The $100 Referral Card
Ridgeway Funeral Home, licensed at two locations, has a written 'community partner agreement' with Cedar Glen Assisted Living, a 60-bed facility. Under the agreement, Ridgeway pays Cedar Glen $1,500 a year as an 'education sponsorship' and gives a $100 gift card to whichever Cedar Glen staff member first calls Ridgeway's dedicated cell phone after a resident dies. The agreement says the payments are 'marketing support, not compensation for referrals.' Ridgeway's owner tells a newly hired licensed funeral director, Ms. Okafor, to deliver the gift cards and to keep a monthly log titled 'referral tracking.' The firm's preneed counselor also hosts monthly 'Medicaid planning' seminars at Cedar Glen. A competing funeral home has complained to the Minnesota Board of Mortuary Science, and an investigator has requested Ridgeway's records. Ms. Okafor has delivered four cards and signed the log twice.
1. Does this arrangement violate the Minnesota Funeral Practice Act? Distinguish it from marketing that is permitted.
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Likely yes. This is the classic prohibited referral arrangement, and the labels do not save it.
The Act prohibits giving or receiving, directly or indirectly, compensation or other consideration for securing funeral business. Test by substance:
- Is value flowing to people in a position to steer deaths to Ridgeway? Yes: $100 per first call and $1,500 per year.
- Is payment tied to referrals? The gift cards plainly are, and the annual payment looks like a retainer when paired with the per-death cards and a log literally titled 'referral tracking.'
- Does the contract's disclaimer control? No. Calling it 'marketing support, not compensation for referrals' is a label; the board looks at the exchange.
What is permitted: ordinary advertising, a booth at a health fair, genuine educational programming with no per-referral payment, and a lawful calling agreement that tells facility staff whom to call without compensation tied to the referral. The dividing line is whether payment is tied to individual deaths or business volume. The Medicaid seminars are lawful standing alone, but if attendance lists feed preneed solicitations with the facility's involvement and payment, that becomes part of the pattern.
2. What is Ms. Okafor's exposure, and what should she do now?
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Ms. Okafor is licensed, and 'the owner told me to' is not a defense to prohibited conduct. Delivering cards and signing the log is participation, and her signature is the evidence the board will rely on.
What she should do:
- Stop delivering cards immediately and put her objection to the owner in writing; keep a copy.
- Preserve the log, the agreement, and any texts. Do not alter or discard them.
- Recognize her own exposure: the prohibition covers giving consideration as well as receiving it, so she can be disciplined even though she received none of the money.
- Consider a self-report attaching her written objection; that is mitigation. She should have counsel before speaking with the investigator.
If she continues, she risks a reprimand or suspension early in her career for conduct the board treats as a consumer-protection violation, and she will be the easiest person in the firm for the board to prove its case against. Following an unlawful instruction does not transfer the risk to the person who gave it.
3. What are the consequences for Ridgeway and its establishment licenses, and what should the firm do with the records the investigator requested?
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The firm's exposure is broader than any individual's:
- The board can subpoena the community partner agreement, the referral log, gift-card receipts, and the seminar records. The investigator's request is not optional, and the firm should route it to counsel while preserving everything.
- Sanctions can include civil penalties, suspension or revocation of the funeral establishment licenses at both locations, and discipline of the licensee in charge.
- The $1,500 'education sponsorship' is the item that most resembles a disguised retainer. If the firm cannot document real education worth $1,500 with no connection to referrals, the board will infer it was paid for access.
- Related exposure exists under Medicare and Medicaid inducement rules and assisted living facility regulations, plus possible civil claims by competitors.
What to do now:
- Terminate the gift-card program and the per-death element in writing and get a signed termination.
- Replace any continuing relationship with a disclosed calling agreement that carries no compensation tied to referrals, or end it.
- Reconcile every card and payment and preserve, rather than shred, the records.
- Consider a self-report with a corrective plan and counsel. Prompt self-correction is treated very differently from a pattern of concealment.
Destroying the log during an investigation is its own violation and is usually prosecuted alongside the original one.