A cremation services company has agreed to provide up to $209 million in refunds to settle a federal class-action lawsuit alleging it deceived 87,000 Florida customers who purchased its prepaid plans.
Houston-based Service Corporation International, owner of 1,500 funeral homes and 400 cemeteries, sold the plans to Florida consumers who were mostly age 60 and above, the lawsuit states.
An affiliate with an office in Sunrise, SCI Direct Inc. (formerly called Neptune Society Management Corp.), was named as co-defendant in the class-action suit originally filed by West Palm Beach senior Nancy Taylor in April 2020 in U.S. District Court in Fort Lauderdale.
Under the settlement, which must be approved by Judge Rodolfo A. Ruiz III, refunds will be made available to all Florida consumers who purchased the companies’ pre-need funeral agreements, transportation and relocation protection plans, and related retail merchandise agreements since April 1, 2016.
How many of the 87,000 Florida customers will request refunds remains to be seen. An attorney for the plaintiff said Monday that the consumers spent on average $2,400 each for the end-of-life services. Those services include an insurance policy guaranteeing that if the purchaser dies while traveling, the body will be returned to Florida from anywhere in the world.
The lawsuit accused the companies of violating Florida laws that require prepaid cremation services providers to deposit 70% of prepaid funds into a trust and provide 100% refunds for the services upon request.
It also accuses the companies of unjust enrichment and violations of the state’s Deceptive and Unfair Trade Practices Act.
In legal filings, Service Corp. International and its affiliates denied the lawsuit’s allegations. In an email on Monday, a spokeswoman said, “While we strongly maintain there was no wrongdoing on Neptune’s behalf, in an effort to move forward and continue our full focus on serving our families, we agreed to settle the remaining disputes.”
Consumers purchase pre-need funeral plans and related merchandise like urns, flowers and memorial guest books to lock in those needs at current prices and to spare loved ones from the expense and stress of managing the purchasers’ cremation needs immediately after their deaths, the suit states.
Florida established the requirement to hold 70% of purchase prices in a trust because of the possibility that cremation-services providers might not still be in business when needed years or decades after the purchases. It also required full refunds in case purchasers move out of state or change their minds about wanting to be cremated.
The lawsuit accused the companies of reducing the amount of money they were required to put into a trust by requiring customers to sign two contracts — one for the cremation services and another for the related merchandise.
The suit claimed that while the wholesale value of the merchandise sent to customers received was $25 or less, the company logged its collective value as “incredibly high,” including $498 for a memory chest, $329 for an urn, $199 for a keepsake plaque, and “remarkably,” $185 for a planning guide.
At the same time, the companies reduced the value of the cremation services in its logs to an amount far below what they would have had to report if consumers bought just the cremation services, the suit states.
As a result of the “bookkeeping sleight-of-hand,” the companies placed in trust “barely 50%” of the amount they otherwise would have been required to place in trust, increasing their “cash flow and bottom line,” the complaint states.
And consumers who waited more than 30 days to seek the 100% refunds required by Florida law were told they could only receive the “barely 50%” portion designated for the cremation services, the suit says. It adds that if they requested a refund for the merchandise, the request was treated under a clause in the purchase agreement as a request to also cancel the pre-need cremation services agreement.
Randall Ewing Jr., attorney for the Chicago-based law firm Korein Tillery, which filed the lawsuit, said by email, “We are extremely pleased with this result after years of hard-fought litigation. We believe the proposed settlement is a great result for the class, and we look forward to its approval.”
The Service Corp. spokeswoman, said in an emailed statement that the company does not believe it will end up paying many refunds.
“Based in part on our customer surveys and because we don’t believe any of our customers were deceived, we are confident that our customers value our products and services and do not believe there will be a material number of cancellations. We stand behind our products and services and are honored by the continued loyalty our customers have shown us,” the statement said.
Customers will be notified of their opportunity to secure a refund after the agreement is finalized, the settlement filing states.