81R7812 JE-F
By: Flynn H.B. No. 3762
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of prepaid funeral benefits; providing
penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 651, Occupations Code, is amended by
adding Subchapter O to read as follows:
SUBCHAPTER O. PREPAID FUNERAL BENEFITS
Sec. 651.701. DEFINITIONS. In this subchapter:
(1) "Contract beneficiary" means the person whose
final disposition is the subject of the prepaid funeral benefits
contract.
(2) "Crypt," "grave," "lawn crypt," "niche," and
"plot" have the meanings assigned by Section 711.001, Health and
Safety Code.
(3) "Financial institution" has the meaning assigned
by Section 201.101, Finance Code.
(4) "Funeral provider" means the funeral home
designated in a prepaid funeral benefits contract that has agreed
to provide the specified prepaid funeral benefits.
(5) "Insurance policy" means a life insurance policy
or annuity contract.
(6) "Permit holder" means a person that holds a permit
to sell prepaid funeral benefits contracts in this state.
(7) "Prepaid" means payment for funeral merchandise or
services before the death of the contract beneficiary in which all
or a portion of the amounts paid are placed in trust or used to pay
insurance policy premiums.
(8) "Prepaid funeral benefits" means prepaid funeral
services or prepaid funeral merchandise, but does not include a
grave marker, monument, tombstone, crypt, niche, plot, or lawn
crypt.
(9) "Prepaid funeral benefits contract" means a
contract entered into by a person, a funeral provider, and a permit
holder that sets out the terms for the provision of prepaid funeral
benefits by the funeral provider.
(10) "Responsible person" means the person charged
with the disposition of the remains of the contract beneficiary
under Section 711.002(a), Health and Safety Code.
Sec. 651.702. ADMINISTRATION OF SUBCHAPTER. (a) The
commission shall administer this subchapter.
(b) The commission may adopt reasonable rules concerning:
(1) fees to defray the cost of administering this
subchapter;
(2) the keeping of records relating to the sale of
prepaid funeral benefits;
(3) the filing of contracts and reports;
(4) changes in the management or control of a permit
holder; and
(5) any other matter relating to the enforcement and
administration of this subchapter.
Sec. 651.703. ANNUAL REPORT. (a) The commission may
require a permit holder with outstanding prepaid funeral benefits
contracts to submit an annual report that specifies:
(1) the number of prepaid funeral benefits contracts
in force at the beginning of the calendar year and the sum of the
total contract price of those contracts;
(2) the total number of new prepaid funeral benefits
contracts issued during the calendar year and the sum of the total
contract price of those contracts;
(3) the total number of prepaid funeral benefits
contracts that have been performed during the calendar year and the
sum of the total contract price of those contracts;
(4) the total number of prepaid funeral benefits
contracts that terminated by cancellation during the calendar year
and the sum of the total contract price of those contracts; and
(5) the total number of prepaid funeral benefits
contracts outstanding at year-end, the sum of the total contract
price of contracts in force, and the total funding available for
those contracts as either:
(A) the amount of insurance in force; or
(B) the amount of trust funds held for those
contracts.
(b) The annual report must include a certification by the
permit holder that states that the insurance premiums received have
been paid to the appropriate insurance company, or the funds that
are held in trust have been received and administered, in
accordance with applicable law.
Sec. 651.704. RECORDS; EXAMINATION. (a) A permit holder
that has outstanding prepaid funeral benefits contracts shall
maintain records as required by the commission. The records are
subject to examination by the commission or its agent on a schedule
to be determined by the commission, but in no event more frequently
than once every three years unless the commission determines
additional examination necessary for cause.
(b) As part of the examination, the commission or its agent
shall be given access to records relating to prepaid funeral
benefits contracts of each permit holder.
(c) By rule, the commission may delegate the examination of
trust-funded permit holders to the Texas Department of Banking and
the examination of insurance-funded permit holders to the Texas
Department of Insurance, including the allocation of any
examination fees under Section 651.705.
Sec. 651.705. EXAMINATION FEE. (a) For each examination
conducted under Section 651.704, the commission may impose on the
permit holder a fee in an amount set by the commission.
(b) The amount of the fee must be sufficient to cover the
cost of the examination, including:
(1) salary and travel expenses for commission
employees, including travel to and from the place where the records
are kept; and
(2) any other expense necessarily incurred in
conducting the examination.
Sec. 651.706. CONFIDENTIALITY; DISCLOSURE OF CERTAIN
INFORMATION. (a) Information relating to the financial condition
of a permit holder obtained by the commission directly or
indirectly, through examination or otherwise, other than published
statements, is confidential.
(b) The files and records of the commission relating to the
financial condition of a permit holder are confidential.
(c) The commission may disclose the information described
by Subsection (a) or (b) to an agency, commission, or
instrumentality of this or another state or the United States if the
commission considers disclosure to be in the best interest of the
public and necessary or proper to enforce the laws of this or
another state or the United States.
Sec. 651.707. PERMIT REQUIREMENT. A person may not sell
prepaid funeral benefits contracts in this state unless the person
holds a permit issued under this subchapter.
Sec. 651.708. PERMIT APPLICATION; FEE. To obtain a permit
to sell or continue to sell prepaid funeral benefits contracts, a
person must:
(1) file an application for a permit with the
commission on a form prescribed by the commission;
(2) pay a filing fee in an amount set by the commission
under Section 651.702; and
(3) if applicable, pay extraordinary expenses
required for out-of-state investigation of the person.
Sec. 651.709. ISSUANCE OF PERMIT. (a) The commission may
investigate an applicant before issuing an initial permit.
(b) The commission shall approve the application and issue a
permit to the applicant if the commission finds that the business
ability, experience, character, financial condition, and general
fitness of the applicant warrant the public's confidence. The
commission shall notify the applicant if the executive director
finds otherwise.
(c) The applicant must demonstrate sufficient financial
responsibility to administer all prepaid funeral benefits
contracts to performance. Sufficient financial responsibility
shall be presumed if the permit holder has current net worth of
$100,000 or provides the commission with a letter of credit or
performance bond or guarantee from its parent company in the amount
of $100,000 in a form and from an issuer acceptable to the
commission.
(d) The commission shall issue the permit within 60 days of
receipt of a completed application or shall provide the applicant
with written notice of the denial of the application, including the
reasons for denial. The applicant on request is entitled to a
hearing on the denial of the application, to be held not later than
the 30th day after the date of the request.
Sec. 651.710. TERM OF PERMIT. (a) A permit is issued for a
five-year term.
(b) The commission by rule may adopt a system under which
permits expire on various dates during the year.
Sec. 651.711. FUNDING OF PREPAID FUNERAL BENEFITS
CONTRACTS. A permit holder may elect to fund prepaid funeral
benefits contracts with insurance policies under Section 651.729 or
trust accounts under Section 651.730, or both.
Sec. 651.712. PROHIBITION ON TRANSFER OF PERMIT. A permit
is not transferable without the prior approval of the commission.
Sec. 651.713. TRANSFER OF BUSINESS OWNERSHIP. (a) A
person may not acquire in any manner an ownership interest in an
entity that is a permit holder, unless the person has filed with the
commission under oath:
(1) a biographical form for each person by whom or on
whose behalf the acquisition is to be effected;
(2) a statement disclosing the substance of any
disciplinary action taken by a financial or insurance regulator of
this state, another state, or the United States against a person who
is acquiring an ownership interest in the permit holder;
(3) a statement certifying that, immediately on the
acquisition, the permit holder will be able to satisfy the
requirements for the issuance of the permit; and
(4) any additional information that the commission by
rule may prescribe as necessary or appropriate to the protection of
the consumers of this state or as in the public interest.
(b) The commission may require a partnership, syndicate, or
other group that is required to file a statement under Subsection
(a) to provide the information under that subsection for each
partner of the partnership, each member of the syndicate, group, or
limited liability company, and each person who controls the partner
or member. If the partner, member, or person is a corporation or
other entity or the person required to file the statement under
Subsection (a) is a corporation, the commission may require that
the information required under that subsection be provided
regarding:
(1) the corporation or other entity;
(2) each individual who is an executive officer or
director of the corporation; and
(3) each person who is directly or indirectly the
beneficial owner of more than 10 percent of the outstanding voting
securities of the corporation.
(c) The commission may disapprove an acquisition if, after
notice and opportunity for hearing, the commission determines that:
(1) immediately on the acquisition, the permit holder
would not be able to satisfy the requirements for the issuance of
the permit;
(2) the competence, trustworthiness, experience, and
integrity of the persons who would control the operation of the
permit holder are such that it would not be in the interest of the
consumers of this state to permit the acquisition; or
(3) the acquisition would violate this subchapter or
another law of this state, another state, or the United States.
(d) Notwithstanding Subsection (c), an acquisition is
considered approved if the commission has not proposed to deny the
requested change before the 61st day after the date the commission
receives all information required by this section.
(e) The requirements of this section do not apply to an
acquisition of ownership, directly or indirectly, that is approved
by the Texas Department of Insurance, the Texas Department of
Banking, or the insurance or banking regulator of any other state or
the United States.
Sec. 651.714. REQUIRED RENEWAL FOR CERTAIN PERMIT HOLDERS.
A permit holder that has outstanding prepaid funeral benefits
contracts shall renew its permit.
Sec. 651.715. RENEWAL FEE. The commission shall set the
renewal fee under Section 651.702.
Sec. 651.716. GROUNDS FOR CANCELLATION OR SUSPENSION OF OR
REFUSAL TO RENEW PERMIT. (a) The commission by order may cancel or
suspend a permit if the commission finds, by examination or other
credible evidence, that the permit holder:
(1) knowingly violated this subchapter or another law
of this state relating to the sale of prepaid funeral benefits
contracts, including a final order of the commission or rule of the
commission;
(2) misrepresented or concealed a material fact in the
permit application;
(3) obtained or attempted to obtain the permit by
misrepresentation, concealment, or fraud;
(4) failed to maintain evidence of financial
responsibility as required by Section 651.709(c); or
(5) failed to maintain the qualifications necessary to
obtain a permit.
(b) The commission by order may refuse to renew a permit if
the commission finds, by examination or other credible evidence,
that the permit holder:
(1) committed one or more of the acts described by
Subsection (a); and
(2) did not correct the violation before the 31st day
after the date of written notice from the commission.
(c) The commission may place on probation a permit holder
whose permit is suspended. If a permit suspension is probated, the
commission may require the permit holder:
(1) to report regularly to the commission on matters
that are the basis of the probation; or
(2) to limit its activities as prescribed by the
commission.
Sec. 651.717. ORDER TO CANCEL, SUSPEND, OR REFUSE TO RENEW
PERMIT. (a) An order issued under Section 651.716 must state:
(1) with reasonable certainty the grounds for the
order; and
(2) the effective date, which may not be before the
16th day after the date the order is mailed.
(b) The order shall be served on the person named in the
order by certified mail, return receipt requested, to the last
known address of the person.
(c) The order takes effect as proposed unless the person
named in the order requests a hearing not later than the 15th day
after the date the order is mailed.
Sec. 651.718. FORM OF CONTRACT. (a) The commission must
approve all prepaid funeral benefits contract forms before their
use.
(b) A prepaid funeral benefits contract must:
(1) be in writing;
(2) state the name and address of the permit holder
selling the prepaid funeral benefits contract;
(3) if the funeral provider is not the permit holder,
state the name and address of the funeral provider responsible for
providing the prepaid funeral benefits specified in the prepaid
funeral benefits contract; and
(4) state the prepaid funeral benefits to be provided.
(c) A funeral provider responsible for providing prepaid
funeral benefits must be a party to the prepaid funeral benefits
contract.
(d) A prepaid funeral benefits contract, whether in English
or Spanish, must be written in plain language designed to be easily
understood by the average consumer. The contract must be printed in
an easily readable font and type size. The commission shall adopt
standards for prepaid funeral benefits contracts that comply with
this subsection.
(e) A permit holder may represent that the commission has
approved a prepaid funeral benefits contract with the following
language: "The Texas Funeral Service Commission regulates the sale
of prepaid funeral benefits contracts" and "The form of this
contract has been approved by the commission."
(f) The sales price of an item not covered by this
subchapter may not be increased to allocate a lesser sales price to
an item covered by this subchapter.
(g) A purchaser of a prepaid funeral benefits contract may
agree in writing to pay the permit holder a finance charge in
accordance with Chapter 345, Finance Code, on any amount due the
permit holder on the prepaid funeral benefits contract.
(h) A prepaid funeral benefits contract must clearly
identify the funeral merchandise and services for which the cost is
guaranteed and those for which the cost is not guaranteed, the
circumstances under which the guarantee is limited, and the
circumstances under which the prepaid funeral benefits contract may
be modified after the death of the contract beneficiary.
Sec. 651.719. CANCELLATION OF CONTRACT. (a) A purchaser of
a prepaid funeral benefits contract may cancel the contract before
maturity by giving written notice of cancellation to the permit
holder. The permit holder shall maintain copies of the written
notice of cancellation for three years from the date of receipt.
(b) The cancellation of the prepaid funeral benefits
contract does not cancel the insurance policy funding the prepaid
funeral benefits contract. The insurance policy may be canceled in
accordance with the terms of the policy.
(c) The cancellation of the prepaid funeral benefits
contract requires the return of trust funds under Section
651.730(e).
Sec. 651.720. MODIFICATION AT TIME OF FUNERAL. (a) The
funeral merchandise and services to be provided by the funeral
provider under a prepaid funeral benefits contract may be modified
after the death of the contract beneficiary if the modification
complies with Subsection (b) or is otherwise agreed to in a writing
signed by the funeral provider and the responsible person, except
that:
(1) if the purchaser of the prepaid funeral benefits
contract is also the contract beneficiary:
(A) the contracted funeral merchandise and
services may not be modified if the contract contains a clause that
prohibits modification; and
(B) a modification may not change the type of
disposition specified by the purchaser in the contract, whether by
burial, cremation, or another alternative by which the purchaser's
remains attain their final resting place, as provided by Section
711.002(g), Health and Safety Code; and
(2) the value attributed to any funeral merchandise or
service for which the cost is guaranteed in the prepaid funeral
benefits contract that is surrendered or exchanged in a
modification must be computed on a comparable time-price basis with
the price charged for substituted funeral merchandise or service
provided as part of the modification.
(b) Except as limited by Subsection (a)(1), the responsible
person may make reasonable modifications to the funeral merchandise
and services provided under a prepaid funeral benefits contract at
the time the funeral is performed, not to exceed 10 percent of the
original purchase price of the contract. This subsection does not
require the permit holder or the funeral provider to:
(1) refund a portion of the funds attributable to the
contract if the permit holder or funeral provider grants credit for
surrender or exchange as provided by Subsection (a)(2);
(2) provide substituted or additional funeral
merchandise or services in excess of credits granted under
Subsection (a)(2) unless the permit holder or funeral provider
receives additional compensation at current prices; or
(3) apply a portion of the funds attributable to the
contract or credits granted under Subsection (a)(2) to another
contract or funeral.
(c) The responsible person may not modify a prepaid funeral
benefits contract that has not been fully paid at the time of death
of the contract beneficiary except as agreed to in a writing signed
by the funeral provider and the responsible person.
Sec. 651.721. WAIVER OF RIGHT OF CANCELLATION. (a) The
purchaser of a prepaid funeral benefits contract may irrevocably
waive the purchaser's right to cancel the contract under Section
651.719. The waiver must be in a separate writing signed by the
purchaser and the permit holder and may take effect no earlier than
the 15th day after the date of the purchase of the contract. The
form of the waiver must comply with the requirements for the form of
a sales contract under Section 651.718.
(b) A waiver made under this section does not affect any
other right of the purchaser.
Sec. 651.722. PERFORMANCE OF CONTRACT. Delivery of funeral
merchandise before death is not performance, in whole or in part, of
a prepaid funeral benefits contract.
Sec. 651.723. ENFORCEMENT OF CONTRACT. A person that
violates Section 651.707 may not enforce a prepaid funeral benefits
contract, but before performance, the purchaser or an heir or legal
representative of the purchaser is entitled to recover:
(1) if trust-funded, the amount paid under the
contract; or
(2) if insurance-funded, ownership of the insurance
policy.
Sec. 651.724. AGENT OF PERMIT HOLDER. (a) A permit holder
may designate one or more agents to solicit and sell prepaid
funeral benefits contracts under a written contract specifying the
duties and obligations of the agents, including the proper receipt
and deposit of any funds or the transmitting of any insurance policy
premiums.
(b) The permit holder is responsible for the action or
failure to act of any agent appointed under Subsection (a) in the
course and scope of the agent's duty under the contract with the
permit holder. The appointment of an agent does not diminish any
obligation or responsibility of the permit holder imposed by the
prepaid funeral benefits contract, this subchapter, or other law.
Sec. 651.725. TRUST-FUNDED PREPAID FUNERAL BENEFITS AGENT.
(a) A permit holder that elects to fund prepaid funeral benefits
contracts with trust funds under Chapter 154, Finance Code, may
sell contracts only through trust-funded prepaid funeral benefits
agents.
(b) A permit holder may appoint funeral directors licensed
by the commission as trust-funded prepaid funeral benefits agents.
Licensed funeral directors are not subject to the requirements of
Sections 651.726, 651.727, and 651.728.
Sec. 651.726. TRAINING AND EXAMINATION. The permit holder
shall appoint an individual applicant to act as a trust-funded
prepaid funeral benefits agent on its certification that the
applicant has:
(1) completed a course of study and instruction in
compliance with this subchapter; and
(2) passed without aid a written examination
administered by the permit holder.
Sec. 651.727. COURSE. (a) To be eligible to receive an
appointment under Section 651.725, an applicant must complete a
course of study and instruction offered by a permit holder under
this section.
(b) The course of study and instruction must:
(1) be at least five hours in duration; and
(2) include instruction on:
(A) funeral merchandise and services, the
responsibilities of a trustee, and the terms of the prepaid funeral
benefits contract; and
(B) the laws relating to funeral prearrangement.
Sec. 651.728. EXAMINATION. (a) The commission shall
prescribe a uniform examination for applicants that fairly tests
knowledge of the information contained in the course under Section
651.727.
(b) The commission shall authorize a permit holder to
administer the examination as provided by this section after
approval by the commission of a complete outline and explanation of
the course and the manner of conducting the examination.
Sec. 651.729. INSURANCE-FUNDED PREPAID FUNERAL BENEFITS
CONTRACTS. (a) Except as specified in this section, the
solicitation and sale of insurance policies to fund prepaid funeral
benefits contracts, the terms of policies, all records relating to
transactions, and the conduct of agents and insurers shall be
conducted in accordance with the Insurance Code and regulated
solely by the Texas Department of Insurance.
(b) Insurance-funded prepaid funeral benefits contracts may
be solicited and sold only by a permit holder, or its agent, who is
properly licensed under Chapter 4054, Insurance Code.
(c) The application for an insurance policy covering the
contract beneficiary shall be executed simultaneously with the
prepaid funeral benefits contract.
(d) The application must include a disclosure in at least
10-point bold type, immediately above the signature line of the
purchaser, that states:
"If you are applying for a life insurance policy with multiple
payments, the total amount of premiums you pay over the life of the
policy may exceed the death benefit."
(e) The application must include the name and address of the
insurer in a form required by the Texas Department of Insurance, and
the policy must include a disclosure of the cash surrender value of
the policy payable to the policy owner on cancellation of the
insurance policy.
(f) The receipt of funds by the agent constitutes receipt of
premium by the insurer subject to the terms of the policy.
(g) The insurance policy must be on a form approved for use
by the Texas Department of Insurance, and the insurance policy must
provide the policy owner the opportunity to cancel the insurance
policy and receive a full refund of any premium paid, for any
reason, for a period of not less than 15 days after the date of
delivery of the insurance policy. After expiration of that period,
cancellation of the insurance policy is subject to the terms of the
policy.
(h) The insurer issuing the insurance policy must be
licensed to do business in this state.
(i) The purchaser of an insurance-funded prepaid funeral
benefits contract may irrevocably assign the purchaser's ownership
of or rights to benefits under the insurance policy to the permit
holder, the funeral provider, or a trustee. An irrevocable
assignment to a trustee is not valid unless it is made solely to
facilitate the eligibility of the purchaser under Title XIX of the
federal Social Security Act (42 U.S.C. Section 1396 et seq.) or
other public assistance program or the trustee is specifically
prohibited from exercising any right under the policy except
administration of the benefits.
(j) The insurer shall pay the beneficiary or assignee of an
insurance policy funding a prepaid funeral benefits contract on
receipt of sufficient documentation, which may include:
(1) a certification signed by the funeral provider and
the responsible person that the funeral service has been performed
in accordance with the prepaid funeral benefits contract and to the
satisfaction of the responsible person, and a copy of the death
certificate; or
(2) other documentation required by the insurer.
Sec. 651.730. TRUST-FUNDED PREPAID FUNERAL BENEFITS
CONTRACTS. (a) Except as specified in this section, the terms of
trusts established for prepaid funeral benefits contracts, all
records relating to transactions, and the conduct of agents and
trustees are governed by Chapter 154, Finance Code, and regulated
by the Texas Department of Banking or other regulators with
jurisdiction over the trustee.
(b) Trust-funded prepaid funeral benefits contracts may be
solicited and sold only by agents appointed by the permit holder on
forms adopted by the commission by rule.
(c) The agent shall provide the purchaser a disclosure in a
form adopted by the commission by rule that includes:
(1) the amount retained by the permit holder, funeral
provider, or agent from any funds received from the purchaser
before deposit;
(2) the amount retained by the permit holder, funeral
provider, or agent from any funds received from the purchaser on
cancellation;
(3) the name, address, and contact person of the
financial institution;
(4) a statement that the funds received will be
invested in accordance with the Finance Code but that no return on
funds is guaranteed; and
(5) a statement that should the contract beneficiary
die before the prepaid funeral benefits contract is paid in full,
the purchaser, the purchaser's authorized representative, or the
responsible person may elect to pay the balance due and receive the
prepaid funeral benefits under the contract.
(d) Funds received for prepaid funeral benefits contracts
shall be administered as prescribed by this section and Chapter
154, Finance Code, as applicable.
(e) Not later than the 30th day after the date of the receipt
of a cancellation request, the permit holder shall withdraw and pay
to the purchaser funds in the depository being held for the
purchaser's use and benefit.
(f) The purchaser or permit holder may not make a partial
cancellation or withdrawal.
(g) On cancellation, the purchaser is entitled to receive
the actual amount paid by the purchaser and half of all earnings
attributable to those funds, less the amount permitted to be
retained as provided by Section 154.252, Finance Code, except as
provided by Subsections (h) and (i).
(h) A purchaser who cancels a contract on the solicitation
of the permit holder or the funeral provider is entitled to receive
the total amount paid to the permit holder or the funeral provider
by the purchaser and all earnings attributable to those funds. If
the funds are used to purchase a new prepaid funeral benefits
contract under a solicitation by the permit holder, the new
contract must protect the purchaser to an extent equal to or greater
than that provided by the original contract, as determined by the
commission. Under the new contract, the cost to the purchaser of
the same or substantially the same services or merchandise may not
be greater than that provided by the canceled contract.
(i) A purchaser who cancels a contract during the first year
of the contract when payments required under the contract are
current is entitled to receive, regardless of the amount held in
trust, the greater of:
(1) 90 percent of the actual amount paid by the
purchaser; or
(2) the amount deposited in trust with respect to the
purchaser's contract.
Sec. 651.731. SEIZURE OF PREPAID FUNERAL TRUST FUNDS AND
RECORDS. (a) After the commission cancels or fails to renew a
permit under Section 651.716(a) or (b) or on notice to a person
required to obtain a permit under this subchapter, the executive
director may issue an order to seize the prepaid funeral trust
funds, including earnings, where those funds are held and may issue
an order to seize the records that relate to the sale of prepaid
funeral benefits if the executive director finds, by examination or
other credible evidence, that the person:
(1) failed to deposit or remit funds in accordance
with Chapter 154, Finance Code;
(2) misappropriated, converted, or illegally withheld
or failed or refused to pay on demand funds entrusted to the person
that belong to the purchaser or contract beneficiary under a
prepaid funeral benefits contract;
(3) refused to submit to examination by the
commission;
(4) was the subject of an order to cancel, suspend, or
refuse to renew a permit; or
(5) does not hold a permit or transferred the
ownership of its business to another person who does not hold a
permit and who:
(A) did not apply for a new permit before the 31st
day after the date the transfer was completed; or
(B) was denied a new permit.
(b) An order shall be served on the person named in the order
by certified mail, return receipt requested, to the last known
address of the person.
(c) An order takes effect immediately if the executive
director finds that immediate and irreparable harm is threatened to
a contract beneficiary under a prepaid funeral benefits contract.
If such a threat does not exist, the order must state the effective
date, which may not be before the 16th day after the date the order
is mailed.
(d) An order takes effect as proposed unless the person
named in the order requests a hearing not later than the 15th day
after the date the order is mailed.
(e) Premiums received on the disposition of a contract
related to the seizure of prepaid funeral trust funds shall be
handled as provided by Section 651.732 and Subchapter H, Chapter
154, Finance Code.
Sec. 651.732. NOTIFICATION TO PURCHASER. Not later than
the 30th day after the date prepaid funeral trust funds are seized
under Section 651.731, the executive director shall notify each
known person who purchased prepaid funeral benefits under a
contract from the permit holder whose permit is canceled. The
notice must:
(1) include an explanation of the procedures under
this subchapter for canceling the contract and claiming funds that
may be due the person if the person elects to cancel;
(2) inform the person to continue to make payments
under the contract if the person elects to keep the contract in
force; and
(3) inform the person that if the person elects to keep
the contract in force the executive director will transfer:
(A) responsibility to perform the contract to a
responsible successor permit holder selected by the executive
director; or
(B) the seized funds to the fund maintained under
Section 154.351, Finance Code, subject to the claims process
prescribed by rule under Subchapter H, Chapter 154, Finance Code.
Sec. 651.733. LIQUIDATION OF BUSINESS AND AFFAIRS OF PERSON
FOLLOWING SEIZURE OF TRUST FUNDS AND RECORDS. After an order issued
under Section 651.731(a) becomes final and unappealable, the
executive director may petition the district court in the county in
which a person required to hold a permit under this subchapter
resides to request the issuance of an order to show cause why the
business and affairs of that person should not be liquidated and a
receiver appointed by the court for that purpose if the person
failed or refused to correct the violation before the 31st day after
the date the person received written notice from the executive
director.
Sec. 651.734. PENALTIES FOR VIOLATIONS OF SUBCHAPTER. (a)
A person commits an offense if the person:
(1) fails to deposit funds in compliance with this
subchapter unless the failure to make a deposit is inadvertent and
is corrected before the 11th day after the date the permit holder
discovers the failure; or
(2) withdraws funds in a manner inconsistent with this
subchapter unless the withdrawal was made in error and the
withdrawal is reversed before the 11th day after the date the permit
holder discovers the error.
(b) An offense under this section is punishable as if it
were an offense under Section 32.45, Penal Code.
Sec. 651.735. ADMINISTRATIVE PENALTY. (a) After notice
and opportunity for hearing, the executive director may impose an
administrative penalty on a person who:
(1) violates this subchapter or a final order of the
commission or rule of the commission and does not correct the
violation before the 31st day after the date the person receives
written notice of the violation from the commission; or
(2) engages in a pattern of violations, as determined
by the executive director.
(b) The amount of the penalty for each violation may not
exceed $1,000 for each day the violation occurs.
(c) In determining the amount of the penalty, the executive
director shall consider the seriousness of the violation, the
person's history of violations, and the person's good faith in
attempting to comply with this subchapter.
(d) The imposition of a penalty under this section is:
(1) subject to the procedures of Subchapter L; and
(2) subject to judicial review as a contested case
under Chapter 2001, Government Code.
Sec. 651.736. RESTITUTION. The commission may issue an
order to a person requiring restitution if, after notice and
opportunity for hearing, the commission finds that the person:
(1) failed to deposit funds in accordance with
Subchapter F, Chapter 154, Finance Code; or
(2) misappropriated, converted, or illegally withheld
or failed or refused to pay on demand funds entrusted to the person
that belong to the contract beneficiary under a prepaid funeral
benefits contract.
Sec. 651.737. DELIVERY AT NEED. (a) A funeral provider
responsible for the delivery of prepaid funeral benefits shall
provide the responsible person, at the time of delivery of prepaid
funeral benefits, with a written reconciliation on a form adopted
by the commission by rule.
(b) The reconciliation must provide complete, item-by-item
details of the provider's resolution of the funeral costs with the
responsible person, including prices and any guarantees, guarantee
limitations, nonguaranteed items, and balance due.
(c) The funeral provider shall maintain a fully executed
copy of each reconciliation until the next examination by the
commission under Section 651.704.
SECTION 2. Section 154.002(10), Finance Code, is amended to
read as follows:
(10) "Seller" means a person holding a permit to sell
[selling, accepting money or premiums for, or soliciting contracts
for] prepaid funeral benefits [or] contracts under Subchapter O,
Chapter 651, Occupations Code, and electing [or insurance policies]
to fund those contracts through a trust [prepaid funeral benefits
in this state].
SECTION 3. The following laws are repealed:
(1) Section 154.002(7), Finance Code;
(2) Subchapters B, C, D, and I, Chapter 154, Finance
Code;
(3) Section 154.201, Finance Code;
(4) Section 154.202, Finance Code;
(5) Section 154.203, Finance Code;
(6) Section 154.205, Finance Code;
(7) Section 154.206, Finance Code;
(8) Section 154.207, Finance Code; and
(9) Sections 651.159 and 651.160, Occupations Code.
SECTION 4. A person holding a permit issued by the Texas
Department of Banking to sell prepaid funeral benefits on the
effective date of this Act shall be issued a permit by the Texas
Funeral Service Commission without application, effective
September 1, 2009. All provisions of this Act apply to the permit
holder on and after the effective date of this Act, except that the
permit holder has until the third anniversary of the effective date
of this Act to meet the financial responsibility requirements of
Section 651.709(c), Occupations Code, as added by this Act.
SECTION 5. This Act takes effect September 1, 2009.