Unclaimed Property Q&A: Leaders’ Top Questions Answered

By Eric J. Boggs, Omar A. Ruiz, and Michael R. Unger
| 3/20/2018
Unclaimed Property: Top Questions Answered
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Several hundred healthcare leaders recently attended Crowe educational webinars about unclaimed property. Previously an overlooked hospital accounting topic, unclaimed property has begun garnering more attention from healthcare organizations as an increasing number of states identify unclaimed property audits as potential sources of revenue.

Because of this uptick in audits and the significant financial risk to organizations that fail to comply with unclaimed property laws, healthcare leaders should become well-versed in unclaimed property reporting requirements. Here, three unclaimed property specialists answer some of healthcare leaders’ most pressing questions.

Q: What is unclaimed property?
A:
Unclaimed property is any property held or owing in the ordinary course of business that has not been claimed by its owner. Some of the most common types of unclaimed property in the healthcare industry include credit balances, unapplied cash, small credit balance write-offs, accounts payable, payroll, and patient refunds.

All states have unclaimed property regulations, and most states require both for-profit and not-for-profit entities to report unclaimed property. Unclaimed property rules dictate that after a certain amount of time has passed, the property must be turned over to the state. Each state has an annual reporting deadline as well as specific rules for areas such as reporting requirements, transfer of funds, and owner outreach.

Q: Why is unclaimed property reporting an important issue for healthcare providers?
A:
Healthcare organizations that fail to properly report unclaimed property as required by law may incur significant penalties and interest, and many states have become more aggressive with enforcing unclaimed property laws as a way to increase state revenue. This has resulted in a proliferation of audit firms, most of which are paid on a contingency fee basis, with whom the states contract to conduct audits of organizations’ unclaimed property reporting. This, in turn, has created a landscape in which it is a matter of when – not if – an organization gets audited.

In addition, today’s consumer climate, in which patients have more choices when it comes to where they receive and purchase their medical care, has made patient experience a top concern for organizations. Returning monies to patients who have overpaid for their medical care, therefore, has customer service implications for providers.

Q: What is the Revised Uniform Unclaimed Property Act, and how will it affect my state and organization?
A:
In 2016, the Uniform Law Commission (ULC) finalized its Revised Uniform Unclaimed Property Act (RUUPA), updating an act that had not been changed since 1995.1 The revised act addresses several areas, including enforcement of unclaimed property laws and penalties for noncompliance.2 Many states likely will rewrite their existing unclaimed property laws based on the updated act, which the ULC sent to states to be used as a template for modernizing their regulations.

Some states already have adopted all or part of the act, and more are expected to propose and enact changes to their own unclaimed property laws in the coming year. Healthcare leaders should stay apprised of activity in their states and watch for changes to laws that affect the way they comply with unclaimed property regulations.

Q: I’m hearing a lot about the state of Delaware in relation to unclaimed property. Why?
A:
Recently, Delaware became one of the first states to adopt a version of the RUUPA, resulting in significant changes to the state’s unclaimed property laws. Delaware’s actions associated with unclaimed property laws can give other states a baseline for what rules and regulations might be upheld or revised in their own states. In addition, many entities – more than 1 million U.S. business entities, including 66 percent of Fortune 500 companies – are incorporated in Delaware.3

As a rule, unclaimed property is reported to the owner’s last known address. If that address is unknown, the property must be turned over to the holder’s state of incorporation. Healthcare facilities must be aware that they have unclaimed property reporting responsibilities not only in their state or states of operation but also in their state or states of incorporation and where their patients, payers, and vendors reside.

Q: What are some unclaimed property audit best practices healthcare leaders should be aware of?
A:
As audits become more frequent in the industry, healthcare leaders must make sure they thoroughly understand states’ unclaimed property reporting laws and requirements, including those of their state of incorporation. Then, they must assess the organization to identify any compliance gaps that might exist. If they find gaps, leaders should work with others across the organization to proactively close those gaps or consider various options to remediate any exposure, such as the various voluntary disclosure programs some states offer. Unclaimed property reporting touches a variety of organizational areas, so assembling a cross-functional unclaimed property team is wise.

In the event the organization is audited, it must make sure to strike a balance between responding to auditors’ requests for information – which can be exhaustive in nature – and following Health Insurance Portability and Accountability Act (HIPAA) and other privacy laws. Consulting with unclaimed property specialists can help organizational leaders successfully navigate an audit, reduce their organization’s overall exposure, and get the audit completed in a timely manner. Being aware of various exemptions and deductions offered by states also can be beneficial to an organization. Because unclaimed property laws are changing frequently – case in point, the recent RUUPA – working with unclaimed property specialists can be a good step toward achieving and maintaining compliance.

Have Additional Questions?

Remaining compliant with statutory unclaimed property requirements can be difficult, as can navigating the burdensome data requests in an unclaimed property audit examination. Healthcare leaders should seek professional expertise to answer any questions they may have as they work to handle their organization’s unclaimed property appropriately.


1 “Uniform Unclaimed Property Act (1995),” National Conference of Commissioners on Uniform State Laws, July-August 1995, http://www.uniformlaws.org/Act.aspx?title=Unclaimed Property Act
2 “Revised Uniform Unclaimed Property Act,” National Conference of Commissioners on Uniform rel="noopener noreferrer" State Laws, July 2016, http://www.uniformlaws.org/Act.aspx?title=Revised Uniform Unclaimed Property Act
3 rel="noopener noreferrer" State of Delaware official website, http://www.corp.delaware.gov/aboutagency.shtml