D.C. Mun. Regs. tit. 17 § 3117

Current through Register Vol. 69, No. 38, September 23, 2022
Rule 17-3117 - PRE-NEED FUNERAL CONTRACTS
3117.1

No person shall offer or sell a pre-need funeral contract, or make or offer such a contract, unless licensed by the Board as a funeral director and acting on behalf of a licensed funeral services establishment. A licensee that offers such contracts shall be subject to the provisions of this section.

3117.2

All pre-need funeral contracts shall be in writing and substantially conform to the model set forth on the Department's website (dcra.dc.gov, then clicking the "Licensing/Registration" tab, then choosing "Professional Licensing"), and shall contain all disclosures required by District and federal law. A pre-need funeral contract shall:

(a) Be written in clear, easily understandable language and state that it is not an insurance product;
(b) Identify the funeral services establishment, its license number, the pre-need funeral contract purchaser, and the pre-need funeral contract beneficiary, if other than the pre-need funeral contract purchaser;
(c) Clearly state whether the contract, or any portion thereof, is guaranteed or non-guaranteed as defined in § 3199.1;
(d) Clearly disclose a complete list of services or supplies purchased;
(e) State, if funds are to be placed in an escrow account, the amount to be deposited, the name of the financial institution holding the escrow account, the disposition of the interest, the fees, expenses, and taxes that may be deducted from the interest, and the contract purchaser's responsibility for any taxes owed on any interest accrued;
(f) State that the Board handles consumer complaints and list the name, address, telephone number, and email address of the Board;
(g) State the terms of pre-need funeral contract termination, including that a portion of the funds may be retained as outlined in § 3117.6;
(h) Provide that, if the services or supplies contracted for cannot be provided, the funeral services establishment shall furnish those services or supplies in substantially similar style and quality and that, pursuant to § 3117.6, the contract purchaser has the right to cancel the contract or consent to any services or supplies that will be substituted;
(i) Disclose any penalties or restrictions, including geographic restrictions or the inability of the funeral services establishment to perform, on the delivery of goods, services, or pre-arrangement guarantee;
(j) Specify the source of funding for the pre-need funeral contract;
(k) Comply with all disclosure requirements required by the Board;
(l) When applicable, contain an appointment by the contract purchaser of a person to assist with the pre-need arrangements, which appointment shall be reduced to a written appointee agreement, be signed by the funeral director and the contract purchaser, and be attached to the pre-need funeral contract as a valid part of the contract;
(m) Contain the signatures of the licensed funeral director acting as an agent of the funeral services establishment and the contract purchaser and the date the contract was executed; and
(n) Be provided to the contract purchaser, along with all other related executed forms and agreements.
3117.3

A licensee that offers pre-need funeral contracts shall:

(a) Within ten (10) days of receipt, deposit all pre-need funds in a federally-insured interest-bearing escrow account;
(b) Keep accurate accounts, books, and records of all pre-need transactions;
(c) Keep a chronological listing of all pre-need funeral contracts. The listing shall include the name of pre-need purchasers, the name of contract beneficiaries, the date of the contract, how the contract was funded, whether any funeral goods or supplies are stored for the contract purchaser, and, if stored, a description of the funeral goods or supplies;
(d) Retain all pre-need funeral contracts and reporting documents, including all insurance information and copies of filed or certified death certificates, for at least three (3) years after the death of the pre-need funeral contract beneficiary; and
(e) Make all records related to pre-need funeral contracts available for inspection by the Department.
3117.4

Each licensee shall:

(a) Within one hundred eighty (180) days of the effective date of this rulemaking, submit to the Board, on a form prescribed by the Board, the following information:
(1) The total number of non-guaranteed and guaranteed pre-need funeral contracts maintained by the funeral establishment;
(2) A list of the names of all individuals who have pre-need funeral contracts with the licensee; and
(3) Any other information related to pre-need funeral contracts that is requested by the Board; and
(b) No later than (30) days after the creation of a new pre-need funeral contract or the transfer, cancellation, or execution of an existing pre-need funeral contract, notify the Board of the name of the pre-need funeral contract beneficiary and whether any new contract is guaranteed or non-guaranteed.
3117.5

A licensee shall provide the pre-need funeral contract purchaser with a receipt for all monies received.

3117.6

A person who purchases a pre-need funeral contract may terminate the contract before any services or supplies are furnished. Refunds shall be made in accordance with the following schedule:

(a) If the pre-need funeral contract is terminated within thirty (30) days of the date of the contract, the entire amount paid, plus any interest accrued, shall be refunded; or
(b) If the pre-need funeral contract purchaser terminates the contract more than thirty (30) days after the date of the contract, the pre-need funeral contract purchaser shall be refunded:
(1) At least ninety percent (90%) of all consideration paid or delivered on nonguaranteed items;
(2) At least ninety percent (90%) of all consideration paid for guaranteed items; and
(3) All interest or income accrued on the contract.
3117.7

A pre-need funeral contract purchaser shall have the right to change the contract provider before the furnishing of the services or supplies contracted for under the pre-need funeral contract. However, if the pre-need funeral contract purchaser wishes to change the contract provider, the pre-need funeral contract must first be terminated and a new pre-need funeral contract must be executed.

3117.8

If a funeral services establishment sells its business to a new owner, the funeral services establishment shall notify the Board and file with the Board a list of all its pre-need funeral contracts and all corresponding bank records to account for all monies collected from the sale of the pre-need funeral contracts. The funeral services establishment shall also notify each pre-need funeral contract purchaser of his or her option of continuing the pre-need funeral contract or obtaining a refund under § 3117.6.

3117.9

A funeral services establishment shall establish an individual escrow account for each pre-need funeral contract or a common escrow account for all pre-need funeral contracts.

3117.10

A funeral services establishment may transfer an escrow account from one federally-insured financial institution to another federally-insured financial institution. Within thirty (30) days of a transfer, a funeral services establishment must provide the new escrow account information to each pre-need funeral contract purchaser.

3117.11

Pre-need funds shall be subject to the following provisions:

(a) With written permission from the pre-need funeral contract purchaser, the funeral services establishment may remove funds deposited and use the funds to purchase individual or group insurance coverage or establish a trust account;
(b) Any interest or dividends earned by an individual escrow account shall accrue to the benefit of the pre-need funeral contract purchaser and shall be used only for the performance of the contract; and
(c) The funeral services establishment shall not withdraw the pre-need funds from the escrow account, unless:
(1) The services and goods have been provided to the pre-need funeral contract purchaser as agreed to in the contract; and
(2) A copy of a filed or certified death certificate is obtained by the funeral establishment and filed in accordance with § 3117.3(d); or
(3) The pre-need funeral contract purchaser, appointee, or his or her legal representative, submits a notarized statement and withdrawal request stating that the funeral services establishment may:
(A) Cancel the prepaid contract; or
(B) Transfer the monies to a named substitute; or
(4) The funds are removed in accordance with paragraph (a) of this subsection.
3117.12

The Board shall investigate any violation of this section. A licensee found to be in violation of this section shall be subject to disciplinary action pursuant to section 9 of the Act (D.C. Official Code § 3-408 (2007 Repl.)) and the penalties provisions of section 18 of the Act (D.C. Official Code § 3-417 (2007 Repl.)).

3117.13

Nothing in this subsection shall be construed to prohibit the use of group or individual insurance coverage, or any other mechanism to fund a prearranged funeral, where monies do not come into the possession of a funeral director or funeral services establishment prior to the death of the beneficiary.

D.C. Mun. Regs. Tit. 17, § 3117

Final Rulemaking published at 39 DCR 7853, 7863 (October 23, 1992); as amended by Notice of Final Rulemaking published at 59 DCR 4766 (May 11, 2012)
Authority: The Director of the Department of Consumer and Regulatory Affairs, pursuant to the authority set forth in section 22 a of the District of Columbia Funeral Services Regulatory Act of 1984, effective October 3, 2001 (D.C. Law 14-28; D.C. Official Code § 3-420 (2007 Repl. & 2011 Supp.)) and Mayor's Order 2007-216, dated October 5, 2007.