Cremation broker investigated by state

   DENVER - The Colorado Division of Insurance is investigating whether a cremation broker with contracts throughout the Front Range - including many in the Colorado Springs area - is breaking state law in its dealings with clients.

   A Colorado Springs funeral home director requested the investigation in a meeting with Insurance Commissioner Marcy Morrison last week after saying he was told by a Neptune Society manager that it operates without formal agreements needed by law.

   Jim Ford, chief executive officer of the Neptune Society, declined to comment Friday, saying he was unaware of the allegations or the investigation.

   Morrison said that while the division is looking into the allegations by Shrine of Remembrance Chief Executive Officer Costas Rombocos against Neptune, it also is studying whether state statutes need to be changed to cover such situations.

   With cremations on the rise and more people making arrangements well before their loved ones are dead, the case highlights the increasingly complex world of endof-life planning and raises questions about where the state needs to step in to regulate it.

   "I think this whole area is a new area in some ways," Morrison said.

   Until the past two decades, the crematory business was limited to a few companies that contracted with funeral homes, Rombocos said. But as cremation became more common, more firms opened facilities, and outside companies without connection to the funeral homes began work as intermediaries, contracting with families to handle cremation arrangements.

   The Neptune Society is a leader in that business, having offices in 10 states. It contracts with people to set up cremations when someone dies, transports the body to the facility and returns the urn of remains to the family, according to its Web site.

   No statistics are readily available on how many families sign pre-need arrangements, but Rombocos wrote to Morrison that Neptune Society of Colorado Manager Gregg Coggin told him he has about 5,000 contracts in the Denver area and an additional 1,500 around Colorado Springs.

   Coggin, who declined to comment this week, spoke to Rombocos about handling the cremations Neptune has under contract, Rombocos wrote in an April 30 letter to Morrison. What alarmed the funeral home director in that conversation was Coggin's admission that he had no formal agreements with any Colorado mortuaries to provide Neptune clients with services, Rombocos wrote.

   This, Rombocos, charged, is a violation of Colorado's Pre-need Law, which specifies that a seller such as Neptune without the staff or equipment to service the contracts it sells must enter into a formal, binding agreement with a funeral home and crematory.

   Also, Rombocos wrote, Coggin said that while Neptune was charging $1,385 per person, it is only putting away $650 - 47 percent of the payment - as a trust in case clients pull out of contracts and have them refunded. Colorado law specifies that 75 percent of clients' money must be put into a trust before the contract is carried out, Rombocos said.

   Morrison, a former state legislator and Manitou Springs mayor, said that she has ordered an investigation into the allegations and that her staff will meet with everyone involved. She did not give a time frame for completion of the work, which could result in dismissal of the allegations, fines by the division or referral of the report to the Attorney General's Office for possible criminal charges.

   Although Morrison would not comment on the specific allegations against Neptune, she noted that her office has not received other complaints about the company and has dealt with a "minuscule" number of complaints about cremation brokers in general. But she has heard concerns about the emerging preneed broker trend from several people in the funeral home industry.

   Ford, Neptune's CEO, said he would comment on the case after he is informed about the investigation by the division.

   Randall Earl, an Illinois funeral home owner and board member of the National Funeral Directors Association, said problems are occurring with preneed sales across the country. The association offers consumer news and contract guidelines at its Web site, www.nfda.org.

   Former state Sen. Maryanne Tebedo, a Colorado Springs Republican who wrote the pre-need law more than 15 years ago, said it was put together after consultations with a funeral industry task force that included a pre-need broker.

   Tebedo went with Rombocos to meet with Morrison because she was concerned that Neptune is not complying with the intent of the law as it is meant to protect the consumer, she said. She worries that if this is happening with one company, it could happen across the state if the Division of Insurance is not regulating it, she said.

   "This is a wonderful way that you can pay for your cremation . . . and pay in advance and assure that you have everything covered when mom or dad dies," Tebedo said of the business in general. "But we do need a law that everyone can abide by."

   CONTACT THE WRITER: (303) 837-0613 or ed.sealover@gazette.com