Bill Text: TX HB1489 | 2013-2014 | 83rd Legislature | Comm Sub


Bill Title: Relating to prepaid funeral benefits contracts; authorizing a fee.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2013-04-29 - Laid on the table subject to call [HB1489 Detail]

Download: Texas-2013-HB1489-Comm_Sub.html
  83R15678 ATP-F
 
  By: Flynn H.B. No. 1489
 
  Substitute the following for H.B. No. 1489:
 
  By:  Villarreal C.S.H.B. No. 1489
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to prepaid funeral benefits contracts; authorizing a fee.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 154.106, Finance Code, is amended to
  read as follows:
         Sec. 154.106.  TRANSFER OF BUSINESS OWNERSHIP. (a) A permit
  holder shall notify the department and either the depository of the
  money held under Subchapter F or the issuer of insurance policy
  funding contracts under Subchapter E of a [contract to] transfer of
  ownership of the permit holder's business or a transfer of 25
  percent or more of the stock or other ownership or membership
  interest of the business in a single transaction. The notice must be
  given:
               (1)  in the case of a voluntary transfer, not later than
  the seventh day after the date the contract for transfer is
  executed; or
               (2)  in the case of an involuntary transfer, not later
  than the first business day after the date the permit holder
  receives notice of the impending foreclosure or other involuntary
  transfer.
         (b)  If the proposed transferee will own 51 percent or more
  of the business and is not a permit holder, the proposed transferee
  shall file an application for a permit with the department in
  accordance with this subchapter.  If the application is complete,
  the commissioner shall approve or deny the application before the
  16th day after the date the application was received.  The transfer
  of prepaid funeral benefits contracts of the permit holder that is
  the transferor may not occur until after the date a permit is issued
  to the applicant that is the transferee.
         (c)  If the commissioner denies the application, the
  applicant may request a hearing not later than the 15th day after
  the date on which notice of the determination is hand-delivered or
  the notice is mailed, whichever date is earlier.
         SECTION 2.  Section 154.107, Finance Code, is amended to
  read as follows:
         Sec. 154.107.  REQUIRED RENEWAL FOR [CERTAIN] SELLERS. (a)
  A seller that [discontinues the sale of prepaid funeral benefits
  but] has outstanding contracts shall renew the seller's permit
  until the contracts are fully discharged.
         (b)  A seller may renew the seller's permit as an
  unrestricted permit if the seller:
               (1)  wishes to continue to sell prepaid funeral
  benefits; and
               (2)  demonstrates to the commissioner that the seller
  continues to meet the qualifications and satisfy the requirements
  that apply to an applicant for a permit.
         (c)  A seller must renew the seller's permit as a restricted
  permit if the seller:
               (1)  cannot demonstrate to the commissioner that the
  seller continues to meet the qualifications and satisfy the
  requirements that apply to an applicant for a permit; or
               (2)  no longer wishes to sell prepaid funeral benefits.
         (d)  A seller that holds a restricted permit may not sell
  prepaid funeral benefits during the period a restricted permit is
  in effect. A contract entered into by a seller that at the time the
  contract is entered into holds a restricted permit is void and
  unenforceable and is not eligible for payment from a guaranty fund
  established under this chapter.
         SECTION 3.  Section 154.161(a), Finance Code, is amended to
  read as follows:
         (a)  The funeral provider under a prepaid funeral benefits
  contract subject to this chapter shall:
               (1)  in compliance with applicable law, protect any
  nonpublic personal financial and health information of the
  purchaser and contract beneficiary in the possession of the funeral
  provider;
               (2)  after the death of the contract beneficiary:
                     (A)  deliver the contracted funeral merchandise
  and services and cash advance items required under the contract,
  subject to Section 154.1551;
                     (B)  prepare a written pre-need to at-need
  reconciliation to verify that the specified goods and services are
  delivered or performed for the agreed price and promptly refund any
  contract overcharges that may be revealed by the reconciliation;
                     (C)  if advance payment of cash advance items was
  included in the contract, prepare a reconciliation of proceeds
  applied to cash advance items; and
                     (D)  retain a copy of each reconciliation until
  the third anniversary of the date of service; and
               (3)  with respect to each prepaid funeral benefits
  contract for which the funeral provider is not also the seller:
                     (A)  sign the reconciliations required by
  Subdivision (2);
                     (B)  promptly deliver the records that verify
  contract performance to the seller, including the final at-need
  contract, the certificate of performance, and the reconciliations
  required under Subdivision (2);
                     (C)  if requested by the seller, correct or
  explain any discrepancy in a reconciliation required under
  Subdivision (2); [and]
                     (D)  subject to Subsection (d), provide copies of
  any other records or documentation related to the offer, sale, and
  performance of the contract that are reasonably requested by the
  seller or the department, including records related to any refund
  required by Section 154.1511 or 154.1551; and
                     (E)  inform each seller with which the funeral
  provider has an outstanding contract of any closure of the
  provider's funeral establishments not later than the 15th day after
  the date of closure.
         SECTION 4.  Section 154.253, Finance Code, is amended to
  read as follows:
         Sec. 154.253.  DEPOSIT OF MONEY PAID OR COLLECTED. (a) Not
  later than the 30th day after the date of collection, the money,
  other than money retained as provided by Section 154.252, shall be
  deposited:
               (1)  in a financial institution that has its main
  office or a branch in this state in an interest-bearing restricted
  account insured by the federal government; or
               (2)  in trust with a financial institution that has its
  main office or a branch located in this state and is authorized to
  act as a fiduciary in this state, to be invested by the financial
  institution as trustee in accordance with this subchapter.
         (b)  An account described by Subsection (a), including a
  trust account, shall be carried in the name of the funeral provider
  or other entity to whom the purchaser makes payment and must include
  the words "prepaid funeral benefits" or "pre-need funeral
  benefits."[.]
         SECTION 5.  Section 154.3595, Finance Code, is amended by
  adding Subsection (a-1) to read as follows:
         (a-1)  A permit holder to which this section applies shall
  notify each purchaser of an outstanding prepaid funeral benefits
  contract of any closure of the funeral provider named in the
  contract not later than the 90th day after the date of its receipt
  of notice of the closure.
         SECTION 6.  Subchapter I, Chapter 154, Finance Code, is
  amended by adding Section 154.400 to read as follows:
         Sec. 154.400.  INVESTIGATION AND SUBPOENA AUTHORITY. (a) If
  the commissioner has a reasonable suspicion of a misallocation or
  defalcation of prepaid funeral funds or an unauthorized sale of
  prepaid funeral benefits, the commissioner may conduct
  investigations as the commissioner considers necessary or
  appropriate to determine whether:
               (1)  a misallocation or defalcation of prepaid funeral
  funds has occurred; or
               (2)  an unauthorized sale of prepaid funeral benefits
  has occurred.
         (b)  The commissioner may issue a subpoena to compel the
  attendance and testimony of a person under oath or the production of
  documents related to an investigation conducted under Subsection
  (a). The subpoena may require attendance and production at the
  department's offices in Austin, Texas, or at another place the
  commissioner designates.
         (c)  A subpoena issued under this section to a financial
  institution is not subject to Section 59.006.
         (d)  If a person refuses to obey a subpoena, a district court
  in Travis County or the county in which the subpoena was served, on
  application by the commissioner, may issue an order requiring the
  person to appear before the commissioner and produce documents or
  give evidence regarding the matter under investigation.
         SECTION 7.  Section 154.4061(a), Finance Code, is amended to
  read as follows:
         (a)  If, after a hearing conducted as provided by Chapter
  2001, Government Code, the trier of fact finds that a violation of
  this chapter or a rule of the Finance Commission of Texas
  establishes a pattern of wilful disregard for the requirements of
  this chapter or rules of the finance commission, the trier of fact
  may [shall] recommend to the commissioner that the maximum
  administrative penalty permitted under Section 154.406 be imposed
  on the person committing the violation or that the commissioner
  cancel or not renew the person's permit under this chapter.
         SECTION 8.  Section 154.407, Finance Code, is amended to
  read as follows:
         Sec. 154.407.  INJUNCTIVE RELIEF. The commissioner may sue
  in a district court in Travis County or the county in which the
  violation occurred to enjoin a violation or threatened violation
  of:
               (1)  this chapter; or
               (2)  a final order of the commissioner or rule of the
  commission.
         SECTION 9.  Section 154.4081(c), Finance Code, is amended to
  read as follows:
         (c)  The person named in the order may request in writing an
  opportunity for a hearing to show that the emergency order should be
  stayed.  The written request for a hearing must be filed with the
  commissioner not later than the 30th day after the date on which the
  order is hand-delivered or the order is mailed, whichever date is
  earlier. On receipt of the request, the commissioner shall set a
  time for the hearing before the 22nd day after the date the
  commissioner received the request, unless extended at the request
  of the person named in the order.
         SECTION 10.  Section 154.409(b), Finance Code, is amended to
  read as follows:
         (b)  The attorney general shall institute suit in the name of
  this state against a person who violates this chapter in a district
  court in Travis County or the county in which the violation
  occurred.
         SECTION 11.  Section 154.412, Finance Code, is amended by
  amending Subsection (c-1) and adding Subsection (h) to read as
  follows:
         (c-1)  An emergency order remains in effect unless stayed by
  the commissioner.  The person named in the order may request in
  writing an opportunity for a hearing to show that the emergency
  order should be stayed.  The written request for a hearing must be
  filed with the commissioner not later than the 30th day after the
  date on which the order is hand-delivered or the order is mailed,
  whichever date is earlier. On receipt of the request, the
  commissioner shall set a time before the 22nd day after the date the
  commissioner received the request, unless extended at the request
  of the person named in the order.  The hearing is an administrative
  hearing relating to the findings that support immediate effect of
  the order.
         (h)  On certification by the commissioner, a record seized as
  provided by Subsection (a) or a record created by or filed with the
  department in connection with a seizure is admissible as evidence
  in any proceeding before the commissioner without prior proof of
  its correctness and without other proof. The certified record or a
  certified copy of the record is prima facie evidence of the facts
  contained in the record. This subsection does not limit another
  provision of this subtitle or a provision of another law that
  provides for the admission of evidence or its evidentiary value.
         SECTION 12.  Section 154.414, Finance Code, is amended to
  read as follows:
         Sec. 154.414.  LIQUIDATION OF BUSINESS AND AFFAIRS OF PERSON
  FOLLOWING SEIZURE OF MONEY AND RECORDS. After an order issued under
  Section 154.412(a) becomes final and unappealable, the
  commissioner may petition a [the] district court in Travis County
  or in the county in which a person required to hold a permit under
  this chapter resides to request the issuance of an order to show
  cause why the business and affairs of that person should not be
  liquidated and a receiver appointed by the court for that purpose
  if:
               (1)  the person:
                     (A)  failed to deposit money in accordance with
  Subchapter F;
                     (B)  misappropriated, converted, or illegally
  withheld or failed or refused to pay on demand money entrusted to
  that person that belongs to the beneficiary under a prepaid funeral
  benefits contract; or
                     (C)  allowed the person's permit to lapse or had
  the permit revoked under this chapter and did not make adequate
  provision for the administration of the money deposited with the
  person for prepaid funeral benefits contracts in accordance with
  the contract and applicable law, including rules; and
               (2)  the person failed or refused to correct the
  violation before the 31st day after the date the person received
  written notice from the commissioner.
         SECTION 13.  Subchapter I, Chapter 154, Finance Code, is
  amended by adding Sections 154.415 and 154.416 to read as follows:
         Sec. 154.415.  PROHIBITION ORDER. (a) The commissioner may
  prohibit a person from participating in the business of prepaid
  funeral benefits sales if the commissioner determines from
  examination or other credible evidence that:
               (1)  the person:
                     (A)  intentionally committed or participated in
  the commission of an act described by Section 154.401;
                     (B)  violated a final cease and desist order
  issued by the department or another state agency related to the sale
  of prepaid funeral benefits; or
                     (C)  made, or caused to be made, false entries in
  the records of a prepaid funeral benefits seller;
               (2)  because of the action by the person described by
  Subdivision (1):
                     (A)  the purchaser or seller of prepaid funeral
  benefits has suffered or will probably suffer financial loss or
  expense, or other damage;
                     (B)  the interests of the purchaser have been or
  could be prejudiced; or
                     (C)  the person has received financial gain or
  other benefit by reason of the action, or likely would have if the
  action had not been discovered; and
               (3)  the action involves personal dishonesty on the
  part of the person.
         (b)  If the commissioner has grounds for action under
  Subsection (a) and finds that a prohibition order appears to be
  necessary and in the best interest of the public, the commissioner
  may serve a proposed prohibition order on a person alleged to have
  committed or participated in the action. The proposed order must:
               (1)  be personally delivered or mailed by registered or
  certified mail, return receipt requested;
               (2)  state with reasonable certainty the grounds for
  prohibition;
               (3)  state the effective date of the order, which may
  not be before the 21st day after the date the proposed order is
  personally delivered or mailed; and
               (4)  state the duration of the order, including whether
  the duration is perpetual.
         (c)  The commissioner may make a prohibition order perpetual
  or effective for a specific period of time, may probate the order,
  or may impose other conditions on the order.
         (d)  The order takes effect if the person against whom the
  proposed order is directed does not request a hearing in writing
  before the effective date. If the person does not request a hearing
  before the effective date, the order is final and not appealable as
  to that person.
         (e)  If the person requests a hearing as provided by
  Subsection (d), the hearing must be conducted as provided by
  Chapter 2001, Government Code, and commission rules. After the
  hearing, the commissioner shall issue or decline to issue the
  proposed order. The proposed order may be modified as necessary to
  conform to the findings at the hearing.
         (f)  An order issued under Subsection (e) is immediately
  final for purposes of enforcement and appeal. The order may be
  appealed as provided by Sections 31.202, 31.203, and 31.204.
         Sec. 154.416.  APPLICATION FOR RELEASE FROM PROHIBITION
  ORDER. (a) After the expiration of 10 years from the date of
  issuance, a person who is subject to a prohibition order issued
  under Section 154.415, regardless of the order's stated duration or
  date of issuance, may apply to the commissioner to be released from
  the order.
         (b)  The application must be made under oath and in the form
  required by the commissioner. The application must be accompanied
  by any required fees.
         (c)  The commissioner, in the exercise of discretion, may
  approve or deny an application filed under this section.
         (d)  The commissioner's decision under Subsection (c) is
  final and not appealable.
         SECTION 14.  This Act takes effect September 1, 2013.
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