A state law that limits funeral home ownership to licensed funeral directors is being challenged by an Arlington, Va.-based public interest law firm on behalf of five entrepreneurs, who say Maryland's law restricts competition and hurts consumers by driving up funeral costs.
The Institute for Justice filed a lawsuit yesterday in U.S. District Court in Baltimore against state regulators. The organization, a nonprofit that describes itself as a libertarian public interest law firm, contends Maryland's law is unconstitutional because it infringes on its clients' right to earn a living without government interference.
"This is like saying that you have to be a pilot to own an airline; there's no reason why you have to be a licensed funeral director to own a funeral home," said Jeff Rowes, an attorney with the institute, which often challenges government regulations.
The law exempts the holders of a limited number of corporate licenses that have been either handed down or sold. Fifty-eight of the state's 220 funeral homes are owned by holders of the corporate licenses.
"What we have going on in Maryland is a cartel of licensed funeral directors and other big players who have the money and connections to get their hands on these [corporate] licenses," Rowes said. "If you don't belong to this cartel, you can't open a funeral home in Maryland, and that leads to disastrous consequences for the consumer and entrepreneur."
Members of a state funeral directors group defended the law, saying it protects consumers who expect funeral home owners to be licensed, and small, family-run businesses.
"Funeral homes for the most part have been small businesses, family-owned operations, and this law has protected those small family-owned businesses from larger, deeper-pocketed competitors from coming in and opening a funeral home on every street corner," said John O. "Jack" Mitchell IV, president of the Maryland State Funeral Directors Association and vice president of the Mitchell-Wiedefeld Funeral Home in Towson.
The federal lawsuit was filed on behalf of four Maryland residents and a Florida resident. The defendants are the 12 members of the Maryland State Board of Morticians, a division of the state Department of Health and Mental Hygiene, which regulates the funeral home industry.
Under the Maryland Morticians Act, a funeral home can be owned only by a licensed funeral director, a corporation that held a license as of June 1945 or the surviving spouse of a deceased funeral director.
