Texas 2013 - 83rd Regular

Texas House Bill HB1489 Compare Versions

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1	1	83R15678 ATP-F
2	2	By: Flynn H.B. No. 1489
3	3	Substitute the following for H.B. No. 1489:
4	4	By: Villarreal C.S.H.B. No. 1489
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to prepaid funeral benefits contracts; authorizing a fee.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 154.106, Finance Code, is amended to
12	12	read as follows:
13	13	Sec. 154.106. TRANSFER OF BUSINESS OWNERSHIP. (a) A permit
14	14	holder shall notify the department and either the depository of the
15	15	money held under Subchapter F or the issuer of insurance policy
16	16	funding contracts under Subchapter E of a [contract to] transfer of
17	17	ownership of the permit holder's business or a transfer of 25
18	18	percent or more of the stock or other ownership or membership
19	19	interest of the business in a single transaction. The notice must be
20	20	given:
21	21	(1) in the case of a voluntary transfer, not later than
22	22	the seventh day after the date the contract for transfer is
23	23	executed; or
24	24	(2) in the case of an involuntary transfer, not later
25	25	than the first business day after the date the permit holder
26	26	receives notice of the impending foreclosure or other involuntary
27	27	transfer.
28	28	(b) If the proposed transferee will own 51 percent or more
29	29	of the business and is not a permit holder, the proposed transferee
30	30	shall file an application for a permit with the department in
31	31	accordance with this subchapter. If the application is complete,
32	32	the commissioner shall approve or deny the application before the
33	33	16th day after the date the application was received. The transfer
34	34	of prepaid funeral benefits contracts of the permit holder that is
35	35	the transferor may not occur until after the date a permit is issued
36	36	to the applicant that is the transferee.
37	37	(c) If the commissioner denies the application, the
38	38	applicant may request a hearing not later than the 15th day after
39	39	the date on which notice of the determination is hand-delivered or
40	40	the notice is mailed, whichever date is earlier.
41	41	SECTION 2. Section 154.107, Finance Code, is amended to
42	42	read as follows:
43	43	Sec. 154.107. REQUIRED RENEWAL FOR [CERTAIN] SELLERS. (a)
44	44	A seller that [discontinues the sale of prepaid funeral benefits
45	45	but] has outstanding contracts shall renew the seller's permit
46	46	until the contracts are fully discharged.
47	47	(b) A seller may renew the seller's permit as an
48	48	unrestricted permit if the seller:
49	49	(1) wishes to continue to sell prepaid funeral
50	50	benefits; and
51	51	(2) demonstrates to the commissioner that the seller
52	52	continues to meet the qualifications and satisfy the requirements
53	53	that apply to an applicant for a permit.
54	54	(c) A seller must renew the seller's permit as a restricted
55	55	permit if the seller:
56	56	(1) cannot demonstrate to the commissioner that the
57	57	seller continues to meet the qualifications and satisfy the
58	58	requirements that apply to an applicant for a permit; or
59	59	(2) no longer wishes to sell prepaid funeral benefits.
60	60	(d) A seller that holds a restricted permit may not sell
61	61	prepaid funeral benefits during the period a restricted permit is
62	62	in effect. A contract entered into by a seller that at the time the
63	63	contract is entered into holds a restricted permit is void and
64	64	unenforceable and is not eligible for payment from a guaranty fund
65	65	established under this chapter.
66	66	SECTION 3. Section 154.161(a), Finance Code, is amended to
67	67	read as follows:
68	68	(a) The funeral provider under a prepaid funeral benefits
69	69	contract subject to this chapter shall:
70	70	(1) in compliance with applicable law, protect any
71	71	nonpublic personal financial and health information of the
72	72	purchaser and contract beneficiary in the possession of the funeral
73	73	provider;
74	74	(2) after the death of the contract beneficiary:
75	75	(A) deliver the contracted funeral merchandise
76	76	and services and cash advance items required under the contract,
77	77	subject to Section 154.1551;
78	78	(B) prepare a written pre-need to at-need
79	79	reconciliation to verify that the specified goods and services are
80	80	delivered or performed for the agreed price and promptly refund any
81	81	contract overcharges that may be revealed by the reconciliation;
82	82	(C) if advance payment of cash advance items was
83	83	included in the contract, prepare a reconciliation of proceeds
84	84	applied to cash advance items; and
85	85	(D) retain a copy of each reconciliation until
86	86	the third anniversary of the date of service; and
87	87	(3) with respect to each prepaid funeral benefits
88	88	contract for which the funeral provider is not also the seller:
89	89	(A) sign the reconciliations required by
90	90	Subdivision (2);
91	91	(B) promptly deliver the records that verify
92	92	contract performance to the seller, including the final at-need
93	93	contract, the certificate of performance, and the reconciliations
94	94	required under Subdivision (2);
95	95	(C) if requested by the seller, correct or
96	96	explain any discrepancy in a reconciliation required under
97	97	Subdivision (2); [and]
98	98	(D) subject to Subsection (d), provide copies of
99	99	any other records or documentation related to the offer, sale, and
100	100	performance of the contract that are reasonably requested by the
101	101	seller or the department, including records related to any refund
102	102	required by Section 154.1511 or 154.1551; and
103	103	(E) inform each seller with which the funeral
104	104	provider has an outstanding contract of any closure of the
105	105	provider's funeral establishments not later than the 15th day after
106	106	the date of closure.
107	107	SECTION 4. Section 154.253, Finance Code, is amended to
108	108	read as follows:
109	109	Sec. 154.253. DEPOSIT OF MONEY PAID OR COLLECTED. (a) Not
110	110	later than the 30th day after the date of collection, the money,
111	111	other than money retained as provided by Section 154.252, shall be
112	112	deposited:
113	113	(1) in a financial institution that has its main
114	114	office or a branch in this state in an interest-bearing restricted
115	115	account insured by the federal government; or
116	116	(2) in trust with a financial institution that has its
117	117	main office or a branch located in this state and is authorized to
118	118	act as a fiduciary in this state, to be invested by the financial
119	119	institution as trustee in accordance with this subchapter.
120	120	(b) An account described by Subsection (a), including a
121	121	trust account, shall be carried in the name of the funeral provider
122	122	or other entity to whom the purchaser makes payment and must include
123	123	the words "prepaid funeral benefits" or "pre-need funeral
124	124	benefits."[.]
125	125	SECTION 5. Section 154.3595, Finance Code, is amended by
126	126	adding Subsection (a-1) to read as follows:
127	127	(a-1) A permit holder to which this section applies shall
128	128	notify each purchaser of an outstanding prepaid funeral benefits
129	129	contract of any closure of the funeral provider named in the
130	130	contract not later than the 90th day after the date of its receipt
131	131	of notice of the closure.
132	132	SECTION 6. Subchapter I, Chapter 154, Finance Code, is
133	133	amended by adding Section 154.400 to read as follows:
134	134	Sec. 154.400. INVESTIGATION AND SUBPOENA AUTHORITY. (a) If
135	135	the commissioner has a reasonable suspicion of a misallocation or
136	136	defalcation of prepaid funeral funds or an unauthorized sale of
137	137	prepaid funeral benefits, the commissioner may conduct
138	138	investigations as the commissioner considers necessary or
139	139	appropriate to determine whether:
140	140	(1) a misallocation or defalcation of prepaid funeral
141	141	funds has occurred; or
142	142	(2) an unauthorized sale of prepaid funeral benefits
143	143	has occurred.
144	144	(b) The commissioner may issue a subpoena to compel the
145	145	attendance and testimony of a person under oath or the production of
146	146	documents related to an investigation conducted under Subsection
147	147	(a). The subpoena may require attendance and production at the
148	148	department's offices in Austin, Texas, or at another place the
149	149	commissioner designates.
150	150	(c) A subpoena issued under this section to a financial
151	151	institution is not subject to Section 59.006.
152	152	(d) If a person refuses to obey a subpoena, a district court
153	153	in Travis County or the county in which the subpoena was served, on
154	154	application by the commissioner, may issue an order requiring the
155	155	person to appear before the commissioner and produce documents or
156	156	give evidence regarding the matter under investigation.
157	157	SECTION 7. Section 154.4061(a), Finance Code, is amended to
158	158	read as follows:
159	159	(a) If, after a hearing conducted as provided by Chapter
160	160	2001, Government Code, the trier of fact finds that a violation of
161	161	this chapter or a rule of the Finance Commission of Texas
162	162	establishes a pattern of wilful disregard for the requirements of
163	163	this chapter or rules of the finance commission, the trier of fact
164	164	may [shall] recommend to the commissioner that the maximum
165	165	administrative penalty permitted under Section 154.406 be imposed
166	166	on the person committing the violation or that the commissioner
167	167	cancel or not renew the person's permit under this chapter.
168	168	SECTION 8. Section 154.407, Finance Code, is amended to
169	169	read as follows:
170	170	Sec. 154.407. INJUNCTIVE RELIEF. The commissioner may sue
171	171	in a district court in Travis County or the county in which the
172	172	violation occurred to enjoin a violation or threatened violation
173	173	of:
174	174	(1) this chapter; or
175	175	(2) a final order of the commissioner or rule of the
176	176	commission.
177	177	SECTION 9. Section 154.4081(c), Finance Code, is amended to
178	178	read as follows:
179	179	(c) The person named in the order may request in writing an
180	180	opportunity for a hearing to show that the emergency order should be
181	181	stayed. The written request for a hearing must be filed with the
182	182	commissioner not later than the 30th day after the date on which the
183	183	order is hand-delivered or the order is mailed, whichever date is
184	184	earlier. On receipt of the request, the commissioner shall set a
185	185	time for the hearing before the 22nd day after the date the
186	186	commissioner received the request, unless extended at the request
187	187	of the person named in the order.
188	188	SECTION 10. Section 154.409(b), Finance Code, is amended to
189	189	read as follows:
190	190	(b) The attorney general shall institute suit in the name of
191	191	this state against a person who violates this chapter in a district
192	192	court in Travis County or the county in which the violation
193	193	occurred.
194	194	SECTION 11. Section 154.412, Finance Code, is amended by
195	195	amending Subsection (c-1) and adding Subsection (h) to read as
196	196	follows:
197	197	(c-1) An emergency order remains in effect unless stayed by
198	198	the commissioner. The person named in the order may request in
199	199	writing an opportunity for a hearing to show that the emergency
200	200	order should be stayed. The written request for a hearing must be
201	201	filed with the commissioner not later than the 30th day after the
202	202	date on which the order is hand-delivered or the order is mailed,
203	203	whichever date is earlier. On receipt of the request, the
204	204	commissioner shall set a time before the 22nd day after the date the
205	205	commissioner received the request, unless extended at the request
206	206	of the person named in the order. The hearing is an administrative
207	207	hearing relating to the findings that support immediate effect of
208	208	the order.
209	209	(h) On certification by the commissioner, a record seized as
210	210	provided by Subsection (a) or a record created by or filed with the
211	211	department in connection with a seizure is admissible as evidence
212	212	in any proceeding before the commissioner without prior proof of
213	213	its correctness and without other proof. The certified record or a
214	214	certified copy of the record is prima facie evidence of the facts
215	215	contained in the record. This subsection does not limit another
216	216	provision of this subtitle or a provision of another law that
217	217	provides for the admission of evidence or its evidentiary value.
218	218	SECTION 12. Section 154.414, Finance Code, is amended to
219	219	read as follows:
220	220	Sec. 154.414. LIQUIDATION OF BUSINESS AND AFFAIRS OF PERSON
221	221	FOLLOWING SEIZURE OF MONEY AND RECORDS. After an order issued under
222	222	Section 154.412(a) becomes final and unappealable, the
223	223	commissioner may petition a [the] district court in Travis County
224	224	or in the county in which a person required to hold a permit under
225	225	this chapter resides to request the issuance of an order to show
226	226	cause why the business and affairs of that person should not be
227	227	liquidated and a receiver appointed by the court for that purpose
228	228	if:
229	229	(1) the person:
230	230	(A) failed to deposit money in accordance with
231	231	Subchapter F;
232	232	(B) misappropriated, converted, or illegally
233	233	withheld or failed or refused to pay on demand money entrusted to
234	234	that person that belongs to the beneficiary under a prepaid funeral
235	235	benefits contract; or
236	236	(C) allowed the person's permit to lapse or had
237	237	the permit revoked under this chapter and did not make adequate
238	238	provision for the administration of the money deposited with the
239	239	person for prepaid funeral benefits contracts in accordance with
240	240	the contract and applicable law, including rules; and
241	241	(2) the person failed or refused to correct the
242	242	violation before the 31st day after the date the person received
243	243	written notice from the commissioner.
244	244	SECTION 13. Subchapter I, Chapter 154, Finance Code, is
245	245	amended by adding Sections 154.415 and 154.416 to read as follows:
246	246	Sec. 154.415. PROHIBITION ORDER. (a) The commissioner may
247	247	prohibit a person from participating in the business of prepaid
248	248	funeral benefits sales if the commissioner determines from
249	249	examination or other credible evidence that:
250	250	(1) the person:
251	251	(A) intentionally committed or participated in
252	252	the commission of an act described by Section 154.401;
253	253	(B) violated a final cease and desist order
254	254	issued by the department or another state agency related to the sale
255	255	of prepaid funeral benefits; or
256	256	(C) made, or caused to be made, false entries in
257	257	the records of a prepaid funeral benefits seller;
258	258	(2) because of the action by the person described by
259	259	Subdivision (1):
260	260	(A) the purchaser or seller of prepaid funeral
261	261	benefits has suffered or will probably suffer financial loss or
262	262	expense, or other damage;
263	263	(B) the interests of the purchaser have been or
264	264	could be prejudiced; or
265	265	(C) the person has received financial gain or
266	266	other benefit by reason of the action, or likely would have if the
267	267	action had not been discovered; and
268	268	(3) the action involves personal dishonesty on the
269	269	part of the person.
270	270	(b) If the commissioner has grounds for action under
271	271	Subsection (a) and finds that a prohibition order appears to be
272	272	necessary and in the best interest of the public, the commissioner
273	273	may serve a proposed prohibition order on a person alleged to have
274	274	committed or participated in the action. The proposed order must:
275	275	(1) be personally delivered or mailed by registered or
276	276	certified mail, return receipt requested;
277	277	(2) state with reasonable certainty the grounds for
278	278	prohibition;
279	279	(3) state the effective date of the order, which may
280	280	not be before the 21st day after the date the proposed order is
281	281	personally delivered or mailed; and
282	282	(4) state the duration of the order, including whether
283	283	the duration is perpetual.
284	284	(c) The commissioner may make a prohibition order perpetual
285	285	or effective for a specific period of time, may probate the order,
286	286	or may impose other conditions on the order.
287	287	(d) The order takes effect if the person against whom the
288	288	proposed order is directed does not request a hearing in writing
289	289	before the effective date. If the person does not request a hearing
290	290	before the effective date, the order is final and not appealable as
291	291	to that person.
292	292	(e) If the person requests a hearing as provided by
293	293	Subsection (d), the hearing must be conducted as provided by
294	294	Chapter 2001, Government Code, and commission rules. After the
295	295	hearing, the commissioner shall issue or decline to issue the
296	296	proposed order. The proposed order may be modified as necessary to
297	297	conform to the findings at the hearing.
298	298	(f) An order issued under Subsection (e) is immediately
299	299	final for purposes of enforcement and appeal. The order may be
300	300	appealed as provided by Sections 31.202, 31.203, and 31.204.
301	301	Sec. 154.416. APPLICATION FOR RELEASE FROM PROHIBITION
302	302	ORDER. (a) After the expiration of 10 years from the date of
303	303	issuance, a person who is subject to a prohibition order issued
304	304	under Section 154.415, regardless of the order's stated duration or
305	305	date of issuance, may apply to the commissioner to be released from
306	306	the order.
307	307	(b) The application must be made under oath and in the form
308	308	required by the commissioner. The application must be accompanied
309	309	by any required fees.
310	310	(c) The commissioner, in the exercise of discretion, may
311	311	approve or deny an application filed under this section.
312	312	(d) The commissioner's decision under Subsection (c) is
313	313	final and not appealable.
314	314	SECTION 14. This Act takes effect September 1, 2013.