H.B. No. 3004

	AN ACT
	relating to prepaid funeral benefits contracts and the prepaid
	funeral contract guaranty fund.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 154.351(a), Finance Code, is amended to
	read as follows:
	(a)  The commission by rule shall establish and the
	department shall maintain a fund to guarantee performance by
	sellers of prepaid funeral benefits contracts and funeral providers
	under those contracts of their obligations to the purchasers.
	SECTION 2.  Section 154.353, Finance Code, is amended to
	read as follows:
	Sec. 154.353.  DEPOSIT OF FUND OR PORTION OF FUND. (a) The
	fund or a portion of the fund may be deposited [with]:
	(1)  with the comptroller;
	(2)  with 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 or a portion of the fund is deposited with
	the comptroller, the comptroller shall manage the deposit [fund] as
	trustee of money outside the state treasury.
	SECTION 3.  Section 154.355, Finance Code, is amended by
	amending Subsection (a) and adding Subsection (d) to read as
	follows:
	(a)  An advisory council composed of the following
	individuals shall supervise the operation and maintenance of the
	fund:
	(1)  the commissioner or the commissioner's
	representative;
	(2)  [the attorney general or the attorney general's
	representative;
	[(3)]  two representatives of the prepaid funeral
	industry appointed by the commission, one of whom represents
	trust-funded prepaid funeral benefits contract sellers and one of
	whom represents insurance-funded prepaid funeral benefits contract
	sellers; and
	(3) [(4)]  one consumer representative appointed by
	the commission.
	(d)  Notwithstanding Chapter 551, Government Code, or any
	other law, the advisory council may hold an open or closed meeting
	by telephone conference call, videoconference, or other similar
	telecommunication method if:
	(1)  notice is given for the meeting as for other
	meetings;
	(2)  the notice specifies a location for the meeting at
	which the public may attend;
	(3)  each part of the meeting that is required to be
	open to the public is audible to the public at the location
	specified in the notice of the meeting; and
	(4)  the meeting is recorded by electronic or other
	means and the recording of each portion of the meeting that is
	required to be open to the public is made available to the public.
	SECTION 4.  Section 154.357, Finance Code, is amended to
	read as follows:
	Sec. 154.357.  CLAIM AGAINST SELLER, FUNERAL PROVIDER, OR
	DEPOSITORY. The department may assert a claim against a seller,
	funeral provider, or depository that commits a violation of this
	chapter that could result in a claim against the fund.
	SECTION 5.  Section 154.358(b), Finance Code, is amended to
	read as follows:
	(b)  A claim against the fund may be made by:
	(1)  a purchaser of a prepaid funeral benefits
	contract;
	(2)  a purchaser's estate;
	(3)  a permit holder or funeral provider who assumes or
	performs a contract; or
	(4)  a claimant for the benefit of a group of purchasers
	of prepaid funeral benefits contracts as part of a plan to arrange
	for another permit holder or funeral provider to assume the
	contract obligations.
	SECTION 6.  Section 154.359(a), Finance Code, is amended to
	read as follows:
	(a)  In addition to uses authorized by Section 154.354, the
	fund may be used to pay:
	(1)  a loss attributable to the failure or inability of
	a permit holder or funeral provider to perform its [the permit
	holder's] obligations under a prepaid funeral benefits contract;
	(2)  expenses of a plan to arrange for another permit
	holder or funeral provider to assume the obligations of the permit
	holder or funeral provider under a prepaid funeral benefits
	contract or a group of prepaid funeral benefits contracts if the
	commissioner finds, with the advice and consent of the advisory
	council, that the plan is reasonable and in the best interests of
	the contract beneficiaries;
	(3)  administrative expenses related to servicing and
	handling outstanding prepaid funeral benefits contracts:
	(A)  that have not been assumed by another permit
	holder; or
	(B)  the obligations under which have not been
	assumed by another funeral provider;
	(4)  expenses for administering the receivership of an
	insolvent permit holder or funeral provider if the permit holder's
	or funeral provider's assets are insufficient to pay those
	expenses; and
	(5)  expenses to employ and compensate a consultant, an
	agent, legal counsel, an accountant, and any other person
	appropriate and consistent with the purpose of the fund, as
	determined by the advisory council.
	SECTION 7.  Subchapter H, Chapter 154, Finance Code, is
	amended by adding Section 154.3595 to read as follows:
	Sec. 154.3595.  DEFAULT BY FUNERAL PROVIDER. (a)  This
	section applies to a permit holder that administers a prepaid
	funeral benefits contract for which:
	(1)  the permit holder is not the funeral provider; and
	(2)  there is an actual or anticipated failure or
	inability of the funeral provider to perform its obligations under
	the contract.
	(b)  A permit holder to which this section applies shall make
	a reasonable effort to find a substitute funeral provider willing
	to assume the contractual obligations of the defaulting funeral
	provider. A reasonable effort includes:
	(1)  identifying and contacting at least three funeral
	providers within the same community or geographic service area as
	the defaulting funeral provider;
	(2)  if at least three funeral providers do not exist
	within the same community or geographic service area, identifying
	and contacting at least three funeral providers within a 50-mile
	radius of the defaulting funeral provider; and
	(3)  for both Subdivisions (1) and (2), first
	contacting those funeral providers that the permit holder considers
	have services and facilities that are comparable to the defaulting
	funeral provider.
	(c)  A permit holder that is unable to locate a substitute
	funeral provider as required by Subsection (b) shall submit
	information to the advisory council describing or identifying:
	(1)  all prepaid funeral benefits contracts to which
	the defaulting funeral provider is a party;
	(2)  to the extent known, the circumstances underlying
	the default by the original funeral provider and any attempt by the
	permit holder to address the default with the defaulting funeral
	provider;
	(3)  any effort by the permit holder to find a
	substitute funeral provider, including:
	(A)  the location and identity of each contacted
	funeral provider;
	(B)  the terms offered to the funeral provider;
	and
	(C)  the terms of any counteroffer or other
	response made by the funeral provider; and
	(4)  other information known to the permit holder that
	the permit holder believes may be relevant or useful to the advisory
	council.
	(d)  The permit holder shall cooperate with the department
	and the advisory council in facilitating selection of a substitute
	funeral provider by complying with any reasonable request for:
	(1)  additional information;
	(2)  assistance in negotiating with a potential
	substitute funeral provider; or
	(3)  assistance in communicating with a purchaser of an
	affected prepaid funeral benefits contract.
	SECTION 8.  The changes in law made by this Act to Subchapter
	H, Chapter 154, Finance Code, do not apply to a loss under a prepaid
	funeral benefits contract sold before the effective date of this
	Act that arises from or relates to the occurrence of one of the
	following events:
	(1)  an event of default under the contract
	attributable to the funeral provider unless the funeral provider is
	also the contract seller; or
	(2)  the bankruptcy, receivership, seizure, or other
	failure of the funeral provider unless the funeral provider is also
	the contract seller.
	SECTION 9.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution.  If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2011.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 3004 was passed by the House on April
	20, 2011, by the following vote:  Yeas 147, Nays 0, 2 present, not
	voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 3004 was passed by the Senate on May
	17, 2011, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	APPROVED:  _____________________
	Date
	_____________________
	Governor