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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of prepaid funeral benefits; providing |
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penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 651, Occupations Code, is amended by |
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adding Subchapter O to read as follows: |
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SUBCHAPTER O. PREPAID FUNERAL BENEFITS |
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Sec. 651.701. DEFINITIONS. In this subchapter: |
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(1) "Contract beneficiary" means the person whose |
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final disposition is the subject of the prepaid funeral benefits |
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contract. |
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(2) "Crypt," "grave," "lawn crypt," "niche," and |
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"plot" have the meanings assigned by Section 711.001, Health and |
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Safety Code. |
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(3) "Financial institution" has the meaning assigned |
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by Section 201.101, Finance Code. |
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(4) "Funeral provider" means the 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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(5) "Insurance policy" means a life insurance policy |
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or annuity contract. |
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(6) "Permit holder" means a person that holds a permit |
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to sell prepaid funeral benefits contracts in this state. |
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(7) "Prepaid" means payment for funeral merchandise or |
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services before the death of the contract beneficiary in which all |
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or a portion of the amounts paid are placed in trust or used to pay |
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insurance policy premiums. |
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(8) "Prepaid funeral benefits" means prepaid funeral |
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services or prepaid funeral merchandise, but does not include a |
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grave marker, monument, tombstone, crypt, niche, plot, or lawn |
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crypt. |
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(9) "Prepaid funeral benefits contract" means a |
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contract entered into by a person, a funeral provider, and a permit |
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holder that sets out the terms for the provision of prepaid funeral |
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benefits by the funeral provider. |
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(10) "Responsible person" means the person charged |
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with the disposition of the remains of the contract beneficiary |
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under Section 711.002(a), Health and Safety Code. |
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Sec. 651.702. ADMINISTRATION OF SUBCHAPTER. (a) The |
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commission shall administer this subchapter. |
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(b) The commission may adopt reasonable rules concerning: |
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(1) fees to defray the cost of administering this |
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subchapter; |
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(2) the keeping of records relating to the sale of |
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prepaid funeral benefits; |
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(3) the filing of contracts and reports; |
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(4) changes in the management or control of a permit |
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holder; and |
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(5) any other matter relating to the enforcement and |
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administration of this subchapter. |
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Sec. 651.703. ANNUAL REPORT. (a) The commission may |
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require a permit holder with outstanding prepaid funeral benefits |
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contracts to submit an annual report that specifies: |
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(1) the number of prepaid funeral benefits contracts |
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in force at the beginning of the calendar year and the sum of the |
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total contract price of those contracts; |
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(2) the total number of new prepaid funeral benefits |
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contracts issued during the calendar year and the sum of the total |
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contract price of those contracts; |
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(3) the total number of prepaid funeral benefits |
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contracts that have been performed during the calendar year and the |
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sum of the total contract price of those contracts; |
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(4) the total number of prepaid funeral benefits |
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contracts that terminated by cancellation during the calendar year |
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and the sum of the total contract price of those contracts; and |
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(5) the total number of prepaid funeral benefits |
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contracts outstanding at year-end, the sum of the total contract |
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price of contracts in force, and the total funding available for |
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those contracts as either: |
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(A) the amount of insurance in force; or |
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(B) the amount of trust funds held for those |
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contracts. |
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(b) The annual report must include a certification by the |
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permit holder that states that the insurance premiums received have |
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been paid to the appropriate insurance company, or the funds that |
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are held in trust have been received and administered, in |
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accordance with applicable law. |
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Sec. 651.704. RECORDS; EXAMINATION. (a) A permit holder |
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that has outstanding prepaid funeral benefits contracts shall |
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maintain records as required by the commission. The records are |
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subject to examination by the commission or its agent on a schedule |
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to be determined by the commission, but in no event more frequently |
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than once every three years unless the commission determines |
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additional examination necessary for cause. |
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(b) As part of the examination, the commission or its agent |
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shall be given access to records relating to prepaid funeral |
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benefits contracts of each permit holder. |
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(c) By rule, the commission may delegate the examination of |
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trust-funded permit holders to the Texas Department of Banking and |
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the examination of insurance-funded permit holders to the Texas |
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Department of Insurance, including the allocation of any |
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examination fees under Section 651.705. |
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Sec. 651.705. EXAMINATION FEE. (a) For each examination |
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conducted under Section 651.704, the commission may impose on the |
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permit holder a fee in an amount set by the commission. |
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(b) The amount of the fee must be sufficient to cover the |
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cost of the examination, including: |
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(1) salary and travel expenses for commission |
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employees, including travel to and from the place where the records |
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are kept; and |
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(2) any other expense necessarily incurred in |
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conducting the examination. |
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Sec. 651.706. CONFIDENTIALITY; DISCLOSURE OF CERTAIN |
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INFORMATION. (a) Information relating to the financial condition |
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of a permit holder obtained by the commission directly or |
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indirectly, through examination or otherwise, other than published |
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statements, is confidential. |
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(b) The files and records of the commission relating to the |
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financial condition of a permit holder are confidential. |
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(c) The commission may disclose the information described |
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by Subsection (a) or (b) to an agency, commission, or |
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instrumentality of this or another state or the United States if the |
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commission considers disclosure to be in the best interest of the |
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public and necessary or proper to enforce the laws of this or |
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another state or the United States. |
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Sec. 651.707. PERMIT REQUIREMENT. A person may not sell |
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prepaid funeral benefits contracts in this state unless the person |
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holds a permit issued under this subchapter. |
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Sec. 651.708. PERMIT APPLICATION; FEE. To obtain a permit |
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to sell or continue to sell prepaid funeral benefits contracts, a |
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person must: |
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(1) file an application for a permit with the |
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commission on a form prescribed by the commission; |
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(2) pay a filing fee in an amount set by the commission |
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under Section 651.702; and |
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(3) if applicable, pay extraordinary expenses |
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required for out-of-state investigation of the person. |
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Sec. 651.709. ISSUANCE OF PERMIT. (a) The commission may |
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investigate an applicant before issuing an initial permit. |
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(b) The commission shall approve the application and issue a |
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permit to the applicant if the commission finds that the business |
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ability, experience, character, financial condition, and general |
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fitness of the applicant warrant the public's confidence. The |
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commission shall notify the applicant if the executive director |
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finds otherwise. |
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(c) The applicant must demonstrate sufficient financial |
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responsibility to administer all prepaid funeral benefits |
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contracts to performance. Sufficient financial responsibility |
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shall be presumed if the permit holder has current net worth of |
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$100,000 or provides the commission with a letter of credit or |
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performance bond or guarantee from its parent company in the amount |
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of $100,000 in a form and from an issuer acceptable to the |
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commission. |
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(d) The commission shall issue the permit within 60 days of |
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receipt of a completed application or shall provide the applicant |
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with written notice of the denial of the application, including the |
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reasons for denial. The applicant on request is entitled to a |
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hearing on the denial of the application, to be held not later than |
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the 30th day after the date of the request. |
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Sec. 651.710. TERM OF PERMIT. (a) A permit is issued for a |
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five-year term. |
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(b) The commission by rule may adopt a system under which |
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permits expire on various dates during the year. |
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Sec. 651.711. FUNDING OF PREPAID FUNERAL BENEFITS |
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CONTRACTS. A permit holder may elect to fund prepaid funeral |
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benefits contracts with insurance policies under Section 651.729 or |
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trust accounts under Section 651.730, or both. |
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Sec. 651.712. PROHIBITION ON TRANSFER OF PERMIT. A permit |
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is not transferable without the prior approval of the commission. |
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Sec. 651.713. TRANSFER OF BUSINESS OWNERSHIP. (a) A |
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person may not acquire in any manner an ownership interest in an |
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entity that is a permit holder, unless the person has filed with the |
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commission under oath: |
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(1) a biographical form for each person by whom or on |
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whose behalf the acquisition is to be effected; |
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(2) a statement disclosing the substance of any |
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disciplinary action taken by a financial or insurance regulator of |
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this state, another state, or the United States against a person who |
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is acquiring an ownership interest in the permit holder; |
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(3) a statement certifying that, immediately on the |
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acquisition, the permit holder will be able to satisfy the |
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requirements for the issuance of the permit; and |
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(4) any additional information that the commission by |
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rule may prescribe as necessary or appropriate to the protection of |
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the consumers of this state or as in the public interest. |
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(b) The commission may require a partnership, syndicate, or |
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other group that is required to file a statement under Subsection |
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(a) to provide the information under that subsection for each |
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partner of the partnership, each member of the syndicate, group, or |
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limited liability company, and each person who controls the partner |
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or member. If the partner, member, or person is a corporation or |
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other entity or the person required to file the statement under |
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Subsection (a) is a corporation, the commission may require that |
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the information required under that subsection be provided |
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regarding: |
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(1) the corporation or other entity; |
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(2) each individual who is an executive officer or |
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director of the corporation; and |
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(3) each person who is directly or indirectly the |
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beneficial owner of more than 10 percent of the outstanding voting |
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securities of the corporation. |
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(c) The commission may disapprove an acquisition if, after |
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notice and opportunity for hearing, the commission determines that: |
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(1) immediately on the acquisition, the permit holder |
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would not be able to satisfy the requirements for the issuance of |
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the permit; |
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(2) the competence, trustworthiness, experience, and |
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integrity of the persons who would control the operation of the |
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permit holder are such that it would not be in the interest of the |
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consumers of this state to permit the acquisition; or |
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(3) the acquisition would violate this subchapter or |
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another law of this state, another state, or the United States. |
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(d) Notwithstanding Subsection (c), an acquisition is |
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considered approved if the commission has not proposed to deny the |
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requested change before the 61st day after the date the commission |
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receives all information required by this section. |
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(e) The requirements of this section do not apply to an |
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acquisition of ownership, directly or indirectly, that is approved |
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by the Texas Department of Insurance, the Texas Department of |
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Banking, or the insurance or banking regulator of any other state or |
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the United States. |
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Sec. 651.714. REQUIRED RENEWAL FOR CERTAIN PERMIT HOLDERS. |
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A permit holder that has outstanding prepaid funeral benefits |
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contracts shall renew its permit. |
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Sec. 651.715. RENEWAL FEE. The commission shall set the |
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renewal fee under Section 651.702. |
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Sec. 651.716. GROUNDS FOR CANCELLATION OR SUSPENSION OF OR |
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REFUSAL TO RENEW PERMIT. (a) The commission by order may cancel or |
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suspend a permit if the commission finds, by examination or other |
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credible evidence, that the permit holder: |
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(1) knowingly violated this subchapter or another law |
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of this state relating to the sale of prepaid funeral benefits |
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contracts, including a final order of the commission or rule of the |
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commission; |
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(2) misrepresented or concealed a material fact in the |
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permit application; |
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(3) obtained or attempted to obtain the permit by |
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misrepresentation, concealment, or fraud; |
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(4) failed to maintain evidence of financial |
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responsibility as required by Section 651.709(c); or |
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(5) failed to maintain the qualifications necessary to |
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obtain a permit. |
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(b) The commission by order may refuse to renew a permit if |
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the commission finds, by examination or other credible evidence, |
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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 commission. |
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(c) The commission may place on probation a permit holder |
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whose permit is suspended. If a permit suspension is probated, the |
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commission may require the permit holder: |
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(1) to report regularly to the commission on matters |
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that are the basis of the probation; or |
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(2) to limit its activities as prescribed by the |
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commission. |
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Sec. 651.717. ORDER TO CANCEL, SUSPEND, OR REFUSE TO RENEW |
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PERMIT. (a) An order issued under Section 651.716 must state: |
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(1) with reasonable certainty the grounds for the |
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order; and |
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(2) the effective date, which may not be before the |
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16th day after the date the order is mailed. |
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(b) The order shall be served on the person named in the |
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order by certified mail, return receipt requested, to the last |
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known address of the person. |
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(c) The order takes effect as proposed unless the person |
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named in the order requests a hearing not later than the 15th day |
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after the date the order is mailed. |
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Sec. 651.718. FORM OF CONTRACT. (a) The commission must |
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approve all prepaid funeral benefits contract forms before their |
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use. |
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(b) A prepaid funeral benefits contract must: |
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(1) be in writing; |
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(2) state the name and address of the permit holder |
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selling the prepaid funeral benefits contract; |
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(3) if the funeral provider is not the permit holder, |
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state the name and address of the funeral provider responsible for |
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providing the prepaid funeral benefits specified in the prepaid |
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funeral benefits contract; and |
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(4) state the prepaid funeral benefits to be provided. |
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(c) A funeral provider responsible for providing prepaid |
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funeral benefits must be a party to the prepaid funeral benefits |
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contract. |
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(d) A prepaid funeral benefits contract, whether in English |
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or Spanish, must be written in plain language designed to be easily |
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understood by the average consumer. The contract must be printed in |
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an easily readable font and type size. The commission shall adopt |
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standards for prepaid funeral benefits contracts that comply with |
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this subsection. |
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(e) A permit holder may represent that the commission has |
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approved a prepaid funeral benefits contract with the following |
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language: "The Texas Funeral Service Commission regulates the sale |
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of prepaid funeral benefits contracts" and "The form of this |
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contract has been approved by the commission." |
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(f) The sales price of an item not covered by this |
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subchapter may not be increased to allocate a lesser sales price to |
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an item covered by this subchapter. |
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(g) A purchaser of a prepaid funeral benefits contract may |
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agree in writing to pay the permit holder a finance charge in |
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accordance with Chapter 345, Finance Code, on any amount due the |
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permit holder on the prepaid funeral benefits contract. |
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(h) A prepaid funeral benefits contract must clearly |
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identify the funeral merchandise and services for which the cost is |
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guaranteed and those for which the cost is not guaranteed, the |
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circumstances under which the guarantee is limited, and the |
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circumstances under which the prepaid funeral benefits contract may |
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be modified after the death of the contract beneficiary. |
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Sec. 651.719. CANCELLATION OF CONTRACT. (a) A purchaser of |
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a prepaid funeral benefits contract may cancel the contract before |
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maturity by giving written notice of cancellation to the permit |
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holder. The permit holder shall maintain copies of the written |
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notice of cancellation for three years from the date of receipt. |
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(b) The cancellation of the prepaid funeral benefits |
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contract does not cancel the insurance policy funding the prepaid |
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funeral benefits contract. The insurance policy may be canceled in |
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accordance with the terms of the policy. |
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(c) The cancellation of the prepaid funeral benefits |
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contract requires the return of trust funds under Section |
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651.730(e). |
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Sec. 651.720. MODIFICATION AT TIME OF FUNERAL. (a) The |
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funeral merchandise and services to be provided by the funeral |
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provider under a prepaid funeral benefits contract may be modified |
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after the death of the contract beneficiary if the modification |
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complies with Subsection (b) or is otherwise agreed to in a writing |
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signed by the funeral provider and the responsible person, except |
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that: |
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(1) if the purchaser of the prepaid funeral benefits |
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contract is also the contract beneficiary: |
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(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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(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 funeral merchandise or |
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service for which the cost is guaranteed in the prepaid funeral |
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benefits contract 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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(b) Except as limited by Subsection (a)(1), the responsible |
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person may make reasonable modifications to the funeral merchandise |
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and services provided under a prepaid funeral benefits contract at |
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the time the funeral is performed, not to exceed 10 percent of the |
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original purchase price of the contract. This subsection does not |
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require the permit holder or the funeral provider to: |
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(1) refund a portion of the funds attributable to the |
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contract if the permit holder or funeral provider grants credit for |
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surrender or exchange as provided by Subsection (a)(2); |
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(2) provide substituted or additional funeral |
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merchandise or services in excess of credits granted under |
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Subsection (a)(2) unless the permit holder or funeral provider |
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receives additional compensation at current prices; or |
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(3) apply a portion of the funds attributable to the |
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contract or credits granted under Subsection (a)(2) to another |
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contract or funeral. |
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(c) The responsible person may not modify a prepaid funeral |
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benefits contract that has not been fully paid at the time of death |
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of the contract beneficiary except as agreed to in a writing signed |
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by the funeral provider and the responsible person. |
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Sec. 651.721. WAIVER OF RIGHT OF CANCELLATION. (a) The |
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purchaser of a prepaid funeral benefits contract may irrevocably |
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waive the purchaser's right to cancel the contract under Section |
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651.719. The waiver must be in a separate writing signed by the |
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purchaser and the permit holder and may take effect no earlier than |
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the 15th day after the date of the purchase of the contract. The |
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form of the waiver must comply with the requirements for the form of |
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a sales contract under Section 651.718. |
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(b) A waiver made under this section does not affect any |
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other right of the purchaser. |
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Sec. 651.722. PERFORMANCE OF CONTRACT. Delivery of funeral |
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merchandise before death is not performance, in whole or in part, of |
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a prepaid funeral benefits contract. |
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Sec. 651.723. ENFORCEMENT OF CONTRACT. A person that |
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violates Section 651.707 may not enforce a prepaid funeral benefits |
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contract, but before performance, the purchaser or an heir or legal |
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representative of the purchaser is entitled to recover: |
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(1) if trust-funded, the amount paid under the |
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contract; or |
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(2) if insurance-funded, ownership of the insurance |
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policy. |
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Sec. 651.724. AGENT OF PERMIT HOLDER. (a) A permit holder |
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may designate one or more agents to solicit and sell prepaid |
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funeral benefits contracts under a written contract specifying the |
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duties and obligations of the agents, including the proper receipt |
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and deposit of any funds or the transmitting of any insurance policy |
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premiums. |
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(b) The permit holder is responsible for the action or |
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failure to act of any agent appointed under Subsection (a) in the |
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course and scope of the agent's duty under the contract with the |
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permit holder. The appointment of an agent does not diminish any |
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obligation or responsibility of the permit holder imposed by the |
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prepaid funeral benefits contract, this subchapter, or other law. |
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Sec. 651.725. TRUST-FUNDED PREPAID FUNERAL BENEFITS AGENT. |
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(a) A permit holder that elects to fund prepaid funeral benefits |
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contracts with trust funds under Chapter 154, Finance Code, may |
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sell contracts only through trust-funded prepaid funeral benefits |
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agents. |
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(b) A permit holder may appoint funeral directors licensed |
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by the commission as trust-funded prepaid funeral benefits agents. |
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Licensed funeral directors are not subject to the requirements of |
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Sections 651.726, 651.727, and 651.728. |
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Sec. 651.726. TRAINING AND EXAMINATION. The permit holder |
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shall appoint an individual applicant to act as a trust-funded |
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prepaid funeral benefits agent on its certification that the |
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applicant has: |
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(1) completed a course of study and instruction in |
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compliance with this subchapter; and |
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(2) passed without aid a written examination |
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administered by the permit holder. |
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Sec. 651.727. COURSE. (a) To be eligible to receive an |
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appointment under Section 651.725, an applicant must complete a |
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course of study and instruction offered by a permit holder under |
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this section. |
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(b) The course of study and instruction must: |
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(1) be at least five hours in duration; and |
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(2) include instruction on: |
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(A) funeral merchandise and services, the |
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responsibilities of a trustee, and the terms of the prepaid funeral |
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benefits contract; and |
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(B) the laws relating to funeral prearrangement. |
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Sec. 651.728. EXAMINATION. (a) The commission shall |
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prescribe a uniform examination for applicants that fairly tests |
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knowledge of the information contained in the course under Section |
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651.727. |
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(b) The commission shall authorize a permit holder to |
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administer the examination as provided by this section after |
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approval by the commission of a complete outline and explanation of |
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the course and the manner of conducting the examination. |
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Sec. 651.729. INSURANCE-FUNDED PREPAID FUNERAL BENEFITS |
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CONTRACTS. (a) Except as specified in this section, the |
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solicitation and sale of insurance policies to fund prepaid funeral |
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benefits contracts, the terms of policies, all records relating to |
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transactions, and the conduct of agents and insurers shall be |
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conducted in accordance with the Insurance Code and regulated |
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solely by the Texas Department of Insurance. |
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(b) Insurance-funded prepaid funeral benefits contracts may |
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be solicited and sold only by a permit holder, or its agent, who is |
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properly licensed under Chapter 4054, Insurance Code. |
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(c) The application for an insurance policy covering the |
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contract beneficiary shall be executed simultaneously with the |
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prepaid funeral benefits contract. |
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(d) The application must include a disclosure in at least |
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10-point bold type, immediately above the signature line of the |
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purchaser, that states: |
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"If you are applying for a life insurance policy with multiple |
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payments, the total amount of premiums you pay over the life of the |
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policy may exceed the death benefit." |
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(e) The application must include the name and address of the |
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insurer in a form required by the Texas Department of Insurance, and |
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the policy must include a disclosure of the cash surrender value of |
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the policy payable to the policy owner on cancellation of the |
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insurance policy. |
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(f) The receipt of funds by the agent constitutes receipt of |
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premium by the insurer subject to the terms of the policy. |
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(g) The insurance policy must be on a form approved for use |
|
by the Texas Department of Insurance, and the insurance policy must |
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provide the policy owner the opportunity to cancel the insurance |
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policy and receive a full refund of any premium paid, for any |
|
reason, for a period of not less than 15 days after the date of |
|
delivery of the insurance policy. After expiration of that period, |
|
cancellation of the insurance policy is subject to the terms of the |
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policy. |
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(h) The insurer issuing the insurance policy must be |
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licensed to do business in this state. |
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(i) The purchaser of an insurance-funded prepaid funeral |
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benefits contract may irrevocably assign the purchaser's ownership |
|
of or rights to benefits under the insurance policy to the permit |
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holder, the funeral provider, or a trustee. An irrevocable |
|
assignment to a trustee is not valid unless it is made solely to |
|
facilitate the eligibility of the purchaser under Title XIX of the |
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federal Social Security Act (42 U.S.C. Section 1396 et seq.) or |
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other public assistance program or the trustee is specifically |
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prohibited from exercising any right under the policy except |
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administration of the benefits. |
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(j) The insurer shall pay the beneficiary or assignee of an |
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insurance policy funding a prepaid funeral benefits contract on |
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receipt of sufficient documentation, which may include: |
|
(1) a certification signed by the funeral provider and |
|
the responsible person that the funeral service has been performed |
|
in accordance with the prepaid funeral benefits contract and to the |
|
satisfaction of the responsible person, and a copy of the death |
|
certificate; or |
|
(2) other documentation required by the insurer. |
|
Sec. 651.730. TRUST-FUNDED PREPAID FUNERAL BENEFITS |
|
CONTRACTS. (a) Except as specified in this section, the terms of |
|
trusts established for prepaid funeral benefits contracts, all |
|
records relating to transactions, and the conduct of agents and |
|
trustees are governed by Chapter 154, Finance Code, and regulated |
|
by the Texas Department of Banking or other regulators with |
|
jurisdiction over the trustee. |
|
(b) Trust-funded prepaid funeral benefits contracts may be |
|
solicited and sold only by agents appointed by the permit holder on |
|
forms adopted by the commission by rule. |
|
(c) The agent shall provide the purchaser a disclosure in a |
|
form adopted by the commission by rule that includes: |
|
(1) the amount retained by the permit holder, funeral |
|
provider, or agent from any funds received from the purchaser |
|
before deposit; |
|
(2) the amount retained by the permit holder, funeral |
|
provider, or agent from any funds received from the purchaser on |
|
cancellation; |
|
(3) the name, address, and contact person of the |
|
financial institution; |
|
(4) a statement that the funds received will be |
|
invested in accordance with the Finance Code but that no return on |
|
funds is guaranteed; and |
|
(5) a statement that should the contract beneficiary |
|
die before the prepaid funeral benefits contract is paid in full, |
|
the purchaser, the purchaser's authorized representative, or the |
|
responsible person may elect to pay the balance due and receive the |
|
prepaid funeral benefits under the contract. |
|
(d) Funds received for prepaid funeral benefits contracts |
|
shall be administered as prescribed by this section and Chapter |
|
154, Finance Code, as applicable. |
|
(e) Not later than the 30th day after the date of the receipt |
|
of a cancellation request, the permit holder shall withdraw and pay |
|
to the purchaser funds in the depository being held for the |
|
purchaser's use and benefit. |
|
(f) The purchaser or permit holder may not make a partial |
|
cancellation or withdrawal. |
|
(g) On cancellation, the purchaser is entitled to receive |
|
the actual amount paid by the purchaser and half of all earnings |
|
attributable to those funds, less the amount permitted to be |
|
retained as provided by Section 154.252, Finance Code, except as |
|
provided by Subsections (h) and (i). |
|
(h) A purchaser who cancels a contract on the solicitation |
|
of the permit holder or the funeral provider is entitled to receive |
|
the total amount paid to the permit holder or the funeral provider |
|
by the purchaser and all earnings attributable to those funds. If |
|
the funds are used to purchase a new prepaid funeral benefits |
|
contract under a solicitation by the permit holder, the new |
|
contract must protect the purchaser to an extent equal to or greater |
|
than that provided by the original contract, as determined by the |
|
commission. Under the new contract, the cost to the purchaser of |
|
the same or substantially the same services or merchandise may not |
|
be greater than that provided by the canceled contract. |
|
(i) A purchaser who cancels a contract during the first year |
|
of the contract when payments required under the contract are |
|
current is entitled to receive, regardless of the amount held in |
|
trust, the greater of: |
|
(1) 90 percent of the actual amount paid by the |
|
purchaser; or |
|
(2) the amount deposited in trust with respect to the |
|
purchaser's contract. |
|
Sec. 651.731. SEIZURE OF PREPAID FUNERAL TRUST FUNDS AND |
|
RECORDS. (a) After the commission cancels or fails to renew a |
|
permit under Section 651.716(a) or (b) or on notice to a person |
|
required to obtain a permit under this subchapter, the executive |
|
director may issue an order to seize the prepaid funeral trust |
|
funds, including earnings, where those funds are held and may issue |
|
an order to seize the records that relate to the sale of prepaid |
|
funeral benefits if the executive director finds, by examination or |
|
other credible evidence, that the person: |
|
(1) failed to deposit or remit funds in accordance |
|
with Chapter 154, Finance Code; |
|
(2) misappropriated, converted, or illegally withheld |
|
or failed or refused to pay on demand funds entrusted to the person |
|
that belong to the purchaser or contract beneficiary under a |
|
prepaid funeral benefits contract; |
|
(3) refused to submit to examination by the |
|
commission; |
|
(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. |
|
(b) An order shall be served on the person named in the order |
|
by certified mail, return receipt requested, to the last known |
|
address of the person. |
|
(c) An order takes effect immediately if the executive |
|
director finds that immediate and irreparable harm is threatened to |
|
a contract 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. |
|
(d) 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. |
|
(e) Premiums received on the disposition of a contract |
|
related to the seizure of prepaid funeral trust funds shall be |
|
handled as provided by Section 651.732 and Subchapter H, Chapter |
|
154, Finance Code. |
|
Sec. 651.732. NOTIFICATION TO PURCHASER. Not later than |
|
the 30th day after the date prepaid funeral trust funds are seized |
|
under Section 651.731, the executive director shall notify each |
|
known person who purchased prepaid funeral benefits under a |
|
contract from the permit holder whose permit is canceled. The |
|
notice must: |
|
(1) include an explanation of the procedures under |
|
this subchapter for canceling the contract and claiming funds that |
|
may be due the person if the person elects to cancel; |
|
(2) inform the person to continue to make payments |
|
under the contract if the person elects to keep the contract in |
|
force; and |
|
(3) inform the person that if the person elects to keep |
|
the contract in force the executive director will transfer: |
|
(A) responsibility to perform the contract to a |
|
responsible successor permit holder selected by the executive |
|
director; or |
|
(B) the seized funds to the fund maintained under |
|
Section 154.351, Finance Code, subject to the claims process |
|
prescribed by rule under Subchapter H, Chapter 154, Finance Code. |
|
Sec. 651.733. LIQUIDATION OF BUSINESS AND AFFAIRS OF PERSON |
|
FOLLOWING SEIZURE OF TRUST FUNDS AND RECORDS. After an order issued |
|
under Section 651.731(a) becomes final and unappealable, the |
|
executive director may petition the district court in the county in |
|
which a person required to hold a permit under this subchapter |
|
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 the person |
|
failed or refused to correct the violation before the 31st day after |
|
the date the person received written notice from the executive |
|
director. |
|
Sec. 651.734. PENALTIES FOR VIOLATIONS OF SUBCHAPTER. (a) |
|
A person commits an offense if the person: |
|
(1) fails to deposit funds in compliance with this |
|
subchapter unless the failure to make a deposit is inadvertent and |
|
is corrected before the 11th day after the date the permit holder |
|
discovers the failure; or |
|
(2) withdraws funds in a manner inconsistent with this |
|
subchapter unless the withdrawal was made in error and the |
|
withdrawal is reversed before the 11th day after the date the permit |
|
holder discovers the error. |
|
(b) An offense under this section is punishable as if it |
|
were an offense under Section 32.45, Penal Code. |
|
Sec. 651.735. ADMINISTRATIVE PENALTY. (a) After notice |
|
and opportunity for hearing, the executive director may impose an |
|
administrative penalty on a person who: |
|
(1) violates this subchapter or a final order of the |
|
commission or rule of the commission and does not correct the |
|
violation before the 31st day after the date the person receives |
|
written notice of the violation from the commission; or |
|
(2) engages in a pattern of violations, as determined |
|
by the executive director. |
|
(b) The amount of the penalty for each violation may not |
|
exceed $1,000 for each day the violation occurs. |
|
(c) In determining the amount of the penalty, the executive |
|
director shall consider the seriousness of the violation, the |
|
person's history of violations, and the person's good faith in |
|
attempting to comply with this subchapter. |
|
(d) The imposition of a penalty under this section is: |
|
(1) subject to the procedures of Subchapter L; and |
|
(2) subject to judicial review as a contested case |
|
under Chapter 2001, Government Code. |
|
Sec. 651.736. RESTITUTION. The commission may issue an |
|
order to a person requiring restitution if, after notice and |
|
opportunity for hearing, the commission finds that the person: |
|
(1) failed to deposit funds in accordance with |
|
Subchapter F, Chapter 154, Finance Code; or |
|
(2) misappropriated, converted, or illegally withheld |
|
or failed or refused to pay on demand funds entrusted to the person |
|
that belong to the contract beneficiary under a prepaid funeral |
|
benefits contract. |
|
Sec. 651.737. DELIVERY AT NEED. (a) A funeral provider |
|
responsible for the delivery of prepaid funeral benefits shall |
|
provide the responsible person, at the time of delivery of prepaid |
|
funeral benefits, with a written reconciliation on a form adopted |
|
by the commission by rule. |
|
(b) The reconciliation must provide complete, item-by-item |
|
details of the provider's resolution of the funeral costs with the |
|
responsible person, including prices and any guarantees, guarantee |
|
limitations, nonguaranteed items, and balance due. |
|
(c) The funeral provider shall maintain a fully executed |
|
copy of each reconciliation until the next examination by the |
|
commission under Section 651.704. |
|
SECTION 2. Section 154.002(10), Finance Code, is amended to |
|
read as follows: |
|
(10) "Seller" means a person holding a permit to sell |
|
[selling, accepting money or premiums for, or soliciting contracts
|
|
for] prepaid funeral benefits [or] contracts under Subchapter O, |
|
Chapter 651, Occupations Code, and electing [or insurance policies] |
|
to fund those contracts through a trust [prepaid funeral benefits
|
|
in this state]. |
|
SECTION 3. The following laws are repealed: |
|
(1) Section 154.002(7), Finance Code; |
|
(2) Subchapters B, C, D, and I, Chapter 154, Finance |
|
Code; |
|
(3) Section 154.201, Finance Code; |
|
(4) Section 154.202, Finance Code; |
|
(5) Section 154.203, Finance Code; |
|
(6) Section 154.205, Finance Code; |
|
(7) Section 154.206, Finance Code; |
|
(8) Section 154.207, Finance Code; and |
|
(9) Sections 651.159 and 651.160, Occupations Code. |
|
SECTION 4. A person holding a permit issued by the Texas |
|
Department of Banking to sell prepaid funeral benefits on the |
|
effective date of this Act shall be issued a permit by the Texas |
|
Funeral Service Commission without application, effective |
|
September 1, 2009. All provisions of this Act apply to the permit |
|
holder on and after the effective date of this Act, except that the |
|
permit holder has until the third anniversary of the effective date |
|
of this Act to meet the financial responsibility requirements of |
|
Section 651.709(c), Occupations Code, as added by this Act. |
|
SECTION 5. This Act takes effect September 1, 2009. |