Court dismisses two ‘body brokers’ and hospice from mortuary lawsuit

Jerry Espinoza Jr. ties a ribbon of remembrance around a tree last September, during a memorial ceremony for people whose remains were allegedly sold without permission of their next of kin, through Sunset Mesa Funeral Directors. (Katharhynn Heidelberg/Montrose Daily Press file photo)

Two “body buyer” defendants and a regional hospice have been dismissed from a multi-party suit arising out of an investigation into the former Sunset Mesa Funeral Foundation and its associated entities over the alleged mishandling of human bodies.

A Dec. 31 order dismisses Axogen Corporation and Innoved Institute LLC from a lawsuit, captioned Espinoza, et. al. The litigation was last year filed by more than 60 individuals who allege Sunset Mesa, owner Megan Hess, and the associated Donor Services, Inc., harvested and sold their deceased loved ones bodies or body parts without their knowledge or consent.

A separate order from Dec. 31 dismisses HopeWest Hospice as a defendant, as well.

The Espinoza suit is among a half-dozen to be filed after the FBI in 2018 served search warrants at the now-closed Sunset Mesa Funeral Home and Crematory. At last report, the U.S. Attorney’s Office was reviewing the evidence gathered and no charges had been filed. 

Hess denies all allegations associated with the investigation and lawsuits.

The state of Colorado separately alleged Hess had returned cement mix instead of ashes, or the incorrect cremains, to families; the allegations formed the basis for an eventual agreement for her to permanently surrender her funeral home and crematory registrations. The stipulation did not require Hess to admit any of the allegations.

Axogen and Innoved were two of the entities said to have purchased human tissue from Hess via Donor Services Inc.

Although District Judge Mary Deganhart found Axogen is not, as it claimed, entitled to immunity under the Uniform Anatomical Gift Act, she dismissed the negligence claims brought against it. 

Axogen argued it did not owe the Espinoza plaintiffs a legal duty of care — it was a “downstream” recipient of the remains and Colorado law does not impose legal duty on such entities. Axogen also contended it was too far removed from the allegations for the plaintiffs to be able to recover damages for emotional distress.

The judge rejected the plaintiffs’ counter argument, which held that they were also seeking recompense for economic injury and property damage. The economic injury claim is based on the allegation that Hess breached her contract by not providing the agreed upon cremation services; however, the claim lacked an allegation that Axogen had direct involvement with “Hess’ appropriation of the decedents’ remains,” Deganhart wrote.

She also found the property damage claim was not supported, because there is “no property right in a dead body.”

The judge further found that Axogen did not violate provisions of the Colorado Mortuary Science Code and similar statute because it does not operate as a crematory or embalm human remains.

The outrageous conduct claim against Axogen was also dismissed because the claim did not meet legal standards. The judge found similarly that plaintiffs did not raise a plausible claim for civil conspiracy or aiding and abetting — there was no evidence presented that Axogen conspired with Hess, and no plausible allegation that the company assisted in misappropriating bodies, the judge said.

The racketeering claim raised under the Colorado Organized Crime Control Act fails as a matter of law, Deganhart’s order also said: the facts alleged in the complaint support only “a vague inference that Axogen may have passively had knowledge that Hess was engaging in fraud,” Deganhart found.

The same order dismisses the claims against Innoved Institute, finding that there was no showing that Innoved worked with another to commit a wrong against the plaintiff or that it engaged in a pattern of racketeering/civil conspiracy.

Deganhart found there was not enough evidence presented that Innoved was aiding and abetting, or that Innoved bore a legal duty to the plaintiffs.




The Espinoza litigants in their outrageous conduct claim accused HopeWest of acting in concert with Sunset Mesa by transferring their loved ones’ bodies there without consent of next of kin, or of recommending Sunset Mesa despite knowing about a “fraudulent scheme” there.

HopeWest filed for dismissal, saying it did not have actual knowledge of the alleged scheme.

Deganhart found the plaintiffs had not alleged a plausible claim on which a court might grant relief. The order indicates the complaint is light on factual allegations, which with respect to the hospice are limited to five of the dozens of plaintiffs whose relatives’ remains were taken to Sunset Mesa.

“There are no factual allegations that HopeWest had direct involvement in the scheme to sell the decedents’ remains and sell them without consent,” Deganhart wrote in her Dec. 31 order.

The judge said the same concerning the allegation that the hospice should have known about illegal activities at Sunset Mesa. “Likewise, there is no allegation that HopeWest mistreated any of the remains, only that HopeWest may have directed the remains of the family members to Sunset Mesa for cremation services,” Deganhart said.

She was therefore unable to conclude there were any plausible allegations to meet legal standards necessary to support the outrageous conduct claims against HopeWest.

The judge also dismissed unjust enrichment claims, finding Colorado law doesn’t recognize a property interest in deceased remains.

Deganhart further dismissed the claim that HopeWest aided and abetted Sunset Mesa, because the allegations in that regard were conclusory.

“That HopeWest may have directed remains or family members to Sunset Mesa, without more, does not support the claim for aiding and abetting,” the order states.

The judge similarly dismissed the civil conspiracy and Colorado Organized Crime Control Act claims against the hospice.

The three entities — Axogen, Innoved and HopeWest — were among multiple defendants named in the Espinoza suit. Previously, Dr. Thomas Canfield, Montrose County coroner, was dismissed from the action, as were Southwest Institute of Bio Advancement and Nielsen GJ Investments.

The Espinoza suit may be consolidated with a second multi-plaintiff and multi-defendant lawsuit, captioned Abachiche et. al. 

The court directed plaintiffs to file a status report by Jan. 23.

Katharhynn Heidelberg is the Montrose Daily Press assistant editor and senior writer. Follow her on Twitter, @kathMDP.

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