**This story is of special interest to me, not only because Forest Hill Cemetery is the original resting place of Elvis Presley and his mother, Gladys, but because this is my hometown. The Forest Hill East location is the oldest and most historic.** deadgirl
By Rob Robertson
July 16, 2006
Memphis, TN--While the funeral home industry has had its share of public relations nightmares in recent years, the latest one to hit locally could have wide-reaching impact. The scandal over prepaid burial contracts at Forest Hill Funeral Home may not have the macabre twists of the 2002 Georgia crematory crime in which hundreds of decaying bodies were found on the property, or Philadelphia's ghoulish scandal in which 30 funeral homes have been investigated during the past two years for secretly removing and selling body parts to tissue banks.
Nonetheless, Forest Hill's announcement that it would not honor 13,000 prepaid burial contracts could have significant consequences for the $12 billion industry.
"The Forest Hill situation may be the biggest case of a single funeral home not honoring customers' prepaid burial contracts we've ever seen," said Josh Slocum, executive director of the Funeral Consumer's Alliance, a nonprofit watchdog organization based in Vermont. "We've gotten an incredible amount of calls from Tennessee about it."
Clayton Smart, the owner of the three funeral homes and 270 acres of cemeteries that make up the Forest Hill properties, announced July 6 that his company would no longer honor more than 13,000 prepaid funeral contracts because a trust fund the company was supposed to maintain had insufficient funds.
Smart said he would credit the face value of the contracts -- typically between $1,200 and $2,500 -- toward the cost of burial and funeral services, which he estimated run between $6,000 and $10,000.
Earlier this week Forest Hill was hit with a class-action lawsuit on behalf of those contract owners for engaging in deceptive business practices.
Another class-action suit was filed against Forest Hill on Friday.
Kevin Snider of the Snider & Horner law firm is one of the attorneys representing about 15 named plaintiffs in the latest complaint. He said he expects another 20-25 plaintiffs will be named in his case soon, but eventually all of the cases will be consolidated.
"There's going to be more coming," Snider said. "People are very upset. It's a situation where they think they've been taken advantage of."
Meanwhile, local funeral home directors -- while picking up new customers -- say they're extremely troubled by what Forest Hill is doing to their reputations.
Al Tacker, owner of Bartlett Funeral Home, tried to hold a meeting for concerned policyholders at Leawood Baptist Church last Tuesday. He expected 600-700 people at the most. More than 3,000 showed up, filling every nook and corner of the sanctuary and the lobby beyond.
"We couldn't believe it," Tacker said. "It was one of the most amazing and saddest things I've ever seen."
Eventually a city fire marshal arrived and made those sitting in the aisles leave the building, which was designed to hold a maximum of 2,200.
"I think this thing is giving one of the worst black eyes to funeral directors that they've ever had," Tacker said. "It's dragging us down to the lowest level imaginable."
Tacker says he's been contacted by at least 2,000 people via letters, calls and e-mails who are looking to change funeral homes or simply looking for advice.
"If I can help them and just break even I will," he said. "But by and large, I tell them to hang on to their contracts if they can. I'm not interested in making money off these people; they've been through enough."
E.C. Daves, president of Memphis Funeral Homes, the Mid-South's largest funeral services provider, said his business has received hundreds of calls and visits.
"Most of the people can't look at the papers and tell what they've got," Daves said. "We're advising people to come in and let us look at the contracts. Often people are finding out they're in better shape than they think."
Daves said most funeral homes today sell insurance-funded pre-need contracts, which he said are safer than trust-funded contracts.
But some experts say customers should be wary of any pre-need contract offered at a funeral home because the regulations governing the execution of the contracts tends to favor the funeral homes and not the consumer.
There are no federal regulations governing prepaid funeral deposits, and most states do not have sufficiently strong trusting and refunds laws, Slocum said.
In Tennessee, state law mandates that 120 percent of the wholesale cost for cemetery goods and services has to be put into a trust.
"That means if you pay $2,000 for a grave and liner, only $1,200 finds its way into a bank," Slocum said. "The bottom line is that not all of the money is going into a trust, and no law requires cemeteries to buy back the plot if consumers change their mind or cannot use it."
Smart, a gas and oil speculator from Oklahoma, said he knew honoring the policies at Forest Hill would be impossible before he bought the company in 2004.
Smart, who owns dozens of cemeteries in other states, is under investigation by attorneys general in Michigan and Tennessee on allegations that he moved millions of dollars from cemetery trust-fund accounts into other businesses he owns.
Smart is alleged to have moved all or part of more than $40 million in insurance premiums and trust funds earmarked for burial policies at Forest Hill to oil exploration and investment ventures in Oklahoma and Nevada.
Smart said the allegations are "false and untrue" and has disputed the $40 million figure in particular, saying the value of the trust was closer to $18 million.
Attempts to reach Smart were unsuccessful.
Snider said the number of people affected makes this case extraordinary.
"I've never seen anything on this scale in terms of a consumer-protection type claim involving a funeral home," he said. "Now it's going to have to be dealt with in the local courts."
-- Rob Robertson: 529-5888
Prepaying for funerals
The Federal Trade Commission says that if you are a consumer thinking about prepaying for funeral goods and services, it's important to consider these issues before putting down any money:
What are you paying for?
Are you buying only merchandise, like a casket and vault, or are you purchasing funeral services as well?
What happens to the money you've prepaid? States have different requirements for handling funds paid for prearranged funeral services.
What happens to the interest income on money that is prepaid and put into a trust account?
Are you protected if the firm you dealt with goes out of business?
Can you cancel the contract and get a full refund if you change your mind?
What happens if you move to a different area or die while away from home? Some prepaid funeral plans can be transferred, but often at an added cost.
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