2023 Tennessee Code › Title 62 - PROFESSIONS, BUSINESSES AND TRADES (§§ 62-1-101 — 62-76-203) › Chapter 5 - FUNERAL DIRECTORS AND EMBALMERS (§§ 62-5-101 — 62-5-810) › Part 4 - TENNESSEE PREPAID FUNERAL BENEFITS ACT (§§ 62-5-401 — 62-5-417) › Section 62-5-414 - [Effective 1/1/2025] 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

(a)
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:
(1)
The pre-need seller has not maintained trust funds received from contracts in the manner required by this part;
(2)
The pre-need seller has allowed its registration to lapse, or the registration has been revoked;
(3)
The pre-need seller is impaired or insolvent;
(4)
The pre-need seller has refused to submit its books, records, accounts, or affairs to examination by the commissioner;
(5)
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;
(6)
The pre-need seller has failed to file its annual report; or
(7)
The pre-need seller cannot or will not be able to meet all of its contractual obligations when they come due.
(b)
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.
(c)
(1)
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.
(2)
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.
(3)
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.
(d)
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.
(e)
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.
(f)
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.
(g)
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.
(h)
(1)
There is established within the general fund a pre-need funeral state administrative fund referred to as the "pre-need funeral account". Funds received by the commissioner under this section must be deposited into the pre-need funeral account and:
(A)
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; and
(B)
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.
(2)
The state treasurer shall, on the effective date of this act, transfer all funds in the indigent burial fund created by the version of § 62-5-414(h) in effect as of December 31, 2024, to the pre-need funeral account.
(3)
If the balance of the account drops below two million dollars ($2,000,000) as of June 30 of any year, then the state administrative fee pursuant to subsection (j) increases to twenty dollars ($20.00) on the following January 1. If, after the administrative fee has increased to twenty dollars ($20.00), the balance of the account is two million five hundred thousand dollars ($2,500,000) or greater as of June 30 of any year, then the fee reverts to ten dollars ($10.00) on the following January 1.
(4)
Interest accruing on investments and deposits of the fund must be credited to the account, must not revert to the general fund, and must be carried forward into each subsequent fiscal year.
(i)
Moneys within the pre-need funeral account must be invested by the state treasurer in accordance with § 9-4-603 for the sole benefit of the pre-need funeral account.
(j)
A pre-need registration renewal must not be issued unless the applicant pays, in addition to the renewal fee, a pre-need state administrative fee of ten dollars ($10.00) for every pre-need funeral sales contract entered into during the preceding renewal period and the state administrative fee may be charged to the consumer as part of the transaction. 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) state administrative fee for the contract, which must be credited to the pre-need funeral account. A pre-need seller shall not charge a consumer more than one (1) state administrative fee for the execution of one (1) or more pre-need funeral sales contracts entered into by the consumer at any one (1) time.
(k)
There is no liability on the part of, and a cause of action of any nature must not 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.
Amended by 2024 Tenn. Acts, ch. 959,s 1, eff. 1/1/2025.
Amended by 2016 Tenn. Acts, ch. 911, s 10, eff. 4/27/2016.
Acts 2007 , ch. 592, § 15; 2010 , ch. 933, § 1.
This section is set out more than once due to postponed, multiple, or conflicting amendments.