of each escrow agent, and any 05006'97 * 11 1 other records as the department may require to enable it to 2 determine whether the registrant is complying with the require- 3 ments of this act. NOT LATER THAN 6 MONTHS AFTER THE EFFECTIVE 4 DATE OF THE AMENDATORY ACT THAT AMENDED THIS SUBSECTION, THE 5 DEPARTMENT SHALL PROMULGATE RULES TO REQUIRE RECORD KEEPING AND 6 REPORTING SIMILAR TO THAT REQUIRED FOR CEMETERIES REGULATED BY 7 THE DEPARTMENT. Records shall be kept for at least 36 months 8 after performance of all obligations of each prepaid funeral con- 9 tract or after the filing of the final special report which 10 includes a contract which has been performed. 11 (2)At least once every 3 years,ANNUALLY a registrant 12 which serves as an escrow agent or which has deposited funds with 13 an escrow agent pursuant to section 12 shall secure a special 14 ATTESTATION reportof limited reviewprepared by a licensed 15 independent certified public accountant pertaining to prepaid 16 funeral contract funds. The special report shall be on forms 17 provided by the department or in any other format considered 18 appropriate by the independent certified public accountant AND 19 THE DEPARTMENT. The special report shall be preparedandBY A 20 MICHIGAN LICENSED CERTIFIED PUBLIC ACCOUNTANT, dated within 90 21 days before the expiration of the registrant's certificate of 22 registration, and shall be furnished to the department with the 23 registrant's application for renewal or, if an application for 24 renewal is not filed, before the expiration of the certificate of 25 registration.In preparing the special report, the independent26certified public accountant shall not be required to review all27prepaid funeral contracts, escrow agreements, escrow accounts, or05006'97 * 12 1records of the registrant, nor shall the independent certified2public accountant be required to review any receipts or deposits3by the registrant of prepaid funeral contract funds.The special 4 report of the independent certified public accountant shall pro- 5 vide the following assurances: 6 (a) That, based either upon a review of the registrant's 7 agreements with escrow agents or depositories which limit invest- 8 ments of the escrow funds by the escrow agents or depositories to 9 those investments permitted by this act, or upon a review of the 10 investments of the escrow accounts, the investment requirements 11 of section 12(4) have been complied with. 12 (b) In the case of escrow accounts where the registrant 13 serves as the escrow agent, that withdrawals, as detailed in the 14 periodic statements of the depositories in which the escrow 15 accounts are maintained, have been made in accordance with this 16 act. 17 (c) That no matters have come to the attention of the inde- 18 pendent certified public accountant during the review of escrow 19 account investments and withdrawals that gave cause to believe 20 that the registrant has not complied with this act, or if any 21 matters have come to his or her attention, the independent certi- 22 fied public accountant shall include an explanation of the mat- 23 ters which caused the belief that the registrant has not complied 24 with this act. 25 (3) A REGISTRANT SHALL MAINTAIN A LIST OF ALL FUTURE PER- 26 FORMANCE OBLIGATIONS. THIS LIST WILL BE CURRENT AT ALL TIMES AND 27 SHALL INCLUDE: 05006'97 * 13 1 (A) COMPLETE DESCRIPTION OF THE FUTURE PERFORMANCE 2 OBLIGATIONS INVOLVED. THESE OBLIGATIONS SHALL SEGREGATE VAULTS, 3 MEMORIALS, SERVICES BY TYPE, AND CASKETS BY MODEL. THE LIST 4 SHALL BE TOTALED BY ITEM TYPE AND MODEL. 5 (B) TOTAL COST OF FULL PERFORMANCE OF ALL OBLIGATIONS AS OF 6 THE DATE OF STATEMENT. 7 (C) COMPLETE INFORMATION ON THE MEANS, PROVISION, TRUST, OR 8 OTHER VEHICLE WHICH WILL ASSURE FULFILLMENT OF ALL OBLIGATIONS, 9 STATING LEDGER AND MARKET VALUES OF THE VEHICLE, ITS LOCATION, 10 NATURE OF INVESTMENTS, AND TRUSTEES INCLUDING FEES PAID TO 11 TRUSTEES. 12 (4)(3)The department may examine each special report 13 required by this section and if the department determines on the 14 basis of its review that the registrant or its agent has not held 15 or invested funds in accordance with the requirements of this act 16 or has failed to file a special report as required, the depart- 17 ment shall take any appropriate corrective or penal action autho- 18 rized by this act. 19 (5)(4)The department may examine, review, or audit the 20 books and records of a contract seller or provider pertaining to 21 funds received in payment for prepaid funeral contracts AND ALLOW 22 THE DEPARTMENT TO MAKE COPIES OF THOSE RECORDS. An audit may 23 include an examination of the books and financial records of the 24 registrant as well as books and financial records of escrow 25 agents used by the registrant. A registrant shall authorize 26 escrow agents to open their records of the registrant accounts to 27 the department upon request AND TO ALLOW THE COPYING OF RELEVANT 05006'97 * 14 1 RECORDS. THE DEPARTMENT MAY REQUEST THE ADVICE AND AID OF THE 2 FINANCIAL INSTITUTIONS BUREAU IN CARRYING OUT THE AUDIT AND 3 INVESTIGATION FUNCTION UNDER THIS ACT. 4 (6)(5)For the purposes of complying with the require- 5 ments of this section, a registrant who has not sold, provided, 6 or agreed to provide funeral goods or funeral services in accord- 7 ance with a prepaid funeral contract and who has no obligations 8 with respect to an outstanding prepaid funeral contract may 9 submit a sworn statement that a prepaid funeral contract has not 10 been sold, provided, or agreed to and there are no obligations 11 outstanding. THE STATEMENT SHALL BE ACCOMPANIED BY A LETTER FROM 12 A CERTIFIED PUBLIC ACCOUNTANT STATING THAT NO PREPAID FUNERAL 13 CONTRACTS WERE SOLD BASED UPON A REVIEW OF THE REGISTRANT'S BUSI- 14 NESS RECORDS. This statement shall be accepted in lieu of the 15 special report. 16 (7) THE DEPARTMENT MAY PROVIDE A FORM FOR A COMBINED REPORT 17 REGARDING A REGISTRANT THAT ALSO OWNS AN INTEREST IN A CEMETERY 18 REGULATED UNDER THE CEMETERY REGULATION ACT, 1968 PA 251, 19 MCL 456.521 TO 456.543. 20 Sec. 12. (1)All fundsSUBJECT TO SECTION 12A, FUNDS 21 received in connection with a prepaid funeral contract shall be 22 held in escrow by an escrow agent for the benefit of theperson23for whom the funeral goods or funeral services have been24purchased. However, a prepaid funeral contract may authorize the25contract seller or provider to charge an additional commission of26not more than 10% of the contract price which shall not be27subject to the depository requirements of this sectionCONTRACT 05006'97 * 15 1 BENEFICIARY. If the contract price is paid in installments, the 2 commission retained by the contract seller or the provider shall 3 not exceed the rate of the commission charged in the contract. A 4 contract buyer upon cancellationshall beIS entitled to a 5 refund as provided in section 13(1). 6 (2) Only the following persons may serve as the escrow agent 7 of FUNDS OF A prepaid funeralfundsCONTRACT: 8 (A) If thepreparedPREPAID funeral contract is a nonguar- 9 anteed price contract, the contract seller or provider of that 10 nonguaranteed price contract., or in11 (B) IN the case of either a guaranteed or nonguaranteed 12 price contract, a state or national bank, a state or federal sav- 13 ings and loan association, a state or federally chartered credit 14 union, a trust company,ora Michigan nonprofit corporation in 15 which the majority interest is held by250100 or more funeral 16 establishments licensed pursuant tosections 1801 to 181217 ARTICLE 18 of the occupational code,Act No. 299 of the Public18Acts of 1980, being sections 339.1801 to 339.1812 of the Michigan19Compiled Laws1980 PA 299, MCL 339.1801 TO 339.1811, or a 20 Michigan nonprofit corporation in which the majority interest is 21 held by25025 or more cemeteries licensed and operated pursu- 22 ant to the cemetery regulation act,Act No. 251 of the Public23Acts of 1968, being sections 456.521 to 456.543 of the Michigan24Compiled Laws1968 PA 251, MCL 456.521 TO 456.543.If the pre-25paid funeral contract is a guaranteed price contract, the con-26tract seller or the provider shall not serve as the escrow27agent.05006'97 * 16 1 (3) If the escrow agent is not the contract seller or 2 provider,of a nonguaranteed price contract,the escrow agent 3 shall be selected as follows: 4 (a) If the contract is a nonguaranteed price contract, the 5 escrow agent may be selected by either the contract seller or the 6 provider. 7 (b) If the contract is a guaranteed price contract, the 8 escrow agent shall be selected by the provider who has been des- 9 ignated to furnish the funeral goods or funeral services. 10 (4) If the escrow agent is a person other than theperson11to whom the funds have been paid by the contract buyerCONTRACT 12 SELLER OR PROVIDER, the funds shall be deposited with the escrow 13 agentwithin 30 days after the receiptby the person to whom 14 the funds are paid NOT LATER THAN THE MONTH FOLLOWING THEIR 15 RECEIPT. 16 (5) Funds held by an escrow agent shall be held and invested 17 only as specified in the prepaid contract. A prepaid contract 18 may authorize investments only as follows: 19 (a) If the contract is a nonguaranteed price contract, the 20 funds shall be invested in 1 or more federally insured 21 interest-bearing accounts in a depository. 22 (b) If the contract is a guaranteed price contract, the 23 principal and income may be invested only in accordance withAct24No. 177 of the Public Acts of 1937, being sections 555.201 to25555.203 of the Michigan Compiled Laws1937 PA 177, MCL 555.201 26 TO 555.203, except that funds shall not be invested in a company 27 owned or operated by a contract seller or provider or their 05006'97 * 17 1 authorized agents,or in loans to any person directly 2 connected with or employed by a contract seller or provider or 3 their authorized agents. 4 (6) Income shall be held and invested by the escrow agent in 5 the same manner as the principal except that the income may be 6 utilized to pay reasonable fees and expenses of the escrow agent 7 in addition to other costs specifically authorized by this act. 8 The expenses and fees paid to the escrow agent shall not exceed 9 1% of the aggregate balance of principal and prior earned income 10 from each account annually. If a fee is charged for reasonable 11 expenses for the administration costs under an escrow agreement, 12 the amount may be paid to the escrow agent periodically or may be 13 accumulated in the account and paid at the time of death or upon 14 cancellation of the contract. 15 (7) Amounts of principal and income held by an escrow agent 16 other than the contract seller or provider of a nonguaranteed 17 price contract may be commingled with principal and income 18 derived from other prepaid funeral accounts. However, a separate 19 accounting of principal and income shall be maintained for each 20 prepaid funeral contract under the name of the contract 21 beneficiary. 22 (8) The contractbuyerSELLER shallbe sentSEND TO THE 23 CONTRACT BUYER a notice stating the date, amount of the deposit, 24 and the name of the escrow agent with whom the funds are 25 deposited. 26 (9) Upon the death of the contract beneficiary and upon 27 performance by the provider of its obligation to furnish funeral 05006'97 * 18 1 goods and funeral services pursuant to the prepaid funeral 2 contract, funds held by the escrow agent shall be disbursed as 3 follows: 4 (a) If the prepaid funeral contract is a nonguaranteed price 5 contract, the principal and income shall first be disbursed by 6 the escrow agent to the provider of the funeral goods or funeral 7 services in payment of all reasonable charges. Thereafter, not 8 less than 90% of the remaining balance of principal and income, 9 if any, shall be disbursed to the person, other than the provider 10 or the contract seller, designated in the contract or authorized 11 by law to receive the surplus, and the remainder, if any, shall 12 be disbursed to the provider as final compensation for its 13 services. The amount paid to the person entitled to receive the 14 surplus shall be as follows: 15 (i) If no commission has been charged pursuant to this sec- 16 tion, at least 90% of the remaining balance of principal and 17 income in the escrow account. 18 (ii) If a commission of 5% or less of the contract price has 19 been charged, at least 95% of the remaining principal and income 20 in the escrow account. 21 (iii) If a commission of greater than 5% of the contract 22 price has been charged, 100% of the remaining principal and 23 income in the escrow account. 24 (b) If the prepaid funeral contract is a guaranteed price 25 contract, the principal and income held by the escrow agent shall 26 be disbursed to the provider, its designee, or its successor. 05006'97 * 19 1 (c) If the escrow agent is notified that there is a dispute 2 as to whether the provider has performed all its obligations 3 under the prepaid funeral contract, the escrow agent shall file 4 an action for interpleader or shall obtain an impartial arbitra- 5 tor to determine the rights of the parties. Expenses of arbitra- 6 tion shall be shared equally by the parties unless otherwise 7 ordered by the arbitrator. 8 (10) A Michigan nonprofit corporation in which the majority 9 interest is held by250100 or more funeral establishments or 10 by25025 or more cemeteries may be designated as the escrow 11 agent only if the contract buyer has expressly authorized such 12 designation in writing. If the contract buyer authorizes the 13 appointment as escrow agent of any such nonprofit corporation in 14 the prepaid funeral contract, the authorization shall be set 15 forth in a separate paragraph which shall not be effective unless 16 separately signed or initialed by a contract buyer and which 17 shall state that the buyer may elect to require that a state or 18 national bank, or state or federal savings and loan association, 19 a state or federally chartered credit union, or a trust company 20 be designated as the escrow agent. 21 (11) If a prepaid contract is canceled, the escrow agent 22 shall disburse the principal and income in accordance with sec- 23 tion 13. 24 (12) At least annually, unless waived in writing by a con- 25 tract buyer, a contract buyer shall be furnished a statement 26 indicating the current balance, the income earned since the last 27 statement, the fees or expenses charged since the last statement, 05006'97 * 20 1 and the name and address of the person from whom additional 2 information may be obtained relative to the account. The cost of 3 the statement required by this subsection may be paid from the 4 income and may be in addition to any other fee or charge autho- 5 rized by this act. 6 SEC. 12A. (1) A REGISTRANT RECEIVING FUNDS FROM A CONTRACT 7 SELLER ACTING ON THE BEHALF OR AT THE DIRECTION OF A REGISTRANT 8 SHALL DEPOSIT INTO AN ESCROW ACCOUNT 70% OF THE RETAIL COST OF 9 ALL PRENEED FUNERAL SERVICES AND 70% OF THE RETAIL COST OF ALL 10 PRENEED FUNERAL GOODS. A CONTRACT SELLER MAY ALSO CHARGE A 11 PRE-ARRANGEMENT FEE NOT TO EXCEED 10% OF THE RETAIL COST OF ALL 12 PRENEED FUNERAL GOODS AND FUNERAL SERVICES. 13 (2) NOTWITHSTANDING SUBSECTION (1), INSCRIBED MARKERS MAY BE 14 STORED UNTIL THE TIME OF NEED SO LONG AS THEY ARE INSURED IN AN 15 AMOUNT IN EXCESS OF THEIR TOTAL REPLACEMENT COST. THE REGISTRANT 16 SHALL ANNUALLY FILE WITH THE DEPARTMENT A CURRENT CERTIFICATE OF 17 INSURANCE COVERAGE. 18 SEC. 12B. (1) A FUNERAL ESTABLISHMENT THAT MAINTAINS AN 19 ESCROW ACCOUNT SHALL PROVIDE A REPORT PREPARED BY A CERTIFIED 20 PUBLIC ACCOUNTANT FOR EACH FUND OR ACCOUNT WHICH SHALL COVER THE 21 IMMEDIATELY PRECEDING 3 CALENDAR YEARS. THE REPORT SHALL BE ON 22 FORMS PROVIDED BY THE DEPARTMENT OR IN ANY OTHER FORMAT CONSID- 23 ERED APPROPRIATE BY THE CERTIFIED PUBLIC ACCOUNTANT AND APPROVED 24 BY THE DEPARTMENT. THE CERTIFIED PUBLIC ACCOUNTANT IS REQUIRED 25 TO UTILIZE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. THE REPORT 26 SHALL PROVIDE A DETERMINATION OF WHETHER THE FUNERAL 05006'97 * 21 1 ESTABLISHMENT HAS APPARENTLY COMPLIED WITH ALL OF THE FOLLOWING 2 AND SHALL INDICATE AREAS OF NONCOMPLIANCE, IF APPLICABLE: 3 (A) THE DEPOSIT REQUIREMENTS. 4 (B) THE INVESTMENT REQUIREMENTS. 5 (C) THE WITHDRAWAL PROCEDURES AND REQUIREMENTS. 6 (D) OTHER REQUIREMENTS OF THIS ACT OR OTHER ACTS WITHIN THE 7 KNOWLEDGE OF THE CERTIFIED PUBLIC ACCOUNTANT AND READILY APPARENT 8 FROM REVIEW OF THE RECORDS AND INFORMATION USED TO COMPILE THE 9 REPORT. 10 (2) THE DEPARTMENT SHALL EXAMINE EACH REPORT REQUIRED BY 11 THIS SECTION AND IF THE DEPARTMENT DETERMINES FROM THAT EXAMINA- 12 TION THAT THE FUNERAL ESTABLISHMENT HAS NOT DEPOSITED, INVESTED, 13 OR WITHDRAWN FUNDS IN ACCORDANCE WITH THIS OR OTHER ACTS OR HAS 14 FAILED TO FILE A REPORT COMPLYING WITH THE REQUIREMENTS OF THIS 15 ACT, THE DEPARTMENT SHALL TAKE ANY APPROPRIATE ACTION AUTHORIZED 16 BY SECTION 24. 17 SEC. 12C. A REGISTRANT WHO DEPOSITS FUNDS WITH AN ESCROW 18 AGENT UNDER THIS ACT SHALL HAVE IN EFFECT AT ALL TIMES AN AGREE- 19 MENT UNDER WHICH THE ESCROW AGENT HAS, UNDER THE FOLLOWING CIR- 20 CUMSTANCES, AGREED TO ALLOW INSPECTION AND COPYING OF RECORDS 21 MAINTAINED BY IT PERTAINING TO FUNDS HELD OR MANAGED BY IT: 22 (A) UPON THE REQUEST BY THE DEPARTMENT, TO INSPECT OR COPY 23 RECORDS PERTAINING TO ANY OR ALL FUNDS HELD OR MANAGED BY THE 24 ESCROW AGENT. 25 (B) UPON THE REQUEST OF THE REGISTRANT OR ITS AGENT, TO 26 INSPECT OR COPY RECORDS PERTAINING TO ANY OR ALL FUNDS DEPOSITED 27 BY THE REGISTRANT WITH THE ESCROW AGENT. 05006'97 * 22 1 (C) UPON THE REQUEST OF A CONTRACT BUYER OR A CONTRACT 2 BENEFICIARY TO INSPECT OR COPY RECORDS PERTAINING TO FUNDS HELD 3 OR MANAGED BY THE ESCROW AGENT PURSUANT TO A CONTRACT TO WHICH 4 THE CONTRACT BUYER IS A PARTY OR FOR WHOSE BENEFIT IT WAS ENTERED 5 INTO. 6 (D) UPON ORDER OF A COURT OF COMPETENT JURISDICTION. 7 SEC. 12D. (1) A REGISTRANT SHALL KEEP, IN THIS STATE, ACCU- 8 RATE ACCOUNTS, BOOKS, AND RECORDS OF ALL TRANSACTIONS AND 9 ACCOUNTS REGULATED BY THIS ACT. RECORDS INCLUDE COPIES OF ALL 10 CONTRACTS, THE DATES AND AMOUNTS OF PAYMENTS MADE AND ACCEPTED 11 UNDER THESE CONTRACTS, THE NAME AND ADDRESS OF EACH CONTRACT 12 BUYER, THE NAME AND ADDRESS OF THE CONTRACT BENEFICIARIES, THE 13 NAME AND ADDRESS OF EACH ESCROW AGENT, AND ANY OTHER RECORDS AS 14 THE DEPARTMENT MAY REQUIRE TO ENABLE IT TO DETERMINE WHETHER THE 15 REGISTRANT IS COMPLYING WITH THE REQUIREMENTS OF THIS ACT. THE 16 REGISTRANT SHALL KEEP RECORDS FOR AT LEAST 36 MONTHS AFTER PER- 17 FORMANCE OF ALL OBLIGATIONS OF EACH CONTRACT OR AFTER THE FILING 18 OF THE FINAL SPECIAL REPORT WHICH INCLUDES A CONTRACT WHICH HAS 19 BEEN PERFORMED. 20 (2) EVERY THIRD YEAR, A REGISTRANT WHICH SERVES AS AN ESCROW 21 AGENT OR WHICH HAS DEPOSITED FUNDS WITH AN ESCROW AGENT SHALL 22 SECURE A SPECIAL REPORT OF LIMITED REVIEW PREPARED BY A LICENSED 23 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT PERTAINING TO FUNDS. THE 24 SPECIAL REPORT SHALL BE ON FORMS PROVIDED BY THE DEPARTMENT OR IN 25 ANY OTHER FORMAT CONSIDERED APPROPRIATE BY THE INDEPENDENT CERTI- 26 FIED PUBLIC ACCOUNTANT AND APPROVED BY THE DEPARTMENT. THE 27 SPECIAL REPORT SHALL BE PREPARED AND DATED WITHIN 90 DAYS BEFORE 05006'97 * 23 1 THE EXPIRATION OF THE REGISTRANT'S CERTIFICATE OF REGISTRATION 2 AND SHALL BE FURNISHED TO THE DEPARTMENT WITH THE REGISTRANT'S 3 APPLICATION FOR RENEWAL OR, IF AN APPLICATION FOR RENEWAL IS NOT 4 FILED, BEFORE THE EXPIRATION OF THE CERTIFICATE OF REGISTRATION. 5 IN PREPARING THE SPECIAL REPORT, THE INDEPENDENT CERTIFIED PUBLIC 6 ACCOUNTANT IS NOT REQUIRED TO REVIEW ALL CONTRACTS, TRUST AGREE- 7 MENTS, TRUST ACCOUNTS, OR RECORDS OF THE REGISTRANT AND THE INDE- 8 PENDENT CERTIFIED PUBLIC ACCOUNTANT IS NOT REQUIRED TO REVIEW ANY 9 RECEIPTS OR DEPOSITS BY THE REGISTRANT OF CONTRACT FUNDS. THE 10 SPECIAL REPORT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 11 SHALL PROVIDE THE FOLLOWING ASSURANCES: 12 (A) BASED EITHER UPON A REVIEW OF THE REGISTRANT'S AGREEMENT 13 WITH ESCROW AGENTS OR DEPOSITORIES WHICH LIMIT INVESTMENTS OF THE 14 FUNDS BY THE ESCROW AGENTS OR DEPOSITORIES TO THOSE INVESTMENTS 15 PERMITTED BY THIS ACT, OR UPON A REVIEW OF THE INVESTMENTS OF THE 16 ESCROW ACCOUNTS, THAT THE REGISTRANT HAS COMPLIED WITH THE 17 INVESTMENT REQUIREMENTS OF THIS ACT. 18 (B) IN THE CASE OF ESCROW ACCOUNTS WHERE THE REGISTRANT 19 SERVES AS THE ESCROW AGENT, THAT WITHDRAWALS, AS DETAILED IN THE 20 PERIODIC STATEMENTS OF THE DEPOSITORIES IN WHICH THE ESCROW 21 ACCOUNTS ARE MAINTAINED, HAVE BEEN MADE IN COMPLIANCE WITH THIS 22 ACT. 23 (C) MATTERS HAVE NOT COME TO THE ATTENTION OF THE INDEPEN- 24 DENT CERTIFIED PUBLIC ACCOUNTANT DURING THE REVIEW OF ESCROW 25 ACCOUNT INVESTMENTS AND WITHDRAWALS THAT GAVE CAUSE TO BELIEVE 26 THAT THE REGISTRANT HAS NOT COMPLIED WITH THIS ACT. IF ANY 27 MATTERS HAVE COME TO HIS OR HER ATTENTION, THE INDEPENDENT 05006'97 * 24 1 CERTIFIED PUBLIC ACCOUNTANT SHALL INCLUDE AN EXPLANATION OF THE 2 MATTERS WHICH CAUSED THE BELIEF THAT THE REGISTRANT HAS NOT COM- 3 PLIED WITH THIS ACT. 4 (3) THE DEPARTMENT MAY EXAMINE EACH SPECIAL REPORT REQUIRED 5 BY THIS SECTION AND IF THE DEPARTMENT DETERMINES ON THE BASIS OF 6 ITS REVIEW THAT THE REGISTRANT OR ITS AGENT HAS NOT HELD OR 7 INVESTED FUNDS IN COMPLIANCE WITH THE REQUIREMENTS OF THIS ACT OR 8 HAS FAILED TO FILE A SPECIAL REPORT AS REQUIRED, THE DEPARTMENT 9 SHALL TAKE ANY APPROPRIATE CORRECTIVE OR PENAL ACTION AUTHORIZED 10 BY THIS ACT. 11 (4) THE DEPARTMENT MAY EXAMINE, REVIEW, OR AUDIT THE BOOKS 12 AND RECORDS OF A CONTRACT SELLER OR PROVIDER PERTAINING TO FUNDS 13 RECEIVED IN PAYMENT FOR CONTRACTS. AN AUDIT MAY INCLUDE AN EXAM- 14 INATION OF THE BOOKS AND FINANCIAL RECORDS OF THE REGISTRANT AS 15 WELL AS BOOKS AND FINANCIAL RECORDS OF ESCROW AGENTS USED BY THE 16 REGISTRANT. A REGISTRANT SHALL AUTHORIZE ESCROW AGENTS TO OPEN 17 THEIR RECORDS OF THE REGISTRANT ACCOUNTS TO THE DEPARTMENT UPON 18 REQUEST. 19 (5) FOR THE PURPOSES OF COMPLYING WITH THE REQUIREMENTS OF 20 THIS SECTION, A REGISTRANT WHO HAS NOT SOLD, PROVIDED, OR AGREED 21 TO PROVIDE FUNERAL MERCHANDISE OR FUNERAL SERVICES IN ACCORDANCE 22 WITH A CONTRACT AND WHO HAS NO OBLIGATIONS WITH RESPECT TO AN 23 OUTSTANDING CONTRACT MAY SUBMIT A SWORN STATEMENT ACCOMPANIED BY 24 A LETTER FROM A MICHIGAN-LICENSED CERTIFIED PUBLIC ACCOUNTANT 25 THAT NO FUNERAL MERCHANDISE OR FUNERAL SERVICES WERE SOLD OR PRO- 26 VIDED BASED UPON A REVIEW OF THE REGISTRANT'S BUSINESS RECORDS 27 THAT A CONTRACT HAS NOT BEEN SOLD, PROVIDED, OR AGREED TO AND 05006'97 * 25 1 THERE ARE NO OBLIGATIONS OUTSTANDING. THE DEPARTMENT SHALL 2 ACCEPT THIS STATEMENT IN LIEU OF THE SPECIAL REPORT. 3 SEC. 12E. A REGISTRANT WHO DISCONTINUES ITS BUSINESS OPERA- 4 TIONS SHALL NOTIFY THE DEPARTMENT AND THE CONTRACT BUYER OF EACH 5 EXISTING CONTRACT AND SHALL PROVIDE WRITTEN DOCUMENTATION THAT IT 6 HAS ARRANGED FOR AN ASSIGNMENT OF THESE CONTRACTS TO ANOTHER PRO- 7 VIDER WHO SATISFIES THE REQUIREMENTS OF SECTION 12B. 8 SEC. 12F. A CONTRACT SHALL DESIGNATE A PROVIDER WHO HAS 9 AGREED TO FURNISH THE FUNERAL GOODS OR FUNERAL SERVICES SPECIFIED 10 IN THE CONTRACT UPON THE DEATH OF THE CONTRACT BENEFICIARY. IF 11 THE PROVIDER DESIGNATED IS NOT THE CONTRACT SELLER OF THE CON- 12 TRACT, THE PROVIDER SHALL HAVE PREVIOUSLY CONTRACTED WITH THE 13 CONTRACT SELLER TO PROVIDE THE GOODS AND SERVICES SPECIFIED IN 14 THE CONTRACT AND THE CONTRACT SHALL INDICATE THIS CONTRACTUAL 15 RELATIONSHIP OR THE PROVIDER SHALL BE MADE A PARTY TO THE CON- 16 TRACT BEFORE ANY CONSIDERATION IS PAID AND THE CONTRACT IS NOT 17 BINDING ON THE CONTRACT BUYER UNTIL THE PROVIDER HAS BEEN MADE A 18 PARTY TO THE CONTRACT. 19 Sec. 13. (1) A contract buyer may cancel a prepaid funeral 20 contract before the death of the contract beneficiary upon3021days'prior written notice to the contract seller of a nonguar- 22 anteed price contract or to the provider designated to furnish 23 funeral goods or funeral services pursuant to a guaranteed price 24 contract. The contract seller or provider shall promptly notify 25 the escrow agent of the cancellation and of its effective date, 26 if the escrow agent is other than the contract seller or the 27 provider. After receipt of the notice of cancellation, the 05006'97 * 26 1 escrow agent shall disburse principaland income in the escrow2accountto the contract buyer pursuant to this subsection and 3 shall disburse the remainder of the principal and income, if any, 4 to the contract seller or the provider. The amounts disbursed to 5 the contract buyer shall be 100% OF THE CONTRACT PRICE PAID TO 6 THE PROVIDER.determined as follows:7(a) If no commission has been charged pursuant to section812(1), at least 90% of the remaining balance of principal and9income in the escrow account or held by the trustee.10(b) If a commission of 5% or less of the contract price has11been charged, at least 95% of the remaining principal and income12in the escrow account.13(c) If a commission of greater than 5% of the contract price14has been charged, 100% of the remaining principal and income in15the escrow account.16 (2) A contract seller of a nonguaranteed price contract or a 17 provider designated to furnish funeral goods or funeral services 18 pursuant to a guaranteed price contract may cancel a prepaid 19 funeral contract only if the contract buyer of a guaranteed price 20 contract is more than 90 days delinquent in making any install- 21 ment payment or partial payment, or the contract buyer is other- 22 wise in default as to any other obligation under the contract. 23 Upon cancellation, the contract buyer shall receive a refund as 24 determined pursuant to subsection (1). 25 (3) AFTER THE DEATH OF THE CONTRACT BENEFICIARY, THE PREPAID 26 CONTRACT MAY BE CANCELED ONLY BY A COURT ORDER ISSUED PURSUANT TO 05006'97 * 27 1 SECTION 2851 OF THE PUBLIC HEALTH CODE, 1978 PA 368, MCL 2 333.2851. 3 (4)(3)After the death of the contract beneficiary, if 4 the escrow accountestablished pursuant to a prepaid funeral5contractis not used by persons legally entitled to make funeral 6 arrangements for the contract beneficiary, the escrow agent shall 7 disburse the principal and income in the escrow account pursuant 8 to subsection (1) within 30 days after receipt of a request for 9 payment from the contract seller of a nonguaranteed price con- 10 tract, or the provider designated to furnish funeral goods or 11 funeral services pursuant to a guaranteed price contract, or the 12 contract buyer or the contract buyer's estate. 13 (5)(4)A contract seller or a provider which assigns or 14 transfers its obligations under a prepaid funeral contract to 15 another provider shall notify the contract buyer of the assign- 16 ment in writing. If the contract buyer cancels the contract 17 within 30 days of the notification of the assignment, the buyer 18 shall be entitled to a refund of 100% of the remaining principal 19 and income.plus the commission, if any, charged in accordance20with section 12(1).An assignment or transfer of a provider's 21 obligations under a prepaid funeral contract which is made in 22 connection with the sale of a business shall be subject to this 23 subsection only if more than 50% of the ownership interest in the 24 business is transferred to another person or persons within a 25 12-month period. Nothing in this subsection shall apply to an 26 assignment of a financial interest in an installment contract to 27 a financial institution. At the time that the contract seller or 05006'97 * 28 1 provider receives payment in exchange for selling or assigning 2 its financial interest in an installment contract to a financial 3 institution, the contract seller or provider shall be required to 4 place in escrow thefull contract priceAMOUNT REQUIRED BY THIS 5 ACT. 6 Sec. 15. (1) All prices or quotations of prices contained 7 in a prepaid funeral contract, offer, or solicitation shall be 8 stated in compliance with applicable federal and state laws and 9 regulations. In addition, a person who offers either funeral 10 goods or funeral servicesfor sale before the death of the11intended user or contract beneficiaryON A PRENEED OR AT-NEED 12 BASIS shall comply with the price disclosure rules of the federal 13 trade commission, code of federal regulations, 16 C.F.R., part 14 453, whether or not the rules by their own terms apply to the 15 offering. Nothing in this subsection shall apply to the sale of 16 any interest in land covered by the endowment care requirements 17 of section 35a ofAct No. 87 of the Public Acts of 1855, being18section 456.35a of the Michigan Compiled Laws1855 PA 87, 19 MCL 456.35A. 20 (2) A person who sells or offers to sell both funeral goods 21 or services and nonfuneral goods or services as part of the same 22 transaction or series of transactions shall not manipulate the 23 relative prices of the goods or services so as to allocate a dis- 24 proportionate share of the total price to nonfuneral property or 25 services. 26 (3) All prepaid funeral contracts shall provide that a 27 contract buyer may revoke the contract within 10 business days 05006'97 * 29 1 after entering into the contract and that upon revocation, all 2 funds paid to the contract seller or provider shall be refunded. 3 This provision shall be conspicuously set forth in the contract 4 at a place immediately before the place where the contract buyer 5 is to sign his or her name. 6 (4) A prepaid funeral contract shall disclose the contract 7 buyer's right to cancel the contract and the amount of the refund 8 to which the contract buyeror that person's estateis entitled 9 upon cancellation.The disclosure shall be stated substantially10as follows: "This contract may be canceled either before death11or after death by the buyer or, if the buyer is deceased, by the12person or persons legally authorized to make funeral13arrangements. If the contract is canceled, the buyer or the14buyer's estate is entitled to receive a refund of ____% of the15contract price and any income earned from investment of the prin-16cipal less administrative or escrow fees." In addition, ifIF a 17 commission is charged pursuant to section 12, the amount of the 18 commission and the fact that it is a charge which is in addition 19 to the contract price shall be stated in the prepaid funeral 20 contract. If a printed contract form is used, the disclosures 21 required by this subsection shall be stated in bold-faced type. 22 (5) Nothing in this act shall authorize a contract seller or 23 provider to perform or offer to perform services for which a mor- 24 tuary science license or funeral establishmentlicensedLICENSE 25 is required bysections 1801 to 1812 of the occupational code,26Act No. 299 of the Public Acts of 1980, being sections 339.180127to 339.1812 of the Michigan Compiled LawsARTICLE 18 OF THE 05006'97 * 30 1 OCCUPATIONAL CODE, 1980 PA 299, MCL 339.1801 TO 339.1811, unless 2 that person holds the required license or licenses. However, 3 this act shall not be construed as requiring a contract seller or 4 a provider to possess this license or any other license to engage 5 in an activity covered under this act for which a license is not 6 required by any other act. 7 (6) A prepaid funeral contract shall provide that the con- 8 tract buyer may designate a new contract beneficiary any time 9 before the death of the contract beneficiary originally specified 10 in the prepaid funeral contract by providing written notice to 11 the contract seller of a nonguaranteed price contract or the pro- 12 vider designated to furnish funeral goods or funeral services 13 pursuant to a guaranteed price contract. Notwithstanding any 14 other provisions of law, a contract buyer may designate the 15 estate of a deceased person as the contract beneficiary, or pro- 16 vide that the contract beneficiary shall be the first of 2 or 17 more designated persons to die. 18 (7) A prepaid funeral contract that is a nonguaranteed price 19 contract shall have it indicated clearly on the contract that it 20 is a nonguaranteed price contract and that the actual costs of 21 the funeral goods and services delivered at the time of death may 22 be greater or less than the amount of principal and income in the 23 escrow account, and that the buyer, the buyer's estate, or the 24 person or persons legally entitled to make funeral arrangements 25 are not obligated to purchase specific goods and services which 26 were selected before the death of the contract beneficiary or to 27 expend a specific amount on funeral goods or funeral services. 05006'97 * 31 1 Sec. 18. (1) Notwithstanding any other law to the contrary, 2 a contract seller, provider, agent, employee, or person acting on 3 behalf of a contract seller or provider, whether a registrant or 4 not, shall not DO ANY OF THE FOLLOWING: 5 (a) Solicit a specific person for the purpose of providing 6 funeral goods or funeral services for a prospective contract ben- 7 eficiary knowing that the death of the prospective contract bene- 8 ficiary has already occurred or is probably imminent. 9 (b) Make a false or misleading statement, oral or written, 10 regarding the sale of funeral goods or funeral services pursuant 11 to a prepaid funeral contract or regarding the rights or obliga- 12 tions of any party or prospective party to a prepaid funeral con- 13 tract for the purpose of inducing a person to purchase the 14 funeral goods or funeral services or a prepaid funeral contract. 15 (c) Advertise or offer funeral goods or funeral services for 16 sale before the death of a prospective contract beneficiary in a 17 manner which is false, misleading, deceptive, or unfair. 18 (d) Fail to refund principal or principal and income paid 19 for a prepaid funeral contract in violation of this act. 20 (E) SOLICIT FUNERAL GOODS OR FUNERAL SERVICES DOOR-TO-DOOR 21 WITHOUT PRIOR CONSENT. 22 (F) FAIL TO DISCLOSE TO A CONTRACT BUYER THAT THE CONTRACT 23 SELLER OR PROVIDER HAS A CONTRACTUAL RELATIONSHIP WITH A 24 CEMETERY. 25 (G) REFUSE THE USE OF FUNERAL GOODS BOUGHT FROM ANOTHER 26 VENDOR. 05006'97 * 32 1 (H) FAIL TO ESCROW FUNDS AS PROVIDED UNDER THIS ACT. 2 (I) SELL OR OFFER TO SELL GOODS OR SERVICES NOT DIRECTLY 3 RELATED TO FUNERAL GOODS OR FUNERAL SERVICES OR GOODS OR SERVICES 4 OF ANY KIND AT BELOW THEIR ACTUAL COST. 5 (J)(e)Violate this act or rules promulgated under this 6 act. 7 (2) Further, a registrant or a person acting on behalf of a 8 registrant, including an agent or employee of a registrant, shall 9 not do EITHER OR BOTH OF the following: 10 (a) Practice fraud, or deception in obtaining registration. 11 (b) Refuse to disclose books and records required to be 12 maintained and disclosed under this act. 13 (3) The department may promulgate rules regulating the 14 solicitation of prepaid funeral contracts by registrants to pro- 15 tect against solicitations which are intimidating, vexatious, 16 fraudulent, or misleading, or which take unfair advantage of a 17 person's ignorance or emotional vulnerability. 18 (4) Any administrative action brought under this act shall 19 be handled pursuant to the administrative procedures act OF 1969, 20Act No. 306 of the Public Acts of 1969, being sections 24.201 to2124.328 of the Michigan Compiled laws1969 PA 306, MCL 24.201 TO 22 24.328. 23 (5) A REGISTRANT SELLING FUNERAL GOODS OR FUNERAL SERVICES 24 SHALL DISCLOSE ON ALL CONTRACTS AND STATIONERY THE NAME OF ANY 25 OTHER ENTITY THAT OWNS AN INTEREST IN THE FUNERAL HOME INCLUDING, 26 BUT NOT LIMITED TO, A CEMETERY, ANOTHER FUNERAL HOME, OR AN 27 ENTITY CONSISTING OF A GROUP OF CEMETERIES OR FUNERAL HOMES. 05006'97 * 33 1 (6) A REGISTRANT HAVING A CONTRACTUAL RELATIONSHIP WITH A 2 CEMETERY SHALL DISCLOSE TO ANY POTENTIAL CONTRACT BUYER THAT 3 RELATIONSHIP. 4 (7) A PERSON THAT SELLS OR OFFERS TO SELL EITHER CEMETERY 5 MERCHANDISE OR SERVICES OR FUNERAL MERCHANDISE OR SERVICES AS 6 PART OF THE SAME TRANSACTION OR SERIES OF TRANSACTIONS SHALL DO 7 ALL OF THE FOLLOWING: 8 (A) REFRAIN FROM MANIPULATING THE RELATIVE PRICES OF THE 9 MERCHANDISE OR SERVICES SO AS TO ALLOCATE A DISPROPORTIONATE 10 SHARE OF THE TOTAL PRICE TO ANY OF THE MERCHANDISE OR SERVICES. 11 (B) CHARGE THE SAME PRICES TO ALL CUSTOMERS WITHOUT REGARD 12 TO WHETHER THE CUSTOMER DOES BUSINESS WITH BOTH A FUNERAL ESTAB- 13 LISHMENT AND AN AFFILIATED CEMETERY. HOWEVER, THE PRICE FOR 14 FUNERAL OR CEMETERY GOODS AND SERVICES MAY PROVIDE FOR A DISCOUNT 15 FOR GROUPINGS OF THOSE GOODS AND SERVICES WITHIN THE SEPARATE 16 CATEGORIES OF FUNERAL OR CEMETERY GOODS AND SERVICES ONLY. 17 DISCOUNTS FOR GOODS AND SERVICES SHALL NOT BE PROVIDED FOR BOTH 18 CEMETERY AND FUNERAL GOODS AND SERVICES. 19 (C) REFRAIN FROM BASING ANY BENEFIT, DISCOUNT, OR OTHER 20 PREFERENTIAL PRICE OR TREATMENT ON THE CONDITION THAT THE CUS- 21 TOMER AGREES TO DO BUSINESS WITH BOTH A FUNERAL ESTABLISHMENT AND 22 ITS AFFILIATED CEMETERY. 23 Sec. 19. (1) A prepaid funeral contract may be made with an 24 applicant for or recipient of assistance under the social welfare 25 act,Act No. 280 of the Public Acts of 1939, being sections26400.1 to 400.121 of the Michigan Compiled Laws1939 PA 280, MCL 27 400.1 TO 400.119B, or a patient or a legal guardian of a patient 05006'97 * 34 1 in a mental health care facility under the jurisdiction of the 2 department ofmentalCOMMUNITY health. If thedepartment of3social servicesFAMILY INDEPENDENCE AGENCY or department of 4mentalCOMMUNITY health determines that the contract is a fully 5 paid guaranteed price contract of not more than$2,000.00THAT 6 AMOUNT ALLOWED UNDER SECTION 2080(6)(G) OF THE INSURANCE CODE OF 7 1956, 1956 PA 218, MCL 500.2080, exclusive of income, and that 8 the state will not be liable for the funeral goods or funeral 9 services, excluding an outside receptacle when required by the 10 chosen cemetery, of the applicant for or recipient of assistance 11 or patient allowable under contracts under this act, the prepaid 12 funeral contract shall be made irrevocable at the request of the 13 applicant for or recipient of assistance, or the patient or a 14 legal guardian of a patient. Thedepartment of social services15 FAMILY INDEPENDENCE AGENCY or department ofmentalCOMMUNITY 16 health shall advise the applicant for or recipient of assistance, 17 or the patient or a legal guardian of a patient that additional 18 funeral goods or funeral services subject to contract under this 19 act will not be paid by thedepartment of social services20 FAMILY INDEPENDENCE AGENCY or department ofmentalCOMMUNITY 21 health but shall not specify or require approval of particular 22 funeral goods or funeral services selected by the applicant for 23 or recipient of assistance, or patient or a legal guardian of a 24 patient. 25 (2) A prepaid funeral contract approved by thedepartment26of social servicesFAMILY INDEPENDENCE AGENCY or department of 27mentalCOMMUNITY health shall not be revoked or canceled by the 05006'97 * 35 1 contract seller, contract provider, contract buyer, or their 2 successors, or the estate of the contract beneficiary either 3 before or after the death of the contract beneficiary.However,4nothing in thisTHIS subsectionshallDOES NOT prevent those 5 legally entitled to make arrangements for a contract beneficiary 6 from reallocating the amount paid under the prepaid contract to 7 different funeral services and funeral goods. An irrevocable 8 contract shall not be considered in determining the eligibility 9 of an applicant or recipient for assistance given underAct10No. 280 of the Public Acts of 1939THE SOCIAL WELFARE ACT, 1939 11 PA 280, MCL 400.1 TO 400.119B. An irrevocable prepaid funeral 12 contract made under this sectionshallIS notbesubject to 13 the cancellation provision of section 13 or to section 15(6). 14 (3) Notwithstanding any other provisions of this act, funds 15 paid in connection with an irrevocable prepaid funeral contract 16 may, at the option of the provider, be held and deposited in the 17 manner prescribed for a nonguaranteed price contract. 18 (4) Thedepartment of social servicesFAMILY INDEPENDENCE 19 AGENCY and department ofmentalCOMMUNITY health may promulgate 20 rules under the administrative procedures act of 1969,Act21No. 306 of the Public Acts of 1969, being sections 24.201 to2224.328 of the Michigan Compiled Laws1969 PA 306, MCL 24.201 TO 23 24.328, to provide for the uniform administration of this 24 section. 25 Sec. 24. The department orany other personA CONTRACT 26 BENEFICIARY OR HIS OR HER REPRESENTATIVE, in order to force 27 compliance with this act, may bring an action in a circuit court 05006'97 * 36 1 in any county in which the registrant or any other person has 2 solicited or sold prepaid funeral contracts, whether or not that 3 person has purchased a prepaid funeral contract or is personally 4 aggrieved by a violation of this act. The court may award dam- 5 ages AND REASONABLE ATTORNEY FEES and issue equitable orders in 6 accordance with the Michigan court rules to restrain conduct in 7 violation of this act. 8 Enacting section 1. This amendatory act does not take 9 effect unless all of the following bills of the 89th Legislature 10 are enacted into law: 11 (a) Senate Bill No. _____ or House Bill No. _____ (request 12 no. 05006'97 a *). 13 (b) Senate Bill No. _____ or House Bill No. _____ (request 14 no. 05007'97 *). 15 (c) Senate Bill No. _____ or House Bill No. _____ (request 16 no. 05214'97 ***). 05006'97 * Final page. LBO