TCA § 62-5-414 — Appointment of receiver — Jurisdiction of court — Other legal remedies — Plan for reorganization, consolidation, conversion, merger or other transformation — Pre-need funeral consumer protection account — Pre-need funeral consumer protection fee

The Davidson County chancery court, upon the petition of the commissioner, may appoint the commissioner as receiver to take charge of, control and manage a pre-need seller upon one (1) or more of the following grounds: The pre-need seller has not maintained trust funds received from contracts in the manner required by this part; The pre-need seller has allowed its registration to lapse, or the registration has been revoked; The pre-need seller is impaired or insolvent; The pre-need seller has refused to submit its books, records, accounts, or affairs to examination by the commissioner; There is reasonable cause to believe that there has been embezzlement, misappropriation, or other wrongful misapplication or use of trust funds or fraud affecting the ability of the pre-need seller to perform its obligations under pre-need funeral contracts sold or assumed by the pre-need seller; The pre-need seller has failed to file its annual report; or The pre-need seller cannot or will not be able to meet all of its contractual obligations when they come due. For the purpose of this section, Davidson County chancery court shall have exclusive jurisdiction over matters brought under this section, and that court is authorized to make all necessary or appropriate orders to carry out the purposes of this part. Receivership proceedings instituted pursuant to this part shall constitute the sole and exclusive method of liquidating, rehabilitating, or conserving a pre-need seller, and no court shall entertain a petition for the commencement of the proceedings unless the petition has been filed in the name of the state on the relation of the commissioner. The commissioner shall commence any such proceeding by application to the court for an order directing the pre-need seller to show cause why the commissioner should not have the relief prayed for in the application. On the return of the order to show cause, and after a full hearing, the court shall either deny the application or grant the application, together with such other relief as the nature of the case and the interests of the prepaid contract purchaser, contract beneficiaries, or the public may require. The commissioner may appoint one (1) or more special deputies, who have all the powers and responsibilities of the receiver granted under this section and the commissioner may employ such counsel, clerks and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks and assistants, and all expenses of taking possession of the pre-need seller and of conducting the proceedings, shall be fixed by the commissioner, with the approval of the Davidson County chancery court, and shall be paid out of the funds or assets of the pre-need seller. The persons appointed under this subsection (d) shall serve at the pleasure of the commissioner. The receiver may take such action as the receiver deems necessary or appropriate to reform and revitalize the pre-need seller. The receiver has all the powers of the owners and directors, whose authority shall be suspended, except as they are redelegated by the receiver. The receiver has full power to direct and manage, to hire and discharge any employees subject to any contractual rights they may have, and to deal with the property and business of the pre-need seller. If it appears to the receiver that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the pre-need seller by any owner, officer, director or other person, the receiver may pursue all appropriate legal remedies on behalf of the pre-need seller. If the receiver determines that reorganization, consolidation, conversion, merger or other transformation of the pre-need seller is appropriate, the receiver shall prepare a plan to effect those changes. Upon application of the receiver for approval of the plan, and after such notice and hearings as the Davidson County chancery court may prescribe, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the receiver shall carry out the plan. There is established within the general fund a pre-need funeral consumer protection account, referred to as the “pre-need funeral account” in this section. Funds received by the commissioner under this section, up to two million five hundred thousand dollars ($2,500,000) or a higher amount as determined by the commissioner by rule, shall be deposited into the pre-need funeral account and held solely for the purposes related to the pre-need registration program and any receivership action initiated by the commissioner against a pre-need seller pursuant to this section. Once the balance in the account exceeds two million five hundred thousand dollars ($2,500,000) or a higher amount as determined by the commissioner by rule, an indigent fund shall be established within the general fund to be administered by the commissioner. Any funds received under this section by the commissioner which are in excess of such amount shall be deposited into the indigent fund. If the balance of the pre-need funeral account is reduced below such amount, no funds shall be deposited into the indigent fund until the pre-need funeral account balance is restored to such amount. An indigent burial fund shall be established for the purpose of reimbursing funeral homes that provide funeral services to Tennessee residents who are indigent. Funds shall only be expended for a person who was receiving state financial assistance on the date such indigent person died. All funds in excess of two million five hundred thousand dollars ($2,500,000) shall not revert to the general fund of the state, but shall remain available to be allocated and used solely for such indigent funerals provided by funeral homes. Interest accruing on investments and deposits of the fund shall be credited to such account, shall not revert to the general fund, and shall be carried forward into each subsequent fiscal year. Moneys in the fund shall be invested in accordance with § 9-4-603. The amount of reimbursement shall be based on available funds in the indigent burial fund at the time a request for reimbursement is filed by a funeral home. A funeral home which provides funeral services to those Tennessee residents who are indigent may file an application with the commissioner, in a manner established by the commissioner, requesting reimbursement from the indigent burial fund for amounts expended by the funeral home in providing such services. The funeral home shall be required to file documentation verifying that the expenses were for providing such services and for no other purposes. In accordance with the commissioner's rule-making authority pursuant to § 62-5-413(b), the commissioner shall promulgate rules defining indigency for purposes of eligibility for reimbursement, setting a maximum amount for reimbursement per burial, the manner in which claims shall be submitted and paid, and any other rules necessary for the proper administration of this program. Moneys within the pre-need funeral account shall be invested by the state treasurer in accordance with § 9-4-603 for the sole benefit of the pre-need funeral account. No pre-need registration renewal shall be issued unless the applicant pays, in addition to the renewal fee, a pre-need funeral consumer protection fee of twenty dollars ($20.00) for every pre-need funeral sales contract entered into during the preceding renewal period. If the pre-need funeral sales contract covers both funeral merchandise and cemetery merchandise as defined in § 46-1-102, then a pre-need seller, other than a cemetery company paying a consumer protection fee for such a contract pursuant to § 46-1-105, shall pay only one (1) consumer protection fee for the contract, which shall be credited to the pre-need funeral account. The funds received pursuant to this section shall be used to fund the pre-need registration program and any receivership action initiated by the commissioner against a pre-need seller to the extent the funds or assets of the pre-need seller are not adequate to fund the receivership. There shall be no liability on the part of, and no cause of action of any nature shall arise against, the commissioner or the department or its employees or agents for any action taken by them in the performance of their power and duties under this section.