Safeguarding Your Business from Cremation Liability

Article Source, the Memorial Business Journal, NFDA

As the basis for their workshop, “Safeguarding Your Business From Cremation Liability,” at the National Funeral Directors Association’s International Convention & Expo, T. Scott Gilligan and Mike Nicodemus used a document called “Due Diligence for Funeral Homes Dealing With ThirdParty Crematories.”

This document came in the wake of the February 15, 2002, discovery by the Georgia Environmental Protection Agency that Tri-State Crematory failed to cremate some 339 discovered bodies and left the remains strewn about the property. Fifty-six funeral homes in three states (Georgia, Tennessee and Alabama) that had been sending bodies to Tri-State Crematory were sued in a class-action suit by hundreds of families – not only the 339 families that had loved ones on the property at the time but pretty much anybody who had used that crematory in the previous 15 years, said Gilligan, who is general counsel for NFDA. Those 56 funeral homes or their insurance companies paid out more than $36 million.

When the findings at Tri-State were reported, NFDA leadership visited Noble, Georgia. As a result, Gilligan said, NFDA started a cremation consumer protection forum that was held in Washington, D.C., with CANA, ICCFA, the FTC and other government agencies. From that, NFDA, CANA and ICCFA decided that a document needed to be created to protect funeral homes that use third-party crematories.

Gilligan noted that these best practices apply in some form or manner not only if you are using a third-party crematory but also if you have your own crematory or you are a crematory and/or funeral home. “If you follow every step in the 13-page document, does that mean you will never be sued?” Gilligan asked rhetorically. “No, but I can guarantee you will significantly reduce your chances of being sued. If you do get sued, that document and the evidence that you have adhered to it and followed it will be your best defense.”

When someone is sued in these types of cases, the claim is negligence that the operator fell below the standard of care that is expected by professionals in funeral service. “This document is the standard of care,” Gilligan said. The main claim in the Tri-State Crematory suit was that the funeral homes had been negligent in selecting the third-party crematory by failing to monitor and inspect that crematory. At the time, Gilligan said, there was no standard by which funeral homes could follow the procedures they needed to protect themselves.

Four Basic Components

Due diligence should be part of every business plan. Thoroughly investigating the people with whom you choose to do business sounds like a no-brainer, but sometimes even the best intentions slip through the cracks. Gilligan said there are four basic components of the due diligence document:

Internal due diligence
Crematory records request
Crematory interview
Crematory inspection.

The first component, internal due diligence, is something every funeral home should be doing regardless of whether they have their own crematory or they are using a third-party crematory.

Internal due diligence comprises the seven steps of due diligence that funeral homes must take to protect themselves internally. The first step is a cremation authorization form. “Make sure you have identification steps in place,” Gilligan said. “This is your first line of defense. A good, comprehensive cremation authorization form is one of your best protections against liability.”

It forces the funeral home to go through a number of steps to protect the business, and at the same time, the document is informing the consumer and getting his or her authorization and approval on various representations that protect you.

Currently, 42 states require a cremation authorization form. “[Funeral directors] should be familiar with it and make sure their authorization form meets the basic requirements in their state,” Gilligan said. He noted that some of the laws are very specific.

“If you are using a one-page cremation authorization form, when you get home, tear it up and throw it in the trash can,” Gilligan said. If a form falls below your state law, that will be Exhibit A in your trial when the plaintiff’s attorney gets you on the stand and says, ‘Here are the requirements of your state statute; show me where these are in the form you are utilizing,’” Gilligan said. The jury will see that you are not in compliance with basic state law.

“Make sure your form, at the very least, complies with the requirements and components that have to be in it from a state law standpoint,” Gilligan said.

Some funeral homes and crematories might want to go beyond what a state requires. Some states simply say that there must be an authorization form and don’t spell out what has to be in it. Gilligan said as a result, he still sees cremation authorization forms that are way too bare-bones, barely a full page.

“If you are using a one-page cremation authorization form, you are leaving yourself open to liability,” he said. “It is unfortunate that we have to have four- or five-page cremation authorization forms, but that is the only way to protect yourselves. It is a key component to your protection. You want to have a cremation authorization form that meets your state statute but that will also have components that are going to protect you.

“If the crematory you are using is asking you to use their form and it is a one-page document, seriously take a look at it and tear it up and start over with a comprehensive form,” Gilligan said, noting that NFDA has a generic cremation authorization form available in its legal library. However, the generic law is not state specific. Gilligan explained that 50 states require different things on their cremation authorization forms and 49 states have a different right of disposition law. “So you would have to take that generic form and adapt it for your state,” Gilligan said.

If you are going to redo your cremation authorization form, the first thing to do is get a copy of your state law.

What are the ingredients in a good cremation authorization form? Components should include:

The identity of the decedent after positive identification has been made by the authorizing agent or his/her representative. In the event that the authorizing agent won’t identify the body, some funeral homes have him or her sign a waiver releasing the funeral home from any liability. “That is absolutely no protection to you; that waiver is worthless,” Gilligan said. “Your rule has to be no identification, no cremation, no exceptions.”
Identification of the authorizing agent and his or her legal authority for authorizing the cremation. This component gets to right-of-disposition issues. “What we recommend is that you put on the front page who the authorizing agent is and then on the back page, take from your right of disposition law that list of who has the right of disposition,” Gilligan said. “It starts out with an appointed agent (spouse, adult children, parents, etc.). Take that right out of the state statute and put it on the back of the form. Ask the authorizing agent to pick which one of these he or she is. The authorizing agent sees what the priority list is. Then the authorizing agent is going to represent on that form that there is no one above him or her. It is very important to follow your state law. It’s also very important to spell out and inform the authorizing agent what the state law is.”
Authorization to remove and dispose of any medical devices implanted in the remains or a representation that no medical devices are present. Gilligan said it is also good practice to list the devices that fall into this category to review and remind the authorizing agent.
If identification of the decedent is to be made by photograph, express permission to photograph the decedent.
Permission to cremate the body and mechanically pulverize the cremated remains after a detailed explanation of the process has been provided to the authorizing agent. Gilligan said that years ago, some funeral homes with a one-page authorization form were sued by families that came back and said they didn’t understand what they were consenting to because the cremation process was not explained. “We have a five-paragraph description of the cremation process,” Gilligan said.
Acknowledgement that the alternative container or casket will be cremated with the remains.
Acknowledgement that some commingling is inevitable and that it is impossible to retrieve all of the cremated remains. Gilligan said there should be language that explains that there will be some inevitable commingling of remains with prior cremations and an acknowledgement that 100 percent of the remains will not be retrievable.
A designation of the urn and/or container that will be utilized to hold the cremated remains.
Specific instructions as to what disposition is to take place with any personal property (clothing, eyeglasses, jewelry, etc.) on the remains. “Here again is where the language on the form is very important,” Gilligan said. He explained that the NFDA form is designed as a negative consent. “We say that anything that is on the body when it is delivered to us will be cremated unless you give us different instructions in writing on the authorization form,” Gilligan said.
Specific instructions as to whom the cremated remains are to be delivered or, in the alternative, what other disposition of the cremated remains is to be made. This is also a critical part of the form and one Gilligan said some funeral homes let slide. “You need to know whether to have them shipped, taken to a cemetery [or] delivered back to the authorizing agent,” Gilligan said. If that part of the form is left blank, the funeral director will have a lot of questions and you are going to get stuck with unclaimed cremated remains. Gilligan suggests that the funeral director insist on getting some instructions from the authorizing agent on what is to be done with the cremated remains. He said the authorizing agent should be pushed into making some kind of resolution even if it requires the funeral director to personally deliver the remains to the agent’s house. “We want them out of the funeral home,” Gilligan said. “You do not want an inventory of cremated remains.”
Certification as to the accuracy and truthfulness of all statements made on the authorization form and indemnification of the funeral home and crematory by the authorizing agent. “That’s why you don’t have a one-page cremation authorization form,” Gilligan said. “You have to get this kind of information to protect yourself.”

Identification of the Body

Reinforcing what Gilligan explained, Nicodemus, NFDA vice president of cremation services, said he was involved as an expert witness in several cases, and there was one he declined to get involved with because the case was just hopeless for the funeral home. “Everything needs to be documented and done properly,” he said.

Turning to the identification process of the body, Nicodemus said that positive identification needs to be done before the funeral director leaves the place of death. Nicodemus said that his former company used a witness of transfer form. “For those of you who make removals, you have to sign their documentation when you go to the hospital or nursing home, so make them sign yours,” Nicodemus said. If they refuse, call the family. If you can’t resolve it, Nicodemus recommended calling the hospital administrator. If that doesn’t work, call the legal department. And if that doesn’t work, call your attorney.

“But do not make the removal unless you have someone at that place of death identifying John Doe as John Doe before you leave,” Nicodemus said. “That’s the very first part of establishing your chain of custody.”

He also emphasized that the ID tag should be attached at the place of death, before the body is removed, and not back at the funeral home. “When you take the body to the crematory, make sure you have two sets of eyes on it before you leave to go to your third-party provider or even if you are doing your own cremations in house,” he said. “Have two people identify that body and don’t go by the outside of the container or by the space that they were put in when they were brought back and placed into refrigeration. Just because when you made the removal you placed Mr. Jones in slot A in the cooler doesn’t mean he is going to be in Slot A when you are taking him to the crematory.

“Make sure you open up the bag and look at the tag that was put on the body at the place of death. Attach the witness of transfer receipt form to the container and make your removal to the crematory,” Nicodemus said. “For those of you providing third-party services, do me a favor and do not even accept a container if it is not in good shape, is leaking fluids or there is no name on the outside for identification or if the paperwork is not in order. Do not take custody of it.”

And do not make exceptions.

He also warned third-party crematories not to accept bodies unless you can perform the cremation immediately or have ample refrigeration to store the body until it is cremated. “A crematory is not a holding facility,” Nicodemus said, and do not be lax on getting signatures on the paperwork.

The Top 4

In his portion of the program, Nicodemus reiterated to attendees that the top four reasons for cremation litigation in the United States are identification, authorizations signed by the non next of kin, family disputes and indigent cremations.

In his experience, Nicodemus said he always wants to have two sets of eyes checking the process along the way. “Seeing a name on a body bag means nothing to me,” he said. “We used to put a specially coded tag on the body to know it was ours.”

Focusing on the identification process, he emphasized the imperative of having a meticulous chain of custody. “Meticulous records of chain of custody of remains from initial removal through final disposition must be maintained,” he said.

If using a third-party crematory, Nicodemus advocates for the funeral home staff to make the delivery to the crematory. Funeral home personnel should confirm and document that the crematory operator has accepted the remains, that the crematory operator has been presented with the cremation authorization form and any necessary permits and authorization and that the crematory operator has executed the receipt for the remains.

When accepting cremated remains from the crematory, funeral home personnel should immediately inspect the urn or container to ensure that there is appropriate identification attached to and inside the urn or container. Once satisfied that the container is intact and secure and the identification and paperwork is complete and present, the transfer of remains back to the funeral home should be documented by the execution of a receipt.

“Have a removal policy in writing,” Nicodemus suggested. “You will do it the same way every time.”

After the funeral home has taken possession of the cremated remains, it should only deliver the cremated remains to the recipient designated in the cremation authorization form. If the authorizing agent wishes to change the disposition or delivery instructions in the cremation authorization form, any such modification should be in writing, signed by the authorizing agent and delivered to funeral home personnel.

Funeral homes should always obtain an executed receipt when turning over possession of the cremated remains to the authorizing agent or a designated third party. As with all paperwork in this chain of transactions, it is essential to preserve the documentation so it will be available, if needed, in the future.

When it comes to turning over the cremated remains, Nicodemus suggested having two people sign the form that may accept the remains. “Only those people named can pick up the remains,” he said. “No exceptions.”

“Document every step of the way,” Nicodemus said. “When you take the body, get a receipt. When you pick up the urn, get a receipt.

“Practice excellent recordkeeping and documentation,” he added. “The more you document, the less likely [you will be viewed] as an attractive defendant.”

Insurance Review

Funeral homes should periodically have their insurance agent review their professional liability insurance to determine if it is at adequate levels and covers liabilities for independent contractors the funeral home utilizes, such as a crematory.

“You want to sit down with your insurance agent and make sure you are covered for what might happen at that third-party crematory,” Gilligan said. “Whenever you do a periodic insurance review, you want to explain in detail your operations so the agent understands and can verify that you are covered.”

Funeral homes may also want to consider the purchase of an umbrella policy, which could cover in the event of a catastrophic court judgment against the firm.

Gilligan also suggested including a “choice of counsel” provision in the policy that would allow you to select your own attorney (someone who knows funeral home and cremation liability issues) should you be sued.

Finally, it is recommended that you consider requiring your third-party service providers to add you as an additional named insured on their policies should you be sued for negligence. “You want to make sure that you are covered on the crematory’s policy and are listed as an additional insured,” Gilligan said.

For every outside crematory the funeral home uses, the funeral home should have a “due diligence” file. In that file, the funeral home will place the documentation and reports that will be generated from following the other three steps outlined in this due diligence package.

Then, if the funeral home gets sued and the insurance company appoints an attorney who then visits with the funeral home owner, during that meeting, the attorney can be handed a due diligence file and note the documentation verifying that you inspect the crematory on an annual basis. If there were any problems with the crematory and that crematory fixed those problems, you have the documentation. “That is going be the best defense,” Gilligan said. “The claim is going to be that the funeral home was negligent in selecting this crematory. But the defense attorney can go in there and say that is not the case, that the funeral home, in fact, did its due diligence.”

“You want to require that the third-party provider sign an indemnification agreement,” Gilligan said. The agreement recommends:

Spelling out who is responsible for what tasks
Including mutual indemnification agreements that protect each party from negligence by the other party.
Requiring the third-party provider to carry insurance and include the funeral home as additional insured.

Crematory Records Request

One important aspect of due diligence is a review of the licenses and operational records of the crematory. A crematory should be willing to provide copies of its licenses and applicable operational records to each funeral home it serves. A refusal by the crematory to provide the records when requested should be regarded as a red flag.

In the due diligence document, there is a section that has a list of 11 records funeral homes should be requesting from the crematory and that should go into the due diligence file:

Policy and procedure manual for the crematory
State crematory license or permit
Copies of membership certificates from CANA, the Better Business Bureau or other organizations
List of crematory operators employed by crematory and a copy of any operator certification each has
Copies of liability insurance policy and professional liability (errors and omissions) insurance policy carried by crematory
Copies of cremation authorization form and any release forms used by crematory. (Gilligan said to compare the form to state law or to the NFDA generic form. “If it is incomplete, if it is missing key components you want on there or if it does not track the requirements of your state law, use another crematory or sit down with the crematory and tell them they have to improve this if you are going to use the crematory,” Gilligan said.
Copies of all body acceptance receipt forms and cremated remains receipt forms used by crematory
Copies of all price lists used by crematory
Copies of any state inspection reports of the crematory
Copies of most recent maintenance/inspection reports or logs used internally by the crematory for its equipment
A copy of the crematory’s standard contract with funeral homes.

“You are going to review these documents to make sure they are satisfactory and then they is going into that due diligence log,” Gilligan said. If the crematory refuses to provide any of these documents, Gilligan said it is a huge red flag and a funeral director should walk away.

Crematory Due Diligence File

All firms using a third-party crematory should have a crematory due diligence file that includes the following:

Crematory records request
Crematory interview questions (a scheduled interview with the owner of the crematory, during which you ask specific questions)
Follow-up notes to interview
Crematory inspection checklist (an unannounced visit and inspection at the crematory)
Follow-up notes to inspection.

“You’ve got to change the way you do business – it can no longer be business as usual, not in this litigious society,” Nicodemus said.

In the crematory records request, Nicodemus said you should review the licenses and operational records of the crematory. This includes:

Authorization under state law
Comprehensive operational procedures
Sufficient liability insurance
Appropriate authorization forms
Trained operators.

Nicodemus noted that in NFDA’s first full year with its certified crematory operator program, nearly 800 funeral directors/crematory operators have been certified. “People are seeing the value of the program so you as a funeral director can speak about anything you need to a family about cremation,” he said. “You want to be very well versed on these comprehensive procedures.”

Nicodemus said that when reviewing licenses and operation records of a crematory, beware of some obvious red flags. “Refusal to provide records or incomplete records – that’s a red flag,” he said. “If they don’t show you the paper-work, find someone who will.”

Maintain these records in a due diligence file so in case of litigation, everything you have done is documented. Nicodemus recommended that the file be updated at least once a year.

“Consistency is the key,” Nicodemus said. Lawyers will look for inconsistencies in your process, so be careful to be consistent across the board with your policies and procedures.

The third step of crematory due diligence is to interview the management of the crematory to obtain information on its personnel, facilities and operations.

“Make sure you call the owner and set up a day and time for you to go in to interview the owner,” Nicodemus said.

Funeral home personnel conducting the interview should take written notes of the responses to the questions. If any response is unsatisfactory or raises concerns, address it with the crematory manager immediately. For example, if the funeral home personnel believes that the crematory’s system for ensuring proper identification of a body is insufficient, discuss it with the crematory manager and obtain written assurances that your concerns will be addressed.

Sample questions on the due diligence document deal with three areas: management and personnel, facilities and equipment, and operations.

Suggested questions for management and personnel:

Who owns the crematory?
When did the current owner acquire or start the crematory?
How many crematory operators are employed by the crematory?
What type of background check is conducted before a crematory operator is hired?
What type of training and/or certification is required of the crematory operators and who conducts the certification?
What is the turnover rate the crematory has experienced with crematory operators?

Suggested questions about facilities and equipment:

Does the crematory have refrigeration?
If so, how many bodies can it hold and what is the equipment age?
Describe the retort that is used, including its manufacturer and year of manufacture.
What type of processing station is used by the crematory?
Describe the schedule for servicing and inspecting crematory equipment.
Does the crematory have an alarm/security system?

Some questions about operations:

What procedures are used to identify remains awaiting cremation, remains in the cremation chamber, cremated remains in the processing station and the urn or container holding cremated remains?
How and where are remains stored when awaiting cremation?
How long does the crematory typically hold a body before cremation?
How are cremations scheduled?
Does the crematory sell or offer to sell its cremation services directly to the public?
Does the crematory allow witnessing of the cremation by the public?
Describe what requirements the crematory has for cremation containers.
What does the crematory do with commingled cremated remains dust in the filtration material it collects?
If the crematory does not collect cremated remains dust, what happens to it?
Describe the crematory’s policy for recovering, handling and disposition of jewelry, dental gold, prostheses, medical devices and casket hardware.

Nicodemus said the more questions you can ask, the better.

Crematory Inspection

The final step in the crematory due diligence process is to conduct an unannounced inspection of the crematory during business hours. The unannounced inspection should be conducted at least once a year, but Nicodemus recommends twice a year.

Some of the sample items for the inspection can be found in the due diligence document:

Does the crematory have its licenses and permits posted?
Are crematory operators and employees dressed appropriately and conducting business in a professional manner?
Are the overall crematory facilities maintained in a neat, clean and orderly fashion?
Are human remains awaiting cremation in the holding area or present elsewhere in the crematory covered up and handled in a respectful and dignified manner?
Is there refrigeration equipment and is it operational?
Is the processing equipment clean, maintained and operational?
Is there an area for witnesses?
Is there a crematory log and is it up to date?
Is there an equipment maintenance schedule and is it up to date?