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.