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Senate Bill 297 |
Senate Author: Carona |
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Effective: 9-1-13 |
House Sponsor: Flynn |
Senate Bill 297 amends the Finance Code to require the holder of a permit authorizing the sale or acceptance of money or premiums for prepaid funeral benefits under a contract or solicitation of a designation of prepaid funeral benefits payable out of a fund, investment, contract, or insurance policy to notify the Texas Department of Banking and either the depository of the money held on a trust-funded contract or the issuer of insurance policy funding contracts, as applicable, if 25 percent or more of the stock or other ownership or membership interest of the permit holder's business is transferred in a single transaction. The bill requires a proposed transferee who is not a permit holder to file an application for a permit with the department only if the transferee will own 51 percent or more of the business after the transfer and allows the applicant to request a hearing if the banking commissioner of Texas denies the application.
Senate Bill 297 requires a seller of prepaid funeral benefits that has outstanding contracts to renew the seller's permit as a restricted permit if the seller either cannot demonstrate to the commissioner that the seller continues to meet the qualifications and satisfy the requirements for a permit or no longer wishes to sell prepaid funeral benefits. The bill prohibits the holder of a restricted permit from selling prepaid funeral benefits while a restricted permit is in effect and renders a contract entered into under those circumstances void and unenforceable.
The bill requires a funeral provider under a funeral benefits contract to inform each seller with which the provider has an outstanding contract of any closure of the provider's funeral establishment and requires a permit holder in turn to notify each purchaser of an outstanding prepaid funeral benefits contract of any closures of the funeral provider named in the contract.
Senate Bill 297 authorizes the commissioner to conduct investigations, and to issue subpoenas as necessary and applicable, to determine whether a misallocation of prepaid funeral funds or an unauthorized sale of prepaid funeral benefits has occurred. The bill authorizes, rather than requires, a trier of fact to recommend that the commissioner either impose the maximum administrative penalty on a person committing a violation or cancel or not renew a person's permit if the trier of fact finds that the person's violation establishes a pattern of wilful disregard for the law or applicable rules of the Finance Commission of Texas.
Under previous law, the commissioner could sue to enjoin a violation or threatened violation of the law governing prepaid funeral services, of a final order of the commissioner, or of a commission rule only in a Travis County district court, and the attorney general could bring suit only in the county in which the violation occurred. The bill instead establishes venue for all such proceedings in a district court in either county.
The bill sets a filing deadline for requesting a hearing regarding the stay of an emergency cease and desist order or an order to seize prepaid funeral accounts and records and makes a seized record or a record created or filed in connection with a seizure admissible as evidence in any proceeding without prior proof of its correctness or other proof on the commissioner's certification of the record. The bill adds a district court in Travis County as a venue in which the commissioner may seek liquidation of a person's business and affairs following a seizure of the person's accounts and records. The bill authorizes the commissioner, on the basis of an examination or other credible evidence of professional misconduct, to issue an order prohibiting a person from participating in the business of prepaid funeral benefits sales; sets out applicable due process provisions; and allows a person to apply for a release from a prohibition order after 10 years from the date of its issue, regardless of the order's stated duration.