Show Me the Money!
A Physician's Guide to the Law of Escheatment

By: Ronald E. Nyman, Esq.

It is the bane of almost all providers to think that they are working longer hours and seeing more patients just to maintain their previous year's revenue levels. Lower managed care reimbursements - along with increased salaries - are among the many factors that can eat into a provider's bottom line. Controlling expenses is one area where most providers tend to look to first in an attempt to increase profits. However, many providers are missing out on some important collection techniques that can have an immediate impact. One of the lesser known practices is checking the state escheatment list to see if the state is holding money for you.

Escheatment is a process of turning over unclaimed or abandoned property to the state. A concept that has been around for several centuries, it was originally developed so that property would revert to the state where there were no legal heirs. Over time, the concept has been expanded to cover situations in which a payee or creditor cannot be located for payment purposes. One common example occurs when an insurance company owes money to a provider but that provider cannot be located. The insurance company, after a certain amount of time, must deposit the money with the state which, in turn, will hold the money until the provider puts in a claim for the funds.

Escheatment is governed by state law. In Connecticut, property that is "held and owing in this state," and is unclaimed by the owner for more than three years after the amount is payable or due, is presumed abandoned (Connecticut General Statutes, Title 3, Section 3-64a). Once property is presumed abandoned, Connecticut law requires the holder of the property or funds to deposit them with the state (Connecticut General Statutes, Title 3, Section 3-65a).

When the state receives unclaimed funds, the payee's name is posted on a list. In pre-Internet days, one would have to contact the State Treasurer's office periodically to check for any missing funds. Now, providers can go to Connecticut's Unclaimed Property web page, www.state.ct.us/ott/ucp.htm. There, anyone can access the state's entire list of unclaimed property and attempt to locate their name or business.

Through our own work, we have been able to identify numerous instances of funds owing to healthcare providers. A common instance occurs when a provider moves offices and a patient or insurance company does not have the new address. Sometimes the funds held by the state constitute only a small amount, but in other cases the monies can be in the thousands of dollars. Whatever the case may be, providers need to check the list on a periodic basis.

One extra note: escheatment law works both ways. If a provider owes money (i.e., a patient refund), and the payee or creditor cannot be located, the money must be deposited with the state once it is legally presumed abandoned. Failure to do so can result in penalties.

This article first appeared in the September/October 1999 issue of News Capsule, a publication of The Fairfield County Medical Association.