V940004

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSIONWASHINGTON, D.C. 20580

OfflCfl of the Dirt!JCtorI1tJre.u of Consumer Protection

COMMISSION AUTHORIZED

January 14, 1994

Dawn P. ScardinoExecutive DirectorBoard of Embalmers and Funeral DirectorsBox 8757Metairie, Louisiana 70011-8757

0ear Ms. Scardino:

The staff of the Federal Trade Commission1 offers thiscomment on the proposal by the Board of Embalmers and FuneralDirectors to amend its rules governing the removal of bodies fromthe state of Louisiana. The proposed new rule would requirethat, with some exceptions, a body could not be removed from thestate unless it was first embalmed (or cremated). Thisrequirement could force consumers to purchase services theyneither need nor want, increase the costs borne by residents ofother states arranging funerals for their relatives who die inLouisiana, and dampen competition between funeral providers inLouisiana and those in other states. Especially in view of thefact that virtually no other jurisdiction imposes a restrictionlike the one the Board has proposed, we urge the Board toconsider carefully whether the public health benefits from therequirement outweigh these likely adverse consequences.

I. Interest and Experience of the Federal Trade Commission.

The Federal Trade Commission is empowered to prevent unfairmethods of competition and unfair or deceptive acts or practicesin or affecting commerce. 2 Pursuant to this statutory mandate,the Commission encourages competition in the licensedprofessions, including those in the funeral and cemetery

1 These comments are the views of the staff of the Bureau ofConsumer Protection of the Federal Trade Commission, and do notnecessarily represent the views of the Commission or anyindividual Commissioner.

2 15 U.S.C. § 41 ~ ~.

Dawn P. ScardinoPage 2

industry, to the maximum extent compatible with other state andfederal goals. The staff of the FTC works to identifyrestrictions that hinder competition and increase costs withoutproviding countervailing benefits to consumers.

The Commission staff has become familiar with the funeralindustry through its work on a Trade Regulation Rule that isintended to promote increased competition and consumer choice inthe funeral industry by facilitating informed purchasedecisions. 3 In addition, the Commission has taken lawenforcement actions against anticompetitive acquisitions in thefuneral industry.4 The staff has previously commented on otherstates' proposed legislation involving the funeral industry.s

II. Description of the Proposed Regulatio~.

The Louisiana State Board UL ::.,.J..Jo.:'mers and Funeral Directorshas proposed a rule that would require that any dead body beembalmed (or cremated) before being transported out of state. 6

In the original announcement, the proposal granted an exceptionto permit transfer of an unembalmed body for the purpose of

3 The FTC rule governing Funeral Industry Practices, 16C.F.R. § 453, became effective April 30, 1984. Among otherthings, the rule requires funeral providers to disclose toconsumers detailed information about prices. The Commission hasrecently approved amendments to this rule, to be effective July18, 1994, as part of a mandatory review procedure. 59 Fed. Reg.1592 (January 11, 1994).

4 See Service Corporation International, Dkts. C-3372(consent order, February 25, 1992), C-3440 (consent order, June15, 1993).

S ~ comments to the Wisconsin State Assembly, September13, 1993; Pennsylvania House of Representatives Committee onBusiness and Commerce, August 29, 1989; Virginia DelegateFranklin P. Hall, February 9, 1989; Oregon State RepresentativeChuck Sides, April 6, 1987; Illinois Department of Registrationand Education, May 9, 1986; Kansas State Representative GingerBarr, February 14, 1986; Alabama Representative Arthur PaYne,January 16, 1986. Commission staff has also testified generallyon regulatory issues in this industry; ~ Statement toCalifornia Assembly Committee on Consumer Protection,Governmental Efficiency and Economic Development, October 17,1991.

6 Proposed Louisiana Administrative Code, Title 46, PartXXXVII, Ch. 13, §1303.B.

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advancing medical science or as a source of. transplant organs.In the amended announcement, another exception was added,providing that the rule was not to be construed to requireembalming if special practices and beliefs of religious groupsprohibited it. 7

In the "impact statement" that accompanies the proposedrule, the Board refers to public health concerns about the spreadof infections and contagious diseases. According to thestatement, an effect of the rule will be a "slight" decrease inrevenues for out-of-state firms, and a corresponding "slight"increase for those in-state; however, the statement says thatthere would be "no known impact on competition and employmentwithin the state of Louisiana." The statement says that "many"local funeral homes already make it a practice to embalm beforetransfer, and points out that those homes may already provide anumber of other services in connection with'interstate transportof bodies.

III. Effects of the Proposed Regulation.

The requirement may force out-of-state clients to obtain,and pay for, services they neither need nor want. NeitherLouisiana nor the bordering states of Texas, Arkansas andMississippi impose a general embalming requirement by statute orregulation. 8 A family in a nearby state who wanted to arrange

7 Because the exception deals only with embalming, the ruleas drafted might still be construed to require cremation,regardless of religious beliefs or practices.

8 The Commission's Funeral Rule declares it to be deceptivefor a funeral provider to represent that the law requiresembalming when that is not the case, or to fail to disclose thatembalming is not required by law except in certain special cases.16 C.F.R. §453.3(a) (1). Thus, the Rule prohibits funeralproviders from representing that embalming is required for directcremation, immediate burial, a funeral using a sealed casket, orif refrigeration is available and the funeral is without viewingor visitation and with a closed casket when state or local lawdoes not require embalming. 16 C.F.R. §453.3(a) (2) (i). The Rulealso requires funeral providers to make the following writtendisclosure on their general price lists:

Except in certain special cases, embalming is notrequired by law. Embalming may be necessary, however,if you select certain funeral arrangements, such as afuneral with viewing. If you do not want embalming,

(continued ... )

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for irrr~diate burial or a funeral without a viewing might wellchoose to save the cost of embalming. But if their family memberhad died across the state line, this proposal would require themto obtain and pay for that servi~c. The proposal, by requiringthat services be obtained from in-state providers, regardless ofwhether related or similar services would also be obtained fromother, out-of-state providers, would also make it more likelythat out-of-state clients would have to pay a basic professionalservices fee 9 to two different funeral providers, incircumstances where it would have been feasible to pay only once.

The Board's impact statement describes how the requirementwill affect competition among providers, especially in geographicmarkets that cross state lines. Funeral establishments in nearbystates could not compete to provide embalming or cremationservices, even when their customers wanted them, and wouldprobably be unable to compete effectively to provide relatedservices such as transportation. =: ~ person from out of statedied in Louisiana, the decedent's family and executor (or, morelikely, their out-of-state funeral home) would have to arrangeand pay for embalming (or cremation) by a Louisiana funeralestablishment before the remains could be returned home forburial. This would be true even if the distance to the out-of­state location were sho~~er than a transfer entirely withinLouisiana. 10 In-state businesses would thus be insulated fromsome of the competition from businesses across the state line.

Most states do not require embalming before remains areshipped. Of the few state statutes that do require embalming,

8( •.. continued)you usually have the right to choose an arrangementwhich does not require you to pay for it, such asdirect cremation or immediate burial.

16 C.F.R. §453.3 (a) (2) (ii) .

9 The Funeral Rule permits funeral providers to establish aseparate fee for professional services, which typically coversoverhead costs as well as staff expenses, and include that fee inthe charge for forwarding or receiving remains. 16 C.F.R.§453.2(b) (4) (iii) (C) (1).

10 An example illustrates the disparity: the proposedregulation would not require embalming or cremation to transfer abody the 300 miles from New Orleans to Shreveport, but would forthe 40 mile transfer from New Orleans to Picayune, Mississippi.

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all but one apply only to bodies shipped on-" common ....arriers. 11

Staff has found that major airlines and businesses activelyengaged in handling shipment of remains for burial do notgenerally require embalming, so long as the remains are carriedin suitable containers.

IV. Conclusion.

Because the proposed regulation would limit consumer choiceand impair competition, we urge the board to consider lessanticompetitive options. We express no opinion on the publichealth issues outlined in the statement accompanying the proposedrule; however, we suggest that the Board consider measures toprotect public health without adversely affecting competition.In particular, a rule based on the method of handling, ratherthan on political boundaries, might both promote public healthand preserve competition.

Sincer~ly,

- /i ( -/" // -t--' \ I -L(~_C_ ~1,"1,.u.( 1-tl-~, j L\ ~'" ).,~~Christia~ S. WhiteActing Director

11 Kansas prohibits common carriers from receiving bodiesthat have not been embalmed. Kans. Stat. Ann., Public HealthCode §65-1703. Idaho and Wyoming appear to do the same, althoughthe statutes do not explicitly require embalming. Id. Gen. L.§54-1120; Wyo. Stat. 1977 §33-16-106. California requiresembalming before common carrier shipment, but provides anexception; if the condition of the ~ody does not permitembalming, it may be shipped in an airtight container. Cal.Health & Safety Code §7355. These four statutes treat interstateand intrastate shipment alike. Arkansas requires embalming ofbodies shipped by common carrier out of the state. Ark. CodeAnn., Prof., Occup. & Bus. §1/-26-311. The exception is Alabama,which requires embalming (or cremation) of any body to betransported out of the state, regardless of whether a commoncarrier is used. Ala. Code §22-19-2.