GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	2 

SENATE BILL 51
Human Resources Committee Substitute Adopted 4/22/91

Short Title:  Funeral and Burial Trust Act.	(Public)
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Sponsors:
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Referred to:  
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February 11, 1991

A BILL TO BE ENTITLED
AN ACT TO MODIFY THE FUNERAL AND BURIAL TRUST FUND ACT.
The General Assembly of North Carolina enacts:
Section 1.  Article 13B of Chapter 90 of the General Statutes is repealed.
Sec. 2.  Chapter 90 of the General Statutes is amended by adding the following new Article to read:
“ARTICLE 13D.
"Funeral and Burial Trust Funds.
"§ 90-210.60.  Definitions.
As used in this Article, unless the context requires otherwise:
(1)	‘Board' means the North Carolina Board of Mortuary Science as created pursuant to Article 13A of Chapter 90 of the General Statutes;
(2)	‘Financial institution' means a bank, trust company, savings bank, or savings and loan association authorized by law to do business in this State;
(3)	‘Insurance company' means any corporation, association, partnership, society, order, individual or aggregation of individuals engaging in or proposing or attempting to engage as principals in any kind of insurance business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations.
(4)	‘Prearrangement insurance policy' means a life insurance policy, annuity contract, or other insurance contract, or any series of contracts or agreements in any form or manner, issued by an insurance company authorized by law to do business in this State, which, whether by assignment or otherwise, has for a purpose the funding of a preneed funeral contract or an insurance-funded funeral or burial prearrangement, the insured or annuitant being the person for whose service the funds were paid;
(5)	‘Preneed funeral contract' means any contract, agreement, or mutual understanding, or any series or combination of contracts, agreements, or mutual understandings, whether funded by trust deposits or prearrangement insurance policies, or any combination thereof, which has for a purpose the furnishing or performance of funeral services, or the furnishing or delivery of personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body, to be furnished or delivered at a time determinable by the death of the person whose body is to be disposed of, but does not mean the furnishing of a cemetery lot, crypt, niche, or mausoleum;
(6)	‘Preneed funeral contract beneficiary' means the person upon whose death the preneed funeral contract will be performed; this person may also be the purchaser of the preneed funeral contract;
(7)	‘Preneed funeral funds' means all payments of money made to any person, partnership, association, corporation, or other entity upon any preneed funeral contract or any other agreement, contract, or prearrangement insurance policy, or any series or combination of preneed funeral contracts or any other agreements, contracts, or prearrangement insurance policies, but excluding the furnishing of cemetery lots, crypts, niches, and mausoleums, which have for a purpose or which by operation provide for the furnishing or performance of funeral or burial services, or the furnishing or delivery of personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body, to be furnished or delivered at a time determinable by the death of the person whose body is to be disposed of, or the providing of the proceeds of any insurance policy for such use;
(8)	‘Preneed funeral planning' means offering to sell or selling preneed funeral contracts, or making other arrangements prior to death for the providing of funeral services or merchandise;
(9)	‘Preneed licensee' means a funeral establishment which has applied for and has been granted a license to sell preneed funeral contracts under the Article.  Such license is also referred to in this Article as a ‘preneed funeral establishment license.'
"§ 90-210.61.  Deposit or application of preneed funeral funds.
(a)	Preneed funeral funds are subject to the provisions of this Article and shall be deposited or applied as follows:
(1)	If the preneed funeral contract purchaser chooses to fund the preneed funeral contract by a trust deposit or deposits, the preneed licensee shall deposit all funds in an insured account in a financial institution, in trust, in the preneed licensee's name as trustee within five business days.  The preneed licensee, at the time of making the deposit as trustee, shall furnish to the financial institution the name of each preneed funeral contract purchaser and the amount of payment on each for which the deposit is being made.  The preneed licensee may establish an individual trust fund for each preneed funeral contract or a common trust fund for all preneed funeral contracts.  The trust accounts shall be carried in the name of the preneed licensee as trustee, but accounting records shall be maintained for each individual preneed funeral contract purchaser showing the amounts deposited and invested, and interest, dividends, increases, and accretions earned.  Except as provided in this Article, all interest, dividends, increases, or accretions earned by the funds shall remain with the principal.  The trust fund may be charged with applicable taxes and for reasonable charges paid by the trustee to itself or others for the preparation of fiduciary tax returns.  Penalties charged by a financial institution for early withdrawals caused by a transfer pursuant to G.S. 90-210.63 shall be paid by the preneed licensee.  Penalties charged as a result of other early withdrawals as permitted by this Article shall be paid from the trust fund, and the financial institution shall give the preneed funeral contract purchaser prompt notice of these penalties.
(2)	Notwithstanding any other provision of law, if a preneed funeral contract is funded by a trust deposit or trust deposits, a preneed licensee may retain, free of the trust, up to ten percent (10%) of any payments made on a preneed funeral contract, provided that the preneed licensee fully discloses in writing in advance to the preneed funeral contract purchaser the percentage of the payments to be retained and subsequent to the execution of the preneed funeral contract, the preneed licensee performs any services or provides any goods or merchandise in connection with the preneed funeral contract.  If there is no substitution pursuant to G.S. 90-210.63(a), the preneed licensee shall give credit for the amount retained upon the death of the preneed funeral contract beneficiary and performance of the preneed funeral contract.
(3)	If the preneed funeral contract purchaser chooses to fund the contract by a prearrangement insurance policy, the preneed licensee shall apply all funds received for this purpose to the purchase of the prearrangement insurance policy within five business days.  The preneed licensee shall notify the insurance company of the name of each preneed funeral contract purchaser and the amount of each payment when the prearrangement insurance policy or policies are purchased.
(b)	Except as provided by this Article or by the preneed funeral contract, all payments made by the purchaser of a preneed funeral contract or prearrangement insurance policy shall remain trust funds within a financial institution or as paid insurance premiums with an insurance company, as the case may be, until the death of the preneed funeral contract beneficiary and until full performance of the preneed funeral contract.
(c)	Each preneed licensee may establish and maintain with a financial institution of its choice, a preneed funeral fund clearing account.  Preneed funeral funds received by a preneed licensee may be deposited and held in such an account until disbursed by the preneed licensee to fund a preneed funeral contract pursuant to subdivisions (a)(1) or (a)(3) of this section.  This account shall be used solely for the receipt and disbursement of preneed funeral funds.
(d)	Funds deposited in trust under a revocable standard preneed funeral contract may, with the written permission of the preneed funeral contract purchaser, be withdrawn by the trustee and used to purchase a prearrangement insurance policy.  Except as provided in this subsection, no funds deposited in trust in a financial institution pursuant to this Article shall be withdrawn by the trustee to purchase a prearrangement insurance policy.
(e)	Except as provided by G.S. 90-210.61(c), at no time before making a deposit or purchasing a prearrangement insurance policy may a preneed licensee, or its agents or employees, deposit in its own account or the account of any other person any monies coming into its hands for the purpose of purchasing services, merchandise, or prearrangement insurance policies under the provisions of this Article.
"§ 90-210.62.  Types of preneed funeral contracts; forms.
(a)	A preneed licensee may offer standard preneed funeral contracts and inflation-proof preneed funeral contracts.  A standard preneed funeral contract applies the trust funds or insurance proceeds to the purchase price of funeral services and merchandise at the time of death of the contract beneficiary without a guarantee against price increases.  An inflation-proof contract establishes a fixed price for funeral services and merchandise without regard to price increases.  Upon written disclosure to the purchaser of a preneed funeral contract, inflation-proof contracts may permit the preneed licensee to retain all of the preneed funeral contract trust funds on deposit, and all insurance proceeds, even those in excess of the retail cost of goods and services provided, when the preneed licensee has fully performed the preneed funeral contract.  Preneed funeral contracts may be revocable or irrevocable, at the option of the preneed funeral contract purchaser.
(b)	The Board shall approve all forms for preneed funeral contracts.  All contracts must be in writing, and no form shall be used without prior approval of the Board.  Any use or attempted use of any oral preneed funeral contract or any written contract in a form not approved by the Board shall be deemed a violation of this Article.
"§ 90-210.63.  Substitution of licensee.
(a)	If the preneed funeral contract is irrevocable, the preneed funeral contract purchaser, or after his death the preneed funeral contract beneficiary or his legal representative, upon written notice to the financial institution or insurance company and the preneed licensee who is a party to the preneed funeral contract, may direct the substitution of a different funeral establishment to furnish funeral services and merchandise.
(1)	If the substitution is made after the death of the preneed funeral contract beneficiary, a funeral establishment providing any funeral services or merchandise need not be a preneed licensee under this Article to receive payment for such services or merchandise.  The original contracting preneed licensee shall be entitled to payment for any services or merchandise provided pursuant to G.S. 90-210.65(d).
(2)	If the substitution is made before the death of the preneed funeral contract beneficiary, the substitution must be to a preneed licensee.  If the preneed funeral contract is funded by a trust deposit or deposits, the financial institution shall immediately pay the funds held to the original contracting preneed licensee.  The original contracting preneed licensee shall immediately pay all such funds received to the successor funeral establishment so designated; provided, however, the original contracting preneed licensee shall not be required to give credit for the amount retained pursuant to G.S. 90-210.61(a)(2).  Provided further, if the original contracting preneed licensee did not retain any portion of payments made to it as is permitted by G.S. 90-210.61(a)(2) then such preneed licensee may retain up to ten percent (10%) of said funds received from the financial institution.  Upon making payments pursuant to this subsection, the financial institution and the original contracting preneed licensee shall be relieved from all further contractual liability thereon.
(3)	If the preneed funeral contract is funded by a prearrangement insurance policy, the insurance company shall not pay any of the funds until the death of the preneed funeral contract beneficiary, and the insurance company shall pay the funds in accordance with the terms of the policy.
(b)	The person giving notice of the substitution of a preneed licensee and the successor preneed licensee shall enter into a new preneed funeral contract for the funds transferred, and this Article shall apply, including the duty of the successor preneed licensee to deposit all of the funds in a financial institution if the death of the preneed funeral contract beneficiary has not occurred.  Nothing in this subsection shall be construed to permit the use of the transferred funds to purchase a prearrangement insurance policy, nor to permit an irrevocable preneed funeral contract to be made revocable or to result in the payment of any of the transferred funds to the preneed funeral contract purchaser or to the preneed funeral contract beneficiary or his estate, except as provided by G.S. 90-210.64(a).
"§ 90-210.64.  Death of preneed funeral contract beneficiary; disposition of funds.
(a)	After the death of a preneed funeral contract beneficiary and full performance of the preneed funeral contract by the preneed licensee, the preneed licensee shall promptly complete a certificate of performance or similar claim form and present it to the financial institution that holds funds in trust under G.S. 90-210.61(a)(1) or to the insurance company that issued a preneed insurance policy pursuant to G.S. 90-210.61(a)(3).  Upon receipt of the certificate of performance or similar claim form, the financial institution shall pay the trust funds to the contracting preneed licensee and the insurance company shall pay the insurance proceeds according to the terms of the policy.
(b)	Unless otherwise specified in the preneed funeral contract, the preneed licensee shall have no obligation to deliver merchandise or perform any services for which payment in full has not yet been deposited with a financial institution or that will not be provided by the proceeds of a prearrangement insurance policy.  Any such amounts received which do not constitute payment in full shall be refunded to the estate of the deceased preneed funeral contract beneficiary or credited against the cost of merchandise or services contracted for by a representative of the deceased.  Any balance remaining after payment for the merchandise and services as set forth in the preneed funeral contract shall be paid to the estate of the preneed funeral contract beneficiary or the prearrangement insurance policy beneficiary named to receive any such balance.  Provided, however, unless the parties agree to the contrary, there shall be no refund to the estate of the preneed funeral contract beneficiary of an inflation-proof preneed funeral contract.
(c)	In the event that any person other than the contracting preneed licensee performs any funeral service or provides any merchandise as a result of the death of the preneed funeral contract beneficiary, the financial institution shall pay the trust funds to the contracting preneed licensee and the insurance company shall pay the insurance proceeds according to the terms of the policy.  The preneed licensee shall, subject to the provisions of G.S. 90-210.65(d), immediately pay the monies so received to the other provider.
(d)	When the balance of a preneed funeral fund is payable to the estate of a deceased preneed funeral contract beneficiary and there has been no representative of the estate appointed, the balance due may be paid into the office of the clerk of superior court in the county where probate proceedings could be filed for the deceased preneed funeral contract beneficiary.
"§ 90-210.65.  Refund of preneed funeral funds.
(a)	Within 30 days of receipt of a written request from the purchaser of a revocable preneed funeral contract who has trust funds deposited with a financial institution pursuant to G.S. 90-210.61(a), the financial institution shall refund to the preneed funeral contract purchaser the entire amount held by the financial institution.
(b)	Within 30 days of receipt of a written notice of cancellation of any prearrangement insurance policy purchased pursuant to G.S. 90-210.61(a)(3), the issuing insurance company shall pay such amounts to such person or persons as is provided under the terms of the prearrangement insurance policy.
(c)	After making refund pursuant to this section and giving notice of the refund to the preneed licensee, the financial institution or insurance company shall be relieved from all further liability.
(d)	Notwithstanding any other provision of this Article, if a preneed funeral contract is revoked or transferred following the death of the preneed funeral contract beneficiary, the purchaser of the preneed funeral contract may be charged according to the contracting preneed licensee's price lists for any services performed or merchandise provided prior to revocation or transfer.
(e)	This section shall not apply to irrevocable preneed funeral contracts.  Irrevocable preneed funeral contracts may not be revoked nor any proceeds refunded except by order of a court of competent jurisdiction.
"§ 90-210.66.  Recovery fund.
(a)	There is established the Preneed Recovery Fund.  The Fund shall be administered by the Board.  The purpose of the Fund is to reimburse purchasers of preneed funeral contracts who have suffered financial loss as a result of the malfeasance, misfeasance, default, failure or insolvency of any licensee under this Article, and includes refunds due a preneed funeral contract beneficiary from a preneed licensee who has retained any portion of the preneed funeral contract payments pursuant to G.S. 90-210.61(a)(2).
(b)	From the fee of fifteen dollars ($15.00) for each preneed funeral contract as required by G.S. 90-210.67(d), the Board shall deposit two dollars ($2.00) into the Fund.  The Board may suspend the deposits into the Fund at any time and for any period for which the Board determines that a sufficient amount is available to meet likely disbursements and to maintain an adequate reserve.
(c)	All sums received by the Board pursuant to this section shall be held in a separate account known as the Preneed Recovery Fund.  Deposits to and disbursements from the Fund account shall be subject to rules established by the Board.
(d)	The Board shall adopt rules governing management of the Fund, the presentation and processing of applications for reimbursement, and subrogation or assignment of the rights of any reimbursed applicant.
(e)	The Board may expend monies in the Fund for the following purposes:
(1)	To make reimbursements on approved applications;
(2)	To purchase insurance to cover losses as deemed appropriate by the Board and not inconsistent with the purposes of the Fund;
(3)	To invest such portions of the Fund as are not currently needed to reimburse losses and maintain adequate reserves, as are permitted to be made by fiduciaries under State law; and
(4)	To pay the expenses of the Board for administering the Fund, including employment of legal counsel to prosecute subrogation claims.
(f)	Reimbursements from the Fund shall be made only to the extent to which such losses are not bonded or otherwise covered, protected or reimbursed and only after the applicant has complied with all applicable rules of the Board.
(g)	The Board shall investigate all applications made and may reject or allow such claims in whole or in part to the extent that monies are available in the Fund.  The Board shall have complete discretion to determine the order and manner of payment of approved applications.  All payments shall be a matter of privilege and not of right, and no person shall have any right in the Fund as a third-party beneficiary or otherwise.  No attorney may be compensated by the Board for prosecuting an application for reimbursement.
(h)	In the event reimbursement is made to an applicant under this section, the Board shall be subrogated in the reimbursed amount and may bring any action it deems advisable against any person, including a preneed licensee.  The Board may enforce any claims it may have for restitution or otherwise and may employ and compensate consultants, agents, legal counsel, accountants and any other persons it deems appropriate.
(i)	The Fund shall apply to losses arising after the effective date of this act, regardless of the date of the underlying preneed funeral contract.
"§ 90-210.67. Application for license.
(a)	No person may offer or sell preneed funeral contracts or offer to make or make any funded funeral prearrangements without first securing a license from the Board.  There shall be two types of licenses:  a preneed funeral establishment license and a preneed sales license.  Only funeral establishments holding a valid establishment permit pursuant to G.S. 90-210.25(d) shall be eligible for a preneed funeral establishment license.  Employees and agents of such entities, upon meeting the qualifications to engage in preneed funeral planning as established by the Board, shall be eligible for a preneed sales license.  The Board shall establish the preneed funeral planning activities that are permitted under a preneed sales license.  The Board shall adopt rules establishing such qualifications and activities no later than 12 months following the ratification of this act.  Preneed sales licensees may sell preneed funeral contracts, prearrangement insurance policies, and make funded funeral prearrangements only on behalf of one preneed funeral establishment licensee; provided, however, they may sell preneed funeral contracts, prearrangement insurance policies, and make funeral prearrangements for any number of licensed preneed funeral establishments that are wholly owned by or affiliated with, through common ownership or contract, the same entity; provided further, in the event they engage in selling prearrangement insurance policies, they shall meet the licensing requirements of the Commissioner of Insurance.  Every preneed funeral contract shall be signed by a person licensed as a funeral director or funeral service licensee pursuant to Article 13A of Chapter 90 of the General Statutes.
Application for a license shall be in writing, signed by the applicant and duly verified on forms furnished by the Board. Each application shall contain at least the following: the full names and addresses (both residence and place of business) of the applicant, and every officer and director thereof if the applicant is a partnership, association, or corporation and any other information as the Board shall deem necessary. A preneed funeral establishment license shall be valid only at the address stated in the application or at a new address approved by the Board.
(b)	An application for a preneed funeral establishment license shall be accompanied by a nonrefundable application fee of not more than one hundred fifty dollars ($150.00).  The Board shall set the amounts of the application fees and renewal fees by rule, but the fees shall not exceed one hundred fifty dollars ($150.00).  If the license is granted, the application fee shall be applied to the annual license fee for the first year or part thereof. Upon receipt of the application and payment of the application fee, the Board shall issue a renewable preneed funeral establishment license unless it determines that the applicant has violated any provision of G.S. 90-210.69(c) or has made false statements or representations in the application, or is insolvent, or has conducted or is about to conduct, its business in a fraudulent manner, or is not duly authorized to transact business in this State.  Each preneed funeral establishment licensee shall pay annually to the Board on or before June 30 of each year a license renewal fee of not more than one hundred fifty dollars ($150.00).
(c)	An application for a preneed sales license shall be accompanied by a nonrefundable application fee of not more than fifty dollars ($50.00).  The Board shall set the amounts of the application fees and renewal fees by rule, but the fees shall not exceed fifty dollars ($50.00).  If the license is granted, the application fee shall be applied to the annual license fee for the first year or part thereof.  The Board shall set the amounts of the application fees and renewal fees by rule, but the fees shall not exceed fifty dollars ($50.00).  Upon receipt of the application and payment of the application fee, the Board shall issue a renewable preneed sales license provided the applicant has met the qualifications to engage in preneed funeral planning as established by the Board unless it determines that the applicant has violated any provision of G.S. 90-210.69(c).  Each preneed sales licensee shall pay annually to the Board on or before June 30 of each year, a license renewal fee of not more than fifty dollars ($50.00).
(d)	Any person selling a preneed funeral contract, whether funded by a trust deposit or a prearrangement insurance policy, shall remit to the Board, within 10 days of the sale, a fee of fifteen dollars ($15.00) for each sale.  The fee shall not be remitted in cash.
(e)	The fees collected under this Article, except for monies used pursuant to G.S. 90-210.66, shall be used for the expenses of the Board in carrying out the provisions of this Article.  Any funds collected under this Article and remaining with the Board after all expenses under this Article for the current fiscal year have been fully provided for shall be paid over to the General Fund of the State of North Carolina.  Provided, however, the Board shall have the right to maintain an amount, the cumulative total of which shall not exceed twenty percent (20%) of gross receipts under this Article for the previous fiscal year of its operations, as a maximum contingency or emergency fund.
(f)	Any entity licensed by the Commissioner of Banks under Article 13B of Chapter 90 of the General Statutes before the effective date of this act shall be entitled to have its license renewed notwithstanding that it is not a funeral establishment, provided it otherwise satisfies the requirements of this Article.
"§ 90-210.68.  Licensee's books and records; notice of transfers, assignments and terminations.
(a)	Every preneed licensee shall keep for examination by the Board accurate accounts, books, and records in this State of all preneed funeral contract and prearrangement insurance policy transactions, copies of all agreements, insurance policies, instruments of assignment, the dates and amounts of payments made and accepted thereon, the names and addresses of the contracting parties, the persons for whose benefit funds are accepted, and the names of the financial institutions holding preneed funeral trust funds and insurance companies issuing prearrangement insurance policies.  The Board, its inspectors appointed pursuant to G.S. 90-210.24 and its examiners, which the Board may appoint to assist in the enforcement of this Article, may at any time investigate the books, records, and accounts of any licensee under this Article with respect to trust funds, preneed funeral contracts, and prearrangement insurance policies.  The Board may require the attendance of and examine under oath all persons whose testimony it may require.  Every preneed licensee shall submit a written report to the Board, at least annually, in a manner and with such content as established by the Board, of its preneed funeral contract sales and performance of such contracts.  The Board may also require other reports.
(b)	A preneed licensee may transfer preneed funds held by it as trustee from the financial institution which is a party to a preneed funeral contract to a substitute financial institution that is not a party to the contract.  Within 10 days after the transfer, the preneed licensee shall notify the Board, in writing, of the name and address of the transferee financial institution.  Before  the transfer may be made, the transferee financial institution shall agree to make disclosures required under the preneed funeral contract to the Board or its inspectors or examiners. If the contract is revocable, the licensee shall notify the contracting party of the intended transfer.
(c)	If any preneed licensee transfers or assigns its assets or stock to a successor funeral establishment or terminates its business as a funeral establishment, the preneed licensee and assignee shall notify the Board at least 15 days prior to the effective date of the transfer, assignment or termination:  provided, however, the successor funeral establishment must be a preneed licensee or shall be required to apply for and be granted such license by the Board before accepting any preneed funeral contracts, whether funded by trust deposits or preneed insurance policies.  Provided further, a successor funeral establishment shall be liable to the preneed funeral contract purchasers for the amount of contract payments retained by the assigning or transferring funeral home pursuant to G.S. 90-210.61(a)(1)a.1.
(d)	Financial institutions that accept preneed funeral trust funds and insurance companies that issue prearrangement insurance policies shall, upon request by the Board or its inspectors or examiners, disclose any information regarding preneed funeral trust accounts held or prearrangement insurance policies issued by it for a preneed licensee.
(e)	In the event that any preneed licensee is unable or unwilling or is for any reason relieved of its responsibility to perform as trustee or to perform any preneed funeral contract, the Board, with the written consent of the purchaser of the preneed funeral contract, or after the purchaser's death or incapacity, the preneed funeral contract beneficiary may order the contract to be assigned to a substitute preneed licensee provided that the substitute licensee agrees to accept such assignment.
"§ 90-210.69.  Rulemaking; enforcement of Article;  judicial review.
(a)	The Board is authorized to adopt rules for the carrying out and enforcement of the provisions of this Article.  The Board may perform such other acts and exercise such other powers and duties as are authorized by this Article and by Article 13A of this Chapter to carry out its powers and duties.
(b)	The Board may administer oaths and issue subpoenas requiring the attendance of persons and the production of papers and records in any investigation conducted by it.  Members of the Board's staff or the sheriff or other appropriate official of any county of this State shall serve all notices, subpoenas and other papers given to them by the Board for service in the same manner as process issued by any court of record.  Any person who does not obey a subpoena issued by the Board shall be guilty of a misdemeanor and, upon  conviction thereof, shall be fined or imprisoned in the discretion of the court.
(c)	If the Board finds that a licensee, an applicant for a license or an applicant for license renewal is guilty of one or more of the following, the Board may refuse to issue or renew a license or may suspend or revoke a license or place the holder thereof on probation upon conditions set by the Board, with revocation upon failure to comply with the conditions:
(1)	Offering to engage or engaging in activities for which a license is required under this Article but without having obtained such a license;
(2)	Aiding or abetting an unlicensed person, firm, partnership, association, corporation or other entity to offer to engage or engage in such activities;
(3)	A crime involving fraud or moral turpitude by conviction thereof;
(4)	Fraud or misrepresentation in obtaining or receiving a license or in preneed funeral planning;
(5)	False or misleading advertising; or
(6)	Violating or cooperating with others to violate any provision of this Article or the rules adopted pursuant thereto.
(d)	Any proceedings pertaining to or actions against a funeral establishment under this Article may be in addition to any proceedings or actions permitted by G.S. 90-210.25(d)(4).  Any proceedings pertaining to or actions against a person licensed for funeral directing or funeral service may be in addition to any proceedings or actions permitted by G.S. 90-210.25 (e)(1) and (2).
(e)	All hearings under this Article shall be conducted pursuant to G.S. 150B-40(e).  Judicial review shall be pursuant to Article 4 of Chapter 150B of the General Statutes.
"§ 90-210.70. Penalties.
(a)	Anyone who embezzles or who fraudulently, or knowingly and willfully misapplies, or in any manner converts preneed funeral funds to his own use, or for the use of any partnership, corporation, association, or entity for any purpose other than as authorized by this Article; or anyone who takes, makes away with or secretes, with intent to embezzle or fraudulently or knowingly and willfully misapply or in any manner convert preneed funeral funds for his own use or the use of any other person for any purpose other than as authorized by this Article shall be punished as a Class H felon.  Each such embezzlement, conversion, or misapplication shall constitute a separate offense and may be prosecuted individually.  Upon conviction, all licenses issued under this Article shall be revoked.
(b)	Any person who willfully violates any other provision of this Article shall be guilty of a misdemeanor and shall be fined not less than five hundred dollars ($500.00) nor more than one thousand dollars ($1,000), or shall be imprisoned for not less than 10 days nor more than six months, or both.  Each such violation shall constitute a separate offense and may be prosecuted individually.
(c)	If a corporation embezzles or fraudulently or knowingly and willfully misapplies or converts preneed funeral funds as provided in subsection (a) hereof or otherwise violates any provision of this Article, the officers, directors, agents, or employees responsible for committing the offense shall be fined or imprisoned as herein provided.
(d)	The Board shall have the power to investigate violations of this section and shall deliver all evidence of violations to the district attorney in the county where the offense occurred.
"§ 90-210.71.  Nonregulation of insurance sales.  
The provisions of this Article do not regulate the issuance and sale of insurance policies, but apply only to the underlying preneed funeral contracts.
"§ 90-210.72.  Nonapplication to certain funeral contracts.
This Article does not apply to contracts for funeral services or merchandise sold as preneed burial insurance policies pursuant to Part 13 of Article 10 of Chapter 143B of the North Carolina General Statutes or to replacements or conversions of such policies pursuant to G.S. 143B-472.28."
Sec. 3.  G.S. 90-210.18(b) reads as rewritten:
"§ 90-210.18. Construction of Article; State Board; members; election; qualifications; term; vacancies.
(b)	The North Carolina Board of Mortuary Science is created as a continuation of the North Carolina Board of Embalmers and Funeral Directors. The Board is the agency for regulation of the practice of funeral service in this State. The Board shall have nine members as follows:
(1)	Four funeral service licensees or persons holding both funeral director's license and an embalmer's license,
(2)	Two persons holding a funeral director's license or a funeral service license, and
(3)	Three public members.
A member's term shall be three years and shall expire on December 31 or when his successor has been duly elected or appointed. No member may serve more than two complete consecutive terms.
The six seats on the Board for licensees shall be filled in an election in which every person licensed to practice embalming, funeral directing, or funeral service in this State may vote. No licensee may be nominated, elected, or serve unless he holds a North Carolina license in the class designated for the seat and unless he is engaged in full-time employment in this State in a practice authorized by his license. Any vacancy occurring in an elective seat on the Board shall be filled for the unexpired term by majority vote of the remaining Board members.
The public members of the Board shall have full voting authority. They shall be appointed by the Governor and may neither be licensed under this Article nor employed by a person who is. A vacancy occurring in a public member's seat shall be filled for the unexpired term by the Governor."
Sec. 4.  G.S. 90-210.22 reads as rewritten:
"§ 90-210.22. Required meetings of the Board.
The Board shall hold at least two meetings in each year at which examinations shall be given to qualified applicants for licenses. In addition, the Board may meet as often as the proper and efficient discharge of its duties shall require.  Five members shall constitute a quorum."
Sec. 5.  (a) As of the effective date of this act, there shall be no requirement for the filing, maintenance or renewal of any bond as was required by G.S. 90-210.31(al) as such section existed prior to being repealed by this act.
(b) As of the effective date of this act, the Commissioner of Banks shall deliver to the North Carolina Board of Mortuary Science all of his records pertaining to the regulation of preneed funeral funds.
Sec. 6.  This act becomes effective January 1, 1992.