FINANCE CODE
CHAPTER 154. PREPAID FUNERAL SERVICES
SUBCHAPTER A. GENERAL PROVISIONS
§ 154.001. PURPOSE. The purposes of this chapter are
to:
(1) limit the manner in which a person may accept funds
in prepayment of funeral services to be performed in the future;
(2) provide a regulatory framework to give the public
an opportunity to arrange and pay for funerals in advance of need;
and
(3) provide all safeguards to protect the prepaid
funds and to assure that the funds will be available to pay for
prearranged funeral services.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.002. DEFINITIONS. In this chapter:
(1) "Commission" means the Finance Commission of
Texas.
(2) "Commissioner" means the banking commissioner of
Texas.
(3) "Department" means the Texas Department of
Banking.
(4) "Earnings" means the amount in an account in
excess of the amount paid by the purchaser of a prepaid funeral
benefits contract that is deposited in the account as provided by
Section 154.253, including accrued interest, accrued income, and
enhanced or increased value.
(5) "Financial institution" has the meaning assigned
by Section 201.101.
(6) "Funeral provider" means the funeral home
designated in a prepaid funeral benefits contract that has agreed
to provide the specified prepaid funeral benefits.
(7) "Insurance policy" means a life insurance policy
or annuity contract.
(8) "Person" means an individual, firm, partnership,
corporation, or association.
(9) "Prepaid funeral benefits" means prearranged or
prepaid funeral or cemetery services or funeral merchandise,
including an alternative container, casket, or outer burial
container. The term does not include a grave, marker, monument,
tombstone, crypt, niche, plot, or lawn crypt unless it is sold in
contemplation of trade for a funeral service or funeral merchandise
to which this chapter applies.
(10) "Seller" means a person selling, accepting money
or premiums for, or soliciting contracts for prepaid funeral
benefits or contracts or insurance policies to fund prepaid funeral
benefits in this state.
(11) "Crypt," "grave," "lawn crypt," "niche," and
"plot" have the meanings assigned by Section 711.001, Health and
Safety Code.
(12) "Funeral merchandise" or "merchandise" means
goods sold or offered for sale on a preneed basis directly to the
public for use in connection with funeral services.
(13) "Funeral service" or "service" means a service
sold or offered for sale on a preneed basis that may be used to:
(A) care for and prepare a deceased human body
for burial, cremation, or other final disposition; and
(B) arrange, supervise, or conduct a funeral
ceremony or the final disposition of a deceased human body.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 62, § 7.40(a), eff. Sept. 1, 1999;
Acts 1999, 76th Leg., ch. 344, § 2.023, eff. Sept. 1, 1999; Acts
2001, 77th Leg., ch. 867, § 72, eff. Sept. 1, 2001.
§ 154.003. EFFECT ON INSURANCE LAWS. Except as provided
by Section 154.004, this chapter does not affect the Insurance
Code.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.004. GROUP INSURANCE CONTRACTS. (a) A life
insurance company authorized to engage in the business of life
insurance in this state may issue a group contract of decreasing
term life insurance to persons who purchase prepaid funeral
benefits from the same seller. The amount of life insurance for a
purchaser must at all times approximate the future unpaid balance
of the purchaser's contract for prepaid funeral benefits.
(b) A seller has an insurable interest in the life of the
purchaser of a prepaid funeral benefits contract to the extent of
any unpaid balance of the contract. The proceeds of a life
insurance policy received by the seller on the life of the purchaser
shall be applied to the unpaid balance.
(c) This section does not affect the funding of prepaid
funeral benefits by other insurance contracts as provided by
Subchapter E.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT
§ 154.051. ADMINISTRATION OF CHAPTER; FEES. (a) The
department shall administer this chapter.
(b) The commission may adopt reasonable rules concerning:
(1) fees to defray the cost of administering this
chapter;
(2) the keeping and inspection of records relating to
the sale of prepaid funeral benefits;
(3) the filing of contracts and reports;
(4) changes in the management or control of an
organization; and
(5) any other matter relating to the enforcement and
administration of this chapter.
(c) The department may not maintain unnecessary fund
balances. Fee amounts must be set in accordance with this
requirement.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 73, eff. Sept. 1, 2001.
§ 154.052. ANNUAL REPORT. (a) The department may
require a permit holder to submit an annual report in the form
required by the department.
(b) The department shall require a seller that discontinues
the sale of prepaid funeral benefits but has outstanding contracts
to submit an annual report until the contracts are fully
discharged.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.053. RECORDS; EXAMINATION. (a) A seller that
has outstanding contracts for prepaid funeral benefits shall
maintain in this state any record required by the department to
determine whether the seller is complying with this chapter. The
record is subject to annual examination by the department or its
agent and to additional examinations the department considers
necessary.
(b) The department may examine or audit a record relating to
prepaid funeral benefits at any place and in any manner the
department considers necessary to protect the interests of the
purchasers or beneficiaries.
(c) As part of the examination, the department shall be
given access to records relating to prepaid funeral benefits of
each entity holding a deposit or premium for an annuity contract or
a policy of insurance under the account and to any other record
necessary to protect the interests of the beneficiaries.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.054. EXAMINATION FEE. (a) For each examination
conducted under Section 154.053, the commissioner or the
commissioner's agent shall impose on the seller a fee in an amount
set by the commission under Section 154.051 and based on the
seller's total outstanding contracts.
(b) The amount of the fee must be sufficient to cover:
(1) the cost of the examination, including:
(A) salary and travel expenses for department
employees, including travel to and from the place where the records
are kept; and
(B) any other expense necessarily incurred in
conducting the examination;
(2) the equitable or proportionate cost of maintaining
and operating the department; and
(3) the cost of enforcing this chapter.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 74, eff. Sept. 1, 2001.
§ 154.055. DISCLOSURE OF CERTAIN INFORMATION;
CONFIDENTIALITY. (a) Information relating to the financial
condition of a seller obtained by the department directly or
indirectly, through examination or otherwise, other than published
statements, is confidential.
(b) The files and records of the department relating to the
financial condition of a seller are confidential.
(c) The commissioner may disclose the information described
by Subsection (a) or (b) to an agency, department, or
instrumentality of this or another state or the United States if the
commissioner considers disclosure to be in the best interest of the
public and necessary or proper to enforce the laws of this or
another state or the United States.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.056. PAYMENT OF RESTITUTION MONEY. The
department shall pay money received under a restitution order to
the injured party as ordered.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER C. PERMITS
§ 154.101. PERMIT REQUIREMENT. A person must hold a
permit issued under this subchapter to:
(1) sell prepaid funeral benefits, or accept money for
prepaid funeral benefits, in this state under any contract; or
(2) solicit an individual's designation of prepaid
funeral benefits to be provided out of a fund, investment,
security, or contract, including a contract or policy of insurance
authorized, and sold under a license issued, by the Texas
Department of Insurance, to be created or purchased by that
individual at the suggestion or solicitation of the seller.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.102. PERMIT APPLICATION; FEE. To obtain a permit
to sell or continue to sell prepaid funeral benefits, a person must:
(1) file an application for a permit with the
department on a form prescribed by the department;
(2) pay a filing fee in an amount set by the commission
under Section 154.051; and
(3) if applicable, pay extraordinary expenses
required for out-of-state investigation of the person.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 75, eff. Sept. 1, 2001.
§ 154.103. ISSUANCE OF PERMIT. (a) The commissioner
may investigate an applicant before issuing an initial permit.
(b) The commissioner shall approve the application and
issue a permit to the applicant if the commissioner finds that the
business ability, experience, character, financial condition, and
general fitness of the applicant warrant the public's confidence.
The commissioner shall notify the applicant if the commissioner
finds otherwise.
(c) The applicant on request is entitled to a hearing on the
denial of the application, to be held not later than the 60th day
after the date of the request.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.104. TERM OF PERMIT. (a) A permit is issued for
a one-year term.
(b) The commission by rule may adopt a system under which
permits expire on various dates during the year.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 76, eff. Sept. 1, 2001.
§ 154.105. PROHIBITION ON TRANSFER OF PERMIT. A permit
is not transferable.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.106. TRANSFER OF BUSINESS OWNERSHIP. (a) A
permit holder shall notify by registered mail the department and
the depository of the money held under Subchapter F of a transfer in
the ownership of the permit holder's business not later than the
seventh day after the date the transfer is completed.
(b) If the transfer is to a person who is not a permit
holder, the person shall file an application for a permit with the
department in accordance with this subchapter not later than the
30th day after the date the transfer is completed.
(c) The commissioner shall follow the procedures under
Sections 154.109-154.111 and Subchapter I for denying the permit
application and for seizing the money or records if the person to
whom the business is transferred:
(1) does not file the application within the period
prescribed by Subsection (b); or
(2) does not meet the requirements for issuance of a
permit under this subchapter.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.107. REQUIRED RENEWAL FOR CERTAIN SELLERS. 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.108. RENEWAL FEE. The commission shall set the
renewal fee under Section 154.051.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 77, eff. Sept. 1, 2001.
§ 154.109. GROUNDS FOR CANCELLATION OR SUSPENSION OF OR
REFUSAL TO RENEW PERMIT. (a) The commissioner by order may cancel
or suspend a permit if the commissioner finds, by examination or
other credible evidence, that the permit holder:
(1) violated this chapter or another law of this state
relating to the sale of prepaid funeral benefits, including a final
order of the commissioner or rule of the commission;
(2) misrepresented or concealed a material fact in the
permit application; or
(3) obtained, or attempted to obtain, the permit by
misrepresentation, concealment, or fraud.
(b) The commissioner by order may refuse to renew a permit
if the commissioner finds, by examination or other credible
evidence, that the permit holder:
(1) committed one or more of the acts described by
Subsection (a); and
(2) did not correct the violation before the 31st day
after the date of written notice from the commissioner.
(c) The commissioner may cancel the permit of a seller that
fails to provide to the department evidence of payment of insurance
premiums required by the department under Section 154.203 after the
department by written notice requests the evidence.
(d) The commissioner may place on probation a permit holder
whose permit is suspended. If a permit suspension is probated, the
commissioner may require the permit holder:
(1) to report regularly to the department on matters
that are the basis of the probation; or
(2) to limit its activities as prescribed by the
commissioner.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 78, eff. Sept. 1, 2001; Acts
2001, 77th Leg., ch. 699, § 5, eff. Sept. 1, 2001.
§ 154.110. ORDER TO CANCEL, SUSPEND, OR REFUSE TO RENEW
PERMIT. (a) An order issued under Section 154.109 must state:
(1) with reasonable certainty the grounds for the
order; and
(2) the effective date, which may not be before the
16th day after the date the order is mailed.
(b) The 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) The 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.111. SUCCESSOR PERMIT HOLDER. (a) The
commission shall adopt rules governing the selection of a successor
permit holder.
(b) A successor permit holder to whom the commissioner
transfers a contract under Section 154.413 shall perform the
contract and is entitled to retain the money that would have been
due the person whose permit was canceled, including any money
seized by the commissioner.
(c) Any premium received through the selection process that
exceeds the claims against the prior permit holder shall be
deposited in the fund maintained under Section 154.351.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 79, eff. Sept. 1, 2001.
SUBCHAPTER D. GENERAL PROVISIONS FOR SALES CONTRACTS
§ 154.151. FORM OF CONTRACT. (a) The department must
approve a sales contract form for prepaid funeral benefits before
the form is used.
(b) A sales contract for prepaid funeral benefits must:
(1) be in writing;
(2) state the name of the funeral provider or other
person primarily responsible for providing the prepaid funeral
benefits specified in the contract; and
(3) state the details of the prepaid funeral benefits
to be provided, including a description and specifications of the
material used in the caskets or grave vaults to be furnished.
(c) A funeral provider designated in the contract to provide
prepaid funeral benefits that are not sold by the funeral provider
must:
(1) be a party to the contract; and
(2) agree in the contract to provide those benefits.
(d) A sales contract for prepaid funeral benefits, whether
in English or Spanish, must be written in plain language designed to
be easily understood by the average consumer. The contract must be
printed in an easily readable font and type size. The department
shall provide model contracts complying with this subsection and
shall enforce this subsection.
(e) The Finance Commission of Texas by rule shall establish
a standard disclosure that must be included in each contract to
inform purchasers of the goods and services that will be provided or
excluded under the contract and the circumstances under which the
contract may be modified after death of the beneficiary.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 699, § 6, eff. Sept. 1, 2001.
§ 154.152. REPRESENTATIONS REGARDING APPROVAL OF PERMIT
HOLDER. A permit holder may represent that the department has
approved or otherwise chosen a prepaid funeral vendor only with the
following language: "The Texas Banking Department regulates the
sale of prearranged funeral contracts" and "The form of this
contract has been approved by the Department."
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.153. ALLOCATION OF SALES PRICE. A seller may not
increase the sales price of an item not covered by this chapter to
allocate a lesser sales price to an item covered by this chapter.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.154. AGREEMENT TO PAY FINANCE CHARGE. A purchaser
of a prepaid funeral benefits contract may agree in writing to pay
the seller a finance charge in accordance with Chapter 345 on an
amount due the seller on the contract.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.155. CANCELLATION OF CONTRACT. (a) A purchaser
of a prepaid funeral benefits contract may cancel the contract
before maturity by giving written notice of cancellation to the
seller on forms prescribed by the department. The seller shall
maintain copies of the cancellation forms for examination by the
department.
(b) Not later than the 30th day after the date of the
cancellation notice, the seller shall withdraw and pay to the
purchaser money in the depository being held for the purchaser's
use and benefit.
(c) The purchaser or seller may not make a partial
cancellation or withdrawal.
(d) The purchaser is entitled to receive the actual amount
paid by the purchaser and half of all earnings attributable to that
money, less the amount permitted to be retained as provided by
Section 154. 252, except as provided by Subsection (e) and by
Sections 154.205 and 154.254.
(e) A purchaser who cancels a contract on the solicitation
of the seller is entitled to withdraw all money paid to the seller
and all earnings attributable to that money. If the money is used
to purchase a new prepaid funeral benefits contract under a
solicitation by the seller, 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 department. 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 699, § 7, eff. Sept. 1, 2001.
§ 154.1551. MODIFICATION AT TIME OF FUNERAL. (a) The
funeral merchandise and services to be provided by the seller under
a fully paid prepaid funeral benefits contract may be modified
after the death of the beneficiary if the modification complies
with Subsection (b) or is otherwise agreed to in a writing signed by
the seller and the person charged with the disposition of the
beneficiary's remains by Section 711.002(a), Health and Safety
Code, except that:
(1) if the purchaser of the contract is also the
beneficiary:
(A) the contracted funeral merchandise and
services may not be modified if the contract contains a clause that
prohibits modification; and
(B) a modification may not change the type of
disposition specified by the purchaser in the contract, whether by
burial, cremation, or another alternative by which the purchaser's
remains attain their final resting place, as provided by Section
711.002(g), Health and Safety Code; and
(2) the value attributed to any contracted funeral
merchandise or service that is surrendered or exchanged in a
modification must be computed on a comparable time-price basis with
the price charged for substituted funeral merchandise or service
provided as part of the modification.
(b) The person charged with the disposition of the
beneficiary's remains by Section 711.002(a), Health and Safety
Code, may make reasonable modifications to the funeral merchandise
and services provided under a prepaid funeral contract at the time
the funeral is performed, not to exceed 10 percent of the original
purchase price of the contract. This subsection does not require
the seller to:
(1) refund a portion of the funds attributable to the
contract if the seller grants credit for surrender or exchange as
provided by Subsection (a)(2);
(2) provide substituted or additional funeral
merchandise or services in excess of credits granted under
Subsection (a)(2) unless the seller receives additional
compensation at current prices; or
(3) apply a portion of the funds attributable to the
contract or credits granted under Subsection (a)(2) to another
contract or funeral.
(c) The person charged with the disposition of the
beneficiary's remains by Section 711.002(a), Health and Safety
Code, may not modify a prepaid funeral benefits contract that has
not been fully paid at the time of death of the beneficiary except
as agreed to in a writing signed by the seller and the person.
Added by Acts 2001, 77th Leg., ch. 699, § 8, eff. Sept. 1, 2001.
§ 154.156. WAIVER OF RIGHT OF CANCELLATION. (a) The
purchaser of a prepaid funeral benefits contract may irrevocably
waive the purchaser's right to cancel the contract under Section
154.155. The waiver must be in a separate writing signed by the
purchaser and the seller not earlier than the 15th day after the
date of the purchase of the contract. The form of the waiver must
comply with the requirements for the form of a sales contract under
Section 154.151.
(b) A waiver made under this section does not affect:
(1) a right the purchaser has under the contract to
change the beneficiary of the contract;
(2) the purchaser's right to cancel the contract under
Section 154.413;
(3) an abandonment of the money paid by the purchaser
under the contract as provided by Subchapter G; or
(4) a modification to the contract as provided by
Section 154.1551.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 699, § 9, eff. Sept. 1, 2001.
§ 154.157. PERFORMANCE OF CONTRACT. Delivery of
funeral merchandise before death is not performance, in whole or in
part, of a prepaid funeral benefits contract entered into after
July 15, 1963.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.158. ENFORCEMENT OF CONTRACT. A seller that
violates Section 154.101 may not enforce a prepaid funeral benefits
contract, but the purchaser or an heir or legal representative of
the purchaser is entitled to recover:
(1) the amount paid to the seller under the contract;
and
(2) the amount paid to a fund or for an investment,
security, or contract, including a contract or policy of insurance
authorized by the Texas Department of Insurance.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.159. ADMINISTRATION OF MONEY RECEIVED. Money
received for prepaid funeral benefits shall be administered as
prescribed by Section 154.155 and Subchapters E and F, as
applicable.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.160. AGENT; DEPOSIT OF MONEY. (a) A seller
shall designate one or more agents by name or title.
(b) The seller shall notify the department of:
(1) the designation not later than the 10th day after
the date the seller becomes subject to this chapter; and
(2) any change in the designation within the 10-day
period preceding the date of the change.
(c) An agent designated under this section is:
(1) considered a fiduciary for purposes of Section
32.45, Penal Code; and
(2) responsible for the deposit of money collected
under prepaid funeral benefits contracts.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER E. INSURANCE-FUNDED PREPAID FUNERAL BENEFITS
§ 154.201. REQUIREMENTS FOR SOLICITATION OF
BENEFITS. A seller may not solicit an individual's designation of
prepaid funeral benefits to be paid from a fund, investment,
security, or contract, including an insurance policy, to be created
or purchased by or for that individual at the suggestion or
solicitation of the seller:
(1) unless the fund is created by an insurance policy
approved by the Texas Department of Insurance and issued by an
insurance company licensed by the Texas Department of Insurance;
(2) except as provided by Subchapter F for
trust-funded prepaid funeral benefits; or
(3) unless the fund, investment, security, or contract
has been approved by the department as safeguarding the rights and
interests of the individual and the individual's heirs and assigns
to substantially the same or a greater degree as provided with
respect to money regulated by Subchapter F.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.202. EXECUTION OF CONTRACT IN CONJUNCTION WITH
APPLICATION FOR POLICY. An insurance-funded prepaid funeral
benefits contract must be executed in conjunction with the
application for the issuance of the insurance policy.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.203. PAYMENT OF PREMIUMS. (a) A seller shall
remit to the insurance company the premiums collected for an
insurance policy that funds prepaid funeral benefits not later than
the 30th day after the date of collection.
(b) The department may require evidence of payment of
premiums on an insurance policy used to create a fund to guarantee
prepaid funeral benefits.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.204. CONVERSION FROM TRUST-FUNDED PREPAID FUNERAL
BENEFITS. (a) The department must approve a conversion from
trust-funded prepaid funeral benefits to insurance-funded prepaid
funeral benefits as safeguarding the rights and interests of the
individual who purchases the prepaid funeral benefits contract.
(b) Each contract holder shall be notified in writing of:
(1) the terms of the proposed conversion; and
(2) the holder's right to decline the conversion.
(c) An application for approval of a conversion from
trust-funded prepaid funeral benefits to insurance-funded prepaid
funeral benefits must be:
(1) filed with the department on forms prescribed by
the department; and
(2) accompanied by a conversion application fee set by
the department under Section 154.051.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.205. AMOUNT PAYABLE ON CANCELLATION OF
CONTRACT. A purchaser of an insurance-funded prepaid funeral
benefits contract who cancels the contract during the first year of
the contract when payments required under the contract are current
is entitled to receive the cash surrender value of the policy.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.206. ASSIGNMENT OF RIGHT TO BENEFITS. The
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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.207. WITHDRAWAL OF BENEFITS PAYABLE UNDER
POLICY. (a) The seller or funeral provider may withdraw the
benefits payable under an insurance policy funding prepaid funeral
benefits after:
(1) the beneficiary named in the contract dies;
(2) the funeral service is completed; and
(3) the insurance company is presented with:
(A) appropriate affidavits by an officer or
designated agent of the seller on forms prescribed by the
department; and
(B) a certified copy of the death certificate.
(b) The seller shall maintain copies of the affidavits and
death certificate for examination by the department.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER F. TRUST-FUNDED PREPAID FUNERAL BENEFITS
§ 154.251. APPLICABILITY. (a) This subchapter applies
only to money paid or collected on a trust-funded prepaid funeral
benefits contract entered into after July 15, 1963.
(b) Money paid or collected on a prepaid funeral benefits
contract entered into before July 15, 1963, shall be handled in
accordance with the law in effect on the date the contract was
entered into.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.252. RETENTION OF MONEY FOR EXPENSES. The seller
of a trust-funded prepaid funeral benefits contract may retain for
the seller's use and benefit an amount not to exceed one-half of all
money collected or paid until the seller has received an amount
equal to 10 percent of the total amount the purchaser agreed to pay
under the contract.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 699, § 10, eff. Sept. 1, 2001.
§ 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 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.024, eff. Sept. 1, 1999.
§ 154.254. AMOUNT PAYABLE ON CANCELLATION OF
CONTRACT. A purchaser of a trust-funded prepaid funeral benefits
contract who cancels the 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.255. STANDARD OF DUTY OF DEPOSITORY. A depository
shall be held to the standard of duty of a fiduciary in holding,
investing, or disbursing the money.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.256. STANDARD OF CARE OF TRUSTEE. A trustee, in
administering assets held in a prepaid funeral benefits trust,
shall exercise the judgment and care under the circumstances that a
person of ordinary prudence, discretion, and intelligence
exercises in the management of the person's own affairs, not in
regard to speculation but in regard to the permanent disposition of
the person's money, considering:
(1) the probable income from and probable increase in
value of the person's capital;
(2) the safety of the person's capital; and
(3) the investment of all the assets of the trust the
trustee has the power to administer rather than the prudence of a
single investment of the trust.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.257. INVESTMENT PLAN. (a) A permit holder or
trustee, if the permit holder deposits the money with a financial
institution as trustee, shall:
(1) adopt a written investment plan consistent with
this section and Sections 154.256 and 154.258 that specifies the
quality, maturity, and diversification of investments;
(2) at least annually, review the adequacy and
implementation of the investment plan;
(3) maintain investment records covering each
transaction; and
(4) maintain the investment plan in the principal
offices of the permit holder and trustee.
(b) The permit holder shall provide the investment plan to
the department with the filing of the permit holder's annual
report.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.025, eff. Sept. 1, 1999.
§ 154.258. PERMITTED INVESTMENTS. (a) Money in a
prepaid funeral benefits trust may be invested only in:
(1) demand deposits, savings accounts, certificates
of deposit, or other accounts issued by financial institutions if
the amounts deposited in those accounts are fully covered by
federal deposit insurance or otherwise fully secured by a separate
fund of securities in the manner provided by Section 184.301,
Finance Code, and rules adopted under that section;
(2) bonds, evidences of indebtedness, or obligations
of the United States or an instrumentality of the United States;
(3) bonds, evidences of indebtedness, or obligations
the principal and interest of which are guaranteed by the full faith
and credit of the United States;
(4) bonds of a state or local government that are
exempt from federal income taxation and that are rated:
(A) "Aa" or better by Moody's bond rating
service; or
(B) "AA" or better by Standard and Poor's bond
rating service;
(5) bonds, evidences of indebtedness, or obligations
of corporations organized under state or federal law and that are
rated:
(A) "A" or better by Moody's bond rating service;
or
(B) "A" or better by Standard and Poor's bond
rating service;
(6) notes, evidences of indebtedness, or
participation in notes or evidences of indebtedness, secured by a
first lien on real property located in the United States, if the
amount of each obligation does not exceed 90 percent of the value of
the real property securing that obligation;
(7) common stock of a corporation that is organized
under state or federal law and:
(A) has a net worth of at least $1 million; or
(B) will have a net worth of at least $1 million
after completion of a securities offering to which the trust is
subscribing;
(8) preferred stock of a corporation organized under
state or federal law and that is rated:
(A) "Baa" or better by Moody's bond rating
service; or
(B) "BBB" or better by Standard and Poor's bond
rating service;
(9) investments not covered by this subsection,
including real property, oil and gas interests, and limited
partnerships;
(10) mutual funds, collective investment funds, or
similar participative investment funds, the assets of which are
invested only in investments that are permitted under this section
and that, if aggregated with other investments, meet the percentage
limitations specified by this section; and
(11) other investments the department approves in
writing.
(b) Not more than 70 percent of the money related to a single
permit holder may be invested in investments described by
Subsection (a)(5), (6), (7), or (8).
(c) Not more than 10 percent of the money related to a single
permit holder may be invested in investments described by
Subsection (a)(9).
(d) Not more than 20 percent of the money related to a single
permit holder may be invested in a single issue of an investment,
except insured deposits and government securities.
(e) The commissioner may waive a limitation provided by
Subsection (b), (c), or (d), on written request of a permit holder,
if the commissioner concludes that the waiver does not threaten an
unreasonable risk of loss to the prepaid funeral benefits trust
funds. The commissioner by order shall approve or disapprove the
request not later than the 60th day after the date the commissioner
receives the request. If the commissioner does not disapprove the
request before the expiration of that period, the request is
approved. If the permit holder does not request a hearing before
the 11th day after the date of an order of disapproval, the order
takes effect on that 11th day. If a hearing is timely requested,
the hearing shall be conducted as a contested case under Chapter
2001, Government Code.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 62, § 7.41(a), eff. Sept. 1, 1999;
Acts 1999, 76th Leg., ch. 344, § 2.026, eff. Sept. 1, 1999; Acts
2001, 77th Leg., ch. 1420, § 6.028, eff. Sept. 1, 2001.
§ 154.259. DISPOSAL OF NONCONFORMING
INVESTMENTS. Before September 1, 1996, a permit holder or trustee
shall dispose of any investment made before September 1, 1993, that
does not comply with Sections 154.256-154.258 with respect to the
type of investment or the percentage of trust money that may be
invested in certain types of investments, except that the
commissioner may grant a permit holder or trustee an extension of
one year or longer to dispose of a nonconforming investment if, in
the commissioner's opinion:
(1) the permit holder or trustee has made a good faith
effort to dispose of the nonconforming investment; or
(2) the disposal of the nonconforming investment would
be materially detrimental to the best interests of the purchasers
of prepaid funeral benefits contracts.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.260. USE OF MONEY TO PURCHASE, LEASE, OR INVEST IN
ASSET OWNED BY SELLER OR FUNERAL PROVIDER. (a) The depository of
money under Section 154.253 must obtain the commissioner's prior
written approval to use that money to purchase, lease, or invest in
an asset owned by the seller or funeral provider or an affiliate of
the seller or funeral provider.
(b) The commissioner by order may disapprove a transaction
described by Subsection (a) on the ground that it would materially
adversely affect the interests of the purchasers of prepaid funeral
benefits contracts.
(c) The commissioner shall enter an order approving or
disapproving the transaction not later than the 30th day after the
date the commissioner receives written notification by the permit
holder. The transaction is considered approved if the commissioner
does not act within that period.
(d) The order takes effect as proposed unless the permit
holder requests a hearing not later than the 10th day after the date
of the order.
(e) In this section, "affiliate" means a person or entity
directly or indirectly controlling, controlled by, or under common
control with a permit holder or funeral provider.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.261. WITHDRAWAL OF EARNINGS TO PAY CERTAIN
EXPENSES. (a) The seller of a trust-funded prepaid funeral
benefits contract may withdraw money from earnings on an account
described by Section 154.253 to pay:
(1) reasonable and necessary trustee's fees or
depository fees;
(2) the examination fee for one examination by the
department each calendar year; or
(3) the expense of preparation of financial statements
required by the department, including those financial statements
required by the department instead of an examination.
(b) With the department's prior approval, the seller may
withdraw money from earnings on an account to pay:
(1) any tax incurred because of the existence of the
account; or
(2) an assessment under Subchapter H.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.262. WITHDRAWAL OF MONEY ON DEATH OF
BENEFICIARY. (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 depository is presented with:
(A) appropriate affidavits by an officer or agent
of the seller on forms prescribed by the department; and
(B) a certified copy of the death certificate.
(b) The seller shall maintain copies of the affidavits and
death certificate for examination by the department.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.263. WITHDRAWAL OF EARNINGS ATTRIBUTABLE TO
CONTRACT. On the maturity date of a trust-funded prepaid funeral
benefits contract as provided by Section 154.262 and after the
funeral provider has performed its obligations under the contract,
or at the time of cancellation of the contract as provided by
Section 154.155 or 154.254, the seller may withdraw from an account
described by Section 154.253:
(1) the proportionate part of the earnings that the
amount deposited under the contract bears to the total amount
deposited from all unmatured contracts, less the amount of excess
earnings that was withdrawn in accordance with prior law; or
(2) if the commissioner has determined that the
records of the permit holder are adequate to allow this method to be
exercised accurately, an amount equal to the actual earnings on
individual matured contracts, less any properly allocated expenses
permitted by this subchapter and less the amount of excess earnings
that was withdrawn in accordance with prior law.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.264. ACCOUNTING RECORDS. A seller shall maintain
accounting records showing the amount deposited or invested under
this subchapter with respect to each contract.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER G. ABANDONED CONTRACTS
§ 154.301. PRESUMPTION OF ABANDONMENT. (a) Money paid
by a purchaser of a prepaid funeral benefits contract is personal
property subject to presumption of abandonment and delivery to the
comptroller under Title 6, Property Code. This subchapter controls
in case of conflict with that title.
(b) Money paid by a purchaser of a prepaid funeral benefits
contract and held in the name of the seller at a depository under
Subchapter F is presumed abandoned if:
(1) the amount due the seller from the purchaser under
the contract has been collected and:
(A) the seller has not known the existence and
location of the purchaser or the beneficiary of the contract for the
three preceding years;
(B) according to the knowledge and records of the
seller, a claim to the money or contract has not been asserted or an
act of ownership of the money or contract has not been exercised
during the three preceding years;
(C) at least 60 years have elapsed since the date
the purchaser executed the contract; and
(D) at least 90 years have elapsed since the date
of birth of the beneficiary of the contract; or
(2) the amount due the seller from the purchaser under
the contract has not been paid and during the three preceding years:
(A) the purchaser has not made a payment to the
seller under the contract;
(B) the seller has not known the existence and
location of the purchaser or the beneficiary of the contract; and
(C) according to the knowledge and records of the
seller, a claim to the money or contract has not been asserted and
an act of ownership of the money or contract has not been exercised.
(c) For purposes of Title 6, Property Code, the seller of
the contract for which money is presumed abandoned under Subsection
(b) is the holder of the money, and the purchaser or the beneficiary
of the contract is the owner of the money.
(d) The presumption of abandonment provided by Subsection
(b) does not apply to:
(1) money retained by the seller to cover selling
expenses, service costs, and general overhead, as provided by
Section 154.252; and
(2) earnings attributable to money paid by the
purchaser under the contract.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.302. NOTICE OF ABANDONED MONEY. On June 30 of
each year, a seller that holds money presumed abandoned under
Section 154.301(b) shall furnish the commissioner with an
acknowledged written notice of the abandoned money not later than
the following October 1. The notice must include:
(1) the name and address, if known, of each person who
appears to be the purchaser or the beneficiary of the contract;
(2) the identification number, if any, of the
contract;
(3) the total amount paid on the contract;
(4) the amount paid on the contract and held at the
depository;
(5) the earnings of the contract; and
(6) a statement by the seller recognizing the seller's
obligation and intent to deliver the abandoned money to the
comptroller in accordance with this subchapter.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.303. AUTHORIZATION TO WITHDRAW MONEY. (a) Not
later than the 15th day after the date the notice required by
Section 154.302 is received, the commissioner shall give the seller
written authorization to:
(1) withdraw the money presumed abandoned as specified
in the notice; and
(2) subject to Subsection (b), withdraw and retain the
money specified in the notice that represents the earnings
attributable to the abandoned money.
(b) The commissioner may refuse to authorize the seller to
withdraw the earnings described by Subsection (a)(2) only if:
(1) the department has canceled or refused to renew
the seller's permit to sell prepaid funeral benefits;
(2) the seller is the subject of a pending proceeding
to cancel the seller's permit to sell prepaid funeral benefits; or
(3) the department has:
(A) determined from an examination of the
seller's records that the seller has made withdrawals from accounts
maintained by the seller that were not authorized under this
chapter; and
(B) previously given written notice to the seller
of that determination.
(c) Not later than the 15th day after the date the notice
under Section 154.302 is received, the commissioner shall give
written notice to the seller stating the reason the commissioner
will not authorize the seller to withdraw the earnings described by
Subsection (a)(2).
(d) A seller that did not receive the commissioner's
authorization to withdraw earnings because of Subsection (b)(2) is
entitled to withdraw and retain the earnings if the department or a
court subsequently determines that the seller's permit should not
be canceled.
(e) A seller that did not receive the commissioner's
authorization to withdraw earnings because of Subsection (b)(3) is
entitled to withdraw and retain the earnings on redepositing in the
accounts the amount of the unauthorized withdrawals.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.304. DELIVERY TO COMPTROLLER OF ABANDONED MONEY
AND REPORT. Not later than the first November 1 after the date the
commissioner receives the notice required by Section 154.302, the
seller shall deliver to the comptroller:
(1) the abandoned money; and
(2) the report required to be filed under Chapter 74,
Property Code.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.305. DISCHARGE OF CONTRACTUAL OBLIGATIONS;
INDEMNITY OF SELLER. (a) The delivery of abandoned money and
reporting to the comptroller under Section 154.304:
(1) relieves the seller of the obligations and
liabilities under the prepaid funeral benefits contract;
(2) cancels the prepaid funeral benefits contract;
and
(3) discharges the obligations and liabilities of and
claims against the seller and funeral provider.
(b) A seller that delivers money to the comptroller under
Section 154.304 shall be indemnified under Section 74.304, Property
Code, for any claim that may be made with respect to the property.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.306. LIABILITY AND OBLIGATIONS OF
COMPTROLLER. (a) The comptroller is liable to the purchaser or
beneficiary of a prepaid funeral benefits contract presumed
abandoned under this subchapter only to the extent of money that is
attributable to the contract and delivered to the comptroller.
(b) The comptroller is not obligated to perform the seller's
duties under an abandoned prepaid funeral benefits contract.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.307. RECOURSE OF PURCHASER OR BENEFICIARY. A
purchaser's or beneficiary's sole recourse after a seller has
delivered abandoned money and reported to the comptroller under
Section 154.304 is to file a claim with the comptroller as provided
by Chapter 74, Property Code.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER H. GUARANTY FUND
§ 154.351. MAINTENANCE OF GUARANTY FUND. 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 80, eff. Sept. 1, 2001.
§ 154.352. ASSESSMENT ON SALES CONTRACTS. (a) The
department shall assess and collect from a seller not more than $1
for each unmatured prepaid funeral benefits contract sold during
each calendar year and shall deposit the assessments in the fund.
(b) The department shall stop assessing the amounts
required by Subsection (a) when the amount in the fund first reaches
$1 million.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.353. DEPOSIT OF FUND. (a) The fund may be
deposited with:
(1) the comptroller;
(2) a federally insured financial institution that has
its main office or a branch in this state; or
(3) in trust with a financial institution that has its
main office or a branch in this state and is authorized to act as a
fiduciary in this state.
(b) If the fund is deposited with the comptroller, the
comptroller shall manage the fund as trustee of money outside the
state treasury.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 1999, 76th Leg., ch. 344, § 2.027, eff. Sept. 1, 1999.
§ 154.354. USE OF FUND EARNINGS. The department may use
the earnings from the fund to operate and maintain the fund.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 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) one representative of the funeral industry
appointed by the Finance Commission of Texas; and
(4) one consumer representative appointed by the
Finance Commission of Texas.
(b) The funeral industry and consumer representatives serve
two-year terms and may not serve more than two terms.
(c) The commissioner shall cast the deciding vote if there
is a tie vote by members of the advisory council.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.356. ASSESSMENT ON OUTSTANDING CONTRACTS TO PAY
CLAIMS. (a) To pay a claim against the fund when the balance of
the fund is insufficient to pay that claim, the advisory council may
assess each person that holds a permit under this chapter based on
the permit holder's proportionate share of the purchasers' deposits
on all outstanding prepaid funeral benefits contracts.
(b) The assessments shall be deposited in 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 81, eff. Sept. 1, 2001.
§ 154.357. CLAIM AGAINST SELLER OR DEPOSITORY. The
department may assert a claim against a seller or depository that
commits a violation of this chapter that could result in a claim
against the fund.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
SUBCHAPTER I. CRIMINAL PENALTIES AND CIVIL REMEDIES
§ 154.401. CRIMINAL PENALTY FOR CERTAIN VIOLATIONS OF
CHAPTER. (a) Except as provided by Section 154.402, an officer,
director, agent, or employee of a seller commits an offense if the
person:
(1) makes or attempts to make a contract in violation
of this chapter;
(2) refuses to allow an inspection of the seller's
records relating to the sale of prepaid funeral benefits;
(3) engages in fraud, deception, misrepresentation,
or another dishonest practice in the sale of a contract subject to
this chapter; or
(4) otherwise violates this chapter.
(b) An offense under this section for which a penalty is not
expressly provided by this subchapter is punishable by:
(1) a fine of not less than $100 or more than $500;
(2) confinement in the county jail for a term of not
less than one month or more than six months; or
(3) both the fine and confinement.
(c) Each violation of this chapter is a separate offense and
shall be prosecuted individually.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.402. CRIMINAL PENALTY RELATING TO DEPOSIT OR
WITHDRAWAL OF MONEY. (a) A person commits an offense if the
person:
(1) fails to deposit money in compliance with this
chapter; or
(2) withdraws money in a manner inconsistent with this
chapter.
(b) An offense under this section is punishable as if it
were an offense under Section 32.45, Penal Code.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.403. CRIMINAL PENALTY FOR FAILURE TO FILE
REPORT. (a) An officer of a seller commits an offense if the
officer fails or refuses to file an annual report required by
Section 154.052 before the 31st day after the date the officer is
notified by the department of the requirement.
(b) An offense under this section is a misdemeanor and is
punishable as provided by Section 154.401.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.404. CRIMINAL PENALTY FOR FAILURE TO DELIVER MONEY
TO DESIGNATED AGENT. (a) A seller or a person acting on behalf of
a seller commits an offense if the seller or person:
(1) collects money under a prepaid funeral benefits
contract; and
(2) fails to deliver the money to a designated agent of
the seller before the 31st day after the date it is collected.
(b) An offense under this section is punishable as if it
were an offense under Section 32.45, Penal Code.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.405. CRIMINAL PENALTY FOR AGENT'S FAILURE TO
DEPOSIT CERTAIN MONEY. (a) A designated agent of a seller commits
an offense if the agent fails to deposit money collected under a
prepaid funeral benefits contract before the 31st day after the
date it is received by the agent.
(b) It is an exception to the application of this section
that the failure to make a deposit is inadvertent and is corrected
before the 11th day after the date the seller discovers the failure.
(c) An offense under this section is punishable as if it
were an offense under Section 32.45, Penal Code.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.406. ADMINISTRATIVE PENALTY. (a) After notice
and opportunity for hearing, the commissioner may impose an
administrative penalty on a person who:
(1) violates this chapter or a final order of the
commissioner 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 department; or
(2) engages in a pattern of violations, as determined
by the commissioner.
(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
commissioner 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 chapter.
(d) The imposition of a penalty under this section is
subject to judicial review as a contested case under Chapter 2001,
Government Code.
(e) The commissioner may collect the penalty in the same
manner that a money judgment is enforced in district court.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 699, § 11, eff. Sept. 1, 2001; Acts
2001, 77th Leg., ch. 867, § 82, eff. Sept. 1, 2001; Acts 2003,
78th Leg., ch. 1276, § 8.003, eff. Sept. 1, 2003.
§ 154.4061. PATTERN OF WILFUL DISREGARD. (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 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.
(b) For the purposes of this section, violations corrected
as provided by Section 154.406 may be included in determining
whether a pattern of wilful disregard for the requirements of this
chapter or rules of the finance commission exists.
Added by Acts 2001, 77th Leg., ch. 699, § 12, eff. Sept. 1, 2001.
§ 154.407. INJUNCTIVE RELIEF. The commissioner may sue
in a district court in Travis County to enjoin a violation or
threatened violation of:
(1) this chapter; or
(2) a final order of the commissioner or rule of the
commission.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 83, eff. Sept. 1, 2001.
§ 154.408. CEASE AND DESIST ORDER. (a) The
commissioner may issue a cease and desist order to a person if the
commissioner finds by examination or other credible evidence that
the person has violated a law of this state relating to the sale of
prepaid funeral benefits, including a violation of this chapter or
a final order of the commissioner or rule of the commission.
(b) The order must state:
(1) with reasonable certainty the grounds for the
order; and
(2) the effective date, which may not be before the
16th day after the date the order is mailed.
(c) The 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.
(d) The 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended
by Acts 2001, 77th Leg., ch. 867, § 84, eff. Sept. 1, 2001.
§ 154.409. SUIT BY ATTORNEY GENERAL. (a) The
department may notify the attorney general of a violation of this
chapter.
(b) The attorney general shall institute suit in the name of
this state against a person who violates this chapter in the county
in which the violation occurred.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.410. QUO WARRANTO PROCEEDINGS. (a) The attorney
general may institute a quo warranto proceeding in a district court
of Travis County to forfeit the charter or the right to do business
of a corporation an officer, director, agent, or employee of which
refuses or fails to correct a violation of this chapter after the
department or attorney general notifies the officer, director,
agent, or employee of the violation.
(b) Thirty days is considered a sufficient period to correct
the violation after notice from the department or attorney general.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.411. RESTITUTION. The commissioner may issue an
order to a person requiring restitution if, after notice and
opportunity for hearing, the commissioner finds that the person:
(1) failed to deposit money in accordance with
Subchapter F; or
(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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.412. SEIZURE OF PREPAID FUNERAL MONEY AND
RECORDS. (a) 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 the prepaid funeral money, including earnings, 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.
(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 commissioner
finds that immediate and irreparable harm is threatened to 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.
(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 money shall be handled as
provided by Sections 154.111 and 154.413.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 154.413. NOTIFICATION OF PURCHASER. Not later than
the 30th day after the date prepaid funeral money is seized under
Section 154.412, the commissioner may 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 chapter for canceling the contract and claiming money that may
be due the person if the person elects to cancel;
(2) inform the person on continuing 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 commissioner will transfer:
(A) responsibility to perform the contract to a
responsible successor permit holder selected by the commissioner;
or
(B) the seized money to the fund maintained under
Section 154.351,subject to the claims process prescribed by rule
under Subchapter H.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 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 the district court 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.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
