SB2148

SECTION 1. In 2007, the legislature passed Act 188, Session Laws of Hawaii 2007, which improved consumer protections within the death care industry by clarifying and enhancing both the rights of purchasers of pre-need funeral or interment goods and services, as well as the responsibilities of cemetery and pre-need funeral authorities.

In October 2007, the National Funeral Directors Association, the largest organization of funeral service professionals in the United States, adopted the Model Consumer Protection Guidelines for State Pre-need Funeral Statutes. These guidelines ensure that consumers who purchase pre-need funeral and interment goods and services will make informed decisions, receive protection against the loss of pre-paid funds, deal with ethical and licensed pre-need authorities and agents, and retain the right to cancel pre-need funeral and interment contracts.

While Hawaii's current law governing pre-need funeral and interment goods and services largely incorporates the model guidelines adopted by the National Funeral Directors Association, the purpose of this Act is bring Hawaii's pre-need law closer to the model guidelines and incorporate even greater consumer protections.

The legislature finds that the provisions of this Act will materially advance and improve the level of consumer protection afforded Hawaii's cemetery and funeral services consumers.

SECTION 2. Chapter 441, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§441‑ Pre-need funeral and pre-need interment salesperson. (a) No person shall act as a pre-need funeral or pre-need interment goods and services salesperson, unless that person is a licensed cemetery or pre-need funeral authority, or:

(1) Is at least eighteen years of age and has received a high school diploma or its equivalent;

(2) Has not been previously convicted of a felony; and

(3) Files an application with the department, which shall include:

(A) The name, address, and telephone number of the applicant;

(B) The names and addresses of all cemeteries and pre-need funeral authorities the applicant will represent; and

(C) A copy of any contract or agreement for representation the applicant has entered into with any cemetery or pre-need funeral authority.

The applicant shall also agree to maintain a copy of this chapter, as amended, in the applicant's principal place of business.

(b) The director shall adopt rules pursuant to chapter 91 for the purpose of carrying out this section.

§441‑ Pre-need funeral and pre-need interment solicitations. (a) All pre-need funeral and pre-need interment salespersons, when engaged in the solicitation of pre-need funeral and pre-need interment goods and services, shall:

(1) Within thirty seconds of initiating a solicitation by telephone, or upon entering the residence of a consumer:

(A) Identify themselves;

(B) Disclose the identity of the pre-need funeral or pre-need interment authority the salesperson is representing; and

(2) Present the consumer with a copy of the general price list of the pre-need funeral or pre-need interment authority; and

(3) When soliciting by telephone, maintain a "do not call" list and place any consumer on this list who requests to be placed upon that list.

(b) All cemetery or pre-need funeral authorities, their employees, agents, or anyone soliciting on their behalf, are prohibited from:

(1) Making untrue statements or omitting any material fact when engaged in solicitation of pre-need interment or pre-need funeral goods and services;

(2) Using advertisements or offers of pre-need interment or pre-need funeral goods and services that are false, misleading, deceptive, unfair, coercive, or intimidating;

(3) Soliciting consumers by telephone any time between the hours of 9:00 p.m. and 8:00 a.m.;

(4) Using the term "trust" or "trust-funded" in any advertisement or solicitation that is misleading in any way; and

(5) Directly or indirectly soliciting persons in hospitals, rest homes, nursing homes, or similar health care facilities in-person or by telephone without having been expressly requested to do so by that person or that person's representative."

SECTION 3. Section 441-22.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Every cemetery or pre-need funeral authority shall be required to provide to the purchaser of cemetery property, pre‑need interment, or pre-need funeral services and related commodities a written contract, in at least eight-point font, which shall contain the following disclosures:

(1) The names[~~and~~], addresses, telephone numbers, and license number, if applicable, of the cemetery or pre‑need funeral authority, and the names, addresses, and telephone numbers of the purchaser, and contract beneficiary, if the beneficiary is someone other than the purchaser;

(2) A clear and concise itemized statement of the property, including, for cemetery property, the location of the plot, crypt, or niche by its unique identifier, and any services and related commodities to be supplied or not supplied and by whom, particularly if the authority is not to be the provider under the terms of the contract;

(3) The purchase price of each item of property, services, and related commodities to be supplied, the total purchase price, and how the total purchase price is payable, including any credit terms, if applicable; provided that, pursuant to section 441-22.7, disclosure shall also be made that further additional charges or fees for perpetual care subsequent to the execution of the contract are prohibited for any purpose and on any occasion, except for reasonable fees related to the administrative costs of transferring ownership rights, including the cost of research, document and file preparation, photocopying, notary fees, records transfer and storage, and any other costs directly related to the transfer of ownership rights;

(4) Related costs covered under the contract;

(5) The basis on which funds are to be deposited in trust, including:

(A) The name and address of the trustee; provided that the disclosure shall not preclude the cemetery or pre-need funeral authority from changing the trustee named;

(B) The percentage of the contract price for trustable items to be placed in trust; provided that the percentage shall be no less than seventy per cent;

(C) The percentage of the contract price for trustable items that the cemetery or pre-need funeral authority will retain and not deposit into the trust; [~~provided that the percentage shall not be more than thirty per cent;~~] as provided in section 441-38(b); and

(D) Where a portion of the contract price relates to property, services, or related commodities that are not trustable items, a clear description of what those non-trustable items are;

(6) The refund, cancellation, and default provisions of the contract, including an explanation of the requirements of section 441-22.8, and a statement in twelve-point bold type in substantially the following form:

"YOU HAVE REFUND, CANCELLATION AND DEFAULT RIGHTS UNDER STATE LAW AND UNDER THE CONTRACT. PLEASE READ THE CONTRACT CAREFULLY FOR AN EXPLANATION OF THESE RIGHTS";

(7) The date and place of execution of the contract;

(8) The cemetery or pre-need funeral authority's or its duly authorized agent's signature on the contract and the identification of this person by name and title;

(9) A statement that the written contract, when signed, shall constitute the entire agreement between the parties relative to its subject matter and that all obligations of both parties shall be fixed and enforceable by the other parties of the contract; [~~and~~]

(10) A statement that the contract may not waive any rights of the consumer or duties of the cemetery or pre-need funeral authority under the law[.]; and

(11) A statement as to who will be responsible for the taxes generated by the earnings on the trust."

SECTION 4. Section 441-22.8, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) If the contract is canceled or terminated pursuant to subsection (a) or (b) or for any other reason, the purchaser shall be entitled to a refund of the amounts paid by the purchaser, less amounts that may be retained by the cemetery or pre-need funeral authority for its costs pursuant to section 441-38(b)[.]; provided that if the contract is canceled within seven days of its purchase, the purchaser shall be entitled to refund of one hundred per cent of the amount paid at the time the contract was purchased. The cemetery or pre-need funeral authority shall make the refund to the purchaser within thirty days of:

(1) Receipt of the purchaser's written notice of cancellation; or

(2) Termination of the contract."

SECTION 5. Section 441-24, Hawaii Revised Statutes, is amended to read as follows:

"§441-24 Inspection of cemetery or pre-need funeral authority books. The books, records, and papers of every cemetery authority whether or not a corporation, which operates or claims to operate a perpetual care cemetery, and of every pre-need funeral authority shall be subject to examination by the director as provided by law, and every cemetery authority operating a perpetual care cemetery, and every pre-need funeral authority shall submit such information as may be required by the director to furnish information as to whether or not the cemetery or pre-need funeral authority has complied with this chapter.

The records of every cemetery authority shall include the information required under section 441-3(b). The records of every cemetery and pre-need funeral authority shall also include a record of any and all notifications from purchasers or representatives of purchasers regarding:

(1) Any change in address; and

(2) Notice of cancellation,

and shall include copies of any and all written notices of termination that were sent to purchasers. Change of address notices, cancellation notices, [~~and~~] notices of termination, and any other records relating to each contract containing any pre‑need funeral services or pre-need interment services shall be maintained by the authority at all times prior to delivering goods or rendering services on the contract and for a period of at least [~~six months~~] three years after all goods have been delivered or all services have been rendered."

SECTION 6. Section 441-38, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) [A] One hundred per cent of the funds paid by the purchaser shall be transferred to the trustee to remain in trust; provided that a cemetery or pre-need funeral authority may take and receive[~~, but shall transfer to the trustee as part of or incident to the pre-need trust, all payments received after the recovery of acquisition costs, which shall be the lesser of~~] amounts necessary to pay for any applicable sales tax, applicable licensing fees owed to the department, taxes on earnings generated by the trust, trustee fees, trust administration expenses, or any applicable cancellation or termination fees permitted by law; provided further that this amount shall not exceed thirty per cent of the contract price [~~or the difference between the contract price and the cost of the pre-need interment or pre-need funeral services contracted to be provided~~]. The transfer shall be made not later than thirty days after receipt of payment from the purchaser and shall be immediately deposited in the trust. The trustee shall provide the purchaser with a confirmation notice that the payments have been deposited with the trustee within thirty days of the receipt of payment by the cemetery or pre-need funeral authority."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2008.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2148
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII