Findings Of Fact On or about June 7, 1979, Petitioner filed with the Department an application together with the required fee, for authority to transfer a cemetery company in St. Petersburg, Florida. The name of the cemetery company sought to be transferred is Royal Palm of St. Petersburg, Inc. A notice of receipt of the application was filed and published in the Florida Administrative Weekly, Volume 5, No. 24, on June 15, 1979. Thereafter, Respondents filed an objection to the granting of the requested transfer. Those Respondents who objected to the granting of the transfer were George E. Feaster, d/b/a Feaster Memorial Homes; Gerald B. Hubbell, d/b/a Hubbell Funeral Home; R. Lee Williams, d/b/a R. Lee Williams Funeral Home; J. Fred Bobbitt, d/b/a Bobbitt Funeral Chapel; A. Bruce Cloud, d/b/a Osgood Cloud Funeral Home; Fred H. Kenfield, d/b/a Fred H. Kenfield Funeral Home; C. James Mathews, d/b/a C. James Mathews Funeral Home; Edmund E. Thurston, d/b/a Wilhelm-Thurston Funeral Home; William J. Rhodes, d/b/a John S. Rhodes, Inc.; Donald I. Dyer, d/b/a The Palms Memorial; Patrick M. McGriff, d/b/a McGriff Funeral Chapel; David A. Dane, d/b/a R. Lee Williams Funeral Home; Lewis W. Mohn, d/b/a Lewis W. Mohn Funeral Home; Alan R. McLeod, d/b/a Alan R. McLeod Funeral Home; William F. McQueen, d/b/a Anderson-McQueen Funeral Home; Mrs. Letha F. Rhodes; Richard H. Fairfield; Betty W. Wilhelm; Timothy T. Brett and Terry Brett, d/b/a Thomas J. Brett Funeral Home; and William B. Gee and Edgar E. Pitts, d/b/a Gee & Pitts Funeral Home. Counsel for all parties stipulated at the final hearing that all Respondents objecting to the transfer are persons whose substantial interests would be affected by this proceeding within the meaning of Chapter 120, Florida Statutes. Respondents contend generally that Petitioner does not meet the statutory requirements contained in Section 559.34, Florida Statutes, for approval of the requested transfer. Petitioner is currently licensed as a cemetery owner in the State of Florida. Petitioner is presently the sole stockholder, president and chief operating officer of Florida Memorial Cemetery, Inc. In addition, Petitioner has previously owned three other cemeteries in Florida and currently owns a cemetery in Tennessee. Petitioner has been engaged in the cemetery business for more than 19 years, the last seven of which have been in the State of Florida. He has been licensed as a cemetery owner in the State of Florida since 1975. Petitioner's prior experience in the cemetery business includes all phases of cemetery operation from salesman to owner. In August of 1975, Petitioner purchased Florida Memorial Cemetery, Inc. At the time of purchase, Petitioner believed that he was assuming liabilities arising from the business activities of the corporation prior to purchase in the following amounts and for the following reasons: $250,000 to provide merchandise for contracts sold prior to 1972 when the Merchandise Trust Fund Law became effective. $150,000 to the Perpetual Care Trust Fund and the Merchandise Trust Fund attributable to sales made by Petitioner's predecessor in interest but not required to be funded at the time Petitioner purchases the corporation. $140,000 to build a mausoleum which the Petitioner's predecessor in interest had obligated the corporation to build. Accordingly, Petitioner was led to believe that outstanding liabilities of Florida Memorial Cemetery, Inc., at the time of purchase totaled $540,000. However, upon an audit conducted by the Department some time after purchase, Petitioner was made aware that the $150,000 pre-1972 obligation referred to above, was, in fact, approximately $350,000. This misunderstanding was due, at least in part, to Petitioner's failure to audit the books and records of Florida Memorial Cemetery, Inc., prior to purchase. It should be noted here that Petitioner had served as general manager of Florida Memorial Cemetery, Inc., from January 1973 until the time he purchased the corporation in August 1975. Cemetery companies selling burial rights and personal property or services on a pre-need basis are required to maintain percentages of those payments received on a pre-need basis in trust. Funds received from the sale of burial rights are maintained in a fund commonly referred to as the Care and Maintenance Trust Fund. Funds received from the sale of personal property or services are maintained in a fund commonly known as the Merchandise Trust Fund. Counsel for all parties stipulated at the hearing that Florida Memorial Cemetery, Inc., failed to timely deposit trust funds required by Florida law in the following amounts for the following audit periods: From January 1, 1976 to June 30, 1976, the Merchandise Trust Fund was deficient in the amount of $5,051.51. From July 1, 1976 to June 30, 1977, the care and Maintenance Trust Fund was deficient in the amount of $7,076.59, and the Merchandise Trust Fund was deficient in the amount of $17,773.23. From July 1, 1977 to June 30, 1978, the Care and Maintenance Trust Fund was delinquent in the amount of $26,068.60, and the Merchandise Trust Fund was deficient in the amount of $64,693.29. From July 1, 1978 to November 30, 1978, the Care and Maintenance Trust Fund was deficient in the amount of $12,317.20, and the Merchandise Trust Fund was deficient in the amount of $29,457.62. From December 1, 1978 through May 1, 1979, the Care and Maintenance Trust Fund was deficient in the amount of $14,827.82, and the Merchandise Trust Fund was deficient in the amount of $33,355.36. All deficits in the two trust funds described above were brought current within thirty days of notification from the Department. In addition, Florida Memorial Cemetery, Inc., has timely made its trust fund deposits since August 1, 1979, and was, at the time of final hearing in this cause, current on deposits to those trust funds. However, at the time the above-described deficits occurred, Petitioner at all times knew of their existence, knew that deposits into the trust accounts were required to be paid on a monthly basis, and made a business decision not to fund those trust accounts in order to use those funds to meet other obligations of the corporation. These obligations included the construction of a mausoleum which his predecessor in title had obligated the corporation to build, and the necessity for the corporation to purchase new merchandise. At the time the deficits in the two trust accounts existed at Florida Memorial Cemetery, Inc., Petitioner was actively engaged in other business pursuits. Petitioner and another investor purchased three other cemeteries in 1976, and borrowed approximately $75,000 to bring the trust funds of those cemeteries current. These cemeteries were later sold by Petitioner and his co- investors. In addition, in 1978 Petitioner created Florida Cemetery Products, Inc., a company engaged in the manufacture of fiberglass vaults. Petitioner invested $25,000 in this company at the time of its creation. In December 1978 or January 1979, Petitioner formed Florida Memorial Mortuary with an initial investment of $25,000. Finally, in June 1979 Florida Memorial Cemetery, Inc., purchased from Petitioner approximately five acres of land at a purchase price of $200,000, $30,000 of which purchase price was paid in cash to Petitioner. Further, during 1979 Florida Memorial Cemetery, Inc., expended $20,000 to $25,000 for the purchase of statues to be placed on the grounds of the cemetery. All these investment activities were conducted at a time when Petitioner knew of the existence of deficits in the various trusts required to be maintained by Florida Memorial Cemetery, Inc. Since Petitioner took over ownership of Florida Memorial Cemetery, Inc., the amount spent on maintaining the cemetery has more than doubled, new features have been added, more cemetery land has been obtained (a portion of which, as indicated above, was purchased by the corporation from Petitioner), roads have been improved, and the number of ground personnel maintaining the cemetery has been doubled. The current cost of maintaining Florida Memorial Cemetery, Inc., is approximately $80,000 to $90,000 per year. Income on the Care and Maintenance Trust Fund from the cemetery is approximately $30,000 to $40,000 per year, which sum is applied toward maintenance expenses. In the application form required to be filed with the Department in order to obtain authority to transfer an existing cemetery company, there is contained a series of questions. One of the questions inquires as to whether the applicant or any company with which he has been associated as an officer or member has ever been declared bankrupt. On the application form Petitioner answered this question in the negative. However, at final hearing in this cause, Petitioner admitted that he had filed for personal bankruptcy, and had been adjudicated a bankrupt in Tennessee in 1966. In explaining his failure to truthfully answer the Department's inquiry in this regard, Petitioner indicated that that period had been a particularly difficult one in his life, and that he had "wanted to put the past behind me." Another question on the application form inquired as to whether Petitioner had any judgments against him. Petitioner answered this question in the negative. At final hearing in this cause, however, Petitioner testified that he had been contacted by a collection agency or a credit bureau some time in 1973 concerning judgments outstanding in Iowa resulting from the operation of a company called "Midwest Sales." Petitioner takes the position that these judgments, copies of which were not introduced into evidence in this record, were not valid against him because personal service of process on him had not been obtained, and the judgments were for debts of "Midwest Sales." It is, however, clear that Petitioner knew of the existence of some dispute in this connection, and that some judgments might be outstanding against him, but failed to divulge their existence on his application form. Petitioner did not include with his application filed with the Department a map showing land platted for burials in the cemetery which he seeks to acquire. The owners of Royal Palm of St. Petersburg, Inc., the cemetery of which Petitioner seeks to obtain ownership, wish to sell the cemetery to Petitioner. The owners of the cemetery are not actively involved in its management, but receive frequent complaints concerning the maintenance and upkeep of the cemetery. Petitioner has apparently made plans to make capital improvements to and upgrade the maintenance of the cemetery if his application is approved. An unaudited financial statement received into evidence at the final hearing in this cause upon Petitioner's swearing to its accuracy indicates that Petitioner and his wife possessed a net worth of $457,000 as of September 30, 1979. An earlier unaudited financial statement submitted by Petitioner to the Department with the filing of his application indicated the net worth of Petitioner and his wife was $1,616,500 as of December 31, 1978. The earlier financial statement was not sworn as required by the Department's rules. It should also be noted here that Petitioner's wife is not a party to the application here under consideration. The parties to this proceeding submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that such findings of fact are not adopted in this Recommended Order, they have been specifically rejected as being either irrelevant to the issues in this cause, or as not having been supported by the evidence.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a Final Order be issued by the Department of Banking and Finance denying the application of Gene S. Crowe for authority to purchase and acquire control of Royal Palm of St. Petersburg, Inc. RECOMMENDED this 28th day of December 1979, in Tallahassee, Florida. WILLIAM E. WILLIAMS Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of December 1979. COPIES FURNISHED: Philip F. Nohrr, Esquire Post Office Box 369 Melbourne, Florida 32901 Laura Bamond, Esquire Office of the Comptroller 1313 Tampa Street Tampa, Florida 33602 Douglas L. Stowell, Esquire Barnett Bank Building Suite 710 Post Office Box 1019 Tallahassee, Florida 32302
The Issue The issues in this proceeding are whether Emerald Coast Funeral Home (Emerald Coast) and Jeffrey Kevin Watts (Watts) failed to treat remains with dignity and respect in violation of Section 497.386(4), Florida Statutes, and whether Emerald Coast was required by Section 497.380(12)(a), Florida Statutes, to submit a change of ownership application.
Findings Of Fact Emerald Coast has been licensed to operate a Funeral Establishment in the state of Florida and as an Apprentice- Intern Training Agency since May 4, 1998, holding license numbers FO41292-2600-01 and FO41292—2200-01. In 1997, Carriage Services of Florida, Inc., acquired Emerald Coast Funeral Home from Forest Lawn/Evergreen Management Corporation. Emerald Coast is a fictitious name registered with the Florida Department of State, Division of Corporations, to Carriage Funeral Holdings, Inc. Also in 1997, Carriage Funeral Holdings, Inc., became the indirect owner of Emerald Coast through issuance of all the shares of common stock of Carriage Services of Florida. In 1998, shortly after the merger, Emerald Coast filed a change of ownership application with the Board of Funeral Directors & Embalmers. Unfortunately, the application contains a scrivener’s error that erroneously reflects “Carriage Funeral Services of Florida” as the owner of Emerald Coast instead of Carriage Services of Florida, Inc. However, the attachments to Emerald Coast’s application properly identify Carriage Services of Florida, Inc., as the direct owner of Emerald Coast, and Respondent’s records reflected Carriage Services of Florida as the owner. Additionally, at the time Emerald Coast’s application was filed, one of the attachments reflected that Carriage Services, Inc., was the sole shareholder of Carriage Services of Florida, Inc. However, as indicated, since 1997, Carriage Funeral Holdings, Inc., has owned all the common stock of Carriage Services of Florida, Inc., and is the ultimate owner of Emerald Coast. In 2000, Carriage Services of Florida, Inc. merged into Carriage Cemetery Services, Inc., a Texas corporation authorized to do business in the State of Florida. Under the Articles of Merger, Carriage Services of Florida and Carriage Cemetery as the constituent corporations merged into the surviving corporation Carriage Cemetery Services. Carriage Services ceased to exist and, by the terms of the merger, Carriage Services shares of stock were cancelled. The official records of the Department of State do not contain any corporate annual reports for Carriage Services after 1999. The official records of the Department of State do contain required corporate annual reports for Carriage Cemetery up through 2009. There was no evidence regarding the relationship between Carriage Holdings and Carriage Cemetery. However, all three corporations appear to be owned by the same individuals, but are legally separate entities. As separate entities, the merger of Carriage Services with Carriage Cemetery technically caused a change of ownership of Emerald Coast to occur at the time of the merger, since Carriage Services ceased to exist. At that point, the new owner should have notified the Department of the change in ownership. Emerald Coast did not file such a notification. There was no evidence that Emerald Coast intentionally elected not to notify the Department regarding its change in ownership or that it was trying to hide such change. As indicated, the people at Emerald Coast’s corporate headquarters remained the same, even though the technical corporate entity changed. However, the failure to notify the Department about the change in ownership is a violation of Florida law, albeit a very minor violation, easily corrected by filing the correct paperwork with the Department. Except for failing to notify the Department, no other violation of Florida law was shown by the evidence, since the funeral establishment is the licensed entity under Florida law and Emerald Coast, as the licensed funeral establishment, had a valid license to operate as such. Given these facts, Emerald Coast is guilty of violating Section 497.380(12)(a), Florida Statutes. All other statutory violations alleged in Count II of the Administrative Complaint should be dismissed. Jeffrey Kevin Watts has been a licensed Funeral Director and Embalmer for approximately 20 years holding license number FO47717. In 2008, he was the funeral director for Emerald Coast. In February of 2008, the family of decedent B.C. hired Emerald Coast to provide funeral services. Those services included embalming B.C.’s body for viewing and cremation. To enable Emerald Coast to prepare B.C.’s body for viewing, B.C.’s husband executed a written Embalming Authorization. The written Authorization authorized Emerald Coast to care for and prepare for disposition of B.C. in accordance with its customary practices. Additionally, B.C.’s family provided Emerald Coast with a photograph of B.C. in life. The purpose of the photograph was to enable Emerald Coast to prepare B.C.’s body for viewing by her friends and family. In fact, the goal of the embalming process was to restore B.C. to as natural state as possible towards which the picture served as the standard. Importantly, B.C.’s tongue did not protrude between her teeth and out of her mouth while she was alive. Thus, the goal was to prepare B.C.’s body so that her mouth would close normally and she would resemble the photograph provided by her husband. In order to prepare a body for viewing, the body of the deceased must be embalmed. Embalming is a restorative art and always involves removing fluid and tissue from the body and replacing the same with embalming fluid. The evidence demonstrated that it is standard practice for some tissue to be removed and discarded down the drain and some tissue to be removed and discarded in a biomedical waste container at the funeral home. The condition of the body at the time of death determines how much tissue must be removed from a decedent’s remains in order to restore the exterior features of that person to its natural appearance. On February 15, 2008, Mr. Watts embalmed the body of B.C. in preparation for its viewing on February 17, 2008. During the embalming process, B.C.’s tongue became swollen. Such swelling is not a frequent occurrence of the embalming process; but it is always a possibility due to the nature of the embalming fluid used to embalm a decedent’s body. In this case, the swelling caused B.C.’s tongue to protrude from her mouth and disfigure her appearance. The decedent’s tongue protruded approximately a quarter of an inch beyond her upper and lower front teeth and prevented the mouth from being closed. The disfigurement would not have allowed B.C. to be viewed with a normal appearance since her tongue would have protruded from her mouth. To reduce the swollen tongue, Mr. Watts first tried to put the tongue back into B.C.’s mouth using firm digital pressure. The pressure was unsuccessful. He also tried to roll decedent’s tongue back into her mouth and reduce the swelling using a series of forceps and clamps. Mr. Watts also attempted to reduce the swelling in decedent’s tongue using a hot towel. These procedures were also unsuccessful and did not improve B.C.’s appearance. Mr. Watts then attempted to suture the inside of B.C.’s upper and lower lip area. However, the sutures did not keep B.C.’s tongue from protruding out of her mouth and did not restore a natural appearance to B.C.’s remains. Next, Mr. Watts tried to put cardboard into B.C.’s mouth to create a barrier that would hold the tongue back. The cardboard was unsuccessful. He also used a syringe to try to remove the fluid from B.C.’s tongue. Again, the attempt was unsuccessful and B.C.’s tongue continued to protrude past her teeth. After all these methods failed to restore B.C. to a natural appearance, Mr. Watts consulted his supervisor, Chuck Jordan, regarding the swelling in the decedent’s tongue. Like Mr. Watts, Mr. Jordan tried to reduce the swelling in the B.C.’s tongue and to force it back into position. Importantly, all of the methods used by Mr. Watts and Mr. Jordan are standard practices in the embalming industry. In fact, the process and practices followed by both men are recognized as appropriate practices to restore a body’s natural appearance. As a last resort, Mr. Jordan and Mr. Watts agreed that excision of the protruding portion of the tongue was the only procedure that would restore B.C.’s natural appearance. Mr. Jordan authorized Mr. Watts to excise the protruding portion of B.C.’s tongue. Again, excision of the tongue, or a portion thereof, in cases such as the one here is an accepted and customary embalming practice specifically recognized by the industry and is addressed in the textbook used by all 49 of the colleges of mortuary science in the United States – Embalming: History, Theory and Practice by Robert G. Mayer – as a proper method of last resort in restoring a body to its natural appearance. Thereafter, Mr. Watts excised the protruding portion of B.C.’s tongue by tracing over the upper and lower teeth with a scalpel. This procedure resulted in the excision of a piece of waste tissue that measured approximately a quarter of an inch wide by an inch and a quarter long. He did not remove a body part from B.C.’s body since B.C.’s tongue remained with her body. After removal, Mr. Watts placed the excised tissue in the biomedical waste container in the preparation room. Such a receptacle is the appropriate container in which to dispose of waste tissue. Indeed, the better expert evidence demonstrated that disposal of such waste tissue as biomedical waste is appropriate and is standard practice in the industry. There was no clear and convincing evidence that demonstrated disposal of waste tissue, like the tissue in this case, was disrespectful or an undignified handling of a person’s remains especially since standard mortuary practice recognizes such disposal as appropriate. Moreover, there was no clear or convincing evidence that the excised portion of B.C.’s tongue constituted human remains since they were no longer part of the decedent’s body. In February of 2008, Kirk Kahler was a licensed embalmer’s apprentice working for Emerald Coast under the supervision of Mr. Watts. As the supervising embalmer, Mr. Watts was responsible to teach and instruct Mr. Kahler. On February, 17, 2008, Mr. Watts discussed the excision of the protruding portions of B.C.’s tongue with Mr. Kahler. Mr. Watts discussed the issues with B.C.’s tongue because the methods and processes he used to resolve the protruding tongue do not occur frequently; but, do occur during the embalming process. It was an opportunity for Mr. Kahler to learn about an infrequent occurrence in the embalming industry. While Mr. Watts was checking the point of excision to ensure there would be no fluid leaks from the area, Mr. Kahler asked Mr. Watts where the excised tissue was and how much had been removed. Mr. Watts informed Mr. Kahler the tissue was in the biomedical waste receptacle and removed it to show Mr. Kahler the amount of tissue removed. In order to show the tongue to Mr. Kahler, Mr. Watts held the tongue up. Mr. Kahler testified that Mr. Watts held the tongue up “like a trophy fish.” Mr. Watts denied such an action or that he demonstrated a “trophy fish” attitude. Such a personal opinion by Mr. Kahler about another person’s attitude or thoughts is neither clear nor convincing evidence that Mr. Watts treated B.C.’s tongue in an undignified manner. After showing Mr. Kahler the excised tissue, Mr. Watts placed the tissue back into the biomedical waste container. Later that day, without Emerald Coast’s consent, Mr. Kahler removed the excised tissue from the biomedical waste container, placed it in an envelope, and kept it in his mailbox at Emerald Coast. Mr. Kahler, whose rationale is somewhat suspect in this case, testified that he took the tissue because he was outraged by Mr. Watts’ handling of the tissue, thought the family should have been advised about the excision of the tissue, and thought the waste tissue should have been cremated with B.C.’s body. His desire was to preserve the tissue as evidence. The family of B.C. held her viewing and service on February, 17, 2008. On February 21, 2008, Mr. Kahler transported B.C.’s body to the crematorium where she was cremated. Even though Mr. Kahler professed concern for the family and felt that the excised tissue should have been placed with the body, Mr. Kahler neither advised the family about the excised tissue, nor placed the excised tissue with the body even though he had the opportunity to do so. Later, after his resignation from Emerald Coast in the middle of March, 2008, Mr. Kahler took the envelope home with him and kept it on his kitchen counter for approximately 45 days. On March 21, 2008, Mr. Kahler emailed the corporate headquarters of Emerald Coast regarding “the removal of a large portion of tongue,” from a decedent’s body. The email also voices other concerns about the management of Emerald Coast. Mr. Kahler again emailed corporate headquarters to advise that he had the “referenced tongue.” He communicated the same message about his possession of “the tongue” to corporate headquarters again on March 30, 2008. At some point, Emerald Coast’s corporate headquarters contacted its attorney regarding Mr. Kahler’s removal and possession of excised tissue from Emerald Coast. On April 29, 2008, the attorney wrote Mr. Kahler a letter demanding that he return the tissue to Emerald Coast by a specific date and time. The attorney advised that if Mr. Kahler did not return the tissue, Carriage would file a civil suit against Mr. Kahler. The letter does not constitute an admission by Respondents that the excised portion of B.C.’s tongue meets the definition of remains contained in Chapter 497, Florida Statutes. On April 30, 2008, Mr. Kahler responded that he would return the tongue to the family since he felt it “technically” belonged to them. He also stated that he would “contact his friends at the local newspaper.” That same day, Mr. Kahler asked that Petitioner contact him about the “illegal removal of body parts.” At that time, Mr. Kahler had the excised tissue in his possession for 70 days. An investigator for the Department met with Mr. Kahler and advised him to return the tissue to Emerald Coast so that it could be disposed of properly. Shortly after that meeting, Mr. Kahler returned the tissue to Emerald Coast. However, the evidence was neither clear nor convincing that either Emerald Coast or Mr. Watts treated B.C.’s remains in an undignified or disrespectful manner. The procedures they used to restore B.C. to a natural appearance were standard procedures. The disposal of the waste tissue from that restorative process was likewise standard. Similarly, there was no clear or convincing evidence that demonstrated Mr. Watts treated B.C.’s remains in an undignified or disrespectful manner. Mr. Kahler’s opinion is simply insufficient to demonstrate that either Respondent violated Florida law regarding the treatment of human remains. Based on these facts, the Count I of the Administrative Complaint filed against Emerald Coast should be dismissed. Similarly, the Administrative Complaint against Mr. Watts should be dismissed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore, RECOMMENDED that a final order be entered dismissing the Administrative Complaint filed against Jeffrey Kevin Watts and dismissing Count I of the Administrative Complaint filed against Emerald Coast. It is further RECOMMENDED that a final order be entered finding Emerald Coast guilty of violating Sections 497.380(12)(a) and 497.152(1)(a), Florida Statutes, and issuing a letter of reprimand for such violation. DONE AND ENTERED this 5th day of October, 2009, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 2009. COPIES FURNISHED: Thomas A. David, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Derek E. Leon, Esquire Christopher J.M. Collings, Esquire Morgan, Lewis & Bockius, LLC 5300 Wachovia Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2399 Diana M. Evans, Director Bureau of Funeral and Cemetery Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0350 Robert Beitler, General Counsel Department of Financial Services 200 East Gaines Street, Suite 526 Tallahassee, Florida 32399-0350
The Issue The issues in this case are whether the issuance of a license to Abbey Hills to operate a perpetual care cemetery would promote competition and whether Abbey Hills' application is complete and truthful.
Findings Of Fact By application dated September 9, 1992, Willard I. Timmer and his wife, Marilyn Timmer, as "proponents," applied for a license to operate a new cemetery on Denton Avenue, Hudson, Pasco County, Florida. The Timmers filed the application on behalf of Abbey Hills Memory Gardens, Inc. (Abbey Hills). By letter dated September 16, 1992, the Department of Banking and Finance (Department) requested additional information, including financial statements for Mr. and Mrs. Timmer and Abbey Hills and a copy of the sales contract for the real property on which the proposed cemetery would be located. By letter dated November 12, 1992, the attorney for Mr. and Mrs. Timmer forwarded to the Department financial statements for the Timmers and Abbey Hills and a copy of the contract for the purchase of the cemetery property. The personal financial statements, which were identical, showed, among other things, a market value for all of the Timmers' funeral homes and cemeteries of $30,000,000 and a net worth of $30,691,111. The "company report" of Abbey Hills showed assets of an initial capitalization of $2000 cash and $5000 in organizational costs. The "company report," which disclosed no liabilities, listed the purchase and sale contract as an asset worth the sales price of $200,000. The net worths of Mr. and Mrs. Timmers and Abbey Hills are overstated. The Timmers' net worth was based on gross retail sales values of all of the vacant cemetery lots in all of their cemeteries. The company's net worth treated the sales price of the land as an asset equal in value to the contract sales price. In fact, Abbey Hills is a new corporation without any net worth. In the case of Mr. and Mrs. Timmer, it is impossible to determine the extent of the overstatement, but they appear to have substantial net worth. Mr. Timmer owns and operates several well-established, profitable cemeteries in and out of Florida and has over 40 years' experience in the cemetery business. The contract to purchase the property describes the site as consisting of about 58 acres. The contract lists Memory Gardens Acquisition, Inc. as the purchaser and contains a closing date of June 25, 1992. The closing date has since been duly extended to April 1, 1994. Memory Gardens is a corporation formed by the Timmers to acquire the cemetery property for Abbey Hills. By memorandum dated December 1, 1992, Andrew Grosmaire, a Department financial specialist, informed his supervisor, W. T. Sims, a Department financial supervisor, that Pasco County contained three licensed cemeteries with a fourth "approved for licensure." After a discussion of various factors, the memorandum recommends that Mr. Sims waive the need survey. On December 8, 1992, Mr. Sims noted on a copy of the memorandum that he agreed to waive the need survey. On December 15, 1992, Mr. Grosmaire signed an internal Department form indicating his recommendation to approve the application. As a result, the Department, in approving Abbey Hills' application, waived the requirement of need based on a determination that the addition of Abbey Hills would promote competition. On December 24, 1992, the Department published in the Florida Administrative Law Weekly a notice of intent to "approve an application for a new cemetery company to Mr. Willard Timmer, the majority owner of the following cemetery company: Abbey Hills Memory Gardens, Inc." On December 31, 1992, the Department sent a letter to the attorney for the Timmers informing him that the Department has "tentatively approved the application of Abbey Hills Memory Gardens, Inc. . . . to establish a new cemetery company in Pasco County." The letter advises that, if no objections were received within 21 days of the date of publication of the notice of intent to issue, then the Department must receive, within 12 months of the date of the letter, 13 items: a legal description of the property including acreage; development plans for the cemetery; written approval from the governing zoning authority; a certified report from a registered testing laboratory concerning the water table at the site; written approval from the local board of health; designation of a general manager who must be of good moral character with not less than one year's experience in the Florida cemetery business; a trust agreement for perpetual care; evidence of a $25,000 deposit into the trust fund; a trust agreement for merchandise; certification that the real property is free and clear of any financial encumbrances; a copy of the recorded deed showing the notice required by Section 497.006(4)(f); documentation of the development of at least two acres including a paved road from a public highway; and a $250 license fee. On the day before the beginning of the final hearing, Abbey Hills supplemented its application without objection. The new information indicated that Mr. Timmer had merely attended rather than graduated from Illinois Institute of Technology. The new information also included a soils report and site development plan. There is not yet any approval from the local zoning board or the local health department. The soils report states that Geoscience & Materials Engineers, Inc. had conducted 10 standard percolation tests on the site on July 21, 1993, and reviewed other data sources. Finding a range of water table elevations on the property, which contains three lakes, the report states that the seasonal high water line at the test sites, which are characterized generally by rapidly draining soils, ranges from depths of 35" to 66". The average depth is about 52". The report concludes that the "majority of the area designated for ground burial is adequately drained and suitable for these purposes." The site development plan, which is tentative, shows initial development only for the northern two-thirds of the property, of which only five acres will be used at first for interments. The cemetery entrance and some of the space reserved for ground burials, covers, among other areas, a relatively small area characterized by a relatively high seasonal water table and poorly drained soils that may be under standing water for 6-9 months annually. However, there is no reason why this problem cannot be managed through the use of fill and careful selection of actual burial sites. The proposed cemetery would be landscaped in a garden style with numerous plantings, featuring indigenous vegetation and low density burials at a rate of no more than 900 units per acre as opposed to the more typical 1200 units per acre. The proposed cemetery would highlight the lakes and use treated wastewater effluent from a nearby source in order to irrigate the vegetation and maintain the cemetery's aesthetic appeal. Initially at least, Mr. Timmer does not plan to operate either a funeral home or a crematorium on-site, but he would sell a full range of funeral merchandise, such as caskets, vaults, and markers. Mr. Timmer owns Parklawn Cemetery in Pinellas County about 29 miles south of Abbey Hills. He intends to reduce operating expenses at Abbey Hills by sharing the sales and maintenance staff between the two cemeteries as much as possible. He is willing and able to fund the investment without short- or medium-term returns. Abbey Hills would be located about 1.5 miles east of US Rte. 19 in the northwest corner of Pasco County about 3.5 miles east of the Gulf of Mexico and 10-11 miles north of New Port Richey. US Rte. 19 is the main north-south artery through west Pasco County. Abbey Hills would be only about three to four miles south of the Hernando County line. Grace Memorial Cemetery is owned by Cemetery Investments, Inc. The closest licensed cemetery to the proposed Abbey Hills, Grace is one to two miles from Abbey Hills and is located directly on US Rte. 19 about two miles south of Hernando County. Encompassing 52 acres, Grace has 42 acres developed for cemetery use. Just over 12 miles in a direct line from Abbey Hills' proposed location, but considerably further via roads, is Florida Hills Cemetery, which is the only licensed cemetery in Hernando County. Florida Hills is located near the Hernando County Airport about two miles west of US Rte. 41, which, when it passes through Pasco County, is, with I-75, one of the two major north- south arterials running through the central part of the County. Florida Hills, which was started in 1974, consists of 84 acres, of which only 13 acres are developed for cemetery use. Florida Hills contains 54,000 unused spaces. Florida Hills markets largely in the Spring Hill area, which consists of a number of residential subdivisions mostly in south Hernando County. Meadowlawn, which is in New Port Richey, is just over 12 miles in a direct line from the proposed location of Abbey Hills and somewhat further via road. Started in 1965, Meadowlawn consists of 51 acres, of which 24 acres are developed. It has roughly a 63-year supply of burial spaces. The aesthetic appeal of Meadowlawn and, to a lesser extent, Grace is less than that planned by Mr. Timmer for Abbey Hills. Meadowlawn is presently owned by SCI Funeral Services of Florida, Inc., which is the largest owner and operator of cemeteries in Florida. The corporate parent of SCI Funeral Services of Florida, Inc. is one of the largest owners and operators of cemeteries and funeral homes in the United States. A new licensed cemetery known as Trinity is to be located about six miles east of Meadowlawn. Trinity will serve a residential subdivision known by the same name. The record does not clearly disclose the size or scope of Trinity's planned cemetery operations. The only other licensed cemetery in Pasco County is Chapel Hills, which is south of Dade City in southeast Pasco County. Chapel Hills is over 27 miles from the proposed Abbey Hills location. The cemetery market in Pasco County is divided into west and east Pasco County, so Chapel Hills does not affect, and will not be affected by, the cemeteries located in west Pasco County. More important to the west Pasco County cemetery market are cemeteries in north Pinellas County. Cycadia, which is nearly 18 miles south in a direct line from the proposed Abbey Hills location, is about two miles south of the Pinellas County line on US Rte. 19. Cycadia is a Greek cemetery and captures much of the Greek business in Pinellas and Pasco counties. Almost three miles south of Cycadia on US Rte. 19 is Curlew Hills. Two miles south of Curley Hills is Mr. Timmer's Parklawn. Sylvan Abbey, which is in Safety Harbor, is about six miles in a direct line southeast of Parklawn. Each of these cemeteries does some business in west Pasco County, especially the southern end of west Pasco County. National Cemetery is about 45 miles northeast of Abbey Hills' proposed location, via State Road 52 and I-75. Located in Bushnell, which is in Sumter County, National Cemetery is limited to military veterans and their immediate families. Although distant from the cemeteries in this case, National Cemetery has a significant impact upon their market due to the inexpensiveness of its goods and services, as described below. Less significant competition to licensed cemeteries comes from unlicensed cemeteries operating in the area. These are operated by religious or private organizations or municipalities. Funeral homes are a more important source of competition for licensed cemeteries. Funeral homes market the same goods and services marketed by cemeteries. Funeral homes even broker burial spaces that they purchase from customers who have bought them from cemeteries. There are 16 funeral homes in west Pasco County. SCI Funeral Services of Florida, Inc. owns six of them, including the funeral home located directly in front of Grace. However, two of Grace's minority owners each owns a funeral home in the area. And the funeral home located in front of Florida Hills is owned by a minority owner of Florida Hills. Licensed cemeteries also face serious competition from crematoria. Cremations are performed by some funeral homes, such as one owned by SCI Funeral Services of Florida, Inc. near Hudson, as well as cemeteries. Cremations without a service cost about $700-$800, but, with a service, may run $1600- $2000. Direct-disposers perform cremations for even less--about $500-- because they have relatively little capital tied up in equipment. By contrast, a funeral often costs over $3000. The demand for cemetery services is influenced by population growth. Pasco County has grown from 36,785 persons in 1960 to 281,131 persons in 1990. From 1980 to 1990, the County's population increased 45 percent, while the population of the entire state increased only 33 percent during the same time period. Pasco County's population is concentrated at older age levels than is the statewide population, and Pasco's growth during the past 30 and especially 10 years has been most dramatic in the age groups over 69 years old. In 1960, residents over 69 years of age in Pasco County constituted 1.34 percent of the total population of these age groups residing in Florida. By 1980, the figure had risen to 3.07 percent, and by 1990, the figure had risen to 3.77 percent. Residents aged 65 years and over are projected to be the second fastest-growing age group in Pasco County through 2010, and Pasco's share of Florida's residents over 65 years of age is projected to continue to grow through 2010. Correspondingly, the average number of deaths in Pasco County has risen from 463 in 1960 to 2835 in 1980 to 4206 in 1990, with a death rate significantly higher than the statewide death rate for each of these years. About 4500 residents of Pasco County are projected to die in 1993. Applying the same projected average death rates to projected populations, Pasco County will experience over 5200 deaths in 2000 and 6200 deaths in 2010. Overall, there will be considerable, ongoing demand for cemetery services in Pasco County for the foreseeable future. Pasco ranks sixth among counties in Florida for population aged over 65 years, eighth for projected increase in population aged over 65 years from 1990 to 2010, and seventh for projected population aged over 65 years in 2010. However, the strong demand for cemetery services driven by favorable population increases, demographics, and death rates is tempered by several factors. Not all persons dying in Pasco County are interred or entombed there. Many County residents are from elsewhere and wish to be returned after death to their homes in the north or midwest. As many as 20-25 percent of the Pasco County corpses are shipped out of the County. On the other hand, "ship-ins" of corpses into the County evidently are not statistically significant. Another factor limiting demand for cemetery services is the increasing popularity of cremation. For various cultural and personal reasons, more persons or their survivors are choosing the alternative of cremation. Increasing at the rate of 1-2 percent points annually for the past five years, the cremation rate presently is about 35 percent. It is difficult to predict where the cremation share of the market will plateau, but market shares of as much as 55-60 percent may someday be reached. Sarasota County, where only 900 burials took place in 1992, presently experiences about a 60 percent cremation rate, and Pinellas County's cremation rate is in the 50-59 percent range. Thus, after taking into consideration the 35 percent of the deaths cremated and 25 percent shipped out of Pasco County, only 40 percent of Pasco County deaths remain available for the existing cemeteries to inter or entomb. In 1991, about 14 percent of the full-casket burials in Pasco and Hernando Counties went to the National Cemetery. The National Cemetery is a federally operated cemetery offering veterans and their immediate families free burial spaces, openings and closings, vaults, and markers. Operating only since 1988, the impact of National Cemetery upon cemeteries in Pasco and Hernando counties will unlikely lessen in the foreseeable future. The effect of National Cemetery, which has been expressed as a percentage of full-casket burials, will leave something less than 40 percent of the Pasco County entombments and interments for the remaining cemeteries. After also factoring in the increasing rate of cremations, it may be estimated that about 33 percent of the deaths in Pasco County will yield interments or entombments for area cemeteries between 1990 and 2010. One-third of 4500 deaths for 1993 means 1500 local interments or entombments; one-third of 5200 deaths in 2000 means 1733 local interments or entombments; and one-third of 6200 deaths in 2010 means 2067 local interments or entombments. From 1988-92, Grace Memorial respectively had, for each year, 353, 389, 365, 378, and 426 entombments and interments. Grace Memorial performed 581, 661, 666, and 658 cremations each year, respectively, from 1989-92. From 1988-92, Meadowlawn respectively had, for each year, 811, 707, 682, 701, and 721 entombments and interments. Meadowlawn performed 151, 154, 169, and 139 cremations each year, respectively, from 1989-92. Annualizing six months' figures for entombments and interments, on the one hand, and cremations, on the other hand, Meadowlawn projects 810 entombments and interments and 226 cremations for 1993. The record does not disclose interment and entombment figures for Chapel Hills cemetery in east Pasco County, although there is a 4:1 ratio of funeral homes in west Pasco County versus east Pasco County (16 versus 4) and there would be a 4:1 ratio of licensed cemeteries in west Pasco County versus east Pasco County if Abbey Hills were approved. Given its proximity to Polk and Hillsborough Counties, Chapel Hills probably does not capture more than 20 percent of Pasco County deaths. In south Hernando County, Florida Hills performed 210 entombments and interments in 1990, 233 entombments and interments in 1991, and 236 entombments and interments in 1992. The majority of these entombments and interments are of residents of Hernando County, whose favorable demographics and population growth assure that it will be a fertile source of cemetery business in years to come. It is very unlikely that Florida Hills' capture of Pasco residents approaches in absolute numbers the number of out-of-county residents captured by Meadowlawn and Grace. It is impossible to project the market share of Trinity Cemetery, which has been approved but has not yet begun operating. The record does not disclose the scope of Trinity planned operations, but a significant part of Trinity's market will consist of a large Pasco County residential subdivision known as Trinity. Only a very rough approximation of the number of entombments and interments available to local cemeteries can be calculated. The record permits only imprecise assumptions: the number of interments and entombments of Pasco County residents performed by Florida Hills will not be greater than the number of interments and entombments performed by licensed cemeteries in Pasco County for out-of-county residents, Chapel Hills will capture 20 percent of the interments and entombments of Pasco County residents, and unlicensed cemeteries will have no significant impact on the number of available interments or entombments. Combined, Grace and Meadowlawn accounted for 1147 entombments and interments in 1992. The projected number of available deaths in 1993 is 1500. After taking away Chapel Hills' 20 percent, this would leave 53 deaths for Trinity and Abbey. As the number of projected deaths not lost to ship-outs, cremation, or National Cemetery grows to 1733 in 2000 and 2067 in 2010, the number of deaths available to Grace, Meadowlawn, Trinity, and Abbey would be correspondingly greater. From 1988-1992, the total number of entombments and interments at Meadowlawn and Grace declined 1.4 percent. If the number of entombments and interments remained unchanged at Grace and Meadowlawn through 2010, there would be, after eliminating Chapel Hills' 20 percent share, 239 available deaths in 2000 and 507 deaths available in 2010. Given the necessarily rough nature of the assumptions, it is difficult to conclude much from the figures of available deaths and projections of each licensed cemetery's share of this business. It appears, though, that the addition of Abbey Hills would have some economic impact upon Grace, Meadowlawn, and Florida Hills because there does not appear to be an oversupply of deaths available to the licensed cemeteries. However, the existing licensed cemeteries could increase their business by capturing some of the fairly large number of ship-outs. The existing licensed cemeteries could also increase business by intensifying their marketing efforts in selling new preneed contracts and reloading existing preneed customers with more goods and services. Aggressive marketing may be able to slow down, though probably not reverse, the rising numbers of cremations, and licensed cemeteries may be able to capture a greater share of cremations. Grace already performs a large number of cremations. Although Meadowlawn performs substantially fewer, an SCI-owned funeral home in west Pasco County performs a large number of cremations. Although not as profitable as interments or entombments, cremations nonetheless represent a profit center for licensed cemeteries that can likely be more fully exploited. In addition to available marketing strategies still available to the existing licensed cemeteries, any assessment of the economic impact of a new cemetery upon existing licensed cemeteries must take into consideration their current financial health. Grace's total revenue has increased in all but one year between 1988 and 1992. The approximate figures (and annual percentage increases) are: 1988--$763,000; 1989--$740,000 (-3 percent); 1990--$775,000 (5 percent); 1991--$871,000 (12 percent); and 1992--$1,268,000 (46 percent). Meadowlawn's total revenue has increased each year between 1988 and 1992. The approximate figures (and annual percentage increases) are: 1988--$1,008,000; 1989--$1,074,000 (7 percent); 1990--$1,493,000 (39 percent); 1991--$1,742,000 (17 percent); 1992--$1,940,000 (11 percent). These revenues are important indicia of profitability given the relatively high markups that prevail in the cemetery industry, as described below. In fact, Grace has enjoyed net profits, as a percentage of revenue, of 7 percent in 1988, 11 percent in 1989, 11 percent in 1990, 16 percent in 1991, and 24 percent in 1992. Meadowlawn has, for the same years, had profits of 23 percent, 33 percent, 22 percent, 28 percent, and 30 percent. During the same time period, Grace has averaged a return on investment of 11.8 percent (with a high of 24 percent in 1992) and a return on net worth of 58 percent (with a high of 80 percent in 1992). Meadowlawn has, for the same years, averaged a return on investment of 9 percent (with highs of 11 percent and 10 percent in 1991 and 1992, respectively) and a return on net worth of 13.2 percent (with highs of 15 percent and 16 percent in 1991 and 1992, respectively). The situation is different for Florida Hills in Hernando County. Its total revenue has dropped 6 percent from about $478,000 in 1988 to about $450,000 in 1992. With net profits of 12 percent and 11 percent, respectively, in 1988 and 1989, Florida Hills' profitability exceeded that of Grace for the same period. But Florida Hills' profits were 4 percent in 1990, 3 percent in 1991, and 5 percent in 1992. And Florida Hills may face a net loss in 1993. Florida Hills' return on investment has deteriorated in the past five years, and especially the past three years: 20 percent in 1988, 12 percent in 1989, 4 percent in 1990, 3 percent in 1991, and 5 percent in 1992. A similar pattern exists in Florida Hills' return on net worth: 29 percent in 1988, 20 percent in 1989, 8 percent in 1990, 5 percent in 1991, and 8 percent in 1992. Florida Hills enjoys a low debt-to-equity ratio, which allows it to withstand a certain amount of financial adversity. Florida Hills is the closest of the subject licensed cemeteries to National Cemetery, and its losses have been exacerbated by the fact that Florida Hills is a veterans-oriented park. Florida Hills' profits have been eroded by its failure to control rising costs, which is especially troublesome during a period of flat or declining revenues. Although it might face less financial pressure in a market with less competition, Florida Hills's problems concerning National Cemetery, the trend toward cremation, and, perhaps to a lesser extent, spiraling costs would remain, even if Abbey Hills' application were denied. The key fact in this case is that, although the relevant cemetery market displays a certain degree of competitiveness through advertising and marketing campaigns, there is a clear practice among existing licensed cemeteries to refrain from price competition. The current ownership of Grace inherited its prices from its predecessor and has found no need to revisit these prices significantly in the 20 months following the acquisition. Grace sells over 90 percent of its goods and services at list price. Insensitivity to price is even more marked at Meadowlawn. Representatives of Meadowlawn, which is the price leader in the area, disclaim any knowledge of competitors' prices. Although SCI Funeral Services of Florida, Inc. insists that its funeral homes perform two annual reviews of competing funeral home prices, it does not require any review of its competitors' cemetery prices. Refusing to acknowledge the importance even of market share, Florida Hills' ownership shares the unwillingness of its more successful competitors to compete by reduced pricing. Despite its financial troubles, the ownership of Florida Hills declines to sell caskets, so as to leave such potentially lucrative business to funeral homes, as long as area funeral homes decline to sell markers to Florida Hills' customers, so as to leave such business to Florida Hills. By declining to sell caskets, Florida Hills fails to take advantage of an important profit center. Running from $1300 on up, caskets are marked up by three or four times cost. Vaults and markers are typically marked up somewhat less, but cemetery lots may be marked up by a factor of 10. When the customer is living and making pre-need arrangements, the mark-up is somewhat less, but when the customer is dead and the subject of at-need arrangements, the mark-up is greater. It is unclear to what extent Trinity will pose serious competition to Meadowlawn, which is its nearest Pasco County neighbor. Due to its superior size, location, and common ownership of six local funeral homes, Meadowlawn will unlikely be forced to redirect substantially its marketing efforts northward due to the competitive presence of Trinity. Abbey Hills would likely have a greater impact on Grace than Trinity will have on Meadowlawn due to the smaller size of Grace when compared to Meadowlawn and the closer proximity of Abbey Hills to US Rte. 19 when compared to Trinity's distance from US Rte. 19. It is likely that the addition of Abbey Hills would cut into sales in Pasco and Hernando Counties by Grace and, to a lesser extent, Florida Hills. However, Grace is in a relatively strong position to meet this competition, and Florida Hills, although lately less profitable than Grace, relies less on Pasco County business where the impact of Abbey Hills would be greatest. If the licensed cemetery market had already undergone significant price competition, the relatively greater economic impact upon the stronger Grace and relatively slighter economic impact upon the weaker Florida Hills would militate against a finding that the addition of Abbey Hills would promote competition. But, thus far, existing licensed cemeteries have not even reviewed their pricing structures in the face of the twin threats of National Cemetery and cremation, even though the appeal of both of these competitive forces lies largely in their much lower cost when compared to the prevailing costs of interment and entombment. The existing licensed cemeteries have thus far responded to the competition of National Cemetery, as well as cremation, by increasing advertising. But, at least in the case of Florida Hills, this strategy has not been enough. The record does not support any inference that reducing the cost advantage of National Cemetery would be futile. After all, National Cemetery suffers from the serious disadvantages of distance from local family and friends and unavailability of interment for members of the nonimmediate family. The same is true if the cost difference between interments or entombments and cremations were lessened. More people would likely choose the more traditional interment or entombment if it were less costly than it is at present, even though it will remain more costly than cremation. Abbey Hills has shown that the relevant market can support the presence of four licensed cemeteries in west Pasco County. The demographic data, together with the high prevailing markups, historic profitability of the local cemetery industry, and opportunity for more aggressive marketing of cemetery goods and services through lower pricing, establish that competition is best promoted and the public interest best served by approving Abbey Hills' application. Although Florida Hills is, at present, clearly more sensitive than Grace (and obviously Meadowlawn) to the introduction of new competition, Abbey Hills would have less impact on Florida Hills because fewer of Abbey Hills' sales would be in Hernando County and fewer of Florida Hills' sales are in Pasco County. Also, Florida Hills has only recently suffered reduced profits and is able to absorb a few down years due to its strong capitalization. In addition, the evidence suggests that Florida Hills may not have fully responded to the challenges of National Cemetery and cremation. Recent reductions in revenue and profits suggest that, with or without the introduction of Abbey Hills, Florida Hills probably cannot continue to conduct business as usual. Thus, even if the evidence were to have shown a greater economic impact upon Florida Hills than is likely, competition would not be promoted nor the public interest served by allowing the financial pressures presently experienced by Florida Hills to preclude the approval of a new licensed cemetery into a price- insensitive market. This is especially true when, consistent with the prevailing anticompetitive market conditions, Florida Hills resists analyzing its market share, expanding its limited product offerings to include caskets, and, most importantly, revising its pricing structure to meet the competition of, first, National Cemetery and cremations and, second, other licensed cemeteries in the area.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Banking and Finance enter a final order dismissing the petitions of Grace and Meadowlawn. ENTERED on August 30, 1993, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 1993.
The Issue The issue is whether Respondent violated section 497.152(1)(a) and (b), Florida Statutes (2013), and, if so, what penalty should be imposed.
Findings Of Fact Stipulated Facts The Department and the Division of Funeral, Cemetery and Consumer Services (“Division”) within the Department have jurisdiction over cemetery license number F039451. At all times relevant to this matter, Rose Hill was licensed as a cemetery (license number F039451), pursuant to chapter 497, Florida Statutes. Rose Hill operated at 4406 Chelsea Avenue, Tampa, Florida 33610. In 2013, Petitioner received a complaint from Mr. Leonardo Rodriguez-Martinez alleging that Rose Hill failed to use due care in the installation of a casket and vault during a grave-site funeral ceremony for his wife, Mrs. Maria Benitez Lugo. In 2013, Mr. Rodriguez-Martinez contracted with Rose Hill for burial services for Mrs. Lugo along with the installation of a vault and casket. On or about April 17, 2013, Rose Hill performed the contracted burial services. After the services were completed, the casket was placed in a cement vault. The body of the deceased was inside the casket. In order to lower the vault and casket into the burial plot, Rose Hill used a back hoe and attached a chain to the cement vault with the casket inside. Raymond Coleman works for Rose Hill. He operated the back hoe used to inter the vault and casket of Mrs. Lugo. While attempting to move the vault and casket, the chain attached to the back hoe broke causing the vault to fall and crack. The cement vault cracked in such a manner that it was rendered unusable for the interment of Mrs. Lugo’s casket. Rose Hill staff proceeded to find a replacement vault. Soon thereafter, Rose Hill replaced the broken chain and the broken vault and interred the casket without further incident. Findings of Fact Not Stipulated to by the Parties George Saclarides was hired in 2008 as the cemetery manager at Rose Hill. As manager, Mr. Saclarides is responsible for maintaining the cemetery, purchasing equipment, maintaining the equipment and supplies needed to operate the cemetery, hiring the staff to maintain the premises, and performing cemetery services. He is the individual responsible for meeting with consumers and entering into contracts for services at Rose Hill. Mr. Saclarides hired Raymond Coleman as the assistant cemetery manager. Mr. Coleman is responsible for the daily maintenance of the cemetery grounds. He cuts the grass, maintains the premises, and performs general repairs. Mr. Coleman also leads a team of workers during cemetery services. These responsibilities include digging burial plots, transporting cement vaults, and interring cement vaults and caskets. Mr. Saclarides met with Mrs. Lugo’s family after her death. Mr. Rodriguez-Martinez, the complainant in this matter, discussed the burial arrangements for his wife, Mrs. Lugo. An interpreter was used during these discussions because Mr. Rodriguez-Martinez speaks Spanish, not English, and Mr. Saclarides does not speak Spanish. During this meeting, Mr. Saclarides discussed the service with the family and informed Mr. Rodriguez-Martinez that a remote set-up would be used for his wife’s burial service, followed by the transport of his wife’s casket via John Deere front end loader to her final resting place within the cemetery. Mr. Rodriguez-Martinez expressed concern with how his wife’s casket would be transported to the burial plot and said he preferred to have pallbearers lift and carry the casket to the final burial location. Mr. Saclarides’ reason for having the service at the remote location within the cemetery, then transporting the casket to the burial plot, was that the remote location was more convenient for elderly and people unable to walk on uneven ground to reach the site. Also, some people do not like to walk across gravesites to reach the burial plot. In retrospect, Mr. Saclarides was glad he suggested the remote site for the service. The day of the funeral when the burial plot was dug, the maintenance workers had a difficult time shoring up the sides of the plot. This was due to the high content of “sugar sand” in the soil which causes the sides of the plot to crumble or cave in. He does not believe the pallbearers could have carried the casket all the way to the site because the two sand piles from the site were blocking access to the site. Also, he feared the sides of the site could crumble or even collapse. On April 19, 2013, the services started at the front of the cemetery, in the remote location, and went smoothly. As the family and Mr. Saclarides were walking the 65-70 feet from the remote location to the burial site, Mr. Rodriguez-Martinez (and others) heard a loud crash. When the back hoe was lifting the vault with Mrs. Lugo’s casket inside, the chain attaching the vault to the back hoe broke, and the vault and casket fell about two to three feet to the ground. Mr. Rodriguez-Martinez returned to the remote location after hearing the crash and found the cement vault with his wife’s casket lying on the ground. The vault had broken in the fall. The casket was undamaged. Ms. Christina Wilder, a guest at the funeral, witnessed the events as they unfolded. She saw the casket swinging as it was lifted and heard the vault fall, stating it sounded “like a cannon shot.” She was critical of Rose Hill for not having a plan in place for emergencies or mishaps such as this. Rose Hill did have a plan in place. Mr. Saclarides sent his employees, including Mr. Coleman, to retrieve a new vault from the rear portion of the cemetery and place the casket inside to be moved, with a new chain attaching it to the back hoe, to the burial plot. This entire process caused a delay of about 45 minutes. Ms. Wilder was present with Mr. Rodriguez-Martinez and served as his interpreter when he met with Ms. Jessica Helms, the Division’s examiner. Ms. Wilder helped Mr. Rodriguez-Martinez file his complaint and provided pictures and a DVD of the funeral service and the incident to Ms. Helms. Ms. Helms investigated the complaint filed by Mr. Rodriguez-Martinez. She is responsible for inspections, financial examinations, and investigations into licensees of the Division. She has completed over 100 complaint investigations while employed with the Division. Ms. Helms has completed approximately five inspections of Rose Hill. She visited the cemetery to investigate Mr. Rodriguez-Martinez’s complaint. She was already familiar with the set-up at Rose Hill. She had expressed her safety concerns regarding the remote set-up with Mr. Saclarides on multiple occasions. Rose Hill continued to use the remote set-up, despite Ms. Helms’ concerns. Ms. Helms inspects about 25 cemeteries a year, and the Division regulates about 150 cemeteries throughout the state. She has never seen the remote set-up at any cemetery, except Rose Hill. Based upon her experience, she believes other cemeteries do not use the remote set-up due to concerns with the risk of keeping human remains secure during transport in a fashion such as occurred in this case. Ms. Helms states that a cement vault is not made to be used for transporting a casket containing human remains. A cement vault is used to support the grave space so that soil, dirt, and other elements will not cause the casket to collapse once interred in the burial space. Ms. Helms testified that National Concrete Burial Vault Association (“NCBVA”) standards deal with the construction and use of concrete burial vaults. She believes the standards suggest that cement vaults not be used as transportation containers. A review of the NCBVA standards provided at the hearing does not support this opinion. The standards neither provide requirements for how to transport a casket inside a vault, nor prohibit such transport. The standards instruct a manufacturer of cement vaults on what materials to use and what load and stress are required. Ms. Helms did provide numerous reasons why she believed the remote grave site is not appropriate and why it could lead to an incident such as occurred here. A remote location was unnecessary in her opinion when immediately following the service the remains were to be interred. Further, having the casket placed into the vault and having the entire 2,000-pound vault attached to a tractor and lifted with the family and guests of the deceased present is an uncommon and inappropriate practice. She believes that allowing this to occur in the presence of those assembled for the funeral is “disturbing.” Ms. Helms questions whether the use of the remote location was for the convenience of the family and guests or for the cemetery. The distance to the final burial site was only 65-70 feet beyond the remote location. Also, the deceased’s spouse wanted the service at the final burial location or, at least, wanted the casket carried by pallbearers, not by tractor, to the final location. Ms. Helms acknowledged that Mr. Saclarides maintains all the required records for Rose Hill and that the cemetery has shown “great improvement” since he took over as manager in 2008. Mr. Coleman has used the same chain that failed in this instance the entire time of his employment at Rose Hill, at least six years. It has never failed in the past. The chain is heavy grade and rated to handle at least 4,000 pounds, more than enough to carry the vault with the casket enclosed. Mr. Saclarides showed remorse on the day of the funeral after the incident with the vault being dropped from the tractor when the chain failed. He used his best efforts to ensure that a new vault was quickly procured, and that the vault and casket were properly interred within 45 minutes of the incident. Mr. Saclarides showed remorse again in his response to the complaint giving rise to this matter when he personally apologized for the accident during the burial service. He noted that Rose Hill had never had a chain break before the incident on April 19, 2013. Mr. Saclarides appeared sincere in his remorse for the incident occurring at the funeral of Mrs. Lugo when he testified at hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding that Respondent Rose Hill violated sections 497.152(1)(a) and 497.386(4) of the Act, as alleged in the Administrative Complaint, and imposing discipline as follows: a $1,000 administrative fine and a reprimand. Further, to the extent the Board has authority, it is recommended that the Board order Rose Hill to cease and desist from its practice of remote burials with transport of the vault containing the casket and initiate rulemaking or seek a legislative change, if desired, to make the practice of remote burials specifically prohibited. DONE AND ENTERED this 9th day of September, 2014, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of September, 2014. COPIES FURNISHED: Linje E. Rivers, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 (eServed) George Saclarides Rose Hill Cemetery Company 4406 East Chelsea Avenue Tampa, Florida 33610 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed) Doug Shropshire, Director Division of Funeral, Cemetery, and Consumer Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0361 (eServed)
The Issue Are Rules 3F-5.004(4)(b)1. and 2., Florida Administrative Code, an invalid exercise of delegated legislative authority?
Findings Of Fact The following are the stipulated facts: On or about September 15, 1995, Trinity Memorial Gardens of Lakeland, Inc., a Florida corporation, filed an application to organize a new cemetery company to be located at the Northwest corner of Mall Hill and Griffen Roads in Polk County, Florida. By publication in the Florida Administrative Weekly on March 29, 1996, the State of Florida, Department of Banking and Finance issued a Notice of Intent to Approve the Application for a New Cemetery Company submitted by Trinity Memorial Gardens of Lakeland, Inc. On April 18, 1996, Lakeland Memorial Gardens, Inc., a licensed Florida cemetery, located at 2126 South Bartow Highway, Lakeland, Polk County, Florida, filed a Petition for Formal Proceeding pursuant to Section 120.57, Florida Statutes, to contest the proposed action of the Department to approve the proposed new cemetery. On June 24, 1997, the Florida Cemetery Association, Inc., filed a Petition to Intervene which was granted July 8, 1997. In reviewing an application for a license for a new cemetery, the Department is required to determine whether there is a need for the new cemetery in accordance with requirements of Sections 497.005(28) and 497.201(3), Florida Statutes, and Rule 3F-5.004(4), Florida Administrative Code. Rule 3F-5.004(4), Florida Administrative Code, has been in existence since approximately 1975, and was last amended on October 23, 1991. Rule 3F-5.004(4), Florida Administrative Code, for purposes of this proceeding, is a rule proposed and adopted by the Department. In reviewing the application filed by Trinity the Department purported to apply Rule 3F-5.004(4)(b)2., Florida Administrative Code, in making a determination of need on the application filed by Trinity Memorial Gardens of Lakeland, Inc. In 1993, the Florida Legislature defined for the first time the term “community” in Section 497.005(28), Florida Statutes, by passing Chapter 93-339, Laws of Florida. Rule 3F-5.004(4), Florida Administrative Code, has not been amended since the passage of Chapter 93-339, Laws of Florida. The Department of Banking and Finance has not implemented the definition of “community” contained in Rule 3F-5.004(4)(b)1., Florida Administrative Code, in a determination of need under Section 497.201(3), Florida Statutes, since the effective date of Chapter 93-339, Laws of Florida. It is the Department’s position that the definition of “community” contained in Section 497.005(28), Florida Statutes, “superseded” or codified the definition of “community” contained in Rule 3F-5.004(4)(b)1., Florida Administrative Code. The Department interprets the requirements of Rule 3F-5.004(4)(b)2., Florida Administrative Code, to mean that only those cemeteries located within a twelve mile radius of a proposed new cemetery will be considered in determining need for a new cemetery. This interpretation by the Department has been utilized since October 18, 1990. In making a determination of need, the Department uses a fifteen-mile radius to determine the projected number of burial spaces needed in the “community” for a period of thirty years. In determining the “adequacy” of existing cemetery facilities under Section 497.201(3), Florida Statutes, the Department uses a twelve-mile radius to determine the number of spaces “available” for a period of thirty years and excludes from consideration all existing licensed or unlicensed cemeteries within a fifteen-mile radius but outside a twelve-mile radius of the proposed new cemetery. Use of twelve-mile radius, as opposed to a fifteen-mile radius, for the examination of the adequacy of existing facilities pursuant to Section 497.201(3), could, and has in the past, caused the exclusion of licensed cemeteries in the area outside of twelve miles but inside of fifteen miles. The Department noticed in the Florida Administrative Weekly the following: Notice of Proposed Rules 3D-30.0051, 3D-30.0052, 3D-30.0053, 3D-30.0054, Volume 22, Number 37, September 13, 1996. Notice of Proposed Rule 3D-30.0055, Volume 22, Number 40, 5665, October 4, 1996. Notice of Withdrawal of Proposed Rules No. 3D-30.0051, 3D-30.0052, 3D-30.0053, 3D-30.0054, Volume 23, Number 15, 1900, April 11, 1997. Notice of Change, Rule 3D-30.0055, Volume 23, Number 15, April 11, 1997.
The Issue Is Proposed Rule 3F-5.009, Florida Administrative Code, invalid on the basis that the proposed rule is an invalid exercise of delegated legislative authority?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings are found: On March 28, 1997, the Board caused to be published in the Florida Administrative Weekly, Volume 23, Number 13, the text of its proposed rule to be known as Rule 3F-5.009, Florida Administrative Code, which the Board indicated that it intended to adopt. The proposed rule reads: 3F-5009 Regulatory Standards for Evaluating Applications by the Board. When an application for authority to organize and operate a new cemetery company is filed, it is the applicant's responsibility to meet the statutory criteria warranting the grant of authority. The Department shall conduct an investigation pursuant to Section 497.201(2), Florida Statutes, and report its findings to the Board. If in the opinion of the Board, any one of the criteria as set forth in Section 497.201, Florida Statutes, which requires board review and approval has not been met and cannot be remedied by the applicant, the Department cannot approve the application. The applicant shall submit information addressing the following: Capital structure. Capital should be adequate to enable the new cemetery to provide necessary services for cemeteries, including adequate service to the community and adequate care and maintenance of the cemetery. Capital shall be sufficient to purchase a cemetery site of no less than 15 contiguous acres in fee simple unencumbered; to develop at least two (2) acres for burial spaces including paved road from a public roadway; to purchase or lease adequate equipment for the operation and maintenance of the cemetery; and to build or lease suitable facilities to operate the cemetery. An applicant shall demonstrate that it has sufficient capital to sustain its operations until its first projected profitable year. Sufficient capital shall mean that the applicant is able to cover its cumulative losses until projected profitability; provided that in no event may the tangible accounting net worth of the applicant be less than $50,000. The demonstration of sufficient capital shall be made by submittal of a business plan covering every year from inception up to and including its first projected year of profitability and providing: Revenue expectations based on the applicant's projected sources of revenue and projected revenue including number of annual sales and average sales on a unit basis and a demographic analysis of the applicant's projected market which supports this revenue projection; An analysis of the cost incurred to achieve the projected revenues including sales costs, product costs, delivery of service costs, financing of capital requirement cost, care and maintenance costs, the costs of perpetual care (including other sources of funds in the event of shortfalls in the perpetual care funds); and any information required by the Board and reasonably necessary for the Board to make a determination of the applicant's financial stability. Proposed executive officers, directors or principals. The proposed officers, directors or principals shall each submit an executed Historical Sketch, Form DBF-HS-1, effective 4/25/94, which has been incorporated in Rule 3F-5.002, and shall have reputations evidencing honesty and integrity. They shall have employment and business histories demonstrating their responsibility in financial affairs. The fact that a proposed officer, director or principal has been adjudicated bankrupt or has filed for relief under the Federal Bankruptcy Act shall be considered a material factor in the evaluation of responsibility in financial affairs. At least one (1) of the proposed directors or principals, who is not also a proposed officer, shall have had substantial direct experience as an executive officer, director or principal of a cemetery or a certificate holder licensed pursuant to Section 497.405, within 3 years of the date of the application. If in the opinion of the Board the aggregate level of experience represented by the proposed board of directors or principals is not substantial, the Board shall require the addition of other outside directors or principals who have adequate experience. The proposed general manager shall have at least 1 year of direct experience within 7 years of the application as a general manager, director, regulator of a cemetery or similar position having an equivalent level of responsibility for a cemetery. The general manager must have a reputation evidencing honesty and integrity and an employment history demonstrating competent past experience. It is not necessary that the name of the general manager be submitted with the application. However, this individual must be named and have submitted an executed Historical Sketch, Form DBF-HS-1, not later than ninety (90) days prior to applicant's intended opening date. The applicant may not open for business without prior approval of the general manager by the Department. Change of a director, chief executive officer, president, principal or general manager or the addition of any new directors, executive officers through the first two (2) years of operation shall also require approval of the Department and the Board. The Department shall conduct background investigations on the principals, general manager, executive officers, directors, and major shareholders. Any misrepresentations or omission of fact in an application by any person shall be cause for the Department or the Board to deny that person's participation in the application and to the extent such misrepresentation or omission of fact reflect upon their honesty and integrity shall be grounds for denial of the entire application. Specific Authority 497.103, F.S. Law Implemented 497.201, F.S. History - New. Eastlake's petition challenges the proposed rule on the basis that it is an invalid exercise of delegated legislative authority. Eastlake's challenge is more specifically set out in paragraphs 5 through 8 of the petition which provide: The proposed rule imposes requirements regarding: the nature of the property interest in a cemetery site necessary to obtain a license; the nature of the capital requirements necessary to obtain a license; the information to be submitted regarding the officers of a cemetery company necessary to obtain a license; the level of experience of directors and principals of the proposed cemetery company necessary to obtain a license; the level of experience of the general manager of the proposed cemetery company necessary to obtain a license; which exceed the Board's grant of rulemaking authority, and enlarge, modify, or contravene the specific provisions of law implemented. The standards established in the proposed rule regarding the "reputations evidencing honesty and integrity" of the proposed officers, directors, principals and general manager, which reputations" may lead the Board to deny a license to engage in the business of a cemetery company are vague, fail to establish adequate standards for the Board's decisions, or vest unbridled discretion in the Board, and are arbitrary or capricious. The standards regarding the ability of the Board to conduct background investigations of the principals, general manager, executive officers, directors and major shareholders, and the extent to which such investigations may allow the Board to deny a license to engage in the business of a cemetery company, exceed the Board's grant of rulemaking authority, and enlarges, modifies, or contravenes the specific provisions of law implemented. The standards regarding the ability of the Board to conduct background investigations of the principals, general manager, executive officers, directors and major shareholders and the extent to which such investigations may allow the Board to deny a license to engage in the business of a cemetery company are vague, fail to establish adequate standards for the Board's decisions, or vest unbridled discretion in the Board, and are arbitrary or capricious. Eastlake is an applicant to obtain a licenses to operate a cemetery and is the Respondent in a challenge to a Board and Department decision to grant initial approval for that license (Trinity Memorial Cemetery, Inc., et al. v. Board of Funeral and Cemetery Services, Department of Bankina and Finance, Division of Finance and Eastlake Memorial Gardens, Inc., Case No. 96-3938), and thus would be affected by the proposed rule if it goes into effect. Trinity holds a license to operate a cemetery and is a petitioner in Trinity, Case No. 96-3938 in opposition to Eastlake's application and thus would be affected by the proposed rule if it goes into effect. The Association is an industry trade association which has membership of some 109 licensed cemeteries in Florida. Its members would be affected by the proposed rule if it goes in effect insofar: (a) as the proposed rule sets forth standards for entities attempting to become licensed as cemetery companies; and (b) as its membership has a direct interest in promoting the overall quality of the cemetery industry and assuring that the entities that are licensed to provide cemetery services provide such services in a manner so as to enhance the industry as a whole. It was the unrebutted testimony of Diana Evans, Executive Director of the Board that the purpose of the proposed rule was to set standards to guide applicants seeking Board approval of their ability, integrity, financial stability, and experience to operate a cemetery, and to guide the Board in reviewing those criteria.
Findings Of Fact Manasota Memorial Park is a large cemetery licensed under Chapter 497, Florida Statutes, by the Department of Banking and Finance, as a "cemetery." It is also licensed under Chapter 470, Florida Statutes, by the Department of Professional Regulation, as a "direct deposer". It is licensed by the Department of Insurance, pursuant to Chapter 639, Florida Statutes, to sell "pre-need" funeral merchandise or service contracts. Manasota has specifically reserved the right to adopt, alter, amend or repeal any of its by-laws, with or without notice to the owners of burial spaces in its cemetery. This reservation is found in paragraph 63, page 14 of Manasota's current by-laws, in evidence. Manasota has, however, agreed to prepare and distribute an updated compilation of its by-laws to its burial space owners at the conclusion of the present proceedings. Manasota is in the business of selling burial space, and conveys that in fee simple to a purchaser, rather than offering mere burial rights to property it retains title to. There are currently between 17 and 18 thousand owners of burial spaces in Manasota Cemetery. Many of Manasota's owners or "clients" have purchased their land "pre-need." Frequently, however, burial spaces are required to be purchased in the "at-need" situation. Because Manasota has already sold in excess of 17 thousand cemetery lots, many of its potential "clients" already own their lots and so Manasota only needs to provide services at the time of the funeral itself. Funeral services at Manasota, by its by-laws, can only be held in a rotunda area away from the actual gravesite. Graveside services are prohibited by a provision of Manasota's bylaws. In the conduct of its business, Manasota often obtains from the funeral directors, the name, address, telephone number and relationships to the deceased of persons making funeral arrangements. Manasota is free to and often does contact that person directly in order to make arrangements for authorization to open and close the grave, conduct the rotunda service, and for payment of the grave opening and closing charge. This charge, for opening and closing the gravesite, is a set fee which is not negotiable. Manasota often quotes this charge and otherwise secures funeral arrangements by telephone. It has produced no evidence to show that this procedure has caused any adverse effect on its business. Manasota seeks, however, in this proceeding, to enact a by-law that requires persons with "paramount authority," that is, persons who are making funeral arrangements for the deceased, to actually sign an authorization form for the service and the grave opening and closing, and to pay for the opening and closing of the grave at least 24 hours in advance of the service. Manasota does not independently determine whether the persons who execute authorization forms and pay grave opening and closing charges, actually have "paramount authority" to do so, but rather, relies upon the assurances of such persons that they have such authority, or upon assurances of the funeral director who is otherwise in charge of arrangements. The proposed by-law requiring 24 hour advance payment and signed authorization from persons with "paramount authority" provides no standard for determining which persons, in the family, or otherwise connected with the deceased, have "paramount authority" and that term is nowhere defined in the proposed by-law or other places in Manasota's by-laws. Manasota, at present, frequently prepares gravesites without requiring a signed authorization form for such work in advance. Typically, Manasota does not presently require that an authorization form be executed when the person with alleged "paramount authority" is not available. Its present procedure, with this built-in flexibility, is especially beneficial for persons who must journey from distant parts of the country, upon hearing of the demise of a relative in the Sarasota area, and who would be unable to arrive 24 hours in advance of the scheduled service, even though such a person might indeed be the person in the deceased's family with "paramount authority" to make the arrangements. The present by-law does not allow any exception to its proposed requirement in this regard for persons who are unable, due to distance or otherwise, to go to Manasota's place of business to sign the appropriate forms and to pay the grave opening and closing charge 24 hours in advance of the scheduled service. The proposed by-law, for instance, does not have the flexibility of allowing the funeral director to act on behalf of such persons in arranging and paying for Manasota's services. By providing no standards for defining which persons have "paramount authority," the proposed by-law does nothing to alleviate any potential confusion between the funeral director and family members as to who has paramount authority to make such arrangements as purchase of a gravesite, payment of opening and closing charges, and other services and charges performed and required by Manasota. The identity of a deceased person is placed on a death certificate for that person by one who first assumes custody of the body. The information as to identity placed on the death certificate is obtained from the next of kin or the best qualified person or source available to identify the deceased. Prior to final disposition, the person who first assumes custody of the body, after the death certificate is prepared (typically, the funeral director) prepares a "burial transit permit" upon which the decedent is identified, which identification is based on the information appearing on the death certificate. Funeral directors who first assume custody of the body are not required to have personal knowledge of the identity of the decedent, but may rely upon the data provided by the next of kin or other qualified persons. Cemetery companies are entitled to rely on, and must rely upon, the information contained in a burial transit permit as to identity of the body that accompanies that burial transit permit to the cemetery premises. By sending a particular burial transit permit with a casket containing a body, a funeral director warrants that the body being conveyed is the body that was identified to them as the person whose name is reflected on that permit. However, funeral directors can make no warranty or representation that the initial identification of the body to them by other persons, upon which information both the death certificate and burial transit permits are based, is correct, unless of course, the funeral director knew the deceased personally. Once the funeral director delivers a casket containing a body to Manasota's rotunda before services, and once those funeral services in the rotunda facility are completed, the funeral director no longer has control over the casket and body, it having been delivered with its accompanying burial transit permit to the custody of Manasota. The funeral directors thus do not participate in the actual burial of the casket in the grave. Manasota, under the present practice, can easily identify caskets delivered to it with the information contained in the accompanying burial transit permit delivered with the casket, so as to ensure that the casket is properly identified. The funeral directors themselves who perform services at Manasota's premises, have no actual, personal knowledge whether the casket containing the body identified in the accompanying burial transit permit, will actually be buried in the correct grave, since they do not participate in the actual burial and leave the premises at the conclusion of the funeral services themselves. Manasota proposes that plastic identification tags be attached to the surface of the casket, but the permanency of this attempted identification method is not reliable because the tags have, in some instances, become unattached. Although the cost is minor, there is an additional cost to funeral directors if they are required to utilize such tags and insure that they remain permanently attached to the caskets, and this additional cost, however small, will be reflected in additional charges made to the public for such services. Further, information concerning identity of the deceased is contained in the burial transit permit which accompanies the casket. The repetition of the same identity information on a plastic tag to be attached to the casket would accomplish nothing, in the way of enabling Manasota to identify caskets in its possession, that the burial transit permit does not already accomplish. The point is that if the funeral director has information concerning who the decedent placed in the casket is, and records that on the burial transit permit, and then "publishes" that same information again by placing the identity information on a plastic tag attached to the casket, it will not serve to better identify the remains inside the casket and will not do anything to forewarn Manasota, the cemetery company, if a mis-identification has occurred by either the funeral director or by the person executing the death certificate, or otherwise informing the funeral director of the identity of the decedent's body placed in his custody. Finally, with regard to the proposed by-law concerning payment for Manasota's services at least 24 hours prior to the scheduled funeral service and its requirement that a person with "paramount authority" sign the necessary agreements with Manasota to initiate their services, at least 24 hours prior to the funeral service, it must be remembered that prior to burial, family members who are typically the group from which the person with "paramount authority" is chosen, are usually in a state of severe bereavement and are not in a proper state of mind to be conducting business transactions, especially during the particularly harrowing time for a family between the point of the decedent's death and the point of that funeral service and burial. It seems especially callous to require full payment for Manasota's services in advance, at least 24 hours before the service, right in the middle of this particularly acute period of bereavement between the death and the burial of a family member, with the implication being that if payment were not made and the appropriate agreements not signed timely, that Manasota might elect to delay or otherwise hinder the performance of the funeral services and burial. Certainly Manasota can provide its services when needed by bereaved parties with "paramount authority" over the remains of the deceased person but require payment at a later date, albeit a date certain, as is done in most other business transactions. The family member or other person with "paramount authority" could be billed at a later time just as easily. Manasota, like any other business, which IS not timely paid for outstanding goods or services rendered, has civil remedies available to it, and it would be beneficial to bereaved persons for Manasota to provide its services when needed, but not to mandatorily seek payment before it performs the funeral service or the burial.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the candor and demeanor of the witnesses, the evidence of record and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the proposed amendments to the by-laws of Manasota Memorial Park, Inc. be disapproved, except that the proposed requirement that 24 hour advance notice by the person in paramount authority, of the need to schedule a funeral service and the proposed limit on Manasota's liability concerning quality of burial merchandise purchased "off-site", be approved. DONE and ENTERED this 27th day of August, 1984, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 1984. COPIES FURNISHED: Douglas L. Stowell, Esquire MANG and STOWELL Barnett Bank Building Suite 740 Tallahassee, Florida 32302 Lee E. Hayworth, Esquire ISPHORDING, PAYNE, KORP, MUIRHEAD and GAY 601 South Osprey Avenue Sarasota, Florida Clyde A. Willard, Esquire The Capitol Suite 1302 Tallahassee, Florida 32301 Honorable Gerald Lewis Comptroller The Capitol Tallahassee, Florida 32301
Findings Of Fact Prior to July 16, 1976, Belleview Memorial Park Association, Inc. operated a cemetery at the southwest corner of Belleview Avenue and Terrace Avenue in Daytona Beach, Volusia County, Florida. Belleview was properly licensed by the Department of Banking and Finance, the state agency which is responsible for regulating the operation of cemeteries, and for licensing cemetery operators. Belleview experienced financial difficulties. One of its creditors was Memorials, Inc. Memorials, Inc. sold bronze markers to Belleview, which Belleview used to mark grave sites. In order to prevent Memorials, Inc. from taking drastic collection action, Belleview gave Memorials, Inc. a mortgage on a portion of the Belleview Cemetery property. In giving the mortgage Belleview neither requested nor received approval from the Department of Banking and Finance. Belleview defaulted on the mortgage, and Memorials, Inc. initiated a foreclosure action in Circuit Court in Volusia County. A judicial sale was conducted, and a certificate of title was issued to Memorials, Inc. Belleview gave similar mortgages covering other portions of the cemetery property to two other creditors: Heritage Federal Savings and Loan Association, and Southeast Bank of New Smyrna. Belleview did not seek nor obtain approval from the Department before it issued these mortgages. Heritage and Southeast foreclosed on their mortgages, and purchased the respective parcels at a public sale. Heritage later conveyed its parcel by warranty deed to Lakeview Cemetery, Inc. Lakeview has for some years, and continues to operate a cemetery directly across Belleview Avenue from the Belleview Cemetery. The Southeast Bank entered into an option agreement with Memorials, Inc. whereby Southeast agreed to convey its portion of the cemetery property to Memorials, Inc., in the event that Memorials, Inc. is successful in obtaining a license to operate a cemetery on the property. The original option agreement has expired, however, it has been extended, and the option is still in effect. As a result of Belleview's financial troubles, and the apparent failure of Belleview to maintain its trust accounts, the Department of Banking and Finance brought an action in Circuit Court in Volusia County to appoint a receiver to manage the affairs of the cemetery. A receiver was initially appointed on July 16, 1976. By order entered August 17, 1976, Lawrence W. Hunt was substituted as the receiver. Hunt, in his capacity as receiver, has operated the Belleview Cemetery since that date. He has operated and maintained the cemetery including the parcels owned by Lakeview, Memorials, Inc., and Southeast Bank, as if it were a single entity. He has honored burial agreements without regard to which parcel the burial plot was located upon. Memorials, Inc., originally filed an application with the Department of Banking and Finance for authority to transfer a portion of the existing Belleview Cemetery to it. Memorials, Inc. was proposing to operate a cemetery on the portion of the Belleview Cemetery that it obtained through foreclosure. The application was filed under authority of Florida Statutes 559.33. The Comptroller entered an order approving the application for further processing subject to several conditions. Thereafter Lakeview Cemetery, Inc., and Lawrence W. Hunt, as receiver of Belleview, petitioned for a hearing, and the matter was forwarded to the office of the Division of Administrative Hearings. A hearing was scheduled, but prior to the hearing Memorials, Inc. withdrew its application. On August 14, 1978 Memorials, Inc. filed an application with the Department for authority to transfer an existing cemetery. This application was filed under authority of Florida Statutes 559.34 Lakeview, and Hunt as receiver again protested the application and the matter was forwarded to the Division of Administrative Hearings. The final hearing was conducted on October 12, 1978. Memorials, Inc., in effect, is seeking to transfer a portion of Belleview's license to it, so that it can operate a cemetery on the property which it obtained through foreclosure. Although the application in this regard is not clear, it appears that Memorials, Inc. is seeking authority only to operate a cemetery on that portion of the former Belleview property that it obtained through foreclosure. Memorials, Inc. is not, at this juncture, seeking authority to operate a cemetery on the property for which it has obtained an option from the Southeast Bank of New Smyrna. The individuals primarily responsible for the operation of Memorials, Inc., are Dorothy Levinson Rubin, Thomas B. Levinson, and H. T. Forrest. Each of these persons is of good moral character, has extensive experience in operating cemetery businesses, and is financially equipped to operate a cemetery business. The financial condition of Memorials, Inc. is such that it could responsibly operate a cemetery busi:ess. The interests of the public would not be served by granting Memorials, Inc. authority to operate a cemetery either solely on the property that it obtained through foreclosure, or upon both that property and the property upon which it has an option to purchase. The property which Memorials, Inc. presently owns, is located virtually in the middle of what has been Belleview Memorial Park. No natural boundaries separate Memorials, Inc.`s property from property presently owned by Lawrence Hunt as receiver, or property presently owned by the Lakeview Cemetery, Inc. The boundaries run directly through grave sites that are presently occupied, and would separate several family plots. The result of granting Memorials, Inc. the authority that it seeks, would be to make Memorials, Inc. responsible for maintaining one portion of a family plot, or of an individual grave site, while other entities (Hunt as receiver of Belleview or Lakeview) would be responsible for maintaining the result. A mausoleum is located virtually on the boundary line which separates the property owned by Memorials, Inc. from property owned by Lakeview. The mausoleum appears to lie on the Lakeview side of the boundary; however, it would not be possible to conduct any service at the mausoleum, or to read the inscriptions on it without standing on property owned by Memorials, Inc. It would be contrary to the public interest to require people to confront two entities to assure that the burial sites of their relatives are properly maintained. The Belleview Cemetery, including these portions owned by Memorials, Inc., Lawrence Hunt as receiver, and Lakeview, is irrigated through a single water system, and is presently maintained through a single maintenance facility. There is no room on the property owned by Memorials, Inc. to dig a well to provide a separate irrigation system for it. There is also no room to construct an adequate maintenance facility. The property constitutes only approximately four acres. The property has been totally platted for grave sites, and all but approximately six of the sites have been sold. Approximately fifty percent of the sites have been filled with interments. There is therefore no economic viability to operating the Memorials, Inc. property as a separate cemetery. Even if Memorials, Inc. operated its property as a cemetery in conjunction with the property for which it now has an option of purchase, there would still be no economic viability. While maintenance and irrigation facilities could be located on the option property, the option property and the property which Memorials, Inc., already owns are not contiguous. There would thus be a problem of operating an irrigation system, which would necessarily have to traverse the property owned by others, and of maintaining a non- contiguous cemetery. Furthermore, operating both properties as a cemetery would not solve the dilemma caused by the fact that several burial sites and family plots are traversed by boundary lines. Thomas B. Levinson, the President of Memorials, Inc. testified that Memorials, Inc. would not necessarily honor provisions of contracts of those who have purchased plots on the property that it now owns at the Belleview Cemetery respecting purchase of burial markers. Thus people who have already paid for markers might not receive them. This would do serious injury to these members of the public, and to other cemetery businesses. Memorials, Inc., has failed to establish any need for the operation of a separate cemetery in the Volusia County area. It does not appear that there is any shortage of competition in the area, and no population or death rate data was presented. Memorials, Inc. would not be unfairly prejudiced by a denial of its application. Memorials, Inc. obtained the subject property through a mortgage foreclosure. It was fully aware when it took the mortgage and when it foreclosed the mortgage that the property was a portion of an existing cemetery.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, hereby, RECOMMENDED: That the application of Memorials, Inc. d/b/a Daytona Memorial Park for authority to transfer a cemetery company be denied. RECOMMENDED this 4th day of December, 1978, in Tallahassee, Florida. G. STEVEN PFEIFFER, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Morton M. Biegel, Esquire Suite 430 2121 Ponce de Leon Boulevard Coral Gables, Florida 33134 Franklyn J. Wollett, Esquire Assistant General Counsel Office of the Comptroller The Capitol Tallahassee, Florida 32304 John B. Liebman, Esquire Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P. A. P. O. Box 1171 Orlando, Florida 32802 John R. Tamm, Esquire and Robert E. Tamm, Esquire P. O. Drawer 2718 408 North Wild Olive Avenue Daytona Beach, Florida 32015
The Issue The issue presented is whether Petitioner is entitled to a consumer certificate of exemption as a religious institution.
Findings Of Fact Petitioner, Greater Miami Jewish Cemetery Association, Inc., is a Florida not-for-profit corporation chartered on June 23, 1931, and is an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1954. Petitioner is a non-stock membership corporation which has three constituent members, namely, Beth David Congregation of Miami, Florida; Beth El Congregation of Miami Beach, Florida; and Beth Jacob Congregation of Miami Beach, Florida, which synagogues are existing Florida not-for-profit corporations exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. Petitioner maintains and operates two cemeteries in Miami, Dade County, Florida, which are dedicated to burial of members of its constituent member synagogues and other persons of the Hebrew faith, including free burial plots for indigent persons of the Hebrew faith, and, as such, have been classified under the State of Florida Funeral and Cemeteries Act as "church cemeteries." It is a religious obligation of the Hebrew faith to provide for and bury the dead. It is usual for synagogues to maintain cemeteries for their members. No synagogue is located on the premises of Petitioner because some Jews are forbidden to be on the grounds near dead bodies. Accordingly, Jewish cemeteries do not have synagogues on the premises, and, conversely, synagogues do not have cemeteries on their premises, as some churches do. Petitioner does have, however, a room or chapel area where religious services are conducted by Petitioner's constituent members, the three synagogues. Those religious services and activities conducted there include burial services, services on religious holy days, and memorial services.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered granting Petitioner's application for a consumer certificate of exemption. DONE AND ENTERED this 24th day of September, 1998, in Tallahassee, Leon County, Florida. LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1998. COPIES FURNISHED: Max R. Silver, Esquire Silver & Silver 150 Southeast Second Avenue, Suite 500 Miami, Florida 33131 William B. Nickell, Esquire Department of Revenue 501 South Calhoun Street, Suite 304 Tallahassee, Florida 32301 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399
