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A BILL TO BE ENTITLED
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AN ACT
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relating to regulation of prepaid funeral benefits. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 154.002, Finance Code, is amended by |
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amending Subdivisions (1) and (6) and adding Subdivisions (1-a), |
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(6-a), and (14) to read as follows: |
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(1) "Cash advance item" has the meaning assigned by 16 |
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C.F.R. Section 453.1. |
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(1-a) "Commission" means the Finance Commission of |
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Texas. |
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(6) "Funeral provider" means the person [funeral home] |
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designated in a prepaid funeral benefits contract that has agreed |
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to provide the specified prepaid funeral benefits. |
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(6-a) "Insurance-funded contract" means an |
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insurance-funded prepaid funeral benefits contract. |
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(14) "Trust-funded contract" means a trust-funded |
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prepaid funeral benefits contract. |
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SECTION 2. Section 154.102, Finance Code, is amended to |
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read as follows: |
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Sec. 154.102. PERMIT APPLICATION; FEE. To obtain a permit |
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to sell or continue to sell prepaid funeral benefits, a person must: |
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(1) be one of the following, if the person proposes to |
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offer and sell prepaid funeral benefits contracts subject to |
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Subchapter E: |
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(A) a funeral provider; |
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(B) an insurance company; or |
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(C) the insurance holding company for an |
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insurance company if the insurance company does not have the |
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authority under its domiciliary law to directly hold a permit |
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issued under this chapter; |
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(2) be a funeral provider, if the person proposes to |
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offer and sell prepaid funeral benefits contracts subject to |
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Subchapter F; |
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(3) file an application for a permit with the |
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department on a form prescribed by the department; |
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(4) [(2)] pay a filing fee in an amount set by the |
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commission under Section 154.051; and |
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(5) [(3)] if applicable, pay extraordinary expenses |
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required for out-of-state investigation of the person. |
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SECTION 3. Sections 154.106(a) and (b), Finance Code, are |
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amended to read as follows: |
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(a) A permit holder shall notify [by registered mail] the |
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department and either the depository of the money held under |
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Subchapter F or the issuer of insurance policy funding contracts |
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under Subchapter E of a contract to transfer [in the] ownership of |
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the permit holder's business not later than the seventh day after |
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the date the contract [transfer] is executed [completed]. |
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(b) If the proposed transferee [transfer is to a person who] |
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is not a permit holder, the proposed transferee [person] shall file |
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an application for a permit with the department in accordance with |
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this subchapter. If the application is complete, the commissioner |
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shall approve or deny the application before the 16th [not later
|
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than the 30th] day after the date the application was received. The |
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transfer of prepaid funeral benefits contracts of the permit holder |
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that is the transferor may not occur until after the date a permit |
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is issued to the applicant that is the transferee [transfer is
|
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completed]. |
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SECTION 4. Section 154.109(b), Finance Code, is amended to |
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read as follows: |
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(b) The commissioner by order may refuse to renew a permit |
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if the commissioner finds, by examination or other credible |
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evidence, that the permit holder does not possess a qualification |
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required by Section 154.103(b) for issuance of an initial permit, |
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or that the permit holder: |
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(1) committed one or more of the acts described by |
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Subsection (a); and |
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(2) did not correct the violation before the 31st day |
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after the date of written notice from the commissioner. |
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SECTION 5. Chapter 154, Finance Code, is amended by adding |
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Subchapter C-1 to read as follows: |
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SUBCHAPTER C-1. PRESALE DISCLOSURES |
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Sec. 154.131. BROCHURE. (a) A seller, directly or |
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through the seller's designated agent, shall provide an |
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informational brochure to each potential purchaser of a prepaid |
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funeral benefits contract. |
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(b) The brochure must: |
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(1) describe the regulation of prepaid funeral |
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benefits contracts and the trust and insurance funding options |
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available under the law of this state; and |
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(2) include a reference to the Internet website |
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required under Section 154.132. |
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(c) The department: |
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(1) must approve an informational brochure before the |
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brochure may be used by the seller; and |
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(2) may provide a model informational brochure that |
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complies with this section. |
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Sec. 154.132. WEBSITE. (a) The department shall establish |
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and maintain an Internet website that provides information to |
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enable consumers to make informed decisions relating to the |
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purchase of prepaid funeral benefits. |
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(b) The website: |
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(1) must include a description of the trust and |
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insurance funding options available under the law of this state; |
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(2) may include links to and be linked from the |
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department's website, the Texas Department of Insurance website, |
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and the Texas Funeral Service Commission website; and |
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(3) may include additional information or links to |
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additional information that the department determines may be |
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helpful to consumers of prepaid funeral benefits in this state. |
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Sec. 154.133. REFERENCE OR LINK TO WEBSITE. Any sales |
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literature or a website that offers or promotes the sale of prepaid |
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funeral benefits contracts to the public must include a reference |
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or link to the Internet website required under Section 154.132. |
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SECTION 6. Sections 154.151(c) and (e), Finance Code, are |
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amended to read as follows: |
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(c) If a [A] funeral provider designated in the contract to |
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provide prepaid funeral benefits is [that are] not the seller |
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licensed under this chapter, [sold by] the funeral provider must: |
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(1) be a party to the contract; [and] |
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(2) agree in the contract to provide those benefits; |
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and |
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(3) acknowledge and agree to discharge the |
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responsibilities imposed on a funeral provider by Section 154.161, |
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either in the prepaid funeral benefits contract or in a separate |
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writing signed by the funeral provider and the seller. |
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(e) The commission [Finance Commission of Texas] by rule |
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shall establish a standard disclosure that must be included in each |
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contract to inform purchasers of the goods and services that will be |
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provided or excluded under the contract and the circumstances under |
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which the contract may be modified after death of the beneficiary. |
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The commission by rule may prescribe a form for the standard |
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disclosure that is designed to more closely conform to variations |
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in sales contract forms that serve different purposes. |
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SECTION 7. Subchapter D, Chapter 154, Finance Code, is |
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amended by adding Section 154.1511 to read as follows: |
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Sec. 154.1511. CASH ADVANCE ITEMS: NON-GUARANTEED |
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MERCHANDISE AND SERVICES. (a) A purchaser of a prepaid funeral |
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benefits contract may agree to advance funds for all or any portion |
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of the estimated cost of cash advance items included in a prepaid |
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funeral benefits contract, the actual cost of which are to be |
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determined by existing prices at the time the items are delivered or |
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provided in connection with at-need performance of the contracted |
|
funeral. |
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(b) Cash advance items included in a prepaid funeral |
|
benefits contract must be clearly grouped together and segregated |
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from prepaid funeral benefits in a manner that will permit the |
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average consumer to easily understand that: |
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(1) cash advance items are not fixed or guaranteed in |
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price; and |
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(2) additional money may be required to fully pay for |
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those items at the time of the funeral. |
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(c) A seller shall administer purchaser funds received in |
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advance for cash advance items under a prepaid funeral benefits |
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contract in the manner required by Section 154.159. |
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(d) After the death of the contract beneficiary, the funeral |
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provider shall apply the proportionate part of the trust or |
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insurance policy proceeds received under the contract that is |
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derived from advance payment of cash advance items to the current |
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purchase price for the items. To the extent the proportionate part |
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of contract proceeds: |
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(1) is less than the current purchase price for the |
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cash advance items, the funeral provider may collect additional |
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money for the difference in exchange for delivering or providing |
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the items as part of the contracted funeral; or |
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(2) is greater than the current purchase price for the |
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cash advance items, the funeral provider shall promptly refund the |
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excess amount unless that amount is offset against other amounts |
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due to the funeral provider in connection with the contracted |
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funeral. |
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SECTION 8. Section 154.155(d), Finance Code, is amended to |
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read as follows: |
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(d) The purchaser is entitled to receive the actual amount |
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paid by the purchaser and half of all earnings attributable to that |
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money, less the amount permitted to be retained as provided by |
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Section 154.252, except as provided by Subsection (e) and by |
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Sections 154.1511, 154.1551, 154.205, and 154.254. |
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SECTION 9. Section 154.1551, Finance Code, is amended by |
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amending Subsection (a) and adding Subsections (d), (e), and (f) to |
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read as follows: |
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(a) The funeral merchandise, funeral [and] services, and |
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cash advance items selected in [to be provided by the seller under] |
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a fully paid prepaid funeral benefits contract may be modified |
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after the death of the beneficiary if the modification complies |
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with this section [Subsection (b)] or is otherwise agreed to in a |
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writing signed by the seller or funeral provider and the person |
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charged with the disposition of the beneficiary's remains by |
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Section 711.002(a), Health and Safety Code, except that[:
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[(1)] if the purchaser of the contract is also the |
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beneficiary: |
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(1) [(A)] the contracted funeral merchandise and |
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services may not be modified if the contract contains a clause that |
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prohibits modification; and |
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(2) [(B)] a modification may not change the type of |
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disposition specified by the purchaser in the contract, whether by |
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burial, cremation, or another alternative by which the purchaser's |
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remains attain their final resting place, as provided by Section |
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711.002(g), Health and Safety Code[; and
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[(2)
the value attributed to any contracted funeral
|
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merchandise or service that is surrendered or exchanged in a
|
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modification must be computed on a comparable time-price basis with
|
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the price charged for substituted funeral merchandise or service
|
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provided as part of the modification]. |
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(d) A modification of contracted funeral merchandise or |
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services must comply with Subsection (b), and the value attributed |
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to any contracted funeral merchandise or service that is |
|
surrendered or exchanged in the modification must be computed on a |
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comparable time-price basis with the price charged for substituted |
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funeral merchandise or service provided as part of the |
|
modification. |
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(e) A modification of cash advance items included in the |
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contract under Section 154.1511 must comply with Subsection (f). |
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(f) A person charged with disposition of the beneficiary's |
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remains may add, surrender, cancel, or modify any cash advance item |
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included under the contract at the time the funeral is performed |
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only if: |
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(1) the value attributed to any contracted funeral |
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merchandise or service that is surrendered in a modification, |
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determined as provided under Subsection (d), may be applied to the |
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unpaid cost of contracted or additional cash advance items; and |
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(2) the funeral provider promptly refunds the |
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proportionate part of the trust or insurance policy proceeds |
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received under the contract that is derived from advance payment of |
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a surrendered or canceled cash advance item to the extent the |
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proceeds are not applied to the unpaid cost of additional cash |
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advance items or additional funeral merchandise or services |
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requested by the person charged with disposition of the |
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beneficiary's remains. |
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SECTION 10. Section 154.156(a), Finance Code, is amended to |
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read as follows: |
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(a) The purchaser of a prepaid funeral benefits contract may |
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irrevocably waive the purchaser's right to cancel the contract |
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under Section 154.155. The waiver must be in a separate writing |
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signed by the purchaser and the seller and [not earlier than the
|
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15th day after the date of the purchase of the contract. The form of
|
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the waiver] must comply with the plain language requirements for |
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the form of a sales contract under Section 154.151. |
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SECTION 11. Section 154.160(b), Finance Code, is amended to |
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read as follows: |
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(b) The seller shall notify the department of: |
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(1) the designation not later than the 10th day after |
|
the date the seller becomes subject to this chapter; and |
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(2) any change in the designation not later than the |
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10th day after [within the 10-day period preceding] the date of the |
|
change. |
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SECTION 12. Subchapter D, Chapter 154, Finance Code, is |
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amended by adding Section 154.161 to read as follows: |
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Sec. 154.161. RESPONSIBILITIES OF FUNERAL PROVIDER. (a) |
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The funeral provider under a prepaid funeral benefits contract |
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subject to this chapter shall: |
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(1) in compliance with applicable law, protect any |
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nonpublic personal financial and health information of the |
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purchaser and contract beneficiary in the possession of the funeral |
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provider; |
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(2) after the death of the contract beneficiary: |
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(A) deliver the contracted funeral merchandise |
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and services and cash advance items required under the contract, |
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subject to Section 154.1551; |
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(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; |
|
and |
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(C) if advance payment of cash advance items was |
|
included in the contract, prepare a reconciliation of proceeds |
|
applied to cash advance items; and |
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(3) with respect to each prepaid funeral benefits |
|
contract for which the funeral provider is not also the seller: |
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(A) sign the reconciliations required by |
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Subsection (a)(2); |
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(B) promptly deliver the records that verify |
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contract performance to the seller, including the final at-need |
|
contract, the certificate of performance, and the reconciliations |
|
required under Subsection (a)(2); |
|
(C) if requested by the seller, correct or |
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explain any discrepancy in a reconciliation required under |
|
Subsection (a)(2); and |
|
(D) provide copies of any other records or |
|
documentation related to the offer, sale, and performance of the |
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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. |
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(b) The seller shall report to the department any |
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discrepancy in a reconciliation required under Subsection (a)(2) |
|
that remains unresolved after a request for correction is made |
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under Subsection (a)(3)(C). |
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SECTION 13. Subchapter E, Chapter 154, Finance Code, is |
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amended by adding Section 154.2021 to read as follows: |
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Sec. 154.2021. REQUIREMENTS FOR INSURANCE POLICIES. (a) An |
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insurance policy used to fund prepaid funeral benefits under this |
|
chapter must contain the following statement on the cover page or |
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otherwise within the policy or a rider to the policy: "This policy |
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is issued to fund a prepaid funeral benefits contract subject to |
|
Chapter 154 of the Texas Finance Code. Cancellation of the prepaid |
|
funeral benefits contract does not automatically cancel this |
|
policy." |
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(b) The aggregate initial face value of one or more |
|
insurance policies issued to fund a prepaid funeral benefits |
|
contract may not exceed the total contract price by more than five |
|
percent unless the purchaser: |
|
(1) receives a conspicuous written disclosure of the |
|
purpose and amount of the excess coverage and how the insurance |
|
benefit will be applied at contract maturity; and |
|
(2) consents in writing to the purchase of the excess |
|
coverage. |
|
SECTION 14. Section 154.205, Finance Code, is amended to |
|
read as follows: |
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Sec. 154.205. AMOUNT PAYABLE ON CANCELLATION OF CONTRACT. |
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A purchaser of an insurance-funded prepaid funeral benefits |
|
contract who cancels the contract [during the first year of the
|
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contract when payments required under the contract are current] is |
|
entitled to receive the cash surrender value of the insurance |
|
policy if the policy is also canceled. Cancellation of the contract |
|
does not automatically cancel the funding insurance policy. |
|
SECTION 15. Section 154.206, Finance Code, is amended to |
|
read as follows: |
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Sec. 154.206. ASSIGNMENT OF RIGHT TO BENEFITS. The |
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purchaser of an insurance-funded prepaid funeral benefits contract |
|
may irrevocably assign the purchaser's ownership of and rights to |
|
benefits under the insurance policy to the seller, the funeral |
|
provider, the trustee, or other person. An assignee under this |
|
section is subject to a fiduciary duty to apply the insurance policy |
|
benefits as provided by the contract and this chapter. |
|
SECTION 16. Section 154.207(a), Finance Code, is amended to |
|
read as follows: |
|
(a) The seller or funeral provider may withdraw the benefits |
|
payable under an insurance policy funding prepaid funeral benefits |
|
after: |
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(1) the beneficiary named in the contract dies; |
|
(2) the funeral service is completed; [and] |
|
(3) the funeral provider has completed the provider's |
|
obligations under Section 154.161(a) with respect to the contract; |
|
and |
|
(4) the insurance company is presented with: |
|
(A) appropriate affidavits by an officer or |
|
designated agent of the seller on forms prescribed by the |
|
department, attesting to matters required by Subsections (a)(2) and |
|
(3); and |
|
(B) a certified copy of the death certificate. |
|
SECTION 17. Section 154.262(a), Finance Code, is amended to |
|
read as follows: |
|
(a) The seller of a trust-funded prepaid funeral benefits |
|
contract may withdraw an amount equal to the original contract |
|
amount paid by the purchaser and the earnings attributable to the |
|
contract, less the amount retained under Section 154.252, after: |
|
(1) the beneficiary named in the contract dies; |
|
(2) the funeral service is completed; [and] |
|
(3) the funeral provider has completed the provider's |
|
obligations under Section 154.161(a) with respect to the contract; |
|
and |
|
(4) the depository is presented with: |
|
(A) appropriate affidavits by an officer or agent |
|
of the seller on forms prescribed by the department, attesting to |
|
matters required by Subsections (a)(2) and (3); and |
|
(B) a certified copy of the death certificate. |
|
SECTION 18. Section 154.351, Finance Code, is amended to |
|
read as follows: |
|
Sec. 154.351. MAINTENANCE OF GUARANTY FUND. (a) The |
|
commission by rule shall establish and the department shall |
|
maintain a fund to guarantee performance by sellers of prepaid |
|
funeral benefits contracts of their obligations to the purchasers |
|
[under the provisions of this chapter governing prepaid funeral
|
|
trusts]. |
|
(b) Except as provided by Subsection (c), for purposes of |
|
claims and assessments, the department shall maintain separate |
|
accounts within the fund for trust-funded contracts and |
|
insurance-funded contracts. |
|
(c) The advisory council under Section 154.355 may |
|
authorize borrowing between accounts to facilitate prompt and |
|
efficient resolution of claims against an account with an |
|
insufficient balance if: |
|
(1) the indebted account is obligated to pay interest |
|
at a rate that will reasonably compensate the lending account for |
|
lost earnings; |
|
(2) required or planned assessments for the benefit of |
|
the indebted account are pending and sufficient to repay the |
|
lending account; and |
|
(3) assessments collected for the benefit of the |
|
indebted account are transferred to the lending account until the |
|
borrowed amount plus interest has been repaid. |
|
SECTION 19. Subchapter H, Chapter 154, Finance Code, is |
|
amended by adding Section 154.3525 to read as follows: |
|
Sec. 154.3525. ASSESSMENT ON INSURANCE-FUNDED CONTRACTS. |
|
(a) The department shall assess and collect from a seller not more |
|
than $1 for each insurance-funded contract sold during each |
|
calendar year and shall deposit the assessments in the |
|
insurance-funded contract account within the fund. |
|
(b) The department shall stop assessing the amounts |
|
required by Subsection (a) when the amount in the insurance-funded |
|
contract account reaches $1 million. |
|
SECTION 20. Section 154.355, Finance Code, is amended to |
|
read as follows: |
|
Sec. 154.355. ADVISORY COUNCIL. (a) An advisory council |
|
composed of the following individuals shall supervise the operation |
|
and maintenance of the fund: |
|
(1) the commissioner or the commissioner's |
|
representative; |
|
(2) the attorney general or the attorney general's |
|
representative; |
|
(3) two representatives [one representative] of the |
|
prepaid funeral industry appointed by the commission, one of whom |
|
represents trust-funded prepaid funeral benefits contract sellers |
|
and one of whom represents insurance-funded prepaid funeral |
|
benefits contract sellers [Finance Commission of Texas]; and |
|
(4) one consumer representative appointed by the |
|
commission [Finance Commission of Texas]. |
|
(b) The prepaid funeral industry and consumer |
|
representatives serve two-year terms and may not serve more than |
|
four [two] terms. |
|
(c) The commissioner shall render a final decision [cast the
|
|
deciding vote] if there is a tie vote by members of the advisory |
|
council. |
|
SECTION 21. Subchapter H, Chapter 154, Finance Code, is |
|
amended by adding Section 154.3551 to read as follows: |
|
Sec. 154.3551. LIMIT ON LIABILITY. (a) A member of the |
|
advisory council is not personally liable for damages arising from |
|
the member's official act or omission under this subchapter unless |
|
the act or omission is corrupt or malicious. |
|
(b) The attorney general shall defend an action brought |
|
against a member of the advisory council arising from an official |
|
act or omission under this subchapter, including an action |
|
instituted after the defendant's service with the advisory council |
|
has terminated. |
|
(c) The attorney general is not required to defend a member |
|
of the advisory council against an action relating to: |
|
(1) the disposition of a claim filed under this |
|
subchapter; or |
|
(2) any issue other than the applicability or effect |
|
of the limitation on liability under this section. |
|
(d) The commissioner on behalf of the fund, with the advice |
|
and consent of the advisory council, may contract with the attorney |
|
general under Chapter 771, Government Code, for legal services not |
|
covered by this section. |
|
SECTION 22. Section 154.356, Finance Code, is amended to |
|
read as follows: |
|
Sec. 154.356. ASSESSMENT ON OUTSTANDING TRUST-FUNDED |
|
CONTRACTS TO PAY CLAIMS. (a) To pay a claim against the fund when |
|
the balance of the trust-funded contract account [fund] is |
|
insufficient to pay that claim, the advisory council may assess |
|
each [person that holds a] permit holder that has outstanding |
|
trust-funded contracts an amount [under this chapter] based on the |
|
permit holder's proportionate share of the purchasers' deposits on |
|
all outstanding trust-funded [prepaid funeral benefits] contracts |
|
determined as of the end of the preceding calendar year. |
|
(b) The assessments shall be deposited in the trust-funded |
|
contract account within the fund and administered by the department |
|
and the advisory council in accordance with commission rules. |
|
(c) An assessment made under this section is in addition to |
|
any assessment required by Section 154.352. |
|
(d) A seller whose permit is revoked or surrendered remains |
|
liable for any unpaid assessment made before the date of the |
|
revocation or surrender. |
|
SECTION 23. Subchapter H, Chapter 154, Finance Code, is |
|
amended by adding Section 154.3565 to read as follows: |
|
Sec. 154.3565. ASSESSMENT ON OUTSTANDING INSURANCE-FUNDED |
|
CONTRACTS TO PAY CLAIMS. (a) To pay a claim against the fund when |
|
the balance of the insurance-funded contract account is |
|
insufficient to pay that claim, the advisory council may assess |
|
each permit holder that has outstanding insurance-funded contracts |
|
an amount based on the permit holder's proportionate share of all |
|
outstanding insurance-funded contracts determined as of the end of |
|
the preceding calendar year. |
|
(b) The assessments shall be deposited in the |
|
insurance-funded contract account within the fund and administered |
|
by the department and the advisory council in accordance with |
|
commission rules. |
|
(c) An assessment made under this section is in addition to |
|
any assessment required by Section 154.3525. |
|
(d) A seller whose permit is revoked or surrendered remains |
|
liable for any unpaid assessment made before the date of the |
|
revocation or surrender. |
|
SECTION 24. Subchapter H, Chapter 154, Finance Code, is |
|
amended by adding Sections 154.358, 154.359, and 154.360 to read as |
|
follows: |
|
Sec. 154.358. CLAIMS AGAINST FUND. (a) The payment of a |
|
claim or expense from the fund is a matter of privilege and not of |
|
right, and a person does not have a vested right in the fund as a |
|
beneficiary or otherwise. |
|
(b) A claim against the fund may be made by: |
|
(1) a purchaser of a prepaid funeral benefits |
|
contract; |
|
(2) a purchaser's estate; |
|
(3) a permit holder or funeral provider who assumes or |
|
performs a contract; or |
|
(4) a claimant for the benefit of a group of purchasers |
|
of prepaid funeral benefits contracts as part of a plan to arrange |
|
for another permit holder to assume the contract obligations. |
|
(c) An approved claim or expense relating to a trust-funded |
|
contract may be paid only from the fund's trust-funded contract |
|
account. An approved claim or expense relating to an |
|
insurance-funded contract may be paid only from the fund's |
|
insurance-funded contract account. |
|
Sec. 154.359. PERMISSIBLE USES OF FUND. (a) In addition to |
|
uses authorized by Section 154.354, the fund may be used to pay: |
|
(1) a loss attributable to the failure or inability of |
|
a permit holder to provide the prepaid funeral benefits under a |
|
prepaid contract or to refund the appropriate amount due because of |
|
a contract cancellation; |
|
(2) expenses of a plan to arrange for another permit |
|
holder to assume the obligations under a prepaid funeral benefits |
|
contract or a group of prepaid funeral benefits contracts if the |
|
commissioner finds, with the advice and consent of the advisory |
|
council, that the plan is reasonable and in the best interests of |
|
the contract beneficiaries; |
|
(3) administrative expenses related to servicing and |
|
handling outstanding prepaid funeral benefits contracts that have |
|
not been assumed by another permit holder; |
|
(4) expenses for administering the receivership of an |
|
insolvent permit holder if the permit holder's assets are |
|
insufficient to pay those expenses; and |
|
(5) expenses to employ and compensate a consultant, an |
|
agent, legal counsel, an accountant, and any other person |
|
appropriate and consistent with the purpose of the fund, as |
|
determined by the advisory council. |
|
(b) The fund is not authorized to pay any claimant an amount |
|
that exceeds the contractual obligations specified by the express |
|
written terms of the prepaid funeral benefits contract, including: |
|
(1) a claim based on marketing materials; |
|
(2) a claim based on side letters or other documents |
|
that do not comply with the requirements of this chapter; |
|
(3) a claim based on misrepresentation of the benefits |
|
conferred by the contract or a funding insurance policy; or |
|
(4) a claim for court costs, attorney's fees, |
|
penalties, or consequential or incidental damages. |
|
(c) A claim may not be approved for a loss to the extent the |
|
claim is insured, bonded, or otherwise covered, protected, or |
|
reimbursed from other sources, including coverage provided by the |
|
Texas Life, Accident, Health, and Hospital Service Insurance |
|
Guaranty Association under Chapter 463, Insurance Code. |
|
Sec. 154.360. SUBROGATION. (a) A person receiving a |
|
benefit under this chapter, including a payment of or on account of |
|
a contractual obligation or provision of substitute or alternative |
|
prepaid funeral benefits, is considered to have assigned to the |
|
fund the rights under, and any cause of action relating to, the |
|
prepaid funeral benefits contract to the extent of the benefit |
|
received. Notwithstanding this assignment by law, the commissioner |
|
may require a payee to execute a formal assignment of the person's |
|
rights and cause of action to the fund as a condition of receiving a |
|
right or benefit under this subchapter. |
|
(b) The fund retains all common law rights of subrogation |
|
and any other equitable or legal remedy that would have been |
|
available to a recipient of benefits from the fund with respect to a |
|
prepaid funeral benefits contract. |
|
(c) The commissioner, on behalf of the fund, may bring an |
|
action against any person and may employ and compensate a |
|
consultant, an agent, legal counsel, an accountant, or any other |
|
person the commissioner considers appropriate to collect a |
|
subrogated amount. Payment shall be made from the appropriate |
|
account within the fund for these services. Any recovery of a |
|
subrogated amount shall be deposited in the appropriate account |
|
within the fund. |
|
SECTION 25. Sections 154.408(b) and (d), Finance Code, are |
|
amended to read as follows: |
|
(b) The order must state: |
|
(1) with reasonable certainty the grounds for the |
|
order; and |
|
(2) the effective date of [, which may not be before
|
|
the 16th day after the date] the order [is mailed]. |
|
(d) Except as provided by Section 154.4081, the [The] order |
|
takes effect as proposed, except that the order may not take effect |
|
before the 16th day after the date the order is mailed unless the |
|
person named in the order requests a hearing not later than the 15th |
|
day after the date the order is mailed. |
|
SECTION 26. Subchapter I, Chapter 154, Finance Code, is |
|
amended by adding Section 154.4081 to read as follows: |
|
Sec. 154.4081. EMERGENCY ORDER. (a) The commissioner may |
|
issue an emergency order that takes effect immediately if the |
|
commissioner finds that immediate and irreparable harm is |
|
threatened to the public or a beneficiary under a prepaid funeral |
|
benefits contract. |
|
(b) An emergency order remains in effect unless stayed by |
|
the commissioner. |
|
(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. 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. |
|
(d) The hearing is an administrative hearing relating to the |
|
validity of findings that support immediate effect of the order. |
|
SECTION 27. The heading to Section 154.412, Finance Code, |
|
is amended to read as follows: |
|
Sec. 154.412. SEIZURE OF PREPAID FUNERAL ACCOUNTS [MONEY] |
|
AND RECORDS. |
|
SECTION 28. Section 154.412, Finance Code, is amended by |
|
amending Subsections (a), (c), and (d) and adding Subsections |
|
(c-1), (f), and (g) to read as follows: |
|
(a) The [After the commissioner cancels or fails to renew a
|
|
permit under Section 154.109(a) or on notice to a person required to
|
|
obtain a permit under this chapter, the] commissioner may issue an |
|
order to seize accounts in which [the] prepaid funeral funds |
|
[money], including earnings, may be [where that money is] held and |
|
may issue an order to seize the records that relate to the sale of |
|
prepaid funeral benefits if the commissioner finds, by examination |
|
or other credible evidence, that the person: |
|
(1) failed to deposit or remit money in accordance |
|
with Subchapter E or F; |
|
(2) misappropriated, converted, or illegally withheld |
|
or failed or refused to pay on demand money entrusted to the person |
|
that belongs to the beneficiary under a prepaid funeral benefits |
|
contract; |
|
(3) refused to submit to examination by the |
|
department; |
|
(4) was the subject of an order to cancel, suspend, or |
|
refuse to renew a permit; or |
|
(5) does not hold a permit or transferred the |
|
ownership of its business to another person who does not hold a |
|
permit [and who:
|
|
[(A)
did not apply for a new permit before the
|
|
31st day after the date the transfer was completed; or
|
|
[(B) was denied a new permit]. |
|
(c) An order takes effect immediately, and remains in effect |
|
unless stayed by the commissioner, if the commissioner finds that |
|
immediate and irreparable harm is threatened to the public or a |
|
beneficiary under a prepaid funeral benefits contract. If such a |
|
threat does not exist, the order must state the effective date, |
|
which may not be before the 16th day after the date the order is |
|
mailed. |
|
(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. 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. |
|
(d) A nonemergency [An] order takes effect as proposed |
|
unless the person named in the order requests a hearing not later |
|
than the 15th day after the date the order is mailed. |
|
(f) After the issuance of an order under this section, the |
|
commissioner may initiate an administrative claim for ancillary |
|
relief, including a claim for: |
|
(1) costs incurred in the administration, transfer, or |
|
other disposition of the seized assets and records; or |
|
(2) costs reasonably expected to be incurred in |
|
connection with the administration and performance of any |
|
outstanding prepaid funeral benefits contracts sold by a person |
|
subject to the order. |
|
(g) The remedy provided by Subsection (f) is not exclusive |
|
and does not limit the commissioner's discretion to seek an |
|
additional remedy authorized under this subchapter. |
|
SECTION 29. Section 1701.005(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) This chapter does not apply to [a rider or endorsement
|
|
that]: |
|
(1) a rider or endorsement that is used at the request |
|
of the holder of a policy, contract, or certificate subject to this |
|
chapter and that[; and
|
|
[(2)] relates to: |
|
(A) the manner of distribution of benefits under |
|
the policy, contract, or certificate; or |
|
(B) the reservation of rights and benefits under |
|
the policy, contract, or certificate; or |
|
(2) the modification of a previously approved |
|
insurance policy form for the sole purpose of adding the statement |
|
required by Section 154.2021(a). |
|
SECTION 30. (a) Section 154.102, Finance Code, as amended |
|
by this Act, applies only to an application for a new permit filed |
|
on or after September 1, 2009. An application for a new permit that |
|
was filed in good faith before the effective date of this Act is |
|
governed by the law as it existed immediately before the effective |
|
date of this Act, and that law is continued in effect for that |
|
purpose. |
|
(b) Section 154.102, Finance Code, as amended by this Act, |
|
does not apply to the renewal of a permit originally issued before |
|
September 1, 2009, if the permit is timely and continuously renewed |
|
after that date and is not suspended, canceled, or nonrenewed for |
|
reasons other than the requirements of Section 154.102, Finance |
|
Code. An application for renewal that meets the conditions of this |
|
subsection is governed by the law as it existed immediately before |
|
the effective date of this Act, and that law is continued in effect |
|
for that purpose. |
|
(c) Section 154.151, Finance Code, as amended by this Act, |
|
and Section 154.2021(b), Finance Code, as added by this Act, apply |
|
only to a prepaid funeral benefits contract entered into on or after |
|
September 1, 2009. A prepaid funeral benefits contract entered |
|
into before September 1, 2009, is governed by the law as it existed |
|
immediately before the effective date of this Act, and that law is |
|
continued in effect for that purpose. |
|
(d) Section 154.2021(a), Finance Code, as added by this Act, |
|
applies only to an insurance policy that is delivered, issued for |
|
delivery, or renewed on or after January 1, 2010. A policy |
|
delivered, issued for delivery, or renewed before January 1, 2010, |
|
is governed by the law as it existed immediately before the |
|
effective date of this Act, and that law is continued in effect for |
|
that purpose. |
|
SECTION 31. (a) Subchapter H, Chapter 154, Finance Code, as |
|
amended by this Act, does not apply to a loss under an |
|
insurance-funded prepaid funeral benefits contract that arises |
|
from or relates to the occurrence of one of the following events |
|
before September 1, 2009: |
|
(1) an event of default under the contract; |
|
(2) the suspension, revocation, or refusal to renew |
|
the permit of the contract seller under Chapter 154, Finance Code; |
|
or |
|
(3) the bankruptcy, receivership, seizure, or other |
|
failure of the contract seller. |
|
(b) Money in the guaranty fund on September 1, 2009, is |
|
allocated to the trust-funded account within the guaranty fund |
|
created by Section 154.351, Finance Code, as amended by this Act. |
|
SECTION 32. Section 154.106(c), Finance Code, is repealed. |
|
SECTION 33. (a) Except as provided by Subsection (b) of |
|
this section, this Act takes effect September 1, 2009. |
|
(b) The following provisions take effect January 1, 2010: |
|
(1) Subchapter C-1, Chapter 154, Finance Code, as |
|
added by this Act; and |
|
(2) Section 154.2021(a), Finance Code, as added by |
|
this Act. |