Texas 2011 - 82nd Regular

Texas Senate Bill SB1166 Compare Versions

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1	1	82R20571 CLG-F
2	2	By: Carona S.B. No. 1166
3	3	(Nash)
4	4	Substitute the following for S.B. No. 1166: No.
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to prepaid funeral benefits contracts and the prepaid
10	10	funeral contract guaranty fund.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 154.351(a), Finance Code, is amended to
13	13	read as follows:
14	14	(a) The commission by rule shall establish and the
15	15	department shall maintain a fund to guarantee performance by
16	16	sellers of prepaid funeral benefits contracts and funeral providers
17	17	under those contracts of their obligations to the purchasers.
18	18	SECTION 2. Section 154.353, Finance Code, is amended to
19	19	read as follows:
20	20	Sec. 154.353. DEPOSIT OF FUND OR PORTION OF FUND. (a) The
21	21	fund or a portion of the fund may be deposited [with]:
22	22	(1) with the comptroller;
23	23	(2) with a federally insured financial institution
24	24	that has its main office or a branch in this state; or
25	25	(3) in trust with a financial institution that has its
26	26	main office or a branch in this state and is authorized to act as a
27	27	fiduciary in this state.
28	28	(b) If the fund or a portion of the fund is deposited with
29	29	the comptroller, the comptroller shall manage the deposit [fund] as
30	30	trustee of money outside the state treasury.
31	31	SECTION 3. Section 154.355, Finance Code, is amended by
32	32	amending Subsection (a) and adding Subsection (d) to read as
33	33	follows:
34	34	(a) An advisory council composed of the following
35	35	individuals shall supervise the operation and maintenance of the
36	36	fund:
37	37	(1) the commissioner or the commissioner's
38	38	representative;
39	39	(2) [the attorney general or the attorney general's
40	40	representative;
41	41	[(3)] two representatives of the prepaid funeral
42	42	industry appointed by the commission, one of whom represents
43	43	trust-funded prepaid funeral benefits contract sellers and one of
44	44	whom represents insurance-funded prepaid funeral benefits contract
45	45	sellers; and
46	46	(3) [(4)] one consumer representative appointed by
47	47	the commission.
48	48	(d) Notwithstanding Chapter 551, Government Code, or any
49	49	other law, the advisory council may hold an open or closed meeting
50	50	by telephone conference call, videoconference, or other similar
51	51	telecommunication method if:
52	52	(1) notice is given for the meeting as for other
53	53	meetings;
54	54	(2) the notice specifies a location for the meeting at
55	55	which the public may attend;
56	56	(3) each part of the meeting that is required to be
57	57	open to the public is audible to the public at the location
58	58	specified in the notice of the meeting; and
59	59	(4) the meeting is recorded by electronic or other
60	60	means and the recording of each portion of the meeting that is
61	61	required to be open to the public is made available to the public.
62	62	SECTION 4. Section 154.357, Finance Code, is amended to
63	63	read as follows:
64	64	Sec. 154.357. CLAIM AGAINST SELLER, FUNERAL PROVIDER, OR
65	65	DEPOSITORY. The department may assert a claim against a seller,
66	66	funeral provider, or depository that commits a violation of this
67	67	chapter that could result in a claim against the fund.
68	68	SECTION 5. Section 154.358(b), Finance Code, is amended to
69	69	read as follows:
70	70	(b) A claim against the fund may be made by:
71	71	(1) a purchaser of a prepaid funeral benefits
72	72	contract;
73	73	(2) a purchaser's estate;
74	74	(3) a permit holder or funeral provider who assumes or
75	75	performs a contract; or
76	76	(4) a claimant for the benefit of a group of purchasers
77	77	of prepaid funeral benefits contracts as part of a plan to arrange
78	78	for another permit holder or funeral provider to assume the
79	79	contract obligations.
80	80	SECTION 6. Section 154.359(a), Finance Code, is amended to
81	81	read as follows:
82	82	(a) In addition to uses authorized by Section 154.354, the
83	83	fund may be used to pay:
84	84	(1) a loss attributable to the failure or inability of
85	85	a permit holder or funeral provider to perform its [the permit
86	86	holder's] obligations under a prepaid funeral benefits contract;
87	87	(2) expenses of a plan to arrange for another permit
88	88	holder or funeral provider to assume the obligations of the permit
89	89	holder or funeral provider under a prepaid funeral benefits
90	90	contract or a group of prepaid funeral benefits contracts if the
91	91	commissioner finds, with the advice and consent of the advisory
92	92	council, that the plan is reasonable and in the best interests of
93	93	the contract beneficiaries;
94	94	(3) administrative expenses related to servicing and
95	95	handling outstanding prepaid funeral benefits contracts:
96	96	(A) that have not been assumed by another permit
97	97	holder; or
98	98	(B) the obligations under which have not been
99	99	assumed by another funeral provider;
100	100	(4) expenses for administering the receivership of an
101	101	insolvent permit holder or funeral provider if the permit holder's
102	102	or funeral provider's assets are insufficient to pay those
103	103	expenses; and
104	104	(5) expenses to employ and compensate a consultant, an
105	105	agent, legal counsel, an accountant, and any other person
106	106	appropriate and consistent with the purpose of the fund, as
107	107	determined by the advisory council.
108	108	SECTION 7. Subchapter H, Chapter 154, Finance Code, is
109	109	amended by adding Section 154.3595 to read as follows:
110	110	Sec. 154.3595. DEFAULT BY FUNERAL PROVIDER. (a) This
111	111	section applies to a permit holder that administers a prepaid
112	112	funeral benefits contract for which:
113	113	(1) the permit holder is not the funeral provider; and
114	114	(2) there is an actual or anticipated failure or
115	115	inability of the funeral provider to perform its obligations under
116	116	the contract.
117	117	(b) A permit holder to which this section applies shall make
118	118	a reasonable effort to find a substitute funeral provider willing
119	119	to assume the contractual obligations of the defaulting funeral
120	120	provider. A reasonable effort includes:
121	121	(1) identifying and contacting at least three funeral
122	122	providers within the same community or geographic service area as
123	123	the defaulting funeral provider;
124	124	(2) if at least three funeral providers do not exist
125	125	within the same community or geographic service area, identifying
126	126	and contacting at least three funeral providers within a 50-mile
127	127	radius of the defaulting funeral provider; and
128	128	(3) for both Subdivisions (1) and (2), first
129	129	contacting those funeral providers that the permit holder considers
130	130	have services and facilities that are comparable to the defaulting
131	131	funeral provider.
132	132	(c) A permit holder that is unable to locate a substitute
133	133	funeral provider as required by Subsection (b) shall submit
134	134	information to the advisory council describing or identifying:
135	135	(1) all prepaid funeral benefits contracts to which
136	136	the defaulting funeral provider is a party;
137	137	(2) to the extent known, the circumstances underlying
138	138	the default by the original funeral provider and any attempt by the
139	139	permit holder to address the default with the defaulting funeral
140	140	provider;
141	141	(3) any effort by the permit holder to find a
142	142	substitute funeral provider, including:
143	143	(A) the location and identity of each contacted
144	144	funeral provider;
145	145	(B) the terms offered to the funeral provider;
146	146	and
147	147	(C) the terms of any counteroffer or other
148	148	response made by the funeral provider; and
149	149	(4) other information known to the permit holder that
150	150	the permit holder believes may be relevant or useful to the advisory
151	151	council.
152	152	(d) The permit holder shall cooperate with the department
153	153	and the advisory council in facilitating selection of a substitute
154	154	funeral provider by complying with any reasonable request for:
155	155	(1) additional information;
156	156	(2) assistance in negotiating with a potential
157	157	substitute funeral provider; or
158	158	(3) assistance in communicating with a purchaser of an
159	159	affected prepaid funeral benefits contract.
160	160	SECTION 8. The changes in law made by this Act to Subchapter
161	161	H, Chapter 154, Finance Code, do not apply to a loss under a prepaid
162	162	funeral benefits contract sold before the effective date of this
163	163	Act that arises from or relates to the occurrence of one of the
164	164	following events:
165	165	(1) an event of default under the contract
166	166	attributable to the funeral provider unless the funeral provider is
167	167	also the contract seller; or
168	168	(2) the bankruptcy, receivership, seizure, or other
169	169	failure of the funeral provider unless the funeral provider is also
170	170	the contract seller.
171	171	SECTION 9. This Act takes effect immediately if it receives
172	172	a vote of two-thirds of all the members elected to each house, as
173	173	provided by Section 39, Article III, Texas Constitution. If this
174	174	Act does not receive the vote necessary for immediate effect, this
175	175	Act takes effect September 1, 2011.