Today’s post is about a series of unsuccessful qui tam cases brought by a former Bank of America employee. Both cases were brought pursuant to state false claims act statutes (first in Florida and then in California) for an alleged failure on the part of Bank of America to escheat uncashed checks to the state of the payee’s last known address. The complaints in both cases alleged that BOA failed to pay to the State amounts that should escheat as abandoned or unclaimed property. Let me say at the outset that this post is not intended to embarrass or to criticize anyone, but rather to show how someone can be so close—and yet so far away—to bringing a valid cause of action under a state false claims act statute. Mr. McCann brought his first qui tam case in the State of Florida under the Florida False Claims Act on or about 2006. In that case, he alleged that Bank of America had failed to escheat unclaimed property belonging to Florida residents. Such amounts should have escheated to the State of Florida, according to McCann. STATE ESCHEAT STATUTES AND STATE FALSE CLAIMS ACTS When someone mails a person a check that is never cashed, after a certain set amount of time the check becomes “unclaimed property.” The Uniform Disposition of Unclaimed Property Act, which has in some form been enacted in all 50 states, requires unclaimed personal property to be delivered to the state of the owner’s last known residence if the “property holder” (i.e., the person who finds themselves in possession of property belonging to someone else) has a last known address for the “property owner” (i.e., the person owning the property.) Just about anyone could become a holder of unclaimed property. For example, if a person has a party at his or her house and afterwards finds an expensive piece of jewelry left behind by a party-goer, the home owner has just become a holder unclaimed personal property. That scenario however is uncommon. What is more far more common is for a bank, a credit union, a retail store, etc. to find itself in possession of property belonging to someone else—someone who, for whatever reason, has not shown any interest in the property. When that happens, the “property holder” must deliver that money to the state of the last known residence of the property owner. But some companies choose not to do this, and instead treat unclaimed property as a revenue source. And that is where state false claims act violations occur. Every holder of property is required to file an annual report with the various states where they do business, and that report must list all of the unclaimed property. UNCLAIMED PROPERTY v. ESCHEAT One very technical but very important point needs to be made. Many sources call this “escheat” of unclaimed property, but the truth is that unclaimed personal property—unlike unclaimed real property—never truly escheats. That is because the states never take title to unclaimed personal the property. Rather, all 50 states simply become “holders” of the unclaimed personal property and it is held in perpetuity for the rightful owners. The state must make regular efforts to locate the rightful owners of the property and deliver the property to them. For that reason, most states have some kind of unclaimed property office that runs advertisements in newspapers, and maintain websites where people can search for their property. MR. MCCAN’S ALLEGATIONS Mr. McCann brought his case in The relator couldn’t point to any specific check however and couldn’t show for certain that the “clearing errors” (as he called them) resulted in any specific liability for unclaimed property to any specific state including but not limited to Florida. At best, his case alleged some errors that might have resulted in some unclaimed property that was owed to someone, somewhere. But he couldn’t point to any specific check to any specific person for any specific sum. 
Both cases failed. In my legal opinion—as someone who has successfully prosecuted such cases—McCann did in fact fail to state a claim, and the result in both cases was correct.
A little background on the escheatment of unclaimed property and state false claims acts will be helpful.
Therein lies the problem with that type of allegation. In order to be unclaimed property, the check draft or other instrument must meet certain requirements–for example, the check or draft be for a specific amount of money and must be payable on demand.
After the Florida case was dismissed, Mr. McCann tried again in California. Proceeding in the name of the State under the California False Claims Act (California Govt.Code, § 12650 et seq.). Again his case was dismissed for failure to state a claim.
CASES STATING A CLAIM FOR FAILURE TO ESCHEAT PROPERTY
Numerous other relators have however succeeded where the relator in this case failed, including here in State of California ex rel. Stull v. Bank of America
So yes, it is quite possible to bring a false claims act cases based on a failure to escheat unclaimed property, but as with every qui tam or False Claims Act case, the devil is in the details.