Escheatment for Healthcare Organizations: A Practical Guide to Compliance

Unclaimed property compliance isn’t just for banks and financial institutions. Healthcare organizations, including hospitals, health systems, urgent care clinics, nursing homes, assisted living facilities, and insurance providers, are also required to report and remit unclaimed funds in accordance with state laws.

At Eisen, we understand that your primary mission is patient care. But staying in escheatment compliance is a critical part of protecting that mission. In this guide, we break down the escheatment process for healthcare organizations and show you how to manage it with confidence, clarity, and purpose.

What Is Escheatment in Healthcare?

Escheatment is the legal process of reporting and transferring unclaimed property to the state after a designated period of inactivity. For healthcare organizations, unclaimed property can take many forms, including:

• Uncashed patient refund checks
• Overpayments from insurance carriers
• Credit balances in patient billing accounts
• Outstanding payments to vendors or contractors
• Dormant custodial or patient trust accounts

If these funds remain unclaimed and the rightful owner cannot be contacted, they must be reported and remitted to the appropriate state agency following the dormancy period defined by that jurisdiction.

The Escheatment Process for Healthcare Providers

Managing unclaimed property in a healthcare setting presents unique challenges operationally, financially, and from a compliance standpoint. Here’s a step-by-step overview to help healthcare providers navigate the process effectively:

1. Identify Dormant Property

The first step is determining which accounts or balances have become dormant. In healthcare, common sources of unclaimed property include:

• Patient credit balances with no recent activity
• Unreturned refunds or insurance overpayments
• Outstanding payments due to vendors
• Inactive custodial or patient trust accounts

Dormancy periods vary by property type and state, but typically range from one to five years. Understanding your state-specific rules is key to accurate identification.

2. Conduct Due Diligence Outreach

Before reporting and remitting unclaimed funds, healthcare providers are legally required to make a good-faith effort to contact the rightful owner. This may include:

• Mailing notices to the last known address
• Sending email communications (if consent has been provided)
• Documenting all outreach attempts, including dates and outcomes

Most states require that due diligence outreach be completed within 60 to 120 days prior to the reporting deadline.

3. Prepare for Reporting and Remittance

Once the due diligence window has passed without successful contact, the property must be reported and remitted to the appropriate state(s). This typically involves:

• Generating a report in NAUPA-compliant format
• Submitting the report to each applicable jurisdiction
• Remitting funds via check or electronic funds transfer (EFT)

Some states may require additional validation or forms for patient-related balances, particularly when dealing with trust accounts or sensitive financial data linked to care.

4. Maintain Records and Stay Audit-Ready

Healthcare organizations are subject to the same recordkeeping standards as financial institutions. You should retain documentation related to:

• Dormancy determinations and supporting documentation
• Records of due diligence outreach
• Copies of remittance reports and payment confirmations
• Proof of all communications with owners or representatives

Record retention periods vary by state but often extend up to 10+ years. Staying audit-ready is essential to maintaining compliance, protecting your organization’s financial integrity, and upholding patient trust.

Common Escheatment Challenges in Healthcare

Escheatment in healthcare comes with unique challenges driven by operational scale, system fragmentation, and strict regulatory requirements. Common pain points include:

• Disparate billing systems and EHR platforms that make data consolidation difficult
• Mismatched or outdated patient names, addresses, or identifiers
• Ensuring HIPAA-compliant handling of patient data during due diligence outreach
• Complexity in managing credit balances resulting from insurance coordination of benefits
• High volumes of small-dollar credit balances that are costly to manage manually

Without a coordinated escheatment strategy, these issues can lead to missed deadlines, regulatory noncompliance, and the unnecessary loss of recoverable funds.

The Cost of Noncompliance: A $7.7 Million Lesson

Failing to comply with unclaimed property laws can lead to substantial financial penalties and reputational damage. A notable example is the case of U.S. HealthWorks (USHW), a nationwide chain of occupational and urgent care clinics.

In September 2024, the California Attorney General announced a $7.7 million settlement with USHW to resolve allegations that the company knowingly retained millions in unclaimed property, violating both the state’s Unclaimed Property Law (UPL) and the California False Claims Act (CFCA). The unclaimed property, largely patient overpayments, remained undisclosed for years.

Although USHW held these funds as early as 2001, it did not report them until 2018, and then only after learning it was under investigation. Internal communications revealed management was aware of their obligations but deliberately avoided compliance to reduce audit risk.

Read the full press release from the California Attorney General’s Office.

This case underscores the importance of adhering to unclaimed property laws. Healthcare organizations must implement robust compliance programs to identify, report, and remit unclaimed funds promptly. Neglecting these responsibilities can result in severe penalties, including substantial fines and damage to the organization's reputation.

How Eisen Supports Healthcare Escheatment Compliance

At Eisen, we understand that healthcare finance teams are already managing complex billing systems, vendor relationships, and patient accounts. Our escheatment services are purpose-built to simplify compliance, reduce risk, and let you focus on what matters most: patient care.

• Escheatment Manager: Automatically track dormancy periods, generate NAUPA-compliant reports, and manage multi-state filing with ease - minimizing manual work and ensuring consistent compliance.
• Outreach Manager: Deliver timely, audit-ready communications to patients, payees, and vendors. Our system is designed to meet state due diligence requirements while maintaining strict data privacy standards.
• Disbursement Manager: Streamline remittance workflows, whether by check, ACH, or transfer, while giving your finance team full visibility and control across all outgoing payments.

Turn Compliance into Confidence

Escheatment may not be your core business, but getting it right protects your patients, your team, and your institution. With Eisen’s tools and healthcare-specific expertise, you can transform escheatment from a compliance burden into a seamless, secure, and efficient process that supports operational excellence.