Effort to keep funeral prices low suffers setback

The Jewish community was dealt a major blow in its efforts to keep funeral prices low in the Washington, D.C., area but has not yet given up the fight.

The Federal Trade Commission decided last week to include the Hines-Rinaldi Funeral Home in the proposed $1.4 billion acquisition by Service Corporation International, the country’s largest funeral home. Hines-Rinaldi of Silver Spring has a contract with the Jewish Funeral Practices Committee that enables anyone requesting it to have a relatively inexpensive Jewish funeral.

Under the contract, a Hines-Rinaldi funeral costs about $4,000 less than an average funeral in this area. It includes a simple pine box casket with a Jewish star and removes much of the grieving family’s stress as the funeral home does not pressure anyone into purchasing extras or paying for anything during the 30-day mourning period.

That contract expires in June 2014. However, the Jewish Funeral Practices Committee can unilaterally decide to extend the contract for two more years, with a minor increase in cost to match the federal Consumer Price Index, explained Bob Hausman, president of the committee. Therefore, he noted, the $1,820 agreed-upon price for a Jewish funeral basically remains in effect for 2 1/2 more years.

After that, the price could easily skyrocket as Hines-Rinaldi may not be permitted to work out a similar agreement with the Jewish Funeral Practice Committee once it is owned by SCI.

Hines-Rinaldi currently is owned by Stewart Enterprise, which is the company that SCI plans to acquire.

However, the FTC did recognize that the merger would decrease competition for the Jewish community in the D.C. area as well as 58 other communities throughout the country. Therefore, it ordered SCI to sell 53 funeral homes and 38 cemeteries before the acquisition could go through.

“The FTC, along with numerous state attorneys general, did an intensive investigation covering dozens of local funeral and cemetery services markets that were affected by SCI’s acquisition of Stewart, including how the deal would likely affect competition related to specific ethnic and religious populations in these localities. We believe that, as a result of the divestitures we’re requiring the companies to make, consumers in these markets will continue to have access to competitive funeral and cemetery services,” explained FTC spokesman Peter Kaplan.

Rather than keep Hines-Rinaldi out of the merger, SCI agreed to rid itself of the Edward Sagel Funeral Direction, with the intent that the Rockville funeral home will keep competition available in this area.

David Balto, an anti-trust lawyer in D.C. who is representing the funeral practices committee, explained that the FTC considers that with Sagel out of the acquisition, the D.C. area now has a new competitor in the market. But, with other Jewish funeral homes in the area, there is little incentive for Sagel to enter into a low-price agreement with the Funeral Practices Committee, Balto noted.

“We are disappointed,” Hausman said, adding that through the many conversations with the FTC on this matter, “they never gave us a hint” of their decision.

Whether or not Sagel will work with the Jewish community “remains to be seen,” he said. He called SCI’s decision not to acquire Sagel “a throw away” which wouldn’t really affect SCI’s ability to profit from the merger.

A Sagel spokesman told Washington Jewish Week that the company had no comment at this time.
Balto said Sagel funeral homes is more of a storefront than a full-service operation and questioned whether it could provide all that the Jewish community requires for a proper burial.

SCI “picked what’s essentially a paper tiger,” Balto said, noting that Sagel’s market share in the D.C. area has dropped from about 25 percent in 2011 to about 11 percent now.

Hausman agreed that “Sagel has not been much of a factor” with the Jewish Funeral Practices Committee.

However, B’nai Israel Congregation and at least one other local congregation have worked with Sagel in the past. Marc Barinbaum, bereavement committee chairman at B’nai Israel and also a board member with the funeral practices committee said it was too soon to know how the FTC ruling will affect his congregation. He did note that obtaining a basic Jewish funeral from Sagel through his Rockville synagogue costs almost $5,000.

Under the terms of the FTC ruling, there is a 30-day window for public comments, which ends Jan. 22. Both Hausman and Balto said they would voice their opposition to the ruling during that time.
Balto noted that approximately 1,200 letters were sent to the FTC from the Jewish community here, and he hoped many of those writers would do so again. “The level of public advocacy was unprecedented,” he said. “We called on the FTC’s conscience. I think we are going to call on that again.”

Hines-Rinaldi agreed to offer low cost funerals to the Jewish community so it could break into the Jewish market, Balto explained.