STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION BOARD OF FUNERAL )

DIRECTORS AND EMBALMERS, )

)

Petitioner, )

)

vs. ) CASE NO. 85-2702

) FLORIDA MORTUARY SERVICES, WILLIAM )

F. RICHARDT and ROBERT HEALY, JR., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officers Donald R. Alexander, on December 20, 1985, in Miami, Florida.

APPEARANCES

For Petitioner: Joseph W. Lawrence, II, Esquire

130 North Monroe Street Tallahassee Florida 32301

For Respondents: Louis B. Stoskopf, Esquire

1461 Northwest 17th Avenue Miami, Florida 33125

BACKGROUND

By administrative complaint filed on July 15, 1985, petitioner, Department of Professional Regulations Board of Funeral Directors and Embalmers, has alleged that respondents, Florida Mortuary Services, a licensed funeral establishment William F. Richardt a licensed funeral director and embalmer and Robert Healy, Jr., a licensed funeral director and embalmer had violated various provisions within Chapters 455 and 470, Florida Statutes.

It is alleged that during the period from 1976 until October 1984, respondents wrote, sold and issued at least

113 preneed funeral merchandise and service contracts to various individuals without possessing the lawful authority to do so under Chapters 470 and 639, Florida Statutes. It is further alleged that during this same period of time the funeral establishment held itself out through advertisements and representations as having authority to sell such contracts. Petitioner contends that such conduct

1. violated Section 470.028, Florida Statutes, which requires that all sales of preneed funeral service contracts be made pursuant to Chapter 639, Florida Statutes, and (b) violated Subsections 470.036(1)(g) and (h), Florida Statutes, which authorize disciplinary action against a licensee for "fraud or deceit or negligence . . . or misconduct in the practice of funeral directing or embalming," and for "a violation or repeated violation of this chapter."

   
   

   Respondents disputed these allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings by petitioner on August 5, 1985, with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated September 5, 1955, a final hearing was set for November 1, 1985, in Miami, Florida. At the request of respondents, the final hearing was rescheduled to December 20 1985, at the same location.

   
   

   On August 1, 1985, respondents filed a motion to dismiss the administrative complaint on the ground the Department of Insurance had jurisdiction over the matter since respondents were charged in part with failing to register to sell preneed contracts with that agency. The motion was denied by order dated October 15, 1985.

   
   

   At the outset of the final hearings respondents ore tenus moved for a continuance; a stay of this proceedings a joinder of the Insurance Commissioner as an indispensable party, and a consolidation of this matter with a complaint against respondents which had not yet been presented to the probable cause panel. All motions were denied.

   
   

   At final hearing petitioner presented by deposition the testimony of R. C. Blanton, Jr., F. James Wylie, Jr., Philip S. Bennett, Jr., Steve Berry, William F. Richardt

   and Robert Healy Jr. The depositions were identified as petitioner's exhibits 1-8, and over objection by respondents, were received in evidence. After petitioner rested, respondents moved to dismiss the complaint on the ground the agency had used selective enforcement against them thereby violating their constitutional rights. A ruling on this motion was reserved. Respondents also moved to dismiss the complaint on the ground petitioner had failed to establish a prima facie case. A ruling was reserved on this motion. Finally, respondents requested the record be kept open to allow them to either file an affidavit or depose a witness who would testify in response to the deposition testimony of Philip S. Bennett, Jr. This request was denied. The request was later renewed by motion to supplement the record. The motion was denied by order dated January 20, 1986. A motion for rehearing or to strike portions of submitted evidence was, filed by respondents on January 31, 1986. It will be dealt with in the Conclusion of Law portion of this order.

   
   

   The transcript of hearing was filed on January 23, 1986. Proposed findings of fact and conclusions of law were filed by respondents and petitioner on February 4 and 7, 1986, respectively. A ruling on each proposed finding of fact has been made in the Appendix attached to this Recommended Order.

   
   

   The issue is whether respondents should be disciplined for the alleged violations set forth in the administrative complaint.

   
   

   Based upon all of the evidenced the following findings of fact are determined:

   
   

   FINDINGS OF FACT

   
   

   1. Respondent, Florida Mortuary Services (FMS), is a licensed funeral establishment at 1495 N.W. 17th Avenues Miami, Florida, having been issued license number FH 661 by petitioner; Department of Professional Regulations Board of Funeral Directors and Embalmers (Board). Respondent, William F. Richardt, is a licensed funeral director and embalmer having been issued license numbers FE 0001490, EM 001490 and FD 0001334 by petitioner. He has been a licensed funeral director since 1967 and is owner and funeral director in charge of the funeral establishment. Respondent, Robert Healy Jr., is also a licensed funeral

      director and embalmer having been issued license numbers FE 000650, EM 000650 and FD 000500 by petitioner. At all times relevant hereto Richardt and Healy were employees of FMS.

      
      

   2. A preneed contract is defined by Subsection 639.07(6), Florida Statutes, as "a contract to furnish funeral merchandise or service in the future." A funeral homed or its agents and employees is authorized to sell preneed funeral contracts if a certificate of authority is obtained from the Department of Insurance (Department).

      
      

   3. In early January 1964, the Department received an anonymous complaint by mail that FMS was offering preneed burial service contracts without having first obtained a certificate of authority. On January 27, 1984, the Department issued a letter to FMS reciting that certain information concerning the sale of preneed contracts by FMS had been brought to its attention, that Department records indicated that FMS had no license under Chapter 639, and that if the allegations were true, FMS must cease and desist from such activities until the firm complied with the law. The Department also furnished FMS with a copy of an application and the applicable law. On February 2, 1984, counsel for FMS advised the Department by letter that he had instructed his client to cease and desist such activities, and that an application to sell preneed contracts would be forthcoming.

      
      

   4. In May 1964 FMS sought the services of Funeral Services, Inc. (FSI), a holding company of funeral directors and others formed to facilitate the sale of preneed contracts and to aid funeral directors in obtaining licensure under Chapter 639. However, FSI declined to act as agent for FMS because of the earlier cease and desist order issued by the Department and because it believed that FMS had continued to advertise the availability of preneed contracts after that order had been issued. In its proposed application filed with FSI, FMS stated that no contracts for preneed funeral services had been entered into prior to its licensure application being filed. It did so on advice of legal counsel since it did not consider the services previously offered to be preneed contracts within the meaning of Chapter 639. Instead it construed them to be "pre-planning agreements" and not subject to the provisions of Chapter 639.

   5. An application was then filed by FMS with the Department on August 22, 1984. After review and processing, a certificate of authority was issued by the Department effective October 24, 1984. In its application FMS certified that there were no preneed contracts in existence which predated the October 24, 1984 registration date.

      
      

   6. Through complaints of unknown origin; the activities of respondents were brought to the attention of petitioner, who issued an administrative complaint on July 15, 1985. That prompted the instant proceeding.

      
      

   7. Records of FMS confirms and respondents conceded that during the period from 1976 through 1983, Richardt as the owner and funeral director in charge of the funeral homed and the funeral homed entered into agreements to provide funeral services and merchandise with at least 130 individuals, including the 113 listed in the administrative complaint.

      
      

   8. The agreements with consumers reflected that FMS was providing "Services for Preneed" for the particular consumer. They specifically referred to FMS providing professional funeral directing services; provision for funeral home facility use, transportation, funeral merchandise and cash advances for the funeral at an agreed upon price. The agreement itself read as follows:

      
      

      The foregoing contract has been read by (to) me, and I hereby acknowledge receipt of a copy of same and agree to pay the above funeral account and such additional services and merchandise as ordered by me on or before

      19 . The liability hereby assumed is in addition to the liability imposed by law upon the estate and others, and shall not constitute a release thereof.

      
      

      The contract then contained a signature of the customer and the funeral director. Those contracts were entered into and signed by Healy or Richardt on behalf of FMS.

      
      

   9. Prior to October 1984, Richardt and FMS advertised the availability of a preneed trust plan through local telephone directories, business signs and radio advertising. In addition, approximately 20,000 advertising

      flyers were mailed to Broward County residents. These flyers stated that by signing up for the plan a consumer could avoid future price increases. They also stated that an installment payment plan was available, and that all monies received by FMS would be placed in a trust account at a banking institution in Miami. It also required a minimum payment of $100 in the form of a check or money order made payable to Florida Mortuary Services. Although the contract itself did not provide for refunding of the monies, the advertising flyer stated that the contract could be cancelled by the consumer. According to respondents, it was the intent of the contract to provide a guarantee of provision of the stated funeral services once the customer executed the agreement and made the required minimum down payment of at least $100.

      
      

   10. After an agreement was executed an account was set up at Amerifirst Federal in Miami with the following designation: "Florida Mortuary Services, in trust for 'Name of Customer'." Monthly bank statements showing the activity on each account were thereafter sent to FMS. If a person holding a preneed contract died, Richardt would present the banking institution with the death certificate and receive all monies in the account, including interest collected to date.

       
       

   11. Based upon the foregoing findings, it is found that the "agreements" sold or offered to be sold by respondents were in actuality preneed funeral contracts which cannot be sold unless approval from the Department of Insurance is obtained.

       
       

   12. After receiving the Department of Insurance certificate of authority in October, 1984, Richardt and FMS took all preexisting contracts and incorporated them into "new" contracts utilizing the contract format approved by the Department of Insurance. They were given new dates beginning with the date of licensure (October 24, 1984) and continuing through the end of the year. By doing so, FMS and Richardt made it appear that the contracts were entered into subsequent to the date of licensure. When the Department of Insurance conducted its annual audit of the insurance funds, it was informed by FMS that the contracts existed as of the new dates indicated on the contracts.

       The Department was never told about the original contracts, or the fact that such contracts were revised to meet the new Department format. Indeed, in its sworn annual

       statement filed with the Department, FMS represented that the first contract was entered into on October 24, 1984, and the other 129 contracts were entered into between that date and December 31, 1984.

       
       

   13. According to Richardt, FMS did not change its method or manner of transacting preneed business after October 1954, except to utilize the new contract form required by the Department. FMS continued to use the same method to create and make withdrawals from the trust account, and to provide the same contractual guarantees to the customer.

       
       

   14. Respondents maintain that the preneed agreements were just that and were not the contracts contemplated by Chapter 639. However, this position conflicts with the testimony of F. James Wylie, a Florida funeral director and administrative officer of FSI whose testimony is accepted as being more persuasive on the issue. According to Wylie, the contracts and advertising used by FMS prior to October 24, 1984, constituted the sale of preneed funeral service contracts. Wylie also opined that by engaging in this activity without a license, a funeral director was guilty of misconduct in the practice of funeral directing.

       Phillip S. Bennett, Jr., a preneed burial examiner for the Department of Insurance, corroborated Wylie's opinion and opined that FMS's activities constituted the sale and offering for sale of preneed contracts without licensure.

       
       

       CONCLUSIONS OF LAW

       
       

   15. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1); Florida Statutes.

       
       

   16. Respondents are charged with three statutory violations in conjunction with their activities during the years 1976-1983. First, it is alleged they violated Subsection 470.028, Florida Statutes, which requires, among other things, that "[a]ll sales of preneed funeral service contracts shall be made pursuant to chapter 639." It is next alleged respondents are guilty of "fraud or deceit, or negligence or misconduct in the practice of funeral directing or embalming" within the meaning of Subsection 470.036(1)(g), Florida Statutes. Finally, petitioner contends that respondents are guilty of "a violation or repeated violation of (chapter 470) or of chapter 455 . .

       ." These charges shall be discussed separately hereinafter.

       
       

   17. All agreements herein were executed between 1976 and 1983. The precise dates are not known, but it can be logically assumed that most, if not all, of the agreements were executed prior to October 1, 1983. That date is relevant since a revision of Chapter 639 became effective that date. Prior to October 1, 1983, Section 639.09, Florida Statutes, provided the following pertinent requirements relating to preneed burial contracts:

       
       

       No person shall receive, hold, controls or manage any funds tendered as payment on any preneed funeral service contract or preneed burial supply contract until such person is possessed of a certificate of authority, or renewal thereof issued by the Department under the circumstances hereinafter stated.

       
       

       Effective October 1, 1983, the same statute was amended to read as follows:

       
       

       1. No person may sell a preneed contract without first having a valid certificate of authority

          (2)(a) No person may receive any funds for payment on a preneed contract who does not hold a valid certificate of authority.

2. The provisions of paragraph (a) do not apply to any trust company or to any national or state bank or savings and loan association having trust powers which company, bank or association receives any money in trust pursuant to the sale of a preneed contract.

(3) No person may obtain a certificate of authority under this chapter for the preneed sale of services unless such person holds a license as a funeral establishment or as a direct disposal establishment under chapter 470.

Prior to October 1, 1983, relevant definitions were provided in Subsections 639.07(2), (3) and (5) as follows:

1. "Preneed funeral service contract" means any contract; other than a contract of insur- ance, under which, for a specified considera-

   tion paid in advance in a lump sum or by installments, a person promises, upon the death of a beneficiary named or implied in the contract, to furnish funeral services or burial supplies and equipment.

2. "Funeral service or services" as used in this chapter shall mean those services nor- mally performed by funeral directors, in- cluding the sale of burial supplies and equipment.

* * *

(5) "Preneed burial supply contract" means any contract under which, for specified consideration paid in advance in a lump sum or by installments a person promises, upon the death of beneficiary named or implied in the contract, to furnish burial supplies or services.

Effective October 1, 1983, the foregoing definitions in former Subsections 639.07(2), (3) and (5), were revised and

essentially incorporated into Subsections 639.07(5); (6) and (7), Florida Statutes, to read as follows:

1. "Funeral merchandise" means any personal property offered or sold by any person for

   use in connection with the final disposition or memorialization of a dead human body.

2. "Preneed contract" means a contract to furnish funeral merchandise or service in the future.

3. "Service" means any service offered or provided by any person in connection with the final disposition of a dead human body.

Because of the foregoing revisions, it is necessary to determine whether the pre-1983 law governs this proceedings or whether the post-1983 law is controlling as to the sale of the preneed contracts. As a general rule, statutes stating new grounds for licensure revocation should not be given retroactive effect. See for example, Nechtman v.

Saker 271 So.2d 26 (Fla. 3rd DCA 1972) (conduct proscribed by statute in force at time of decision cannot be applied retroactively); Department of Transportation v. James, 403 So.2d 1066 (Fla. 4th DCA 1982) (Career Service Commission statute in effect at time of incident applies as to "penalty" notwithstanding subsequent amendment). However,

the substantial restatement of an old ground in a new statute authorizes disciplinary action on the old ground under the new statute. Solloway v. Department of Professional Regulations 421 So.2d 573 (Fla. 3rd DCA 1982). In the case at bar, both the old and new statutes required that a certificate of authority be obtained before receiving funds for payment on a preneed contract.

Although former Section 639.09 prohibits only the receipt of funds relating to preneed contracts, but not the sale of same; former Section 639.06 makes clear that the intent of the old law was to govern both sales and contracts to sell funeral supplies, equipment and services, which intent corresponds with the current prohibition in Subsection 639.09(1). In addition, the definitions appearing in former Subsections 639.07(2), (3) and (5) have been consolidated and substantially readopted in new Section

1. Moreover, both the new and old statutes provide regulatory control over the same type of activity. Therefore, it is concluded that the legitimacy of respondents' activities should be measured under the standards imposed under new Chapter 639.

   
   

   1. Respondents are first charged with violating Section 470.028, Florida Statutes, by failing to obtain a certificate of authority from the Department of Insurance prior to selling preneed contracts. Respondents contend that they sold "pre-planning agreements" which differ from the statutory preneed contract, and as such, had no need to seek licensure from the State, or to report these transactions to regulatory authorities. In resolving this question, it is again helpful to make reference to Subsections 639.07(5), (6) and (7) and 639.09(1) and (2)(a), Florida Statutes (1985). They read as follows:

      
      

      1. "Funeral merchandise" means any personal property offered or sold by any person for

         use in connection with the final disposition or memorialization of a dead human body.

      2. "Preneed contract" means a contract to furnish funeral merchandise or service in the future.

      3. "Service" means any service offered or provided by any person in connection with the final disposition of a dead human body.

      * * *

      (1) No person may sell a preneed contract without first having a valid certificate of

      authority.

      (2)(a) No person may receive any funds for payment on a preneed contract who does not hold a valid certificate of authority.

      
      

      The evidence reflects that respondents contracted "to furnish funeral merchandise on service in the future" on at least 130 occasions between 1976 and 1983. According to the evidence the services or merchandise included professional funeral directing services, the use of the funeral home's facility, transportation, merchandiser and cash advances for the funeral. Richardt himself acknowledged that, except for the use of a newly approved Department form, the services and merchandise now offered under a certificate of authority do not differ in any respect from those offered between 1976 and 1983. Based on the foregoing, and testimony from two experts who concluded that such activities were improper, it is concluded that respondents were engaged in the activity of selling preneed contracts within the meaning of Chapter 639. By doing so without a certificate of authority, they failed to adhere to the provisions of Chapter 639 which in turn constitutes a violation of Section 470.028; Florida Statutes.

      Therefore, this portion of the charges has been established. 1/

      
      

   2. Respondents are next charged with violating Subsection 470.036(1)(g) which makes it unlawful for a licensee to commit "frauds or deceit, or negligence, incompetency, or misconduct, in the practice of funeral directing or embalming." As clarified in its post-hearing filing petitioner contends that respondents are only guilty of misconduct. Expert testimony supports the conclusion that by selling preneed contracts without appropriate licensure respondents are guilty of misconduct within the meaning of Subsection 470.036(1)(g), Florida Statutes.

      
      

   3. Finally, respondents are charged with violating Subsection 470.036(1)(g) by virtue of their having committed "a violation or repeated violation of this chapter." There, being evidence of repeated violations of Section 470.028, this charge has been proven.

      
      

   4. Respondents' motion to dismiss and motion for rehearing and to strike record are hereby DENIED.

   5. In its proposed orders petitioner recommends that the licenses of FMS and Richardt be suspended for two years with all but sixty days stayed, and that their licenses be placed on probation for five years. A two-year probationary period for Healy is suggested. Respondents obviously urge a different result, and contend that no willful and intentional violation of the law has occurred. Having considered the facts and circumstances in this case, and the economic harm accruing to respondents by virtue of having their viable business closed, it is recommended that petitioner's suggested penalty be imposed except that the suspension be stayed unless and until further violations occur during the probationary period. In that event the stay should be lifted.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law it is

RECOMMENDED that respondents be found guilty as charged in the administrative complaint, and the licenses of respondents Florida Mortuary Services and William F. Richardt be suspended for two years with said suspension stayed and their licenses placed on probation for five years, subject to such terms and conditions as the Board deems appropriate. The license of respondent Robert Healy, Jr., should be placed on probation for two years.

DONE and ORDERED this 17th day of February 1986, in Tallahassee, Florida.

Hearings

Hearings

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative

The Oakland Building 2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

FILED with the Clerk of the Division of Administrative

this 17th day of February 1986.

ENDNOTE

1/ Even if the pre-1983 law applied, respondents' activities would clearly fall within the proscription in former Section 639.09 since the activities fit the definitions in former Subsections 639.07(2), (3) and (5).

APPENDIX

PETITIONER:

1. Covered in finding of fact 1.

2. Covered in findings of fact 7, 8, 9 and 10.

3. Covered in finding of fact 3.

4. Covered in finding of fact 4.

5. Covered in finding of fact 5.

6. Covered in finding of fact 12.

7. Covered in finding of fact 13.

8. Covered in finding of fact 14.

RESPONDENTS:

NOTE - Respondents' proposed order contained only proposed findings of fact 16 and 17. The remaining paragraphs were labeled as either a statement of the case or conclusions of

law. Therefore only paragraphs 16 and 17 have been considered in this Appendix.

1. Partially covered in findings of fact 4 and 7. The remainder has been rejected as being irrelevant or unnecessary.

2. Substantially rejected as being unsupported by competent and substantial evidenced representing conclusions of law rather than findings of fact, or being unnecessary for a determination of the issues herein.

COPIES FURNISHED:

Joseph W. Lawrence, II, Esquire

130 N. Monroe St. Tallahassee Florida 32301

Louis B. Stoskopf, Esquire 1461 Northwest 17th Ave.

Miami, Florida 33125

R. C. Blanton Jr. Executive Director

Board of Funeral Directors and Embalmers Room 507, 111 E. Coastline Dr.

Jacksonville, Florida 32202

Docket for Case No: 85-002702

Orders for Case No: 85-002702