S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5677
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 10, 2019
                                ___________
 
 Introduced  by  Sen.  COMRIE -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer Protection
 
 AN ACT to amend the general business law and the public health  law,  in
   relation to financial liability and disclosure for funeral homes
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph (a) of subdivision 1 and subdivisions 8 and 10 of
 section 453 of the general business law, paragraph (a) of subdivision  1
 as  amended by chapter 557 of the laws of 2001, subdivision 8 as amended
 by chapter 529 of the laws of 1993, and subdivision 10 as added by chap-
 ter 279 of the laws of 2007 are amended and three new  subdivisions  12,
 13, and 14 are added to read as follows:
   (a)  Any  and  all  moneys  paid  to a funeral firm, funeral director,
 undertaker, cemetery, or any other person, firm or corporation, under or
 in connection with an agreement, or any option to enter into  an  agree-
 ment, for the sale of merchandise to be used in connection with a funer-
 al  or  burial,  or for the furnishing of personal services of a funeral
 director or undertaker, wherein the merchandise is not  to  be  actually
 physically  delivered  or  the  personal services are not to be rendered
 until the occurrence of the death of the person  for  whose  funeral  or
 burial  such  merchandise or services are to be furnished shall continue
 to be the money of the person making such payment and shall be  held  in
 trust for such person by the funeral firm, funeral director, undertaker,
 cemetery  or  any other person, firm or corporation to whom such payment
 is made and shall, within ten business days of receipt, be deposited  in
 an  interest  bearing  account in a bank, national bank, federal savings
 bank, federal savings and loan association, savings  bank,  savings  and
 loan association, credit union, or federal credit union within the state
 and  duly  authorized  to  receive deposits in the state of New York and
 which shall earn interest at a rate which shall be at not less than  the
 prevailing rate of interest earned by other such deposits in such banks,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD11658-01-9

 S. 5677                             2
 
 savings  banks,  savings  and  loan associations, or credit unions under
 this section, or shall be placed in a trust  company  in  an  investment
 backed  by  the government of the United States and shall not be commin-
 gled  with other moneys of the funeral firm, funeral director, undertak-
 er, cemetery, or other person, firm or corporation or become  the  funds
 of  the  funeral  firm, funeral director, undertaker, cemetery, or other
 person, firm or corporation, and shall be so held on  deposit,  together
 with  any  interest thereon WITH INTEREST EARNED BEING ACCRUED DAILY AND
 CREDITED MONTHLY, until said merchandise has  been  actually  physically
 delivered  and  said personal services have been rendered, unless sooner
 repaid, in whole or in part. No funeral firm, funeral  director,  under-
 taker,  cemetery  or  any  other  person,  firm  or  corporation,  shall
 discharge the obligation established under this section  to  deposit  or
 place  money  with  a bank, national bank, federal savings bank, federal
 savings and loan association, savings bank,  savings  and  loan  associ-
 ation,  credit  union,  federal credit union or trust company within the
 state through  a  surety  bond  or  other  financial  instrument  unless
 expressly provided under this section.
   8.  Records  required by this section to be maintained and true copies
 of agreements shall be retained for four years following the  provisions
 of  funeral merchandise and services OR, IF A PRENEED ADMINISTRATOR, FOR
 FOUR YEARS AFTER FINAL PAYMENT IS DISBURSED PURSUANT TO  THE  AGREEMENT.
 In  the  event  the  funds  are returned to the person who deposited the
 money or their representative, such records,  including  the  record  of
 return  of  funds shall be retained for a period of four years after the
 sale, transfer, termination, cessation of operation or discontinuance of
 the funeral.  FOR PURPOSES OF THIS SECTION, RECORDS SHALL  INCLUDE,  BUT
 NOT  BE  LIMITED  TO, A COPY OF THE AGREEMENT, A DEATH CERTIFICATE AND A
 COPY OF THE CHECK OR OTHER  PAYMENT  MADE  PURSUANT  TO  THE  AGREEMENT.
 COPIES  OF SUCH RECORDS SHALL BE MADE AVAILABLE FOR INSPECTION AND SHALL
 BE MADE AVAILABLE DURING ORDINARY BUSINESS HOURS FOR COPYING UPON  WRIT-
 TEN  REQUEST  BY  ANY  STATE AGENCY REGULATING THE FUNERAL FIRM, FUNERAL
 DIRECTOR, UNDERTAKER, CEMETERY OR  OTHER  PERSON,  FIRM  OR  CORPORATION
 WHICH RECEIVED SUCH MONEY OR ENFORCING THE REQUIREMENTS OF THIS SECTION,
 PROVIDED  A  COMPLAINT, EITHER ORAL OR WRITTEN, HAS BEEN RECEIVED, OR AN
 INSPECTOR HAS GROUNDS TO BELIEVE THAT SERIOUS OR  REPEAT  VIOLATIONS  OF
 THIS SECTION HAVE OCCURRED.
   10. For the purposes of [subdivision eleven of] this section, "preneed
 administrator"  means  any  person, partnership, firm, limited liability
 company or corporation, which is either domiciled in or  doing  business
 in  the  state  of  New  York,  and which has received money under or in
 connection with an agreement executed  pursuant  to  this  section;  and
 "county"  shall  refer  only to a county located within the state of New
 York. For the purposes of subdivision five  of  this  section,  "preneed
 administrator"  shall also include any successor, assignee or transferee
 of funds held pursuant to this section.
   12. A PRENEED ADMINISTRATOR OPERATING UNDER THIS SECTION SHALL CONDUCT
 AN AUDIT OF ALL OF ITS ACCOUNTS RELATING TO PRENEED AGREEMENTS AS OF THE
 THIRTY-FIRST OF DECEMBER OF EACH CALENDAR YEAR.  THE AUDIT SHALL INCLUDE
 THE FOLLOWING REQUIREMENTS:
   (A) THE AUDIT SHALL BE PERFORMED  BY  A  CERTIFIED  PUBLIC  ACCOUNTANT
 LICENSED TO PRACTICE IN NEW YORK STATE.
   (B) THE AUDIT SHALL BE COMPLETED AND DELIVERED TO THE PRENEED ADMINIS-
 TRATOR WITHIN ONE HUNDRED TWENTY DAYS OF THE END OF SUCH CALENDAR YEAR.

 S. 5677                             3
 
   (C)  THE  AUDIT  SHALL VERIFY, BY WAY OF A REPRESENTATIVE SAMPLE, THAT
 THE PRENEED ADMINISTRATOR HAS A SIGNED COPY OF THE  AGREEMENT  FOR  EACH
 ACCOUNT.
   (D)  THE  AUDIT  SHALL VERIFY, BY WAY OF A REPRESENTATIVE SAMPLE, THAT
 APPROPRIATE INCOME TAX REPORTS HAVE BEEN SENT BY THE PRENEED ADMINISTRA-
 TOR TO THE OWNER OF EACH ACCOUNT.
   (E) THE AUDIT SHALL VERIFY THAT THE INVESTMENT OF ALL  FUNDS  FOR  THE
 AGREEMENTS IS IN COMPLIANCE WITH THIS SECTION.
   (F)  THE  AUDIT  SHALL VERIFY, BY AN APPROPRIATE SAMPLING METHOD, THAT
 THE EARNINGS ON THE INVESTMENTS  ARE  BEING  PROPERLY  APPLIED  TO  EACH
 ACCOUNT  AND  THAT  THE  EARNINGS  ARE CREDITED TO EACH ACCOUNT AT LEAST
 MONTHLY.
   (G) THE AUDIT SHALL EXPRESS AN OPINION THAT THE  FINANCIAL  STATEMENTS
 OF THE PRENEED ADMINISTRATOR FAIRLY REPRESENT THE FINANCIAL CONDITION OF
 THE  FUNDS  RECEIVED  IN  ALL  MATERIAL RESPECTS, AND THAT ALL FINANCIAL
 INFORMATION DISTRIBUTED  BY  THE  PRENEED  ADMINISTRATOR  TO  CONSUMERS,
 FUNERAL HOMES OR OTHER PARTIES IS ACCURATE.
   (H)  THE  AUDIT  SHALL  VERIFY  THAT  THE STATED YIELD CREDITED TO THE
 ACCOUNT FOR THAT FISCAL YEAR, AS ANNOUNCED BY THE PRENEED ADMINISTRATOR,
 IS ACCURATE.
   13. (A) IN NO EVENT SHALL THE  ADMINISTRATIVE  FEES  CHARGED  UNDER  A
 PRENEED AGREEMENT IN ANY CALENDAR YEAR EXCEED THE NET INCOME CREDITED TO
 AN  ACCOUNT  FOR  SUCH CALENDAR YEAR; THAT IS, THE ACCOUNT BALANCE SHALL
 NEVER BE REDUCED IN ANY CALENDAR YEAR  BECAUSE  OF  ADMINISTRATIVE  FEES
 CHARGED AGAINST THE ACCOUNT.
   (B)  ANY  ADMINISTRATIVE FEES OTHERWISE PAYABLE IN RELATION TO PRENEED
 AGREEMENTS WHICH ARE NOT PAID IN ANY CALENDAR YEAR BECAUSE OF THE  LIMI-
 TATIONS  IN  PARAGRAPH (A) OF THIS SUBDIVISION SHALL NOT BE COLLECTED IN
 ANY SUBSEQUENT CALENDAR YEAR.
   14. A PRENEED ADMINISTRATOR OPERATING UNDER THIS SECTION SHALL, AT THE
 END OF EACH CALENDAR YEAR, HAVE  ALL  ASSETS  VALUED  AND  PRESENTED  IN
 ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
   §  2.  Paragraph  (l)  of  subdivision 1 of section 3450 of the public
 health law, as amended by chapter 557 of the laws of 2001, is amended to
 read as follows:
   (l) has paid, given, has caused to be paid or given or offered to  pay
 or  to  give  to any person a commission or other valuable consideration
 for the solicitation or procurement, either directly or  indirectly,  of
 funeral  patronage, or has accepted any consideration (including without
 limitation a commission, rebate, or discount or direct or indirect price
 reduction on merchandise from the current value thereof) from any finan-
 cial institution or trust company,  or  agent  thereof,  with  whom  the
 funeral  director deposits funds paid for funeral services in advance of
 need pursuant to subdivision one of section four hundred fifty-three  of
 the  general  business  law EXCEPT THAT THE FUNERAL DIRECTOR MAY ACCEPT,
 FROM THE FINANCIAL INSTITUTION, TRUST COMPANY OR AGENT  THEREOF,  UP  TO
 TWENTY-FIVE  HUNDREDTHS OF ONE PERCENT OF THE FEE AUTHORIZED UNDER PARA-
 GRAPH (B) OF SUBDIVISION THREE OF SECTION FOUR  HUNDRED  FIFTY-THREE  OF
 THE  GENERAL  BUSINESS  LAW  FOR ADMINISTRATIVE SERVICES PROVIDED BY THE
 FUNERAL DIRECTOR, or has accepted any consideration  (including  without
 limitation  a  commission or gift) from any insurer or agent thereof, to
 sell, offer or promote the sale of  any  policy  of  insurance  payable,
 expressly  or  as  marketed,  at the death of the insured for funeral or
 burial expenses;

 S. 5677                             4
 
   § 3. Paragraph (l) of subdivision 1 of  section  3450  of  the  public
 health law, as amended by chapter 560 of the laws of 1998, is amended to
 read as follows:
   (l)  has paid, given, has caused to be paid or given or offered to pay
 or to give to any person a commission or  other  valuable  consideration
 for  the  solicitation or procurement, either directly or indirectly, of
 funeral patronage, or has accepted any consideration (including  without
 limitation a commission, rebate, or discount or direct or indirect price
 reduction on merchandise from the current value thereof) from any finan-
 cial  institution  or  trust  company,  or  agent thereof, with whom the
 funeral director deposits funds paid for funeral services in advance  of
 need  pursuant to subdivision one of section four hundred fifty-three of
 the general business law EXCEPT THAT THE FUNERAL  DIRECTOR  MAY  ACCEPT,
 FROM  THE  FINANCIAL  INSTITUTION, TRUST COMPANY OR AGENT THEREOF, UP TO
 TWENTY-FIVE HUNDREDTHS OF ONE PERCENT OF THE FEE AUTHORIZED UNDER  PARA-
 GRAPH  (B)  OF  SUBDIVISION THREE OF SECTION FOUR HUNDRED FIFTY-THREE OF
 THE GENERAL BUSINESS LAW FOR ADMINISTRATIVE  SERVICES  PROVIDED  BY  THE
 FUNERAL DIRECTOR;
   §  4.  This  act shall take effect on the ninetieth day after it shall
 have become a law, provided that the  amendments  to  paragraph  (l)  of
 subdivision  1  of section 3450 of the public health law made by section
 two of this act shall be subject to the expiration and reversion of such
 paragraph pursuant to section 6 of chapter 557 of the laws of  2001,  as
 amended, when upon such date the provisions of section three of this act
 shall take effect.