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Lemasters Consulting Parliament

Parliament is a quarterly journal focusing on the deathcare profession.

Summer 2013

Spring 2013


Lemasters Consulting Parliament

TABLE OF CONTENTS 3 7 11 16 20

Letter from the Publisher FTC Update 2013: A Review of Opinions "But I Didn't Know the Law" | A Case Study An Update on Human Resources Issues by Michael S. Pepperman An Update on Tax Issues by Les Schneider

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Letter from the Publisher

started this letter off with a typical example to illustrate the problem. What I wrote was how I constantly tell businesses and the individuals working in the deathcare profession that you have to keep up with the law. I am amazed how many businesses aren’t familiar with their state law. Actually, that’s an incorrect statement. Every business is familiar with the laws that affect and control their business. The problem is that a business knows the laws from a particular point in time—and rarely keep up with the changes in laws. As I finished that paragraph, and tried to write the next line—basically getting ready to complain about how lax businesses are and how it is entirely up to them—I realized that I couldn’t really blame anyone without blaming myself about this problem too. After all, I write and speak, and participate actively within the deathcare profession but I have yet to address in Parliament recent updates to laws. So, if I have a problem with people not knowing about changes in the law, then maybe I need to do a better job about updating everyone and getting

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them motivated to learn more. Keep in mind that I can help, but ultimately, it’s up to each of us to know the current laws and how they affect us. This issue of Parliament looks at some of the big changes in the deathcare profession that have happened and may happen. I may not be able to update every change in every state in the deathcare profession in this issue of Parliament—but I can give some highlights that affect us and also give you the push to check your state and local laws for changes as well. Let this issue serve as a reminder that not only are the laws and rules constantly evolving, but that we are all responsible for knowing and understanding these laws. As always, I truly hope you enjoy Parliament, and welcome any comments, feedback, questions, or ideas for future issues.

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About the Publisher ABOUT POUL LEMASTERS, ESQ. Poul Lemasters is the publisher of Parliament, a licensed attorney and a funeral director/embalmer. Poul is also an adjunct professor at the Cincinnati College of Mortuary Science. He is an active member of the International Cemetery Cremation Funeral Association where he advises on cremation concerns and FTC compliance to members. Poul is also active in various state funeral, crematory, and cemetery associations. ABOUT LEMASTERS CONSULTING Lemasters Consulting is a company formed exclusively to serve the needs of the funeral profession, including funeral homes, funeral directors, cemeteries, cemeterians, crematories, and those working in the industry. Lemasters Consulting provides various services in: Government Compliance, Policy and Procedures, Risk Management, Litigation, Valuation, Market Analysis, Buy/Sell, Forms Management, and Next of Kin Disputes. www.lemastersconsulting.com

Contributing Authors ABOUT MICHAEL S. PEPPERMAN Michael S. Pepperman is an accomplished attorney known for his tireless advocacy on behalf of his clients. He focuses his practice exclusively on the representation of management in all aspects of labor relations and employment law. Mr. Pepperman is the chair of his firm’s Labor Relations Practice Group. As a labor relations and employment lawyer, Mr. Pepperman provides advice and counsel to employers throughout the country in a wide range of businesses including manufacturers and fabricators, hospitality, retail, food services, transportation, deathcare and facilities management businesses among others as well as government entities and municipalities. He partners with clients to provide direction and step-by-step counsel in an effort to proactively address and manage employment and labor-related problems. michael.pepperman@obermayer.com

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ABOUT LES SCHNEIDER Les Schneider, of Ivins, Phillips & Barker, is tax counsel to ICCFA and is available to provide free consultations on tax matters to members of ICCFA. He can be contacted by email at LSchneider@ipbtax.com. You can view Les’ resume at www.ipbtax.com.

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Parliament is published quarterly. Publisher: Poul Lemasters Art Direction & Design: Doth Brands Questions? info@lemastersconsulting.com Subscriptions are free. Please visit lemastersconsulting.com to sign up.

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All issues of Parliament are free, all the time, even back issues. Please visit LemastersConsulting.com/Parliament to find past issues. Thanks for reading and supporting this publication. © Copyright 2013 Lemasters Consulting and Poul Lemasters. All Rights Reserved.

All photography in this issue by Poul Lemasters.


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FTC Update 2013: A Review of Opinions

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n almost a yearly basis the FTC responds to various questions regarding application and interpretation of the Funeral Rule. It’s a bit amazing that after all these years there are still questions about how to apply the Funeral Rule. However, what it demonstrates is all the changes that continue to occur in this profession. The most recent Opinions from the FTC (there were two in January 2013) deal with very similar issues. The issue discussed in both Opinions was whether a funeral provider could charge additional fees to a family for providing additional or special services. Overall, the FTC opined that so long as the fees were disclosed on the GPL, then any additional fees could be collected. OPINION 1 Collecting Fees for Processing Insurance/Trusts The issue of this Opinion was whether a funeral provider could charge a family a fee for processing paperwork to collect insurance assignments or whether they could pass along the fees that a third-party funding company charges for processing and paying insurance claims. The FTC began their Opinion by reaffirming that the Rule expressly prohibits a funeral provider from charging any fees as a condition to furnishing any funeral goods and services. It further explained that while the Rule does not permit a second non-declinable fee – it DOES permit fees for services that are voluntarily selected by the purchaser. The FTC stated that the fees for

processing insurance are allowed to be charged, but explained that any fees must be disclosed on the GPL and disclosed to the purchaser before the fee could be charged. With the fee on the GPL, and a description of the services, then the purchaser is able to select the optional service at their discretion. If the service was selected then the fee would ultimately have to be shown on the SFGS. This would apply to an at-need and a pre-need selection. OPINION 2 Additional Fees for Special Cases Obese bodies or large funeral services This Opinion revolved around additional fees for handling special cases. Specifically, the Opinion asked if a funeral provider could charge additional fees when handling an obese body or when handling a funeral service that was very large in size. The FTC started off by explaining and clarifying, that a funeral provider may only charge for its services that are listed on its GPL or other price lists required by the Rule. Within those listed fees, the provider can place any reasonable limitations to the items listed on their GPL. As an example the FTC pointed to the mileage limitation, where a provider will put a limit on how many miles a transfer fee will be allowed—and then listing a fee for additional mileage. Based on this example, the FTC stated that a funeral provider would be allowed to include in its GPL an express weight limit for transferring remains to the funeral home, so long as the provider listed additional fees for removal that exceeded the weight

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Continued...FTC Update limitation. Likewise, there could be a limit on the weight for a cremation fee, with additional fees listed for cremations that exceeded the listed weight limitations. In addressing the second issue, large funeral services, the FTC stated the funeral provider could limit its GPL price for funeral/memorial services to a maximum number of people in attendance. Again, the GPL would also have to list the cost for services that exceeded the specified maximum. Any fees disclosed and selected by the purchaser would have to be listed on the SFGS.

OVERALL These Opinions should not surprise anyone in the profession. The Opinions reaffirm the long time holding that providers must accurately disclose its fees on the GPL. This also follows the goal of the Funeral Rule that is to enhance consumer choice and price competition by requiring itemized presale price disclosure for funeral goods and services. It is always recommended that disclosure is the best rule. Keep in mind that the Funeral Rule requires certain items to be included on your GPL, but it does not limit what you can include. You are free to add any services and associated fees so long as the consumer is free to choose or decline these additional services. And to end on a good note—the FTC (along with other federal agencies) published their rulemaking projects with timetables and deadlines. The FTC indicated that the Funeral Rule is not listed for any review until 2019. So, while the FTC could change the target date for review at any time, it looks like we can all rest easy for a few years.

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"But I Didn't Know the Law" | A Case Analysis

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t’s a common saying—“Ignorance of the law is no excuse.” People say it and hear it everyday. It probably ranks right up there with “Finders keepers; losers weepers.” But does ignorance of the law really hold up in Court? Can you make a valid argument on the theory of—just not knowing? This case involves a family that accused a cemetery of a disinterment and re-interment without their consent. Maria Gakin and Frederick Eagle Tail Jr. v. City of Rapid City, South Dakota, a Political Subdivision, Mt. View Cemetery, a Municipal Entity, and Tom Vallette, employee, and Jerry Zimmerman, employee, and John Does Three through Five, Jointly, Severally and in their Individual Capacities, 698 NW 2d 493. (As an aside please note all of the people named as Defendants in this lawsuit. Not only did they file suit against the business, but also all of the employees.) The facts of the case showed that the Plaintiffs were the parents of Ty Eagle Tail, who was born on July 27, 1999. Ty had severe genetic and physical impairments and lived a short life of two and a half months. Upon Ty’s passing, the parents hired Kirk Funeral Home to provide funeral arrangements. Included in those funeral arrangements was a burial at Mountain View Cemetery. The funeral and burial took place on October 15, 1999. Within just a couple of days of the burial, the parents suspected that the grave site had been tampered with and that Ty had been moved several feet from his original position. The parents called the cemetery to

confront them—but the cemetery denied the allegations. Then, almost two years later, the parents engaged an attorney to contact the cemetery. The attorney notified the cemetery about the alleged incident and the cemetery responded that the grave was originally dug in the wrong spot but prior to the burial, the cemetery discovered the error and re-dug the grave in the correct position. The parents were not convinced, and in May of 2002, they ordered a disinterment to see if Ty was in the correct spot. The disinterment confirmed that Ty was in the correct grave—but the casket was facing the wrong direction. Through a comparison of photographs it was shown that the casket had been turned after the burial—proving that the casket had been moved. Based on this information, the parents filed a suit against the cemetery and its employees. The claims included negligence, reckless and intentional conduct, intentional and negligent infliction of emotional distress, fraud, concealment and punitive damages. In response to the Complaint, the Defendants filed a motion for summary judgment. The basis for the motion for summary judgment was that all claims against the cemetery were barred because the statute of limitations had expired. Under a motion for summary judgment, the defending party can argue that this case should not go forward because as a matter of law, they party suing cannot win. If the motion for summary judgment is approved by the Court—the case is

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Continued...But I Didn't Know dismissed. In the Defendant’s motion for summary judgment they argued that under SDCL 3-21-2, any claims for damages must be put in writing and on notice within 180 days after the injury. Therefore, since the injury happened at the burial, which was more than two years ago, all claims are now barred. The Plaintiffs made two arguments against the Defendants Motion. The arguments were that they did not know and that the 180 day statute of limitation should have started at the time of disinterment. The lower Court did not buy into either argument and found in favor of the Cemetery—and the Supreme Court affirmed. As to the Plaintiffs not knowing the law—the Court stated that ignorance of the law is no excuse. It went on to state that “Mere ignorance of the law can never be considered a mistake upon which relief from the operation or effect of the law may be predicated.” Simply put, not knowing will never serve as a defense or as an excuse to file suit. As to the claim that the 180 days should have started at the disinterment and not the burial the Court focused entirely on the date of the injury. Specifically the Court looked at the records to find out when the injury occurred—not when the injury was discovered. From the facts presented the family and their attorney admitted that they thought something was wrong within a few days of the burial. In fact, the family had called the cemetery to confront them. This—‚he Court held—was when the injury occurred.

The Plaintiffs made an additional argument that due to the Cemetery’s fraud and deceit in covering up this incident—the 180 day limitation should have been tolled. There is law to support the fact that if a party actively hides something, then this will toll the time for filing suit. But, again, the Court looked at the facts and found that the Cemetery—while lying about the facts—did not hide what had occurred. The family had photos and the ability to see the gravesite and make their own assumptions as to the burial. In fact, it was through the photos the family took that ultimately proved the facts that the cemetery had moved the casket. Again, the family knew within days that something was wrong but waited well beyond the 180 days to pursue legal recourse. The fact that the disinterment proved the facts, it did not change the time of when the incident occurred and was noticed by the family. While the facts presented show that the Plaintiff’s case was dismissed as to all the tort and negligence claims—the Court did allow a few contract claims to proceed. Overall though, the big claims, including negligence, emotional damages, fraud, deceit, and punitive damages were all dismissed. And again, keep in mind that this lawsuit involved not only the business, but also all the employees individually. Overall, the law is what we have to follow, whether we know it or not. But don’t be fooled by this case. Ignorance of the law is a double-edged sword. In this case, the fact that the plaintiff did not know about when they had to file suit was a valid, and great defense, for the defendant. Ultimately, it helped

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Continued...But I Didn't Know the cemetery win the case. But, as a business and deathcare provider, you have to know all the laws and rules that control your business. Just as the plaintiff couldn’t argue ignorance; if one day your business makes a mistake you will not be able to make the argument “I didn’t know.”

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An Update on Human Resources Issues

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By Michael S. Pepperman

he following is a round up of three HR issues that might impact you and your business:

New Form I-9 is Required Starting on May 7, 2013 On March 8, 2013, the US Citizenship and Immigration Services ("USCIS") released a revised Form I-9. The main changes to the revised Form I-9 are as follows: improved instructions; additional data fields for employee telephone numbers and email addresses; and, a revised layout that expands the form to two pages instead of one, not counting the instructions and list of acceptable documents. Employers should begin using the new form for all new hires immediately. The new Form I-9 has a revision date of "03/08/13" located in the lower left corner of the form. Prior versions of the form cannot be used after May 7, 2013. An employer's I-9 Forms are subject to inspection by USCIS, the Department of Justice, the Department of Homeland Security and the US Department of Labor. In the event of an inspection, an employer's use of an expired Form I-9 for completing the requisite verification process amounts to an administrative violation that may result in fines. It is also important to remember that employers are required to keep completed I-9 Forms for three years after the date of hire, or for one year after employment is terminated, whichever is later. Completed forms on file need not be re-done but the new forms must be used for all new employees.

DC Court of Appeals Invalidates NLRB’s Notice Posting Rule In a unanimous decision, the DC Court of Appeals rejected the National Labor Relations Board’s “notice posting rule” which would have required employers to conspicuously display the Board’s employee-rights poster informing employees of their rights under the National Labor Relations Act (“NLRA”), including the right to form, join or assist a union. National Association of Manufacturers v. NLRB, No. 12-5068.  As a result, employers are not required to post the NLRB’s poster.   Before turning to the merits of the case, the Court examined whether the Board had the authority to  promulgate the notice posting rule in light of the Court’s recent decision rendered in Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013). As we reported in January, the Court in Noel held that a recess appointment is constitutionally valid only if the appointment is made during an intersession recess of the Senate and to fill a vacancy that arose during that same intersession recess.  After careful consideration, the Court held that the Board had a valid quorum under Noel as of the date the notice posting decision was filed.  The Court reasoned that although the Board may have lost a quorum before the rule was published, this did not render the rule invalid.    The Court concluded that the Board’s three methods of enforcing the notice posting rule were invalid. The Court stated that because the rule makes an employer’s failure to post the notice an unfair labor practice and the Board would treat such a failure as evidence of an unfair labor practice,

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Continued...Human Resources the Board’s rule violates Section 8(c) of the NLRA, which generally provides that expressing views or opinions cannot be evidence of an unfair labor practice. Relying heavily on Supreme Court authority, the Court reasoned that, “like the freedom of speech guaranteed in the First Amendment, Section 8(c) of the NLRA protects the right of employers (and unions) not to speak.” In addition, the Court ruled that the Board’s third method of enforcing the notice posting rule, by allowing the Board to toll the sixmonth statute of limitations to file an unfair labor charge, violated Section 10(b) of the NLRA.   In 2012, a Federal Court in South Carolina also rejected the Board’s notice posting rule.  The appeal of that decision is currently pending before the Fourth Circuit Court of Appeals.    Obama Recess Appointments Unconstitutional In a unanimous decision, the DC Circuit Court of Appeals ruled today that the President of the United States can make recess appointments only when the Senate has formally adjourned between sessions of Congress—not when members of Congress leave Washington for a brief break. Last year, President Obama used the recess appointment power to fill three seats on the National Labor Relations Board (NLRB), an agency that has been used as a power center for President Obama's union allies. In making the appointment, the Obama Administration claimed that the US Senate was in recess even though the Senate was in fact still in session. At the time, most lawmakers had left Washington DC for the holidays. Summer 2013

In its decision, the DC Circuit Court of Appeals determined that a "recess" refers to the break when Congress formally adjourns after a two-year session, not a period of time when lawmakers may be away from Washington DC for a brief break.   The impact of this decision on the NLRB will be immediate and significant. The law requires three members on the five-member Board in order to have a quorum to conduct business or issue orders. See New Process Steel, L.P. v. NLRB, 130 S. Ct. 2635 (2010).  Therefore, all NLRB orders issued since these recess appointments were seated will be void and the NLRB will have no power to act unless and until the Senate votes to confirm President Obama's nominees. Clearly, we have not heard the last of this as this issue will likely be appealed by the NLRB to the United States Supreme Court.

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An Update on Tax Issues

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By Les Schneider

ost of you are no doubt aware of the new Medicare tax on investment income that took effect on January 1 of this year. This provision was enacted in 2010 as part of the health care legislation. Under this new provision, an additional Medicare tax of 3.8% is imposed on investment income of individuals with annual incomes above $200,000 ($250,000 in the case of married individuals filing joint tax returns). This new tax is imposed in addition to the regular income tax. What cemeteries and funeral homes may not be aware of is that this new tax also applies to trusts. Moreover, the income threshold at which the tax becomes applicable to a trust is just under $12,000 per trust, which is obviously a much lower threshold than applies in the case of individuals. Because of this lower threshold, the tax has now become a concern for cemeteries and funeral homes with respect to their pre-need trusts and perpetual care trusts. For pre-need trusts for which an election is being made under section 685, informal indications are that the Internal Revenue Service intends to apply the $12,000 exemption level to each separate beneficiary within a section 685 trust, even if multiple beneficiaries are funded through a single trust. Under that interpretation, it is unlikely that any pre-need trust will ever have to pay the new Medicare tax. However, this interpretation needs to be formally adopted in regulations and ICCFA and several other groups have submitted comments to the Internal Revenue Service on this point. Of greater concern is the treatment of perpetual care trust funds. Such funds

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do not qualify for multiple $12,000 exemptions because, in the IRS’ view, it is not clear who is the beneficiary of a perpetual care trust. Accordingly, as an alternative, ICCFA has suggested to the IRS that it exempt perpetual care trusts from the new Medicare tax. However, at this time it is unclear whether the Internal Revenue Service will agree with that approach. Accordingly, please be aware of the issue and keep alert for developments and announcements on this subject.


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Parliament Volume 3, Issue 4