83R15678 ATP-F
By: Flynn H.B. No. 1489
Substitute the following for H.B. No. 1489:
By: Villarreal C.S.H.B. No. 1489
A BILL TO BE ENTITLED
AN ACT
relating to prepaid funeral benefits contracts; authorizing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 154.106, Finance Code, is amended to
read as follows:
Sec. 154.106. TRANSFER OF BUSINESS OWNERSHIP. (a) A permit
holder shall notify 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 of
ownership of the permit holder's business or a transfer of 25
percent or more of the stock or other ownership or membership
interest of the business in a single transaction. The notice must be
given:
(1) in the case of a voluntary transfer, not later than
the seventh day after the date the contract for transfer is
executed; or
(2) in the case of an involuntary transfer, not later
than the first business day after the date the permit holder
receives notice of the impending foreclosure or other involuntary
transfer.
(b) If the proposed transferee will own 51 percent or more
of the business and is not a permit holder, the proposed transferee
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 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.
(c) If the commissioner denies the application, the
applicant may request a hearing not later than the 15th day after
the date on which notice of the determination is hand-delivered or
the notice is mailed, whichever date is earlier.
SECTION 2. Section 154.107, Finance Code, is amended to
read as follows:
Sec. 154.107. REQUIRED RENEWAL FOR [CERTAIN] SELLERS. (a)
A seller that [discontinues the sale of prepaid funeral benefits
but] has outstanding contracts shall renew the seller's permit
until the contracts are fully discharged.
(b) A seller may renew the seller's permit as an
unrestricted permit if the seller:
(1) wishes to continue to sell prepaid funeral
benefits; and
(2) demonstrates to the commissioner that the seller
continues to meet the qualifications and satisfy the requirements
that apply to an applicant for a permit.
(c) A seller must renew the seller's permit as a restricted
permit if the seller:
(1) cannot demonstrate to the commissioner that the
seller continues to meet the qualifications and satisfy the
requirements that apply to an applicant for a permit; or
(2) no longer wishes to sell prepaid funeral benefits.
(d) A seller that holds a restricted permit may not sell
prepaid funeral benefits during the period a restricted permit is
in effect. A contract entered into by a seller that at the time the
contract is entered into holds a restricted permit is void and
unenforceable and is not eligible for payment from a guaranty fund
established under this chapter.
SECTION 3. Section 154.161(a), Finance Code, is amended to
read as follows:
(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;
(C) if advance payment of cash advance items was
included in the contract, prepare a reconciliation of proceeds
applied to cash advance items; and
(D) retain a copy of each reconciliation until
the third anniversary of the date of service; 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
Subdivision (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 Subdivision (2);
(C) if requested by the seller, correct or
explain any discrepancy in a reconciliation required under
Subdivision (2); [and]
(D) subject to Subsection (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; and
(E) inform each seller with which the funeral
provider has an outstanding contract of any closure of the
provider's funeral establishments not later than the 15th day after
the date of closure.
SECTION 4. Section 154.253, Finance Code, is amended to
read as follows:
Sec. 154.253. DEPOSIT OF MONEY PAID OR COLLECTED. (a) Not
later than the 30th day after the date of collection, the money,
other than money retained as provided by Section 154.252, shall be
deposited:
(1) in a financial institution that has its main
office or a branch in this state in an interest-bearing restricted
account insured by the federal government; or
(2) in trust with a financial institution that has its
main office or a branch located in this state and is authorized to
act as a fiduciary in this state, to be invested by the financial
institution as trustee in accordance with this subchapter.
(b) An account described by Subsection (a), including a
trust account, shall be carried in the name of the funeral provider
or other entity to whom the purchaser makes payment and must include
the words "prepaid funeral benefits" or "pre-need funeral
benefits."[.]
SECTION 5. Section 154.3595, Finance Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) A permit holder to which this section applies shall
notify each purchaser of an outstanding prepaid funeral benefits
contract of any closure of the funeral provider named in the
contract not later than the 90th day after the date of its receipt
of notice of the closure.
SECTION 6. Subchapter I, Chapter 154, Finance Code, is
amended by adding Section 154.400 to read as follows:
Sec. 154.400. INVESTIGATION AND SUBPOENA AUTHORITY. (a) If
the commissioner has a reasonable suspicion of a misallocation or
defalcation of prepaid funeral funds or an unauthorized sale of
prepaid funeral benefits, the commissioner may conduct
investigations as the commissioner considers necessary or
appropriate to determine whether:
(1) a misallocation or defalcation of prepaid funeral
funds has occurred; or
(2) an unauthorized sale of prepaid funeral benefits
has occurred.
(b) The commissioner may issue a subpoena to compel the
attendance and testimony of a person under oath or the production of
documents related to an investigation conducted under Subsection
(a). The subpoena may require attendance and production at the
department's offices in Austin, Texas, or at another place the
commissioner designates.
(c) A subpoena issued under this section to a financial
institution is not subject to Section 59.006.
(d) If a person refuses to obey a subpoena, a district court
in Travis County or the county in which the subpoena was served, on
application by the commissioner, may issue an order requiring the
person to appear before the commissioner and produce documents or
give evidence regarding the matter under investigation.
SECTION 7. Section 154.4061(a), Finance Code, is amended to
read as follows:
(a) If, after a hearing conducted as provided by Chapter
2001, Government Code, the trier of fact finds that a violation of
this chapter or a rule of the Finance Commission of Texas
establishes a pattern of wilful disregard for the requirements of
this chapter or rules of the finance commission, the trier of fact
may [shall] recommend to the commissioner that the maximum
administrative penalty permitted under Section 154.406 be imposed
on the person committing the violation or that the commissioner
cancel or not renew the person's permit under this chapter.
SECTION 8. Section 154.407, Finance Code, is amended to
read as follows:
Sec. 154.407. INJUNCTIVE RELIEF. The commissioner may sue
in a district court in Travis County or the county in which the
violation occurred to enjoin a violation or threatened violation
of:
(1) this chapter; or
(2) a final order of the commissioner or rule of the
commission.
SECTION 9. Section 154.4081(c), Finance Code, is amended to
read as follows:
(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. The written request for a hearing must be filed with the
commissioner not later than the 30th day after the date on which the
order is hand-delivered or the order is mailed, whichever date is
earlier. 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.
SECTION 10. Section 154.409(b), Finance Code, is amended to
read as follows:
(b) The attorney general shall institute suit in the name of
this state against a person who violates this chapter in a district
court in Travis County or the county in which the violation
occurred.
SECTION 11. Section 154.412, Finance Code, is amended by
amending Subsection (c-1) and adding Subsection (h) to read as
follows:
(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. The written request for a hearing must be
filed with the commissioner not later than the 30th day after the
date on which the order is hand-delivered or the order is mailed,
whichever date is earlier. 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.
(h) On certification by the commissioner, a record seized as
provided by Subsection (a) or a record created by or filed with the
department in connection with a seizure is admissible as evidence
in any proceeding before the commissioner without prior proof of
its correctness and without other proof. The certified record or a
certified copy of the record is prima facie evidence of the facts
contained in the record. This subsection does not limit another
provision of this subtitle or a provision of another law that
provides for the admission of evidence or its evidentiary value.
SECTION 12. Section 154.414, Finance Code, is amended to
read as follows:
Sec. 154.414. LIQUIDATION OF BUSINESS AND AFFAIRS OF PERSON
FOLLOWING SEIZURE OF MONEY AND RECORDS. After an order issued under
Section 154.412(a) becomes final and unappealable, the
commissioner may petition a [the] district court in Travis County
or in the county in which a person required to hold a permit under
this chapter resides to request the issuance of an order to show
cause why the business and affairs of that person should not be
liquidated and a receiver appointed by the court for that purpose
if:
(1) the person:
(A) failed to deposit money in accordance with
Subchapter F;
(B) misappropriated, converted, or illegally
withheld or failed or refused to pay on demand money entrusted to
that person that belongs to the beneficiary under a prepaid funeral
benefits contract; or
(C) allowed the person's permit to lapse or had
the permit revoked under this chapter and did not make adequate
provision for the administration of the money deposited with the
person for prepaid funeral benefits contracts in accordance with
the contract and applicable law, including rules; and
(2) the person failed or refused to correct the
violation before the 31st day after the date the person received
written notice from the commissioner.
SECTION 13. Subchapter I, Chapter 154, Finance Code, is
amended by adding Sections 154.415 and 154.416 to read as follows:
Sec. 154.415. PROHIBITION ORDER. (a) The commissioner may
prohibit a person from participating in the business of prepaid
funeral benefits sales if the commissioner determines from
examination or other credible evidence that:
(1) the person:
(A) intentionally committed or participated in
the commission of an act described by Section 154.401;
(B) violated a final cease and desist order
issued by the department or another state agency related to the sale
of prepaid funeral benefits; or
(C) made, or caused to be made, false entries in
the records of a prepaid funeral benefits seller;
(2) because of the action by the person described by
Subdivision (1):
(A) the purchaser or seller of prepaid funeral
benefits has suffered or will probably suffer financial loss or
expense, or other damage;
(B) the interests of the purchaser have been or
could be prejudiced; or
(C) the person has received financial gain or
other benefit by reason of the action, or likely would have if the
action had not been discovered; and
(3) the action involves personal dishonesty on the
part of the person.
(b) If the commissioner has grounds for action under
Subsection (a) and finds that a prohibition order appears to be
necessary and in the best interest of the public, the commissioner
may serve a proposed prohibition order on a person alleged to have
committed or participated in the action. The proposed order must:
(1) be personally delivered or mailed by registered or
certified mail, return receipt requested;
(2) state with reasonable certainty the grounds for
prohibition;
(3) state the effective date of the order, which may
not be before the 21st day after the date the proposed order is
personally delivered or mailed; and
(4) state the duration of the order, including whether
the duration is perpetual.
(c) The commissioner may make a prohibition order perpetual
or effective for a specific period of time, may probate the order,
or may impose other conditions on the order.
(d) The order takes effect if the person against whom the
proposed order is directed does not request a hearing in writing
before the effective date. If the person does not request a hearing
before the effective date, the order is final and not appealable as
to that person.
(e) If the person requests a hearing as provided by
Subsection (d), the hearing must be conducted as provided by
Chapter 2001, Government Code, and commission rules. After the
hearing, the commissioner shall issue or decline to issue the
proposed order. The proposed order may be modified as necessary to
conform to the findings at the hearing.
(f) An order issued under Subsection (e) is immediately
final for purposes of enforcement and appeal. The order may be
appealed as provided by Sections 31.202, 31.203, and 31.204.
Sec. 154.416. APPLICATION FOR RELEASE FROM PROHIBITION
ORDER. (a) After the expiration of 10 years from the date of
issuance, a person who is subject to a prohibition order issued
under Section 154.415, regardless of the order's stated duration or
date of issuance, may apply to the commissioner to be released from
the order.
(b) The application must be made under oath and in the form
required by the commissioner. The application must be accompanied
by any required fees.
(c) The commissioner, in the exercise of discretion, may
approve or deny an application filed under this section.
(d) The commissioner's decision under Subsection (c) is
final and not appealable.
SECTION 14. This Act takes effect September 1, 2013.