CHARLESTON – West Virginia Attorney General Patrick Morrisey’s office has filed its own lawsuit against a Putnam County funeral home accused of violating the state’s Preneed Funeral Contracts Act.
In the complaint, filed Sept. 18 in Kanawha Circuit Court, Morrisey’s office says Gatens-Harding Funeral Home of Poca and owners Chad and Billie Harding misappropriated money from consumers who were trying to prepay their funeral costs and did not register some preneed funeral contracts with the state.
The complaint is for injunction and related relief, claiming the defendants have violated the West Virginia Consumer Credit and Protection Act and the state’s Preneed Funeral Contracts Act continuously since at least 2012.
“The complaint we filed today alleges egregious conduct on the part of this particular business,” Morrisey said Friday in a statement. “My office is committed to protecting West Virginia consumers.”
In August, the Attorney General’s office says it conducted an audit of the preneed contracts held by the funeral home and uncovered that at least 108 West Virginia consumers were affected. None of the 108 contract beneficiaries were deceased at the time that the funeral home made death claims to the insurance company.
The complaint also alleges that the Harding’s failed to keep accurate records of all of their transactions and failed to disclose withdrawals of funds to the Attorney General’s Preneed Funeral Contracts Unit, as required by law.
“When a company allegedly violates West Virginia consumer protection laws, my office is going to step in and stop it,” Morrisey said.
The complaint asks for civil penalties of $5,000 per violation and punitive damages equal to three times the civil penalties.
The AG’s office also seeks order to force the funeral home to refund all consumer preneed advance payments it has received for funerals it has not yet performed, turn over to the state all preneed contracts it may have entered into and produce any documents and/or records pertaining to any prepayment or agreement to prepay for funeral goods or services by any consumer prior to the death of the consumer.
The complaint seeks an order to permanently prohibit the funeral home from selling, making available and/or acting as a provider of preened funeral goods and services and to cooperate in transferring all preneed contracts to other funeral service providers.
Last month, Homesteaders Life Company of Iowa filed a lawsuit in Putnam Circuit Court claiming the funeral home falsely reported the deaths of 111 people who had signed up for pre-need funeral services and collected more than $900,000 from the insurance company. In their answer, which was filed Sept. 10 in federal court after the funeral home removed it there, the Hardings deny any wrongdoing and seek to have the complaint dismissed.
“The alleged losses or damages experienced by the plaintiffs, if any, were not proximately caused by any acts or omissions of these defendants either individually or in any of their individual or official capacities,” the answer states.
In its Putnam County complaint, Homesteaders said it sells life insurance and annuity products, including life insurance policies to consumers entering into pre-need funeral contracts. In 2005, the companies entered into an agreement for the sale of pre-need contracts. For each enrollment, Chad Harding would be paid a commission, the complaint states. A similar agreement was signed again in 2007 with Chad Harding. Another similar agreement was signed in 2010 and again in 2012 for Chad Harding and additional employees of Gatens-Harding Funeral Home.
Homesteaders paid commissions totaling $136,719.73 to Chad Harding and other funeral home employees for enrollments, according to the complaint. The funeral home also received an additional $14,667.23 override and bonus. Chad Harding received an additional $7,242.62.
Homesteaders would release funds upon the death of a consumer who had signed up for a pre-need funeral contract. Beginning around September 2012, Chad Harding allegedly started filing false death claims with Homesteaders.
He “engaged in a continuous pattern and practice of submitting materially false death claims to HLC, by telephone, and filling out and signing materially false bank drafts, wherein he fraudulently misrepresented that the … consumers had died … and that the contracted-for funeral services had been provided, when, in fact, said consumers were no deceased and said funeral services had not been provided,” according to the complaint.
“Chad R. Henning, on behalf of Gatens-Harding Funeral Home, signed his name … and falsely certified thereon the date of death of the consumer and that funeral services and goods had been provided.”
To these consumers who still are alive, Homesteaders says it has reinstituted the life insurance policies. Of the 111 people the funeral home claimed to be dead, 14 people did pass away after the funeral home claimed they had passed.
Homesteaders accuses the defendants of fraud, violation of RICO laws for racketeering, conversion, breach of contract and unjust enrichment. It seeks compensatory damages, actual damages, special damages, punitive damages, attorney fees, court costs, pre-judgment interest and other relief.
The funeral home posted a message about the lawsuit last month on its Facebook page.
"We want to say thank you to all the people that have called, emailed and text to say I love you and we support you,” it says. “There are always two sides to every story. We are not perfect and yes we make mistakes. Our attorney is working to get his resolved as soon as possible and if we owe anything it will be paid completely. We appreciate your continued prayers."
In the Putnam County case that was removed to U.S. District Court, the insurance company is being represented by Alex Macia and Keith D. Fisher from Spilman Thomas & Battle PLLC in Charleston. The funeral home and the Hardings are represented by Jeff C. Woods of The Law Office of Jeff C. Woods in Scott Depot.
In the newly filed Kanawha County complaint, Michael M. Morrison of the AG ofices’s Consumer Protection Division is handling the case. It has been assigned to Circuit Judge Joanna Tabit.
Kanawha Circuit Court case number: 15-C-1756