The largely unknown legal concept of unclaimed property is being resurrected by the state of California in a bid to generate revenue without having to raise taxes, according to Becker's Hospital Review.
Within the healthcare industry, unclaimed property can take the form of un-cashed payroll, dividend, and vendor checks, as well as credit balances such as insurance company overpayments and duplicate payments. Auditors can then take possession of the funds as property owed to the state. California State Controller John Chiang recently reported that the state is currently holding over $6 billion in unclaimed property funds.
When facing an unclaimed property audit, companies should request a confidentiality agreement in order to mitigate the number of states added to an audit, as the majority of contingent fee auditors have contracts with a large number of states. These kinds of audits can last up to five years and are very extensive, so it is important to perform a potential liability assessment that will give a rough idea of what to expect.
Methods can also be put in place to identify and ultimately reduce common culprits of unclaimed property accrual – for example, company mergers, large client bases, and high transaction volumes can result in an increased rate of duplicate payments.