This chapter shall be cited as the Alabama Preneed Funeral and Cemetery Act.
(a) An application to the commissioner for a certificate of authority shall be accompanied by the statement and other matters described in this section in the form prescribed by the commissioner. Annually thereafter, within three months after the end of its fiscal period, or within an extension of time therefor, as the commissioner for good cause may grant, the person authorized to engage in the sale of preneed contracts shall file with the commissioner a full and true statement of his or her financial condition, transactions, and affairs, prepared on a basis as adopted by a rule of the commissioner, as of the preceding fiscal period or at such other time or times as the commissioner may provide by rule, together with information and data which may be required by the commissioner.
(b) The statement shall include all of the following:
(1) The types of preneed contracts proposed to be written and the type of funding vehicle to be used.
(2) The name and address of the place of business of the person offering to write preneed contracts.
(3) Evidence that the person offering the statement has the following qualifications:
a. Has the ability to discharge his or her liabilities as they become due in the normal course of business and has sufficient funds available during the calendar year to perform his or her obligations under the contract.
b. Has complied with the trust requirements for the funds received under contracts issued by himself or herself as hereinafter described.
c. Has disbursed interest, dividends, or accretions earned by trust funds, in accordance with this article and rules promulgated hereunder.
d. Has complied with this chapter and any rules of the commissioner.
(4) Any other information considered necessary by the commissioner to meet the commissioner's responsibilities under this chapter.
(c) If the person is an individual, the statement shall be sworn by him or her; if a firm or association, by all members thereof; or, if a corporation, by any officer of the corporation.
(d)(1) An application to the commissioner for an initial certificate of authority shall be accompanied by an application fee in an amount to be determined by the commissioner, not to exceed one hundred fifty dollars ($150). Thereafter, each annual application for renewal of a certificate of authority shall be accompanied by the appropriate fee as determined by the commissioner not to exceed seventy-five dollars ($75).
(2) Any person or entity that is part of a common business enterprise that has a certificate of authority issued pursuant to this article and elects to operate under a name other than that of the common business enterprise shall submit an application on a form adopted by the commissioner to become a branch registrant. Upon the approval of the commissioner that the entity qualifies to sell preneed contracts under this article except for the requirements of paragraph a. of subdivision (3) of subsection (b) and if the certificate holder meets the requirements of paragraph a., a branch registration shall be issued. Each branch registrant may operate under the certificate of authority of the common business enterprise upon the payment of a fee established by the commissioner not to exceed one hundred fifty dollars ($150) accompanying the application on April 1 annually.
(e) Upon the commissioner being satisfied that the statement and matters which may accompany it meet the requirements of this article and of its rules, the commissioner shall issue or renew the certificate of authority.
(f) The certificate of authority shall expire annually on June 1, unless renewed, or at such other time or times as the commissioner may provide by rule.
(g) On or before April 1 of each year, the certificate holder shall file with the commissioner in the form prescribed by the commissioner a full and true statement as to the activities of any trust established by it pursuant to this article for the preceding calendar year.
(h) In addition to any other penalty that may be provided for under this article, the commissioner may levy a fine not to exceed fifty dollars ($50) per day for each day the certificate holder fails to file its annual statement, and the commissioner may levy a fine not to exceed fifty dollars ($50) per day for each day the certificate holder fails to file the statement of activities of the trust. Upon notice to the certificate holder by the commissioner that the certificate holder has failed to file the annual statement or the statement of activities of the trust, the certificate holder's authority to sell preneed contracts shall cease while the default continues.
(i) To facilitate uniformity in financial statements and to facilitate analysis, the commissioner may by rule adopt a form for financial statements.
(j) The commissioner may authorize the transfer of certificates of authority and establish fees for the transfer in an amount not to exceed one hundred dollars ($100). Upon receipt of an application for transfer, the commissioner may grant a temporary certificate of authority to the proposed transferee, based upon criteria established by the commissioner by rule, which criteria shall promote the purposes of this article in protecting the consumer. A temporary certificate of authority shall expire 60 days after issuance unless renewed by the commissioner.
(a) Preneed contract forms and related forms shall be filed with and approved by the commissioner.
(b) Specific disclosure regarding the certificate holder's requirement to place certain preneed funds received in trust, is required in the preneed contract.
(c) Preneed contracts which have been submitted to the commissioner shall be deemed to have been approved by the commissioner in the event that the commissioner fails to notify the certificate holder that approval has been denied within 30 days following submission to the commissioner.
(a) Except as provided in Sections 27-17A-3 and 27-17A-14, every preneed contract shall require the moneys paid to the seller or trustee to be placed in trust in accordance with Article 3, for funeral merchandise and services, or Article 4, for cemetery merchandise and services.
(b) Although this chapter does not apply to preneed contracts entered into prior to May 1, 2002, a preneed provider which contends that a preneed trust fund which was in effect prior to May 1, 2002, complies with this chapter with respect to the contracts entered into prior to May 1, 2002, may provide to the commissioner documentary proof thereof. Upon the commissioner determining that compliance has been established, the pre-existing preneed trust fund assets may be merged with or into the trust fund required under this chapter or continued as the trust fund and that determination by the commissioner shall be noted on the certificate of authority, and thereafter all preneed contracts covered by the trust fund, including those entered into prior to May 1, 2002, shall be subject to this chapter.
(a) As an alternative to the trust requirement of Section 27-17A-13, the details of which are set forth in Articles 3 and 4, a preneed provider may, with the prior approval of the commissioner, purchase a surety bond in an amount not less than the aggregate value of outstanding liabilities on undelivered preneed contracts for merchandise, services, and cash advances. For the purposes of this section, the term 'outstanding liabilities' means the original retail amount of services and cash advances and the actual cost to the entity to provide the undelivered merchandise sold on the contract.
(b) The bond shall be made payable to the State of Alabama for the benefit of the commissioner and of all purchasers of preneed merchandise, services, and cash advances. The bond shall be issued by an insurance company licensed in the State of Alabama and authorized to issue surety bonds and approved by the commissioner.
(c) The amount of the bond shall be based on a report documenting the outstanding liabilities of the preneed provider, shall be prepared by the preneed provider using generally accepted accounting principles, and shall be signed by the chief executive officer or chief financial officer of the preneed provider. The report shall be compiled as of the end of the preneed provider's fiscal year and updated annually.
(d) The amount of the bond shall be increased or decreased as necessary to correlate with changes in the outstanding liabilities. Further, the commissioner may order the bond to be increased as necessary to correlate with changes in the outstanding liabilities of bonded contracts due to increases in the consumer price index.
(e) If the preneed provider fails to maintain a bond pursuant to this section the preneed provider shall cease the offering for sale and sale of preneed merchandise, services, and cash advances.
(f) No surety bond used to comply with this section shall be canceled or subject to cancellation unless at least 60 days' advance notice thereof, in writing, is filed with the commissioner, by the surety company. The cancellation of the bond shall not relieve the obligation of the surety company for claims arising out of contracts issued or otherwise covered before cancellation of the bond. In the event that notice of termination of the bond is filed with the commissioner, the certificate holder insured thereunder shall, within 30 days of the filing of the notice of termination with the commissioner, provide the commissioner with a replacement bond or with evidence which is satisfactory to the commissioner demonstrating that the provisions of this chapter have been fully complied with. If within 30 days of filing of the notice of termination with the commissioner no replacement bond acceptable to the commissioner or no evidence satisfactory to the commissioner demonstrating that the provisions of this chapter have been complied with is filed with the commissioner, the commissioner shall suspend the license of the certificate holder until the certificate holder files a replacement bond acceptable to the commissioner or demonstrates to the satisfaction of the commissioner that it has complied with the provisions of this chapter.
(g) Upon prior approval by the commissioner, the preneed provider may file with the commissioner a letter of credit in the amount of the outstanding liabilities in lieu of a surety bond, in the form and subject to the terms and conditions evidencing the financial responsibility of the party or parties issuing the letter of credit, and otherwise, as may be prescribed by the commissioner.
(a) The commissioner shall, as often as he or she may deem necessary, examine the business of any person writing preneed contracts under this chapter to the extent applicable. The examination shall be made by designated representatives or examiners of the Department of Insurance.
(b) The written report of each examination, when completed, shall be filed in the office of the commissioner and, when so filed, shall not constitute a public record.
(c) Any person being examined shall produce, upon request, all records of the person. The designated representative of the commissioner may at any time examine the records and affairs of the person, whether in connection with a formal examination or not.
(d) The commissioner may waive the examination requirements of this section if the certificate holder submits audited financial statements.
(e) The person examined shall pay the examination expenses, travel expense and per diem subsistence allowance provided for examiners and incurred by the commissioner's representatives or examiners in connection with an examination in accordance with Section 27-2-25.
(a) A certificate holder shall be considered inactive upon the acceptance of the surrender of its license by the commissioner or upon the nonreceipt by the commissioner of the certificate of authority renewal application and fees.
(b) A certificate holder shall cease all preneed sales to the public upon becoming inactive. The certificate holder shall collect and deposit into trust all of the funds paid toward preneed contracts sold prior to becoming inactive.
(c) Any certificate holder desiring to surrender its license to the commissioner shall first do all of the following:
(1) File notice with the commissioner.
(2) Submit copies of its existing trust agreements.
(3) Submit a sample copy of each type of preneed contract sold.
(4) Resolve to the commissioner's satisfaction all findings and violations resulting from the last examination conducted.
(5) Pay all outstanding fines and invoices due the commissioner.
(6) Submit its current certificate of authority.
(d) Upon receipt of the notice, the commissioner shall review the certificate holder's trust funds, trust agreements, and evidence of all outstanding preneed contracts.
(e) After a review to the commissioner's satisfaction, the commissioner shall terminate the certificate of authority by an order which shall set forth the conditions of termination established by the commissioner to ensure that the preneed funds will be available for their intended purpose.
(f) The trust fund of the certificate holder shall be held intact and in trust after the certificate holder has become inactive, and the funds in that trust shall be disbursed in accordance with the requirements of the written contracts until the funds have been exhausted.
(g) The commissioner shall continue to have jurisdiction over the inactive certificate holder as if the certificate were active and to require the reports and inspect the records as the commissioner deems appropriate so long as there are funds in trust or preneed contracts that are not fulfilled.
(h) In addition to any other terms of revocation or suspension ordered pursuant to Chapter 13 of Title 34, the provisions of this chapter may also apply.
(a) Any dissolution or liquidation of a certificate holder shall be deemed to be the liquidation of an insurance company and shall be conducted under the supervision of the commissioner, who shall have all powers with respect thereto granted to the commissioner under Chapter 32 with respect to the liquidation of insurance companies.
(b) The commissioner may apply for an order directing the commissioner to liquidate a certificate holder upon any one or more grounds set out in Section 27-32-6 or when, in the commissioner's opinion, the continued operation of the certificate holder would be hazardous either to purchasers, beneficiaries, or to the people of this state.
(a) All individuals who offer preneed contracts to the public, or who execute preneed contracts on behalf of a certificate holder, including all individuals who offer, sell, or sign contracts for the preneed sale of burial rights, shall be registered with the commissioner as preneed sales agents, pursuant to this article.
(b) All preneed sales agents and funeral directors acting as preneed sales agents shall be affiliated with the certificate holder that they are representing.
(c) A certificate holder shall be responsible for the activities of all preneed sales agents and all funeral directors acting as preneed sales agents, who are affiliated with the certificate holder and who perform any type of preneed-related activity on behalf of the certificate holder. In addition to the preneed sales agents and funeral directors acting as preneed sales agents, each certificate holder shall also be subject to discipline if its preneed sales agents or funeral directors acting as preneed sales agents violate any provision of this article.
(d) A preneed sales agent and a funeral director acting as a preneed sales agent shall be authorized to sell, offer, and execute preneed contracts on behalf of all entities owned or operated by the sponsoring certificate holder.
(e) An individual may begin functioning as a preneed sales agent as soon as a completed application for registration, as set forth in subsection (g), is sent to the commissioner.
(f) The qualifications for a preneed sales agent are as follows:
(1) The applicant must be at least 18 years of age.
(2) The applicant must be in good standing with the commissioner.
(3) The applicant must not have any felony or misdemeanor convictions that relate to any activity regulated by this chapter.
(g) An application for registration as a preneed sales agent shall be submitted to the commissioner with an application fee determined by the commissioner, but not to exceed twenty-five dollars ($25), by the certificate holder in a form that has been prescribed by commissioner rule and approved by the commissioner. The application shall contain, at a minimum, all of the following:
(1) The name, address, Social Security number, and date of birth of the applicant and any other information as the commissioner may reasonably require of the applicant.
(2) The name, address, and license number of the sponsoring certificate holder.
(3) A representation, signed by the applicant, that the applicant meets the requirements set forth in subsection (f).
(4) A representation, signed by the certificate holder, that the applicant is authorized to offer, sell, and sign preneed contracts on behalf of the certificate holder, and that the certificate holder has trained the applicant in the provisions of this article relating to preneed sales, the provisions of the certificate holder's preneed contract, and the nature of the merchandise, services, or burial rights sold by the certificate holder.
(5) A statement indicating whether the applicant has any type of working or agency relationship with any other certificate holder or insurance company.
(h) An individual may be registered as a preneed sales agent on behalf of more than one certificate holder, provided that the individual has received the written consent of all certificate holders.
(i) A certificate holder who has registered a preneed sales agent shall notify the commissioner within 30 days after the individual's status as a preneed sales agent has been terminated.
(j) Upon receipt of an application that complies with all of the requirements of subsection (g), the commissioner shall register the applicant. The commissioner shall by rule provide for annual renewal of registration and a renewal fee not to exceed twenty-five dollars ($25) as set by the commissioner.
No person shall engage in this state in any trade practice which is addressed in the Alabama Deceptive Trade Practices Act (Section 8-19-1 et seq.), or as determined pursuant to this chapter to be, an unfair method of competition or an unfair or deceptive act or practice.
As used in this chapter, the following terms shall have the following meanings:
(1) ALTERNATIVE CONTAINER. A nonmetal receptacle or enclosure, without ornamentation or a fixed interior lining, which is designed for the encasement of human remains and which is made of cardboard, pressed-wood, composition materials (with or without an outside covering), or pouches of canvas or other materials.
(2) ARRANGEMENT CONFERENCE. The meeting occurring either at need or preneed between the seller and the purchaser during which funeral or cemetery merchandise and services are discussed.
(3) ARRANGEMENT CONFERENCE FEE. The charge to the purchaser in conjunction with the arrangement conference.
(4) AT NEED. At the time of death, or immediately following death.
(5) AUTHORIZING AGENT. One who is lawfully authorized to control the final disposition of human remains.
(6) BELOW-GROUND CRYPT. A preplaced enclosed chamber, which is usually constructed of reinforced concrete, poured in place or a precast unit installed in quantity, either side-by-side or multiple depth, and covered by earth or sod and known also as a lawn crypt or turf-top crypt.
(7) BENEFICIARY. One who benefits from an act, such as one for whom a preneed contract is entered into or the successor-in-interest of a life insurance policy.
(8) BURIAL. The placement of human remains in a grave space or lawn crypt.
(9) CASH ADVANCE. Any item of service or merchandise described to a purchaser as a 'cash advance,' 'accommodation,' 'cash disbursement,' or similar term. A cash advance item is also any item obtained from a third party and paid for by the seller on the purchaser's behalf. Cash advance items may include, but are not limited to, cemetery or crematory services, pallbearers, public transportation, clergy honoraria, flowers, musicians or singers, nurses, obituary notices, gratuities, and death certificates.
(10) CASKET. A rigid container which is designed for the encasement of human remains and which is usually constructed of wood, metal, or like material, and ornamented and lined with fabric.
(11) CEMETERY. A place that is established, maintained, managed, operated, or improved and which is dedicated to and used or intended to be used for the final disposition of human remains and their memorialization.
(12) CEMETERY AUTHORITY. Any person who owns or controls a cemetery or conducts cemetery business.
(13) CEMETERY MERCHANDISE. Any personal property offered for sale, contracted for sale, or sold for use in connection with the burial of, final disposition, memorialization, interment, entombment, or inurnment of human remains. Cemetery merchandise specifically includes, but is not limited to, the outer burial container and the memorial.
(14) CEMETERY SERVICES. Services provided by a cemetery authority for interment, entombment, inurnment, and installation of cemetery merchandise.
(15) CERTIFICATE HOLDER. A funeral establishment, cemetery authority, third-party seller, or any other person to whom a valid certificate of authority to sell preneed contracts has been granted by the commissioner.
(16) COLUMBARIUM. A structure or room or space in a building or structure used or intended to be used for the inurnment of cremated remains.
(17) COMMISSIONER. The Alabama Commissioner of Insurance.
(18) CREMATED REMAINS. The bone fragments remaining after the cremation process, which may include the residue of any foreign materials that were cremated with the human remains.
(19) CREMATED REMAINS CONTAINER. A receptacle in which cremated remains are placed.
(20) CREMATION. The irreversible process of reducing human remains to bone fragments through intense heat and evaporation, performed in a specifically designed furnace or retort, which may include any other mechanical or thermal process whereby the bone fragments are pulverized, or otherwise further reduced in size or quantity. Cremation is a process and is a method of final disposition.
(21) CREMATORY AUTHORITY. Any person who owns or controls a crematory.
(22) DEATH CERTIFICATE. A legal document containing vital statistics pertaining to the life and death of the deceased.
(23) DECEASED or DECEDENT. One who is no longer living.
(24) EMBALMER. One authorized by law to engage in embalming.
(25) EMBALMING. A procedure whereby human remains are chemically treated by injection for temporary preservation including, but not limited to, the act of disinfecting, preserving, and restoring human remains to a natural life-like appearance.
(26) ENCASEMENT. The placement of human remains in a rigid container, including, but not limited to, a casket or urn.
(27) ENDOWMENT CARE. The maintenance and repair of all places in the cemetery, subject to the rules and regulations of the cemetery authority; may be known also as endowed care, perpetual care, improvement care, or permanent care.
(28) ENDOWMENT CARE TRUST FUND. An irrevocable trust fund set aside by law with a trustee, along with the income therefrom, to provide for the endowment care of the cemetery.
(29) ENTOMBMENT. The act of placing human remains in a mausoleum crypt.
(30) FINAL DISPOSITION. The lawful disposal of human remains whether by interment, entombment, burial at sea, cremation, or other method.
(31) FUNERAL. The rites held commemorating the deceased with human remains present.
(32) FUNERAL DIRECTING. The act or service of conducting funerals and counseling with survivors and preparing human remains, other than by embalming, for the interment or other means of disposition, and may include the management and supervision of all operations in a funeral establishment, which may or may not include the practice of embalming.
(33) FUNERAL DIRECTOR. One authorized by law to engage in funeral directing.
(34) FUNERAL ESTABLISHMENT. A place of business used in the care, planning, and preparation for final disposition or transportation of human remains, or any place where one or more are engaged and represent themselves to be engaged in the business of embalming or funeral directing.
(35) FUNERAL MERCHANDISE. Any personal property offered for sale, contracted for sale, or sold for use in connection with funeral directing. Funeral merchandise specifically includes, but is not limited to, the following:
a. Alternative container.
b. Casket.
c. Outer burial container.
d. Urn.
(36) FUNERAL SERVICE. Services provided by a funeral establishment in connection with funeral directing.
(37) GRAVE SPACE. A space of ground in a cemetery that is used or intended to be used for in-ground burial.
(38) HUMAN REMAINS. The body of a decedent and includes the body in any stage of decomposition and cremated remains.
(39) INTERMENT. The final disposition of human remains by burial, entombment, or inurnment.
(40) INTERMENT RIGHT. The right to inter human remains in a particular interment space in the cemetery.
(41) INTERMENT SPACE. A space intended for the final disposition of human remains including, but not limited to, a grave space, mausoleum crypt, niche, and below-ground crypt.
(42) INURNMENT. The act of placing cremated remains in a receptacle including, but not limited to, an urn and depositing it in a niche.
(43) MAUSOLEUM. A chamber or structure used or intended to be used for entombment.
(44) MAUSOLEUM CRYPT. A chamber of a mausoleum of sufficient size for entombment of human remains.
(45) MEMORIAL. Any product, other than a mausoleum or columbarium, used for identifying an interment space or for commemoration of the life, deeds, or career of some decedent including, but not limited to, a monument, marker, niche plate, urn garden plaque, crypt plate, cenotaph, marker bench, and vase.
(46) MEMORIAL RETAILER. Any person offering or selling memorials at retail to the public.
(47) MEMORIALIZATION. Any permanent system designed to mark or record the names and other data pertaining to a decedent.
(48) NICHE. A space usually within a columbarium used or intended to be used for inurnment of cremated remains.
(49) OUTER BURIAL CONTAINER. A container which is designed for placement in the grave space around the casket or the urn including, but not limited to, containers commonly known as burial vaults, grave boxes, and grave liners.
(50) PERSON. Any individual, firm, corporation, partnership, joint venture, limited liability company, association, trustee, government or governmental subdivision, agency, or other entity, or any combination thereof.
(51) PREARRANGEMENT. The term applied to completing the details for selection of merchandise or services on a preneed basis, which may or may not include provisions for prefunding or prepayment.
(52) PREDEVELOPED. Designated areas or buildings within a cemetery that have been mapped and planned for future construction but are not yet completed.
(53) PREDEVELOPED INTERMENT SPACE. An interment space that is planned for future construction but is not yet completed.
(54) PREFUND. The term applied to completing the financial details of a prearrangement, which include provisions for funding or prepayment.
(55) PRENEED. Any time prior to death.
(56) PRENEED CONTRACT. A written contract to purchase funeral merchandise, funeral services, cemetery merchandise, or cemetery services from the seller on a preneed basis.
(57) PRENEED CONTRACT TRUST FUND. The funds received pursuant to a preneed contract which are required by law to be held in trust until the merchandise or services purchased pursuant to the contract are delivered or provided or until otherwise lawfully withdrawn.
(58) PROVIDER. A person who may or may not be the seller, who will actually provide the merchandise and services under the terms of a preneed contract.
(59) PURCHASE PRICE. The amount paid by the purchaser for merchandise and services purchased under a preneed contract, exclusive of finance charges, sales tax, charges relating to interment rights, arrangement conference fees, or charges for credit life insurance.
(60) PURCHASER. The person who purchases a preneed contract either on his or her behalf or on behalf of a third party beneficiary.
(61) RELIGIOUS INSTITUTION. An organization formed primarily for religious purposes which has qualified for exemption from federal income tax as an exempt organization under the provisions of Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
(62) SCATTERING. The lawful dispersion of cremated remains.
(63) SELLER. Any person offering or selling merchandise or services on a preneed basis including, but not limited to, funeral establishments, cemetery authorities, crematory authorities, memorial retailers, direct disposers, etc.
(64) SPECIAL CARE. Any care provided, or to be provided, that is supplemental to, or in excess of, endowment care, in accordance with the specific directions of any donor of funds for such purposes.
(65) SUCCESSOR-IN-INTEREST. A person who lawfully follows another in ownership or control of property or rights.
(66) THIRD-PARTY SELLER. Any person, who is not a funeral establishment or a cemetery authority, engaged in the sale of preneed funeral merchandise or cemetery merchandise.
(67) TRUSTEE. Any person, state or national bank, trust company, or federally insured savings and loan association lawfully appointed as fiduciary over funds deposited by one or more purchasers of a preneed contract or deposited pursuant to an endowment care trust fund; not to be confused with a board of trustees.
(68) URN. A receptacle for the encasement of cremated remains.
(a) Whenever the commissioner has reason to believe that any person has engaged, or is engaging, in this state in any unfair method of competition or any unfair or deceptive act or practice as defined in this article, or is engaging in the sale of preneed contracts without being properly licensed as required by this article, or is otherwise acting in violation of this chapter, and that a proceeding by the commissioner in respect thereto would be in the interest of the public, the commissioner shall institute a proceeding in accordance with this section.
(b) A statement of charges, notice, or order or other process under this chapter may be served by anyone duly authorized by the commissioner. Service may be made either in the manner provided by law for service of process in civil actions or by certifying and mailing a copy of the statement to the person affected by the statement, notice, or order or other process at his or her or its residence or principal office or place of business. The verified return by the person so serving the statement, notice, or order or other process, setting forth the manner of the service, shall be proof of the service; and the return postcard receipt for the statement, notice, or order or other process, certified and mailed as provided in this subsection, shall be proof of service of the statement, notice, or order or other process.
(c) The commissioner shall conduct or cause to have conducted a hearing in accordance with Article 1 of Chapter 2, and shall, during the conduct of the hearing, have those powers necessary to enforce this chapter; however, the penalties for failure to comply with a subpoena or with an order directing discovery shall be limited to a fine not to exceed one thousand dollars ($1,000) per violation.
(a) If the commissioner finds that one or more grounds exist for the discretionary suspension or revocation of a certificate of authority issued under this article, the commissioner may, in lieu of the suspension or revocation, impose a fine upon the certificate holder in an amount not to exceed one thousand dollars ($1,000) for each nonwillful violation and in an amount not to exceed ten thousand dollars ($10,000) for each willful violation.
(b) The commissioner may grant not more than 30 days from the date of the order for the payment of any fine.
Any officer or director, or person occupying similar status or performing similar functions, of a certificate holder who fails to make required deposits to any trust fund required by this chapter; any director, officer, agent, or employee of a certificate holder who makes any unlawful withdrawal of funds from any such account or who knowingly discloses to the commissioner or an employee thereof any false report made pursuant to this chapter; or any person who willfully violates any of the provisions of this chapter commits a Class B misdemeanor, punishable as provided by law.
The Attorney General or any person may bring a civil action against a person or company violating the provisions of this chapter in the appropriate court of the county in which the alleged violator resides or has his or her or its principal place of business or in the county wherein the alleged violation occurred. Upon adverse adjudication, the defendant shall be liable for actual damages caused by the violation. The court may, as provided by common law, award punitive damages and may provide equitable relief as it deems proper or necessary, including enjoining the defendant from further violations of this chapter.
The provisions of this chapter are cumulative to rights under the general civil and common law, and no action of the commissioner may abrogate the rights to damages or other relief in any court.
(a) All fees collected by the commissioner pursuant to this chapter shall be deposited into the State Treasury to the credit of the Insurance Department Fund.
(b) All fines collected by the commissioner pursuant to this chapter shall be deposited into the State Treasury to the credit of the State General Fund.
Nothing in this chapter shall be construed to prohibit the funding of preneed contracts with insurance contracts. Life insurance contracts used to fund preneed contracts shall conform with the provisions of this title as they relate to life insurance and shall cover at a minimum the retail amount of the preneed contract at the time of purchase.
To comply with the trust requirement of subsection (a) of Section 27-17A-13, all certificate holders providing preneed contracts for funeral services or funeral merchandise shall be subject to this article.
(a) Any person who is paid, collects, or receives funds under a preneed contract for funeral services or funeral merchandise shall deposit in this state an amount at least equal to the sum of 75 percent of the purchase price collected for all funeral services and funeral merchandise sold and facilities rented other than outer burial containers, 60 percent of the purchase price collected for outer burial containers, and 100 percent of the purchase price collected for all cash advance items sold.
(b) All deposits shall be made within 30 days after the end of the calendar month in which the preneed contract is paid in full, unless, prior to that time, all liabilities of the seller under the preneed contract to deliver the specific funeral merchandise or funeral services, or both, or the specific cash advances, identified by the preneed provider as properly allocated to the payment, have been satisfied, or the preneed contract is validly cancelled.
(c) The trustee shall take title to the property conveyed to the trust for the purpose of investing, protecting, and conserving it for the certificate holder; collecting income; and distributing the principal and income as prescribed in this article.
(d) The certificate holder is prohibited from sharing in the discharge of these responsibilities, except that the certificate holder may appoint an adviser to the trustee.
(e) The trust agreement shall be submitted to the commissioner for approval and filing.
(f) The funds shall be held in trust, both as to principal and income earned thereon, and shall remain intact, except that the cost of the operation of the trust or trust account authorized by this section may be deducted from the income earned thereon.
(g) The contract purchaser shall have no interest whatsoever in, or power whatsoever over, funds deposited in trust pursuant to this section.
(h) In no event may such funds be loaned to a certificate holder, an affiliate of a certificate holder, or any person directly or indirectly engaged in the burial, funeral home, or cemetery business. Furthermore, the certificate holder's interest in the trust shall not be pledged as collateral for any loans, debts, or liabilities of the certificate holder and shall not be transferred to any person without the prior written approval from the commissioner and the trustee. Even though the certificate holder shall be deemed and treated as the settlor and beneficiary of the trust for all purposes, all of the trust funds are exempt from all claims of creditors of the certificate holder except as to the claims of the contract purchaser, his or her representative, or the commissioner.
(a) Without limiting in any way the liability of the seller under a preneed contract to perform its obligations thereunder, including, without limitation, the obligation to deliver the funeral merchandise, and for installation thereof if it is to be included in the preneed contract, the seller shall not be required to place in trust proceeds paid under the contract for funeral merchandise. If the trust proceeds have previously been paid, the seller may withdraw the principal amount there, at such time as the funeral merchandise, if comprised of materials designed to withstand prolonged, protected storage without deterioration, is placed in storage with a responsible third party bonded and insured for the wholesale value thereof and evidenced by a receipt specifically identifying the item, the specific preneed contract, the location of the item, and the identity and address of the bonding and insuring parties. For purposes of this subsection only, caskets and alternative containers may not be delivered prior to death.
(b) The trustee shall make regular valuations of the assets it holds in trust and provide a report of the valuations to the certificate holder at least quarterly. Any person who withdraws appreciation in the value of trust, other than the pro rata portion of such appreciation which may be withdrawn upon the death of a contract beneficiary or upon cancellation of a preneed contract, shall be required to make additional deposits from his or her own funds to restore the aggregate value of assets to the value of funds deposited in trust, but excluding from the funds deposited those funds paid out upon preneed contracts which the person has fully performed or which have been otherwise withdrawn, as provided in this article. The certificate holder shall be liable to third parties to the extent that income from the trust is not sufficient to pay the expenses of the trust.
(c) The trustee of the trust established pursuant to this article shall have all of the following powers:
(1) Make investments and exercise necessary investment powers, provided that the commissioner may by order require the trustee to liquidate or dispose of any investment within 30 days after the order.
(2) Borrow money up to an aggregate amount of 10 percent of trust assets, at interest rates then prevailing from any individual, bank, insurance company, or other source, irrespective of whether any such person is then acting as trustee, and to create security interests in no more than 10 percent of trust assets by mortgage, pledge, or otherwise, upon the terms and conditions and for the purposes as the trustee may deem advisable.
(3) Commingle the property of the trust with the property of any other preneed funeral or endowment care trust established pursuant to this article and make corresponding allocations and divisions of assets, liabilities, income, and expenses.
(a) A purchaser, by providing written notice to the certificate holder, may cancel a preneed contract within 30 days of the date that the contract was executed provided that the funeral merchandise and funeral services have not yet been used. Upon providing the notice, the purchaser shall be entitled to a complete refund of the amount paid, except for the amount allocable to any funeral merchandise or funeral services that have been used, and shall be released from all obligations under the contract. This subsection shall apply to all items that are purchased as part of a preneed contract.
(b) After 30 days from the date the preneed contract was executed, a purchaser, by providing written notice to the certificate holder, may cancel the funeral services, funeral merchandise, facilities, and cash advance items portions of a preneed contract at any time, and shall be entitled to the refund defined in the preneed contract allocable to those items. Any accumulated earnings allocable to the preneed contract shall be paid to the certificate holder upon the cancellation.
(c) Upon breach of contract or failure of the certificate holder to provide funeral merchandise or services under a preneed contract, the contract purchaser shall be entitled to a refund of 100 percent of all money paid on the contract. The refund shall be made within 30 days after receipt by the certificate holder of the contract purchaser's written request for refund.
(d) If a purchaser is 90 days past due in making payments on a preneed contract, the contract shall be considered to be in default, and the certificate holder shall be entitled to cancel the contract and withdraw all funds in trust. Upon making the withdrawal, the certificate holder shall refund to the purchaser the amount defined in the preneed contract in the event of default of the purchaser, provided that the certificate holder has provided the purchaser with 30 days' written notice of its intention to exercise any of its rights under this provision.
(e) All preneed contracts are cancelable and revocable as provided in this section during the lifetime of the purchaser, provided that a preneed contract does not restrict any contract purchaser who is a qualified applicant for, or a recipient of, supplemental security income, temporary cash assistance, or Medicaid from making his or her contract irrevocable.
(f) In the event that the preneed contract is made irrevocable pursuant to subsection (e), the purchaser or the authorizing agent shall have the right to appoint a provider other than the seller of the preneed contract. In the event that a provider is appointed pursuant to this subsection, the seller shall transfer to the appointed provider the amount paid by the purchaser less a reasonable transfer fee determined by the seller. No transfer hereunder shall occur without the acceptance of the appointed provider.
(g) All refunds required to be made under this section to a purchaser who has canceled a contract must be made within 30 days after the date the written notice of cancellation is received by the certificate holder.
(a) Disbursement of funds discharging any preneed contract for funeral services or funeral merchandise fulfilled after May 1, 2002, shall be made by the trustee to the certificate holder upon receipt by the trustee of a certification of the certificate holder that the preneed contract has been performed in whole or in part. Any trustee accepting preneed contract proceeds under this article may rely upon the certification of the certificate holder as herein required to be made, and shall not be liable to anyone for such reliance. If the contract is only partially performed, the disbursement shall only cover that portion of the contract performed. In the event of any contract default by the contract purchaser, or in the event that the funeral merchandise or funeral service contracted for is not provided, the trustee shall return, within 30 days after its receipt of a written request therefor, 100 percent of the funds paid on the contract and the income and accretion thereon to the certificate holder or to its assigns, subject to the provisions of Section 27-17A-33.
(b) If the preneed contract so provides, the trustee may distribute trust income allocable to the preneed contract to the certificate holder on an annual basis, so long as the distribution is consistent with subsection (b) of Section 27-17A-32.
Nothing in this chapter shall be construed to prohibit cemetery authorities from selling funeral merchandise, funeral establishments from selling cemetery merchandise, or third-party sellers from selling either funeral merchandise or cemetery merchandise, or both. Provided, the required amount of the purchase price to be placed into trust shall be governed by the appropriate section of this chapter.
To comply with the trust requirement of subsection (a) of Section 27-17A-13, all certificate holders providing preneed contracts for cemetery services or cemetery merchandise shall be subject to this article.
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