The so-called “Pre-Need Arrangement For Memorial Services” is not a pre-need burial plan within the meaning of Section 333.035-1(12)(d), RSMo 1959, but is only a discount certificate. Licensed embalmers who directly or indirectly enter into Articles of Agreement for the sale of such plans are guilty of unprofessional conduct as defined in Section 333.035-1(12)(d). However, neither subparagraphs (c) nor (d) of this section prohibit embalmers from entering into contracts providing for the sale of genuine pre-need burial plans.

ADMINISTRATIVE LA\<1: / / STA-I'E BOARD OF E:MBALMING~ /;"',.. I \ The so-called 11 Pre -Need ::1r·ra.ngement For Memorial Serv1.ce s n :1 s nc-r a -c re-need burial plan within the mean1.ng cf Sectj_on 333.035-lll2)(d). RSMo J959. but lS only a discount certif1cate .. LJcer,.-::?a embalr~~-; :> who directly or indirecLy en· ::-r .1nto Articles of Agreement foY' the 3ale of ~ .:tcr. plans are guilty of unprcfess ional cond._,.:; t d f ., d . s ti ":1 '3~ Q">•- , .• ;::J\ f ) as e :..ne ln ec on -'· ··" ~ ·--.. :,1-J.O , However, nei ther subparagraphs 10} nor (j) of this secti.on prohlbi t embal mer.s f-::·om entering into contracts orov::.d1ng for the sale of genui.ne pr e-need burial. r.!ans, June 5:) 1964 Opinion No . ~03 \1963) Opinion Nc. 21 (~964) FILED Mrv Charles L. Zaring~ President Missouri State Board of Embalming Tenth and Walnut e:ZI Columbia., Missouri Dear Mr . Zaring: This is in answer to your request for an opinion of this office as to whether it would be conduct violative of Miss )uri la~ for an embal mer licensed under the laws of this stat e to enter into a contract to furnish burial services to persons purchasing a so-called "Pre-Need Arrangement for Memorial Se:rvicesu sold by National Association Funeral Home Inc.~ herein caJ:ed 11 Associated 11 • This contract or certificate is an agreement betv1een the purchaser, called the plan ot.,mer, and the seller, called 'Associatc::d" 9 which acts as agent of a funeral home n.amed on the face of the agreement . It provides that the plan owner, by the payrr1e-r.t of $95 .00, will receive at plan ovmer ' s death a credit of $95.00 plus a 2CI/o reduction from the retail price of the memoria} service selected from the named funeral. home . The services 11hich the f'uP-era l home agrees to provide at a discount are listed in the con~ract" ' The purchase price may be paid in install ments , but if the, ;;~ian owner defaults in his payments, Associat ed may term:inate the contract and retain all money previously paid. To provide these certificates, Associated has entered into other contracts called AY'ticles of Agreement -v11 th funeral r.omes throughout the state . Funeral homes entering into these agree- ments are referred to as 11approvedn funera l tomeso The Art1.c1es provide that each 11approved" funeral home agrees to make As<>c.ciated its exclusive agent for the purpose of soliclting and acqui '1ng nE:w :part.ies t o the agreement and also for the purpose of secur:lP.g funeral oontracts from the public. When the entire fee of $95.00 ~8 col~ected from the plan purchaser, Associated agrees to {Jay $25.00 to the funeral home named on the contract and may retain the remaining $70 . 00. Each ,approved" funeral hom& agrees to honor all such contracts issued by Associated as agent for all other funeral homes which are or may become part of the agreement . Howeve:r, neither the Articles of Agreement nor the certlfjcate fo-r' burial services contain any provision for return. of the money 1:0 a plan pur:.-ha R~r who moves 1.nto another state or t.nto an area with no approved funeral homes. Chapter 333, RSMo, relates to the regulationJ practice, and licensing of embalmers. Many funeral homes are owned or operated by licensed embalmers. ~hese embalmers may be held responsible by the Board for acts done jn the name of the funeral home . Section 333.035 authorizes the State Board of Embalming to suspend or revoke the license of any licensed emba1.mer for several causes which include! 11 (12) Unprofessicnal conduct which is hereby def:i.ned to include: * * * * * * * * 11 (d) The buying of business by the licensee, his agents, assistants or employees or the direct or indirect payment or offer of payment of a com- mission by the licensee~ his agents, assistants and employees for the pur- pose of securing dead human bodies, but this provision does not prohibit the se~ling of pre-need burial contracts or 1nsurance. 11 The burial certificate provides that Associated 1s actir~ as the cgent of the approved funeral home named on tne face thereof. Even without this statement~ is is apparent that Associated is acting as the agent not only of the named funeral home but also as agent of all 11approved.t funera"!. nornes. As t-he agent of the "approved 11 funeral homes and on thelr behalf Associated, in acr'!ordance w! th its contra.c: ua 1 c b :'..~gation , cal: s upon members of the public to sollcit the JJUrchase of a buria~ certificate, and thus induce such purchasers at ~1me of need t c use the services of the funeral home na~ed ~n the cert1f!cate or another funeral home affi1 j a ted wl~h Assoc~a ted o Ea.cl:"'. funer&.1. home which has signed the Articles of Agreement has emrloyed Associated for the purpose and pa~d ~t $?Oo00 for ~ach Sllccessful -2 - solicitation. The fact that the fee is retained from the contract price rather than paid directly does not make it any less a commission. The payment is made indirectly by the funeral home as it must refund the entire $95 .00 at the time of need . The payment of a commission or fee to Associated to induce persons to use the service.s of a particular funeral home and the embalmer or embalmers connected therewith constitutes the buying of business and the direct or indirect payment of fees for the purpose of securi~ dead human bodies within the meaning of Section 333.035-1(12)(d). A licensed embalmer who directly or indirectly enters into such an agreement is guilty of conduct in violation of the statute unless the agreement is a pre-need burial contract or insurance . The :agreement does not purpGrt to be an insurance contract and specifically states that "This certificate is not a member- ship in a burial association, or an insurance company and is non-assessable." Nor has Associated attempted to qualify as an insurance company under the laws of this state. The question then remains: Is the self-styled "Pre-Need Agreement for Memorial Services" in fact a pre-need burial con~ract. The term "Pre-Need burial contract" has not been defined in Missouri either by the legislature or by the courts . However, inherent in the meaning of the term is the idea that a pre-need burial contract is a contract for the payment of funeral or burial servic~s or merchandise at a future time determined by the death of the person within the coverage of the contract . The pre-payment may be made in a lump -sum or by installments but must be in payment for funeral or burial expenses that will be needed at a future date. - The contract in question contains none of these elements . There is no pre-payment of. burial expenses ~s the plan purchaser does not pay any part o·f his future burial expenses . He receives only a discount on such expenses if he uses an approved funeral home. The contract is called a Pre-Need Agreement for Memorial Services . The Articles of Agreement between Associated and the various funeral homes refer to the contract as a pre-need plan. Notwithstanding the attached labels, it is our opinion that the agreement in question is a discount certificate and is not a pre-need burial contract as that term is used in Section 333. 035-1(12)(d). It is also our opinion that a 'licensed em- balmer, acting by himself or through a funeral home who enters into such a contract is guilty of conduct which violates this section. -3- Your letter also requests our opinion as to the authority of the Board to revoke or suspend the license of an embal mer who participates in the sale of other burial plans 'being sold throughout the state. Our office has obtained copies of most of these plans, which are all quite similar. They are not ·sold by funeral homes but through independent corporations . Each corporation is affiliated with one funeral home . Its name ts quite similar to the funeral home and it is our understanding that ln most cases the owners of the funeral home also own and operate the affiliated corporation. Pre-need burial contracts Misscuri . However, judging by Board and by this office, this abused and the public misled . are authori zed by the law in the complaints received by the privilege may some~imes be Among these abuses are ~ 1. These pl ans are sometimes sold by a "hard -sell" house to house sol i citation by salesmen employed by the selling corporation. Some people are repeatedly solicitated for possibly unwanted services. 2. The sell ing corporation usually retains 25% of the contract price and the remaining 75~ is to be placed in trust to be given to the funeral home which is to provide the service at the time of need . Some of these plans do not protect t he plan owner against mismanagement or misuse of trust funds. Some plans do not require that the trust funds be placed in a reputable bank or trust company . Nor do they make provisions as to ide.ntity of t he trustees or limit or prescribe the investment pcwers of the trustees. 3. The public is persuaded to purchase pre--need burial contracts upon a representat ion that they are receiving a large dis~ount · on their burial contract . The funeral homea usually receive 75<!> of the contract price _, hence., it is diffi.cult to see how funeral services can be provided at substantial discounls. The Board of Embalming has received compl aints that short:y after a contract purchaser has received funeral services for the "discount" price, others have received the same services for approximately the same price. 4. Contracts are sometimes sold to persons who are not able to meet the payments. Sometimes they have moved away from t he area and are not able to util ize the particular funera l home designated in the contract. If the pl an owner defaults or after making all of his payments does not use the f~eral home, the selling corporation retains 25% of the entire contract trice. -4- '• Thus, if a contract purchaser agrees to buy a plan for $1000 and defaults after paying $260.00, the selling corporation may retain $250 . 00 and is obligated to return $10 . 00 ~ Complaints from purchasers indicate they have difficulty obtai ning return of payments in excess of 25~. Some states have enacted laws regulating the sale of pre- need plana and the manner in which the proceeds must be handled . Per haps this is a subject that might be considered by the Legislature . Poasibly most licensed embalmers will not feel it necessary to participate in such plans in order to compete successful ly with· those now doing so. There may be plans which are honestly conceived, sold, and administered; but , abuses and i nequit ies whi ch have characterized many such plans should be adequat e warning to any licensed embalmer to approach such pl ans with caution l est the public, whom he is licensed to serve~ be defraud~d in t i me of greatest sorrow and susceptibilit y . CONCLUSION The so-called "Pre-Need Arrangement For Memot'ial Services" {which provides that the owner of a certificate cc.sting $95. 00 will receive at his death a credit of $95 . 00 pl us a ~ red~c tion from the retail price of a funeral from a named funer al home ) :i is not a pre-need burial plan within the meaning of Sect 1.on 333.035-1(12)(d), RSMo 1959, but is a discount cert ific at e ~ Licensed embalmers who directly or indirectly enter :1.nto the Articl~s of Agreement for the sale of such plans are gui lty of unprofessional conduct as def~ned in Section 333.035-1(12 )(d ) . However, neither subparagraphs {c) or (d) of this section pr ohibits licensed embalmers from entering in'Co contracts pro- viding for the sale of genuine pre-need burial pJ ans . The foregoing opinion, which I hereby approve , was prepar ed by my Assistant, J ohn H. Denman. Very truly yours ~ ~~~ Attor ney Gen a l