Bill Text: NY A07777 | 2019-2020 | General Assembly | Introduced
Bill Title: Relates to financial liability and disclosure for funeral homes and requires an audit of accounts related to preneed agreements.
Spectrum: Moderate Partisan Bill (Democrat 5-1)
Status: (Passed) 2019-12-12 - SIGNED CHAP.642 [A07777 Detail]
Download: New_York-2019-A07777-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7777 2019-2020 Regular Sessions IN ASSEMBLY May 20, 2019 ___________ Introduced by M. of A. GOTTFRIED -- read once and referred to the Committee on Consumer Affairs and Protection AN ACT to amend the general business law and the public health law, in relation to financial liability and disclosure for funeral homes The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph (a) of subdivision 1 and subdivisions 8 and 10 of 2 section 453 of the general business law, paragraph (a) of subdivision 1 3 as amended by chapter 557 of the laws of 2001, subdivision 8 as amended 4 by chapter 529 of the laws of 1993, and subdivision 10 as added by chap- 5 ter 279 of the laws of 2007 are amended and three new subdivisions 12, 6 13, and 14 are added to read as follows: 7 (a) Any and all moneys paid to a funeral firm, funeral director, 8 undertaker, cemetery, or any other person, firm or corporation, under or 9 in connection with an agreement, or any option to enter into an agree- 10 ment, for the sale of merchandise to be used in connection with a funer- 11 al or burial, or for the furnishing of personal services of a funeral 12 director or undertaker, wherein the merchandise is not to be actually 13 physically delivered or the personal services are not to be rendered 14 until the occurrence of the death of the person for whose funeral or 15 burial such merchandise or services are to be furnished shall continue 16 to be the money of the person making such payment and shall be held in 17 trust for such person by the funeral firm, funeral director, undertaker, 18 cemetery or any other person, firm or corporation to whom such payment 19 is made and shall, within ten business days of receipt, be deposited in 20 an interest bearing account in a bank, national bank, federal savings 21 bank, federal savings and loan association, savings bank, savings and 22 loan association, credit union, or federal credit union within the state 23 and duly authorized to receive deposits in the state of New York and 24 which shall earn interest at a rate which shall be at not less than the 25 prevailing rate of interest earned by other such deposits in such banks, EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11658-03-9A. 7777 2 1 savings banks, savings and loan associations, or credit unions under 2 this section, or shall be placed in a trust company in an investment 3 backed by the government of the United States and shall not be commin- 4 gled with other moneys of the funeral firm, funeral director, undertak- 5 er, cemetery, or other person, firm or corporation or become the funds 6 of the funeral firm, funeral director, undertaker, cemetery, or other 7 person, firm or corporation, and shall be so held on deposit, together 8 with any interest thereon with interest earned being accrued daily and 9 credited monthly, until said merchandise has been actually physically 10 delivered and said personal services have been rendered, unless sooner 11 repaid, in whole or in part. No funeral firm, funeral director, under- 12 taker, cemetery or any other person, firm or corporation, shall 13 discharge the obligation established under this section to deposit or 14 place money with a bank, national bank, federal savings bank, federal 15 savings and loan association, savings bank, savings and loan associ- 16 ation, credit union, federal credit union or trust company within the 17 state through a surety bond or other financial instrument unless 18 expressly provided under this section. 19 8. Records required by this section to be maintained and true copies 20 of agreements shall be retained for four years following the provisions 21 of funeral merchandise and services or, if a preneed administrator, for 22 four years after final payment is disbursed pursuant to the agreement. 23 In the event the funds are returned to the person who deposited the 24 money or their representative, such records, including the record of 25 return of funds shall be retained for a period of four years after the 26 sale, transfer, termination, cessation of operation or discontinuance of 27 the funeral. For purposes of this section, records shall include, but 28 not be limited to, a copy of the agreement, a death certificate and a 29 copy of the check or other payment made pursuant to the agreement. 30 Copies of such records shall be made available for inspection and shall 31 be made available during ordinary business hours for copying upon writ- 32 ten request by any state agency regulating the funeral firm, funeral 33 director, undertaker, cemetery or other person, firm or corporation 34 which received such money or enforcing the requirements of this section, 35 provided a complaint, either oral or written, has been received, or an 36 inspector has grounds to believe that serious or repeat violations of 37 this section have occurred. 38 10. For the purposes of [subdivision eleven of] this section, "preneed 39 administrator" means any person, partnership, firm, limited liability 40 company or corporation, which is either domiciled in or doing business 41 in the state of New York, and which has received money under or in 42 connection with an agreement executed pursuant to this section; and 43 "county" shall refer only to a county located within the state of New 44 York. For the purposes of subdivision five of this section, "preneed 45 administrator" shall also include any successor, assignee or transferee 46 of funds held pursuant to this section. 47 12. A preneed administrator operating under this section shall conduct 48 an audit of all of its accounts relating to preneed agreements as of the 49 thirty-first of December of each calendar year. The audit shall: 50 (a) Be performed by a certified public accountant licensed to practice 51 in New York state; 52 (b) Be completed and delivered to the preneed administrator within one 53 hundred twenty days of the end of such calendar year; 54 (c) Verify, by way of a representative sample, that the preneed admin- 55 istrator has a signed copy of the agreement for each account;A. 7777 3 1 (d) Verify, by way of a representative sample, that appropriate income 2 tax reports have been sent by the preneed administrator to the owner of 3 each account; 4 (e) Verify that the investment of all funds for the agreements is in 5 compliance with this section; 6 (f) Verify, by an appropriate sampling method, that the earnings on 7 the investments are being properly applied to each account and that the 8 earnings are credited to each account at least monthly; 9 (g) Express an opinion that the financial statements of the preneed 10 administrator fairly represent the financial condition of the funds 11 received in all material respects, and that all financial information 12 distributed by the preneed administrator to consumers, funeral homes or 13 other parties is accurate; and 14 (h) Verify that the stated yield credited to the account for that 15 fiscal year, as announced by the preneed administrator, is accurate. 16 13. (a) In no event shall the administrative fees charged under a 17 preneed agreement in any calendar year exceed the net income credited to 18 an account for such calendar year; that is, the account balance shall 19 never be reduced in any calendar year because of administrative fees 20 charged against the account. 21 (b) Any administrative fees otherwise payable in relation to preneed 22 agreements which are not paid in any calendar year because of the limi- 23 tations in paragraph (a) of this subdivision shall not be collected in 24 any subsequent calendar year. 25 14. A preneed administrator operating under this section shall, at the 26 end of each calendar year, have all assets valued and presented in 27 accordance with generally accepted accounting principles. 28 § 2. Paragraph (l) of subdivision 1 of section 3450 of the public 29 health law, as amended by chapter 557 of the laws of 2001, is amended to 30 read as follows: 31 (l) has paid, given, has caused to be paid or given or offered to pay 32 or to give to any person a commission or other valuable consideration 33 for the solicitation or procurement, either directly or indirectly, of 34 funeral patronage, or has accepted any consideration (including without 35 limitation a commission, rebate, or discount or direct or indirect price 36 reduction on merchandise from the current value thereof) from any finan- 37 cial institution or trust company, or agent thereof, with whom the 38 funeral director deposits funds paid for funeral services in advance of 39 need pursuant to subdivision one of section four hundred fifty-three of 40 the general business law except that the funeral director may accept, 41 from the financial institution, trust company or agent thereof, up to 42 twenty-five hundredths of one percent of the fee authorized under para- 43 graph (b) of subdivision three of section four hundred fifty-three of 44 the general business law for administrative services provided by the 45 funeral director, or has accepted any consideration (including without 46 limitation a commission or gift) from any insurer or agent thereof, to 47 sell, offer or promote the sale of any policy of insurance payable, 48 expressly or as marketed, at the death of the insured for funeral or 49 burial expenses; 50 § 3. Paragraph (l) of subdivision 1 of section 3450 of the public 51 health law, as amended by chapter 560 of the laws of 1998, is amended to 52 read as follows: 53 (l) has paid, given, has caused to be paid or given or offered to pay 54 or to give to any person a commission or other valuable consideration 55 for the solicitation or procurement, either directly or indirectly, of 56 funeral patronage, or has accepted any consideration (including withoutA. 7777 4 1 limitation a commission, rebate, or discount or direct or indirect price 2 reduction on merchandise from the current value thereof) from any finan- 3 cial institution or trust company, or agent thereof, with whom the 4 funeral director deposits funds paid for funeral services in advance of 5 need pursuant to subdivision one of section four hundred fifty-three of 6 the general business law except that the funeral director may accept, 7 from the financial institution, trust company or agent thereof, up to 8 twenty-five hundredths of one percent of the fee authorized under para- 9 graph (b) of subdivision three of section four hundred fifty-three of 10 the general business law for administrative services provided by the 11 funeral director; 12 § 4. This act shall take effect on the ninetieth day after it shall 13 have become a law, provided that the amendments to paragraph (l) of 14 subdivision 1 of section 3450 of the public health law made by section 15 two of this act shall be subject to the expiration and reversion of such 16 paragraph pursuant to section 6 of chapter 557 of the laws of 2001, as 17 amended, when upon such date the provisions of section three of this act 18 shall take effect.
