Death Care Industry: Regulation Varies across States and by	 
Industry Segment (25-AUG-03, GAO-03-757).			 
                                                                 
Media reports of desecration of graves and human remains and	 
other types of mismanagement at cemeteries and crematories have  
inspired a debate regarding whether the federal government should
take on a greater role in regulating the death care industry,	 
primarily funeral homes, crematories, cemeteries, pre-need sales 
of funeral plans, and third party sales of funeral goods. The	 
federal government has a limited role in regulating the death	 
care industry, as most regulatory responsibilities are handled at
the state level. Because of this, federal policymakers have	 
expressed an interest in understanding the range of practices	 
that are used by the states to regulate the various segments of  
the death care industry. Based on surveys of state regulators	 
covering the various segments of the death care industry; and	 
visits to the states of California, Florida, Georgia, Hawaii, New
York, and Texas; this report provides information on (1) the	 
structures used by states for regulating the death care industry,
and (2) the mechanisms used by states for enforcing their	 
regulations covering the industry. The report also provides	 
information on the resources available to help consumers make	 
informed choices regarding death care transactions. Details on	 
the results of GAO's surveys of the states can be found at:	 
http://www.gao.gov/cgi-bin/ getrpt?GAO-03-831SP.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-757 					        
    ACCNO:   A08203						        
  TITLE:     Death Care Industry: Regulation Varies across States and 
by Industry Segment						 
     DATE:   08/25/2003 
  SUBJECT:   Building inspection				 
	     Crimes or offenses 				 
	     Regulation 					 
	     State governments					 
	     Surveys						 
	     Cemeteries 					 
	     Deceased persons					 

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GAO-03-757

Report to Congressional Requesters

United States General Accounting Office

GAO

August 2003 DEATH CARE INDUSTRY

Regulation Varies across States and by Industry Segment

GAO- 03- 757

GAO*s research shows that states vary in their approach to regulating the
various segments of the death care industry. A majority of states have
more than one state organization that is responsible for regulating all or
most of the industry segments, whereas fewer states rely on one state
organization for regulating the entire death care industry.

States also vary in the mechanisms they have and use to enforce
regulations covering the death care industry and protect consumers. These
enforcement mechanisms include licensing or registering businesses and
practitioners, inspecting facilities, and taking enforcement actions
against those businesses or practitioners that violate state rules or
regulations. The majority of states regulate funeral homes, crematories,
cemeteries, and

pre- need sales of funeral plans, although the specific licensing
requirements vary across the states. Fewer states regulate third party
sales of funeral goods. Further, even in those states that regulate each
industry segment, not all businesses or practitioners may be subject to
licensing or regulation.

Most states also require inspections of funeral homes and crematories, but
fewer states require inspections of cemeteries. In most of these states,
the inspections are conducted annually. Information obtained from the six
case

study states show that these inspections tend to focus on such things as
the proper posting of licenses, the availability of price lists, and the
cleanliness and adequacy of equipment and the facilities.

Since January 1, 2000, a majority of states have taken enforcement actions
against funeral homes, funeral directors, or embalmers for violations of a
variety of state rules or regulations. Fewer states, however, have taken
such actions against the other industry segments.

States* Regulation of the Various Segments of the Death Care Industry

Source: Results from GAO's Web based surveys.

0 10 20 30 40 50 Funeral

homes

Number of states responding to each of GAO's Web based surveys. 48 45 42
42 45

36 44 34

45 16

Total number of states

Number of responding states that stated they regulate the death care
industry segment.

Pre- need sales of funeral plans a Crematories Cemeteries b Third party
sales

of funeral goods

a GAO*s survey focused on sales of pre- need funeral plans funded through
trusts, not those funded through insurance. b Not all cemeteries are
regulated in these states, though. For example, cemeteries operated by
municipalities or religious organizations are exempt from regulation in
many states.

Media reports of desecration of graves and human remains and other types
of mismanagement at cemeteries and crematories have inspired a debate
regarding whether the federal government should take on a greater role in
regulating the death care industry, primarily funeral homes, crematories,
cemeteries, pre- need sales of funeral plans, and third party sales of
funeral goods. The federal government has a limited role in regulating the
death care industry, as most regulatory responsibilities are handled at
the state level. Because of this, federal

policymakers have expressed an interest in understanding the range of
practices that are used by the states to regulate the various segments of
the death care industry.

Based on surveys of state regulators covering the various segments of the
death care industry; and visits to the states of California, Florida,
Georgia, Hawaii, New York, and Texas; this report provides information on
(1) the structures used by states for

regulating the death care industry, and (2) the mechanisms used by states
for enforcing their regulations covering the industry. The report also
provides information on the resources available to help consumers make
informed choices regarding death care transactions. Details on the results
of GAO*s surveys of the

states can be found at: http:// www. gao. gov/ cgibin/ getrpt? GAO- 03-
831SP.

www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 757. To view the full product,
including the scope and methodology, click on the link above. For more
information, contact Laurie Ekstrand at (202) 512- 8777 or ekstrandl@ gao.
gov. Highlights of GAO- 03- 757, a report to

congressional requesters

August 2003

DEATH CARE INDUSTRY

Regulation Varies across States and by Industry Segment

Page i GAO- 03- 757 Death Care Industry Letter 1 Background 2 Results in
Brief 5 Appendix I Objectives, Scope, and Methodology 16 Objectives 16
Scope and Methodology 16 Appendix II Resources Available to Assist
Consumers in Death

Care Transactions 20 Resources Available from FTC 20 Resources Available
from Death Care Industry Sources 20 Resources Available from Consumer
Associations 21 Consumer Protection Information Offered by States 21
Appendix III California*s Regulation of the Death Care Industry 26

Regulatory Structure 26 Enforcement Mechanisms 26 Appendix IV Florida*s
Regulation of the Death Care Industry 30 Regulatory Structure 30
Enforcement Mechanisms 30 Appendix V Georgia*s Regulation of the Death
Care Industry 34 Regulatory Structure 34 Enforcement Mechanisms 34
Appendix VI Hawaii*s Regulation of the Death Care Industry 38 Regulatory
Structure 38 Enforcement Mechanisms 38 Appendix VII New York*s Regulation
of the Death Care Industry 41 Regulatory Structure 41 Enforcement
Mechanisms 41 Contents

Page ii GAO- 03- 757 Death Care Industry Appendix VIII Texas*s Regulation
of the Death Care Industry 44 Regulatory Structure 44 Enforcement
Mechanisms 44 Appendix IX Comparison of Regulation of the Death Care

Industry across the 6 Case Study States 48

Appendix X Consolidation of the Death Care Industry and the Interstate
Transit of Human Remains 58

Consolidation of the Death Care Industry 58 Interstate Transit of Human
Remains 59 Appendix XI GAO Contacts and Staff Acknowledgments 60 GAO
Contacts 60 Staff Acknowledgments 60 Glossary 61

Tables

Table 1: Summary of Surveyed States* Licensing Requirements for Funeral
Homes, Funeral Directors, and Embalmers 7 Table 2: Summary of Surveyed
States* Licensing Requirements for

Crematories and Crematory Operators 9 Table 3: Summary of Surveyed States*
Licensing Requirements for Cemeteries and Cemetery Operators 10 Table 4:
Summary of Surveyed States* Regulation and Registration or Licensing
Requirements Regarding Sales of Pre- need Funeral Plans 12 Table 5:
Summary of Surveyed States* Regulation and Licensing

Requirements for Third Party Sales of Funeral Goods 13 Table 6: Listing of
State Regulatory Agencies, Death Care Industry Associations, and Consumer
Associations We Met with in the 6 States Visited 18 Table 7: Summary of
Consumer Information and Protections Offered by the States 22 Table 8:
Comparison of Requirements for Funeral Homes across the 6 Case Study
States 48

Page iii GAO- 03- 757 Death Care Industry Table 9: Comparison of
Requirements for Crematories across the 6 Case Study States 50 Table 10:
Comparison of Requirements for Cemeteries across the

6 Case Study States 52 Table 11: Comparison of Requirements for Pre- Need
Funeral Plan Sales Funded by Trusts in the 6 Case Study States 54 Table
12: Comparison of Requirements for Third Party Sales of Funeral Goods
across the 6 Case Study States 57 Figures

Figure 1: State and Federal Governments* Roles in Regulating the Death
Care Industry 4 Figure 2: Mechanisms States Use to Enforce Regulations
Pertaining

to Death Care Industry Segments 6 Abbreviations

FTC Federal Trade Commission NFDA National Funeral Directors Association

This is a work of the U. S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

Page 1 GAO- 03- 757 Death Care Industry August 25, 2003 The Honorable
Christopher J. Dodd

United States Senate The Honorable Mark A. Foley House of Representatives

Media reports of desecration of graves and human remains and other types
of mismanagement at cemeteries and crematories have inspired a debate
regarding whether the federal government should take on a greater role in

regulating the death care industry, that is, the array of providers of
funeral and cemetery goods and services, such as funeral directors,
embalmers, crematory operators, cemetery operators, sellers of pre- need
funeral plans, and third party sellers of funeral goods. 1 In November
2002, bills were introduced in the 107th Congress that, if enacted, would
have, among other things (1) provided federal funding to states that agree
to comply with newly established federal standards and requirements for
regulating various segments of the death care industry and (2) expanded
the Federal

Trade Commission*s (FTC) role in protecting consumers in arranging death
care transactions. 2 Though these bills did not pass, policymakers
continue to express an

interest in the range of practices states use to regulate the various
segments of the death care industry. This report responds to your requests
that we provide information on the regulation of the industry.
Specifically, we are reporting on (1) the structures states use for
regulating the death care industry and (2) the mechanisms states use for
enforcing their regulations pertaining to the death care industry. We are
also providing information on resources available to help consumers make
informed choices regarding death care transactions (see app. II), as well
as consolidation of the death care industry and the interstate nature of
death care transactions (see app. X).

1 Third party sellers of funeral goods refer primarily to retailers that
are not affiliated with a funeral home or cemetery that sell caskets and
other funeral- related products. 2 Federal Death Care Inspection and
Disclosure Act, S. 3168 and H. R. 5743, 107th Cong. (2002).

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 757 Death Care Industry We gathered information to address
the two primary objectives using a two- pronged approach. First, we
developed five Web based surveys to

gather information from state regulatory officials covering each of the
five death care industry segments. 3 Second, we visited and collected more
specific information from state regulatory officials, death care industry
officials, and consumer association representatives in six states*
California, Florida, Georgia, Hawaii, New York, and Texas. California,
Florida, Georgia, and Hawaii were selected because of media reports of
desecration of graves and human remains and other types of mismanagement
at cemeteries and crematories in these states. New York

and Texas were selected because they represent states that have
comparatively large populations. We will refer to these six states
throughout the report as the *case study states.*

We conducted our review between July 2002 and July 2003 in accordance with
generally accepted government auditing standards. Appendix I describes our
objectives, scope, and methodology in greater detail.

While accurate data are not readily available on how much consumers spend
each year on death care transactions, we do know that it is substantial.
According to the National Center for Health Statistics, there were about
2.4 million deaths registered in the United States in 2000* the most
recent year for which complete data are available. To put that in
perspective, the North American Funeral Directors Association reports that
of the 2.4 million deaths in 2000, approximately 75 percent resulted in
earth burial or entombment and 25 percent resulted in cremation. The

Association also reports that based on a 2001 survey, the average adult
funeral costs $5,180. Multiplying this figure by 1,800,000 (75 percent of
the 2.4 million deaths) provides an estimate of over $9.3 billion spent
each year on funeral costs alone in the United States. Costs for the
estimated 25 percent of deaths that resulted in cremations would be added
to that

cost figure, but data on cremation costs were not available. The death
care industry has been undergoing a transformation. According to AARP
(formerly known as the American Association of Retired Persons), the death
care industry has historically been fragmented, with limited overlap
between the funeral and cemetery segments of the

3 We did not independently verify the accuracy or completeness of the
responses to the Web based surveys. Background

Page 3 GAO- 03- 757 Death Care Industry industry. 4 Today, such
distinctions are diminishing as the death care industry is consolidating.
Increasingly, funeral directors provide goods and

services once exclusive to cemetery operators and similarly, cemetery
operators sell items that were once exclusive to the funeral industry. In
addition, according to officials within the death care industry, there was
increased corporate ownership of local funeral homes and cemeteries in the
1990s, but that trend has reversed in recent years.

AARP attributes much of the change in the death care industry in recent
years to the growth of pre- need sales of funeral and cemetery goods. In
the past, when nearly all funerals and burials were arranged upon death
and survivors went to their local funeral homes and cemeteries at the time
of need, comparatively little competition existed within the industry.
Today, a growing number of consumers who purchase funeral and cemetery
goods and services have shopped around in advance.

Figure 1 shows that the federal government has a limited role in
regulating the death care industry and that most regulatory
responsibilities regarding the death care industry are handled at the
state level. According to FTC*s Funeral Rule, any business that sells or
offers to sell both funeral goods and funeral services to the public must
comply with the Funeral Rule. The Funeral Rule specifies, among other
things, that consumers are entitled to price information about funeral
goods and services before they purchase

them. Thus, the Funeral Rule requires funeral homes and sellers of both
pre- need and at- need funeral plans to provide the consumer, at the
beginning of the discussion about arrangements for funeral goods and
services, a general price list that can be used for comparative shopping,
if the consumer so wishes. Since the Funeral Rule only applies to
businesses

providing both funeral goods and services, it generally does not apply to
crematories, cemeteries, or third party sales of funeral goods since these
businesses usually provide only merchandise or only services. Aside from
FTC*s Funeral Rule, there is no regulation that specifically addresses the
marketing practices of the death care industry at the federal level.

4 A typical funeral includes a combination of goods (casket and outer
burial container) and services (care of the body, transportation, and use
of facilities). A burial typically includes both goods (burial plot and
marker) and services (opening and closing of the grave and perpetual
care).

Page 4 GAO- 03- 757 Death Care Industry Figure 1: State and Federal
Governments* Roles in Regulating the Death Care Industry

a Since the Funeral Rule only applies to businesses providing both funeral
goods and services, it generally does not apply to crematories,
cemeteries, or third party sales of funeral goods.

Consumer associations, death care industry associations, and state
regulators have divergent views on whether the federal government should
take on a greater role in regulating the death care industry. While
consumer associations generally favor an enhanced federal role,
representatives of the death care industry generally do not. Support among
state regulators for an enhanced federal role is mixed. Complaint data
shed little light on this debate. In an earlier report, 5 we found that
comprehensive information on consumer complaints that would indicate the
overall nature and extent of problems that consumers experience involving
the death care industry was not available. While we were able to obtain
some complaint data involving the death care industry from two

organizations, the data were not comprehensive because (1) complaint data
are not systematically gathered within states or across the states, (2)
there is no central repository for death care industry complaint data, (3)
not all consumers who experience problems in their death care transactions
file complaints, and (4) some consumers may file the same complaint with
more than one organization. Nonetheless, the seriousness

of the issues involved have prompted some policymakers to consider whether
the federal government should take on a greater role in regulating the
death care industry.

5 U. S. General Accounting Office, Funeral- Related Industries: Complaints
and State Laws Vary, and FTC Could Better Manage the Funeral Rule, GAO/
GGD- 99- 156 (Washington, D. C.: September 1999).

Source: GAO. Funeral

homes Funeral homes a

Cemeteries Crematories

Federal regulation

State regulation

Death care industry segments

Third party sales of funeral goods Pre- need

sales of funeral plans

Pre- need sales of funeral plans a

Page 5 GAO- 03- 757 Death Care Industry States vary in their approach to
regulating the various segments of the death care industry. Twenty- nine
states have more than 1 state

organization* such as a state agency, bureau, or board* that are
responsible for regulating all or most of the five death care industry
segments, whereas 21 states rely on 1 state organization for regulating
the death care industry. For example, in Florida, a board within the
Department of Business and Professional Regulation and a board within the
Department of Financial Services are responsible for regulating segments
of the death care industry. In contrast, California has a bureau within
the Department of Consumer Affairs that regulates the death care industry.
Further, in some states, the state regulatory organization focuses solely
on the death care industry, whereas in other states, organizations also
have regulatory responsibilities for other industries. For example, the
Texas Funeral Service Commission focuses exclusively on regulating death
care- related businesses, whereas Hawaii*s Department of Health*s
Sanitation Branch regulates some funeral homes but also regulates food
preparation industries and other businesses.

States also vary in the mechanisms they have and use to enforce
regulations covering the various segments of the death care industry. As
can be seen in figure 2, the enforcement mechanisms used by states to
regulate the death care industry and protect consumers include licensing
or registering businesses and practitioners, inspecting facilities, and
taking enforcement actions against those individuals or businesses that
violate state rules or regulations. The sections that follow present a
summary of states* enforcement mechanisms, segregated by each of the 5
death care industry segments. (More detailed information on the 6 case
study states* regulation of the separate death care industry segments can
be found in appendixes III through IX.) Results in Brief

Structure for Regulating the Death Care Industry Varies across States

Mechanisms for Enforcing Regulations Covering the Death Care Industry Also
Vary across States

Page 6 GAO- 03- 757 Death Care Industry Figure 2: Mechanisms States Use to
Enforce Regulations Pertaining to Death Care Industry Segments

Results of our surveys of state regulators covering the various segments
of the death care industry show that funeral homes are regulated and
licensed more than any other segment of the death care industry. Table 1
shows that of the 48 states that responded to our survey regarding funeral
homes, 45 reported that they regulate funeral homes. Of the 43 states that
responded to this issue, all but 1 state regulate all funeral homes. 6 The
majority of states that regulate funeral homes also require funeral homes,
funeral directors, and embalmers to be licensed, although specific
licensing requirements vary. Our work in the 6 case study states

reflect the same variation in licensing requirements for funeral homes,
funeral directors, and embalmers found in our survey. For example,
California, Florida, Georgia, and Texas require all funeral homes, funeral
directors, and embalmers to hold a license to operate in the state. By
contrast, Hawaii requires a license only for embalmers and for those
funeral homes that perform embalmings, but not for funeral directors or
for funeral homes that do not embalm; and in New York, funeral directors
are required to be licensed, but there is no separate licensing
requirement for embalmers or funeral homes. 7 6 In Nebraska, all funeral
homes are licensed and regulated except those on designated

tribal reservations. 7 New York State used to license embalmers separately
from funeral directors, but this practice ceased in the 1960s. Funeral
Homes, Funeral

Directors, and Embalmers

Page 7 GAO- 03- 757 Death Care Industry Table 1: Summary of Surveyed
States* Licensing Requirements for Funeral Homes, Funeral Directors, and
Embalmers

Regulates funeral homes

Requires all funeral homes

to be licensed Requires all

funeral directors to be licensed

Requires all embalmers to be

licensed

Total 45 of 48 responders 42 of 43

responders 42 of 43 responders 41 of 42

responders Source: Information obtained from answers to GAO*s Web based
survey of all 50 states.

While most of the states that require inspections of funeral homes conduct
those inspections at least annually, the number of inspectors who conduct
the inspections varies across the states. Results from our survey of
funeral- related issues show that 37 of the 43 responding states require
funeral homes to be inspected, with most of these states requiring funeral
homes to be inspected at least once a year. Based on the information

obtained from our case study states, these inspections tend to focus on
such things as whether (1) equipment and supplies are adequate, (2)
embalming rooms are clean and properly ventilated, (3) licenses are
current and conspicuously displayed, and (4) price lists are readily
available. Among the responding states, the number of inspectors that
conduct inspections of funeral homes ranges from a low of 1 to a high of
17, with most reporting they have 1 or 2 inspectors. Further, the percent
of time inspectors devote to inspecting funeral homes varies, with
inspectors

in half of the responding states devoting 70 percent or less of their time
to such inspections, while inspectors in the remaining half of the states
spend 80 percent or more of their time inspecting funeral homes. The
variation in requirements for funeral home inspections among the 6 case
study states was similar to the variation reflected in our survey. For
example, Florida and Georgia require all funeral homes to be inspected at
least once a year, whereas New York has no specific requirement for
funeral homes to be inspected, but inspections are conducted on a
*recurrent basis.*

Since January 1, 2000, a majority of the states have taken enforcement
actions against funeral homes, funeral directors, or embalmers for
violations of state rules or regulations. Of the 42 states that responded
to this survey issue, 40 had taken enforcement actions, ranging from
issuing notices of noncompliance, to revoking licenses, and prosecuting
violators. It must be noted that a low number of enforcement actions taken
by a state may not be indicative of lax enforcement efforts, but rather
could be reflective of a general lack of problems involving the death care
industry in that state.

Page 8 GAO- 03- 757 Death Care Industry Consistent with results obtained
through our funeral home survey, 5 of the 6 case study states have taken a
range of enforcement actions against

funeral homes, funeral directors, or embalmers for violations of state
rules or regulations since January 1, 2000. For example, Florida has taken
a number of actions, including (1) issuing a notice of noncompliance to a
funeral director for failing to properly display casket prices and (2)
placing a funeral director on probation, levying a fine against him, and
making him

pass a state examination on state laws and rules after he did not properly
maintain a body so that it would be suitable for viewing.

See appendixes III through IX for more detailed information on the 6 case
study states* regulation of funeral homes, funeral directors, and
embalmers. To view the survey covering funeral homes, funeral directors,
and embalmers and the responding states* answers to the survey questions,
go to http:// www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 831SP.

A majority of states regulate crematories and require crematories to be
licensed to operate in their state, but fewer require crematory operators
to be licensed. Specifically, as shown in table 2, of the 45 states
responding to our survey covering crematories and crematory operators, 36
regulate crematories, and 29 regulate all crematories in the state. 8
Further, of the

35 states that responded to this issue, 27 require all crematories to be
licensed to operate within their state, whereas only 16 of these states
require all crematory operators to be licensed. Our work in the 6 case
study states exhibits the same variation in licensing requirements and
practices for crematories and crematory operators. For example, California
requires all crematories and crematory operators to be licensed to operate
in the state. In contrast, Hawaii and New York do not license either
crematories or crematory operators.

8 Crematories at state medical schools, not- for- profit crematories, and
crematories run by religious groups or municipalities are among the
crematories that are exempt from some states* regulations. Crematories and
Crematory

Operators

Page 9 GAO- 03- 757 Death Care Industry Table 2: Summary of Surveyed
States* Licensing Requirements for Crematories and Crematory Operators

Regulates crematories Requires all crematories

to be licensed Requires all crematory operators to be licensed

Total 36 of 45 responders 27 of 35 responders 16 of 35 responders Source:
Information obtained from answers to GAO*s Web based survey of all 50
states.

Similar to funeral homes, most states require inspections of crematories
at least annually. Of the 36 states that responded to this issue in our
survey, 33 require crematories to be inspected, and most of these states
require crematories to be inspected at least once a year. The number of
inspectors who conduct those inspections and the percent of their time
devoted to inspections of crematories, however, vary from state to state.
Among the

responding states, a majority reported they have 1 or 2 inspectors who
inspect crematories and, in most of the responding states, these
inspectors devote 10 percent or less of their time to inspections of
crematories. The requirements for crematory inspections across the 6 case
study states also vary. For example, California, Florida, Georgia, 9 and
New York require

inspections of crematories at least once a year. In contrast, neither
Hawaii nor Texas 10 requires inspections of crematories.

Since January 1, 2000, only a minority of the states that regulate
crematories have taken enforcement actions against crematories or
crematory operators for violations of state rules or regulations. Of the
32 states that responded to this survey question, 13 have taken a variety
of enforcement actions for violations, ranging from issuing notices of
noncompliance, to revoking licenses and prosecution. Among the 6 case
study states, California, Florida, and New York have taken a range of

9 In May 2002, subsequent to the discovery of decomposed bodies at the
Tri- State Crematory in Noble, Georgia, the state amended the definition
of the term *crematory* to cover more facilities, including the Tri- State
Crematory. Prior to this amendment, crematory was

defined as *any place that is owned by a funeral director or funeral
establishment where cremation is performed, and which is open to the
public other than a hospital, clinic, laboratory, or other facility
authorized by the Department of Human Resources for such purposes.*
Because Tri- State Crematory was not owned by a funeral director or
funeral establishment, it was not covered by the former definition of
crematory, and thus not subject to regulation.

10 Under a new law, effective September 1, 2003, all licensed crematories
will be required to be inspected at least once every 2 years by staff of
the Texas Funeral Service Commission. If the Commission finds a violation,
the crematory is required to be inspected annually until the Commission
determines the crematory is free of violations.

Page 10 GAO- 03- 757 Death Care Industry enforcement actions for
violations of state rules or regulations, whereas Georgia, Hawaii, and
Texas have not. For example, California placed a

facility on probation for failing to properly inter or dispose of cremated
remains.

See appendixes III through IX for more detailed information on the 6 case
study states* regulation of crematories and crematory operators. To view
the survey covering crematories and crematory operators and the responding
states* answers to the survey questions, go to http:// www. gao. gov/ cgi-
bin/ getrpt? GAO- 03- 831SP.

Most states regulate cemeteries, although not all cemeteries in those
states are subject to regulation. 11 Specifically, as shown in table 3, of
the 44 states that responded to our survey covering cemeteries and
cemetery operators, 34 regulate cemeteries, and 27 of these states noted
that not all cemeteries are subject to regulation. About half of the
states that regulate cemeteries require at least some cemetery operators
to be licensed,

although the licensing requirements vary across the states. Of the 33
states responding to this issue, 23 said that at least some cemeteries
must be licensed, whereas only 16 of these states require at least some
cemetery operators to be licensed. Our work in the 6 case study states
shows similar results.

Table 3: Summary of Surveyed States* Licensing Requirements for Cemeteries
and Cemetery Operators Regulates at least

some cemeteries Requires at least

some cemeteries to be licensed

Requires at least some cemetery operators to be

licensed

Total 34 of 44 responders 23 of 33 responders 16 of 33 responders Source:
Information obtained from answers to GAO*s Web based survey of all 50
states.

Cemetery inspection requirements also vary across the states. Of the 33
states that responded to this issue in our survey, 14 require cemeteries
to be inspected and, among these states, 6 require inspections of
cemeteries at least every 2 years. The number of inspectors who inspect
cemeteries and the percent of their time devoted to these inspections also
vary across the states. Among the responding states, a majority reported
they have 3 or less inspectors who inspect cemeteries and, in most of the

11 For example, cemeteries that are operated by municipalities or by
religious organizations are exempt from regulation in many states.
Cemeteries and Cemetery

Operators

Page 11 GAO- 03- 757 Death Care Industry responding states, these
inspectors devote 50 percent or less of their time to inspections of
cemeteries. The requirements for cemetery inspections

across the 6 case study states also vary, with 3 states requiring
inspections of cemeteries, while the 3 remaining states do not. A majority
of the responding states have taken actions against cemeteries or cemetery
operators for violations of state rules or regulations since January 1,
2000. Specifically, of the 33 states responding to this issue, 23 noted
they have taken enforcement actions ranging from issuing notices of
noncompliance, to revoking licenses, and prosecuting violators. However,
among the 6 case study states, each has taken enforcement actions against
cemeteries or cemetery operators since January 1, 2000, for violations of
state rules or regulations. For example, Hawaii suspended

a cemetery authority license because the licensee did not file required
audited financial statements, and New York issued a notice of
noncompliance to a cemetery because its record keeping was not sufficient
to identify who is buried in each grave.

More detailed information on the 6 case study states* regulation of
cemeteries and cemetery operators can be found in appendixes III through
IX. To view the survey covering cemeteries and cemetery operators and the
responding states* answers to the survey questions, go to http:// www.
gao. gov/ cgi- bin/ getrpt? GAO- 03- 831SP.

Most states regulate pre- need sales of funeral plans. 12 Specifically,
table 4 shows that all 42 of the states that responded to this issue in
our survey stated that they regulate sales of pre- need funeral plans,
with 34 of these states regulating all sales of pre- need funeral plans.
13 A majority of the states that responded to this survey also require at
least some sellers of pre- need funeral plans* to include the companies or
the actual sales agents* to be licensed by the state. Of the 38 states
that responded to this issue, 35 require at least some sellers of pre-
need funeral plans to be

licensed to operate within their state, and 31 of the 38 states responding
require at least some sellers to register with the state. Similarly,
regulation of pre- need funeral plan sales in the 6 case study states also
varies. For

example, Florida requires companies to obtain a *certificate of authority*
12 For purposes of our survey, we focused on regulation of pre- need
funeral plans that are funded by trusts. 13 Among the pre- need funeral
plan sales that are exempt from regulation across the other states include
those that are funded by insurance. Pre- need Sales of Funeral

Plans

Page 12 GAO- 03- 757 Death Care Industry in order to sell pre- need
funeral plans in the state. In contrast, New York only permits licensed
funeral directors to sell pre- need funeral plans,

which must be funded through trusts. Table 4: Summary of Surveyed States*
Regulation and Registration or Licensing Requirements Regarding Sales of
Pre- need Funeral Plans

Regulates pre- need funeral plan

sales Regulates all

pre- need funeral plan

sales Requires at least

some sellers of pre- need funeral plans

to be licensed by the state

Requires at least some sellers of pre- need funeral plans to register with

the state

Total 42 of 42 responders 34 of 41

responders 35 of 38 responders 31 of 38 responders Source: Information
obtained from answers to GAO*s Web based survey of all 50 states.

A majority of states require a portion of the proceeds from sales of
preneed funeral plans to be placed in trust, but trusting requirements
vary across the states. Specifically, results from our survey show that of
the 40 states that responded to this issue, 35 require a percentage of
pre- need sales revenues to be placed in trust. The trusting requirements
vary, though, depending on the category of funeral or cemetery goods or
services purchased. Further, the refunds that purchasers of pre- need
funeral plans are entitled to if they cancel their pre- need contracts
also vary across the states. Some states allow consumers who cancel their
preneed sales contracts to recoup the amount of principal they paid plus
any interest that has accrued, while in other states, consumers are
entitled only to receive a majority of the principal they have paid.
Regulation of pre- need funeral plan sales in the 6 case study states was
consistent with the results obtained through our survey. Further, while
each of the 6 states allow consumers to recoup the majority of the
principal they paid when

they cancel pre- need funeral plans prior to need, requirements vary on
the amount, if any, of accrued interest to which they are due.

A majority of the states that regulate pre- need funeral plan sales have
taken enforcement actions against sellers of such plans for violations of
state rules or regulations since January 1, 2000. Specifically, of the 36
states responding to this issue in our survey, 25 stated that they have
taken such actions. Among the 6 case study states, all have taken at least
one enforcement action against sellers of pre- need funeral plans for
violations of state rules or regulations since January 1, 2000. For
example, California revoked a license of a seller of pre- need funeral
plans after the state determined the seller, among other things (1) lied
about his criminal history, (2) fraudulently altered test results to
obtain his license, and

Page 13 GAO- 03- 757 Death Care Industry (3) failed to place pre- need
sales funds in trust. Texas issued a notice of noncompliance to a cemetery
for failure to properly make timely deposits

to the trust fund as required. More detailed information on the 6 case
study states* regulation of preneed funeral plan sales can be found in
appendixes III through IX. To view the survey covering pre- need sales of
funeral plans and the responding states* answers to the survey questions,
go to http:// www. gao. gov/ cgibin/ getrpt? GAO- 03- 831SP.

Third party sales of funeral goods are regulated less than any other
segment of the death care industry. As can be seen in table 5, of the 45
states that responded to our survey covering third party sales of funeral
goods, only 16 regulate third party sales of funeral goods, and only 10 of
those states responded that they regulate all third party sales of funeral
goods. 14 Even fewer states require third party sellers of funeral goods
to be licensed by or registered with the state. Only 9 of the 13
responding states require at least some third party sellers to be
licensed, and 9 of the 14 responding states require third party sellers of
funeral goods to register with the state. Regulation of third party sales
in the 6 case study states also varies. For example, California, Hawaii,
New York, and Texas do not regulate or license third party sales of
funeral goods. In contrast, Florida only regulates monument dealers.

Table 5: Summary of Surveyed States* Regulation and Licensing Requirements
for Third Party Sales of Funeral Goods

Regulates third party sales of funeral goods

Regulates all third party

sales of funeral goods

Requires at least some third party sellers of funeral

goods to be licensed by the

state Requires third

party sellers of funeral goods to register with the

state

Total 16 of 45 responders 10 of 15

responders 9 of 13 responders 9 of 14

responders Source: Information obtained from answers to GAO*s Web based
survey of all 50 states.

14 Among the types of third party sales of funeral goods that are exempt
from regulation across the states that do not regulate all third party
sales are Internet sales, sales to consumers who need the goods
immediately (referred to as *at- need*), and sales of funeral goods when
the consumer takes possession of the merchandise within a fixed period of

time. Third Party Sales of Funeral

Goods

Page 14 GAO- 03- 757 Death Care Industry Few states responded that they
have taken enforcement actions against third party sellers of funeral
goods for violations of state rules or

regulations since January 1, 2000. Of the 16 responding states that
regulate third party sales of funeral goods, 14 addressed this issue and,
of these, 6 stated they have taken actions against third party sellers.
Among the 6 case study states, only Georgia has taken any enforcement
actions against third party sellers of funeral goods since January 1,
2000, and this action was to deny the registration of a third party
seller.

More detailed information on the 6 case study states* regulation of third
party sellers of funeral goods can be found in appendixes III through IX.
To view our survey covering third party sales of funeral goods and the
responding states* answers to the survey questions, go to http:// www.
gao. gov/ cgi- bin/ getrpt? GAO- 03- 831SP.

As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the report date. At that time, we will send copies of this report to the
Chairman of the Federal Trade Commission. We will also make copies
available to others on request. In addition, the report will be available
at no charge on GAO*s Web site at http:// www. gao. gov.

Page 15 GAO- 03- 757 Death Care Industry If you or your staffs have any
questions regarding this report, please contact John Mortin or me at (202)
512- 8777. Key contributors to this

report are listed in appendix XI. Laurie E. Ekstrand Director, Homeland
Security & Justice

Appendix I: Objectives, Scope, and Methodology

Page 16 GAO- 03- 757 Death Care Industry Our overall objectives were to
report on (1) states* roles in and the structures used by states for
regulating the death care industry and (2) the

mechanisms used by states for enforcing their regulations pertaining to
the death care industry.

To obtain information on the various ways states regulate the death care
industry, we used a two- pronged approach. First, we determined the proper
points of contacts within each state for regulating the various segments
of the death care industry and designed and implemented five Web based
surveys to gather information on the regulatory structure and enforcement
mechanisms that are in place in the states to regulate each of the five
segments of the death care industry we reviewed* funeral homes,

crematories, cemeteries, pre- need sales of funeral plans, 1 and third
party sales of funeral goods. In some states, one person was designated as
their state*s point of contact for responding to all five surveys. In
other states, there were multiple points of contact for responding to the
five separate surveys.

To ensure we obtained the highest response rate possible, we made the Web
based surveys available to the designated state contacts from December 2,
2002, through March 7, 2003, and sent reminders via E- mails

and telephone calls to the state contacts. Over this 3- month period, we
obtained responses from 48 states covering regulation of funeral homes, 45
states covering regulation of crematories, 44 states covering regulation
of cemeteries, 42 states covering regulation of sales of pre- need funeral

plans, and 45 states covering regulation of third party sales of funeral
goods. While the overall response rate was relatively high, not all states
that completed the surveys provided responses to all the appropriate
questions. Further, we did not independently verify the accuracy or
completeness of the responses provided from the Web based surveys.

The second part of our approach to gathering data on state regulation of
the death care industry was to visit the 6 states of California, Florida,
Georgia, Hawaii, New York, and Texas. We conducted work in California,
Florida, Georgia, and Hawaii because of media reports of desecration of

graves and human remains and other types of mismanagement at cemeteries
and crematories in those states. New York and Texas were

1 For purposes of our survey, we focused on regulation of pre- need
funeral plans that are funded by trusts not those funded through
insurance. Appendix I: Objectives, Scope, and Methodology

Objectives Scope and Methodology

Appendix I: Objectives, Scope, and Methodology

Page 17 GAO- 03- 757 Death Care Industry selected because they represent
states that have comparatively large populations. 2 Within these 6 states,
we conducted interviews with the

relevant regulatory officials to collect more in- depth information and
documentation on (1) relevant state rules and regulations; (2) the
structure in place to regulate the death care industry; (3) enforcement
mechanisms and capabilities that are in place to enforce the relevant
state rules and regulations; and (4) the results of enforcement efforts*
such as

inspections of facilities, and enforcement actions taken. We also
researched and reviewed relevant portions of these states* laws and
regulations concerning the death care industry. Table 6 provides a listing
of the state regulatory, death care industry, and consumer associations we
met in the 6 states visited. The results from our work in these states are
not generalizeable across all states.

2 California, Florida, New York, and Texas, were also included in an
earlier report on the death care industry, U. S. General Accounting
Office, Funeral- Related Industries: Complaints and State Laws Vary, and
FTC Could Better Manage the Funeral Rule, GAO/ GGD- 99- 156 (Washington,
D. C.: September 1999).

Appendix I: Objectives, Scope, and Methodology

Page 18 GAO- 03- 757 Death Care Industry Table 6: Listing of State
Regulatory Agencies, Death Care Industry Associations, and Consumer
Associations We Met with in the 6 States Visited State State regulatory
agencies Death care industry associations Consumer associations

California Department of Consumer Affairs, Cemetery and Funeral Bureau
California Funeral Directors Association

Interment Association of California Funeral Consumers Alliance of

California Florida Department of Business and

Professional Regulation, Board of Funeral Directors and Embalmers

Department of Banking and Finance (Now called the Department of Financial
Services), Bureau of Funeral and Cemetery Services

Florida Funeral Directors Association Association of Independent Funeral
Directors of Florida

Florida Funeral and Cemetery Consumer Advocacy Georgia Office of the
Secretary of State,

Securities and Business Regulation Division

Professional Licensing Boards Division Georgia Funeral Directors
Association AARP, Georgia State Office

Hawaii a Department of Health, Sanitation Branch

Department of Health, Clean Air Branch

Department of Commerce and Consumer Affairs, Cemetery and Funeral Trust
Program

Hawaii Funeral Directors Association Hawaii Allied Memorial Council

Memorial Society of Hawaii New York Department of State, Division of

Cemeteries Department of Health, Bureau of Funeral Directing

New York State Funeral Directors Association

New York State Association of Cemeteries Memorial Society of the
HudsonMohawk

Region Texas Texas Funeral Service Commission Department of Banking,
Special Audits Division Texas Funeral Directors Association

Texas Cemeteries Association Consumers Union, Southwest Region

Funeral Consumers Alliance of Texas

Source: GAO. a In Hawaii, we also attended a meeting of the *Hawaii Task
Force to Examine State Regulators of Death Care Providers.*

Our work focused primarily on the states since most regulatory
responsibilities regarding the death care industry are handled at the
state level. We did, however, communicate with officials from the (1)
Federal Trade Commission, (2) Department of Veterans Affairs* National
Cemetery Administration, (3) Environmental Protection Agency, and (4)
Occupational Safety & Health Administration to obtain information and
documentation on these agencies* specific roles and responsibilities

Appendix I: Objectives, Scope, and Methodology

Page 19 GAO- 03- 757 Death Care Industry in regulating the death care
industry and their interaction with state agencies that are the primary
regulators of the death care industry.

In order to obtain broader perspectives regarding the death care industry*
including changing trends and information available to assist consumers in
making informed choices regarding death care transactions* we spoke with
officials from the North American Cemetery Regulators Association and with
representatives from consumer associations and the death care industry.
Specifically, we met with and collected relevant documentation from
consumer association officials representing AARP, the Funeral Consumers
Alliance, and consumer associations having an interest in death care
industry issues within the 6 states we visited (see table 6). For the
death care industry, we met with and collected relevant documentation from
officials representing the

Cremation Association of North American, the International Cemetery and
Funeral Association, the National Funeral Directors Association, as well
as local industry associations within the 6 states we visited (see table
6).

Appendix II: Resources Available to Assist Consumers in Death Care
Transactions Page 20 GAO- 03- 757 Death Care Industry There are a variety
of resources available to consumers for gathering information regarding
death care transactions. Through the Federal Trade

Commission (FTC), various death care industry associations, and consumer
associations, consumers are able to find brochures and planning guides.
While the information contained in this appendix is not

comprehensive, it highlights some sources of information available to
consumers for making informed choices regarding death care transactions.
FTC provides a printed publication entitled Funerals: A Consumers Guide,
which is also available on- line at (http:// www. ftc. gov/ bcp/ conline/
pubs/ services/ funeral. html) that informs consumers on how the Funeral
Rule protects them and provides a glossary of terms, advice for planning
funerals, and a worksheet for consumers to compare costs. FTC*s Web site
provides links to consumer advocacy and industry trade associations,
provides a link to electronically file a

complaint, and posts a toll- free telephone number to its Consumer
Response Center, 1- 877- FTC- HELP (382- 4357).

Representatives from the death care industry associations with whom we
spoke (both national and local) all provide information on their Internet
sites and printed documents for consumers.

 National Funeral Directors Association: The professional association for
funeral directors and embalmers, has a link entitled *consumer resources*
on its Web site (www. nfda. org) that consumers can use to find
information about their state funeral directors associations, associations

focusing on grief, and funeral planning. Some state funeral directors
organizations also provide printed and on- line information related to
such topics as alternatives to traditional funerals, pre- need funeral
plans, and the role of the funeral director.

 Cremation Association of North America: A professional association
promoting the practice of cremation that also provides educational
brochures on cremation and cremation- related articles for consumers on
its Web site (http:// www. cremationassociation. org). For example, the
Cremation Association of North America*s Web site offers a brochure
answering frequently asked questions, such as how cremations are performed
and whether embalming is necessary. Articles available on the Web site
cover, for example, the history of cremation and trends contributing to
the increase in cremation rates. Appendix II: Resources Available to
Assist

Consumers in Death Care Transactions Resources Available from FTC

Resources Available from Death Care Industry Sources

Appendix II: Resources Available to Assist Consumers in Death Care
Transactions Page 21 GAO- 03- 757 Death Care Industry  International
Cemetery and Funeral Association: Like other industry associations we
interviewed, this association, a trade association for

cemeteries, crematories, monument sellers, and funeral homes, provides
information for consumers via its Web site (http:// www. icfa. org). The
International Cemetery and Funeral Association provides a Consumer
Resource Guide that answers questions related to dealing with grief,
burial, cremation, pre- need funeral plans, and the Cemetery Consumer
Service Council* a voluntary service that mediates complaints between
consumers and participating cemeteries at no cost to consumers.

 AARP: An organization for people over 50. Its publications and Web site
(www. aarp. org) cover a variety of topics of interest to seniors and its
Web site presents information regarding death care services.

 Funeral Consumers Alliance: A consumer advocacy association that
provides death care industry- related information through its Web site
(http:// www. funerals. org). The Web site features such information as a
list of state and local member organizations, how to file a funeral or
cemetery complaint, and consumer alerts regarding various aspects of the
death care industry. State affiliate organizations, also known as memorial
societies, also provide brochures and Web information, though these
resources are generally state or county focused.

Results from our surveys show that most states provide some information or
protections to consumers regarding their transactions involving the death
care industry. Table 7 summarizes the range of responses we

received from the states. Resources Available

from Consumer Associations

Consumer Protection Information Offered by States

Appendix II: Resources Available to Assist Consumers in Death Care
Transactions Page 22 GAO- 03- 757 Death Care Industry Table 7: Summary of
Consumer Information and Protections Offered by the States State

Requires death care businesses to

provide general price

lists Provides

one or more statesponsored

complaint hot lines

Provides information

through statesponsored Web page

Conducts educational

outreach programs

Provides information on licensed

facilities in good standing

Holds public hearings

Conducts investigations of

legitimate consumer complaints

Alabama X X X X Alaska X X Arizona X X X X Arkansas X X X X X X California
X X X X X X X Colorado X X X X Connecticut X X X X X Delaware X X X X
Florida X X X X X X Georgia X X X X X Hawaii X X X X X Idaho X X X X
Illinois X X X X X X X Indiana a a a a a a a Iowa X X X X X Kansas X X X X
X X Kentucky X X X X X Louisiana X X X X X X Maine X X X X X Maryland X X
X X X X X Massachusetts X X X X Michigan X X X X Minnesota X X X X
Mississippi X X X X X Missouri X X X X X X Montana X X X Nebraska X X X X
X Nevada X X X X X New Hampshire b b b b b b b New Jersey X X X X X X

New Mexico X X X X X X New York X X X X X

Appendix II: Resources Available to Assist Consumers in Death Care
Transactions Page 23 GAO- 03- 757 Death Care Industry State Requires

death care businesses to

provide general price

lists Provides

one or more statesponsored

complaint hot lines

Provides information

through statesponsored Web page

Conducts educational

outreach programs

Provides information on licensed

facilities in good standing

Holds public hearings

Conducts investigations of

legitimate consumer complaints

North Carolina X X X X X North Dakota X X X X Ohio X X X X Oklahoma X X X
X X Oregon X X X Pennsylvania X X X X X Rhode Island X X X South Carolina
X X X X South Dakota X X X X X X Tennessee X Texas X X X X X X X Utah X X
Vermont X X X X X Virginia X X X X X X X Washington X X X X West Virginia
X X X X X X X Wisconsin X X X X Wyoming X X X X Totals 32 27 42 17 45 19
48 Source: Information obtained from states* answers to GAO*s Web based
surveys of all 50 states.

a State did not provide responses to any of the five Web based surveys. b
State did not provide responses to questions regarding consumer
protections.

The 6 states we visited all provide consumers with certain information and
protections so that they can make informed choices about death care
transactions. A description of the information and protections available
to consumers in the 6 states we visited is summarized below.

 California: Requires that all licensed death care facilities, with the
exception of cemeteries, place the Cemetery and Funeral Bureau*s name,
address, and telephone number on all contracts and provide consumers with
a general price list. Additionally, the Cemetery and Funeral Bureau
provides a consumer informational guide entitled Consumer Guide to Funeral
and Cemetery Purchases both in print and on its Web site (http:// www.
cfb. ca. gov) and requires all funeral homes and licensed Summary of
Results

from 6 States Visited

Appendix II: Resources Available to Assist Consumers in Death Care
Transactions Page 24 GAO- 03- 757 Death Care Industry cemeteries to
display the guide for consumers who inquire about funeral or cemetery
services and give the guide to consumers before drafting a

contract. California also has a state sponsored Web page that (1) lists
some actions taken against licensees through posted press releases, (2)
provides a complaint hot line number to the Consumer Information Center,
(3) provides an on- line complaint form, and (4) has a search program that
allows consumers to research whether firms are in good standing.

 Florida: Provides a state sponsored Web page (http:// www.
myfloridalicense. com) where consumers can obtain information on firms in
good standing. The Web page also provides a hot line number for consumers
to contact a customer service agent, as well as an on- line complaint
form. The Department of Financial Services requires its toll- free hot
line number to be placed on the signature page of all

contracts and maintains a Pre- need Funeral Contract Consumer Protection
Trust Fund for consumers who are defrauded by companies that sell pre-
need funeral plans.

 Georgia: Provides on- line information to consumers through a state
sponsored Web page regarding funeral homes and funeral directors that are
in good standing with the state. Information regarding cemeteries, preneed
dealers and salespersons, and third party sellers of funeral goods
(merchandise dealers) can be obtained by contacting the Securities and
Business Regulation Division. The Division also provides general consumer
information on the Web page. In addition, Georgia holds public hearings to
address consumer concerns or complaints and conducts investigations of
legitimate consumer complaints. Further, Georgia requires that all
cemeteries and businesses that sell pre- need funeral merchandise and
services provide general price lists to consumers.

 Hawaii: Provides a state sponsored Web page through the Department of
Commerce and Consumer Affairs (http:// www. ehawaiigov. org) where
consumers can obtain information about whether a cemetery or pre- need
licensee is in good standing, verify licensure, and obtain information on
complaints filed against licensees. The Department of Commerce and
Consumer Affairs also has a telephone number where consumers can call

to verify that a business is licensed and to request audited financial
statements and actuarial reports on trust funds. The Department of Health
does not have consumer protections that relate to death care transactions.

 New York: Provides on- line information to consumers through a state
sponsored Web page that provides information on licensed facilities in
good standing with the state. New York also conducts educational

Appendix II: Resources Available to Assist Consumers in Death Care
Transactions Page 25 GAO- 03- 757 Death Care Industry outreach programs to
seniors and others. For cemeteries, New York requires that a notice be
conspicuously posted on or adjacent to the

cemetery that is in English and includes information such as that the
cemetery is regulated by the New York State Cemetery Board and lists the
telephone number of the nearest office of the Division of Cemeteries. In
addition, cemeteries are required by law to conspicuously post their
rules, regulations, charges, and prices of their lots in each of their
offices.

 Texas: Requires that all funeral- related businesses provide customers
with a general price list. Additionally, funeral homes are required to
provide a brochure, Facts About Funerals, to all customers. Texas requires
all cemeteries and pre- need companies to provide general price lists.
Texas maintains complaint hot lines and Web pages and requires its
regulated entities to include this information on sales agreements and
price lists. Texas provides information on firms and salespersons in good
standing and holds public hearings to resolve controversial issues when
warranted.

Appendix III: California*s Regulation of the Death Care Industry

Page 26 GAO- 03- 757 Death Care Industry  In California, the Cemetery and
Funeral Bureau within the California Department of Consumer Affairs
regulates funeral homes, funeral

directors, embalmers, cemeteries, cemetery managers (operators),
crematories, and crematory managers (operators). The Bureau also regulates
sales of pre- need funeral plans, but only those that are sold by funeral
homes that place the sales revenue in trust. California does not regulate
third party sales of funeral goods.

 Staff within the Cemetery and Funeral Bureau within the California
Department of Consumer Affairs focus solely on regulation of the death
care industry.

 Requires all funeral homes (also known as *funeral establishments* in
California), funeral directors, and embalmers to hold a license and
apprentice embalmers to hold a registration certificate to operate in the
state.

 Requires prospective funeral home owners, funeral directors, embalmers,
and apprentice embalmers to pass a criminal background check. In addition
to the criminal background checks, prospective funeral directors,
embalmers, and apprentice embalmers must also be 18 years of age or older
and pay the appropriate fees. Funeral directors and embalmers must pass a
state examination. Funeral directors are also required to have an
Associate of Arts or Science degree. To receive an embalmers license,
California also requires a 1- year course in an embalming school and a 2-
year apprenticeship with an experienced embalmer in a California licensed
funeral establishment, during which time the apprentice embalmer must
embalm or assist in embalming at least 100 cases.

 Licenses for funeral homes, funeral directors, and embalmers are to be
renewed annually.

 Each of California*s 936 funeral homes is to be inspected every 24 to 30
months. California has four inspectors that spend 100 percent of their
time conducting such inspections and investigating consumer complaints.
During inspections of funeral homes, inspectors use a prepared checklist
and look to ensure, among other things, that (1) arrangement counselors
have the required training; (2) the facility, the funeral directors, and
embalmers are properly licensed and that the licenses are conspicuously
Appendix III: California*s Regulation of the

Death Care Industry Regulatory Structure

Enforcement Mechanisms

Funeral Homes, Funeral Directors, and Embalmers

Appendix III: California*s Regulation of the Death Care Industry

Page 27 GAO- 03- 757 Death Care Industry displayed; (3) there is proper
maintenance of the preparation room and embalming equipment; (4) storage
facilities for human remains are

properly maintained; (5) price lists, contracts, and disclosures meet
legal requirements; and (6) case files are properly completed.

 Since January 1, 2000, California has taken a range of enforcement
actions against funeral homes and funeral directors or embalmers for
violations of state rules or regulations. The actions taken include
issuing notices of noncompliance, assessing investigative costs, levying
monetary fines, placing violators on probation, asking for the voluntary
relinquishment of a license, suspending a license, revoking licenses, and
criminally prosecuting a violator.

 Requires crematories to hold a license to operate in the state.
Effective July 1, 2003, crematory managers (operators) are required to be
licensed to operate in California.

 Requires prospective crematory managers (operators) to be at least 18
years of age, pass a criminal background check, be a high school graduate
or have a general equivalency diploma, and pass the state crematory
manager examination.

 Licenses for crematories and crematory managers (operators) are to be
renewed annually.

 Each of California*s 176 crematories is to be inspected annually. The
state has two inspectors that spend 100 percent of their time inspecting
crematories and cemeteries and as of July 1, 2003, added three more
inspectors. During inspections of crematories, inspectors use a prepared
checklist and look to ensure, among other things, that the facility is

properly licensed and has a licensed crematory manager; meets
refrigeration standards; provides written General Price Lists; there is a
system for properly identifying remains; the crematory maintains employee
training records, and price lists; contracts and disclosures meet legal
requirements; case files, disposition permits, and cremation logs are
properly completed; and cremated remains are not commingled.

 Since January 1, 2000, California has taken a range of enforcement
actions against crematories or crematory operators for violations of state
rules or regulations. The actions taken include issuing notices of
noncompliance, assessing investigative costs, levying monetary fines,
placing a violator on probation, asking for the voluntary relinquishment
of licenses, revoking

licenses, and criminally prosecuting a violator. Crematories and

Crematory Operators

Appendix III: California*s Regulation of the Death Care Industry

Page 28 GAO- 03- 757 Death Care Industry  Requires some cemeteries to be
licensed to operate in the state, but private or fraternal cemeteries of
less than 10 acres that were formed

before 1939; and religious and public cemeteries are not subject to
regulation. Cemetery brokers (supervisors of cemetery sales) and cemetery
salespersons (persons selling cemetery goods and services, cemetery
property, and interment space) are to be licensed to operate in the state.
As of July 1, 2003, California began requiring cemetery managers
(operators) to be licensed to operate in the state.  Requires prospective
cemetery managers (operators) to be at least

18 years of age, pass a criminal background check, be a high school
graduate or have a general equivalency diploma, pass a state examination,
and have 2 years of cemetery experience.

 Licenses for cemeteries are to be renewed annually. Licenses for
cemetery managers (operators) also have an annual renewal requirement.

 Effective July 1, 2003, the state began requiring each of its 190
licensed cemeteries to be subject to annual, unannounced inspections. The
state has five inspectors responsible for inspecting cemeteries and
crematories. These inspectors spend 100 percent of their time inspecting
cemeteries and investigating consumer complaints involving cemeteries and
crematories. During inspections of cemeteries, inspectors use a prepared
checklist and look to ensure that, among other things, the cemetery is
properly licensed and has a licensed cemetery manager; maintains an
appropriate record system, price lists, contracts, and that disclosures
meet legal requirements; case files, disposition permits and interment
records are properly completed; accurate maps of clearly marked sections
and plots are maintained; an appropriate amount of dirt covers vaults and
caskets; and sales of cemetery goods, services, and property meet legal
requirements.

 Since January 1, 2000, California has taken a range of enforcement
actions against cemeteries or cemetery operators for violations of state
rules or regulations. The actions taken include issuing notices of
noncompliance, assessing investigative costs, levying monetary fines,
placing a violator on probation, asking for the voluntary relinquishment
of licenses, revoking

licenses, and criminally prosecuting a violator. 1 1 In its responses to
our surveys, California listed the same answers for the actions taken
against cemeteries or cemetery operators as they did for actions taken
against crematories and crematory operators. Cemeteries and

Cemetery Operators

Appendix III: California*s Regulation of the Death Care Industry

Page 29 GAO- 03- 757 Death Care Industry  Regulates only those pre- need
funeral plans sold through funeral homes in which the proceeds are placed
in trust. The state does not license

companies who sell pre- need funeral plans or their sales staff. The state
has four auditors whose responsibilities include reviewing pre- need
contracts for proper language and ensuring the soundness of funds placed
in trust.

 Sellers of pre- need funeral plans are required to place into trust 100
percent of the principal paid for pre- need funeral and cemetery goods and
services. However, sellers of pre- need funeral plans are permitted to
take up to 4 percent of the sales revenue out of interest earned as an
administrative fee.  If a purchaser cancels the pre- need contract, the
seller is required to

refund 100 percent of the principal invested and cannot take more than 10
percent of the interest that has accrued as a revocation fee.  Since
January 1, 2000, California has taken a range of enforcement actions

against sellers of pre- need funeral plans for violations of state rules
or regulations. The actions taken include suspending a license and
prosecuting a violator.

 California does not license or register third party sellers of funeral
goods, but California*s general business law requires price disclosures,
in the form of a General Price List, individual price tags, and itemized
contracts of casket retailers.

 Since January 1, 2000, California has taken no enforcement actions
against third party sellers of funeral goods. Pre- need Sales of

Funeral Plans Third Party Sales of Funeral Goods

Appendix IV: Florida*s Regulation of the Death Care Industry

Page 30 GAO- 03- 757 Death Care Industry  In Florida, two entities
regulate the death care industry. The Board of Funeral Directors and
Embalmers within the Department of Business and

Professional Regulation regulates funeral homes, funeral directors,
embalmers, crematories, direct disposers, direct disposer establishments,
centralized embalming facilities, refrigeration facilities, and removal
services. In addition, the Board of Funeral and Cemetery Services within
the Department of Financial Services regulates cemeteries and sellers of
pre- need funeral plans. Florida does not license third party sellers of
funeral goods, but registers third party sellers of monuments.  Staff who
work directly for the Board of Funeral Directors and Embalmers

within the Department of Business and Professional Regulation, also work
with other professions. Staff who work for the Board of Funeral and
Cemetery Services within the Department of Financial Services, focus
solely on the death care industry. Inspectors in the Department of
Business and Professional Regulation, however, are responsible for
inspecting businesses other than just death care- related businesses.
Field examiners within the Department of Financial Services are only
responsible for inspections of cemeteries and financial examinations of
cemeteries and pre- need sales of funeral goods.

 Requires all funeral homes (also known as *funeral establishments* in
Florida), funeral directors, and embalmers to hold a license to operate in
the state.

 Prospective funeral directors and embalmers are required to, among other
things, (1) pay an application and examination fee to the state, (2) be at
least 18 years of age, (3) complete a 1- year internship with a licensed

funeral director or embalmer, and (4) pass a state and national
examination. In addition, prospective funeral directors are required to
have an associates degree in mortuary science, and prospective embalmers
are to have completed a course in mortuary science.

 Licenses for funeral homes, funeral directors, and embalmers are to be
renewed every 2 years.

 Each of Florida*s 895 funeral homes is to be inspected annually. If
violations are found, however, the funeral home has 30 days to correct the
deficiencies and they can be re- inspected. Further, there are additional
Appendix IV: Florida*s Regulation of the

Death Care Industry Regulatory Structure

Enforcement Mechanisms

Funeral Homes, Funeral Directors, and Embalmers

Appendix IV: Florida*s Regulation of the Death Care Industry

Page 31 GAO- 03- 757 Death Care Industry inspections if the funeral home
is part of an on- going investigation. The state has 17 inspectors,
divided among several geographic regions, that

spend approximately 8 percent of their time inspecting funeral homes and
crematories. They are also responsible for inspecting other types of
funeral- related facilities, such as removal services, refrigeration
facilities, centralized embalming facilities, and direct disposal
establishments, in addition to barber shops, cosmetologists, and
veterinary clinics. During inspections of funeral homes, inspectors use a
prepared checklist to look for such things as whether the facility, the
funeral directors, and

embalmers have current licenses and that the licenses are properly
displayed; there is adequate ventilation, equipment, and cleanliness in
the embalming room( s); itemized price lists have the funeral home*s name,
address, and telephone number; and written agreements for services have
proper disclosure statements.

 Since January 1, 2000, Florida has taken a range of enforcement actions
against funeral homes, funeral directors, or embalmers for violations of
state rules or regulations. The actions taken include issuing notices of
noncompliance, sending letters of reprimand, assessing investigative
costs, levying monetary fines, placing violators on probation, asking for
the voluntary relinquishment of licenses, suspending licenses, and
revoking licenses.

 Requires crematories to hold a license to operate in the state. While
Florida does not license crematory operators, they do require a designated
licensed funeral director or direct disposer to be in charge of each

crematory.  Crematory licenses are to be renewed every 2 years.  Each of
Florida*s 123 crematories is to be inspected annually, but may be

done more frequently if deficiencies are found or if there is an on- going
investigation. The same 17 inspectors who inspect funeral homes in Florida
also conduct inspections of crematories. In conjunction with their
inspections of funeral homes, other funeral- related facilities,
barbershops, cosmetologists, and veterinary clinics, these inspectors
spend an estimated 8 percent of their time inspecting crematories. During
inspections of crematories, among the items inspectors look at include
ensuring that the name of the facility and the funeral director in charge
is posted at the public entrance, a system exists for properly identifying
human remains, and that bodies are properly placed in the incinerator.

 Since January 1, 2000, Florida has issued six notices of noncompliance
to crematories or crematory operators for violations of state rules or
Crematories and

Crematory Operators

Appendix IV: Florida*s Regulation of the Death Care Industry

Page 32 GAO- 03- 757 Death Care Industry regulations, though these are not
considered by Florida to be disciplinary actions.

 Requires some cemeteries to be licensed to operate in the state, but
cemeteries such as those operated by families, or by county, municipal,
religious, or fraternal organizations are exempt from regulation. Florida
does not require cemetery operators to be licensed.

 Cemetery licenses are to be renewed annually.  Each of Florida*s 173
licensed cemeteries is to be inspected annually with

a financial examination every 3 years. If a problem is discovered during
an inspection, such inspections might occur more frequently. The state has
11 field examiners that spend 100 percent of their time inspecting
cemeteries and conducting financial examinations. The inspectors use a
prepared checklist for these inspections to ensure, among other things,
that proper licenses are conspicuously displayed, price lists are
available, and cemetery grounds and roads are maintained. Financial
examiners look for such things as verification of burial records,
reasonable maintenance of burial grounds, and that disclosures are given
to consumers.

 Since January 1, 2000, Florida has taken a range of enforcement actions
against cemeteries or cemetery operators for violations of state rules or
regulations. The actions taken include issuing notices of noncompliance,
sending letters of reprimand, levying monetary fines, asking for the
voluntary relinquishment of a license, revoking licenses, and prosecuting
violators.

 Companies who wish to sell pre- need funeral plans are required to
obtain a *certificate of authority* that authorizes the company to sell
pre- need funeral plans in Florida. These certificates of authority are
renewed annually and, with each renewal, licensees must submit a financial
statement. Separate from its licensing requirements, Florida requires
companies that sell pre- need funeral plans to contribute $1.00 1 to the
PreNeed Funeral Contract Consumer Protection Trust Fund to ensure that
pre- need funds are available to pay for consumers* funerals in the event
that sellers of pre- need funeral plans go out of business or otherwise
cannot meet their contractual obligations to consumers. The state does not
require the sales agents for these companies to be licensed. Rather,

1 Companies that secure pre- need contracts with surety bonds or letters
of credit pay $5. 00 per contract. Cemeteries and

Cemetery Operators Pre- need Sales of Funeral Plans

Appendix IV: Florida*s Regulation of the Death Care Industry

Page 33 GAO- 03- 757 Death Care Industry sales agents who are not licensed
funeral directors are required to register with the state. Sales agents
are required to renew their registration every 2 years. The state has 11
field examiners whose responsibilities include, in

addition to inspecting and examining cemeteries, examining pre- need
licensees at least once every 3 years to ensure, among other things, that
(1) the pre- need contracts meet state requirements, (2) sales agents are
properly registered, and (3) the licensee supported withdrawals from its
trust fund.

 The state has different trusting requirements for purchases of pre- need
funeral and cemetery goods than it does for purchases of pre- need funeral
and cemetery services. Sellers of pre- need funeral and cemetery goods are

required to place into trust 110 percent of the wholesale cost or 30
percent of the retail price, whichever amount is greater for each good
sold. Preneed sellers of funeral or cemetery services are required to
place into trust a minimum of 70 percent of the total principal.

 Purchasers are allowed to cancel pre- need contracts at any time. If a
purchaser cancels the pre- need contract within 30 days, the seller is
required to refund 100 percent of the principal invested for unused goods
and services, but is permitted to retain all of the interest accrued. If
the purchaser cancels the pre- need contract more than 30 days after
purchase, the seller is required to refund 100 percent of the principal
invested for unused services, but can retain any interest that may have
accrued. Sellers, however, are required to deliver goods as stated in the
pre- need contract or make arrangements with another seller to deliver the
purchased goods.

 Since January 1, 2000, Florida has taken a range of enforcement actions
against sellers of pre- need funeral plans for violations of state rules
or regulations. The actions taken include issuing notices of
noncompliance, sending letters of reprimand, assessing investigative
costs, levying monetary fines, revoking licenses, and prosecuting
violators.  Florida does not license third party sellers of funeral
goods, but does

require monument dealers to register with the state. Monument dealers are
required to (1) be located in a physical location with a street address,
(2) pay a registration fee, and (3) renew their registration biennially.

 Since January 1, 2000, Florida has taken no enforcement actions against
third party sellers of funeral goods for violations of state rules or
regulations. Third Party Sales of Funeral Goods

Appendix V: Georgia*s Regulation of the Death Care Industry

Page 34 GAO- 03- 757 Death Care Industry  In Georgia, regulation of the
death care industry is centralized in the Office of the Secretary of
State. Within this office, the Securities and Business

Regulation Division regulates perpetual care cemeteries, pre- need sales
of funeral plans, and third party sales of funeral goods. In addition, the
Georgia State Board of Funeral Service, within the Secretary of State*s
Office, regulates funeral homes, funeral directors, and crematories, and
is supported by staff of the State*s Professional Licensing Boards
Division.

 Staff within the Division responsible for administering and regulating
cemeteries, pre- need sales of funeral plans, and third party sales of
funeral goods spend half of their time on the administration and
regulation of cemeteries, pre- need sales of funeral plans, and third
party sales of funeral goods and the other half of their time on
regulation of charities. Staff that work for the State Board of Funeral
Service spend about 30 percent of

their time on death care related issues.  Requires all funeral homes,
funeral directors, and embalmers to hold a

license to operate in the state.  Prospective funeral directors and
embalmers must pass both a national

and state examination, have a degree in mortuary science, and serve an
apprenticeship of 3,120 hours over an 18- month period.

 Licenses for funeral homes, funeral directors, and embalmers are to be
renewed every 2 years.

 Each of Georgia*s 736 licensed funeral homes is to be *regularly*
inspected and all are inspected at least once per year. The state has two
inspectors that spend 100 percent of their time conducting inspections of
funeral homes. During these inspections, the inspectors use a prepared
checklist to look for such things as ensuring whether the embalming room
has proper equipment, the facility has a range of caskets available with
prices visibly posted, and licenses for the funeral home and funeral
director( s) are current and conspicuously displayed.

 Since January 1, 2000, Georgia has taken a range of enforcement actions
against funeral homes, funeral directors, or embalmers for violations of
state rules or regulations. The actions taken include issuing letters of
reprimand, levying monetary fines, placing violators on probation, asking
Appendix V: Georgia*s Regulation of the

Death Care Industry Regulatory Structure

Enforcement Mechanisms

Funeral Homes, Funeral Directors, and Embalmers

Appendix V: Georgia*s Regulation of the Death Care Industry

Page 35 GAO- 03- 757 Death Care Industry for the voluntary relinquishment
of licenses, suspending licenses, and revoking licenses.

 Requires crematories to hold a license to operate in the state. While
Georgia does not license crematory operators per se, they do require a
designated licensed funeral director to be in charge of each crematory.

 Crematory licenses are to be renewed every 2 years.  As of May 2002,
each of Georgia*s 46 crematories is to be inspected at least

once a year. 1 The same two inspectors who conduct inspections of funeral
homes in Georgia also conduct inspections of crematories. During
inspections of crematories, inspectors use a prepared checklist and look
to ensure that, among other things, the equipment is operable, there is
sufficient room for memorial services, and that licenses are current and
conspicuously displayed.  Since January 1, 2000, Georgia has not taken
any enforcement actions

against crematories or crematory operators for violations of state rules
or regulations.  Requires perpetual care cemeteries to be registered to
operate in the state, but exempts governmentally owned cemeteries,
fraternal cemeteries, and

cemeteries owned and operated by churches, synagogues, or communities, and
family burial plots. Cemetery operators are not required to be licensed,
but they are required to register with the state each year.

 Cemetery registrations are to be renewed annually.  While state law
does not require annual inspections of Georgia*s

206 registered cemeteries, inspections are conducted in response to
complaints. The state has three investigative analysts (inspectors) who
spend 25 percent of their time inspecting cemeteries. The investigative
analysts use a checklist and look at such things as whether price lists,

1 In May 2002, subsequent to the discovery of decomposed bodies at the
Tri- State Crematory in Noble, Georgia, the state amended the definition
of the term *crematory* to cover more facilities, including the Tri- State
Crematory. Prior to this amendment, crematory was

defined as *any place that is owned by a funeral director or funeral
establishment where cremation is performed, and which is open to the
public other than a hospital, clinic, laboratory, or other facility
authorized by the Department of Human Resources for such purposes.*
Because Tri- State Crematory was not owned by a funeral director or
funeral establishment, it was not covered by the former definition of
crematory, and thus not subject to regulation. Crematories and

Crematory Operators Cemeteries and Cemetery Operators

Appendix V: Georgia*s Regulation of the Death Care Industry

Page 36 GAO- 03- 757 Death Care Industry certificates, and sales materials
are properly posted, and the general condition of the cemetery. The
investigative analysts also review financial

statements and documents.  Since January 1, 2000, Georgia has taken a
range of enforcement actions

against cemeteries and cemetery operators for violations of state rules or
regulations. The actions taken include issuing notices of noncompliance,
assessing investigative costs, levying monetary fines, and suspending
licenses.

 The state does not license companies and their sales agents who sell
preneed funeral plans funded by trusts, but these companies and their
sales agents are to annually register with the state.

 Sellers of pre- need funeral and cemetery services are required to place
into trust 100 percent of the principal paid. The state has different
trusting requirements for sellers of pre- need funeral and cemetery goods.
For preneed funeral goods, sellers are required to place into trust 100
percent of the principal paid, while sellers of cemetery monuments and
outer burial containers are required to place into trust 35 percent of the
principal paid or 110 percent of the wholesale price.  If a purchaser
cancels the pre- need contract for merchandise and services,

the seller is required to refund 100 percent of the principal invested and
100 percent of any interest that has accrued, except that interest is not
refunded on monuments and vaults.

 Since January 1, 2000, Georgia has taken enforcement actions against
sellers of pre- need funeral plans. These actions include four orders
denying registration of pre- need sales agents.

 Georgia requires certain, but not all, third party sellers of funeral
goods to register with the Office of the Secretary of State and these
registrations are to be renewed at least once per year. 2 2 In Georgia,
certain third party sellers are exempt, such as those providing interment
and disinterment services exclusively at cemeteries exempt from
registration. Pre- need Sales of

Funeral Plans Third Party Sales of Funeral Goods

Appendix V: Georgia*s Regulation of the Death Care Industry

Page 37 GAO- 03- 757 Death Care Industry  Since January 1, 2000, Georgia
has denied the registration of a third party seller of funeral goods.

Appendix VI: Hawaii*s Regulation of the Death Care Industry Page 38 GAO-
03- 757 Death Care Industry  In Hawaii, regulation of the death care
industry is divided between two state agencies. The Department of Health
has responsibility for regulating funeral homes with embalming rooms and
embalmers. The Department of Commerce and Consumer Affairs regulates
cemeteries and pre- need sales of funeral plans. Hawaii does not license
crematories or third party sellers of funeral goods.

 Staff in the Department of Health*s Sanitation Branch are responsible
for regulating embalmers and funeral homes with embalming rooms, but also
regulate food preparation and other businesses. Staff in the Department of
Commerce and Consumer Affairs* Division of Professional and Vocational
Licensing regulate cemeteries and sales of pre- need funeral plans, but

these represent only a portion of the businesses regulated.  Hawaii only
requires a license for those funeral homes (also known as

*mortuaries* in Hawaii) that perform embalmings. Funeral homes that do not
perform embalmings are not licensed. Embalmers are required to be
licensed, but funeral directors who do not embalm are not licensed.

 Embalmers are required to serve a 1- year apprenticeship with a licensed
embalmer if they did not graduate from a nationally recognized embalming
school, and pass a national and practical examination.  Licenses for
embalmers and for funeral homes that embalm are to be

renewed annually.  Each of the 17 funeral homes in Hawaii that perform
embalmings is to be

inspected annually. If a funeral home does not perform embalmings, it is
not inspected. The state has 24 inspectors that spend less than 1 percent
of their time conducting inspections of embalming rooms within funeral
homes. These inspectors spend the majority of their time inspecting food
preparation and other types of businesses. Inspectors use a prepared

checklist for inspections of funeral homes and they look for such things
as proper ventilation, sterilized equipment, and proper disposal of
wastewater.

 Since January 1, 2000, Hawaii has taken no actions against funeral
homes, funeral directors, or embalmers for violations of state rules or
regulations. Appendix VI: Hawaii*s Regulation of the

Death Care Industry Regulatory Structure

Enforcement Mechanisms

Funeral Homes, Funeral Directors, and Embalmers

Appendix VI: Hawaii*s Regulation of the Death Care Industry Page 39 GAO-
03- 757 Death Care Industry  Hawaii does not license crematories or
crematory operators.  Hawaii does not require inspections of crematories.
 Since January 1, 2000, Hawaii has taken no actions against crematories
or

crematory operators for violations of state rules or regulations.  Hawaii
requires some cemeteries to be licensed to operate in the state, but

cemeteries operated by families, plantations, communities, or churches are
exempt from regulation. Hawaii does not require cemetery operators to be
licensed.

 Cemetery licenses are to be renewed every 2 years.  While state law
does not require inspections of Hawaii*s 14 licensed

cemeteries, inspections can be conducted to investigate complaints against
cemeteries.

 Since January 1, 2000, Hawaii has taken enforcement actions against
cemeteries or cemetery operators for violations of state rules or
regulations. These actions include issuing warning letters and levying a

monetary fine  Companies offering pre- need funeral plans are to obtain a
*pre- need

funeral authority* license to operate, but their sales agents are not
required to be licensed or registered by the state. Applicants for pre-
need licenses are required to provide such things as, business
registration,

current financial statements, proof of tax clearances, credit reports,
copy of the sales contract to be used, a bond of $50,000, trust agreement
between applicant and trustee, and an application fee. Companies are
required to renew their licenses every 2 years. A staff person reviews
preneed contracts and trust agreements with assistance from a deputy
attorney general. Licensees are required to submit an audited financial
statement and actuarial study on a fiscal or calendar year basis to the
Department of Commerce and Consumer Affairs. The state*s consultant
reviews the financial statements and actuarial studies.

 Sellers of pre- need funeral plans are required to place into trust 70
percent of the principal and can retain up to 30 percent of the principal
for recovery of acquisition costs. Purchasers who cancel their pre- need
contract are entitled to a refund of 100 percent of the principal they
paid, but none of the interest that has accrued. Crematories and

Crematory Operators Cemeteries and Cemetery Operators

Pre- need Sales of Funeral Plans

Appendix VI: Hawaii*s Regulation of the Death Care Industry Page 40 GAO-
03- 757 Death Care Industry  Since January 1, 2000, Hawaii has issued one
warning letter to a licensed seller of pre- need funeral plans and
prosecuted one seller of pre- need funeral plans for violations of state
rules or regulations.

 Hawaii does not license or register third party sellers of funeral goods
 Since January 1, 2000, Hawaii has taken no actions against third party

sellers of funeral goods for violations of state rules or regulations.
Third Party Sales of

Funeral Goods

Appendix VII: New York*s Regulation of the Death Care Industry

Page 41 GAO- 03- 757 Death Care Industry  Regulation of the death care
industry is handled by two organizations in New York. The Bureau of
Funeral Directing within the Department of

Health regulates funeral homes, funeral directors, and embalmers. The
Bureau also regulates sales of pre- need funeral plans since only licensed
funeral directors can sell pre- need funeral plans. In addition, the
Cemetery

Board, which is composed of the Secretary of State, the Attorney General,
and the Commissioner of Health, regulates cemeteries and crematories.
Within the Department of State, the Division of Cemeteries administers
both state laws and the Cemetery Board*s rules and regulations. New York
State does not regulate third party sales of funeral or cemetery goods.

 Staff responsible for regulating the death care industry in New York
work exclusively on death care issues and are not responsible for
regulating other types of businesses.

 Requires all funeral homes (also called *funeral firms*) to register
with the state, whereas funeral directors are required to hold a license
to operate in the state and this license also authorizes them to perform
embalmings. As

such, since the 1960s, New York has had no separate license for embalmers.

 Requires prospective funeral directors to graduate from mortuary school,
pass both a national and a state examination, and serve a 1- year
residency with a licensed funeral director. In addition, funeral directors
are required to have 12 hours of continuing education every 2 years.

 Funeral homes are required to renew their registration every 2 years and
funeral directors are also required to renew their registration every 2
years.

 While New York has no specific requirement to inspect its estimated
1,985 funeral homes, the state has two inspectors that spend 20 percent of
their time conducting inspections of funeral homes on a *recurrent basis.*

These inspectors use a prepared checklist to look for such things as that
the embalming room is properly equipped and sanitary, actual retail prices
are posted on funeral merchandise offered for sale, and licenses and
registrations are current and conspicuously posted. Appendix VII: New
York*s Regulation of the

Death Care Industry Regulatory Structure

Enforcement Mechanisms

Funeral Homes, Funeral Directors, and Embalmers

Appendix VII: New York*s Regulation of the Death Care Industry

Page 42 GAO- 03- 757 Death Care Industry  Since January 1, 2000, New York
has taken a variety of enforcement actions against funeral homes, funeral
directors, or embalmers for

violations of state rules or regulations. These actions include issuing
notices of noncompliance, sending letters of reprimand, levying monetary
fines, asking for voluntary relinquishment of licenses, revoking licenses,
and prosecuting violators.

 Does not license crematories or crematory operators. However, the state
Cemetery Board must approve every certificate of incorporation of a
cemetery corporation, which includes crematories.

 Each of New York*s 43 crematories is to be inspected twice a year. The
state has the equivalent of 2.5 inspectors available that spend an
estimated 10 percent of their time inspecting crematories. (These
inspectors also

inspect cemeteries.) During inspections of crematories, inspectors use a
prepared checklist and look to ensure such things as whether the facility
is maintained in a clean, orderly, and sanitary manner; there is a plan
for

proper identification of human remains; and current charges are properly
displayed.

 Since January 1, 2000, New York has issued 5 notices of noncompliance to
crematories or crematory operators for violations of state rules or
regulations.  The state does not require cemeteries or cemetery operators
to be

licensed, but the Cemetery Board must approve every certificate of
incorporation of a cemetery corporation. In addition, all cemeteries are
required to be not- for- profit corporations.

 New York*s 1,860 regulated cemeteries are inspected about every 6 or 7
years. More frequent inspections occur if complaints are received. The
state has the equivalent of 2.5 inspectors who spend 20 percent of their
time inspecting cemeteries. The inspectors use a checklist and look at
such things as whether rules and regulations are conspicuously displayed,
the condition of memorials, evidence of vandalism, and the overall

condition of the cemetery.  Since January 1, 2000, New York has issued 23
notices of noncompliance

to cemeteries or cemetery operators for violations of state rules or
regulations.  In New York, only licensed and registered funeral directors
can sell preneed

funeral plans funded by trusts. As such, there is no separate license
Crematories and

Crematory Operators Cemeteries and Cemetery Operators

Pre- need Sales of Funeral Plans

Appendix VII: New York*s Regulation of the Death Care Industry

Page 43 GAO- 03- 757 Death Care Industry for sellers of pre- need funeral
plans. Registrations are to be renewed every 2 years.

 Sellers of pre- need funeral goods and services and pre- need cemetery
goods plans are required to place into trust 100 percent of the principal
paid. There is no requirement to place into trust proceeds from the
preneed sale of cemetery services.

 If a purchaser cancels the pre- need contract prior to its use, the
seller is required to refund 100 percent of the principal paid and 100
percent of any interest that has accrued.  Since January 1, 2000, New
York has taken a number of enforcement

actions against sellers of pre- need funeral plans for violations of state
rules or regulations. The actions taken include issuing notices of
noncompliance, sending letters of reprimand, levying monetary fines,
requiring restitution to consumers, revoking licenses, and prosecuting
violators.

 New York does not regulate third party sales of funeral goods.  Since
January 1, 2000, New York has taken no enforcement actions against

third party sellers of funeral goods for violations of state rules or
regulations. Third Party Sales of Funeral Goods

Appendix VIII: Texas*s Regulation of the Death Care Industry Page 44 GAO-
03- 757 Death Care Industry  Regulation of the death care industry is
handled by two organizations in Texas. The Texas Funeral Service
Commission is responsible for

regulating funeral homes, funeral directors and embalmers, and for
registering crematories and certain cemeteries. The Department of Banking
regulates pre- need sales of funeral plans. The Department of Banking also
regulates third party sellers of funeral and cemetery goods if they sell
the goods pre- need. If third party sellers sell the goods at- need, they
are not regulated.

 Staff in the Texas Funeral Service Commission focus exclusively on
regulation of death care industry businesses, whereas staff in the
Department of Banking are responsible for regulating financial businesses
in addition to pre- need sales of funeral plans. The Department of Banking
has staff dedicated exclusively to the regulation of pre- need sales of
funeral plans and perpetual care cemeteries.

 Requires all funeral homes, funeral directors, and embalmers to hold a
license to operate in the state.

 Prospective funeral directors or embalmers must be a graduate of a
college of mortuary science, pass both a national and state examination,
pass a criminal background check, serve a 1- to 2- year provisional
licensing program (internship) period with a licensed funeral home, and
pass an oral examination before the Texas Funeral Service Commission
board. In addition, funeral directors and embalmers are required to obtain
20 hours of continuing professional education every 2 years.  Licenses
for funeral homes are to be renewed annually, whereas licenses

for funeral directors and embalmers are to be renewed every 2 years. 
Each of the estimated 1,300 funeral homes in Texas is to be inspected at

least once every 2 years. 1 The state has two inspectors that spend
approximately 90 percent of their time inspecting funeral homes. During
inspections of funeral homes, these inspectors use a prepared checklist to
1 By law, if a violation is found, the funeral home is required to be
inspected annually until

the Texas Funeral Service Commission determines the funeral home is free
of violations. Appendix VIII: Texas*s Regulation of the

Death Care Industry Regulatory Structure

Enforcement Mechanisms

Funeral Homes, Funeral Directors, and Embalmers

Appendix VIII: Texas*s Regulation of the Death Care Industry Page 45 GAO-
03- 757 Death Care Industry look for such things as whether the embalming
room has proper supplies and equipment, licenses are current and properly
displayed, price lists are

available, and adequate numbers of caskets are displayed.  Since January
1, 2000, Texas has taken a variety of enforcement actions

against funeral homes, funeral directors, or embalmers for violations of
state rules or regulations. The enforcement actions include issuing
notices of noncompliance, sending letters of reprimand, assessing
investigative

costs, levying monetary fines, placing violators on probation, asking for
the voluntary relinquishment of licenses, suspending licenses, revoking
licenses, and prosecuting violators.

 Does not license crematories or crematory operators, but crematories
must annually register with the Texas Funeral Service Commission. 2  Does
not require crematories to be inspected unless the Texas Funeral

Service Commission receives a complaint. 3  Since January 1, 2000, Texas
has taken no enforcement actions against crematories or crematory
operators for violations of state rules or regulations.  The state does
not require cemeteries to be licensed, but some cemeteries must annually
register with the Texas Funeral Service Commission. 4 Cemeteries that are
exempt from registration requirements include public cemeteries owned by
the state, county, or municipality, family, fraternal,

and religious cemeteries. Cemetery operators are not required to be
licensed.

2 HB 587, which was signed into law by the Texas Governor on May 29, 2003,
will require crematories to be licensed starting September 1, 2003, and
then renewed annually. 3 HB 1538, which was signed into law by the Texas
Governor on June 20, 2003, will require all licensed crematories to be
inspected at least once every 2 years effective September 1,

2003. If the Texas Funeral Service Commission finds a violation, the
crematory is required to be inspected annually until the Commission
determines the crematory is free of violations.

4 Effective September 1, 2003, cemeteries in Texas will be required to be
licensed by the Texas Funeral Service Commission. These licenses will have
to be renewed annually. This licensing requirement, however, does not
apply to certain cemeteries* such as cemeteries owned by a municipality or
family, or by a fraternal or religious organization. Crematories and

Crematory Operators Cemeteries and Cemetery Operators

Appendix VIII: Texas*s Regulation of the Death Care Industry Page 46 GAO-
03- 757 Death Care Industry  Texas does not require inspections of its
232 registered cemeteries unless the Texas Funeral Service Commission
receives a complaint. 5  Since January 1, 2000, Texas has issued notices
of noncompliance to and assessed investigative costs against cemeteries or
cemetery operators for

violations of state rules or regulations.  Companies who wish to sell
pre- need funeral plans are required to obtain

a permit from the Department of Banking. These permits are to be renewed
at least once each year. The state does not regulate or license the
individual sales agents of these companies. Contracts used for pre- need

funeral plan sales must be approved in advance by the Department of
Banking.

 Sellers of pre- need funeral plans are required to place into trust 90
percent of the principal for funeral goods, funeral services, cemetery
goods, and cemetery services. The sellers are permitted to retain 10
percent of the principal.

 For pre- need funeral plan contracts purchased prior to September 1,
2001, or held less than 1 year, if a purchaser cancels the pre- need
contract, the seller is required to refund 90 percent of the principal
invested, but is permitted to retain all of the interest accrued. For pre-
need contracts purchased on or after September 1, 2001, if a purchaser
cancels the preneed contract after 1 year, the seller is required to
refund 90 percent of the principal invested and 50 percent of the interest
accrued.

 Since January 1, 2000, Texas has taken a variety of enforcement actions
against sellers of pre- need funeral plans for violations of state rules
or regulations. The actions include issuing notices of noncompliance;
assessing investigative costs; conducting follow- up examinations; levying
monetary fines; placing violators on probation; suspending permits;

revoking permits; and issuing cease, desist, and seizure orders.  Texas
does not regulate third party sales of funeral goods.

5 Effective September 1, 2003, cemeteries will be required to be inspected
at least once every 2 years. If the Texas Funeral Service Commission finds
a violation, the cemetery is required to be inspected annually until the
Commission determines the cemetery is free of violations. Pre- need Sales
of

Funeral Plans Third Party Sales of Funeral Goods

Appendix VIII: Texas*s Regulation of the Death Care Industry Page 47 GAO-
03- 757 Death Care Industry  Since January 1, 2000, Texas has taken no
enforcement actions against third party sellers of funeral goods for
violations of state rules or regulations.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 48 GAO- 03- 757 Death Care Industry Table 8: Comparison of
Requirements for Funeral Homes across the 6 Case Study States State

Licensing or registration requirements Licensing or

registration renewals Inspection requirements Inspection staff Percent of
time allocated

to inspections

California Funeral homes, funeral directors, and embalmers are required to
be licensed.

Licenses for funeral homes, funeral directors, and

embalmers are to be renewed annually.

Each of California*s 936 funeral homes is to be inspected every 24 to 30
months.

There are 4 inspectors responsible for inspecting California*s

936 funeral homes. The inspectors spend

100% of their time inspecting funeral homes and investigating consumer
complaints involving funeral homes.

Florida Funeral homes, funeral directors, and embalmers are required to be
licensed.

Licenses for funeral homes, funeral directors, and

embalmers are to be renewed every 2 years.

Each of Florida*s 895 funeral homes is to be inspected annually.

There are 17 inspectors who, among other things, are responsible for
inspecting Florida*s 895 funeral homes and its 123 crematories.

The inspectors spend an estimated 8% of their time on inspections of
funeral homes and crematories. They are also responsible for inspecting
other funeral- related facilities, such as removal services, direct
refrigeration facilities, centralized embalming facilities, and

direct disposers in addition to barber shops, veterinary clinics, and
cosmetologists. Georgia Funeral homes,

funeral directors, and embalmers are required to be licensed.

Licenses for funeral homes, funeral directors, and

embalmers are to be renewed every 2 years.

Each of Georgia*s 736 funeral homes is to be *regularly* inspected and all
are inspected at least once a year.

There are 2 inspectors responsible for inspecting Georgia*s

736 funeral homes and its 46 crematories

The inspectors spend 100% of their time on inspections of funeral homes
and crematories.

Hawaii Embalmers and funeral homes that perform embalmings are required to
be licensed. Funeral directors and funeral homes that do not perform
embalmings are not licensed.

Licenses for embalmers and funeral homes that perform

embalmings are to be renewed annually.

Each of Hawaii*s 17 funeral homes that perform embalmings is to be
inspected annually

There are 24 inspectors who, among other things, are responsible for
inspecting Hawaii*s 17 funeral homes that

perform embalmings. The inspectors spend less

than 1% of their time inspecting funeral homes* embalming rooms. They
spend most of their time inspecting food establishments.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 49 GAO- 03- 757 Death Care Industry State Licensing or

registration requirements Licensing or

registration renewals Inspection requirements Inspection staff Percent of
time allocated

to inspections

New York Funeral homes are required to register, but are not licensed.
Funeral directors are required to be licensed and registered. There is no
separate license for embalmers Funeral firms and

funeral directors are required to renew their registrations every 2 years.

There is no specific requirement for New York*s estimated 1,985 funeral
firms to be inspected, but they are inspected on a *recurrent basis.*

There are 2 investigators who, among other things, are responsible for
inspecting New York*s estimated 1,985 funeral firms.

The investigators spend an estimated 20% of their time on inspections of
funeral firms and the remainder of their time on other issues related to
regulation of funeral firms, funeral directors, and sales of pre- need
funeral plans.

Texas Funeral homes, funeral directors, and embalmers are required to be
licensed.

Funeral home licenses are to be renewed annually and licenses for funeral
directors and embalmers are to be renewed every 2 years.

Each of Texas*s estimated 1,300 funeral homes is to be

inspected at least once every 2 years. There are 2

inspectors who, among other things, are responsible for inspecting Texas*s
estimated 1,300 funeral homes. The inspectors spend an estimated 90% of
their

time on inspections of funeral homes and the remainder of their time on
other issues related to regulation of funeral homes and funeral directors.

Source: GAO analysis of data provided by officials within the 6 case study
states.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 50 GAO- 03- 757 Death Care Industry Table 9: Comparison of
Requirements for Crematories across the 6 Case Study States State

Licensing or registration requirements Licensing or

registration renewals Inspection

requirements Inspection staff Percent of time allocated to inspections

California Crematories and crematory operators are required to be
licensed.

Licenses for crematories and crematory operators

are to be renewed annually.

Each of California*s 176 crematories is to be inspected annually.

There are 2 inspectors responsible for inspecting and

investigating complaints about California*s 176 licensed crematories and
its 190 licensed cemeteries. Effective July 1, 2003, 3 more inspectors
will be available to inspect and investigate crematories and cemeteries.

The inspectors spend 100% of their time on inspections and investigations
of

crematories and cemeteries. Florida Crematories are

required to be licensed, but not crematory operators. Each crematory,
however, must designate a licensed funeral director to be

in charge. Crematory licenses

are to be renewed every 2 years

Each of Florida*s 123 crematories is to be inspected annually.

There are 17 inspectors responsible for inspecting Florida*s 123
crematories and its 895 funeral homes.

The inspectors spend an estimated 8% of their time on inspections of
funeral homes and crematories. They are also responsible for inspecting
other funeral- related facilities, such as removal services, direct
refrigeration facilities, centralized embalming facilities, and

direct disposers in addition to barber shops, veterinary clinics, and
cosmetologists. Georgia Crematories are

required to be licensed, but not crematory operators. Each crematory,
however, must designate a funeral director to be in charge.

Crematory licenses are to be renewed every 2 years

As of May 2002, each of Georgia*s 46 crematories is to be

inspected at least once per year.

There are 2 inspectors responsible for inspecting Georgia*s

46 crematories and its 736 funeral homes.

The inspectors spend 100% of their time on inspections of crematories and
funeral homes.

Hawaii Neither crematories nor crematory operators are required to be
licensed. Not applicable. Crematories are not

required to be inspected. Not applicable. Not applicable.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 51 GAO- 03- 757 Death Care Industry State Licensing or

registration requirements Licensing or

registration renewals Inspection

requirements Inspection staff Percent of time allocated to inspections

New York Neither crematories nor crematory operators are required to be
licensed. However, New York*s Cemetery Board must approve every
certificate of incorporation of a cemetery corporation, which includes
crematories.

Not applicable. Each of New York*s 43 crematories is to be inspected twice
a year.

The state has the equivalent of 2.5 inspectors available to conduct
inspections of crematories. These inspectors also inspect cemeteries.

The inspectors spend an estimated 10% of their time inspecting
crematories.

The inspectors spend the rest of their time performing other duties
related to regulation of crematories and cemeteries.

Texas Neither crematories nor crematory operators are required to be
licensed, but crematories must register. a Crematories must

annually renew their registration. a Crematories are not

required to be inspected, but inspections are performed if a

complaint is received. b Not applicable. Not applicable. Source: GAO
analysis of data provided by officials within the 6 case study states. a
Effective September 1, 2003, crematories in Texas will be required to be
licensed and the licenses will be required to be renewed annually. b
Effective September 1, 2003, crematories in Texas will be required to be
inspected at least once every 2 years. If the Texas Funeral Service
Commission finds a violation, the crematory is required to be inspected
annually until the Commission determines the crematory is free of
violations.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 52 GAO- 03- 757 Death Care Industry Table 10: Comparison of
Requirements for Cemeteries across the 6 Case Study States State

Licensing or registration requirements Licensing or

registration renewals Inspection

requirements Inspection or examination staff

Percent of time allocated to inspections or examinations

California Some cemeteries are required to be licensed and cemetery

managers are required to be licensed. Licenses for nonexempt cemeteries

and for cemetery managers are to be renewed annually.

Effective July 1, 2003, each of California*s 190 licensed cemeteries is
subject to annual inspections.

There are 2 inspectors responsible for inspecting and

investigating California*s 190 licensed cemeteries and its 176
crematories. Effective July 1, 2003, 3 more inspectors will be available
to inspect and investigate cemeteries and

crematories. The inspectors spend

100% of their time on inspections and investigations of

cemeteries and crematories.

Florida The state estimates that it has 3,000 cemeteries, but most are
exempt from regulation. While some cemeteries are required to be licensed,
cemetery operators are not required to be licensed.

Licenses for nonexempt cemeteries are to be renewed annually.

Each of Florida*s 173 licensed cemeteries is to be inspected annually,
with financial

examinations to be performed very 3 years.

There are 11 field examiners responsible for inspecting/

examining Florida*s 173 licensed cemeteries and sellers of pre- need
funeral plans.

The field examiners spend 100% of their time on inspections of licensed
cemeteries and financial examinations of cemeteries and sellers

of pre- need funeral plans.

Georgia Some cemeteries are required to register. Cemetery operators are
not required to be licensed, but they must register.

Registrations for nonexempt cemeteries and for cemetery operators are to
be renewed annually.

There is no requirement for inspections of

Georgia*s 206 registered cemeteries, but they are inspected in response to
complaints.

There are 3 investigative analysts responsible for examining Georgia*s

206 registered cemeteries. The investigative

analysts spend an estimated 25% of their time on inspections of registered
cemeteries. In addition, they review cemetery trust fund and escrow
records and accounts and annual financial statements for cemeteries. They
are also are responsible for reviewing financial records for other types
of businesses, like sellers of pre- need funeral plans and charities.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 53 GAO- 03- 757 Death Care Industry State Licensing or

registration requirements Licensing or

registration renewals Inspection

requirements Inspection or examination staff

Percent of time allocated to inspections or examinations

Hawaii Some cemeteries are required to be licensed, but cemetery operators
are not required to be licensed.

Licenses for nonexempt cemeteries are to be renewed every 2 years. There
is no

requirement for inspections of Hawaii*s 14 licensed cemeteries, but they
can be inspected in response to complaints.

Not applicable. Not applicable. New York There is no requirement for
cemeteries or cemetery operators to be licensed, but the Cemetery Board
must approve the certificate of incorporation for each cemetery and all
regulated cemeteries are required to be notfor- profit corporations.

Not applicable Inspections of New York*s 1,860 regulated cemeteries are
conducted every 6 or 7 years, but are done more frequently if complaints
are received.

There are the equivalent of 2.5 inspectors responsible for inspecting New
York*s 1,860 regulated cemeteries.

The inspectors spend an estimated 20% of their time inspecting cemeteries.
The inspectors spend the rest of their time performing other duties
related to regulation of cemeteries and crematories.

Texas There is no requirement for cemeteries or

cemetery operators to be licensed, but cemeteries must register with the
state. a Texas did not provide

information on the number of cemeteries that are exempt from regulation.

Cemeteries must annually renew their registration with the state. a There
is no

requirement for Texas*s 232 registered cemeteries to be inspected unless a
complaint is received. b There are 8 examiners

responsible for on- site examinations at Texas*s 232 registered

cemeteries. These 8 examiners

spend an estimated 35% of their time examining registered cemeteries. The
examiners spend the majority (65%) of their time examining trust funds and
contracts for pre- need funeral plans.

Source: GAO analysis of data provided by officials within the 6 case study
states. Note: Of the 6 case study states, only Florida provided
information on the total number of cemeteries that operate in their state.
The types of cemeteries that are exempt from regulation include those
cemeteries that are affiliated with a religious organization or that are
owned and operated by a municipality. a Effective September 1, 2003,
cemeteries in Texas will be required to be licensed by the Texas Funeral
Service Commission. These licenses will have to be renewed annually. This
licensing

requirement, however, does not apply to certain cemeteries* such as
cemeteries owned by a municipality or family, or by a fraternal or
religious organization. b Effective September 1, 2003, cemeteries will be
required to be inspected at least once every 2 years. If the Texas Funeral
Service Commission finds a violation, the cemetery is required to be
inspected

annually until the Commission determines the cemetery is free of
violations.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 54 GAO- 03- 757 Death Care Industry Table 11: Comparison of
Requirements for Pre- Need Funeral Plan Sales Funded by Trusts in the 6
Case Study States State

Licensing or registration requirements Licensing or

registration renewals Trusting requirements Reimbursement

requirements Inspection/ audit resources

California State regulates only pre- need funeral plan sales by funeral

homes in which the proceeds are placed in trust.

Not applicable. Sellers of pre- need funeral plans are required to place
into trust 100% of the principal paid for funeral and cemetery goods and
services.

If a purchaser cancels a pre- need contract, the seller is required to
refund 100% of the principal paid and cannot take more than 10% of the
interest that may have accrued.

There are 4 auditors who review pre- need contracts for proper language
and for ensuring the soundness of funds placed in trust.

Florida Companies that wish to sell pre- need funeral plans are required
to obtain a *certificate of authority* that authorizes them to sell pre-
need funeral plans in Florida. Sales agents for these companies are not
required to be licensed, but they must register.

Companies are required to renew their certificate of authority each year
and to annually submit financial statements.

Sales agents of these companies are required to renew their registration
with the state every 2 years.

Sellers of pre- need funeral and cemetery goods are required to place into
trust 110% of the wholesale cost or 30% of the retail price, whichever
amount is greater for each good sold. Preneed sellers of funeral or
cemetery services

are required to place into trust a minimum of 70% of the total principal.

If a purchaser cancels the pre- need contract within 30 days of purchase,
the seller is required to refund 100% of all funds paid. If a purchaser
cancels the pre- need contract more than 30 days after purchase, the
seller is required to refund 100% of the principal invested for unused
services, but can retain any interest that may have accrued. Sellers,
however, are required to deliver goods as stated in the pre- need contract
or make arrangements with another seller to deliver the purchased goods.

There are 11 examiners who, besides inspecting and examining licensed
cemeteries, also examine pre- need

licensees (companies) to ensure, among other things, that pre- need
contracts meet state requirements, sales agents are properly registered,
and whether the licensees

supported withdrawals from its trust fund.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 55 GAO- 03- 757 Death Care Industry State Licensing or

registration requirements Licensing or

registration renewals Trusting requirements Reimbursement

requirements Inspection/ audit resources

Georgia Neither companies that sell pre- need funeral plans nor their
sales agents are required to be licensed, but the companies and their
sales agents are to register.

Companies that sell pre- need funeral plans and their sales agents are to
renew their registration with the state each year.

Sellers of pre- need funeral plans are required to place in trust 100% of
the principal paid. For preneed funeral goods, sellers are required to
place in trust 100% of the principal paid, while sellers of cemetery goods
(monuments and outer burial containers) are required to place in trust 35%
of the principal paid or 110% of the wholesale price.

If a purchaser cancels the pre- need contract, the seller is required to
refund 100% of the principal invested and 100% of any interest that may
have accrued.

There are 3 investigative analysts responsible for examining financial

statements of sellers of pre- need funeral plans. These field examiners
are also responsible for examining financial records of other businesses,
like cemeteries and charities.

Hawaii Companies that want to sell pre- need funeral plans in Hawaii are
required to obtain

a *pre- need funeral authority license.* The companies* sales agents are
not required to be licensed or registered.

Companies are required to renew their *pre- need funeral authority
license* every 2 years. Companies that sell

pre- need funeral plans are required to place in trust 70% of the
principal and can retain up to 30% for recovery of acquisition costs.

Purchasers of pre- need funeral plans that cancel their contract are
entitled to a refund of 100% of the principal they paid, but none of the
interest that may have accrued. A staff person reviews

pre- need contracts and trust agreements with assistance from the Deputy
Attorney General. Companies

that sell pre- need funeral plans are required to submit an audited
financial statement and an actuarial statement on a fiscal or calendar
year basis. The state*s consultant reviews the financial and actuarial
statements.

New York In New York, only licensed and registered funeral directors can
sell preneed funeral plans funded by trusts. As such, there is no separate
license for

sellers of pre- need funeral plans.

Registrations for selling pre- need funeral plans are to be

renewed every 2 years.

Sellers of pre- need funeral goods and services and pre- need cemetery
goods are required to place in trust 100% of the principal paid. There is
no requirement to place in trust proceeds from the sale of cemetery
services.

If a purchaser cancels a pre- need contract, the seller is required to
refund 100% of the principal paid and 100% of any interest that may have
accrued.

Two investigators perform reviews of preneed funeral plan contracts. These
2 investigators are also responsible for regulations involving

funeral homes and funeral directors.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 56 GAO- 03- 757 Death Care Industry State Licensing or

registration requirements Licensing or

registration renewals Trusting requirements Reimbursement

requirements Inspection/ audit resources

Texas Companies that wish to sell trust- funded pre- need funeral plans in
Texas are required to obtain a permit from the Department of Banking.
Texas does not regulate or license the sales agents for these companies.

Companies that sell trust- funded pre- need funeral plans in Texas are
required to renew their permit at least once per year.

Sellers of pre- need funeral plans are required to place in trust 90% of
the principal for funeral and cemetery goods and services. Sellers are
permitted to retain 10% of the principal.

For contracts purchased prior to September 1, 2001, or held for less than
1 year, if a purchaser cancels a pre- need contract, the seller is
required to refund 90% of the principal invested, but is permitted to
retain all of the interest that may have accrued. For trust- funded pre-
need contracts purchased on or after September 1, 2001, if the purchaser
cancels the contract after 1 year, the seller is required to refund 90% of
the principal invested and 50% of any interest that may have accrued.
Texas has 8 examiners

who spend 65% of their time on reviewing preneed funeral plan sales
contracts and examining the trust funds from sales of pre- need funeral
plans. These examinations are performed every 12 to 16 months. These same
8 examiners spend the remaining 35% of their time examining financial
records of regulated cemeteries.

Source: GAO analysis of data provided by officials within the 6 case study
states.

Appendix IX: Comparison of Regulation of the Death Care Industry across
the 6 Case Study States

Page 57 GAO- 03- 757 Death Care Industry Table 12: Comparison of
Requirements for Third Party Sales of Funeral Goods across the 6 Case
Study States

State Licensing or registration requirements

California There is no licensing or registration requirement for third
party sellers of funeral goods, but California requires that casket
retailers provide a General Price List, individual price tag, and an
itemized contract.

Florida There is no licensing requirement for third party sellers of
funeral goods, but monument dealers are required to (1) register with the
state, (2) be located in a physical location with a street address, (3)
and pay a registration fee. Monument dealers must renew their registration
every 2 years.

Georgia Some third party sellers are required to register with the Office
of the Secretary of State. These registrations are to be renewed at least
once per year a Hawaii There is no licensing or registration requirement
for third party sellers of

funeral goods. New York There is no licensing or registration requirement
for third party sellers of

funeral goods. Texas There is no licensing or registration requirement for
third party sellers of

funeral goods. Source: GAO analysis of data provided by officials within
the 6 case study states. a In Georgia, some third party sellers are exempt
from registration requirements, such as those providing interment and
disinterment services exclusively at cemeteries that are exempt from
regulation.

Appendix X: Consolidation of the Death Care Industry and the Interstate
Transit of Human Remains

Page 58 GAO- 03- 757 Death Care Industry During our review, questions
arose about the extent to which the death care industry has been
undergoing a transformation from an industry comprised of small, family-
owned businesses to one where many of the

small businesses had been *consolidated* under corporate ownership by
large, publicly traded companies. The variety of possible ownership
arrangements for this industry, as for any other, can take a range of
forms, including single ownership of one establishment, single ownership
of multiple establishments (that could exclusively be of one type such as
funeral homes, or multiple types, such as funeral homes and cemeteries),
partnerships of various configurations, to corporations of all sizes. We
contacted death care industry associations, state regulators in the 6 case
study states, and national and state consumer associations to gather data
on the configuration of the death care industry, and particularly on

ownership of death care- related businesses by large corporations, but
found very limited data available.

According to officials within the death care industry and state regulators
within the 6 case study states, the corporate purchases of funeral homes
and cemeteries reached a peak in the late 1990s. Since that time,
according to these officials, the large, publicly traded corporations have
been divesting themselves of funeral homes and cemeteries. Data we
obtained from the National Funeral Directors Association (NFDA) support
these

officials* statements. According to NFDA data, as of July 2003, there were
an estimated 21,710 funeral homes in the United States* 89 percent of
which were owned by individuals, families, or closely held private
corporations and the remaining 11 percent were owned by one of the
publicly traded corporations. The data further show that while the number
of funeral homes in the United States has remained fairly stable since
1998, the percent of funeral homes in the United States owned by one of
the publicly traded corporations has decreased slightly since 1998* from
13 percent in 1998, to 12 percent in 2002, and then to 11 percent in 2003.
1 We have not reviewed these data to verify their validity, and our

information on corporate ownership relate only to the large, publicly
traded corporations.

1 Data on corporate ownership of funeral homes in the Unites States were
not available for prior years because until recently, NFDA has not
gathered these data on a regular basis. Appendix X: Consolidation of the
Death Care

Industry and the Interstate Transit of Human Remains

Consolidation of the Death Care Industry

Appendix X: Consolidation of the Death Care Industry and the Interstate
Transit of Human Remains

Page 59 GAO- 03- 757 Death Care Industry While it is clear that a number
of people die each year in locations other than where they or their
families want their remains to be placed, no

systematic data are available to document the extent to which death care
transactions involve the shipment of human remains across state lines.
Human remains can be transported from location to location, including
across state lines, by aircraft, motor vehicles, trains, or other modes of
transportation. For those living and working in areas proximate to state
boundaries, the transport of human remains across jurisdictions is no
doubt routine. For example, an individual could die in Maryland and be
transported to Virginia or the District of Columbia for burial. Similarly,
an individual could work and die in New York City and be transported to
the

location of his home in New Jersey or Connecticut for burial. The number
of these interstate movements is generally not maintained.

We were unable to gather data from airlines or interstate shipping
companies about the extent to which death care transactions involve
interstate transport of human remains because either they did not compile
such data or they would not share these data for proprietary reasons. 2 We
also contacted officials in our 6 case study states to find out if their
states maintain records of the interstate transit of human remains either
to or from their state. Only Florida was able to provide any data on this
issue. Specifically, the data provided by a state official showed that,
between 1999 and 2002, the remains of between 14 and 15 percent of the
individuals who died in Florida were transported out- of- state. State
officials did not have data on the number of bodies that were transported
into Florida from other states for final disposition.

2 One airline was willing to provide data for 3 recent years, but we are
not reporting the data because we were unable to obtain comparable data
from other airlines or interstate shipping companies to provide a more
complete picture of trends involving the interstate transport of human
remains. Interstate Transit of Human Remains

Appendix XI: GAO Contacts and Staff Acknowledgments

Page 60 GAO- 03- 757 Death Care Industry John Mortin (202) 512- 8777 or
mortinj@ gao. gov Leo Barbour, Christopher Conrad, Tahra Edwards, Stu
Kaufman,

Daniel Mesler, Susan Michal- Smith, John Mingus, Amy Rosewarne, and Greg
Wilmoth made key contributions to this report. Appendix XI: GAO Contacts
and Staff

Acknowledgments GAO Contacts Staff Acknowledgments

Glossary Page 61 GAO- 03- 757 Death Care Industry This glossary is
provided for reader convenience, not to provide authoritative or complete
definitions. An area of ground set aside for burial or entombment. The
person who operates or manages the cemetery. The process of burning human
remains and the container encasing them and processing the resulting bone
fragments into ash.

A furnace for cremating remains or a building housing such a furnace. The
person who is responsible for operating or managing the crematory. The
process of preserving a dead body by means of circulating a preservative
fluid through the veins and arteries.

A professional who disinfects or preserves dead human bodies by the
injection or external application of antiseptics, disinfectants, or
preservative fluids.

A professional who prepares for the burial or other disposition of dead
human bodies, supervises such burial or disposition, maintains a funeral
establishment for such purposes, counsels with survivors. Synonym:
mortician, undertaker.

A building used for the purpose of embalming, arranging and conducting
funerals. Also called *funeral establishment,* *funeral firm,* or
*mortuary* in some states.

A method of identifying the occupant of a particular grave. Monuments or
markers are usually of metal or stone, which gives such data as the name
of the individual, date and place of birth, date and place of death.
Glossary

Cemetery Cemetery Operator Cremation

Crematory Crematory Operator Embalming

Embalmer Funeral Director Funeral Home Monument or Memorial Marker

Glossary Page 62 GAO- 03- 757 Death Care Industry That part of the funeral
service profession dealing with the proper preparation of the body for
final disposition. A contractual agreement whereby funeral and/ or burial
arrangements are made and paid for by an individual prior to his/ her
death.

Companies or businesses that are not affiliated with a funeral home or
cemetery that sell funeral goods. Mortuary Science

Pre- need Funeral Plan Third Party Sellers of Funeral Goods

(440147)

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