CHARLESTON, W.Va. — State officials may move responsibility for licensing funeral homes to the Secretary of State’s office under a bill prompted by a fraud investigation.

Funeral homes have been regulated by their peers through the state Board of Funeral Examiners.

Earlier this year, a state legislative report concluded the board acted more to protect a funeral home director than the needs of the public in a fraud case over cashing in prearranged funeral plans for people who hadn’t died.

The report focused on how the state Board of Funeral Examiners dealt with the case of Chad Harding, a funeral home director in Poca.

The state Legislative Auditor’s office, in its report, recommended the Legislature consider terminating the board and placing the regulatory function under another agency.

The Joint Committee on Government Operations voted Tuesday to support a bill that would trigger that move.

Jennifer Greenlief, counsel for the committee, said she’d discussed the possible move with the Secretary of State’s office, which was cooperative. She said that agency already oversees the regulation of private detectives.

Gary Howell

“I think it’s a very good move,” said Gary Howell, co-chairman of the committee. “There were a lot of issues. It’s a very small industry in the state. There’s a lot of people who knew other people and sometimes they looked the other way because they may have had a relationship with the person. That eliminates that.”

The problems with Harding Family Group, a funeral and cremation company in Poca, Putnam County, became apparent in August, 2015, when Homsteaders Life Insurance Co. of Iowa filed a federal lawsuit claiming Chad Harding committed fraud against 111 consumers with preneed policies.

The lawsuit claimed Harding had filed false death claims and claims of providing funeral services prior to the actual deaths of those who held the policies — receiving $900,000 by cashing in the claims.

By August, 2016, a federal judge had ruled in favor of the insurer and against Harding and his wife for about $2.8 million, concluding that Harding had violated the Racketeer Influenced and Corrupt Organizations Act, which provided for triple damages.

Dealings between Harding and the Board of Funeral Examiners stretched out after that.

The Legislative Auditor concluded that the board received a copy of the federal complaint about Harding in August 2015 but didn’t begin discussing Harding’s actions until March 2016.

An assistant attorney general had told the board during a March, 2016, meeting that it could not take disciplinary action against Harding without a complaint setting forth the violation of the funeral service laws.

But the report from the Legislative Auditor concluded that state boards may suspend a license prior to a hearing if the licensee constitutes an immediate threat to the public.

A timeline laid out in the audit shows that the board first contacted Harding by letter in late September, 2016. A followup letter sent in November, 2016, advised Harding there was probable cause to believe he had violated the West Virginia Funeral Services Act.

On Dec. 22, 2016, Harding filed a petition in Kanawha Circuit Court to try to stop the board’s disciplinary action. Harding stated that “he will suffer irreparable harm if the disciplinary hearing is allowed to proceed.” Harding’s motion was later dismissed.

A disciplinary hearing for Harding that had been repeatedly delayed was eventually canceled, and the board voted 3-2 to accept a settlement proposal that called for Harding’s funeral director and crematory licenses suspended for six months, followed by probation for another six months.

By this past July 20, three members of the board resigned.

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