November 17, 2010
UNCLAIMED PROPERTY AND DAS RECOVERIES
By: Robin K. Cohen, Principal Analyst
Terrance Adams, Legislative Analyst II
Linda Miller, Principal Analyst
You asked if the Department of Administrative Services (DAS) looks to the state's unclaimed properties when recovering from the beneficiaries of state benefits and services.
When an individual (1) applies for state aid from the departments of Social Services (DSS), Mental Health and Addiction Services (DMHAS), Children and Families (DCF), or Developmental Disabilities (DDS) or (2) has been sentenced to serve a jail term by a Connecticut court, he or she is liable to repay the state for the full amount of public assistance, care costs, or incarceration services provided. DAS pursues these recoveries through its Collections Recovery Unit.
DAS typically recovers when recipients of such assistance or their liable relative have or acquire property, receive a windfall, or die. These recovery “claims” generally have priority over most other unsecured claims. DAS' primary collection mechanism is to place liens on windfalls and recover from estates. If the estate includes unclaimed property, DAS pursues collection through the estate.
For recovery purposes, DAS believes it has the authority to file a claim against the Unclaimed Property Fund, but does so only when pursuing an estate recovery. If a recipient is still alive, DAS reports that it will not file a claim against the unclaimed Property Fund because (1) it does not have the resources to pursue these claims and (2) the cost of pursuing the claims would likely outweigh the benefits.
When an individual (1) applies for state aid from DSS, DMHAS, DCF, or DDS or (2) has been sentenced to serve a jail term by a Connecticut court, he or she is liable to repay the state for the full amount of public assistance, care costs, or incarceration services provided. These recoveries typically come from windfalls, including lawsuits and inheritances, as well as the estates of deceased recipients.
A number of sources provide DAS with notification of windfalls. For instance, insurers are required to notify DAS of any claims involving bodily injury or death so that the department can match these claims against the names of people who owe the state money (CGS § 38a-318a). DAS also subscribes to a claims database maintained by a private vendor, and it receives information from other entities, such as probate courts and other state agencies.
DSS Clients—Repayment of Aid Provided
The law gives the state a claim against any property that an adult public assistance recipient acquires, including any interest in a property. This claim is for the full amount of aid provided. Parents of children who receive cash assistance are also liable for the repayment. The state also has a claim and has explicit authority to place liens against certain windfalls that the recipient or parent receives, such as lottery winnings, lawsuits, and inheritances. For lawsuits or inheritances, the state's claim is the lesser of 50% of the windfall proceeds or the amount of assistance provided; for any other windfall, such as lottery winnings, the state's claim is the lesser of 100% of the proceeds or the amount of assistance provided.
When a public assistance recipient or the parents of a child who received assistance dies, his or her estate is also subject to paid assistance recoveries. The claim is for the entire amount of assistance provided, with some exceptions (CGS §§ 17b-93 to -95).
For more information, see OLR Report 2009-R-0412, which provides a more detailed description of the DSS recoveries process.
The law also gives the state a claim against inmates for repayment of their incarceration costs. The claim can be against (1) most property owned by the inmate, including lottery and pari-mutuel (i.e., gambling) winnings after the inmate's release from prison; (2) his or her estate; (3) an inheritance; and (4) proceeds from lawsuits brought within 20 years of release.
The state's claim for windfalls is similar to its claim for public assistance recoveries (CGS §§ 18-85a-c).
OLR Report 2006-R-0231 provides a more detailed description of the DOC recovery law.
State law authorizes the DCF commissioner to bill and collect from the person in charge of the estate of a child or youth who receives goods or services from DCF or the payee of the child's or youth's income, the total amount spent for care or any portion thereof that the estate or payee can pay. But the commissioner may not collect from the proceeds of (1) lawsuits that the child or youth receives, (2) lottery winnings due to him or her, (3) an inheritance, (4) trusts, or (5) the child's or youth's decedent estate (CGS § 46b-129l).
The law makes the parents of a minor child for whom DCF provides care or support liable to reimburse the state for the care and support to the same extent, and under the same terms and conditions, as parents of public assistance recipients (CGS § 46b-130).
State Humane Institutions
Patients in state humane institutions, their parents if they are under age 18, or their spouses are responsible for repaying the state for services the institutions provide. These institutions include state mental hospitals, community mental health centers, treatment facilities for children and adolescents, or any other facility or program administered by DCF, DMHAS, or DDS.
The state agency (with the comptroller) establishes the per capita charges for patient care. The state's legally liable relative law determines the amount of the charges that the responsible parties pay, based on their ability.
State law also makes the patient (but not the parent or spouse) liable to reimburse the state for any unpaid portion of the per capita cost to the same extent as the liability of a public assistance beneficiary under CGS §§ 17b-93 and 17b-95 (but not CGS § 17b-94, which pertains to lawsuits and inheritances) (CGS §§ 17b-222 to -224, 4a-12).
DAS as Estate Administrator
When (1) a minor child, incapable or incompetent person, or a deceased person has been receiving state financial aid and (2) the individual owns property, the law authorizes DAS to apply to the probate court to act as an estate administrator. DAS can act as a guardian, conservator, administrator, or trustee, or in any other fiduciary capacity under the court's jurisdiction and appointment. The DAS administrator has the same rights, duties, and obligations as any other guardians, conservators, administrators, and fiduciaries.
However, the authority of the DAS estate administrator to act, and of the court to appoint him or her, is limited to cases in which (1) the estate consists of personal property only, and (2) the amount of property involved, or the annual income other than state benefits, does not exceed $50,000 in value. (When the estate's value is larger, DAS will still attempt to recover, but then it is not in charge of the estate.)
Additionally, when (1) a public assistance recipient, (2) someone who receives care or support from a state humane institution, or (3) a person who has been a DOC inmate dies leaving an estate worth less than $40,000, the DAS commissioner must certify to the court (1) the estate's value and (2) that the state's claim, together with certain expenses (i.e., last illness and funeral), equals or exceeds the estate's value.
The court must then issue a certificate that the DAS commissioner is the legal estate representative to recover its claim from the estate. The administrator's receipt thereof is a valid discharge of the person's liability for the assistance, last illness, and funeral expenses. According to DAS' Keilty, these are the more common recoveries in which DAS is the administrator (CGS §§ 4a-14 to -16).
DAS Ability to Recover from Personal Property
DAS, acting as the state, has a claim to a public assistance recipient's or inmate's property, including unclaimed property. But except for a narrow circumstance, the law does not give the state explicit authority to pursue these claims through liens. DAS has interpreted this to mean that it does not have the authority to place liens on such property (CGS § 17b-93).
According to Andrea Keilty of DAS, pursuing a claim involves litigating against the recipient or inmate, a process that could be costly and time-consuming. Further, the amount of money recovered may be less than the cost of pursuing the claim. A lien, on the other hand, is a directive that must be complied with and is far less costly than filing a claim.
Keilty also noted that pursuing unclaimed property would represent a different policy approach. Currently, DAS only seeks recovery of windfalls, which are generally one-time awards. Unclaimed property, however, is more similar to a current asset and is different from a windfall.
DSS Experience with Unclaimed Property
Although DAS has not sought to recover from the unclaimed property owned by DSS clients or their parents, DSS' Craig Zimmerman reports that his agency used to cross match public assistance applicants with the list of unclaimed properties. When there was a “match,” that information would be sent to the regional eligibility worker, who would then count the amount on the list as an asset. This could conceivably affect someone's eligibility for benefits if the amount was substantial. Zimmerman indicated that there were many “hits” but the department stopped doing the matches at some point in time. Zimmerman was unable to say why.
Office of the State Treasurer – Unclaimed Property
Under state law, intangible property with some financial value may escheat (revert) to the state once it is presumed abandoned. The dormancy period for most asset classes is three years although wages and payroll have a one-year dormancy period and travelers' checks have a seven-year dormancy period. State law requires unclaimed property holders such as banks, insurance companies, and other businesses to (1) provide a report to the state listing the names and last known addresses of rightful owners and (2) remit unclaimed property to the state. The Office of the State Treasurer (OST) is permitted to examine the records of these organizations to ensure compliance with the state's unclaimed property laws.
When the state receives unclaimed property in the form of cash, it is deposited as revenue into the General Fund. When the unclaimed property is negotiable securities like stocks and bonds, it is sold on a monthly basis by OST and the proceeds are deposited to the General Fund. Payments to the rightful owners of the property who come forward to claim the abandoned property are made from a General Fund appropriation.
Once every two years, OST is required to publish in newspapers throughout the state the names of rightful owners of unclaimed property that the state has received in the preceding two calendar years. OST also maintains a website with the names of rightful owners of unclaimed property that is updated weekly. There is no time limit for a rightful owner to come forward and claim abandoned property.
The list of rightful owners is publicly available on the Treasury's website (http://www.state.ct.us/ott/aboutucp.htm). While OST does not formally share the list with other state agencies, it is available to check for information on potential monies owed to individuals that may be indebted to the State.