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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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Litigation Update: Court Dismisses $14.5 Billion Case Against Life Insurers

Posted By Administration, Thursday, May 30, 2019

On April 3, 2019, New York Supreme Court Justice Andrea Masley granted a motion to dismiss by defendant life insurers in Total Asset Recovery Services LLC v. Met Life Inc., a whistleblower (qui tam) case brought by audit firm Total Asset Recovery Services on behalf of the state of New York. 

 

Filed in 2010 and amended by TARS in 2011 and 2017 under the New York False Claims Act, the case alleged that nearly a dozen life insurance companies failed to escheat to the state unclaimed funds held under mature life insurance policies. The plaintiff alleged more than $14.5 billion in damages.

 

TARS based its claim, in part, on the defendant life insurers’ alleged failure to use the Social Security Administration’s Death Master File to locate beneficiaries of deceased insureds and to report and escheat to the state funds that had not been claimed by the beneficiaries. However, the court pointed out in its ruling that insurance companies had no obligation to search the DMF when the case brought in 2010. New York did not require such searches until April 2012. 

 

“TARS’ assertion that death alone, not proof of death triggers the three-year dormancy period of escheatment requirement… lacks merit. The pleadings do not allege that any of the defendants received notice and proof of death of any insureds,” the court wrote. 

 

The court also denied a request to amend its pleading, saying it had already done so twice and “any further amendment would be futile.” 

 

Created and maintained by the Social Security Administration, the Death Master File has been a controversial tool. Government agencies and private businesses rely on the DMF to verify the death of U.S. citizens, but questions about its accuracy and, thus, reliability continue to make it a contentious issue among insurers, consumers, government agencies and politicians. Life insurers’ use of the DMF has been a source of debate, scrutiny, litigation and regulation in recent years.

Tags:  Death Master File  DMF  qui tam  whistleblower 

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District of Columbia Considers RUUPA Bill ​

Posted By Administration, Thursday, November 8, 2018
Updated: Wednesday, November 7, 2018

On Jan. 5, 2018, District of Columbia Council member Jack Evans introduced bill B22-0654, the district’s version of the Revised Uniform Unclaimed Property Act. The bill sat idle throughout much of the year until an Oct. 10, 2018, public hearing.  

 

If enacted, the new law would reflect a substantial overhaul of the district’s unclaimed property requirements, including changes to required due diligence practices, dormancy triggers and covered property types.

 

As with many of the bills introduced nationwide in the wake of the RUUPA’s adoption by the Uniform Law Commission, the D.C. bill contains potential issues, including several discrepancies related to the Derivative Rights Doctrine, which allows the state rights equal to, but not greater than, those of the owner.

 

For example, the bill includes gift cards under the definition of “stored-value cards,” requiring escheat of such cards that are redeemable for goods and services. Because the owner can’t redeem a gift card for money, it stands that the state shouldn’t be able to claim their cash value. The bill’s broad definition of “stored value card”  and “virtual currency” could similarly require escheat of property types not normally redeemable for cash by the owner. 

 

B22-0654 also would require holders to escheat property even if the owner’s rights to the property have expired under a contract, court order or other law. Much like with gift cards and stored value cards, this provision gives the government rights beyond those of the property owner. 

 

The bill may present other challenges as well. The American Council of Life Insurers, which supports the overall bill, has raised concerns that conflicts between regulators may arise as a result of the bill’s provision specifying that a death master file match be considered knowledge of death of an insured or annuitant.

 

With all significant unclaimed property legislation, UPPO’s Government Relations and Advocacy Committee evaluates bill language and develops a response on behalf of the organization. UPPO and GRAC will continue to monitor this legislation, and we will provide updates as appropriate. 

 

UPPO members can track the progress of this bill and all active unclaimed property legislation nationwide via our govWATCH service

 

As more and more legislatures and regulatory agencies take on issues affecting unclaimed property compliance, advocacy has become an increasingly important role for UPPO. Please take a few minutes to complete our Government Relations and Advocacy Survey to help us build our grassroots network. Responses will give us the ability to mobilize UPPO members when we are faced with legislative and regulatory challenges and opportunities. 

Tags:  Death  Derivative Rights Doctrine  District of Columbia  DMF  RUUPA 

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Tennessee Reduces Dormancy Period, Adds Requirements

Posted By Tim Dressen, UPPO, Thursday, August 10, 2017
Updated: Wednesday, January 9, 2019

Among the first states to pass a version of the Revised Uniform Unclaimed Property Act this year was Tennessee. On May 25, 2017, Tennessee Gov. Bill Haslam signed H.B. 420 into law, effective July 1, 2017. The new law includes several substantial changes to the state’s unclaimed property requirements. Noteworthy provisions include:

 

New property types: Among the new property types addressed in H.B. 420 are health savings accounts (HSAs) and stored value cards. HSAs are presumed abandoned if unclaimed three years after the earlier of either the date distributions must begin to avoid tax penalty or 30 years after the account was opened. Stored value cards (other than payroll or gift cards) are presumed abandoned five years after the later of: Dec. 31 of the year in which the card was issued or funds were last deposited; the most recent indication of owner interest in the card; or a verification of the balance by or on behalf of the owner. 

 

Due diligence: Holders must perform due diligence for property valued at $50 or more. Notices must be sent to apparent owners by first-class mail between 180 days and 60 days before the unclaimed property report is filed. Owners who have consented to receive electronic communications must be sent the notice by both first-class mail and email unless the holder believes the email address is invalid. 

 

DMF matching requirement: The new law specifies that life insurers must perform searches of the death master file and comply with the Unclaimed Life Insurance Benefits Act. 

 

Dormancy periods: Most property type dormancy periods have been reduced from five years to three years under H.B. 420.

  

Record retention: Holders are required to retain records for 10 years after the unclaimed property report was filed or was due to be filed. 

 

Promulgation of examination rules: The new law specifies that the state treasurer should develop rules for examinations, including procedures and standards for estimation, extrapolation and statistical sampling.

 

Sale of securities: H.B. 420 requires the treasurer to sell a security between eight months and one year after receiving it and giving the apparent owner notice. If the treasurer sells the security within five years, and a valid claim is filed before the five-year period expires, the owner will be entitled to receive a replacement of the security or its market value plus interest.

 

Informal conference provision: This law establishes provisions for an informal conference in situations where an examination results in a determination that a holder has failed to pay or deliver reportable property to the treasurer. It also allows for judicial review of the treasurer's decision. 

 

Exemptions: The law retains the state’s business to business and gift card exemptions. 

 

For the latest information about this and other noteworthy unclaimed property bills, visit UPPO’s govWATCH website

 

Tags:  audits  DMF  dormancy periods  due diligence  record retention  RUUPA  securities  Tennessee  unclaimed property 

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Life insurance in the news

Posted By Administration, Thursday, April 28, 2016

Since the airing of the “60 Minutes” piece on unclaimed life insurance benefits life insurance has been crossing publication headlines. Below is a roundup of some of the articles we’ve found about the topic.

 

Florida life insurance law lands on ’60 Minutes’
WGCU

Forcing Insurers to Search for Beneficiaries is Fixing the Wrong Problem
InsuranceNewsNet

U.S. Sen. Dick Durbin Calls on Kemper to Change its Practices

U.S. Sen. Durbin’s online newsroom

200,000 Consumers Receive $5 billion Resulting from Insurance Commissioners’ investigation
California Department of Insurance press release

MassMutual has Proactively Checked the DMF for Decades
Mass Mutual press room

ACLI Supports National Standard on Unclaimed Benefits
ACLI newsroom 

Stay in touch with emerging legislation and regulations impacting the life insurance industry with govWATCH, our legislative and regulatory tracking system.

Tags:  DMF  life insurance  unclaimed property 

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