A judge has ordered the owners of a Poca-based funeral home to pay nearly $3 million to an Iowa-based insurance company for selling and cashing in on pre-need funeral arrangements for more than 100 people who weren't actually dead.
Chad and Billie Harding must pay three times the amount they bilked from Homesteaders Life Insurance Co., Chief U.S. District Judge Robert Chambers ruled Monday, as damages can be tripled under the Racketeer Influenced and Corrupt Organizations Act.
Chambers granted the insurance company default judgment in June, after the funeral home's owners and their lawyer, Jeff Woods, of Scott Depot, failed to respond to court orders and comply with court rules.
"Tacitly, Defendants have refused to participate in almost every part of this case, which is based on fraud in the funeral home business," Chambers wrote in an order this week.
For nearly a decade, between 2005 and 2013, the Hardings cashed in on about $900,000 worth of pre-need funeral contracts for 111 people who weren't dead, according to the lawsuit. For each submitted death claim, Gatens-Harding received payments ranging from $1,448 to $14,565, according to the lawsuit, which was filed in Huntington in August 2015.
Chambers awarded nearly $2.8 million in damages, about $69,000 in attorney's fees and roughly $58,000 in pre-judgment interest on the damages under the West Virginia fraud claim. Charleston lawyers Alexander Macia and Keith Fisher represent Homesteaders.
Prearranged plans are generally viewed by consumers as beneficial because they free families from financial and other burdens that arise upon the passing of a loved one. For a funeral home to receive payment, it is required to submit a death claim to the insurance company for the amount of death benefits available on a consumer's policy. Once a claim is submitted, the funeral home certifies the date of death and that the funeral services have been provided. Once the insurance company receives the funeral home's certification, it can release the funds.
Woods responded to the lawsuit and denied the allegations in September 2015, but never filed anything else until last month.
In granting default judgment, Chambers gave the Hardings time to file documentation showing why they shouldn't have to pay. The defendants didn't respond, but last month Scott Depot lawyer Jeff Woods, who represents the Hardings, filed a motion to waive payment of plaintiff's expenses.
"Now that costs and fees have been levied against them, Defendants and their Counsel respond in defense," Chambers wrote Monday.
Woods listed other lawsuits and litigation the Hardings are involved in to explain the lack of participation in the case. West Virginia Attorney General Patrick Morrisey's office is suing Gatens-Harding in Kanawha Circuit Court, claiming the funeral home's actions violated the state's Consumer Credit and Protection Act and the state Funeral Contracts Act.
Also, people who loaned Chad Harding money to purchase the funeral home are trying to remove him and take over the business. Mack Johnson and Leonard Johnson Funeral Homes also filed a lawsuit against the Hardings, who, in turn, sued them back claiming they are intentionally damaging their business relationship. Those cases are pending in Putnam Circuit Court.
Plus, Chad Harding is the target of a potential criminal investigation, Woods told the judge last month.
Instead of ignoring deadlines in the case, Woods could have asked that the case be put on hold until the criminal charges were resolved, according to the judge's order.
"None of Defendants proffered reasons substantially justifies their blatant noncompliance," the judge wrote. "The Court is sensitive to Defendants' circumstance of defending an onslaught of suits. Defendants' manner of prioritizing resources to deal with that onslaught, however, inappropriately shifted costs onto Plaintiff and this Court."
Reach Kate White at kate.white@wvgazettemail.com, 304-348-1723 or follow @KateLWhite on Twitter.