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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 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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HIPAA and Unclaimed Property

Posted By Administration, Thursday, December 6, 2018

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is intended, in part, to protect patients’ privacy. The law establishes standards for handling and securing potentially sensitive protected health information (PHI).


HIPAA is not typically associated with unclaimed property. However, for property holders in the health care field or that work with the health care field, it’s important to understand HIPAA implications. Considerations related to HIPAA most often come into play when dealing with an audit or a voluntary disclosure agreement. Auditors or VDA administrators may ask for information that, when shared, could violate HIPAA provisions.


HIPAA precludes covered entities, such as health plans, insurers and providers from disclosing PHI to third parties, with a few narrow exceptions. According to the Department of Health and Human Services, PHI includes demographic information relating to:

  • An individual’s past, present or future physical or mental health or condition.
  • The provision of health care to the individual.
  • Payment for health care that may identify the individual.


PHI includes common identifiers, such as name, address, birth date and Social Security number, when they can be associated with health information. It can also include identifiers that could be used to trace an account to a specific medical issue, such as internal account numbers.


“There is a general prohibition on disclosure of records dealing with mental health, substance abuse treatment, genetic testing and HIV/AIDS under HIPAA and various federal and state laws, absent patient consent,” said Scott Heyman, partner with Sidley Austin LLP. “Those laws are very strict and without exception. Even if exceptions are available for providing other PHI to third parties, they are not available for those conditions.”


HIPAA violations are subject to civil and criminal penalties, so great care needs to be taken to ensure compliance.


Three exceptions to PHI disclosure without patient consent exist under HIPAA:

  • Disclosure to public health authorities.
  • Disclosure in health oversight activities.
  • Disclosure for law enforcement purposes.


State treasurers and controllers conducting unclaimed property audits are not public health authorities and are not engaged in health oversight activities, so the first two exceptions do not apply. 


The “disclosure for law enforcement purposes” exception is broad enough to cover unclaimed property audits. In order to disclose information under the law enforcement exception: 

  • PHI sought must be “relevant and necessary to a legitimate law enforcement inquiry.”
  • The request must be ”specific and limited in scope to the extent reasonably practicable in light of the purpose for which the information is sought.” 
  • “Deidentified information could not be reasonably be used.” 


Disclosure is permitted only to law enforcement officials, defined as “an officer or employee” of an eligible agency. Thus, PHI may not be disclosed to private government contractors without patient consent. In contrast, the public health and health oversight exceptions expressly permit disclosure of information to government contractors. 


PHI should be retracted from items provided to auditors. 


“If they insist that they need PHI for audit purposes, providing the information directly to the state and letting the state decide what to do with it may be a reasonable response,” Heyman said.


Redaction can be very time-consuming and one of the more burdensome aspects of an unclaimed property audit in the health care industry. 


“Often the information at issue includes things like explanations of benefits, where you’re proving out voids and reissuances,” said Heyman. “Those tend to be copies of paper documents. It means reading those documents and crossing out PHI with a black marker. It’s an intensively manual process, and knowing which boxes contain PHI and which don’t, and blacking them out appropriately, is essential.”  


Holders should refer to information from HHS for guidance on de-identifying PHI.


Unclaimed property compliance and audits are rarely simple. For holders in the health care space, HIPAA adds yet another compliance layer. 


The 2019 UPPO Annual Conference, March 24-27 in New Orleans, will include industry breakouts and an industry focus session for holders in the health care industry to discuss audit trends and compliance issues affecting them. Learn more and register today.



Tags:  audits  health care  HIPAA  unclaimed property 

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Unclaimed Property Fraud Hits LinkedIn

Posted By Administration, Thursday, November 1, 2018

Scams involving unclaimed property are nothing new, but the latest attempt at defrauding property owners uses a new tactic – a bogus LinkedIn profile designed to look as though it belongs to a state treasurer.


On Oct. 23, 2018, Nebraska State Treasurer Don Stenberg issued a warning that a fake LinkedIn account that appeared to be his had been used to contact unsuspecting recipients about unclaimed property. 


“I want Nebraskans to know that this impersonator has been active on LinkedIn and through email, and I am urging Nebraskans to contact my office immediately if they have any concerns or suspicions about notifications they have received claiming to be from the Nebraska State Treasurer’s Office,” Stenberg said.


The LinkedIn profile used the name “Don Stanberg” – one letter off from the treasuer’s actual name – and the title “Executive Director at National Association of Unclaimed Property (NAUP) – one letter off from the treasurer’s former position as president of the National Association of Unclaimed Property Administrators (NAUPA). 


The biography on the fake account profile was identical to Stenberg’s biography on the treasurer’s website, using the correct spelling of his name and his professional background.


The sender’s email address used in that communication was Email messages were signed “Hon. Don Stenberg” and were identified as the treasurer’s private email address. All legitimate Nebraska Treasurer’s Office email accounts come from the domain and end with 


Despite the effort put into developing a somewhat convincing LinkedIn profile, the email text should be a tipoff to most recipients that it’s a scam. A Houston resident who received one of the emails was informed he was an heir to $12 million that a deceased client had deposited in a U.S. “Finance House in State of Nevada” that was “now lying DORMANT and UNCLAIMED.” The email was long and awkwardly worded, with poor grammar and confusing sentences.


Stenberg encouraged anyone contacted by the impersonator to contact his office with details.


Scams directed at individual property owners have sprung up often enough to warrant consumer warnings from several states in recent years. This form of fraud usually entails someone offering to help locate property for a fee or, like the Nebraska incident, promising a substantial (and completely fictional) windfall. Eager consumers either pay for bogus services or provide personal information that gives scammers access to bank accounts. 



Tags:  fraud  Nebraska  scam  unclaimed property 

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Jury Rules Against Overstock in Qui Tam Lawsuit

Posted By Administration, Thursday, October 25, 2018

On Sept. 20, 2018, a Delaware Superior Court jury ruled in The State of Delaware ex. rel. William Sean French v. Inc. that violated the state’s False Claims and Reporting Act by failing to escheat unredeemed gift card balances as unclaimed property. 


At issue in the lawsuit was Overstock’s relationship with Card Compliant LLC (previously CardFact), a third-party Ohio-based company used to issue gift cards and assume certain gift card responsibilities. The case came about when a former Card Compliant employee filed a qui tam(whistleblower) lawsuit, alleging fraud against the government. Dozens of other defendants were dismissed from the lawsuit or settled, leaving Overstock as the only defendant.  


Among the various allegations, the plaintiffs claim that some defendants didn’t account for the transfer of liability in the manner its contracts specified. According to the state, the liability wasn’t truly transferred and, thus, defendants had the obligation to remit unclaimed property to Delaware but didn’t do so.


“It’s unusual in this line of business to have a jury verdict,” said Diann Smith, counsel with McDermott Will & Emery LLP. “Usually we get an opinion from the judge that will provide the facts and explain how the law applies to those facts, but that’s not the case with a jury verdict. We don’t really know why they came to this conclusion, leaving some mystery about what it means for other holders.”


Although the decision against Overstock has no precedential value, it certainly could have a ripple effect, encouraging Delaware to pursue similar actions against other retailers who use the giftco structure to shift unclaimed property liability. 


“Given this verdict, one would expect that Delaware will continue to take the position that the CardFact structure, as least in its current form, doesn’t work,” said Ethan Millar, partner with Alston & Bird LLP. “Although jury verdicts have no precedential value, it is also possible Delaware may use the verdict as an excuse to become more aggressive about challenging other types of gift card structures.”


This decision should encourage other companies with third-party giftco arrangements to review their practices to ensure the structures have substance and avoid the issues alleged by the whistleblower and Delaware. 


“Holders should consider carefully not just what was at issue in this case but also how it was brought – as a qui tam action, “Smith said. “They should think about what their compliance positions are and whether they are at risk for this type of action. The Delaware decision could raise the profile for people who are inclined to bring this type of action, and you want to avoid being a target.” 


Because whistleblowers receive a portion of the settlement/recovery for actions they bring, the incentive to report a former employer, for example, is high. A lawsuit that results in a multi-million dollar decision or settlement can provide a life-changing windfall for the whistleblower. 


One complaint that Delaware had in this case was that companies didn’t reach out to the state to ask whether the structure was valid. That raises the question whether companies with ambiguous issues related to their escheat practices, such as giftcos, should consult with the states. 


“In the Overstock case, Delaware argued that Overstock should have asked the state for guidance regarding the structure.  Technically, of course, there is no requirement to do so,” Millar said. “Consulting with counsel should be sufficient. Nonetheless, it would be helpful to understand what Delaware believes is necessary for a gift card structure to be effective. Accordingly, there could be something to gain from dialogue with the states on this and other issues.”


Even if the state’s response doesn’t affirm a specific practice, documenting the interaction and demonstrating that the state’s response wasn’t backed by a compelling argument or specific reasoning could prove useful if a dispute arises later. 


If Overstock appeals or if this decision leads to further action by Delaware, UPPO will continue to monitor and report on any noteworthy developments.  

Tags:  card compliant  Delaware  litigation  overstock  qui tam  unclaimed property 

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Building a Strong P&P Foundation

Posted By Administration, Thursday, September 13, 2018
Updated: Wednesday, September 12, 2018

Unclaimed property policies and procedures define a company’s goals and actions in pursuit of its goals to protect its interests. They are intended to strengthen compliance with the reporting requirements, and maintain an effective and efficient method to process, report and remit unclaimed property. 


What are the basic building blocks needed to document the reporting function and all of its responsibilities?


Understand reporting responsibilities for your company. Rules and regulations vary significantly by jurisdiction and industries. Despite this multitude of rules, look for opportunities to simplify. For many companies, the majority of unclaimed property exposure reside in a handful of states. If that’s the case, they may be able to base their procedures around what those states require. Staying on top of the legal requirements in the states where the majority of business occurs is typically the most effective use of limited resources. 


More conservative companies may put practices into place that ensure blanket compliance with the most stringent states’ requirements even if it means going far beyond the requirements in other states. 


Identify all potential sources of unclaimed property. Because states consider so many different types of property as reportable, it’s important to leave no stone unturned when outlining company policies and procedures. 


Review types of accounts and activities within the general ledger. Identify accounting activities for amounts reversed to income or expense, write-offs, voided checks and clean-up reversals. Evaluate promotional programs and contractual terms, loyalty programs, rebates and incentives programs, invoicing and settlement practices. Determine whether owner names and addresses are available.


Document not only what is considered unclaimed property in your company, but also other areas that have been reviewed and determined to not require reporting. Doing so helps ensure consistent application of policies and procedures. 


Build a team. Resources dedicated to unclaimed property may be scarce, so begin with what you have and build on it. You may not have buy-in from all the necessary people immediately, but as they become more familiar with what unclaimed property is, why compliance matters and how their role in compliance is important to the company’s goals, buy-in will increase. 


Involve all entities, divisions and departments. Define and assign responsibilities. For each area, establish department procedures, including:

  • Identifying unclaimed property. 
  • Researching.
  • Setting materiality limits and time frames. 
  • Detecting errors or irregularities. 
  • Resolving with the owner. 
  • Retaining adequate supporting documentation. 

Address how mergers and acquisitions will impact annual reporting. When becoming aware that a merger or acquisition has occurred, the holder must analyze the specific terms of the agreement to know what’s being purchased and what’s being retained – and whether there’s a provision addressing unclaimed property. Addressing M&A activity in unclaimed property procedures can help avoid confusion when such a transaction is under consideration or has recently occurred. 


Create an audit-ready one-stop shop. Actively following policies and procedures will make things much easier if auditors or other stakeholders require documentation of unclaimed property decisions. Recommended steps include: 

  • Create a designated unclaimed property liability account. 
  • Capture requisite details needed for reporting. Analyze data accessibility and evaluate the cost-benefit of automation.
  • Reconcile to a subledger database.
  • Establish record retention provisions. 
  • Safeguard unclaimed property, including data security controls, segregation of duties and internal controls and oversight. 

Establishing policies and procedures is merely the beginning of their lifespan. Unless they are followed, maintained and updated, guidelines and documentation serve little purpose. Make sure to include provisions for regularly reviewing and updating policies and procedures, and communicating changes to team members. 


Tags:  policies  procedures  Unclaimed Property 

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UPPO Asks: What has been the most noteworthy change within the unclaimed property profession during your career?​

Posted By Administration, Thursday, August 9, 2018

Occasionally, UPPO asks members to respond to a question, sharing their ideas, insights, and experience. The recurring UPPO Asks feature is a compilation of their responses. 


We recently asked several members: What has been the most noteworthy change within the unclaimed property profession during your career? 


“In an effort to raise revenue and balance their budget, states have been actively initiating audits, shortened dormancy periods, and use third-party auditors with aggressive audit practices. However, the most noteworthy change during my career is the landmark Temple-Inland, Inc. v. Cookcourt case, which challenged the state of Delaware’s unclaimed property audit practices. Not only did the case shed light on Delaware’s estimation methodology, but it also challenged its constitutionality.  


“Everyone in the unclaimed property community remembers where they were, when they first read the U.S. District Court for the District of Delaware’s opinion holding Delaware’s executive action of auditing and assessing a multistate corporation’s unclaimed property, violated substantive due process because the states action when taken together, ‘shock the conscience.’ Those words reverberated throughout the unclaimed property community for several months. 


In finding that the audit assessment ‘shock the conscience’ the court relied on six factors including the fact that the state waited 22 years to conduct the audit and circumvented the typical three- to six-year statute of limitations period. As a result of the court’s decision, Delaware overhauled its unclaimed property statutes and among other things reduced the look back period and limit the statute of limitations. This is a landmark case, because the court decision significantly impacted the future of unclaimed property audits not only by Delaware, but other states as well.”—Zenith Lewis, manager, federal taxes, Southwest Airlines Co.



“In my 15-year career, there have been significant changes from online reporting, vast amount of resources such webinars, conferences, and – most importantly for me – I was tasked by my current employer to find an organization that would allow me to grow in my position and I came across UPPO. UPPO has been that noteworthy change. I have formed many friendships within this wonderful organization, joined committees, gained a multitude of knowledge and taken advantage of the certificate program.”—Rolita Brownlee, supervisor, policy management, Geico Marine Insurance



“The most noteworthy change in my opinion is the unclaimed property voluntary disclosure program (VDA), which gives holders an opportunity to come into compliance with their legal responsibilities. It’s also a great tool to use for mitigating the risk associated with premerger due-diligence and post-merger remediation. The benefits of the VDA program are a limited look-back period, and waived or reduced penalties and interest on past due items.  


“We recently used the VDA program to report past due property picked up from an acquisition. In this instance, the unclaimed property reports were filed in a timely manner, but there were other issues such as a lack of complete records that were at a greater risk of being noncompliance. Fortunately, working with a third-party vendor, we were able to reduce both the initial obligation and interest penalties. 


“Now, that I’ve had that experience, I’m excited about the latest changes in Delaware that revise the earlier guidelines and no longer permit the state to initiate audits without first giving a company the opportunity to enter into the VDA program. Hopefully, this change will benefit holders, especially since the potential for a state audit is higher after a M&A.”—Alicia Douglas, unclaimed property specialist, business development, Ocwen Financial Corporation



“The change to online filing and the requirements has been a huge change. It remains a constant struggle to be up to date on the all compliance changes.”—Susan Greulich, unclaimed property administrator, GFSS–Global Financial Services and Systems, Eaton



“The most noteworthy change in unclaimed property over the course of my experience would be the impact of audits. They have not only brought unclaimed property to the table for consumers/clients, but for companies overall. When I began in unclaimed property, there were so few policies, procedures and best practices in place, as well as hardly anyone who could share their experience or guidance in the process. Now we are seeing unclaimed property commercials on TV, online advertisements, and conversations among those not directly involved, and that is such a good thing. The newfound awareness will not only help to create more effective procedures, policies, best practices, etc. but will also lend itself to more individuals that know what unclaimed property is, as well as how it should be handled. I think the industry will continue to grow and expand and we are just beginning to break the surface. I look forward to staying tuned to what is in store in the future and beyond!”—Jessica Rogers, analyst, treasury consultant, Lincoln Financial Group



Now it’s your turn. What do you think are the most important personality traits for an unclaimed property professional? Add a comment to this post to share your response.


Tags:  unclaimed property  UPPO Asks 

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