A federal court jury in St. Louis recently awarded $491 million in damages in a lawsuit sparked by the collapse of a Missouri-based company, National Prearranged Services Inc., that sold prepaid funerals.
NPS promised customers across the country that money from prearranged funeral contracts would be held in trust. Claims were supposed to be funded by life insurance policies payable to the trust but federal authorities found that company officers and others spent some of the money on lavish lifestyles instead.
Beginning in the early 1990s, liabilities exceeded trust assets, the plaintiffs said, and NPS could pay for funerals only by using cash from new contracts. More than 97,000 victims — customers, funeral homes, insurers and financial institutions — lost money, federal officials have said.
The suit was filed by state life and health guarantee associations and a special receiver set up to wind down NPS. After a five-week trial, the jury awarded $355.5 million in compensatory damages and $35.5 million in punitive damages against PNC Bank and $100 million more against Forever Enterprises, the latter being a defunct family-owned holding company.
PNC was not involved with NPS but was a defendant as a successor to Allegiant Bank, a former trustee of NPS assets.