The Day Elvis Died

I have been blessed with absolutely fantastic secretaries throughout my career.  My first secretary, Janet, worked with me at the UNC Institute of Government.  She was responsible for five faculty members and I have no idea how she managed to keep up with each of us.  Her support and insight into the mechanisms of working for the State were invaluable.  Most remarkable was her consistently cheerful disposition. 

          Like millions of fans around the world, Janet adored Elvis.  She and her husband, “Shotgun”, had managed to score tickets to his upcoming  Fayetteville, North Carolina, concert.  She was overjoyed. 

On August 16, 1977, after being in meetings all afternoon, I hurried back to the office.  Walking into our “alcove,” I was startled to see Janet sobbing at her desk.  When she looked up, her eyes were red and mascara was smeared down her cheeks.  Elvis was dead.  There would be no concert.

          Years later, the State of North Carolina sued the City of Asheville and Fayetteville’s Cumberland County Memorial Auditorium when they failed to refund the money to those who had bought tickets to the Elvis concert.  Relying on the little known “escheat” laws, the State argued that the defendants had a duty to refund all tickets.  Any unclaimed refunds were the property of the State Treasury.

          The defendants argued that they had a duty to issue refunds only on request of ticket holders.  It assumed others wanted to keep their tickets as Elvis memorabilia.  The Court agreed with the defendants, noting that a ticket may be a sentimental treasure as important as the concert itself.

          While Elvis escaped the State Treasury department, others snagged by the escheat laws have not been so lucky.  In fact, those laws are the third biggest source of revenue for the State of Delaware.  Seeking to cash in during these difficult economic times, many other states are now looking for potential defendants – especially health care providers. 

Today’s health care providers often require patients to pay for services in advance or on the day the service is rendered.  When the patient checks in, the front desk personnel estimate the cost to the patient of the service and

demand payment.  However, the front desk may miscalculate the amount of insurance coming in from the patient’s health care insurer.  Or, the doctor may change the treatment plan in a way that reduces the charge to the patient.  At the end of the day, the provider has been overpaid.  As most computerized accounting programs are not set up to deal with these patient credits, the money often goes into the provider’s operating account and disappears.

          Experts estimate that these overpayments total $8 billion per year in the United States.  Medicaid, Medicare, and some insurance companies require providers to refund patient credits within 60 days.  North Carolina law gives health care providers five years to refund overpayments to the patient or insurance carrier.  After that time, providers must turn the money over to the State.

          The federal government imposes severe penalties, including hefty fines and imprisonment, for failure to refund money in Medicaid and Medicare programs.   North Carolina imposes a fine of $1000 per day up to $25,000 along with interest and penalties in the amount of 25% of the value of the property at issue.  It has the right to audit companies it suspects of failing to comply with the law.  Complaints from unhappy consumers and former employees often trigger investigations.   When medical or dental practices change ownership, the buyer may become aware of the credits and report them to the State in an effort to avoid liability.

          Health care providers are not the only targets of state Treasury Departments.  In 1992, North Carolina successfully sued the Roses Department store chain for failing to turn over lay-away payments it had not  refunded to customers.  In other states, penalties against life insurance companies have totaled hundreds of millions of dollars.  Clearly, it is important to understand and comply with our State’s escheat laws – known by the Treasury Department as the “NC Cash Program.”

          There are days I will never forget.  Like most Americans, I remember where I was the day President Kennedy was shot.  I also know what I was doing on September 11^th.  And, I’ll never forget the Tuesday afternoon when Elvis’ death broke Janet’s heart.

Timing is Everything

          As a child, I remember watching a television show dedicated to debunking Bible miracles.  Scientists had studied everything from the creation to the resurrection and assured us that every “miracle” could be explained scientifically.  I was very upset to learn that the Red Sea parted for Moses and the Israelites because of a rare phenomenon called “wind settling.”  The wind had blown the sea out of the way of the Israelites.  It was the wind, not Moses, who rescued God’s people from Pharaoh’s army. 

With tears in my eyes, I turned to my Dad and said, “I guess Moses wasn’t that big a deal after all.”

“But you are forgetting one very important fact,” my Dad answered.  “The scientists said that “wind settling” is rare.  Yet, that wind parted the sea at the very moment Moses needed to escape.  And it stopped blowing just in time for the sea to close up over the Egyptian army.  Sometimes the timing of an event is the miracle.”

Since that night, I have often been reminded that timing is everything.

          April 20, 2010, was a ho-hum day for the CBS news team.  The evening news reported that lobbyists from JP Morgan Chase opposed federal financial regulations.  Union lobbyists announced that they were going to oppose “moderate” Democrats as well as Republicans in the upcoming elections.  The Tea Party complained that the Ohio Republican Party wasn’t supporting the Tea Party agenda.  Of course, the biggest story of April 20^th was still percolating in a Deepwater Horizon drilling rig.  Had the rig blown earlier in the day, CBS would not have needed to spice up the news with its copier identity theft story.

          Months earlier, CBS had purchased 4 used copiers, removed the copiers’ hard drives, and downloaded documents that had been copied, faxed, or scanned on the machines.  They hit “paydirt” with all four copiers.  One was from the Sex Crimes Division of a Police Department.  Another was from a construction company.  It had thousands of names, addresses, and Social Security numbers.  The third was from another police department and contained information relating to drug investigations.  The hard drive on the fourth copier turned out to be a Pandora’s Box for Affinity Health Plan.  It contained medical information on approximately 344,579 patients insured by Affinity. 

          Like most of us at the time, Affinity probably did not know that modern-day copiers record every document copied.  Unaware of this handy feature, Affinity simply turned in its copiers at the end of the copiers’ lease period.  It also failed to document in its HIPAA-mandated “Risk Assessment” the fact that medical information was stored on its copiers. Thanks to the CBS story, Affinity had to file a confession of wrong-doing known as a “Breach Notification Report.”  Within a month, the feds had launched an investigation.

Three years later, Affinity owed the feds $1,215,780.  This is in addition to the hundreds of thousands of dollars spent on investigators, forensic computer analysts, and lawyers.  Affinity also agreed to try to track down all of its former copiers and delete patient records from the hard drives on those copiers.  It must revise its risk assessment and confidentiality policies.  Once the government has approved those new policies, Affinity must educate its employees about the policies.

The Affinity copier scandal and the resulting fine seem insignificant compared to the billions of dollars in damages resulting from the Gulf oil rig explosion that monopolized news organizations for months after April 20th.  In fact, had the explosion occurred a few hours earlier on the 20th, it is possible that we would not have known about Affinity Health Care and its copier problems.  Other health care providers, law firms, federal agencies, and police departments may have continued taking broken copiers to the dump.    Edward Snowden and Wiki-leaks could have avoided all their legal problems by getting their top secret information from discarded copiers, thumb drives, laptops, DVD’s and computers.

But then, as Moses could tell us, timing is everything.