News Flash

Texas Court Rules Most Funeral Home Sales Are Cash Advance Items

Consumer Group Sues Big Four for Anti-Competitive Practices

TEXAS DISTRICT COURT RULES MOST FUNERAL HOME SALES ARE CASH ADVANCE ITEMS
El Paso, Texas County Judge Javier Alvarez sent shock waves through the funeral service community by ruling in favor of Plaintiff David Hijar who alleged that several Texas SCI funeral homes violated the Federal Trade Commission’s (FTC) “Funeral Rule” by not treating casket sales as a cash advance item and disclosing the mark-up in prices of caskets to buyers.

The Court ruled that all funeral merchandise and services obtained from a third-party seller, wholesaler or manufacturer qualify as cash advance items. According to the ruling, funeral homes must disclose the price they paid for caskets, memorial booklets, folders/prayer cards, acknowledgment cards, flowers, urns and shipping containers as well as the price they are charging the customer. The same applies to services such as forwarding remains, transportation, cremation, music, cosmetology and processional escorts.

This judge made his ruling despite an FTC representative’s statement that disclosing prices paid by funeral homes to third-party sellers for merchandise and services is not a requirement of the “Funeral Rule."

The Texas Supreme Court recently reversed the lower court's decision. OGR will continue to monitor the implications of this case.

CONSUMER GROUP SUES BIG FOUR FOR ANTI-COMPETITIVE PRACTICES
The Funeral Consumers Alliance (FCA), a consumer funeral service advocacy group, has filed a class action suit in U.S. District Court of Northern California against the three largest funeral home conglomerates and the largest casket manufacturer in the United States.

The lawsuit alleges that Service Corporation International (SCI), the Alderwoods Group, Stewart Enterprises and Hillenbrand Industries, Inc., parent company of Batesville Casket Company, actively inhibited competition with casket discounters through “their group boycott, disparagement and coordinated pricing campaigns.”

According to the plaintiff, the defendants engaged in illegal group boycotts of third-party sellers when: 1) leading casket manufacturers set a policy to restrict sales of caskets to licensed funeral directors and thereby excluded casket discounters from selling the same caskets; 2) funeral home owners threatened to boycott casket manufacturers who sold directly to third party sellers; and 3) funeral homes conspired to artificially inflate the prices consumers paid for caskets.

The lawsuit named several “co-conspirators” who alleged engaged in price fixing practices. The National Funeral Directors Association was specifically cited for presenting anti-competitive information during its convention sessions. Federated Funeral Directors of America was also named because they distribute reports on average funeral home revenues, sales and costs. The plaintiffs contend that these actions established standards by which funeral homes set their prices.

November 2005
The U.S. District Court in Northern California recently granted defendants’ motion to transfer venue of the huge litigation, In Re Funeral Consumers Antitrust Litigation, to the federal district court in the Southern District of Texas. OGR will continue to monitor this situation.