Texas 2013 - 83rd Regular

Texas Senate Bill SB297 Compare Versions

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