1. (a) Pursuant to Texas Civil Statutes, Article 4582b, §4(I), the Texas Funeral Service Commission (herein referred to as the TFSC), the Texas Department of Insurance (herein referred to as the TDI), and the Texas Department of Banking (herein referred to as the DOB) hereby adopt the following joint memorandum of understanding (JMOU) relating to prepaid funeral services and transactions. The TFSC, TDI, and DOB intend this memorandum of understanding to serve as a vehicle to assist the three agencies in their regulatory activities, and to make it as easy as possible for a consumer with a complaint to have the complaint acted upon by all three agencies, where appropriate. In order to accomplish this end, where not statutorily prohibited, the three agencies will share information between the agencies which may not be available to the public generally under the Open Records Act, Texas Civil Statutes, Article 6252-17a. Such information will be transmitted between agencies with the notation on the information that it is considered confidential, is being furnished to the other agencies in furtherance of their joint responsibilities as state agencies in enforcing their respective statutes, and that it may not be disseminated to others.

2. (b) Responsibilities of each agency in regulating prepaid funeral services and transactions.

   1. (1) The Texas Funeral Service Commission is responsible for the following:

      1. (A) licensing funeral directors and embalmers, apprentice funeral directors and apprentice embalmers (Texas Civil Statutes, Article 4582b, §3) and funeral establishments (Texas Civil Statutes, Article 4582b, §4(A)). The TFSC may refuse to license a person or establishment that violates Texas Civil Statutes, Article 548b, under Texas Civil Statutes, Article 4582b, §3(H)(10);
      2. (B) taking action against any licensee violating Article 548b, under Texas Civil Statutes, Article 4582b, §3(H)(10);
      3. (C) taking action against any funeral director in charge and/or funeral establishment for violations of Article 548b, by persons directly or indirectly connected to the funeral establishment, under Texas Civil Statutes, Article 4582b, §4(D)(1)(f) and §4(E).

   2. (2) The Texas Department of Banking is responsible for administering Texas Civil Statutes, Article 548b, including, but not limited to, the following:

      1. (A) issuing permits to sell prepaid funeral services or funeral merchandise pursuant to Texas Civil Statutes, Article 548b, §1 and §3;
      2. (B) approving forms for sales contracts pursuant to Texas Civil Statutes, Article 548b, §2;
      3. (C) canceling or refusing to renew permits pursuant to Texas Civil Statutes, Article 548b, §4; and providing notice of alleged violations to the attorney general of Texas and to sellers pursuant to Texas Civil Statutes, Article 548b, §9(e) and (f);
      4. (D) approving the release or withdrawal of funds under certain circumstances or for certain purposes, pursuant to Texas Civil Statutes, Article 548b, §5(3), (4), and (5);
      5. (E) providing for reporting requirements and performing examinations under Texas Civil Statutes, Article 548b, §7 and §8(a);
      6. (F) maintaining a guaranty fund with respect to prepaid funeral benefits owned by trusts, pursuant to Texas Civil Statutes, Article 548b, §8A.

   3. (3) The Texas Department of Insurance is responsible for the following:

      1. (A) regulating licensed insurers that issue or propose to issue life insurance/annuity contracts which may fund prepaid funeral contracts;
      2. (B) regulating individuals/entities that perform the acts of an insurance agent(s) as defined in the Insurance Code, Articles 21.02 and 1.14-1;
      3. (C) regulating insurance/annuity contracts that may fund prepaid funeral contracts;
      4. (D) regulating unfair trade practices relating to the insurance/annuity contracts which may fund prepaid funeral contracts pursuant to Insurance Code, Article 21.21;
      5. (E) regulating unfair claims settlement practices by insurance companies pursuant to the Insurance Code, Article 21.21-2.

3. (c) Procedures used by each agency in exchanging information with or referring complaint to one of the other agencies.

   1. (1) Exchanging information. If, upon receipt of a complaint, or during the course of an investigation, an agency (referred to as the receiving agency) receives any information that might be deemed of value to another of the agencies (referred to as the reviewing agency), the receiving agency will contact the reviewing agency and will forward the relevant information to the reviewing agency at its request.
   2. (2) Referral of complaints for handling. When an agency receiving a complaint refers the complaint to another agency for handling, the receiving agency will contact the complainant in writing informing him or her of the referral, and providing contact information to the reviewing agency, and encouraging the complainant to recontact the receiving agency if she or he has any problem with the reviewing agency's processing of the complaint.
   3. (3) Complaint procedures. The three agencies will work together to establish procedures to ensure complaints will be fully resolved by the reviewing agency.

4. (d) Procedures to be used by each agency in investigating a complaint.

   1. (1) All agencies.

      1. (A) Each agency will develop an internal complaint procedures manual for violations relating to prepaid funeral services and/or transactions. The manual should at a minimum provide for:

         1. (i) cross-checking the other two agencies' lists of licensees against the investigating agency's list;
         2. (ii) background checks on disciplinary proceedings and license eligibility--including background checks into the two other agencies' complaints, disciplinary proceedings, and licensing process involving the same licensee if any, where not prohibited by law;
         3. (iii) outlining of relevant law for each agency with check-point steps to ensure all relevant information has been obtained from complainant and references to applicable legal provisions;
         4. (iv) identification of necessary data and documents to be obtained from the complainant; and
         5. (v) such other steps deemed necessary for the agency to perform an adequate and appropriate investigation.
      2. (B) Each agency will maintain its centralized complaint resolution process with a long-term goal of integrating the complaint resolution process, which includes the complaint tracking system, with the other agencies in the most effective, cost-efficient manner.
      3. (C) Within four months from the final adoption of the JMOU by rulemaking, the DOB, TFSC, and TDI will develop one or more complaint and referral forms that are substantially similar in content and format to be used by each agency in processing complaints relating to prepaid funeral services and/or transactions.
      4. (D) Each reviewing agency will provide periodic, no less than quarterly, status reports on the complaint investigation to the receiving agency or agencies. In addition, the reviewing agency will contact the complainant to inform him or her of the status of the investigation.
      5. (E) Each agency will develop with the other agency, or other two agencies, a written plan for conducting joint investigations where appropriate which, at a minimum, establishes a case manager for the investigation, establishes the divisions of duties among the agencies, and establishes a timeline for completion of the investigation.
      6. (F) As soon as possible following the final adoption of the JMOU by rulemaking the DOB, TFSC, and TDI will each ensure its complaint resolution procedure is accessible to the public by reviewing its procedures, forms, brochures, and letters to determine what steps, if any, are needed to remedy problems of accessibility. The DOB, TFSC, and TDI will implement the needed steps as soon as possible thereafter.
      7. (G) The TDI, DOB, and TFSC commit to a long-term goal with a five-year planning horizon to develop an efficient and cost-effective way to ensure that the three agencies can readily exchange information and that there is effective and easy access by each of the three agencies to the information and data held by the other agencies relating to complaints and information regarding licensees in the prepaid funeral services area.

   2. (2) The Texas Funeral Service Commission.

      1. (A) The TFSC, in accordance with Texas Civil Statutes, Article 4582b, §4(D)(2)(b), will investigate violations of prepaid funeral services only if the investigation does not interfere with or duplicate an investigation conducted by the DOB.
      2. (B) The TFSC will, upon request, assist the DOB and/or the TDI with investigations.

   3. (3) Texas Department of Banking.

      1. (A) Complaints received by the Special Audit Division will be entered into a complaint log and assigned a reference number. If, after agency notice to the subject of the complaint, the complaint is not resolved, the DOB will investigate.
      2. (B) If disciplinary action against a DOB permittee is appropriate, the matter will be referred to the agency's legal staff.
      3. (C) If the complaint involves a matter handled by either the TDI or TFSC, as well as a violation of the DOB statutes or regulations, the DOB will coordinate the investigation with either or both of these agencies, as appropriate. The DOB will, upon request, assist the TFSC and/or TDI with investigations.
      4. (D) In the event that a licensee under the TFSC's jurisdiction is found, after hearing, to have violated one or more provisions of Article 548b, the DOB will inform the TFSC of the violation(s) in writing and provide documentation supporting the occurrence of the violation(s).

   4. (4) Texas Department of Insurance.

      1. (A) Complaints received by the Consumer Services area of the TDI will be logged in and investigated. Other areas of the agency can be called upon for assistance in the investigation of the complaint where appropriate.
      2. (B) If disciplinary action against a licensee of the TDI is found to be appropriate, the matter will be referred to the Compliance Intake Unit of the TDI.
      3. (C) If the complaint involves a matter handled by either the DOB or TFSC, as well as a violation of the TDI statutes or regulations, the investigation will be coordinated with either or both of those agencies.
      4. (D) The TDI will, upon request, assist the TFSC and/or DOB with investigations.

5. (e) Actions the agencies regard as deceptive trade practices.

   1. (1) The TFSC, the DOB, and the TDI regard as deceptive trade practices those actions found under the Texas Business and Commerce Code, §17.46.
   2. (2) With respect to trade practices within the business of insurance, the TDI regards as deceptive trade practices those actions found under the Insurance Code, Article 21.21, and other articles of the Code and the regulations promulgated by the TDI thereunder.

6. (f) Information the agencies will provide consumers and when that information is to be provided.

   1. (1) The TFSC, DOB, and TDI will continue to provide consumers with the brochure entitled "Facts About Funerals" developed by TFSC (in Spanish and in English). As soon as possible after the final adoption of the JMOU by rulemaking, the agencies will update the brochure to provide information about insolvency, the guaranty funds, and consumer complaints, and make the brochure accessible under the terms of the Americans with Disabilities Act. The agencies will provide other relevant consumer brochures to each other.
   2. (2) The TDI will maintain its toll-free number, and TFSC and DOB will each work toward consumer access via a toll-free number. Each agency will include its toll-free number as a prepaid funeral consumer protection resource in the respective agencies' consumer information materials. The DOB, TFSC, and TDI will routinely inform consumers of options within the agency's knowledge available to them to resolve the complaint.
   3. (3) The TFSC, DOB, and TDI, as state agencies, are subject to the Open Records Act, Texas Civil Statutes, Article 6252-17a. Upon written request, the three agencies will provide consumers with public information which is not exempt from disclosure under that Act. As noted in the preamble to this JMOU, the agencies may, where not statutorily prohibited, exchange information necessary to fulfill their statutory responsibilities among each other, without making such information public information under the Open Records Act.

7. (g) Administrative penalties each agency imposes for violations.

   1. (1) All agencies.

      1. (A) The DOB, TDI, and TFSC will create a working group to develop recommendations concerning the three agencies working together on enforcement actions using the resources of the attorney general and/or prosecutorial or investigative agencies, where appropriate.
      2. (B) The DOB, TDI, and TFSC will refer DTPA and other such violations to the Federal Trade Commission and/or the attorney general whenever appropriate.
   2. (2) Texas Funeral Service Commission. The TFSC may impose an administrative penalty, issue a reprimand, or revoke, suspend, or place on probation any licensee who violates Article 548b. The recommended range of administrative penalty for a violation of Article 548b is $500 to $5,000. Also, a funeral establishment may be assessed an administrative penalty of $250 to $5,000 for each violation of Article 548b by a person directly or indirectly connected to the funeral establishment, under §201.11(a)(6) and (25) of this title (relating to Disciplinary Guidelines).

   3. (3) Texas Department of Banking. The DOB may impose the following administrative penalties:

      1. (A) cancel a permit or refuse to renew a permit pursuant to Texas Civil Statutes, Article 548b, §4;
      2. (B) seize prepaid funeral funds and records of a prior permit holder pursuant to Texas Civil Statutes, Article 548b, §8(b).
   4. (4) Texas Department of Insurance. TDI administrative penalties vary based on the violation; TDI sanctions are imposed under the Insurance Code, Article 1.10.

8. (h) Meetings for developing cooperative efforts in regulation.

   1. (1) The DOB and TDI will develop an insolvency alert among themselves to minimize the drain of trust funds and premiums consistent with their respective statutory provisions. They will also clarify each agency's responsibility to access the respective guaranty fund vis-a-vis the other agency.
   2. (2) The DOB, TDI, and TFSC will develop methods to coordinate the efforts of the agencies to articulate the funeral providers' responsibility in the event of seller and/or insurance company insolvency.
   3. (3) Each agency should seek input from the other agencies on any proposed agency regulations relating to prepaid funeral services and/or transactions; and, where appropriate, legislative recommendations concerning prepaid funeral services and/or transactions.
   4. (4) The three agencies will provide lists of their key contact personnel and their telephone numbers to each other.
   5. (5) In order to better accomplish the exchange of information and coordination of regulation described in this memorandum of understanding, the appropriate staff of the TFSC, DOB, and TDI shall meet, at a minimum, once a year, to discuss matters of mutual regulatory concern and share updates of the regulations promulgated by the respective agencies.

Source Note:The provisions of this §201.15 adopted to be effective February 14, 1994, 19 TexReg 717.