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06/30/2017

Important Funeral Related Law Changes to Ohio Revised Code Chapter 4717

Effective 90 Days after Governor’s signature

The OFDA Legislative Committee, along with input from the State Board of Embalmers and Funeral Directors (hereinafter “the Board”) and other key entities collaborated with State Representative Tim Schaffer to draft legislation that better protects consumers from preneed funeral contract fraud. H.B. 157 was introduced on March 23, 2017 and later amended into   H.B. 49 (State Budget Bill). The following safeguards that offer additional consumer protections, as well as several other substantive changes to Chapter 4717 of the Ohio Revised Code will become effective 90 days after Governor Kasich’s signs H.B. 49. The effective date of these changes to Ohio law should be at the end of this September or early October.

  1. Embalming Definition: Section 4717.01(A) provides a more detailed definition of embalming. 
  1. Composition of the State Board: Section 4717.02(A) requires that of the five funeral directors on the State Board, only four of them need to be a licensed embalmer.  Currently, all five must have dual licenses.  In addition, the Section also requires that one funeral director licensee hold a crematory operator’s permit.  
  1. Holding Cremated Remains for Payment: Sections 4717.04(A)(9)(e) and 4717.13(a)(11) makes clear that withholding cremated remains from the person who is entitled to them is a violation of Chapter 4717. 
  1. Annual Reports: Section 4717.4(A)(9)(h) specifies that if a funeral home mails its annual preneed report to the Board with a postmark that is dated on or before the due date, the funeral home has made a timely filing.  This will soften the current requirement to have the report in the hands of the Board by the due date.  
  1. Unclaimed Cremated Remains in Closed Funeral Home: Section 4717.04(A)(11) has been amended to allow the Board to dispose of unclaimed cremated remains that are held or stored at a funeral home or crematory that has been closed.  
  1. Crematory Operator’s Permit: New Section 4717.051 requires crematory operators to obtain a permit from the state to operate a crematory.  Among the requirements for a permit is the successful completion by the applicant of a crematory operation certification program approved by the Board.  
  1. Elimination of Funeral Home Name Requirement: Section 4717.06(B) is revised to eliminate the requirement that a funeral home contain the name of the funeral director who is actually in charge and ultimately responsible (“AIC/UR”).  This will allow funeral homes to use geographical references or fictional names for funeral homes.  There is a requirement that the name of the funeral director who is holding the funeral home’s license must be conspicuously displayed immediately on the outside or inside of the primary entrance to the funeral home that is used by the public.  The same requirement would apply to embalming facilities and crematories.   
  1. Continuing Education Requirements: Section 4717.09 is revised to clarify that a courtesy card permit holder is not required to comply with continuing education requirements.  In addition, a new division (D) has been added which requires a crematory operator to maintain an active crematory operator’s certification in order to renew his or her permit.  
  1. Change of Ownership: Section 4717.11 is modified to address the change of ownership, location, or AIC/UR for a funeral home, embalming facility, and crematory.  The statute requires the person who is licensed to operate those facilities to surrender the license within thirty (30) days whenever there is a change in location, AIC/UR, or ownership.  In addition, the new licensee that operates the facility is required to apply for a new license within thirty (30) days after the change and may continue to operate the funeral home unless the Board denies the license.  
  1. Disposition within Thirty (30) Days: A new division (12) has been added to Section 4717.13(A) to require a funeral home to complete final disposition of a dead human body within thirty (30) days after the funeral home has taken custody of the body.  
  1. Notice of Closing of Funeral Home: A new division (D) has been added to Section 4717.13 to require the license holder for a funeral home that is closed to send written notice to each preneed funeral contract purchaser of the closing of the funeral home.  That notice shall be sent within thirty (30) days of the funeral home closing.  This new provision also requires that the funeral home transfer all preneed contracts to a successor funeral home, or, if a successor funeral home is not designated, the section gives the Board the power to make the determination of the successor funeral home to receive the preneed contracts.  
  1. Requirements for Funeral Home Name: Section 4717.14(A)(10) has been amended to impose restrictions on a funeral home’s name.  While a funeral home is no longer required to be named after the licensee who is AIC/UR, there is a prohibition against using in the funeral home name the surname of an individual who is not directly, actively or presently associated with the funeral home unless that surname has been previously and continuously used by the funeral home.  
  1. Disposition of Unclaimed Cremated Remains: Section 4717.27(C) is amended to allow funeral homes and crematories to dispose of unclaimed cremated remains by scattering them or disposing them in any lawful manner.  Currently, unclaimed cremated remains may only be disposed of in a grave, crypt or niche.  This provision would allow greater flexibility in the disposition of unclaimed cremated remains.  
  1. Immunity Provisions: Section 4717.30 has been revised to clarify that the immunity provided to crematory operators extends to the crematory facility, funeral director or funeral homes involved in the disposition. 
  1. Disclosures in Preneed Contracts: Section 4717.32 contains the list of written disclosures that must be made in preneed contracts to consumers.  As discussed below, proposed changes to the preneed law include the creation of a consumer guarantee fund, a requirement that preneed funds be paid directly to the trustee or insurance company, and an option for funeral homes to retain up to 10% of preneed funds as an initial service fee for guaranteed price contracts.  This section now requires disclosures in the preneed contract for each one of those items.  
  1. Direct Payment to Trustee/Insurance Company: Amended Sections 4717.35 and 4717.36 (C) now require that all payments from a preneed contract purchaser be paid directly to the insurance company or trustee that will hold the funds for the preneed contract.  No monies may be paid directly to the funeral home.  The purpose of the change is to reduce the risk of funeral homes failing to purchase an insurance policy or deposit the funds into a trust.  
  1. 10% Service Fee: Section 4717.36(B) allows a funeral home that sells a guaranteed price preneed contract to retain up to 10% of the prepaid funds as an initial service fee.  Currently, the preneed statute allows a funeral home to take a 10% transfer or cancellation fee if a guaranteed preneed contract is transferred or cancelled.  This provision would allow the funeral home to take that fee upfront.  If a funeral home does take an initial service fee, it may not take a transfer or cancellation fee if the contract is later moved to another funeral home or cancelled by the preneed purchaser.  
  1. Preneed Guarantee Fund: New Section 4717.41 has been added to the preneed law to establish a preneed guarantee fund.  Each time a funeral home sells a preneed contract other than one funded by the assignment of an existing insurance policy, a $10 fee shall  be collected and remitted to the state to fund the preneed guarantee fund.  Part of the fee will also be used to cover the cost of administering the fund.  The fund will be segregated from the State General Fund and its sole purpose is to reimburse consumers in the case of an insolvency or embezzlement of preneed funds by a funeral home.  If the fund reaches $2 million, the $10 fee will be reduced to $5 for the following fiscal year.  Anytime that the fund reaches $3 million, the fee will be suspended until the fund falls below the $3 million threshold.  The Board shall adopt rules governing the payment of monies from the funds. 

H.B. 49 in its entirety is over 5,000 pages. The funeral related changes to the Ohio Revised Code can be found in Chapter 4717.