72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 836
A-Engrossed
Senate Bill 200
Ordered by the House May 9
Including House Amendments dated May 9
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of Governor Theodore R.
Kulongoski for Department of Consumer and Business Services)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
{ + Specifies master trustee does not include certain
financial institutions that act solely as depositories. + }
Requires master trustee to submit annual report to Director of
Department of Consumer and Business Services. Subjects master
trustee to examination requirements. Authorizes director to
discipline certified provider or master trustee for insolvency.
Increases penalty for violating certification or registration
requirements to maximum $5,000 fine, one year's imprisonment, or
both.
A BILL FOR AN ACT
Relating to providers of prepaid funeral services; amending ORS
97.923, 97.927, 97.933, 97.935, 97.945, 97.947, 97.948, 97.949
and 97.994.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 97.923 is amended to read:
97.923. As used in ORS 97.923 to 97.949 and 97.994 unless the
context requires otherwise:
(1) 'Beneficiary' means the person, if known, who is to receive
the funeral and cemetery merchandise, funeral and cemetery
services or completed interment, entombment or cremation spaces.
(2) 'Certified provider' means any person certified under ORS
97.933 to sell or offer for sale prearrangement sales contracts
or preconstruction sales contracts.
(3) 'Delivery' occurs when:
(a) Physical possession of the funeral and cemetery merchandise
is transferred to the purchaser;
(b) Title to the funeral and cemetery merchandise has been
transferred to the purchaser, has been paid for, and is in the
possession of the seller, who has placed it, until needed, for
storage on the seller's premises; or
(c) The merchandise has been identified for the purchaser or
the beneficiary and held by the manufacturer for future delivery.
(4) 'Depository' means a financial institution or trust
company, as those terms are defined ORS 706.008, that is
authorized to accept deposits in this state or to transact trust
business in this state.
(5) 'Director' means the Director of the Department of Consumer
and Business Services.
(6) 'Funeral and cemetery merchandise' includes nonperishable
items of personal property customarily sold by funeral service
establishments, cemeteries, crematoriums and monument companies,
including, but not limited to, caskets, burial vaults, memorials,
markers and foundations, but shall not include rights of
interment or entombment in a cemetery section, lawn crypt
section, mausoleum or columbarium that is in existence at the
time of initial payment on the contract.
(7) 'Funeral and cemetery services' includes all services
customarily performed:
(a) By a funeral service practitioner, embalmer, funeral
service establishment, cemetery or crematorium licensed under ORS
chapter 692;
(b) In conjunction with an interment, entombment or cremation;
and
(c) In conjunction with the sale, installation or erection of a
memorial, marker, monument or foundation.
(8) 'Guaranteed contract' means a written preconstruction sales
contract or prearrangement sales contract that guarantees the
beneficiary the specific undeveloped space or spaces or funeral
and cemetery merchandise or funeral and cemetery services
contained in the contract and under which no charges other than
the sales price contained in the contract shall be required upon
delivery or performance of the funeral and cemetery services.
(9) 'Master trustee' means an entity appointed by a certified
provider to administer moneys received from the certified
provider under ORS 97.941 who acts independently from any
certified provider and who is not also a certified provider under
ORS 97.923 to 97.949. { + ' Master trustee' does not include a
financial institution, as defined in ORS 706.008, that acts
solely as a depository under ORS 97.923 to 97.949. + }
(10) 'Nonguaranteed contract' means a written preconstruction
sales contract or prearrangement sales contract that guarantees
the beneficiary the specific undeveloped space or spaces or
funeral and cemetery merchandise or funeral and cemetery services
contained in the contract and under which additional charges
other than the sales price contained in the contract may be
required at the time of delivery or performance of the funeral
and cemetery services.
(11) 'Preconstruction sales' or 'preconstruction sales
contract' means any sale made to a purchaser, which has as its
purpose the furnishing of undeveloped interment, entombment or
cremation spaces and where the sale terms require payment or
payments to be made at a currently determinable time.
(12) 'Prearrangement sales' or 'prearrangement sales contract'
means any sale, excluding the sale and contemporaneous or
subsequent assignment of a life insurance policy or an annuity
contract, made to a purchaser, that has as its purpose the
furnishing of funeral and cemetery merchandise or funeral and
cemetery services in connection with the final disposition or
commemoration of the memory of a dead human body, for use at a
time determinable by the death of the person or persons whose
body or bodies are to be disposed and where the sale terms
require payment or payments to be made at a currently
determinable time.
(13) 'Provider' means any entity that sells and offers for sale
funeral and cemetery merchandise or funeral and cemetery
services.
(14) 'Purchaser' means a beneficiary or a person acting on
behalf of a beneficiary who enters into a prearrangement sales
contract or a preconstruction sales contract with a certified
provider under which any payment or payments made under the
contract are required to be deposited in trust under ORS 97.941.
(15) 'Salesperson' means an individual registered under ORS
97.931 and employed by a certified provider to engage in the sale
of prearrangement or preconstruction sales contracts on behalf of
the certified provider.
(16) 'Sales price' means the gross amount paid by a purchaser
for a prearrangement sales contract or preconstruction sales
contract, excluding sales taxes, credit life insurance premiums
and finance charges.
(17) 'Trust' means an express trust created under ORS 97.941
whereby a trustee has the duty to administer the amounts
specified under ORS 97.941 received under a prearrangement sales
contract or a preconstruction sales contract for the benefit of
the purchaser of a prearrangement sales contract or
preconstruction sales contract.
(18) 'Undeveloped interment, entombment or cremation spaces' or
'undeveloped spaces' means any space to be used for the reception
of human remains that is not completely constructed or developed
at the time of initial payment.
SECTION 2. ORS 97.927 is amended to read:
97.927. { + (1) + } Except as provided in this section, ORS
97.923 to 97.949, 97.992, 97.994 and 692.180 apply to all
certified providers { + , master trustees + } and salespersons
who sell or offer for sale prearrangement sales contracts or
preconstruction sales contracts.
{ + (2) + } ORS 97.923 to 97.949, 97.992, 97.994 and 692.180
do not apply to:
{ - (1) - } { + (a) + } Agreements to sell or sales made by
endowment care cemeteries under ORS 97.929; or
{ - (2) - } { + (b) + } Any nonprofit memorial society
charging less than a $100 membership fee.
SECTION 3. ORS 97.933 is amended to read:
97.933. (1) A provider { - , as defined in ORS 97.923, - }
{ + + }may not engage in prearrangement sales or
preconstruction sales unless the provider is certified by the
Director of the Department of Consumer and Business Services. The
director shall:
(a) Establish procedures for issuing certificates required by
this section.
(b) Establish standards for determining whether a certificate
should be issued.
(c) Set certification and renewal fees.
(d) Require annual renewal of certification.
(e) Establish standards for rules of conduct of
{ + certified + } providers.
(2) The fees described in this section shall be reasonable and
shall defray the costs associated with the administration of ORS
97.923 to 97.949.
(3)(a) Every certified provider shall file an annual report
with the director on forms provided by the director. The annual
report shall contain any information reasonably considered
necessary by the director, including but not limited to:
(A) A disclosure of changes in trust deposits;
(B) The number of consecutively numbered prearrangement or
preconstruction sales contracts sold during the reporting period;
and
(C) The number of withdrawals from or terminations of any
trusts.
(b) If the annual report is not filed or is filed and shows any
material discrepancy, the director may take appropriate action
and send notification of the matter to the State Mortuary and
Cemetery Board.
(c) The director may relieve a certified provider of the duty
to file the annual report upon a determination that the certified
provider has performed all obligations under the prearrangement
sales contract or preconstruction sales contract, or that such
obligations lawfully have been assumed by another or have been
discharged or canceled.
(4) The director may audit the records of a certified provider
that relate to prearrangement sales or preconstruction sales, as
the director may consider appropriate. The director may refer any
matter outside of normal auditing procedures to the office of the
Attorney General for investigation and send notification of the
referral to the State Mortuary and Cemetery Board.
(5) The conduct of individuals, including salespersons as
defined in ORS 97.923, employed by a certified provider is the
direct responsibility of the certified provider.
SECTION 4. ORS 97.935 is amended to read:
97.935. (1) A person may not operate as a master trustee { - ,
as defined in ORS 97.923, - } unless { - that - }
{ + the + } person is registered with the Director of the
Department of Consumer and Business Services. The director shall:
(a) Establish procedures for registering persons under this
section.
(b) Establish standards for master trustees.
(c) Set registration and renewal fees.
(d) Establish standards for rules of conduct of master
trustees.
{ + (2)(a) Every master trustee shall file an annual report
with the director on forms provided by the director. The annual
report shall contain any information reasonably considered
necessary by the director, including but not limited to:
(A) A disclosure of changes in trust deposits; and
(B) A list of all certified providers for which the master
trustee holds funds and the total amount of funds held for each
certified provider.
(b) The director may take appropriate action under ORS 97.948
and 97.949 if a master trustee fails to file the annual report or
the report contains any material discrepancy.
(c) The director may relieve a master trustee of the duty to
file the annual report upon a determination that the master
trustee has performed all obligations under the trust agreement
with each certified provider, or that the master trustee's
obligations have been lawfully assumed by another person or have
been discharged or canceled. + }
{ - (2) - } { + (3) + } The director may conduct an annual
audit of a master trustee. The director shall prescribe the form
of audits under this section.
{ - (3) - } { + (4) + } A master trustee who is audited
under this section shall pay all expenses and costs incurred by
the director in conducting the audit.
{ - (4) - } { + (5) + } The director shall adopt rules
necessary to administer this section. The rules shall identify
the specific trust provisions that are the subject of an audit
conducted under this section.
SECTION 5. ORS 97.945 is amended to read:
97.945. (1) Every prearrangement sales contract or
preconstruction sales contract seller shall pay to the Director
of the Department of Consumer and Business Services a $5 fee for
each prearrangement sales contract or preconstruction sales
contract entered into, to be paid into a special income earning
fund in the State Treasury, separate from the General Fund, known
as the Funeral and Cemetery Consumer Protection Trust Fund. The
fees shall be remitted to the director { - semiannually - }
{ + annually + } within 30 days after the end of { - June
and - } December for all contracts that have been entered into
during the { - six-month - } { + 12-month + } period.
(2) Except as provided in this section, the fund shall be used
solely for the purpose of providing restitution to purchasers who
have suffered pecuniary loss arising out of prearrangement sales
contracts or preconstruction sales contracts. The fund may be
used for payment of actual administrative expenses incurred in
administering the fund. All moneys in the Funeral and Cemetery
Consumer Protection Trust Fund are appropriated continuously to
the director for the payment of restitution under this section
and the payment of expenses incurred in performing the duties and
functions of the director required under ORS 97.923 to 97.949,
97.992, 97.994 and 692.180.
(3) The director shall administer the fund and shall adopt
rules governing the payment of restitution from the fund.
(4) Payments for restitution shall be made only upon order of
the director where the director determines that the obligation is
noncollectible from the certified provider. Restitution shall not
exceed the amount of the sales price paid plus interest at the
statutory rate.
(5) The fund shall not be applied toward any restitution for
losses on a prearrangement sales contract or preconstruction
sales contract entered into prior to September 27, 1987.
(6) The fund shall not be allocated for any purpose other than
that specified in ORS 97.923 to 97.949, 97.992, 97.994 and
692.180.
(7) If the director proposes to deny an application for
restitution from the fund, the director shall accord an
opportunity for a hearing as provided in ORS 183.310 to 183.550.
(8) Notwithstanding any other provision of this section, the
payment of restitution from the fund shall be a matter of grace
and not of right and no purchaser shall have vested rights in the
fund as a beneficiary or otherwise.
(9) The status of the fund shall be reviewed annually by the
director. If the review determines that the fund together with
all accumulated income earned on the fund is sufficient to cover
costs of potential claims against the fund and that the total
number of outstanding claims filed against the fund is less than
10 percent of the fund's current balance, then payments to the
fund shall be adjusted accordingly at the discretion of the
director.
SECTION 6. ORS 97.947 is amended to read:
97.947. (1) Each certified provider or master trustee is
subject to the examination of the Director of the Department of
Consumer and Business Services. The director may conduct
examinations of the conditions and resources of each certified
provider { + or master trustee + }, including a review of sales
contracts used by the certified provider { + or master
trustee + }, to determine whether the certified provider { + or
master trustee + } is complying with the requirements of ORS
97.923 to 97.949, the laws of this state and the rules of the
director. The director may require certified providers { + or
master trustees + } to pay the actual and reasonable costs of the
examination.
(2) For the purpose of an examination under this section, the
director may administer oaths and affirmations, subpoena
witnesses and compel their attendance, take evidence and require
the production of books, papers, correspondence, memoranda,
agreements or other documents or records that the director
considers relevant or material to the examination.
(3) If a certified provider { + or master trustee + } fails to
comply with a subpoena issued under this section or a party or
witness refuses to testify on any matter, the judge of the
circuit court for any county, on the application of the director,
shall compel obedience by proceedings for contempt as in the case
of disobedience of the requirements of a subpoena issued from the
court or a refusal to testify on a matter before the court.
(4) Each witness who appears before the director under a
subpoena issued under this section shall receive the fees and
mileage provided for witnesses in ORS 44.415 (2), except that a
witness subpoenaed at the instance of parties other than the
director or an examiner may not be compensated for attendance or
travel unless the director certifies that the testimony of the
witness was material to the matter investigated.
(5) During the course of any examination, the director may
cause the depositions of witnesses to be taken in the manner
prescribed by law for like depositions in civil suits in the
circuit court.
SECTION 7. ORS 97.948 is amended to read:
97.948. (1) The Director of the Department of Consumer and
Business Services may discipline as provided in this section any
certified provider { - , - } { + or + } master
trustee { + , + } or person acting as a certified provider or
master trustee without a certification or registration { + , + }
who has been found by an audit or examination conducted by the
director { + : + }
{ + (a) + } To be in violation of one or more of the
provisions of ORS 97.923 to 97.949 { + ;
(b) To be insolvent because the certified provider's or master
trustee's liabilities exceed the certified provider's or master
trustee's assets;
(c) The certified provider or master trustee cannot meet
obligations as they come due; or
(d) The certified provider or master trustee is in such
financial condition that the certified provider or master trustee
cannot adequately protect the interests of the certified
provider's or master trustee's customers + }.
(2) In disciplining a certified provider, master trustee or
person acting as a certified provider or master trustee without a
certification or registration as authorized by subsection (1) of
this section, the director may take any or all of the following
actions:
(a) Impose probation.
(b) Suspend the certificate or registration.
(c) Revoke the certificate or registration.
(d) Place limitations on the certificate or registration.
(e) Refuse to issue or renew a certificate or registration.
(f) Take such other disciplinary action as the director in the
director's discretion finds proper, including assessment of the
costs of the investigation and disciplinary proceedings and
assessment of a civil penalty not to exceed $10,000 per
violation.
(3) If the certificate or registration of a certified provider
or master trustee is suspended under this section, the holder of
the certificate or registration may not engage in the activities
allowed by the certificate or registration during the term of
suspension. Upon the expiration of the term of suspension, the
director shall reinstate the certificate or registration if the
conditions for which the certificate or registration was
suspended no longer exist.
(4) The director shall enter each case of disciplinary action
on the records of the Department of Consumer and Business
Services.
(5) Civil penalties under this section may be imposed as
provided in ORS 183.090.
(6) If the director takes disciplinary action under this
section, the director { - shall - } { + may + } send a notice
of the action to the State Mortuary and Cemetery Board { + and
to the Attorney General + }.
SECTION 8. ORS 97.949 is amended to read:
97.949. (1) If the Director of the Department of Consumer and
Business Services has reason to believe that a person has
violated any provision of ORS 97.923 to 97.949, the director
{ - shall - } { + may + } give the information relative to the
violation to the appropriate federal, state or local law
enforcement officer having jurisdiction over the violation.
(2) If the director, in the course of taking an action against
a certified provider, master trustee or person acting as a
certified provider or master trustee without a registration or
certification, finds that a salesperson or person acting as a
salesperson has violated any provision of ORS 97.923 to 97.949,
the director shall provide the State Mortuary and Cemetery Board
with a copy of the findings and the order of the director. The
board shall, upon receipt of such information, discipline the
salesperson or person acting as a salesperson { - according to
established procedures - } { + as required by law + }.
SECTION 9. ORS 97.994 is amended to read:
97.994. { - Any certified provider or salesperson
violating - } { + Violation of any of the provisions of + } ORS
97.931, 97.933 { + , + } { - or - } 97.941 { + or 97.943 + }
is { - guilty of - } { + punishable as + } a Class
{ - C - } { + A + } misdemeanor.
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