Friday, September 11, 2015

Friday Lost + Found: Australia Amendments, NY Numbers, Escheat Events

Australia to Revise Bank Account Rules -- According to an article om, the Australian government is considering legislation to (re)revise its laws relating to unclaimed bank accounts.  Under the current rules, certain bank accounts are deemed unclaimed if there has been no activity for 3 years.  The proposed revisions would change the period of inactivity required to 7 years.

New York Holding $14B in Unclaimed Property -- Every once in a while, we like to keep tabs on the current amount of money being held by the states' as unclaimed property.  According to one recent article, the amount currently held by the New York Office of Unclaimed Funds for New Yorkers is $14 billion as of fiscal year end March 31.

Upcoming UPPO Webinar on Recovering Property -- Though we spend the vast majority of time on this site writing about the process of reporting and remitting unclaimed property, it is worth remembering that most holders of unclaimed property are also owners of unclaimed property held by others.  On October 14, the Unclaimed Property Professionals' Organizations is sponsoring a webinar on "How to Recover Property for Your Company".  Webinar details and registration information can be found at the UPPO website.

Monday, July 27, 2015

Delaware Audit / VDA Bill Signed by the Governor

Earlier this month, we mentioned the legislative approval of Delaware Senate Bill 141. The bill has now been signed by the Governor and enacted into law.  As noted earlier, the legislation extends voluntary disclosure program run by the Secretary of State, and implements some new audit practices, including:
  • limiting the lookback period for audits already underway to January 1, 1986;
  • limiting the lookback period for new audits to January 1, 1991; and
  • beginning in 2017, limiting the lookback period for new audits to 22 years.

Wednesday, July 1, 2015

Senate Bill 141 Passes House, Awaiting Executive Action

Early this morning Delaware Senate Bill 141 passed the House, and now is ready to be signed by the Governor.  If passed, the bill would make some significant changes to the First State's audit practices and would further extend the voluntary disclosure program run by the Secretary of State (which is closed at the moment, but would become permanent if the law passes).

As to the state's audit practices, the new legislation:
  • limits the lookback period for audits already underway to January 1, 1986;
  • limits the lookback period for new audits to January 1, 1991; and
  • effective January 1, 2017, limits the lookback period for new audits to 22 years
The bill also reopens the Secretary of State's VDA program, and provides that any holder entering into the VDA program by December 31, 2016, and agrees to pay within 2 years of entry will have its records reviewed back to the "transaction" year 1996.  Holders enrolling thereafter would have similarly have a 19 year lookback period.

The law provides that no new audits will be commenced until such time as the Secretary of State notifies the holder of the ability to enter into the VDA program, and the holder fails to do so within 60 days.

On the negative side for holders, effective March 1, 2016 the bill also reinstates interest on overdue amounts at 0.5% per month unless (up to 25% of the amount to be paid) unless the failure to pay "is due to reasonable cause and not willful neglect."

Monday, June 29, 2015

Legislative Updates - Updates from Texas, Nevada, and Maine

Texas Lowers Aggregate Reporting Threshold . . .  -- Texas Senate Bill 1021 lowers the aggregate reporting threshold from $50 to $25, effective September 1, 2015.

  . . . And Provides for Cash Redemption of Certain Low Value Gift Cards -- Also in the Lone Star State, Texas House Bill 2391 provides that consumers may obtain a cash refund for stored value cards with balances of $2.50 or less after purchase.

Nevada Enacts Business-to-Business Exemption -- Nevada Senate Bill 348 enacts a business-to-business exemption, providing that certain credits (but not checks) among businesses need not be reported if there is an ongoing business relationship between the parties.

Maine Enacts Savings-Bond Escheat Bill -- Maine Senate Bill 320 extends the provisions of that state's unclaimed property act to matured U.S. Savings Bonds. 

Thursday, June 18, 2015

West Virginia Supreme Court Rules That Insurers Must Track Policyholder Death Information

The West Virginia Supreme Court of Appeals recently issued an opinion in Purdue v. Nationwide Life Insurance Company, a case presenting the issue of whether a life insurer is required to undertake periodic investigations to determine whether any of its policyholders are deceased.

The case began in 2012, when West Virginia State Treasurer John D. Purdue sued ten life insurers, claiming that they failed to report and deliver unclaimed insurance policies in accordance with the West Virginia Unclaimed Property Act.  Specifically, the Treasurer alleged that because the insurers did not regularly review in-force policies against the Social Security Death Master File (DMF) to determine whether the policyholder was deceased, they failed to report property when due.  The Treasurer's office sued dozens of additional insurers in 2013, making similar allegations against a total of 69 separate companies.  The insurers contested the Treasurer's theory, generally arguing that as a contractual matter, the policies at issue were payable upon notice and proof of the insured's death.  The insurers further noted that they were under no statutory obligation under the West Virginia Unclaimed Property Act or otherwise to undertake searches of the DMF.

In December of 2013, a West Virginia court dismissed the Treasurer's lawsuits, siding with the insurers and ruling that there was no affirmative legal duty to search the DMF.  The Treasurer appealed the decision to the West Virgina Supreme Court, which ruled in favor of the Treasurer and sent the case back to the lower court for further proceedings. 

In the Supreme Court's view, it was undisputed that unclaimed life insurance policies were escheatable three years after the insurer's obligation to pay arose; rather, the case boiled down to when the obligation to pay arose.  According to the Treasurer, the obligation to pay arises when the policyholder dies.  According to the insurers (and the lower court) the obligation to pay does not arise until proof of the insured's death is provided to the insurer.

The Supreme Court began its analysis by reviewing Section 2(e) of the West Virginia Act, which generally provides that property is payable "not withstanding the owner's failure to make [a] demand" for payment.  That language, the Court explained, undercut the insurers' argument that an insurance policy cannot be payable until such time as a claim is filed.  In so doing, the Court distinguished cases in other states requiring a claim on the grounds that those cases simply held that an insurer had no obligation to search the DMF, not that the obligation to pay doesn't arise until a claim is made.

Having made that distinction, however, the Court was left with the following question:  How is an insurer to obtain information regarding policyholder deaths if there is no affirmative duty to search the DMF?  Indeed, the Court explicitly held that the West Virginia Unclaimed Property Act "imposes no specific duty on insurers to search the [DMF] or any comparable data source."  The Court largely punted back to the insurers on this issue - holding that the dormancy period commences with the death of the insured and that the insurers could do whatever they want to determine when a policyholder death takes place.  Of course, the insurers could search the DMF, the Court explained, but they could also "contact its insureds directly" (e.g., call them every year), farm the task out to agents, or do whatever else the found "the most economical" so long as they obtained the required information.

The Supreme Court sent the case back to the lower court to allow the Treasurer's office to continue its examination of the insurers' records.