PROVIDENCE -- Two bills designed to safeguard funeral home customers have been filed in the General Assembly in response, largely, to a former Woonsocket funeral home director convicted of embezzling nearly $437,971 in prepaid funeral contracts from more than 100 families.
The pair of bills, introduced this week by several Blackstone Valley representatives, have been referred to the House Corporations Committee. One would establish a funeral services trust account to protect consumers in the event a funeral home defaults on what the funeral industry terms "preneed" contracts, and the other would establish at least twice yearly inspections of the records and accounts kept by businesses regarding the agreements.
Rep. Todd Brien, D-Woonsocket, says that the bills will go a long way in protecting people who have entrusted funds to unscrupulous funeral home businesses from fraud or mismanagement. He pointed to the case of Paul Menoche, former director of a Providence Street funeral home, who embezzled 118 families out of their prepaid burial payments.
"People prearrange funerals to provide themselves and their families some peace of mind in knowing that when the time comes, everything will be taken care of properly," Brien said in a news release. "What happened with Menoche showed us that there needs to be a system in place to guarantee them that security."
Menoche, 53, pleaded no contest in August to one count each of failing to maintain a funeral escrow account, operating a funeral home without an embalmer's license and embezzlement over $100. He is serving four years of a 15-year sentence at the Adult Correctional Institutions.
In September, a Superior Court judge granted Menoche, who had no prior criminal record, permission to enter the state's work-release program while serving sentence. He's due back in court for a restitution hearing Feb. 4, according to court records, to determine the amount of money he is able to pay to his victims and how it will be distributed.
State law requires that funeral home businesses put all the money for any preneed contracts in an escrow account. Menoche did not do this, investigators said.
One of the bills introduced this week would set up a trust account funded by a $10 fee on every funeral, burial or disposition performed by a funeral home business in the state. The account would be capped at $300,000. If a funeral home defaults on a prepaid contract, a customer would be protected.
Brien said that if the account ever reached its capped amount, the state would stop collecting the fees unless it went back down, according to the legislation.
Securing funeral and burial services before someone dies is a big business, more than $10 billion a year across the country. According to the National Funeral Directors Association statistics from 2000. Roughly one-third of the nearly 2 million funerals each year nationally were planned and partially prepaid.
The motto of the nonprofit Funeral Consumers Alliance, based in South Burlington, Vt., for making funeral arrangements is, "It always pays to plan ahead. It rarely pays to pay ahead."
Lisa Carlson, executive director of the watchdog group that monitors the industry, said yesterday that a glut of funeral homes leads all too often to embezzled prepaid funds. The death rate in Rhode Island, she said, could support 38 full-time mortuaries if they had one funeral a day, five days a week. But there are currently 127, which greatly increasing competition among funeral businesses, according to Carlson.
"There are far too many funeral homes for the death rate ... so they're fighting over dead bodies," she said. "Funeral home inflation is far exceeding funeral home income."
A similar law, with a smaller account cap, was enacted in Vermont approximately three years ago in response to a scandal involving a funeral home in St. Johnsbury, which is in the northeastern part of that state.
The embezzled prepaid funds at the Menoche Funeral Home came to light when the business, which had been shuttered by a bank foreclosure in June 2001, was bought at a tax sale auction by Francis Cartier some four months later.
Woonsocket police discovered soon thereafter that there were many outstanding prepaid funeral contracts that were not part of Menoche's tax sale deal, which eventually led to his arrest on criminal charges. The police held a packed public hearing, attended by then-Atty. Gen. Sheldon Whitehouse, in the high school in September 2001 to allay concerns of people who had invested in funeral plans at Menoche's business.
Cartier, who reopened the Providence Street facility under the name Cartier Memorial Funeral Home, pledges to honor any customer's prepaid contract made previously with Menoche.
The Federal Trade Commission set up a Funeral Rule in 1984, which stipulates that a violating business owner can be subject to penalties of up to $10,000 per violation of the industry's rules. All funeral providers must comply for all preneed contracts entered into afer the federal mandate went into effect in 1984. Menoche went into business in 1986.
