Texas 2009 - 81st Regular

Texas House Bill HB3801 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R8585 DAK-F
2	2	By: Flynn H.B. No. 3801
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to regulation of prepaid funeral benefits.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 154.002, Finance Code, is amended by
10	10	amending Subdivisions (1) and (6) and adding Subdivisions (1-a),
11	11	(6-a), and (14) to read as follows:
12	12	(1) "Cash advance item" has the meaning assigned by 16
13	13	C.F.R. Section 453.1.
14	14	(1-a) "Commission" means the Finance Commission of
15	15	Texas.
16	16	(6) "Funeral provider" means the person [funeral home]
17	17	designated in a prepaid funeral benefits contract that has agreed
18	18	to provide the specified prepaid funeral benefits.
19	19	(6-a) "Insurance-funded contract" means an
20	20	insurance-funded prepaid funeral benefits contract.
21	21	(14) "Trust-funded contract" means a trust-funded
22	22	prepaid funeral benefits contract.
23	23	SECTION 2. Section 154.102, Finance Code, is amended to
24	24	read as follows:
25	25	Sec. 154.102. PERMIT APPLICATION; FEE. To obtain a permit
26	26	to sell or continue to sell prepaid funeral benefits, a person must:
27	27	(1) be one of the following, if the person proposes to
28	28	offer and sell prepaid funeral benefits contracts subject to
29	29	Subchapter E:
30	30	(A) a funeral provider;
31	31	(B) an insurance company; or
32	32	(C) the insurance holding company for an
33	33	insurance company if the insurance company does not have the
34	34	authority under its domiciliary law to directly hold a permit
35	35	issued under this chapter;
36	36	(2) be a funeral provider, if the person proposes to
37	37	offer and sell prepaid funeral benefits contracts subject to
38	38	Subchapter F;
39	39	(3) file an application for a permit with the
40	40	department on a form prescribed by the department;
41	41	(4) [(2)] pay a filing fee in an amount set by the
42	42	commission under Section 154.051; and
43	43	(5) [(3)] if applicable, pay extraordinary expenses
44	44	required for out-of-state investigation of the person.
45	45	SECTION 3. Sections 154.106(a) and (b), Finance Code, are
46	46	amended to read as follows:
47	47	(a) A permit holder shall notify [by registered mail] the
48	48	department and either the depository of the money held under
49	49	Subchapter F or the issuer of insurance policy funding contracts
50	50	under Subchapter E of a contract to transfer [in the] ownership of
51	51	the permit holder's business not later than the seventh day after
52	52	the date the contract [transfer] is executed [completed].
53	53	(b) If the proposed transferee [transfer is to a person who]
54	54	is not a permit holder, the proposed transferee [person] shall file
55	55	an application for a permit with the department in accordance with
56	56	this subchapter. If the application is complete, the commissioner
57	57	shall approve or deny the application before the 16th [not later
58	58	than the 30th] day after the date the application was received. The
59	59	transfer of prepaid funeral benefits contracts of the permit holder
60	60	that is the transferor may not occur until after the date a permit
61	61	is issued to the applicant that is the transferee [transfer is
62	62	completed].
63	63	SECTION 4. Section 154.109(b), Finance Code, is amended to
64	64	read as follows:
65	65	(b) The commissioner by order may refuse to renew a permit
66	66	if the commissioner finds, by examination or other credible
67	67	evidence, that the permit holder does not possess a qualification
68	68	required by Section 154.103(b) for issuance of an initial permit,
69	69	or that the permit holder:
70	70	(1) committed one or more of the acts described by
71	71	Subsection (a); and
72	72	(2) did not correct the violation before the 31st day
73	73	after the date of written notice from the commissioner.
74	74	SECTION 5. Chapter 154, Finance Code, is amended by adding
75	75	Subchapter C-1 to read as follows:
76	76	SUBCHAPTER C-1. PRESALE DISCLOSURES
77	77	Sec. 154.131. BROCHURE. (a) A seller, directly or
78	78	through the seller's designated agent, shall provide an
79	79	informational brochure to each potential purchaser of a prepaid
80	80	funeral benefits contract.
81	81	(b) The brochure must:
82	82	(1) describe the regulation of prepaid funeral
83	83	benefits contracts and the trust and insurance funding options
84	84	available under the law of this state; and
85	85	(2) include a reference to the Internet website
86	86	required under Section 154.132.
87	87	(c) The department:
88	88	(1) must approve an informational brochure before the
89	89	brochure may be used by the seller; and
90	90	(2) may provide a model informational brochure that
91	91	complies with this section.
92	92	Sec. 154.132. WEBSITE. (a) The department shall establish
93	93	and maintain an Internet website that provides information to
94	94	enable consumers to make informed decisions relating to the
95	95	purchase of prepaid funeral benefits.
96	96	(b) The website:
97	97	(1) must include a description of the trust and
98	98	insurance funding options available under the law of this state;
99	99	(2) may include links to and be linked from the
100	100	department's website, the Texas Department of Insurance website,
101	101	and the Texas Funeral Service Commission website; and
102	102	(3) may include additional information or links to
103	103	additional information that the department determines may be
104	104	helpful to consumers of prepaid funeral benefits in this state.
105	105	Sec. 154.133. REFERENCE OR LINK TO WEBSITE. Any sales
106	106	literature or a website that offers or promotes the sale of prepaid
107	107	funeral benefits contracts to the public must include a reference
108	108	or link to the Internet website required under Section 154.132.
109	109	SECTION 6. Sections 154.151(c) and (e), Finance Code, are
110	110	amended to read as follows:
111	111	(c) If a [A] funeral provider designated in the contract to
112	112	provide prepaid funeral benefits is [that are] not the seller
113	113	licensed under this chapter, [sold by] the funeral provider must:
114	114	(1) be a party to the contract; [and]
115	115	(2) agree in the contract to provide those benefits;
116	116	and
117	117	(3) acknowledge and agree to discharge the
118	118	responsibilities imposed on a funeral provider by Section 154.161,
119	119	either in the prepaid funeral benefits contract or in a separate
120	120	writing signed by the funeral provider and the seller.
121	121	(e) The commission [Finance Commission of Texas] by rule
122	122	shall establish a standard disclosure that must be included in each
123	123	contract to inform purchasers of the goods and services that will be
124	124	provided or excluded under the contract and the circumstances under
125	125	which the contract may be modified after death of the beneficiary.
126	126	The commission by rule may prescribe a form for the standard
127	127	disclosure that is designed to more closely conform to variations
128	128	in sales contract forms that serve different purposes.
129	129	SECTION 7. Subchapter D, Chapter 154, Finance Code, is
130	130	amended by adding Section 154.1511 to read as follows:
131	131	Sec. 154.1511. CASH ADVANCE ITEMS: NON-GUARANTEED
132	132	MERCHANDISE AND SERVICES. (a) A purchaser of a prepaid funeral
133	133	benefits contract may agree to advance funds for all or any portion
134	134	of the estimated cost of cash advance items included in a prepaid
135	135	funeral benefits contract, the actual cost of which are to be
136	136	determined by existing prices at the time the items are delivered or
137	137	provided in connection with at-need performance of the contracted
138	138	funeral.
139	139	(b) Cash advance items included in a prepaid funeral
140	140	benefits contract must be clearly grouped together and segregated
141	141	from prepaid funeral benefits in a manner that will permit the
142	142	average consumer to easily understand that:
143	143	(1) cash advance items are not fixed or guaranteed in
144	144	price; and
145	145	(2) additional money may be required to fully pay for
146	146	those items at the time of the funeral.
147	147	(c) A seller shall administer purchaser funds received in
148	148	advance for cash advance items under a prepaid funeral benefits
149	149	contract in the manner required by Section 154.159.
150	150	(d) After the death of the contract beneficiary, the funeral
151	151	provider shall apply the proportionate part of the trust or
152	152	insurance policy proceeds received under the contract that is
153	153	derived from advance payment of cash advance items to the current
154	154	purchase price for the items. To the extent the proportionate part
155	155	of contract proceeds:
156	156	(1) is less than the current purchase price for the
157	157	cash advance items, the funeral provider may collect additional
158	158	money for the difference in exchange for delivering or providing
159	159	the items as part of the contracted funeral; or
160	160	(2) is greater than the current purchase price for the
161	161	cash advance items, the funeral provider shall promptly refund the
162	162	excess amount unless that amount is offset against other amounts
163	163	due to the funeral provider in connection with the contracted
164	164	funeral.
165	165	SECTION 8. Section 154.155(d), Finance Code, is amended to
166	166	read as follows:
167	167	(d) The purchaser is entitled to receive the actual amount
168	168	paid by the purchaser and half of all earnings attributable to that
169	169	money, less the amount permitted to be retained as provided by
170	170	Section 154.252, except as provided by Subsection (e) and by
171	171	Sections 154.1511, 154.1551, 154.205, and 154.254.
172	172	SECTION 9. Section 154.1551, Finance Code, is amended by
173	173	amending Subsection (a) and adding Subsections (d), (e), and (f) to
174	174	read as follows:
175	175	(a) The funeral merchandise, funeral [and] services, and
176	176	cash advance items selected in [to be provided by the seller under]
177	177	a fully paid prepaid funeral benefits contract may be modified
178	178	after the death of the beneficiary if the modification complies
179	179	with this section [Subsection (b)] or is otherwise agreed to in a
180	180	writing signed by the seller or funeral provider and the person
181	181	charged with the disposition of the beneficiary's remains by
182	182	Section 711.002(a), Health and Safety Code, except that[:
183	183	[(1)] if the purchaser of the contract is also the
184	184	beneficiary:
185	185	(1) [(A)] the contracted funeral merchandise and
186	186	services may not be modified if the contract contains a clause that
187	187	prohibits modification; and
188	188	(2) [(B)] a modification may not change the type of
189	189	disposition specified by the purchaser in the contract, whether by
190	190	burial, cremation, or another alternative by which the purchaser's
191	191	remains attain their final resting place, as provided by Section
192	192	711.002(g), Health and Safety Code[; and
193	193	[(2) the value attributed to any contracted funeral
194	194	merchandise or service that is surrendered or exchanged in a
195	195	modification must be computed on a comparable time-price basis with
196	196	the price charged for substituted funeral merchandise or service
197	197	provided as part of the modification].
198	198	(d) A modification of contracted funeral merchandise or
199	199	services must comply with Subsection (b), and the value attributed
200	200	to any contracted funeral merchandise or service that is
201	201	surrendered or exchanged in the modification must be computed on a
202	202	comparable time-price basis with the price charged for substituted
203	203	funeral merchandise or service provided as part of the
204	204	modification.
205	205	(e) A modification of cash advance items included in the
206	206	contract under Section 154.1511 must comply with Subsection (f).
207	207	(f) A person charged with disposition of the beneficiary's
208	208	remains may add, surrender, cancel, or modify any cash advance item
209	209	included under the contract at the time the funeral is performed
210	210	only if:
211	211	(1) the value attributed to any contracted funeral
212	212	merchandise or service that is surrendered in a modification,
213	213	determined as provided under Subsection (d), may be applied to the
214	214	unpaid cost of contracted or additional cash advance items; and
215	215	(2) the funeral provider promptly refunds the
216	216	proportionate part of the trust or insurance policy proceeds
217	217	received under the contract that is derived from advance payment of
218	218	a surrendered or canceled cash advance item to the extent the
219	219	proceeds are not applied to the unpaid cost of additional cash
220	220	advance items or additional funeral merchandise or services
221	221	requested by the person charged with disposition of the
222	222	beneficiary's remains.
223	223	SECTION 10. Section 154.156(a), Finance Code, is amended to
224	224	read as follows:
225	225	(a) The purchaser of a prepaid funeral benefits contract may
226	226	irrevocably waive the purchaser's right to cancel the contract
227	227	under Section 154.155. The waiver must be in a separate writing
228	228	signed by the purchaser and the seller and [not earlier than the
229	229	15th day after the date of the purchase of the contract. The form of
230	230	the waiver] must comply with the plain language requirements for
231	231	the form of a sales contract under Section 154.151.
232	232	SECTION 11. Section 154.160(b), Finance Code, is amended to
233	233	read as follows:
234	234	(b) The seller shall notify the department of:
235	235	(1) the designation not later than the 10th day after
236	236	the date the seller becomes subject to this chapter; and
237	237	(2) any change in the designation not later than the
238	238	10th day after [within the 10-day period preceding] the date of the
239	239	change.
240	240	SECTION 12. Subchapter D, Chapter 154, Finance Code, is
241	241	amended by adding Section 154.161 to read as follows:
242	242	Sec. 154.161. RESPONSIBILITIES OF FUNERAL PROVIDER. (a)
243	243	The funeral provider under a prepaid funeral benefits contract
244	244	subject to this chapter shall:
245	245	(1) in compliance with applicable law, protect any
246	246	nonpublic personal financial and health information of the
247	247	purchaser and contract beneficiary in the possession of the funeral
248	248	provider;
249	249	(2) after the death of the contract beneficiary:
250	250	(A) deliver the contracted funeral merchandise
251	251	and services and cash advance items required under the contract,
252	252	subject to Section 154.1551;
253	253	(B) prepare a written pre-need to at-need
254	254	reconciliation to verify that the specified goods and services are
255	255	delivered or performed for the agreed price and promptly refund any
256	256	contract overcharges that may be revealed by the reconciliation;
257	257	and
258	258	(C) if advance payment of cash advance items was
259	259	included in the contract, prepare a reconciliation of proceeds
260	260	applied to cash advance items; and
261	261	(3) with respect to each prepaid funeral benefits
262	262	contract for which the funeral provider is not also the seller:
263	263	(A) sign the reconciliations required by
264	264	Subsection (a)(2);
265	265	(B) promptly deliver the records that verify
266	266	contract performance to the seller, including the final at-need
267	267	contract, the certificate of performance, and the reconciliations
268	268	required under Subsection (a)(2);
269	269	(C) if requested by the seller, correct or
270	270	explain any discrepancy in a reconciliation required under
271	271	Subsection (a)(2); and
272	272	(D) provide copies of any other records or
273	273	documentation related to the offer, sale, and performance of the
274	274	contract that are reasonably requested by the seller or the
275	275	department, including records related to any refund required by
276	276	Section 154.1511 or 154.1551.
277	277	(b) The seller shall report to the department any
278	278	discrepancy in a reconciliation required under Subsection (a)(2)
279	279	that remains unresolved after a request for correction is made
280	280	under Subsection (a)(3)(C).
281	281	SECTION 13. Subchapter E, Chapter 154, Finance Code, is
282	282	amended by adding Section 154.2021 to read as follows:
283	283	Sec. 154.2021. REQUIREMENTS FOR INSURANCE POLICIES. (a) An
284	284	insurance policy used to fund prepaid funeral benefits under this
285	285	chapter must contain the following statement on the cover page or
286	286	otherwise within the policy or a rider to the policy: "This policy
287	287	is issued to fund a prepaid funeral benefits contract subject to
288	288	Chapter 154 of the Texas Finance Code. Cancellation of the prepaid
289	289	funeral benefits contract does not automatically cancel this
290	290	policy."
291	291	(b) The aggregate initial face value of one or more
292	292	insurance policies issued to fund a prepaid funeral benefits
293	293	contract may not exceed the total contract price by more than five
294	294	percent unless the purchaser:
295	295	(1) receives a conspicuous written disclosure of the
296	296	purpose and amount of the excess coverage and how the insurance
297	297	benefit will be applied at contract maturity; and
298	298	(2) consents in writing to the purchase of the excess
299	299	coverage.
300	300	SECTION 14. Section 154.205, Finance Code, is amended to
301	301	read as follows:
302	302	Sec. 154.205. AMOUNT PAYABLE ON CANCELLATION OF CONTRACT.
303	303	A purchaser of an insurance-funded prepaid funeral benefits
304	304	contract who cancels the contract [during the first year of the
305	305	contract when payments required under the contract are current] is
306	306	entitled to receive the cash surrender value of the insurance
307	307	policy if the policy is also canceled. Cancellation of the contract
308	308	does not automatically cancel the funding insurance policy.
309	309	SECTION 15. Section 154.206, Finance Code, is amended to
310	310	read as follows:
311	311	Sec. 154.206. ASSIGNMENT OF RIGHT TO BENEFITS. The
312	312	purchaser of an insurance-funded prepaid funeral benefits contract
313	313	may irrevocably assign the purchaser's ownership of and rights to
314	314	benefits under the insurance policy to the seller, the funeral
315	315	provider, the trustee, or other person. An assignee under this
316	316	section is subject to a fiduciary duty to apply the insurance policy
317	317	benefits as provided by the contract and this chapter.
318	318	SECTION 16. Section 154.207(a), Finance Code, is amended to
319	319	read as follows:
320	320	(a) The seller or funeral provider may withdraw the benefits
321	321	payable under an insurance policy funding prepaid funeral benefits
322	322	after:
323	323	(1) the beneficiary named in the contract dies;
324	324	(2) the funeral service is completed; [and]
325	325	(3) the funeral provider has completed the provider's
326	326	obligations under Section 154.161(a) with respect to the contract;
327	327	and
328	328	(4) the insurance company is presented with:
329	329	(A) appropriate affidavits by an officer or
330	330	designated agent of the seller on forms prescribed by the
331	331	department, attesting to matters required by Subsections (a)(2) and
332	332	(3); and
333	333	(B) a certified copy of the death certificate.
334	334	SECTION 17. Section 154.262(a), Finance Code, is amended to
335	335	read as follows:
336	336	(a) The seller of a trust-funded prepaid funeral benefits
337	337	contract may withdraw an amount equal to the original contract
338	338	amount paid by the purchaser and the earnings attributable to the
339	339	contract, less the amount retained under Section 154.252, after:
340	340	(1) the beneficiary named in the contract dies;
341	341	(2) the funeral service is completed; [and]
342	342	(3) the funeral provider has completed the provider's
343	343	obligations under Section 154.161(a) with respect to the contract;
344	344	and
345	345	(4) the depository is presented with:
346	346	(A) appropriate affidavits by an officer or agent
347	347	of the seller on forms prescribed by the department, attesting to
348	348	matters required by Subsections (a)(2) and (3); and
349	349	(B) a certified copy of the death certificate.
350	350	SECTION 18. Section 154.351, Finance Code, is amended to
351	351	read as follows:
352	352	Sec. 154.351. MAINTENANCE OF GUARANTY FUND. (a) The
353	353	commission by rule shall establish and the department shall
354	354	maintain a fund to guarantee performance by sellers of prepaid
355	355	funeral benefits contracts of their obligations to the purchasers
356	356	[under the provisions of this chapter governing prepaid funeral
357	357	trusts].
358	358	(b) Except as provided by Subsection (c), for purposes of
359	359	claims and assessments, the department shall maintain separate
360	360	accounts within the fund for trust-funded contracts and
361	361	insurance-funded contracts.
362	362	(c) The advisory council under Section 154.355 may
363	363	authorize borrowing between accounts to facilitate prompt and
364	364	efficient resolution of claims against an account with an
365	365	insufficient balance if:
366	366	(1) the indebted account is obligated to pay interest
367	367	at a rate that will reasonably compensate the lending account for
368	368	lost earnings;
369	369	(2) required or planned assessments for the benefit of
370	370	the indebted account are pending and sufficient to repay the
371	371	lending account; and
372	372	(3) assessments collected for the benefit of the
373	373	indebted account are transferred to the lending account until the
374	374	borrowed amount plus interest has been repaid.
375	375	SECTION 19. Subchapter H, Chapter 154, Finance Code, is
376	376	amended by adding Section 154.3525 to read as follows:
377	377	Sec. 154.3525. ASSESSMENT ON INSURANCE-FUNDED CONTRACTS.
378	378	(a) The department shall assess and collect from a seller not more
379	379	than $1 for each insurance-funded contract sold during each
380	380	calendar year and shall deposit the assessments in the
381	381	insurance-funded contract account within the fund.
382	382	(b) The department shall stop assessing the amounts
383	383	required by Subsection (a) when the amount in the insurance-funded
384	384	contract account reaches $1 million.
385	385	SECTION 20. Section 154.355, Finance Code, is amended to
386	386	read as follows:
387	387	Sec. 154.355. ADVISORY COUNCIL. (a) An advisory council
388	388	composed of the following individuals shall supervise the operation
389	389	and maintenance of the fund:
390	390	(1) the commissioner or the commissioner's
391	391	representative;
392	392	(2) the attorney general or the attorney general's
393	393	representative;
394	394	(3) two representatives [one representative] of the
395	395	prepaid funeral industry appointed by the commission, one of whom
396	396	represents trust-funded prepaid funeral benefits contract sellers
397	397	and one of whom represents insurance-funded prepaid funeral
398	398	benefits contract sellers [Finance Commission of Texas]; and
399	399	(4) one consumer representative appointed by the
400	400	commission [Finance Commission of Texas].
401	401	(b) The prepaid funeral industry and consumer
402	402	representatives serve two-year terms and may not serve more than
403	403	four [two] terms.
404	404	(c) The commissioner shall render a final decision [cast the
405	405	deciding vote] if there is a tie vote by members of the advisory
406	406	council.
407	407	SECTION 21. Subchapter H, Chapter 154, Finance Code, is
408	408	amended by adding Section 154.3551 to read as follows:
409	409	Sec. 154.3551. LIMIT ON LIABILITY. (a) A member of the
410	410	advisory council is not personally liable for damages arising from
411	411	the member's official act or omission under this subchapter unless
412	412	the act or omission is corrupt or malicious.
413	413	(b) The attorney general shall defend an action brought
414	414	against a member of the advisory council arising from an official
415	415	act or omission under this subchapter, including an action
416	416	instituted after the defendant's service with the advisory council
417	417	has terminated.
418	418	(c) The attorney general is not required to defend a member
419	419	of the advisory council against an action relating to:
420	420	(1) the disposition of a claim filed under this
421	421	subchapter; or
422	422	(2) any issue other than the applicability or effect
423	423	of the limitation on liability under this section.
424	424	(d) The commissioner on behalf of the fund, with the advice
425	425	and consent of the advisory council, may contract with the attorney
426	426	general under Chapter 771, Government Code, for legal services not
427	427	covered by this section.
428	428	SECTION 22. Section 154.356, Finance Code, is amended to
429	429	read as follows:
430	430	Sec. 154.356. ASSESSMENT ON OUTSTANDING TRUST-FUNDED
431	431	CONTRACTS TO PAY CLAIMS. (a) To pay a claim against the fund when
432	432	the balance of the trust-funded contract account [fund] is
433	433	insufficient to pay that claim, the advisory council may assess
434	434	each [person that holds a] permit holder that has outstanding
435	435	trust-funded contracts an amount [under this chapter] based on the
436	436	permit holder's proportionate share of the purchasers' deposits on
437	437	all outstanding trust-funded [prepaid funeral benefits] contracts
438	438	determined as of the end of the preceding calendar year.
439	439	(b) The assessments shall be deposited in the trust-funded
440	440	contract account within the fund and administered by the department
441	441	and the advisory council in accordance with commission rules.
442	442	(c) An assessment made under this section is in addition to
443	443	any assessment required by Section 154.352.
444	444	(d) A seller whose permit is revoked or surrendered remains
445	445	liable for any unpaid assessment made before the date of the
446	446	revocation or surrender.
447	447	SECTION 23. Subchapter H, Chapter 154, Finance Code, is
448	448	amended by adding Section 154.3565 to read as follows:
449	449	Sec. 154.3565. ASSESSMENT ON OUTSTANDING INSURANCE-FUNDED
450	450	CONTRACTS TO PAY CLAIMS. (a) To pay a claim against the fund when
451	451	the balance of the insurance-funded contract account is
452	452	insufficient to pay that claim, the advisory council may assess
453	453	each permit holder that has outstanding insurance-funded contracts
454	454	an amount based on the permit holder's proportionate share of all
455	455	outstanding insurance-funded contracts determined as of the end of
456	456	the preceding calendar year.
457	457	(b) The assessments shall be deposited in the
458	458	insurance-funded contract account within the fund and administered
459	459	by the department and the advisory council in accordance with
460	460	commission rules.
461	461	(c) An assessment made under this section is in addition to
462	462	any assessment required by Section 154.3525.
463	463	(d) A seller whose permit is revoked or surrendered remains
464	464	liable for any unpaid assessment made before the date of the
465	465	revocation or surrender.
466	466	SECTION 24. Subchapter H, Chapter 154, Finance Code, is
467	467	amended by adding Sections 154.358, 154.359, and 154.360 to read as
468	468	follows:
469	469	Sec. 154.358. CLAIMS AGAINST FUND. (a) The payment of a
470	470	claim or expense from the fund is a matter of privilege and not of
471	471	right, and a person does not have a vested right in the fund as a
472	472	beneficiary or otherwise.
473	473	(b) A claim against the fund may be made by:
474	474	(1) a purchaser of a prepaid funeral benefits
475	475	contract;
476	476	(2) a purchaser's estate;
477	477	(3) a permit holder or funeral provider who assumes or
478	478	performs a contract; or
479	479	(4) a claimant for the benefit of a group of purchasers
480	480	of prepaid funeral benefits contracts as part of a plan to arrange
481	481	for another permit holder to assume the contract obligations.
482	482	(c) An approved claim or expense relating to a trust-funded
483	483	contract may be paid only from the fund's trust-funded contract
484	484	account. An approved claim or expense relating to an
485	485	insurance-funded contract may be paid only from the fund's
486	486	insurance-funded contract account.
487	487	Sec. 154.359. PERMISSIBLE USES OF FUND. (a) In addition to
488	488	uses authorized by Section 154.354, the fund may be used to pay:
489	489	(1) a loss attributable to the failure or inability of
490	490	a permit holder to provide the prepaid funeral benefits under a
491	491	prepaid contract or to refund the appropriate amount due because of
492	492	a contract cancellation;
493	493	(2) expenses of a plan to arrange for another permit
494	494	holder to assume the obligations under a prepaid funeral benefits
495	495	contract or a group of prepaid funeral benefits contracts if the
496	496	commissioner finds, with the advice and consent of the advisory
497	497	council, that the plan is reasonable and in the best interests of
498	498	the contract beneficiaries;
499	499	(3) administrative expenses related to servicing and
500	500	handling outstanding prepaid funeral benefits contracts that have
501	501	not been assumed by another permit holder;
502	502	(4) expenses for administering the receivership of an
503	503	insolvent permit holder if the permit holder's assets are
504	504	insufficient to pay those expenses; and
505	505	(5) expenses to employ and compensate a consultant, an
506	506	agent, legal counsel, an accountant, and any other person
507	507	appropriate and consistent with the purpose of the fund, as
508	508	determined by the advisory council.
509	509	(b) The fund is not authorized to pay any claimant an amount
510	510	that exceeds the contractual obligations specified by the express
511	511	written terms of the prepaid funeral benefits contract, including:
512	512	(1) a claim based on marketing materials;
513	513	(2) a claim based on side letters or other documents
514	514	that do not comply with the requirements of this chapter;
515	515	(3) a claim based on misrepresentation of the benefits
516	516	conferred by the contract or a funding insurance policy; or
517	517	(4) a claim for court costs, attorney's fees,
518	518	penalties, or consequential or incidental damages.
519	519	(c) A claim may not be approved for a loss to the extent the
520	520	claim is insured, bonded, or otherwise covered, protected, or
521	521	reimbursed from other sources, including coverage provided by the
522	522	Texas Life, Accident, Health, and Hospital Service Insurance
523	523	Guaranty Association under Chapter 463, Insurance Code.
524	524	Sec. 154.360. SUBROGATION. (a) A person receiving a
525	525	benefit under this chapter, including a payment of or on account of
526	526	a contractual obligation or provision of substitute or alternative
527	527	prepaid funeral benefits, is considered to have assigned to the
528	528	fund the rights under, and any cause of action relating to, the
529	529	prepaid funeral benefits contract to the extent of the benefit
530	530	received. Notwithstanding this assignment by law, the commissioner
531	531	may require a payee to execute a formal assignment of the person's
532	532	rights and cause of action to the fund as a condition of receiving a
533	533	right or benefit under this subchapter.
534	534	(b) The fund retains all common law rights of subrogation
535	535	and any other equitable or legal remedy that would have been
536	536	available to a recipient of benefits from the fund with respect to a
537	537	prepaid funeral benefits contract.
538	538	(c) The commissioner, on behalf of the fund, may bring an
539	539	action against any person and may employ and compensate a
540	540	consultant, an agent, legal counsel, an accountant, or any other
541	541	person the commissioner considers appropriate to collect a
542	542	subrogated amount. Payment shall be made from the appropriate
543	543	account within the fund for these services. Any recovery of a
544	544	subrogated amount shall be deposited in the appropriate account
545	545	within the fund.
546	546	SECTION 25. Sections 154.408(b) and (d), Finance Code, are
547	547	amended to read as follows:
548	548	(b) The order must state:
549	549	(1) with reasonable certainty the grounds for the
550	550	order; and
551	551	(2) the effective date of [, which may not be before
552	552	the 16th day after the date] the order [is mailed].
553	553	(d) Except as provided by Section 154.4081, the [The] order
554	554	takes effect as proposed, except that the order may not take effect
555	555	before the 16th day after the date the order is mailed unless the
556	556	person named in the order requests a hearing not later than the 15th
557	557	day after the date the order is mailed.
558	558	SECTION 26. Subchapter I, Chapter 154, Finance Code, is
559	559	amended by adding Section 154.4081 to read as follows:
560	560	Sec. 154.4081. EMERGENCY ORDER. (a) The commissioner may
561	561	issue an emergency order that takes effect immediately if the
562	562	commissioner finds that immediate and irreparable harm is
563	563	threatened to the public or a beneficiary under a prepaid funeral
564	564	benefits contract.
565	565	(b) An emergency order remains in effect unless stayed by
566	566	the commissioner.
567	567	(c) The person named in the order may request in writing an
568	568	opportunity for a hearing to show that the emergency order should be
569	569	stayed. On receipt of the request, the commissioner shall set a
570	570	time for the hearing before the 22nd day after the date the
571	571	commissioner received the request, unless extended at the request
572	572	of the person named in the order.
573	573	(d) The hearing is an administrative hearing relating to the
574	574	validity of findings that support immediate effect of the order.
575	575	SECTION 27. The heading to Section 154.412, Finance Code,
576	576	is amended to read as follows:
577	577	Sec. 154.412. SEIZURE OF PREPAID FUNERAL ACCOUNTS [MONEY]
578	578	AND RECORDS.
579	579	SECTION 28. Section 154.412, Finance Code, is amended by
580	580	amending Subsections (a), (c), and (d) and adding Subsections
581	581	(c-1), (f), and (g) to read as follows:
582	582	(a) The [After the commissioner cancels or fails to renew a
583	583	permit under Section 154.109(a) or on notice to a person required to
584	584	obtain a permit under this chapter, the] commissioner may issue an
585	585	order to seize accounts in which [the] prepaid funeral funds
586	586	[money], including earnings, may be [where that money is] held and
587	587	may issue an order to seize the records that relate to the sale of
588	588	prepaid funeral benefits if the commissioner finds, by examination
589	589	or other credible evidence, that the person:
590	590	(1) failed to deposit or remit money in accordance
591	591	with Subchapter E or F;
592	592	(2) misappropriated, converted, or illegally withheld
593	593	or failed or refused to pay on demand money entrusted to the person
594	594	that belongs to the beneficiary under a prepaid funeral benefits
595	595	contract;
596	596	(3) refused to submit to examination by the
597	597	department;
598	598	(4) was the subject of an order to cancel, suspend, or
599	599	refuse to renew a permit; or
600	600	(5) does not hold a permit or transferred the
601	601	ownership of its business to another person who does not hold a
602	602	permit [and who:
603	603	[(A) did not apply for a new permit before the
604	604	31st day after the date the transfer was completed; or
605	605	[(B) was denied a new permit].
606	606	(c) An order takes effect immediately, and remains in effect
607	607	unless stayed by the commissioner, if the commissioner finds that
608	608	immediate and irreparable harm is threatened to the public or a
609	609	beneficiary under a prepaid funeral benefits contract. If such a
610	610	threat does not exist, the order must state the effective date,
611	611	which may not be before the 16th day after the date the order is
612	612	mailed.
613	613	(c-1) An emergency order remains in effect unless stayed by
614	614	the commissioner. The person named in the order may request in
615	615	writing an opportunity for a hearing to show that the emergency
616	616	order should be stayed. On receipt of the request, the commissioner
617	617	shall set a time before the 22nd day after the date the commissioner
618	618	received the request, unless extended at the request of the person
619	619	named in the order. The hearing is an administrative hearing
620	620	relating to the findings that support immediate effect of the
621	621	order.
622	622	(d) A nonemergency [An] order takes effect as proposed
623	623	unless the person named in the order requests a hearing not later
624	624	than the 15th day after the date the order is mailed.
625	625	(f) After the issuance of an order under this section, the
626	626	commissioner may initiate an administrative claim for ancillary
627	627	relief, including a claim for:
628	628	(1) costs incurred in the administration, transfer, or
629	629	other disposition of the seized assets and records; or
630	630	(2) costs reasonably expected to be incurred in
631	631	connection with the administration and performance of any
632	632	outstanding prepaid funeral benefits contracts sold by a person
633	633	subject to the order.
634	634	(g) The remedy provided by Subsection (f) is not exclusive
635	635	and does not limit the commissioner's discretion to seek an
636	636	additional remedy authorized under this subchapter.
637	637	SECTION 29. Section 1701.005(a), Insurance Code, is amended
638	638	to read as follows:
639	639	(a) This chapter does not apply to [a rider or endorsement
640	640	that]:
641	641	(1) a rider or endorsement that is used at the request
642	642	of the holder of a policy, contract, or certificate subject to this
643	643	chapter and that[; and
644	644	[(2)] relates to:
645	645	(A) the manner of distribution of benefits under
646	646	the policy, contract, or certificate; or
647	647	(B) the reservation of rights and benefits under
648	648	the policy, contract, or certificate; or
649	649	(2) the modification of a previously approved
650	650	insurance policy form for the sole purpose of adding the statement
651	651	required by Section 154.2021(a).
652	652	SECTION 30. (a) Section 154.102, Finance Code, as amended
653	653	by this Act, applies only to an application for a new permit filed
654	654	on or after September 1, 2009. An application for a new permit that
655	655	was filed in good faith before the effective date of this Act is
656	656	governed by the law as it existed immediately before the effective
657	657	date of this Act, and that law is continued in effect for that
658	658	purpose.
659	659	(b) Section 154.102, Finance Code, as amended by this Act,
660	660	does not apply to the renewal of a permit originally issued before
661	661	September 1, 2009, if the permit is timely and continuously renewed
662	662	after that date and is not suspended, canceled, or nonrenewed for
663	663	reasons other than the requirements of Section 154.102, Finance
664	664	Code. An application for renewal that meets the conditions of this
665	665	subsection is governed by the law as it existed immediately before
666	666	the effective date of this Act, and that law is continued in effect
667	667	for that purpose.
668	668	(c) Section 154.151, Finance Code, as amended by this Act,
669	669	and Section 154.2021(b), Finance Code, as added by this Act, apply
670	670	only to a prepaid funeral benefits contract entered into on or after
671	671	September 1, 2009. A prepaid funeral benefits contract entered
672	672	into before September 1, 2009, is governed by the law as it existed
673	673	immediately before the effective date of this Act, and that law is
674	674	continued in effect for that purpose.
675	675	(d) Section 154.2021(a), Finance Code, as added by this Act,
676	676	applies only to an insurance policy that is delivered, issued for
677	677	delivery, or renewed on or after January 1, 2010. A policy
678	678	delivered, issued for delivery, or renewed before January 1, 2010,
679	679	is governed by the law as it existed immediately before the
680	680	effective date of this Act, and that law is continued in effect for
681	681	that purpose.
682	682	SECTION 31. (a) Subchapter H, Chapter 154, Finance Code, as
683	683	amended by this Act, does not apply to a loss under an
684	684	insurance-funded prepaid funeral benefits contract that arises
685	685	from or relates to the occurrence of one of the following events
686	686	before September 1, 2009:
687	687	(1) an event of default under the contract;
688	688	(2) the suspension, revocation, or refusal to renew
689	689	the permit of the contract seller under Chapter 154, Finance Code;
690	690	or
691	691	(3) the bankruptcy, receivership, seizure, or other
692	692	failure of the contract seller.
693	693	(b) Money in the guaranty fund on September 1, 2009, is
694	694	allocated to the trust-funded account within the guaranty fund
695	695	created by Section 154.351, Finance Code, as amended by this Act.
696	696	SECTION 32. Section 154.106(c), Finance Code, is repealed.
697	697	SECTION 33. (a) Except as provided by Subsection (b) of
698	698	this section, this Act takes effect September 1, 2009.
699	699	(b) The following provisions take effect January 1, 2010:
700	700	(1) Subchapter C-1, Chapter 154, Finance Code, as
701	701	added by this Act; and
702	702	(2) Section 154.2021(a), Finance Code, as added by
703	703	this Act.