SECTION 25.5. How Do I Obtain Approval of a Non-Model Contract or Waiver?

(a) Authority. Finance Code, §154.151(a), requires the department to approve a prepaid funeral benefits contract form before you use the form. Finance Code, §154.156(a), requires the department to approve a waiver of cancellation rights form in the same manner. You may use the department's model contracts or model waiver as provided in §25.2(a) of this title (relating to Am I Required to Use the Model Contract and Model Waiver). This section describes:

(1) how to apply to the department for approval of your proposed non-model contract, what information, documents, and fees you must file as part of your application before the department will accept it for filing, and what fees the department may impose, in subsection (b) of this section;

(2) what procedures the department will follow to approve or deny approval of your proposed non-model document and when you may reasonably expect the department to decide, in subsection (c) of this section;

(3) what actions you must take to obtain a second review by the department or a hearing before the commissioner if the department denies approval of your proposed non-model document, in subsection (d) of this section;

(4) how you may request a hearing before the commissioner, how the hearing will be conducted, and what the staff of the department must prove to uphold the disapproval, in subsection (e) of this section; and

(5) when you may no longer use an approved contract form, in subsection (f) of this section.

(b) Application for approval. Your application for approval of your proposed non-model document must be in writing and include all additional information, documents, and fees required by this subsection. You should file your application as far in advance of the date you intend to use your proposed document as possible.

(1) The additional information, documents, and fees that you must file as part of your application include:

(A) both a printed copy of your proposed non-model document and an electronic version of the document, prepared using Microsoft Word or Corel WordPerfect software, including computer screenshots of any portion to be used in electronic form;

(B) except as provided in §25.2(d) of this title, an English translation if the proposed non-model document is in Spanish and a certification from a translation service acceptable to the department that the filed English version is a true and correct translation of the proposed Spanish non-model document filed for approval;

(C) if your application is for approval of amendments to a previously approved non-model document:

(i) a printed copy of the proposed non-model document that is specifically marked to show all text proposed to be added and all text proposed to be deleted; and

(ii) a written summary of the amendments, both additions and deletions, explaining their purpose;

(D) a certification on a form supplied by the department, signed and acknowledged by you or your authorized agent, that you have reviewed the proposed non-model document that you filed for approval and to the best of your knowledge:

(i) your proposed non-model document complies with all applicable state and federal law, including Finance Code, Chapter 154, and this chapter;

(ii) if in electronic form, your proposed non-model document also complies with Business and Commerce Code, Chapter 322, and Electronic Signatures in Global and National Commerce Act, 15 U.S.C., §7001 et seq; and

(iii) if your application is for approval of amendments to a previously approved non-model document, the proposed non-model document is identical to the previously approved document except for text specifically marked as additions and deletions;

(E) unless you notify the department that it already has a copy on file:

(i) a copy of all related contracts and agreements that are part of your prepaid funeral arrangement, such as a separate finance charge agreement; and

(ii) if the proposed non-model document is an insurance-funded contract, a copy of the insurance policy form you intend to use and written evidence from the Texas Department of Insurance that the insurance policy has been approved for use in conjunction with the sale of prepaid funeral benefits; and

(F) payment of a $250 filing fee, except that upon request the department may waive or reduce the fee for review of minor amendments to a previously approved non-model document that are submitted under subparagraph (C) of this paragraph.

(2) Your application is considered accepted for filing and eligible for consideration if the application is substantially complete with all information, documents, and fees required by paragraph (1) of this subsection. At your request, the department will inform you in writing of the date it considers your application accepted for filing.

(3) If the department's review of a non-model document takes longer than four employee hours, you must pay a review fee of $60 per employee hour in excess of four hours. If you fail to pay review fees on or before the 10th day after you receive a written statement of charges due from the department, the department may exercise its discretion to conclude that you have withdrawn your application.

(c) Review process. This subsection describes when you may reasonably expect the department to approve or deny approval of your proposed non-model document and the procedure the department will follow in making its initial decision.

(1) The time the department's decision is due regarding your proposed non-model document will vary depending upon the date your application is accepted for filing under subsection (b)(2) of this section and on the nature of the document you seek to have approved.

(A) If your proposed non-model contract filing is the result of legislative amendments to Finance Code Chapter 154 effective on or after September 1, 2009, your non-model contract filing will be considered a new contract filing and the department will approve or deny approval on or before the 45th day after the date your application is accepted for filing.

(B) If your proposed non-model document is a non-model waiver or an amended version of a non-model contract previously approved by the department under this section, the department will approve or deny approval on or before the 30th day after the date your application is accepted for filing, except the department will either approve or deny approval on or before the 10th day after the date your application is accepted for filing if the proposed amendments are limited to changed or added information about you or a funeral home.

(2) The department may extend the date its decision is due under this subsection by up to an additional 30 days if it determines that your application raises issues requiring additional information or additional time for analysis. The department may request additional information from you in writing if the information is reasonably necessary for an informed decision to approve or deny approval of your proposed non-model document. If you receive a written request for additional information, you must file the information or a satisfactory written explanation of when the information can be filed with the department on or before the 30th day after the date you receive the request. If you fail to reply within this time period the department may exercise its discretion to conclude that you have withdrawn your application.

(3) The department will approve your proposed non-model document unless a specific basis exists to deny approval. The department will deny approval if your proposed non-model document fails to comply with the standards of this subchapter that apply. If the department discovers and confirms that use of the proposed non-model document will clearly violate a mandatory requirement of an applicable state or federal law other than Finance Code, Chapter 154, and this chapter, the department will deny approval. However, the department will ordinarily not review a proposed non-model document for compliance with other law, and approval of a non-model document under this section does not mean the department has determined that the non-model document complies with any state and federal law other than Finance Code, Chapter 154, and this chapter.

(4) If the department denies approval of your proposed non-model document, the department will send you a written notice of denial that:

(A) states the specific basis for the denial in writing and cites the specific provisions of law that the document does not satisfy;

(B) informs you that, on or before the 30th day after the date you receive the notice of denial, you must exercise your rights under subsection (d) of this section, to file either a written request for hearing or a revised non-model document for second review, or the denial will become final.

(d) Your rights after initial denial. This subsection describes the further actions you may take to obtain approval of your non-model document if the department initially denies approval under subsection (c) of this section.

(1) If the department denies approval of your proposed non-model document under subsection (c) of this section, you may file a written request for hearing before the commissioner under subsection (e) of this section or seek the department's second review by filing a new version of your proposed non-model document that you have specifically revised to address the reasons for denial.

(2) If you elect to file a new version of your proposed non-model document for second review, the department will consider the revised document to be part of your original application and will not require a new filing fee but may charge additional review fees under subsection (b)(3) of this section. The department will approve or deny approval of your revised non-model document on or before the 10th day following the date of its filing.

(3) If the department denies approval of your revised non-model document, the department will send you a second written notice of denial that:

(A) states the specific basis for the denial in writing and cites the specific provisions of law that the revised non-model document does not satisfy;

(B) if minor changes to the proposed document would result in approval and you have not previously been given the opportunity to make these changes, informs you of the opportunity to obtain approval by submitting your document with the specified changes on or before the 10th day after the date you receive the department's second written notice of denial; and

(C) informs you that you must file a written request for hearing with the department under subsection (e) of this section on or before the 30th day after the date you receive the department's second written notice of denial or the denial will become final.

(e) Commissioner hearing. This subsection describes how you may obtain a hearing before the commissioner and how the hearing will be conducted.

(1) To obtain a hearing before the commissioner, you must file a written request for hearing with the department on or before the 30th day after the date you receive the department's written notice of denial. Your written request for hearing must state with specificity the reasons you allege the department's denial of approval is in error.

(2) The department will forward your request for hearing to the administrative law judge, who shall enter appropriate orders and conduct the hearing on or before the 60th day after the date your request for hearing was received, under Chapter 9 of this title (relating to Rules of Procedure for Contested Case Hearings, Appeals, and Rulemaking) and Government Code, Chapter 2001. Your complete application, the department's notice or notices of denial, and your request for hearing will be made a part of the record.

(3) At the hearing, the staff of the department bears the burden of proof that approval of your proposed non-model document should be denied.

(4) The proposal for decision, exceptions and replies to the proposal for decision, the order of the commissioner, and motions for rehearing are governed by Chapter 9 of this title and Government Code, Chapter 2001.

(f) Withdrawn approval. The department may withdraw its approval of a model or previously approved non-model document for future use if governing law is changed or clarified by statute, rule, or judicial opinion. The department will notify you in writing if you are affected by a withdrawn approval.

Source Note: The provisions of this §25.5 adopted to be effective March 14, 2002, 27 TexReg 1706; amended to be effective March 11, 2004, 29 TexReg 2301; amended to be effective January 7, 2010 35 TexReg 204; amended to be effective November 10, 2016, 41 TexReg 8814