Charges of Misconduct by Mortician Voiced : Death: Switching of bodies is among complaints at hearing. Funeral home owner’s license may be revoked or suspended.

When Mary Nutter’s grief-stricken relatives arrived at her funeral, they did not recognize the woman lying in the coffin. Her face and body seemed completely different from those of the family matriarch they knew and loved. But mortuary officials reassured them, they said, that death could change a person’s looks--and that the body was, indeed, Mary Nutter’s. The funeral proceeded as planned.

In fact, according to state records, the Houston and Peoples Funeral Home had switched Nutter’s body with that of Nevel Milligan. Milligan’s distraught family, in turn, spent weeks not knowing where her body was, until it was finally located in Nutter’s grave.

The two incidents--with a series of others--eventually became the basis of a complaint filed by state officials that could lead to revocation or suspension of the license held by the owner of the funeral home, Willie Frank Houston.

At a hearing that began Wednesday in state offices in Downtown Los Angeles, the still-furious relatives began recounting their experiences with Houston or other staff at his two mortuaries in South-Central Los Angeles and one in Pomona.

The case already has prompted a call for tightened state oversight of funeral homes and led some of the families to form a foundation to lobby for greater protection of consumers.

The state’s civil complaint, filed by Deputy Atty. Gen. Robert A. Heron on behalf of the State Board of Funeral Directors and Embalmers, accuses Houston of gross negligence, unprofessional conduct and other improprieties involving his handling of 20 bodies.

Houston, 57, declined comment. But his lawyer, Jacque Boyle, said Houston had been in business more than 25 years and “feels he will be vindicated of all the accusations against him.”

In questioning of witnesses Wednesday, Boyle suggested that embalmers working as independent contractors may have been responsible for the alleged abuses at Houston’s businesses.

The state documents described the practices as “an extreme departure from the ordinary standard of conduct in funeral directing.” The incidents cited included:

* Keeping the body of one man “unrefrigerated, wrapped in a soiled sheet and covered with insects.”

* Presenting another man to his family for viewing “with a strong foul smelling odor and fluids leaking from his head and neck.” * Picking up a family for an agreed-upon drive to a cemetery, only to instead drive them “to the bank (where they were) met by Houston, who spent 45 minutes demanding of the family that they . . . pay him.”

The case was brought amid growing criticism of state funeral home enforcement following scandals such as one involving the now-closed Lamb Funeral Home of Pasadena. Its owners were accused of mishandling the remains of 5,000 people who were cremated. One of the operators went to jail and a class-action lawsuit was settled last year for $15.4 million.

A state internal audit of Houston’s funeral operations led to the resignation in June of James B. Allen, the board’s executive officer. The Department of Consumer Affairs conducted the audit after board investigators privately complained to Assemblywoman Jackie Speier (D-San Francisco) that violations they uncovered at Houston’s facilities were ignored by board officials.

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The report found “several serious deficiencies” in board audits of mortuary trust funds, including a deficit of at least $57,000 in a fund at one of Houston’s homes.

The Los Angeles families unhappy with Houston’s services started a support group--called the AH Foundation--which has expanded into a grass-roots campaign to improve oversight of the state’s 844 funeral directors and 5,477 embalmers.

Among the first witnesses Wednesday was a relative of Charmaine Jackson, a stillborn baby whose body was embalmed by an unlicensed embalmer at Houston’s Vermont Avenue mortuary, according to the state complaint. Mary Wise of Corona, the baby’s grandmother, choked back tears as she testified that the infant’s skin looked “real dark” at the funeral home.

When she asked the embalmer about it, she said, he slathered a wax-like material over the baby’s face, apparently to improve the looks. “He just made a mess,” Wise testified.

Houston is accused of allowing embalmings to be done by two unlicensed employees. In the Jackson case, as well as five others, he is also accused of getting bodies from coroners without the authorization of family survivors.

After the baby’s family protested the delivery of the body to the mortuary, Houston “refused to promptly release baby Charmaine C. Jackson to her family and another mortuary without payment of $695,” according to the accusation.

Another witness, a former funeral board inspector, testified that a body he observed during one inspection at the Vermont Avenue facility was “so decomposed and covered with bugs I could not tell if it had been embalmed.”

Donald Hudgens, a licensed embalmer who worked for the funeral board between 1988 and 1992, said that when he lifted up the sheet covering the body, “there were so many bugs they flew up in my face.”

Hudgens said after his testimony that he had issued “many, many citations” to Houston, and that the board’s failure to discipline the funeral director earlier had led to his resignation in 1992.

The funeral board employs only two field representatives to inspect funeral homes, review embalming practices and handle consumer complaints. Two auditors monitor trust funds maintained by the homes with “pre-need” insurance that clients purchase.

According to state records, one funeral home director’s license was revoked in the last fiscal year, and five other licensees were suspended or placed on probation.

The funeral board’s newly appointed executive officer, Richard Yanes, said that about 17 auditors and inspectors would be needed to properly monitor the funeral home industry in California.