'Protectionist' Funeral Home Rules Struck Down by Judge

By Eric Boehm | PA Independent

HARRISBURG—After a four-year court battle, wide swaths of state regulations for funeral homes were swept aside last year by a federal judge who ruled them anti-competitive and protectionist.

In a May 2012 ruling, Judge John E. Jones struck down 11 provisions of Pennsylvania’s Funeral Director Law as unconstitutional, including a requirement that funeral homes build expensive and often unnecessary preparation rooms, a prohibition serving food inside a funeral home and several regulations concerning the ownership, operation and names of funeral homes.

The ruling strikes a serious blow against the regulatory authority of the State Board of Funeral Directors, which some of the plaintiffs in the case likened to a cartel. But a trade association for the funeral industry in the state sees the erosion of regulations as a concern for consumers; even though Jones ruled that the board failed “to highlight even one piece of evidence demonstrating how the public interest would be adversely affected by a ruling that declines to uphold the protectionist regime.”

Ernie Heffner, the lead plaintiff in the case, said he and other funeral directors decided to challenge the state board after watching them levy thousands of dollars in fines against another funeral director.

“What it means to the industry is that you don’t have to change anything about the way you’re doing business. But you can start to offer consumers more services than you did before,” said Heffner, who operates several funeral homes in central Pennsylvania.

The challenge won national attention within the industry but went largely unnoticed by the media even after the ruling was handed down last year.

After the May 2012 ruling, Jones gave the board 90 days to remove the now-unconstitutional provisions from the law.

But by August, with the board having taken no steps to change or amend the unconstitutional parts of the funeral law, Jones issued a memo slamming the board’s conduct as “the very epitome of bad faith” and describing “an almost cavalier disregard” for the May 2012 ruling.

“That the Board would cling to a law that is so outdated and patently unconstitutional in so many ways is as embarrassing as it is unconscionable,” Jones wrote. “Frankly, the members of the Board should be ashamed of themselves.”

A subsequent court order barred the board from enforcing any of the provisions of the law found unconstitutional. The case is now being appealed to in the Third Circuit Court of Appeals.

Joshua Slocum, executive director of the Funeral Consumers Alliance, a Vermont-based organization that advocates for a more open market for funeral providers and their customers, said the Pennsylvania case is about keeping competition low and prices high.

“This is clearly about trying to preserve an old-timey system of elite funeral directors from competition from newcomers,” Slocum said. His organization submitted a brief in support of Heffner and the other plantiffs.

According to Slocum, antiquated and anti-competitive regulations on the funeral home industry are a national problem. Most states created boards or agencies in the early 20th century to oversee the funeral industry, and those rule-making authorities have been captured by funeral directors’ trade associations to erect barriers to competition.

In Pennsylvania, it’s easy to see how such a thing could happen. The State Board of Funeral Directors has nine members, but five seats are reserved for licensed funeral directors, giving them a majority.

John Eirkson, executive director of the Pennsylvania Funeral Directors Association, disputed that claim. He argued the process for members to be placed on the board, which includes being nominated by the governor and approved by the state Senate, would prevent such “regulatory capture.”

Regardless, a large regulatory framework developed over the years — whether intentionally or by accident — that determined nearly every aspect of how funeral homes operate.

That includes one rule the plaintiffs say is particularly onerous: the requirement for each funeral home to have a fully equipped preparation room with embalming equipment.

Even funeral homes that specialize in non-embalmed funerals and cremations were required to buy the equipment, which costs up to $30,000—driving up the cost of doing business and resulting in more expensive funerals for consumers.

Those rules are common in other states—an ongoing legal battle in Minnesota is seeking to strike down a similar provision there.

But Eirkson maintains the embalming equipment is a necessary part of running a functioning funeral home.

“One analogy would be that it is like owning a restaurant without having a kitchen,” he said.

Slocum sees it differently. Regulations such as the embalming room requirement are a way for existing funeral directors to shut out potential competition, which, Slocum said, is the main goal behind most of the regulations found unconstitutional.

Eirkson said he is worried consumers will be exposed to unscrupulous funeral home owners because of a lack of inspections, both physical and financial, after the court ruling.

Previously, the state board could inspect funeral homes with no advance warning and no warrant, which Jones ruled a violation of the Fourth Amendment.

Jones said other provisions, such as the ban on food service and a requirement that funeral homes can only be named after the current or former funeral director operating them, ran afoul of the U.S. Constitution’s due process requirements and the First Amendment, respectively.

With those rules swept aside, Slocum said, the funeral services industry in Pennsylvania will benefit from becoming more competitive, with new opportunities for providers to offer low-cost, alternative funeral arraignments that might come without embalming rooms or three-story Victorian mansions.

That’s particularly good for low-income consumers, he said.

The average cost of a funeral in Pennsylvania is more than $6,000, according to Eirkson.

Heffner said most of the regulatory changes probably will go unnoticed by consumers, except for the fact that he will now be allowed to offer food service during viewing hours. That’s something consumers expect, since any type of gathering of family and friends is usually accompanied by a little comfort food, he said.

And more options mean more room for competition between funeral homes.

“Now I can offer continental breakfast visitations and I can offer dessert visitations in the evening. Is that a bad thing? I don’t think so,” he said.

Boehm can be reached at Eric@PAIndependent.com and follow @PAIndependent on Twitter for more.