Maryland Funeral Homes
Challenging Barriers To Economic Opportunity
All Charles S. Brown wants is the chance to offer consumers the best service a funeral home can at the best price. But the State of Maryland is standing in his way.
Brown owns Rest Haven Cemetery in Hagerstown, Md., and runs it with his wife Pat and their son Eric. Charles wants to own the funeral home he built in order to provide additional revenue to care for the gravesites in his cemetery when the cemetery itself is full.
The State of Maryland arbitrarily restricts who can own a funeral home. In Maryland, only licensed funeral directors and a handful of politically favored corporations and individuals may own a funeral home. Becoming a licensed funeral director takes two years of study and thousands of dollars. Among the many requirements of a mortuary science degree is learning how to embalm corpses. As a result, consumers pay more than they otherwise would, and opportunities for would-be entrepreneurs are blocked. These are among the reasons why the Institute for Justice filed a federal lawsuit seeking to break up the government-imposed cartel.
Maryland’s law is a racket designed to protect the state’s funeral cartel from competition, and that’s not a valid use of government authority. Federal District Judge Richard D. Bennett agreed, declaring the law unconstitutional and describing it as “the most blatantly anti-competitive state funeral regulation in the nation.” But the Fourth Circuit reversed Judge Bennett on the grounds that the movement of investment capital and profits across state lines was not “interstate commerce” within the meaning of the Constitution. Unfortunately, the Supreme Court declined to review that obviously erroneous ruling even though it was in direct conflict with Supreme Court precedent and with case law in several other circuits. As a result, Charles Brown and his fellow plaintiffs will have to go back to the same state legislature that refused to change this exploitative, unjust law for more than 15 years, and hope that this time legislators will finally choose to put the interests of hard-working consumers and entrepreneurs ahead of the Maryland funeral cartel.
Court's opinion denying Maryland's motion to dismiss
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The Maryland Morticians Act[i] imposes arbitrary restrictions on who can own a funeral home, thereby driving up costs to consumers and blocking opportunity for would-be entrepreneurs.
In Maryland, only licensed funeral directors and a handful of politically favored corporations and individuals may own a funeral home.[ii] But owning does not mean operating. Under Maryland law, a person is not allowed to own a funeral home even if he or she hires a licensed funeral director to oversee the funeral home’s day-to-day operations. It is like saying that someone must be a pilot to own an airline.
Only two other states exclude most entrepreneurs from the funeral home market. [iii]
There are no genuine health or consumer-protection reasons to justify this law. As a result, 58 corporations are authorized to own funeral homes,[iv] as are the surviving spouses of deceased funeral directors,[v] as are the executors of deceased funeral directors’ estates even though an executor could be someone with no experience at all in this line of work.[vi] It’s simply impossible to look at the range of exceptions to this law and conclude that the government has any true interest in keeping ordinary entrepreneurs from owning funeral homes.
The real interest the law serves is the funeral home industry’s bottom line. Like all cartels, Maryland’s funeral home cartel exploits its monopoly power by pushing prices well above what they would be in a competitive market. Some experts estimate that each Maryland funeral costs about $800 more than it should.[vii] With tens of thousands of burials a year, the funeral home cartel is fleecing consumers for millions.
This law does not just harm consumers; it also clobbers entrepreneurs by denying their right to earn an honest living in the field of their choice. Fed up with this unnecessary law, five entrepreneurs—Charles Brown, Joe Jenkins, Gail Manuel, John Armiger and Brian Chisholm—have teamed up with the Institute for Justice to challenge the Maryland Morticians Act in federal court. On March 1, 2006, they filed a lawsuit in U.S. District Court for the District of Maryland seeking to vindicate their constitutional right to earn an honest living in Maryland without pointless government interference.
This case is the latest in the Institute for Justice’s nationwide effort to strike down protectionist state laws that stifle entrepreneurship and harm consumers. IJ’s goal is to restore constitutional protection to the right to earn an honest living in the occupation of one’s choice free from excessive government regulation—the right to economic liberty.
The Funeral Home Industry: An Overview
A funeral director is a trained professional responsible for the disposition of human remains. [viii] A funeral director’s relationship with a client often begins with the advance sale of a funeral package while the client is still alive. A funeral package may include merchandise like a casket and services like embalming or cremation. Maryland has licensed funeral directors since 1902.[ix]
A cemeterian, on the other hand, owns a cemetery and arranges for the interment of remains and the preservation of the gravesite.[x] A cemeterian does not embalm the dead or perform the other duties of a funeral director.
Though cemeteries are as ancient as human society, the funeral home is a relatively recent innovation. As America made the transition in the 20th century from a primarily agricultural to a primarily industrial nation, its funeral practices changed as well.[xi] Traditionally, the deceased was buried soon after death either in his or her farm or a local churchyard. A quick burial became impractical in the industrial age, however, because extended families no longer lived within a few miles of each other.[xii] A need thus arose for persons with expertise in the preservation of human remains and the planning of funeral arrangements. It was from this need that mortuary science and the modern funeral home emerged.
Despite their kinship, cemeteries and funeral homes were, from the Reconstruction era through the New Deal, always run as separate businesses in separate places.[xiii] Indeed, cemeterians and funeral directors have traditionally been rather suspicious of one another. It was not until 1934 that Hubert Eaton, a true American visionary who built California’s magnificent Forest Lawn cemetery, opened a funeral home on cemetery grounds. Eaton brought a funeral home to Forest Lawn because he refused to deal with the many funeral directors who demanded illegal kickbacks in exchange for sending business his way.
Upset with Eaton’s intrusion into their market, funeral directors pressured manufacturers not to supply Forest Lawn with caskets. This presented Eaton with a dire predicament because he could not get the state morticians board to issue him a license without an inventory of caskets. Eaton persevered, however, and found a supplier. The board nevertheless simply refused to issue the license and eventually did so only under threat of contempt sanctions from an appeals court.
Eaton’s story illustrates just how deep the roots of protectionism have descended in the funeral home industry.
Some Bad Apples Spoil the Bunch
The unscrupulous funeral directors with whom Eaton struggled had their counterparts in Maryland, too. In the years before World War II, Maryland legislators became concerned about fly-by-night hucksters who rolled into town with great fanfare, sold expensive funeral packages, and then were never heard from again. Rather than respond in a measured way, the General Assembly passed a law providing that only licensed funeral directors could own funeral homes.[xiv]
As noted earlier, there are three important exceptions to this rule. First, corporations that then owned funeral homes were permitted to stay in business under a grandfather clause.[xv] There remain 58 such corporate funeral homes in Maryland today and each one must employ a licensed funeral director to make the actual funeral arrangements.
Second, the surviving spouse of a deceased funeral director could own the decedent’s funeral home without becoming a funeral director him- or herself, though, again, employing a licensed funeral director is required.[xvi]
Finally, and more recently, the executor of a deceased funeral director is authorized to run the funeral home for at least six months, though, of course, only with a licensed funeral director managing. This exception is particularly broad because the executor could be almost any adult in the world with no expertise or insight into this industry whatsoever.
There’s Something About Maryland
These ownership restrictions have left Maryland out of step with the rest of the country. [xvii] The total number of funeral homes in Maryland is far lower than one would predict. Despite having about two percent of the U.S. population, Maryland has only about one percent of the funeral homes.[xviii] Furthermore, the nationwide ratio is one funeral home for about every 17,588 people, but in Maryland there is only one funeral home for every 24,520 people.[xix]
The closed nature of the Maryland funeral home industry becomes even clearer when comparing Maryland to its close neighbors New York, New Jersey, Delaware, Virginia, West Virginia and North Carolina, all of which have open markets in funeral home ownership. With their open markets resulting in more funeral homes, there is on average one funeral home for every 135 deaths.[xx] In Maryland, on the other hand, there is only one funeral home for about every 198 deaths. When understood in terms of their respective mortality rates, this means that there are nearly 50 percent fewer funeral homes in Maryland than in neighboring states.
This translates directly into a windfall for the funeral home cartel. The average American funeral home has revenue of $681,000 while the average Maryland funeral home has revenue of $887,000.[xxi]
Maryland is also an outlier when it comes to corporate ownership of funeral homes. Nationwide, corporations own about 87 percent of funeral homes and this 87 percent figure accounts for about 91 percent of total funeral home revenue.[xxii] Thus in an open funeral home market, as in markets for everything else, there is a strong tendency toward corporate ownership. This is unsurprising, of course, because owning a business as a corporation enables entrepreneurs to be much more efficient.
In Maryland, however, corporations own only 26 percent of the funeral homes.[xxiii] This is a strong signal that something is suppressing price-lowering competition.
Plaintiff Charles S. Brown is a resident of Maryland and the owner of Rest Haven Cemetery in Hagerstown, Md. He wants to own a funeral home in Maryland without becoming a licensed funeral director. He runs Rest Haven with his wife Pat and their son Eric, who is a licensed funeral director and runs the funeral home at Rest Haven that Charles built. Charles simply wants to own the funeral home he built in order to provide additional revenue to care for the gravesites in his cemetery when the cemetery itself is full. He has been at the forefront of a decade-long effort in the General Assembly to reform Maryland’s unfair funeral home ownership law.
Plaintiff Joseph B. Jenkins III, is a resident of Maryland and a third-generation licensed funeral director. He has served on the Washington, D.C., Board of Funeral Directors and the Maryland State Board of Morticians, and he was the youngest-ever president of the International Conference of Funeral Service Examining Boards. Joe’s dream is to own a cemetery/funeral home combination, but, because of its complexity, this plan isn’t a realistic possibility unless he can incorporate his funeral home on the same terms as the 58 special corporate licensees.
Plaintiff Gail Manuel is a resident of Maryland who wants to own a funeral home in Maryland without becoming a licensed funeral director. Together with her husband Doug, Gail owns and operates Trinity Memorial Gardens Cemetery and Mausoleum in Waldorf, Md. Neither Gail nor her husband is a licensed funeral director and neither wishes to become one. She would, however, like to open a funeral home on the grounds of Trinity Memorial Gardens to expand her own business opportunities and to better serve her many loyal families of customers. She simply wants to be able to do what existing corporate licensees, surviving spouses and executors are already allowed to do.
Plaintiff John Armiger is a resident of Maryland and owns Dulaney Valley Memorial Gardens and Mausoleum in Timonium, Md. The cemetery, which was founded by his father, has been in his family for 48 years. John, who is not a licensed funeral director, has for many years wanted to open a funeral home on the grounds of Dulaney Valley Memorial Gardens to ensure that the cemetery always has revenue for its proper upkeep. John believes deeply in honoring the sacrifices of our military dead and started Dulaney Valley’s renowned Memorial Day ceremonies.
Plaintiff Brian Chisholm is a resident of Florida and a licensed funeral director in Maryland. He owns Brian T. Chisholm Funeral Services, which is located at Dulaney Valley Memorial Gardens and Mausoleum in Timonium, Md. His company performs some, but not all, of the services of a traditional funeral home, often for much less. Brian would like to expand his business to include traditional funeral homes, but this is not realistic without being able to incorporate for that purpose because such a venture would otherwise be too complex. His inability to open these homes on the same terms as the special corporate licensees prevents him from expanding in the Maryland market and offering his goods and services to Maryland consumers.
The defendants in this case are the 12 members of the Maryland State Board of Morticians, each of whom is being sued in his or her official capacity. The Maryland State Board of Morticians, which is located in Baltimore, is responsible for regulating the funeral home industry. The Board is part of the Department of Health and Mental Hygiene.
Keeping Entrepreneurs Out
While Maryland’s funeral home ownership law may seem benign, it has turned out to be a disaster for both entrepreneurs and consumers.
It is extraordinarily difficult for a would-be entrepreneur like Charles Brown, who is not a licensed funeral director, to open a funeral home on the grounds of Rest Haven, the cemetery he owns in Hagerstown, Md. Realistically, he has two options. First, he can buy one of the 58 corporate licenses and run the funeral home at Rest Haven through a corporation. Unfortunately, buying one of these scarce licenses reportedly costs up to a quarter million dollars.[xxiv] Given the huge capital investment necessary just to get one of these special licenses, it’s no surprise that half of them are in the hands of a few big conglomerates like Service Corporation International of Houston, Texas. Apparently in the Maryland funeral industry, you get special privileges if you’re rich.
With an existing corporate license out of his price range because of their government-created scarcity, Charles’ only other option is to invest two years and considerable money in becoming a licensed funeral director. Among the many requirements of a mortuary science degree are an extensive knowledge of anatomy and expertise in embalming. Not only does Charles have no interest in learning or doing these things, they clearly aren’t necessary to owning a funeral home. After all, in Maryland 58 corporations, surviving spouses and executors do it all the time without being licensed funeral directors.
Now consider a different situation. Joe Jenkins is a licensed funeral director in Landover, Md. It’s Joe’s dream to open a cemetery/funeral home combination, but such a complex endeavor is only a realistic possibility if he can do it through a corporation. But under Maryland law, Joe is not allowed to own a funeral home as a corporation; he must own and operate it as an individual.
There are many reasons why it almost always makes much better sense to own a business through a corporation,[xxv] but at least two reasons stand out in the funeral home context. First, a corporation endures indefinitely, meaning that Maryland’s corporate funeral homes aren’t tied directly to the life of any particular owner.[xxvi] Not so for an individual funeral home owner who can only pass on his or her business to a spouse, not a child or anyone else, for that matter, who isn’t a licensed funeral director.
Second, corporations can raise capital by selling shares, making it easier for entrepreneurs to raise money.[xxvii] By contrast, a funeral director who simply owns his or her funeral home in an individual capacity must rely on personal loans to expand or upgrade and can’t easily sell off portions of his interest to raise money.[xxviii]
The importance of longevity to entrepreneurs like Charles and Joe cannot be underestimated. Like their fellow plaintiffs Gail Manuel and John Armiger, Charles and Joe want to open cemetery/funeral home combinations. Because cemeteries are forever, cemeterians feel a profound moral responsibility to their clients, both living and deceased, to ensure that their cemeteries are properly cared for always. The permanence of corporate ownership reassures them that their duty to their clients will be properly discharged even after they themselves are gone.
Burying the Consumer
Common sense and basic economics tell us that when competition goes down prices go up. The data bear this out. At least one set of experts calculates that the average funeral in Maryland costs about $800 more than it would if the market were more competitive.[xxix] With nearly 45,000 deaths annually, this means that the Maryland funeral home industry is overcharging consumers by millions and millions of dollars every year.[xxx]
Given that Maryland’s funeral home ownership law gouges consumers, it’s not surprising that only two other states have similar laws on their books.[xxxi] Over the past decade, Charles and Brian have worn out more than a few pairs of shoes walking the halls of the state Capitol in Annapolis to talk with legislators about a more sensible ownership law, one that will let them own funeral homes on the same terms as the current cartel. Just about everyone they have talked to agrees that the law needs to change.
As amazing as it sounds, not even the State of Maryland is completely behind this law. In 2004, during one of the many efforts to reform the law in the General Assembly, the Maryland Department of Health and Mental Hygiene, which oversees the State Board of Morticians, expressed its official opinion that the law harms consumers and the industry alike.[xxxii] In recommending that Maryland’s funeral home ownership law be repealed, the Department of Health and Mental Hygiene was reiterating what a special task force on the funeral home industry concluded as far back as 1996: the General Assembly should repeal the anti-competitive restrictions on funeral home ownership.[xxxiii]
The Federal Trade Commission likewise agrees that Maryland’s funeral home ownership law does nothing to help the public and is instead a blatant impediment to competition that injures the public by artificially raising funeral prices.[xxxiv] Finally, in separate studies, Professors Lynn Stout of the UCLA Law School and David Levy of the University of Baltimore also concluded that Maryland’s funeral home ownership restrictions do nothing but harm consumers.[xxxv]
Burying the Competition
So what’s going on? Given the conspicuous absence of support for this law among lawmakers, regulators and experts, why do reform bills keep dying year after year in Annapolis? How does such a bad law survive when the State health department, the Federal Trade Commission and nearly everyone else roundly condemns it?
It turns out that the law has one key constituency: the Maryland State Funeral Directors Association (MSFDA) and other beneficiaries of the funeral home cartel. When, for example, a reform bill called HB 795 was proposed in 2004 (the one the FTC said would be great for consumers), the MSFDA issued an “important notice” to its members to oppose any change. After going through the time-honored ritual of arguing that in the funeral industry—unlike every other industry—competition would be bad for consumers, the MSFDA finally expressed its true concern: “funeral directors will suffer” if Maryland’s funeral home cartel is broken up.[xxxvi] This “suffering,” of course, refers to the millions in windfall profits the funeral industry would lose if Maryland scrubbed this protectionist licensing law from its books. Like any monopolist, the MSFDA is dead set against any effort to eliminate a racket that enables its members to charge about 30 percent more than the average American funeral home.[xxxvii]
Of course, the MSFDA and likeminded funeral directors do not just sit on their hands and hope no one notices that the funeral home ownership law frustrates honest entrepreneurship and shakes down consumers for millions of dollars. To the contrary, they devote considerable sums to maintaining a key legislative blockade named Delegate Hattie N. Harrison of East Baltimore, chairperson of the House Rules Committee. [xxxviii] Over the years, she has received thousands from the MSFDA and other cartel beneficiaries. [xxxix] Through Delegate Harrison’s veto, the MSFDA and its members have been remarkably successful not only in defeating repeated efforts to dismantle Maryland’s funeral home cartel, but also in keeping the reform bills bottled up in Delegate Harrison’s committee, where they never see the light of day. The MSFDA is so brazen about imposing its anti-consumer, pro-industry goals through lobbying that on February 28 and March 1, 2006, it held its annual “PAC-a-Thon” to raise money for key legislators who do the industry’s bidding in Annapolis.[xl]
It is only because the MSFDA has subverted the legislative process that the General Assembly has not reformed a law that everyone else recognizes is bad for consumers, bad for entrepreneurs and good only for a single fat-cat interest group. After 10 fruitless years trying to persuade the state legislature to do the right thing on its own, the five plaintiffs have concluded that the only realistic chance of taking down Maryland’s funeral home cartel is in court.
The Importance of Economic Liberty
This lawsuit is not simply about eradicating an inefficient law that reduces competition and drives up prices. The plaintiffs in this case want nothing more than what has always been an essential part of the American Dream: the right to earn an honest living free from unreasonable or discriminatory government interference. Our history and traditions recognize that there is dignity in honest work and that pointless—or, worse, blatantly protectionist—government interference is an insult to this dignity. The right to engage in honest work is also fundamental to good citizenship because it is the cornerstone of independence and responsibility.
The demise of economic liberty began almost as soon as it achieved its greatest reach. After the Civil War, emancipated slaves counted economic liberty as among the most crucial of their new civil rights. To protect entrenched white businessmen from competition, however, Southern governments soon suppressed economic opportunities for their newest citizens by heavily regulating entry into trades and business. The national government tried to curtail these abuses by enacting the Civil Rights Act of 1866 and the Fourteenth Amendment to the U.S. Constitution, both of which sought to protect the economic liberty of all Americans by forbidding states from abridging the “privileges or immunities” of American citizenship.
But in the 1873 Slaughter-House Cases, a sharply divided U.S. Supreme Court read the Privileges or Immunities Clause out of the U.S. Constitution by a mere 5-4 vote. That decision gave states carte blanche to enact shameful Jim Crow-era laws that restricted economic opportunities for black Americans. In addition to oppressing their black citizens, the states also used their now-unchecked regulatory power to protect all sorts of entrenched interests. Relying on the line of cases going back through the New Deal to the Slaughter-House Cases, states continue to erect arbitrary barriers to entry into many trades and professions. As is the case with the Maryland funeral home ownership law, these onerous restrictions often far exceed those necessary to protect public health and safety, thus revealing their real purpose—the protection of cartels.
Claims of the Lawsuit
The protection of cartels is not a legitimate use of government power. The plaintiffs are challenging Maryland’s funeral home ownership law under four separate provisions of the U.S. Constitution.
First, the Due Process Clause of the Fourteenth Amendment includes protection of the right to earn an honest living, subject only to regulations that advance a legitimate public interest. This right has been part of our law for centuries, stretching back through pre-Colonial times to the ancient English common law. Maryland’s funeral home ownership law violates the right of Charles, Gail and John to earn an honest living because it imposes irrational licensing requirements that do nothing but harm the public and serve only the interests of the funeral home cartel.
Next, the Equal Protection Clause of the Fourteenth Amendment forbids the government from treating similar people differently without a good reason. Maryland’s funeral home ownership law violates the equal protection rights of Charles, Gail and John by denying them the opportunity to own a funeral home when surviving spouses, executors and the special corporate licensees are allowed to own funeral homes even though they are not licensed funeral directors. The law also violates the equal protection rights of all the plaintiffs by denying them the opportunity to own a funeral home on the same terms that apply to the special corporate licensees.
Third, the Privileges or Immunities Clause of the Fourteenth Amendment also protects the right to earn an honest living. The Maryland funeral home ownership law violates the privileges or immunities of citizenship of Charles, Gail, and John for the same reason that it violates their due process rights.
Finally, the Commerce Clause of Article One, Section Eight reserves to Congress the power to regulate the national economy, particularly the movement of goods and services across state lines. The purpose of the Commerce Clause was to create a free and open market between the states to ensure our shared economic prosperity. States violate the Commerce Clause when their local laws or regulations discriminate against out-of-state economic interests or unduly burden commerce between the states. Maryland’s irrational funeral home ownership law violates the Commerce Clause by making it unreasonably difficult for an out-of-state resident like Brian to do business in the Maryland funeral home industry.
The lead attorney in this case for the Institute for Justice is Clark Neily, who litigates economic liberty and school choice cases nationwide. Prior to joining the Institute, where he is now a senior attorney, Neily was an associate in the trial department of Thompson & Knight in Dallas. He will be joined by staff attorney Jeff Rowes, whose practice focuses on economic liberty and property rights.
Founded in 1991, the Institute for Justice has successfully represented entrepreneurs nationwide who fought arbitrary government regulation.
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Cornwell v. California Board of Barbering and Cosmetology
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Farmer v. Arizona Board of Cosmetology
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Armstrong v. Lunsford
This case successfully challenged Mississippi’s cosmetology regulations, which barred braiders from practicing their craft. Prior to receiving a ruling from the court, Mississippi’s legislature exempted braiders from the cosmetology licensing requirement in 2005. This result allows IJ’s client to continue to practice without obtaining a license.
Diaw v. Washington State Cosmetology, Barbering, Esthetics, and Manicuring Advisory Board
After being sued by the IJ’s Washington Chapter, Washington State’s Department of Licensing filed an “Interpretative Statement” exempting braiders from the State’s cosmetology licensing requirements.
Uqdah v. D.C. Board of Cosmetology
IJ’s work in court and the court of public opinion on behalf of D.C. hairbraiders led the District of Columbia to deregulate the cosmetology industry.
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[i] Md. Code Ann. Health Occupations § 7-101 et seq.
[ii] Md. Code Ann. Health Occupations § 7-310.
[iii] These two states are New Hampshire and Pennsylvania. N.H. Rev. Stat. Ann. § 325:15; 49 Pa. Code § 13.121.
[iv] Md. Code Ann. Health Occupations § 7-309. Section 309 states that corporations in the funeral home business as of June 1, 1945 are permitted to own funeral homes. The Institute for Justice has documents on file showing that there are 58 such corporations still in business.
[v] Md. Code Ann. Health Occupations § 7-308. A surviving spouse must take a written examination within six months, but doesn’t need to become a licensed funeral director. A deceased funeral director’s children, however, are ineligible for this exception.
[vi] Md. Code Ann. Health Occupations § 7-308.1. Strictly speaking, of course, an executor does not own the decedent’s funeral home. The executor is, however, able to operate the funeral home in a capacity analogous to ownership for six months.
[vii] Thomas Firey and David Harrington, Funeral Services Industry Making a Killing in Annapolis, The Baltimore Sun, February 1, 2006, at 17A.
[viii] Md. Code Ann. Health Occupations §§ 7-302, 303 & 307.
[ix] Acts 1902 Ch. 160 § 8. The current licensing requirement for funeral directors is codified at Md. Code Ann. Health Occupations § 7-307.
[x] A mortician (sometimes called an undertaker) specializes in the sanitary preparation of human remains, usually through the embalming process. To be licensed in Maryland, a mortician must earn a two-year degree in mortuary science and serve an apprenticeship. Md. Code Ann. Health Occupations § 7-303. Though funeral directors are not necessarily morticians, it is the norm in Maryland and elsewhere for funeral directors to be licensed morticians as well. In fact, the terms “mortician” and “funeral director” are now synonymous.
[xi] Though set in the early 20th century, traditional American burial practices, including the construction of a homemade casket and the absence of embalming, are depicted in William Faulkner’s classic As I Lay Dying.
[xii] For an extended discussion of the advent of the modern funeral home industry, see John F. Llewellyn, A Cemetery Should Be Forever 77-79 (1998).
[xiii] Id. at 80-82.
[xiv] Acts 1937 Ch. 503. The current version of this law is found at Md. Code Ann. Health Occupations §§ 7-307 & 310.
[xv] The grandfather clause was expanded slightly in 1945. Acts 1945 Ch. 741. The current version is codified at Md. Code Ann. Health Occupations § 7-309.
[xvi] Md. Code Ann. Health Occupations §§ 7-308 & 310.
[xvii] Only two other states, New Hampshire and Pennsylvania, have this sort of arbitrary and economically inefficient law on their books. N.H. Rev. Stat. Ann. § 325:15; 49 Pa. Code § 13.121.
[xviii] U.S. Census Bureau 2000 Population Survey put the U.S. population at 281,421,906 and Maryland’s population at 5,296,486.
[xix] These figures were derived from the source cited in footnote 20.
[xx] These figures are reasonable estimates based on comparing the total number of deaths in each state in 1999 against the total number of funeral homes in each state in 2002. The detailed mortality data are maintained by the U.S. Centers for Disease Control. http://www.cdc.gov/nchs/datawh/statab/ unpubd/mortabs/gmwk8_1.htm. The data on funeral homes are maintained by the U.S. Census Bureau and can be found by doing a state-by-state search using the code for funeral homes (NAICS Code 8122101). http://factfinder.census.gov/servlet/FindEconDatasetsServlet? _ caller=geoselect&_ts=158250734957
Of the six states considered in comparison to Maryland, New Jersey had the highest deaths/funeral homes ratio of 159. West Virginia had the lowest at 90. Maryland was thus considerably higher than the next closest state and more than double the state with the lowest ratio.
[xxi] See footnote 37.
[xxii] U.S. Census Bureau Economic Survey Data 2002 shows that there were 15,912 funeral homes nationwide in that year, of which 13,902 were corporations. Total funeral home revenue was $10,847,384,000 and total corporate revenue was $9,923,190,000. http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_ name=EC0200A1&-geo_id=&- _skip=300&-ds_name=EC0281SSSZ7&-_lang=en
[xxiii] U.S. Census Bureau Economic Survey Data 2002 states that in that year there were 216 funeral homes in Maryland with total revenues of $191,587,000. http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_ name=EC0200A1&- geo_id=04000US24&-_skip=600&-ds_name=EC0281SLLS1&-_lang=en
[xxiv] This figure comes from discussions with the five plaintiffs and others in the Maryland funeral industry.
[xxv] For a general discussion of the attributes and advantages of the corporate form, see Stephen M. Bainbridge, Corporation Law and Economics 2 (2002). See also Affidavit of Professor Lynn A. Stout of the UCLA Law School at 6 (analyzing the funeral home ownership law in the Maryland Morticians Act) (On file with the Institute for Justice).
[xxvi] Stout Affidavit, supra, note 14 at 8.
[xxvii] Id. at 4-6.
[xxviii] A funeral director’s only option is to enter into partnership with another funeral director. Md. Code Ann. Health Occupations § 7-401.
[xxix] Thomas Firey and David Harrington, Funeral Services Industry Making a Killing in Annapolis, The Baltimore Sun, February 1, 2006, at 17A.
[xxx] Even under a very conservative set of assumptions, for example that only 25,000 deaths a year (56 percent of deaths in Maryland) result in a funeral home burial, the Maryland funeral industry is overcharging consumers by twenty million dollars a year.
[xxxi] See note 18.
[xxxii] Letter, dated February 18, 2004, from Secretary Nelson Sabatini to the Hon. John A. Hurson, Chairman of the House Health and Government Operations Committee. (On file with the Institute for Justice.)
[xxxiii] This report is on file with the Institute for Justice. The Institute for Justice also has a copy of the unpublished minority report, which condemned the task force, particularly its chairman, as being heavily biased in favor of the funeral home industry, which makes the task force’s recommendation all the more remarkable.
[xxxv] These reports are on file with the Institute for Justice.
[xxxvi] This notice, which was issued by MFDA president John Aymold Jr. on November 24, 2004, is on file with the Institute for Justice. The underline is in the original and is the only underlined portion of the document.
[xxxvii] U.S. Census Bureau Economic Survey Data 2002 shows that total funeral home revenue in Maryland that year was $191,587,000, which breaks down to about $887,000 in revenue per funeral home. http://factfinder.census.gov/servlet/IBQTable? _bm=y&-fds_name=EC0200A1&-geo_id=04000US24&- _skip=600&-ds_name=EC0281SLLS1&- _lang=en Total funeral home revenue was $10,847,384,000 for the nation’s entire 15,912 funeral homes, which breaks down to about $681,000 in revenue per funeral home. http://factfinder.census.gov/ servlet/IBQTable?_bm=y&-fds_name=EC0200A1&-geo _id=&-_skip=300&-ds _name=EC0281SSSZ7&-_lang=en
[xxxviii] Matthew Mosk, Maryland Mortuary Law Has Guardian Angel: delegate thwarts efforts to ease limits, Wash. Post January 4, 2006, at B5.
[xxxix] Ibid, see also http://www.elections.state.md.us/campaign _finance/database/index.html for data on campaign donations in Maryland.
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