Read The American Way of Death Revisited Online
Authors: Jessica Mitford
If you have already purchased a guaranteed-price plan—which leaves you with the feeling that you’ve got a great deal because the local funeral home will take care of everything—then what?
It’s a situation that invites abuse. The daughter of one Vermont woman, who a few years earlier had paid $3,000 for her funeral, was billed for an additional $1,000 service charge by the funeral home’s new owner.
How else can the undertaker make up for funeral inflation on a prepaid contract? “Cash Advance” items—cost of the obituary (if there is a fee), the death certificate, flowers, or cemetery expenses—will not have been included in your funeral package. An SCI-owned funeral home charged a Denver husband $200 to fax four copies of his wife’s obituary to area newspapers—where the obits ran for free.
A New York widow was told, “We’ll take care of everything.” The mortician charged her $175 to have her husband’s date of death inscribed on the existing family monument. Actual cost of the inscription? $75.
Among the creative ideas currently favored by the industry, none is more profitable, nor more subject to abuse, than its appropriation of the legal fiction of “constructive delivery.” Prepayment laws in most states require that prepaid funds be placed in trust. California, for example, requires 100 percent trusting, but, like many states, has a loophole wide enough to accommodate a Cadillac hearse. It exempts from the trust requirement monies paid in advance for the prepurchase of goods such as burial plots, vaults, markers, and so on—the bulk of the cost of burial—provided that the prepurchased items are stored or warehoused for the customer’s future use. Constructive delivery is in reality no delivery, and it is the rare consumer who will have the wit to even try to ascertain whether or where the prepaid goods are being stored, let alone have the persistence to demand a glimpse of the items he or she presumably owns.
Neptune Society provides an instructive example of the invitation to large-scale fraud afforded by constructive delivery. A recent release by the California Department of Consumer Affairs announced that three of Neptune’s eleven locations (San Pedro, Burbank, and Santa Barbara) were charged with “unprofessional conduct” for allegedly failing to place $12.6 million into a trust fund “or to maintain sufficient merchandise to match purchases.” For this egregious fraud, Neptune must have been delighted to receive no more than the customary slap on the wrist in the form of three years’ probation, during which they were permitted to remain in business. There is also an order to pay $55,000 to reimburse the department for costs, but nothing is said about reimbursing the consumer $12.6 million for the apparently misappropriated boodle.
Of the $12.6 million, $9 million was allegedly for the sale of caskets and urns. This is odd, because Neptune, numero uno in the for-profit cremation business, well knew that caskets are not required, nor are urns. Karen Leonard, however, has the videotape of a “Dateline NBC” program in which she participated, on which one of Neptune’s top salespeople explained, in an expansive mood, that the law requires a casket (cost: $400), while in practice bodies are cremated
in a shroud. This avid seller likewise explained that an urn is required by law (cost: $75), whereas a $2 cardboard box is used.
One of the biggest problems—and greatest opportunities for mischief—may be the choice of casket. Like automobiles, casket styles change often, sometimes as frequently as every six months. If your pre-need agreement specifies the “Tuscany H66813D” and the Tuscany H66813D is no longer available, your survivors may be asked, for an added fee, to select a different box.
A legal action now pending in Louisiana suggests that there may be far more serious problems in obtaining the benefits of a pre-need plan.
E. J. Ourso sold his fifteen funeral homes and funeral insurance company, Security Industrial, to Loewen in 1996 for a reported $180 million. One can only speculate on how the value of these properties was broken down in the negotiations over price, but it seems reasonable to guess that the funeral homes were worth no more than $3 million apiece, on average, or $45 million total. Given that assumption, Loewen paid about $135 million for the funeral insurance company.
Why would Loewen pay that much money to take over liability for funeral insurance policies—many of which were sold decades ago for $300 or less—guaranteeing to provide a funeral which today would cost many times that amount? Wouldn’t they expect to lose a lot of money when people cash in the policies? Are these people saints? One can only guess, but it seems likely that Loewen expects to sell a lot of “extras” to the survivors.
At this writing, a class action has been filed. Undoubtedly, many versions of the “facts” will be argued before it is resolved. In the meantime, Peggy Porter of Baton Rouge—whose father is a claimant in the suit—wrote a lengthy letter to her state representative, describing the ordeals her family went through with an insurance policy that had promised to fully cover her mother’s funeral. The letter is quoted in abridged form below:
Dear Mr. Dardenne,
Please accept this letter as a formal request to personally meet with you to discuss a matter of great importance to the elderly and the “baby boomers” of Louisiana.…
Hopefully, you won’t send me a form letter telling me that another department handles such matters. I have tried them all. Earlier, I wrote to the La. State Insurance Commission, La. State Board of Embalmers and Funeral Directors, La. State Attorney General’s Office, Jefferson Parish Attorney General’s Office, New Orleans Better Business Bureau, Funeral Service Consumer Assistance Program and the Federal Trade Commission.…
The La. State Insurance Commission, although they are investigating my complaint, say that they do not have jurisdiction over such matters. They say the La. Board of Embalmers and Funeral Directors has control. This involves an insurance policy which should be under the control of the insurance commission. Pam Williams has said that because there have been so many complaints, there has been a task force set up to investigate these matters. This has been happening for more than 20 years. How long and how many complaints does it take to get action and restitution? Mr. and Mrs. Schwartz and my father are in their eighties. Time is running out.
The La. Board of Embalmers and Funeral Directors replied to my complaint by saying, in a “unanimous decision they found no apparent violation of the statutes, rules and/or regulations under which the board is empowered to operate.” They also stated that the Board has no jurisdiction over “insurance” policies. I wasn’t given the opportunity to appear and speak before this board made this decision. The La. Board of Embalmers and Funeral Directors is a farce. According to its Rules and Regulations, this board is made up of seven members appointed by the Governor. Six of those members are either embalmers or funeral directors and one is a consumer that must be at least 65 years old. A consumer doesn’t have a chance.…
The Attorney General’s Office says they are without jurisdiction over this matter, that all insurance matters are subject to regulation by the La. Insurance Commission and that these transactions are specifically exempted from the Unfair Trade Practices Act and Consumer Protection Law. How can such matters, which will at some time in their life affect almost
every consumer, be exempt from the Unfair Trade Practices Act and Consumer Protection Law?
… In June 1942, my father purchased a funeral policy from Tharp-Sontheimer Life Insurance Company for my mother, Liberty Lemoine Feldheim, as well as one for himself. Later, in 1943 & 1945, he purchased one for each of his three daughters at a cost of approximately $218 per policy. Two hundred eighteen dollars does not seem like much, but in the 1940s, when your annual salary was approximately $3,000, it was quite a lot. As you can see, the policy included just about everything needed for a complete funeral. This policy was not purchased through a fast-talking salesman but from my grandfather, his father. I feel confident that my grandfather would not have sold these policies to family members and friends if he had known that it was a scam or fraudulent.
On April 15, 1996, my mother died. On April 16, 1996, my father and two sisters met with David Rogers with Tharp-Sontheimer, 1600 N. Causeway Boulevard, Metairie, La. In going over the arrangements they were shown one casket that he said was included in the policy. It looked as if it was covered in a felt material that resembled carpet padding (bits and pieces glued together) and that it might fall apart from the weight of a body. My father asked if he could pay extra for a better casket. They refused and said ANY changes in the casket voided the policy, but they would give a credit of $300 toward the cost of a more expensive funeral. This seems like the old “Bait and Switch” scam so widely used to swindle people.
My father then said he would take the original casket with the services offered in the policy and donate the casket to someone’s family who couldn’t afford one and purchase an additional casket. Again they refused. They stated that under a Federal Trade Commission ruling they were not allowed to substitute or upgrade a casket or even separate a casket from the services. (In a recent conversation with the FTC, I have been told there is no such ruling.)
Please note on the enclosed price list of caskets available, there are no Embossed Grey Tharson or Grey Analea Cloth
Covered Caskets, as specified on the policy. Since they were not listed, they were not available. Why were they only shown one casket when the policy specifically lists two caskets? How do we know that the one casket offered was one of the two specified in the policy? When asked which one it was, the Tharson or the Analea, they simply say it is the one that goes with the policy. Could it be Tharp-Sontheimer had already made their own substitutions in the caskets when they said they were not allowed to? What gives them the right to make their own substitutions without notification and/or approval of the policyholder?
… After several futile requests were made to have them allow us to pay for a better casket without voiding the rest of the services offered in the policy, my father and sisters, feeling both emotionally and physically drained, did what the funeral homes rely on them to do. They chose a different casket and the services they wished to have and in the end were given an invoice in the amount of $7,916.84 after the $300 credit. The cost of the chosen casket alone was $3,595.00 plus tax. From there they went to see David Rogers’ supervisor and Chairman of the Board, Stephen Sontheimer, at the 4127 S. Claiborne Avenue, New Orleans office to plead their case. Having to deal with my mother’s sudden death combined with five days of little to no sleep while at the hospital, we were all in emotional turmoil. At a time when compassion and understanding were most definitely needed, they found Mr. Sontheimer to be very arrogant, disrespectful and degrading. Mr. Sontheimer refused their repeated request and led them to believe that there was absolutely nothing he could do. Why would the insurance company and/or funeral home not allow you to purchase a different casket without voiding the rest of the benefits of the policy if it were not meant to be a scam of “Bait & Switch” or “Insurance Fraud.” What harm could it do? We are aware of at least one New Orleans funeral home that has allowed such changes.
Enclosed is a copy of the invoice for my mother’s funeral. As you can see, $7,916.84 is a far cry from the $218 he originally paid. There was no credit given for inflation, unless you
want to consider the $82 difference in the amount paid and the face value. Do you honestly think that people would have purchased these policies if they would have known that they would be offered inferior merchandise or that all they would have been given was a $300 credit? They could have invested the original $218 in a regular savings account with a minimal interest rate and would have had several thousand dollars after 50 years. If you add the figures for the services originally offered in the policy and their respective costs today, from the Security Funeral Homes price lists and the invoice, the credit figure should have been more like $5,067.00.
My father bought these policies 50 years ago to protect himself and his family from having to face the high costs of funerals and possibly not having the funds to cover them. He did what he thought was right, he bought through an honest agent (his father) and from what he thought was a reputable and trustworthy company, Tharp-Sontheimer. In our extended family alone there are at least eight more of these policies yet to be used.
… Since the purchase of these policies in the ’40s, Tharp-Sontheimer was bought out by Delta Life Insurance, Security Industrial Insurance Company and most recently The Loewen Group for $180 million. It proves that there was and still is definitely a lot of unsuspecting people of Louisiana being swindled out of money. This is very upsetting. Just recently
The Advocate
and the
Times-Picayune
praised E. J. Ourso, who owned Security Industrial Insurance, for his $15 million donation to an LSU Business School to be named in his honor. In one article he was quoted as saying, “I’m not up here through ambition, drive and persistence—two things got me here: her (Marjory’s) fertility and compound interest.” The truth is he was running a scam: Selling preneed burial policies, collecting people’s nickels, dimes or quarters each week and, by his own admission, receiving interest on these monies, sometimes for as long as 50 years. When the time of “need” came there was usually some excuse or reason (usually involving the quality of the casket) which prevented the policy holder or his family from receiving the full benefits of the policy. All he did was pay the $300 or so and just pocketed all the interest.…
There was a recent suit between Tessier and Rabenhorst Funeral Home and Insurance where the appeals court ruled in favor of Tessier in a matter very similar to ours. There are also two other families I am aware of that are filing suits. Not everyone has the funds to file civil suits nor the stamina to follow through on their complaints when all they get are reply letters or people telling them that “it’s not my job.” Everyone keeps passing the “Buck.” Most of the complaints have fallen through the cracks of Louisiana politics. When is this going to stop? When are Louisiana politicians going to stop their crooked ways and stand up for the people of Louisiana?
I hope you will use your resources and do a thorough investigation into this matter. You might be surprised how widespread this problem is in Louisiana. It is going to take new state laws governing the insurance and funeral industry to protect the people of Louisiana from these fraudulent activities. Teresa Fox, who lives in Kenner and also has a similar complaint, has been trying to get help for the past two years and has contacted her representative, Glenn Ansardi. Maybe if we all work together, it won’t take another 20 years before changes can be made.…
Sincerely yours,
Peggy F. Porter
Enclosures