81R8585 DAK-F
By: Flynn H.B. No. 3801
A BILL TO BE ENTITLED
AN ACT
relating to regulation of prepaid funeral benefits.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 154.002, Finance Code, is amended by
amending Subdivisions (1) and (6) and adding Subdivisions (1-a),
(6-a), and (14) to read as follows:
(1) "Cash advance item" has the meaning assigned by 16
C.F.R. Section 453.1.
(1-a) "Commission" means the Finance Commission of
Texas.
(6) "Funeral provider" means the person [funeral home]
designated in a prepaid funeral benefits contract that has agreed
to provide the specified prepaid funeral benefits.
(6-a) "Insurance-funded contract" means an
insurance-funded prepaid funeral benefits contract.
(14) "Trust-funded contract" means a trust-funded
prepaid funeral benefits contract.
SECTION 2. Section 154.102, Finance Code, is amended to
read as follows:
Sec. 154.102. PERMIT APPLICATION; FEE. To obtain a permit
to sell or continue to sell prepaid funeral benefits, a person must:
(1) be one of the following, if the person proposes to
offer and sell prepaid funeral benefits contracts subject to
Subchapter E:
(A) a funeral provider;
(B) an insurance company; or
(C) the insurance holding company for an
insurance company if the insurance company does not have the
authority under its domiciliary law to directly hold a permit
issued under this chapter;
(2) be a funeral provider, if the person proposes to
offer and sell prepaid funeral benefits contracts subject to
Subchapter F;
(3) file an application for a permit with the
department on a form prescribed by the department;
(4) [(2)] pay a filing fee in an amount set by the
commission under Section 154.051; and
(5) [(3)] if applicable, pay extraordinary expenses
required for out-of-state investigation of the person.
SECTION 3. Sections 154.106(a) and (b), Finance Code, are
amended to read as follows:
(a) A permit holder shall notify [by registered mail] the
department and either the depository of the money held under
Subchapter F or the issuer of insurance policy funding contracts
under Subchapter E of a contract to transfer [in the] ownership of
the permit holder's business not later than the seventh day after
the date the contract [transfer] is executed [completed].
(b) If the proposed transferee [transfer is to a person who]
is not a permit holder, the proposed transferee [person] shall file
an application for a permit with the department in accordance with
this subchapter. If the application is complete, the commissioner
shall approve or deny the application before the 16th [not later
than the 30th] day after the date the application was received. The
transfer of prepaid funeral benefits contracts of the permit holder
that is the transferor may not occur until after the date a permit
is issued to the applicant that is the transferee [transfer is
completed].
SECTION 4. Section 154.109(b), Finance Code, is amended to
read as follows:
(b) The commissioner by order may refuse to renew a permit
if the commissioner finds, by examination or other credible
evidence, that the permit holder does not possess a qualification
required by Section 154.103(b) for issuance of an initial permit,
or 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 commissioner.
SECTION 5. Chapter 154, Finance Code, is amended by adding
Subchapter C-1 to read as follows:
SUBCHAPTER C-1. PRESALE DISCLOSURES
Sec. 154.131. BROCHURE. (a) A seller, directly or
through the seller's designated agent, shall provide an
informational brochure to each potential purchaser of a prepaid
funeral benefits contract.
(b) The brochure must:
(1) describe the regulation of prepaid funeral
benefits contracts and the trust and insurance funding options
available under the law of this state; and
(2) include a reference to the Internet website
required under Section 154.132.
(c) The department:
(1) must approve an informational brochure before the
brochure may be used by the seller; and
(2) may provide a model informational brochure that
complies with this section.
Sec. 154.132. WEBSITE. (a) The department shall establish
and maintain an Internet website that provides information to
enable consumers to make informed decisions relating to the
purchase of prepaid funeral benefits.
(b) The website:
(1) must include a description of the trust and
insurance funding options available under the law of this state;
(2) may include links to and be linked from the
department's website, the Texas Department of Insurance website,
and the Texas Funeral Service Commission website; and
(3) may include additional information or links to
additional information that the department determines may be
helpful to consumers of prepaid funeral benefits in this state.
Sec. 154.133. REFERENCE OR LINK TO WEBSITE. Any sales
literature or a website that offers or promotes the sale of prepaid
funeral benefits contracts to the public must include a reference
or link to the Internet website required under Section 154.132.
SECTION 6. Sections 154.151(c) and (e), Finance Code, are
amended to read as follows:
(c) If a [A] funeral provider designated in the contract to
provide prepaid funeral benefits is [that are] not the seller
licensed under this chapter, [sold by] the funeral provider must:
(1) be a party to the contract; [and]
(2) agree in the contract to provide those benefits;
and
(3) acknowledge and agree to discharge the
responsibilities imposed on a funeral provider by Section 154.161,
either in the prepaid funeral benefits contract or in a separate
writing signed by the funeral provider and the seller.
(e) The commission [Finance Commission of Texas] by rule
shall establish a standard disclosure that must be included in each
contract to inform purchasers of the goods and services that will be
provided or excluded under the contract and the circumstances under
which the contract may be modified after death of the beneficiary.
The commission by rule may prescribe a form for the standard
disclosure that is designed to more closely conform to variations
in sales contract forms that serve different purposes.
SECTION 7. Subchapter D, Chapter 154, Finance Code, is
amended by adding Section 154.1511 to read as follows:
Sec. 154.1511. CASH ADVANCE ITEMS: NON-GUARANTEED
MERCHANDISE AND SERVICES. (a) A purchaser of a prepaid funeral
benefits contract may agree to advance funds for all or any portion
of the estimated cost of cash advance items included in a prepaid
funeral benefits contract, the actual cost of which are to be
determined by existing prices at the time the items are delivered or
provided in connection with at-need performance of the contracted
funeral.
(b) Cash advance items included in a prepaid funeral
benefits contract must be clearly grouped together and segregated
from prepaid funeral benefits in a manner that will permit the
average consumer to easily understand that:
(1) cash advance items are not fixed or guaranteed in
price; and
(2) additional money may be required to fully pay for
those items at the time of the funeral.
(c) A seller shall administer purchaser funds received in
advance for cash advance items under a prepaid funeral benefits
contract in the manner required by Section 154.159.
(d) After the death of the contract beneficiary, the funeral
provider shall apply the proportionate part of the trust or
insurance policy proceeds received under the contract that is
derived from advance payment of cash advance items to the current
purchase price for the items. To the extent the proportionate part
of contract proceeds:
(1) is less than the current purchase price for the
cash advance items, the funeral provider may collect additional
money for the difference in exchange for delivering or providing
the items as part of the contracted funeral; or
(2) is greater than the current purchase price for the
cash advance items, the funeral provider shall promptly refund the
excess amount unless that amount is offset against other amounts
due to the funeral provider in connection with the contracted
funeral.
SECTION 8. Section 154.155(d), Finance Code, is amended to
read as follows:
(d) The purchaser is entitled to receive the actual amount
paid by the purchaser and half of all earnings attributable to that
money, less the amount permitted to be retained as provided by
Section 154.252, except as provided by Subsection (e) and by
Sections 154.1511, 154.1551, 154.205, and 154.254.
SECTION 9. Section 154.1551, Finance Code, is amended by
amending Subsection (a) and adding Subsections (d), (e), and (f) to
read as follows:
(a) The funeral merchandise, funeral [and] services, and
cash advance items selected in [to be provided by the seller under]
a fully paid prepaid funeral benefits contract may be modified
after the death of the beneficiary if the modification complies
with this section [Subsection (b)] or is otherwise agreed to in a
writing signed by the seller or funeral provider and the person
charged with the disposition of the beneficiary's remains by
Section 711.002(a), Health and Safety Code, except that[:
[(1)] if the purchaser of the contract is also the
beneficiary:
(1) [(A)] the contracted funeral merchandise and
services may not be modified if the contract contains a clause that
prohibits modification; and
(2) [(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 contracted funeral
merchandise or service 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].
(d) A modification of contracted funeral merchandise or
services must comply with Subsection (b), and the value attributed
to any contracted funeral merchandise or service that is
surrendered or exchanged in the 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.
(e) A modification of cash advance items included in the
contract under Section 154.1511 must comply with Subsection (f).
(f) A person charged with disposition of the beneficiary's
remains may add, surrender, cancel, or modify any cash advance item
included under the contract at the time the funeral is performed
only if:
(1) the value attributed to any contracted funeral
merchandise or service that is surrendered in a modification,
determined as provided under Subsection (d), may be applied to the
unpaid cost of contracted or additional cash advance items; and
(2) the funeral provider promptly refunds the
proportionate part of the trust or insurance policy proceeds
received under the contract that is derived from advance payment of
a surrendered or canceled cash advance item to the extent the
proceeds are not applied to the unpaid cost of additional cash
advance items or additional funeral merchandise or services
requested by the person charged with disposition of the
beneficiary's remains.
SECTION 10. Section 154.156(a), Finance Code, is amended to
read as follows:
(a) The purchaser of a prepaid funeral benefits contract may
irrevocably waive the purchaser's right to cancel the contract
under Section 154.155. The waiver must be in a separate writing
signed by the purchaser and the seller and [not earlier than the
15th day after the date of the purchase of the contract. The form of
the waiver] must comply with the plain language requirements for
the form of a sales contract under Section 154.151.
SECTION 11. Section 154.160(b), Finance Code, is amended to
read as follows:
(b) The seller shall notify the department of:
(1) the designation not later than the 10th day after
the date the seller becomes subject to this chapter; and
(2) any change in the designation not later than the
10th day after [within the 10-day period preceding] the date of the
change.
SECTION 12. Subchapter D, Chapter 154, Finance Code, is
amended by adding Section 154.161 to read as follows:
Sec. 154.161. RESPONSIBILITIES OF FUNERAL PROVIDER. (a)
The funeral provider under a prepaid funeral benefits contract
subject to this chapter shall:
(1) in compliance with applicable law, protect any
nonpublic personal financial and health information of the
purchaser and contract beneficiary in the possession of the funeral
provider;
(2) after the death of the contract beneficiary:
(A) deliver the contracted funeral merchandise
and services and cash advance items required under the contract,
subject to Section 154.1551;
(B) prepare a written pre-need to at-need
reconciliation to verify that the specified goods and services are
delivered or performed for the agreed price and promptly refund any
contract overcharges that may be revealed by the reconciliation;
and
(C) if advance payment of cash advance items was
included in the contract, prepare a reconciliation of proceeds
applied to cash advance items; and
(3) with respect to each prepaid funeral benefits
contract for which the funeral provider is not also the seller:
(A) sign the reconciliations required by
Subsection (a)(2);
(B) promptly deliver the records that verify
contract performance to the seller, including the final at-need
contract, the certificate of performance, and the reconciliations
required under Subsection (a)(2);
(C) if requested by the seller, correct or
explain any discrepancy in a reconciliation required under
Subsection (a)(2); and
(D) provide copies of any other records or
documentation related to the offer, sale, and performance of the
contract that are reasonably requested by the seller or the
department, including records related to any refund required by
Section 154.1511 or 154.1551.
(b) The seller shall report to the department any
discrepancy in a reconciliation required under Subsection (a)(2)
that remains unresolved after a request for correction is made
under Subsection (a)(3)(C).
SECTION 13. Subchapter E, Chapter 154, Finance Code, is
amended by adding Section 154.2021 to read as follows:
Sec. 154.2021. REQUIREMENTS FOR INSURANCE POLICIES. (a) An
insurance policy used to fund prepaid funeral benefits under this
chapter must contain the following statement on the cover page or
otherwise within the policy or a rider to the policy: "This policy
is issued to fund a prepaid funeral benefits contract subject to
Chapter 154 of the Texas Finance Code. Cancellation of the prepaid
funeral benefits contract does not automatically cancel this
policy."
(b) The aggregate initial face value of one or more
insurance policies issued to fund a prepaid funeral benefits
contract may not exceed the total contract price by more than five
percent unless the purchaser:
(1) receives a conspicuous written disclosure of the
purpose and amount of the excess coverage and how the insurance
benefit will be applied at contract maturity; and
(2) consents in writing to the purchase of the excess
coverage.
SECTION 14. Section 154.205, Finance Code, is amended to
read as follows:
Sec. 154.205. AMOUNT PAYABLE ON CANCELLATION OF CONTRACT.
A purchaser of an insurance-funded prepaid funeral benefits
contract who cancels the contract [during the first year of the
contract when payments required under the contract are current] is
entitled to receive the cash surrender value of the insurance
policy if the policy is also canceled. Cancellation of the contract
does not automatically cancel the funding insurance policy.
SECTION 15. Section 154.206, Finance Code, is amended to
read as follows:
Sec. 154.206. ASSIGNMENT OF RIGHT TO BENEFITS. The
purchaser of an insurance-funded prepaid funeral benefits contract
may irrevocably assign the purchaser's ownership of and rights to
benefits under the insurance policy to the seller, the funeral
provider, the trustee, or other person. An assignee under this
section is subject to a fiduciary duty to apply the insurance policy
benefits as provided by the contract and this chapter.
SECTION 16. Section 154.207(a), Finance Code, is amended to
read as follows:
(a) The seller or funeral provider may withdraw the benefits
payable under an insurance policy funding prepaid funeral benefits
after:
(1) the beneficiary named in the contract dies;
(2) the funeral service is completed; [and]
(3) the funeral provider has completed the provider's
obligations under Section 154.161(a) with respect to the contract;
and
(4) the insurance company is presented with:
(A) appropriate affidavits by an officer or
designated agent of the seller on forms prescribed by the
department, attesting to matters required by Subsections (a)(2) and
(3); and
(B) a certified copy of the death certificate.
SECTION 17. Section 154.262(a), Finance Code, is amended to
read as follows:
(a) The seller of a trust-funded prepaid funeral benefits
contract may withdraw an amount equal to the original contract
amount paid by the purchaser and the earnings attributable to the
contract, less the amount retained under Section 154.252, after:
(1) the beneficiary named in the contract dies;
(2) the funeral service is completed; [and]
(3) the funeral provider has completed the provider's
obligations under Section 154.161(a) with respect to the contract;
and
(4) the depository is presented with:
(A) appropriate affidavits by an officer or agent
of the seller on forms prescribed by the department, attesting to
matters required by Subsections (a)(2) and (3); and
(B) a certified copy of the death certificate.
SECTION 18. Section 154.351, Finance Code, is amended to
read as follows:
Sec. 154.351. MAINTENANCE OF GUARANTY FUND. (a) The
commission by rule shall establish and the department shall
maintain a fund to guarantee performance by sellers of prepaid
funeral benefits contracts of their obligations to the purchasers
[under the provisions of this chapter governing prepaid funeral
trusts].
(b) Except as provided by Subsection (c), for purposes of
claims and assessments, the department shall maintain separate
accounts within the fund for trust-funded contracts and
insurance-funded contracts.
(c) The advisory council under Section 154.355 may
authorize borrowing between accounts to facilitate prompt and
efficient resolution of claims against an account with an
insufficient balance if:
(1) the indebted account is obligated to pay interest
at a rate that will reasonably compensate the lending account for
lost earnings;
(2) required or planned assessments for the benefit of
the indebted account are pending and sufficient to repay the
lending account; and
(3) assessments collected for the benefit of the
indebted account are transferred to the lending account until the
borrowed amount plus interest has been repaid.
SECTION 19. Subchapter H, Chapter 154, Finance Code, is
amended by adding Section 154.3525 to read as follows:
Sec. 154.3525. ASSESSMENT ON INSURANCE-FUNDED CONTRACTS.
(a) The department shall assess and collect from a seller not more
than $1 for each insurance-funded contract sold during each
calendar year and shall deposit the assessments in the
insurance-funded contract account within the fund.
(b) The department shall stop assessing the amounts
required by Subsection (a) when the amount in the insurance-funded
contract account reaches $1 million.
SECTION 20. Section 154.355, Finance Code, is amended to
read as follows:
Sec. 154.355. ADVISORY COUNCIL. (a) An advisory council
composed of the following individuals shall supervise the operation
and maintenance of the fund:
(1) the commissioner or the commissioner's
representative;
(2) the attorney general or the attorney general's
representative;
(3) two representatives [one representative] of the
prepaid funeral industry appointed by the commission, one of whom
represents trust-funded prepaid funeral benefits contract sellers
and one of whom represents insurance-funded prepaid funeral
benefits contract sellers [Finance Commission of Texas]; and
(4) one consumer representative appointed by the
commission [Finance Commission of Texas].
(b) The prepaid funeral industry and consumer
representatives serve two-year terms and may not serve more than
four [two] terms.
(c) The commissioner shall render a final decision [cast the
deciding vote] if there is a tie vote by members of the advisory
council.
SECTION 21. Subchapter H, Chapter 154, Finance Code, is
amended by adding Section 154.3551 to read as follows:
Sec. 154.3551. LIMIT ON LIABILITY. (a) A member of the
advisory council is not personally liable for damages arising from
the member's official act or omission under this subchapter unless
the act or omission is corrupt or malicious.
(b) The attorney general shall defend an action brought
against a member of the advisory council arising from an official
act or omission under this subchapter, including an action
instituted after the defendant's service with the advisory council
has terminated.
(c) The attorney general is not required to defend a member
of the advisory council against an action relating to:
(1) the disposition of a claim filed under this
subchapter; or
(2) any issue other than the applicability or effect
of the limitation on liability under this section.
(d) The commissioner on behalf of the fund, with the advice
and consent of the advisory council, may contract with the attorney
general under Chapter 771, Government Code, for legal services not
covered by this section.
SECTION 22. Section 154.356, Finance Code, is amended to
read as follows:
Sec. 154.356. ASSESSMENT ON OUTSTANDING TRUST-FUNDED
CONTRACTS TO PAY CLAIMS. (a) To pay a claim against the fund when
the balance of the trust-funded contract account [fund] is
insufficient to pay that claim, the advisory council may assess
each [person that holds a] permit holder that has outstanding
trust-funded contracts an amount [under this chapter] based on the
permit holder's proportionate share of the purchasers' deposits on
all outstanding trust-funded [prepaid funeral benefits] contracts
determined as of the end of the preceding calendar year.
(b) The assessments shall be deposited in the trust-funded
contract account within the fund and administered by the department
and the advisory council in accordance with commission rules.
(c) An assessment made under this section is in addition to
any assessment required by Section 154.352.
(d) A seller whose permit is revoked or surrendered remains
liable for any unpaid assessment made before the date of the
revocation or surrender.
SECTION 23. Subchapter H, Chapter 154, Finance Code, is
amended by adding Section 154.3565 to read as follows:
Sec. 154.3565. ASSESSMENT ON OUTSTANDING INSURANCE-FUNDED
CONTRACTS TO PAY CLAIMS. (a) To pay a claim against the fund when
the balance of the insurance-funded contract account is
insufficient to pay that claim, the advisory council may assess
each permit holder that has outstanding insurance-funded contracts
an amount based on the permit holder's proportionate share of all
outstanding insurance-funded contracts determined as of the end of
the preceding calendar year.
(b) The assessments shall be deposited in the
insurance-funded contract account within the fund and administered
by the department and the advisory council in accordance with
commission rules.
(c) An assessment made under this section is in addition to
any assessment required by Section 154.3525.
(d) A seller whose permit is revoked or surrendered remains
liable for any unpaid assessment made before the date of the
revocation or surrender.
SECTION 24. Subchapter H, Chapter 154, Finance Code, is
amended by adding Sections 154.358, 154.359, and 154.360 to read as
follows:
Sec. 154.358. CLAIMS AGAINST FUND. (a) The payment of a
claim or expense from the fund is a matter of privilege and not of
right, and a person does not have a vested right in the fund as a
beneficiary or otherwise.
(b) A claim against the fund may be made by:
(1) a purchaser of a prepaid funeral benefits
contract;
(2) a purchaser's estate;
(3) a permit holder or funeral provider who assumes or
performs a contract; or
(4) a claimant for the benefit of a group of purchasers
of prepaid funeral benefits contracts as part of a plan to arrange
for another permit holder to assume the contract obligations.
(c) An approved claim or expense relating to a trust-funded
contract may be paid only from the fund's trust-funded contract
account. An approved claim or expense relating to an
insurance-funded contract may be paid only from the fund's
insurance-funded contract account.
Sec. 154.359. PERMISSIBLE USES OF FUND. (a) In addition to
uses authorized by Section 154.354, the fund may be used to pay:
(1) a loss attributable to the failure or inability of
a permit holder to provide the prepaid funeral benefits under a
prepaid contract or to refund the appropriate amount due because of
a contract cancellation;
(2) expenses of a plan to arrange for another permit
holder to assume the obligations under a prepaid funeral benefits
contract or a group of prepaid funeral benefits contracts if the
commissioner finds, with the advice and consent of the advisory
council, that the plan is reasonable and in the best interests of
the contract beneficiaries;
(3) administrative expenses related to servicing and
handling outstanding prepaid funeral benefits contracts that have
not been assumed by another permit holder;
(4) expenses for administering the receivership of an
insolvent permit holder if the permit holder's assets are
insufficient to pay those expenses; and
(5) expenses to employ and compensate a consultant, an
agent, legal counsel, an accountant, and any other person
appropriate and consistent with the purpose of the fund, as
determined by the advisory council.
(b) The fund is not authorized to pay any claimant an amount
that exceeds the contractual obligations specified by the express
written terms of the prepaid funeral benefits contract, including:
(1) a claim based on marketing materials;
(2) a claim based on side letters or other documents
that do not comply with the requirements of this chapter;
(3) a claim based on misrepresentation of the benefits
conferred by the contract or a funding insurance policy; or
(4) a claim for court costs, attorney's fees,
penalties, or consequential or incidental damages.
(c) A claim may not be approved for a loss to the extent the
claim is insured, bonded, or otherwise covered, protected, or
reimbursed from other sources, including coverage provided by the
Texas Life, Accident, Health, and Hospital Service Insurance
Guaranty Association under Chapter 463, Insurance Code.
Sec. 154.360. SUBROGATION. (a) A person receiving a
benefit under this chapter, including a payment of or on account of
a contractual obligation or provision of substitute or alternative
prepaid funeral benefits, is considered to have assigned to the
fund the rights under, and any cause of action relating to, the
prepaid funeral benefits contract to the extent of the benefit
received. Notwithstanding this assignment by law, the commissioner
may require a payee to execute a formal assignment of the person's
rights and cause of action to the fund as a condition of receiving a
right or benefit under this subchapter.
(b) The fund retains all common law rights of subrogation
and any other equitable or legal remedy that would have been
available to a recipient of benefits from the fund with respect to a
prepaid funeral benefits contract.
(c) The commissioner, on behalf of the fund, may bring an
action against any person and may employ and compensate a
consultant, an agent, legal counsel, an accountant, or any other
person the commissioner considers appropriate to collect a
subrogated amount. Payment shall be made from the appropriate
account within the fund for these services. Any recovery of a
subrogated amount shall be deposited in the appropriate account
within the fund.
SECTION 25. Sections 154.408(b) and (d), Finance Code, are
amended to read as follows:
(b) The order must state:
(1) with reasonable certainty the grounds for the
order; and
(2) the effective date of [, which may not be before
the 16th day after the date] the order [is mailed].
(d) Except as provided by Section 154.4081, the [The] order
takes effect as proposed, except that the order may not take effect
before the 16th day after the date the order is mailed unless the
person named in the order requests a hearing not later than the 15th
day after the date the order is mailed.
SECTION 26. Subchapter I, Chapter 154, Finance Code, is
amended by adding Section 154.4081 to read as follows:
Sec. 154.4081. EMERGENCY ORDER. (a) The commissioner may
issue an emergency order that takes effect immediately if the
commissioner finds that immediate and irreparable harm is
threatened to the public or a beneficiary under a prepaid funeral
benefits contract.
(b) An emergency order remains in effect unless stayed by
the commissioner.
(c) The person named in the order may request in writing an
opportunity for a hearing to show that the emergency order should be
stayed. On receipt of the request, the commissioner shall set a
time for the hearing before the 22nd day after the date the
commissioner received the request, unless extended at the request
of the person named in the order.
(d) The hearing is an administrative hearing relating to the
validity of findings that support immediate effect of the order.
SECTION 27. The heading to Section 154.412, Finance Code,
is amended to read as follows:
Sec. 154.412. SEIZURE OF PREPAID FUNERAL ACCOUNTS [MONEY]
AND RECORDS.
SECTION 28. Section 154.412, Finance Code, is amended by
amending Subsections (a), (c), and (d) and adding Subsections
(c-1), (f), and (g) to read as follows:
(a) The [After the commissioner cancels or fails to renew a
permit under Section 154.109(a) or on notice to a person required to
obtain a permit under this chapter, the] commissioner may issue an
order to seize accounts in which [the] prepaid funeral funds
[money], including earnings, may be [where that money is] held and
may issue an order to seize the records that relate to the sale of
prepaid funeral benefits if the commissioner finds, by examination
or other credible evidence, that the person:
(1) failed to deposit or remit money in accordance
with Subchapter E or F;
(2) misappropriated, converted, or illegally withheld
or failed or refused to pay on demand money entrusted to the person
that belongs to the beneficiary under a prepaid funeral benefits
contract;
(3) refused to submit to examination by the
department;
(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].
(c) An order takes effect immediately, and remains in effect
unless stayed by the commissioner, if the commissioner finds that
immediate and irreparable harm is threatened to the public or a
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.
(c-1) An emergency order remains in effect unless stayed by
the commissioner. The person named in the order may request in
writing an opportunity for a hearing to show that the emergency
order should be stayed. On receipt of the request, the commissioner
shall set a time before the 22nd day after the date the commissioner
received the request, unless extended at the request of the person
named in the order. The hearing is an administrative hearing
relating to the findings that support immediate effect of the
order.
(d) A nonemergency [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.
(f) After the issuance of an order under this section, the
commissioner may initiate an administrative claim for ancillary
relief, including a claim for:
(1) costs incurred in the administration, transfer, or
other disposition of the seized assets and records; or
(2) costs reasonably expected to be incurred in
connection with the administration and performance of any
outstanding prepaid funeral benefits contracts sold by a person
subject to the order.
(g) The remedy provided by Subsection (f) is not exclusive
and does not limit the commissioner's discretion to seek an
additional remedy authorized under this subchapter.
SECTION 29. Section 1701.005(a), Insurance Code, is amended
to read as follows:
(a) This chapter does not apply to [a rider or endorsement
that]:
(1) a rider or endorsement that is used at the request
of the holder of a policy, contract, or certificate subject to this
chapter and that[; and
[(2)] relates to:
(A) the manner of distribution of benefits under
the policy, contract, or certificate; or
(B) the reservation of rights and benefits under
the policy, contract, or certificate; or
(2) the modification of a previously approved
insurance policy form for the sole purpose of adding the statement
required by Section 154.2021(a).
SECTION 30. (a) Section 154.102, Finance Code, as amended
by this Act, applies only to an application for a new permit filed
on or after September 1, 2009. An application for a new permit that
was filed in good faith before the effective date of this Act is
governed by the law as it existed immediately before the effective
date of this Act, and that law is continued in effect for that
purpose.
(b) Section 154.102, Finance Code, as amended by this Act,
does not apply to the renewal of a permit originally issued before
September 1, 2009, if the permit is timely and continuously renewed
after that date and is not suspended, canceled, or nonrenewed for
reasons other than the requirements of Section 154.102, Finance
Code. An application for renewal that meets the conditions of this
subsection is governed by the law as it existed immediately before
the effective date of this Act, and that law is continued in effect
for that purpose.
(c) Section 154.151, Finance Code, as amended by this Act,
and Section 154.2021(b), Finance Code, as added by this Act, apply
only to a prepaid funeral benefits contract entered into on or after
September 1, 2009. A prepaid funeral benefits contract entered
into before September 1, 2009, is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
(d) Section 154.2021(a), Finance Code, as added by this Act,
applies only to an insurance policy that is delivered, issued for
delivery, or renewed on or after January 1, 2010. A policy
delivered, issued for delivery, or renewed before January 1, 2010,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 31. (a) Subchapter H, Chapter 154, Finance Code, as
amended by this Act, does not apply to a loss under an
insurance-funded prepaid funeral benefits contract that arises
from or relates to the occurrence of one of the following events
before September 1, 2009:
(1) an event of default under the contract;
(2) the suspension, revocation, or refusal to renew
the permit of the contract seller under Chapter 154, Finance Code;
or
(3) the bankruptcy, receivership, seizure, or other
failure of the contract seller.
(b) Money in the guaranty fund on September 1, 2009, is
allocated to the trust-funded account within the guaranty fund
created by Section 154.351, Finance Code, as amended by this Act.
SECTION 32. Section 154.106(c), Finance Code, is repealed.
SECTION 33. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2009.
(b) The following provisions take effect January 1, 2010:
(1) Subchapter C-1, Chapter 154, Finance Code, as
added by this Act; and
(2) Section 154.2021(a), Finance Code, as added by
this Act.