By Thomas A. Parmalee
The Luzerne County Funeral Directors Association recently filed a lawsuit against the Pennsylvania Funeral Directors Association, alleging that the association wrongfully refused to hand over financial records.
The lawsuit was filed Oct. 2 in the Court of Common Pleas for Dauphin County.
According to the lawsuit, the secretary of the Luzerne County Funeral Directors Association, Thomas Wiedlich, asked the PFDA’s board of directors in April 2024 for it to hand over all check registers for association business for 2023 and 2024. The secretary also wanted to know the compensation for all PFDA staff.
The request came after the LCFDA heard about a number of what it describes as concerning developments, including the resignation of Michael L. Hacker as PFDA president on Jan. 5, 2024, and the departure of James Erikson, former chief operating officer of PFDA – as well as the departure of several PFDA employees over a multi-year period, according to the factual background section of the lawsuit.
Although the LCFDA’s members are due-paying members of the PFDA, the request was denied.
In its response to the request, which came in a form of a letter, the PFDA noted, “compiling documentation of every receipt and disbursement over the last 16 months is not as simple as handing you a checkbook, and would consume an unreasonable amount of staff time and resources. In addition, providing you with a list of receipts and debits, without any context or additional information, is likely to raise more questions than it answers. We believe your requests are overly broad and not related or proportionate to the purposes stated in your letter.”
The PFDA did, however, offered to provide the last five years of its Form 990 as well as its 2023 audited financial statements.
That, however, did not satisfy the LCFDA, which proceeded to have its legal counsel write to Christopher Calvey, then the president of PFDA, requesting the 2023 and 2024 expenditures of Kathleen Ryan, formerly the executive director and general counsel of the PFDA, for 2023 and 2024 – as well as monthly financial statements, balance sheets and income and expense comparisons.
In tandem with that request, the LCFDA also proposed that an independent auditor conduct a financial audit of the records to determine if Ryan’s expenditures and “the hiring of her relatives were business-related and in conformance with PFDA’s Expense Reimbursement and Conflicts of Interest Policy.”
The letter, sent by Terese M. Connerton with The Law Office of Terese M. Connerton, which is a boutique firm that specializes in ERISA, employee benefits, employment and nonprofit law, noted that LCFDA board members had received additional information from individuals regarding “financial irregularities” principally involving Ryan, then the executive director and general counsel of the PFDA. The letter noted, “Essentially, the message that has been conveyed to LCFDA Board members is that the PFDA and Unichoice Boards have not exercised necessary oversight of the Executive Director and the expenditures of PFDA’s assets and that the office environment is toxic.”
Her letter went on to request the PFDA’s board to conduct “a limited and discrete investigation into the expenditures of Ms. Ryan in 2023 and 2024 to determine if they were business related and in conformance with PFDA’s accountable Expense Reimbursement Policy.”
According to a lawsuit that the LCFDA has filed against the PFDA, its request was denied with PFDA’s counsel informing the LCFDA that it had “failed to provide any credible basis for the gossip-fueled fishing expedition.”
Additional attempts by LCFDA and its counsel in obtaining the records it sought were not successful, with the PFDA arguing that requests failed to comply with statutory requirements governing such demands.
The PFDA also noted that “it is unclear whether the demand is being made by a member” and further noted that one such demand did not describe with reasonable particularity the records to be inspected and that it “is not for a proper purpose” and “is not made in good faith.”
In its response to one of the requests, the PFDA stated that “LCFDA’s demands have reached the level of harassment and bad faith.”
In the “cause of action” section of its lawsuit, the LCFDA notes that state statute provides that nonprofit corporations shall keep minutes of all proceedings and appropriate complete and accurate books or records of account and that a member has “the right to examine during the usual hours for business for any proper purpose, the membership register, books and records of account, and minutes of and consents in lieu of meetings of meetings by, the incorporators, members(and) directors … and to make copies … thereof.”
The cause for action further notes that LCFDA’s counsel “made an explicit demand on PFDA’s counsel (as he requested) for books and records to ascertain whether Kathleen Ryan misused PFDA’s assets for private inurement and nonbusiness related purposes. The records of account were clearly delineated. The PFDA’s counsel never answered the request.”
The LCFDA contends that “PFDA’s absolute refusal to turn over any records of account when LCFDA’s counsel explained why they sought the records (limited by a reasonable time frame) was unjustified, even if PFDA’s counsel believed that PFDA had adequately responded verbally to Plaintiffs’ accusations against Kathleen Ryan.”
The plaintiffs are asking the court to order the PFDA to comply with an inspection of PFDA’s minutes and records as requested and that the court rules that its inspection is for a proper purpose.
The LCFDA is also seeking reasonable attorney fees based on PFDA’s “dilatory, obdurate and/or vexatious conduct” as well as any further legal and equitable relief if deems proper.
The PFDA Responds
FuneralVision.com reached out to legal counsel with the PFDA asking for it to respond to the lawsuit.
A statement approved by the PFDA board is below in its entirety:
More than 18 months ago, members of the Luzerne County local association raised questions about personnel changes at PFDA and passed along gossip about association expenses. PFDA leadership met with Luzerne County to answer these questions and address these rumors. PFDA produced association tax returns and offered to make other confidential financial records available as long as the recipients agreed to maintain their confidentiality. These records included the audit, recently completed by an independent outside auditor, which PFDA conducts every three years.
The PFDA board regularly reviews association financial statements, and, in light of Luzerne County’s questions, the PFDA executive board took a comprehensive second look at expenditures to ensure their propriety. And, at its 2024 statewide convention, PFDA held an hour-long breakout session for Luzerne County members and any other members who wished to attend, where the full PFDA board, its then-executive director, and current executive director addressed the issues raised by Luzerne County and answered questions from the audience.
Despite the fact that PFDA directly, transparently, and repeatedly addressed their concerns, Luzerne County continued to make a series of demands for an ever-expanding list of records to conduct their own audit of the association. PFDA explained the proper procedure that needed to be followed for these requests, but Luzerne County refused to follow that procedure. Most importantly, Luzerne County never provided a justification for their sweeping demands or the substantial time, expense, and disruption that they would have caused, and so PFDA declined their requests.
Without warning, certain Luzerne County members filed a lawsuit to continue to press their demands. PFDA is confident in the merits of its position and looks forward to resolving the matter, so that we can focus on advocating for our funeral home members and enhancing the quality of service to grieving families.
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