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Unclaimed Property Focus
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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via tim@uppo.org with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.

 

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Common reporting errors in healthcare

Posted By Administration, Thursday, April 21, 2016

Nearly every holder that reports unclaimed property to the states faces certain nuances unique to their industry. Being aware of some of the challenges and potential pitfalls of those nuances can help ensure reports contain fewer errors. During the Industry Focus: Healthcare session at the 2016 UPPO Annual Conference, Leigh Underwood, senior manager of unclaimed property and insurance taxes for HCA Healthcare, shared some of the common reporting errors healthcare providers face.

 

Proper owner

Healthcare providers receive payments from multiple payers on a single account. They include patients, insurance companies, patient guarantors and, if the patient has passed away, estate executors. Doing sufficient due diligence is essential to ensuring the correct property owner is listed on the report.

 

“If you look at the account information and see that a patient’s birth date was seven years ago, you know that person isn’t making the payment,” Underwood says. “So you need to look at the patient account and see who the patient guarantor is.”

 

Social Security numbers vs. federal ID numbers

When remitting property to the state for an insurance company, ensure the field for a Social Security number or federal ID number lists the company’s federal ID number rather than the patient’s Social Security number. It is common for providers to inadvertently include the patient’s Social Security number, but doing so makes matching the account to the insurance company challenging.

 

Insurer’s last known address

The employees who enter information into the provider’s database are sometimes tempted to use shortcuts rather than thoroughly entering each piece of data properly. For example, they may enter “see address on insurance card” in the insurance company address field. Unfortunately, this presents a problem for the person filing the unclaimed property report, who doesn’t have access to patients’ complete records.

 

“Talk to the people who are gathering that information and make sure they understand the need for including complete information in the correct fields,” Underwood says.

 

Multiple patient addresses

If a patient’s record includes both a physical address and a mailing address, it is essential to be aware of any restrictions placed on use of the physical address. Patients may specify that they do not want any correspondence sent to the physical address for privacy reasons. Particularly in the case of providers specializing in sensitive areas such as psychiatric care, patients may not want other people who have access to mail sent to the physical address to know about the care they are receiving.

 

Multiple addresses also increase the chances of an incorrect city, state or ZIP code on the report. Ensure the information from these fields corresponds to the mailing address rather than the physical address.

 

Tools

UPPO offers several tools to help unclaimed property professionals meet their reporting requirements. The Jurisdiction Resource Guide outlines reporting requirements of U.S. and Canadian jurisdictions in one central location. Member forums provide an online medium to discuss reporting challenges and other issues with peers. The govWATCH legislative and regulatory tracking service helps members keep up with pending bills and enacted legislation that could affect reporting requirements.

 

More information

UPPO Jurisdiction Resource Guide

Identify and eliminate common reporting errors

How to avoid the five most common unclaimed property reporting and remitting errors

Tags:  compliance  health care  reporting  unclaimed property 

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Meet UPPO’s New President

Posted By Administration, Thursday, April 14, 2016

Nearly 15 years ago, when Heela Popal began her career in unclaimed property, she never imagined she would one day become president of her profession’s trade organization. However, as her experience, expertise and passion for the profession grew, she was soon on the track to hold UPPO’s highest leadership position. At the UPPO Annual Conference in March, she was installed as the association’s president.

 

“As an associate, I looked up to people who had so many more years of experience in unclaimed property than I did and were very active in this organization,” Popal says. “So it’s really rewarding, fulfilling and surreal to move into the president role. I never thought it would happen, and I feel like it’s a major accomplishment.”

 

Popal began her career with Deloitte in 2001 as an associate in the firm’s state and local tax group. Initially, she split her time between credit and incentive work and unclaimed property. It didn’t take long to realize she had a passion for unclaimed property and wanted to make it the focus of her career.

 

“What appealed to me about unclaimed property as a young associate and senior associate was being in the same room as the client—the company executives,” she says. “I was talking to the controller, the vice president of taxes—basically C-suite executives—about their unclaimed property liability and how to help them mitigate it. I really enjoy the consulting aspect, discussing state compliance and auditing trends, and how we could help.”

 

In 2009, when Deloitte got out of the unclaimed property business, Popal moved to Thomson Reuters for two years before accepting a position at PricewaterhouseCoopers, helping to lead the East Region for the firm’s unclaimed property group. As a PwC director and East Region leader of the Abandoned and Unclaimed Property practice based in Atlanta, she specializes in unclaimed property project management, audit defense, high-level risk assessments, state voluntary disclosure initiatives, and the quantification of unclaimed property liabilities. She also works with clients to implement policies and procedures related to unclaimed property reporting and tracking.

 

In addition to her move to PwC, in 2011 Popal’s peers elected her to the position of southern vice president on the UPPO Board of Directors. In 2014, she was elected to the second vice president seat and progressed through the officer chairs to become first vice president in 2015 and now president.

 

Popal’s leadership comes at an exciting and historic time for UPPO and the unclaimed property profession. The Uniform Law Commission (ULC) is on the verge of releasing the final draft of the Revised Uniform Unclaimed Property Act (RUUPA), and the need for specialized unclaimed property education and professional development opportunities continues to increase. As such, Popal is making advocacy, membership, and professional development her top priorities.

 

As the ULC wraps up its work on the RUUPA in July, Popal looks forward to UPPO’s work with state legislatures to reform unclaimed property compliance laws and regulations.

 

“This will be a long process,” she says. “But with the dedication and tenacity of our Government Relations and Advocacy Committee, we’ll be able to put forward a strong voice and affect real change.”

 

The need for education focused on the ever-evolving unclaimed property laws and compliance requirements will accelerate as states adopt the RUUPA. This presents an opportunity for UPPO membership growth. Popal plans to work with the board and committees to explore and create partnerships with other organizations with similar goals or needs that UPPO can fulfill.

 

Popal also looks forward to the association expanding its certificate program. As the program is refined following the pilot program stage, it offers the potential for unclaimed property professionals and their companies to better demonstrate their expertise and commitment to high standards.  

 

With UPPO playing such an instrumental role in the success of its members and evolution of the unclaimed property profession, Popal couldn’t be more honored to serve as 2016/17 president.

 

“UPPO has been a consistent piece of my professional life,” she says. “Through my UPPO membership, I’ve gained life-long friends, professional connections, and had a reliable place to turn for information and resources. UPPO has given me the opportunity to grow into the professional I am today, and I’m grateful to have this opportunity to give back to this organization and my peers in a big way.”

 

Outside of her professional life, Popal and her husband are proud parents of five-year-old and seven-year-old sons. They are planning upcoming trips to California to spend time with family and to Florida to spend time with Mickey Mouse.

 

Tags:  Heela Popal  leadership  UPPO 

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Understanding the priority rules

Posted By Administration, Thursday, April 7, 2016

When property is abandoned, the law requires the holder to transfer it to the state, which then acts as its custodian. While this fundamental concept of unclaimed property is relatively easy to understand, the reality of which jurisdiction is the rightful custodian of the property is much more complicated. Is it the state where the transaction took place, the state where the owner is believed to be located, the state where the holder is incorporated, or the state where the holder’s primary business location resides?

 

During the Understanding the Priority Rules session at UPPO’s Annual Conference in March, presenters Kevin Spiegel, senior manager from Crowe Horwath LLP, and David Finkelson, partner with McGuireWoods LLP, discussed the priority rules that specify how to determine the appropriate state to receive unclaimed property.

 

The Rules

The U.S. Supreme Court established two unclaimed property priority rules with its Texas v. New Jersey decision in 1965:

  • First Priority Rule: Abandoned property must be escheated to the state of the owner’s last known address, as determined by the holder’s books and records.
  • Second Priority Rule: The property is paid to the state of corporate domicile if the owner’s address is incomplete or unknown, or if the owner’s last known address is in a state that does not provide for escheat of the property owed.

 

“The court reasoned that this approach is very straightforward, is easy to resolve, and leaves no legal issues to be decided,” Spiegel says.

 

Specific Property Types

Two additional Supreme Court cases further clarified the rules for money orders and similar payment instruments, and for securities. Following a 1972 decision in Pennsylvania v. New York, a case dealing with money orders, Congress established an exception to the priority rules for money orders, traveler’s checks and similar written payment instruments other than third-party bank checks. In these cases, the value of the property escheats to the state where the money order or traveler’s check was purchased. If that information is not available, it escheats to the state where the holder’s primary place of business is located.

 

In the 1993 case of Delaware v. New York, the Supreme Court considered which state receives unclaimed securities distributions held by intermediary banks, brokers and depositories for owners who cannot be identified or located. It ruled that the intermediary—not the issuer—is considered the holder because it is legally obligated to deliver securities to the owner. Thus, under the second priority rule, the intermediary’s state of corporate domicile receives the unclaimed property.

 

Corporate Domicile

Because application of the second priority rule is dependent on the holder’s “corporate domicile,” knowing what that term means is essential. As with so many aspects of unclaimed property law, it depends. Many states’ unclaimed property statutes rely on the definition of “domicile” from the 1981 or 1995 Uniform Unclaimed Property Act. For a corporation, “domicile” is the state of incorporation. For unincorporated holders, it is the principal place of business. Other states, however, define “domicile” for unincorporated business associations as the state of organization or formation, rather than the principal place of business. And some states fail to define “domicile” entirely. Resolving those conflicting definitions presents a quandary for holders.

 

Delaware, where many companies were legally formed, takes the position that its unclaimed property statutes cover Delaware-formed unincorporated entities. Some holders, however, have argued against Delaware that the state of their primary location—rather than Delaware, where they were established—is entitled to receive funds under the second priority rule.

 

The judge in a recent Delaware Chancery Court case agreed, ruling that Delaware has jurisdiction and its escheat laws apply to Delaware-formed LLCs even though their principal locations are elsewhere.

 

“This is by no means the last word on the issue,” Finkelson says. “Ultimately, it will likely take a case where the state of principal location is at the table, advocating for its position as opposed to just the holder doing so.”

 

Although the domicile issue presents some room for conflict, the priority rules have provided a largely reliable method for holders to determine the proper states for escheating unclaimed property. As such, understanding and applying the rules correctly is essential. 

 

“Whether it’s in our daily reporting, in an audit setting or in a mergers and acquisitions setting, application of the priority rules is one of those issues that’s always looming in all aspects of what we do,” says Finkelson.

 

Tags:  compliance  priority rules  unclaimed property 

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Michigan Treasurer Khouri shares why S.B. 538 will impact the business community

Posted By Administration, Thursday, March 31, 2016

Claps were coming from Michigan as Michigan S.B. 538 passed through the Michigan legislative chambers and was signed into law in December 2015. It’s progressive legislation that contradicts the current enforcement environment in many states, and will positively impact the business community.

 

As Treasurer Khouri stepped into office, his team developed a list of projects to improve efficiency and effectiveness. Onto the list went unclaimed property compliance and enforcement and owner reunification efforts. “One of the main focuses in Treasury is to improve the operational efficiency of Treasury, and unclaimed property was on the list. It [audits] took too long and focused on the wrong thing, and we needed to improve the process for those that enforced the audits and those that needed to respond to audits and escheat property,” says Treasurer Khouri.

 

To get the project moving, the Treasury Department reached out to the business community to better understand the issue and identify solutions that worked. Jon Hallack, a UPPO member, joined the work group assembled by the treasurer on behalf of his employer, Stryker Corp. “Treasurer Khouri came to a meeting of the Michigan Chamber of Commerce Tax Policy Committee and listened to suggestions of improvement Treasury could make. As a result of his willingness to listen, and then act, SB 538 came to be,” says Hallack.

 

“We knew audits took too long, and in affect were collecting less money,” says Khouri. The legislation aimed to shorten the audit period, define the property types involved in audits, and created a tangible timeline for holders and the state to follow.

 

Highlights of the bill

  • Streamlines audit process:

o   To participate in the streamlined audit process the holder must execute a nondisclosure agreement acceptable to the Treasurer within 30 days

o   Goal to complete the audit within 18 months

  • Defines an eligible holder that can participate in the streamlined audit process
  • Exempts property valued $25 or less from being reported to Michigan - equity-related property doesn’t fall under this exemption
  • Checks voided within 180 days of issuance are not included in a streamlined audit
  • Prohibits the State Treasurer from commencing an action or proceeding respected to any duty of a holder under the Act more than four years if the holder is enrolled in the streamlined audit process

The bill became effective immediately and promises to provide positive changes to Michigan’s enforcement environment. “So far, we’ve heard positive things from the holder community. It’s more transparent, easier to administer and will return the department’s focus on reuniting property with the owner,” says Khouri.

 

During the 2016 Annual Conference, March 20 – 23, members voted Michigan as UPPO’s Member Choice Overall Excellence Award recipient. Thank you for your commitment to working with the holder community and achieving a more fair and transparent audit environment.

 


Tags:  Michigan  Michigan Treasurer Khouri  S.B. 538  unclaimed property 

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UPPO Honors Annual Award Winners

Posted By Administration, Tuesday, March 29, 2016

Each year during the Annual Conference, UPPO recognizes the hard work and dedication of association members whose efforts contributed to the success of UPPO and the unclaimed property profession throughout the past year. They deserve recognition and appreciation for their hard work, leadership, teamwork and passion.

 

Member’s Choice Awards

With the Member’s Choice Awards, UPPO recognizes specific state administrators, staff, and unclaimed property programs for their excellence. Conference attendees chose the winners from a slate of nominees, and the winners were announced during “The State Talk”. Congratulations to this year’s recipients:

  • Above & Beyond award: Walter Graham, Florida
  • Website award: Indiana
  • Overall excellence award: Michigan

 

Awards of Merit

This award is given to member organizations that have provided exceptional support to UPPO. Reed Smith, Bailey Cavalieri, McElroy, Deutsch, Mulvaney & Carpenter, and Alston & Bird received this honor for working collaboratively to represent UPPO on a pro bono basis, producing an amicus curiea brief for the Taylor v. Yee case being considered by the U.S. Supreme Court.

 

Team Player Awards

This award is presented to volunteers who serve on committees, work diligently on projects that advance the work of their committees and help pull the team together to accomplish their goals. This year’s recipients include:

  • John Waite, who initiated the recommendation of the owner representatives education and networking group to the board of directors.
  • Jennifer Borden, who assisted Uniform Law Commission and UPPO representatives better understand the securities industry as they work toward a clear, concise and fair Revised Uniform Unclaimed Property Act.
  • Adriane Counts, who led the on-demand virtual education subcommittee, turning it into an effective and efficient group that provided education to membership and the UPPO Certificate Program.  

 

Shining Star Awards

Seven UPPO members received Shining Star honors for “shining brightly to help guide the way.” They are:

  • Rick Mah, for his sustainable and forward-thinking attitude and guidance on the UPPO Scholarship Program.
  • Karen Anderson and Chris Hopkins, for their leadership and guidance on the consolidated reporting issue that UPPO and Nevada are working together on.
  • Leigh Underwood, for her leading the development and successful launch of the new certificate program.
  • John Paul (J.P.) DeCloux, for developing a system to help the Finance Committee consider project ROI and analyze the lifetime value of members based on current membership factors.
  • Chris Powers, for recommending a change to UPPO’s credit card processor, which will save the association approximately $10,000 annually.
  • Jon Hallack, for working to reform Michigan’s audit procedures.

 

President’s Award

This award, chosen by the association’s president, honors a member who has taken on a huge task or project that will help change or improve the unclaimed property profession for years to come. Kendall Houghton and Debbie Zumoff received this award for their tireless leadership representing UPPO at the ULC Drafting Committee meetings.

 

Congratulations to all of this year’s winners for their selfless dedication and commitment to their association and profession.

 

Tags:  awards  unclaimed property  UPPO Annual Conference 

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