Funeral insurance providers in two Missouri lawsuits

Two recent Missouri lawsuits are targeting sellers and handlers of pre-need funeral plans, claiming various businesses have defrauded funeral homes across the country.

Last week, a Cape Girardeau law firm filed a class action lawsuit in Kansas City-based federal court against about a dozen businesses, including banks and life insurance companies, affiliated with St. Louis-based National Prearranged Services. Missouri Attorney General Jay Nixon filed a similar suit in St. Louis County Circuit Court earlier this month.

National Prearranged Services purportedly provides funeral homes and individuals a way to pay for future funeral services. According to the lawsuit filed in federal court -- James & Gahr Mortuary et al. v. National Heritage Enterprises et al. -- the service is actually a "massive fraudulent conspiracy" to bilk money from funeral homes.

Lead Plaintiffs' attorney J. Michael Ponder, of Cape Girardeau- based Cook, Barkett, Maguire & Ponder, did not return a message seeking comment. The suit seeks class status, saying that there are "hundreds if not thousands" of potential plaintiffs.

A Texas circuit court placed National Prearranged Services and two of its affiliates, Memorial Service Life Insurance Co. and Lincoln Memorial Life Insurance Co., in receivership last month. The court appointed Donna J. Garrett as special deputy receiver. She could not be reached for comment.

The 42-page complaint filed Friday alleges 10 claims ranging from racketeering to conspiracy. Nixon's suit lists several of the same defendants, and seeks an injunction to prevent any further sales of pre-funeral need plans and to freeze the companies' assets.

The companies allegedly offer the pre-funeral plans with an insurance policy for the contract. But the suits allege the policies are purchased from the same entity that owns all of the defendant businesses: RBT Trust II, which is allegedly controlled by a Missouri resident, Howard Wittner. Since 2004, the insurance policy premiums for thousands of plans have lapsed, diminishing the cash value of the plans to nothing, according to the complaint.

The funeral homes have been stiffed by the pre-funeral plans when trying to collect and the entire operation has become "financially troubled," according the federal suit.

The suit does not seek specific monetary figures, but it does request actual and punitive damages.

According to National Prearranged Services' Web site, Garrett "is working with regulators from affected states to determine the best course of action to provide the greatest level of protection for all consumers and other stakeholders."

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