the council of state governments 25

any children repeat thephrase “Finders Keepers,Losers Weepers.” Thanks to

the diligence of state governments, thischildhood lesson is not always a factof life. Every day, owners rediscovertheir lost property because of un-claimed property programs operatingin all 50 states and the District ofColumbia.

In West Virginia, Betty Hennessyrecently filed a claim with the state

treasurer’s office for unclaimed assetsshe thought amounted to $370. Thetreasurer’s office quickly determinedthat she was entitled to more than$25,600 in assets held by her late hus-band who died without telling herabout his investments. Her experienceis common.

“We have managed to set records ineach of the past two years in both theamount of money we recovered in un-claimed property and in the amount

State unclaimed

property programs

return millions of lost

dollars and property

to rightful owners.

BY DAN DESIMONE

_______________Dan DeSimone is a policy analyst with theNational Association of State Treasurersin Washington, D.C.

consumersconsumers

Everystate'slostandfound

26 state government news january 2001

of money we have returned to therightful owners,” West Virginia Trea-surer John Perdue said. “It is my intentto continue to set records and put thesefunds back into the hands of the right-ful owners.”

Across the country, the dollar valueof lost property is staggering. Billions

of dollars remainunclaimed in dor-mant bank accounts,uncashed checks,insurance refundsor claims, oil royal-ties, wages, utilityrefunds and depos-its, bail bonds, child-support paymentsand forgotten safe-

deposit boxes. Often the rightful own-ers never knew they had the propertyin the first place or that they were en-titled to recovery of these assets. That’swhere the states come in, reuniting lostproperty with rightful owners.

Hundreds of years ago in England,where modern-day unclaimed prop-erty statutes derive, lost property“escheated” to the king. Today, lostproperty escheats to the states, whichact as custodians of the property andreunite it with its rightful owner. Theprocess is not an easy one.

Unclaimed property law has evolvedsteadily since the first “model act” in1954 by the National Conference ofCommissioners on Uniform State Laws.Three additional model acts (promul-gated in 1966, 1981 and 1995) furtherdefine what unclaimed property is,how it should be returned to states andfinally to its owner.

For these acts to take effect, statelegislatures must adopt them in full orin part. The acts meet three goals: re-uniting owners with lost property thatis rightfully theirs; protecting compa-nies, or “holders,” from liability afterproperty escheats to the states; andensuring that any economic windfall,albeit temporary, benefits all residentsof a state and not just the holders ofunclaimed assets.

How property islost and found

Virtually everycompany “holds”lost property. Prop-erty is lost and un-claimed when a hold-er, such as a bank,cannot locate theasset’s owner withina certain amount oftime (the asset’s dor-mancy period). Whycan’t holders findowners? Owners forget about accounts,owners move and neglect to leave aforwarding address, and owners diewith assets unknown to their heirs.Once declared lost and unclaimed,property escheats to the states.

Often the value of lost property issmall — a $50 util-ity deposit, for ex-ample. Sometimes,however, the valueis astonishing. Inthe late 1990s, stateunclaimed prop-erty policy-makersworked with Swit-zerland to settleclaims by Jews who

were Holocaust survivors and theirheirs in the United States amountingto $1.25 billion.

In a more typical case, Massachu-setts State Treasurer Shannon O’Brienrecently returned more than $525,000in life insurance proceeds to a Bostonwoman whose husband passed awayin 1987. “I had no idea that my hus-band had purchased this policy untilthe treasurer’s office called me and toldme about it,” she said. “It’s nice toknow that the treasurer’s office is look-ing out for the interests of ordinarytaxpayers like myself.”

Whatever the amount, states remainsteadfast in reuniting owners withwhat is rightfully theirs.

To accomplish this goal, states em-power state treasurers, comptrollersand other officials to act as consumer

advocates. Unclaim-ed property officesemploy small teamsof auditors and ad-ministrators to workwith holders andensure compliancewith state law. Un-claimed propertypersonnel, in con-cert with other stateagencies, then searchfor lost owners andadvertise state hold-ings of property.

Visit any state fair, for example, andyou’ll find a state booth with potentialowners searching for lost property andfiling claims with the state.

Not content with traditional adver-tising and outreach, states aggressivelyuse the Internet to advertise state hold-ings. Recently, the states established anonline national database of unclaimedproperty that in almost one year ofoperation has helped to return $77 mil-lion to owners. State databases and thenational database can be found at www.unclaimed.org and www.missingmoney.com respectively.

Losers weepers?

Some critics argue the unclaimedproperty laws function as an indirecttax on the business community. Someholders actively campaign against these

state laws, seekingto weaken and un-dermine what is aservice protectingconsumers. “Theseprograms serve a vi-tal public need,” saidNebraska State Trea-surer David Heine-man. “States mustact as advocates forcitizens, protecting

and returning what is rightfully theirs.”Echoing this comment, O’Brien of

Massachusetts said, “This money nei-ther belongs to businesses nor to thestate. Our state programs return mil-

MassachusettsState TreasurerShannonO’Brien

West VirginiaTreasurer JohnPerdue

Nebraska StateTreasurer DavidHeineman

“These programsserve a vital publicneed. States must

act as advocates forcitizens, protectingand returning whatis rightfully theirs.”

— Nebraska StateTreasurer David

Heineman

the council of state governments 27

lions of dollars to citizens, and yet un-claimed property programs are underassault by holders of unclaimed prop-erty who resist state efforts to reuniteproperty with owners.”

Virginia’s unclaimed property stat-utes recently faced challenges by a coa-lition of holders resulting in significantrevisions to its unclaimed property law.During the 1999 General Assemblysession, concessions to the holder com-munity included elimination of giftcertificates and credit balances as prop-erty items that holders must escheatto the state. At the same time the Leg-islature expanded penalties for non-compliance to enhance state collectionefforts. “There needs to be a balancebetween the interest of the holder com-munity and the consumer,” said Vir-

VirginiaTreasurer MaryMorris

ginia Treasurer Mary Morris. “Un-claimed property statutes have beenunder attack for a number of years,

and state unclaimedproperty divisionshave attempted tomaintain the integ-rity of their statutes.They want to fulfillthe purpose of pro-tecting individualcitizens in reunit-ing them with theirfunds or property,

while at the same addressing the legiti-mate concerns of the holder commu-nity. This is not always an easy pro-cess for either side.”

Recently, two powerful public-service organizations joined forces to

preserve these state laws protecting un-claimed property. The National Asso-ciation of State Treasurers and theNational Association of UnclaimedProperty Administrators affiliated,bringing together state policy-makersand program administrators. Both alsoare affiliated with The Council of StateGovernments. This new coalition willpool resources to further protect therights of citizens.

Stephen E. Larson, NAUPA presi-dent and executive officer of the IowaTreasury Department, lauded the al-liance, saying, “States have facedchallenges and have tried to reconcilethe two interests. We’ve made con-cessions, but also amended the pen-alties to allow us to do our jobs moreefficiently.”

result, the United States developed al-most half of the world’s drugs from1975 to 1994, and 370 new medicinesin the last decade alone. By cutting intoprofits, PhRMA says, mandatory bulk-purchasing agreements and price con-trols would chill investment in phar-maceutical companies, thus slowingresearch.

On the other side, lawmakers instates such as Maine say they cannotafford to continue paying more for pre-scription drugs. Former state SenateMajority Leader Chellie Pingree, theDemocrat who led the effort to passthe Rx Program, said Maine pays suchincreased costs in two ways. First, thestate pays for drugs through its phar-maceutical assistance program, theLow Cost Drugs for the Elderly Pro-gram, established in 1975. Second,when Maine residents who can’t af-ford to buy prescription drugs end upin a hospital or nursing home, the statemust foot the bill. The solution, saidPingree, is to try to get drugmakers tolower their prices.

“If they can make these prices avail-

Mixing politics and prescriptionsfrom page 13

able to HMOs and citizens in Canada,why can’t we receive the same pricesfor our senior citizens?” she asked.

Pingree argued that bulk-purchasingagreements are common in the privatesector. “That’s exactly how an HMOformulary works,” she said. “The pro-cess allows us to favor particular com-panies that have lower-priced drugs.”

Prior authorization lists also areused often, Pingree said. “We are try-ing to use a private-sector solution,”she said. “Yet it’s the private sector thatis not covering our senior citizens.”And Pingree pointed out that the pre-liminary injunction does not stop thestate from publicizing which compa-nies won’t agree to negotiate. “Doctorsand patients have sent letters to them,so they are still being pressured,” shesaid.

Maine residents think the Rx Pro-gram is an excellent prescription fortheir state, Pingree said. “When wefirst put the idea out there for debate,citizens were strongly supportive,” shesaid. “They were out there saying,‘This is a serious issue, we can’t afford

to pay for prescription drugs,’ and doc-tors were out there saying, ‘We arewriting prescriptions but patientsaren’t getting them filled.’ There was ahuge response.” The state Senatepassed the program unanimously, 141of 151 members of the House voted forit, and Gov. Angus King, who hadtoyed with the idea of vetoing it, hasbecome one of its biggest boosters.

Interest in the program outside ofMaine also has been high. Pingree saidthat from June to November, she hastestified in, received calls from and sentcopies of legislation to officials in atleast 25 states. Pingree agrees withdrug manufacturers that profits are atthe center of the debate. “It’s all aboutmoney, no question about it,” she said.“States are big customers. Drug com-panies have seen what has happenedin Maine and they are afraid it couldspread to other states.”

As legislative sessions meet, justhow many states decide to take Maine’sapproach may hinge on the courts andtheir willingness to step into the unfa-miliar territory of price controls.