1. (a) Notice to purchasers. Within 30 days of cancellation of a permit to sell prepaid funeral benefits and the seizure of prepaid funeral funds, the department shall notify those who have purchased prepaid funeral contracts from the cancelled permit holder. The notice shall inform the purchasers of the cancellation and seizure; provide instructions set out in Finance Code, §154.413; provide an address to which any future payments due under the contracts must be sent; explain how monies can be released from the seized funds prior to selection of a successor permit holder; and explain how the contract may be cancelled should the purchaser wish to cancel it.
2. (b) Bid list. The department shall maintain a bid list of permit holders who wish to bid for the right to assume the cancelled permit holder's obligations under prepaid funeral contracts and the right to receive the balance of prepaid funeral funds paid or to be paid under those contracts. Upon the request of any permit holder, the department shall add to or delete from the bid list the permit holder's name. The department shall purge the list by deleting the names of those whose permits are cancelled or surrendered prior to the consideration of any bid award.
3. (c) Solicitation of bids. On or before the 60th day after the date of final cancellation of a permit to sell prepaid funeral benefits, the department shall notify those on the bid list and all funeral providers in the vicinity of the canceled permit holder of the cancellation. The notice shall include the name and address of the cancelled permit holder, the number and aggregate dollar amount of unperformed prepaid funeral contracts, the balance of unearned prepaid funeral funds, and the date by which sealed bid proposals must be submitted to the department to be considered for the bid award. The notice shall also include instructions as to how eligible potential bidders may inspect the cancelled permit holder's prepaid funeral contract records. The seized contracts will be bid on as a bloc rather than on an individual contract basis, and the commissioner shall have the discretion to combine or group contracts seized for bidding and sale purposes. The notice shall inform any non-permit holder that it must apply for and obtain a permit from the commissioner to sell prepaid funeral benefits in the State of Texas in the event that it receives the bid award.
4. (d) Solicitation of bids on certain contracts. The commissioner may also from time to time solicit bids on seized prepaid funeral contracts which were not placed with successor permittees as a result of the original or any subsequent bid solicitations.

5. (e) Selection criteria.

   1. (1) Time of selection. After the deadline has expired for submitting sealed bids, the commissioner may select a successor to the cancelled permit holder.

   2. (2) Criteria for permit holders. If the bidder is a permit holder, the commissioner shall consider:

      1. (A) whether the bidder has demonstrated an ability to properly manage, maintain, and account for its own prepaid funeral funds;
      2. (B) whether the bidder has properly remedied violations of law cited by the department in its examination reports;
      3. (C) whether the bidder has a history of repeated or continuous violations;
      4. (D) whether the bidder has the ability to fulfill the terms of the prepaid funeral contract;
      5. (E) whether the bidder poses any other significant regulatory concern; and
      6. (F) the amount of money in the cancelled permit holder's prepaid funeral funds, the value of receivables that are due under the contracts of the cancelled permit holder to a successor permit holder, the amount of money offered for the prepaid funeral business, the current or potential claim against the guaranty fund, and any other relevant information.

   3. (3) Criteria for non-permit holder funeral providers. If the bidder is a non-permit holder funeral provider, the commissioner shall consider, to the extent applicable, all of the factors listed in paragraph (2) of this subsection and the following:

      1. (A) the bidder's general reputation in the community where it is located;
      2. (B) whether the bidder's business ability, experience, character, and general fitness warrant the confidence of the public;
      3. (C) any state or federal regulatory or law enforcement, administrative, or other action taken against the bidder; and
      4. (D) the bidder's willingness to obtain a permit from the commissioner to sell prepaid funeral benefits in the State of Texas and to abide by the statutes and rules governing such permits.
   4. (4) Rejection of bids. The commissioner may reject all bid proposals received pursuant to this section. If all bids are rejected, a new bid proposal may be solicited or, alternatively, the balance of prepaid funeral funds paid or to be paid under the contracts of the cancelled permit holder shall be received into the guaranty fund for management by the Guaranty Fund Advisory Council, and the department shall manage the prepaid funeral contracts; provided, however, that the commissioner may thereafter solicit additional bid proposals under subsection (d) of this section.
6. (f) Selection of successor. The commissioner alone shall be responsible for the selection of a successor permit holder under this section. The commissioner shall make no contract regarding the selection of a successor permit holder that obligates the guaranty fund in any way until a vote of the members of the Guaranty Fund Advisory Council approving such obligation has been given in a properly posted open meeting.

Source Note:The provisions of this §25.19 adopted to be effective June 25, 1993, 18 TexReg 3691; amended to be effective May 14, 1994, 19 TexReg 3247; amended to be effective July 11, 2002, 27 TexReg 5963; amended to be effective November 10, 2002, 27 TexReg 10377.