Michigan Considers Controversial Unclaimed Property Audit Appeal Process
Many state unclaimed property acts explicitly provide for an administrative appeals process pursuant to which a court or other “independent” entity will review the administrator’s decision. Examples can be found in Delaware and Massachusetts law. Even where a state unclaimed property act does not have a formal review process enshrined in the law, most state constitutions enshrine the doctrine of judicial review (that is, the ability of a court to review executive or legislative actions.
The Michigan legislature is currently considering House Bill 4703, which would create an administrative appeal process to review decisions of the state’s unclaimed property administrator. Currently, under the Michigan Act, a party aggrieved by a decision has 90 days to institute proceedings in court for review. House Bill 4703 would create a multi-tiered intermediate appeal process (which could last for the better part of 2 years) that a holder would have to avail itself of before seeking judicial review. Under the Bill, the holder could protest audit findings first to the Administrator, net to the State Treasurer, and ultimately to an “Independent Reviewer” appointed by the State Treasurer. Of course, all of these reviewers would be either employed by the Treasury Department directly, or appointed by the State Treasurer. Moreover, the even the decision of the non-Treasury “Independent Reviewer” would not be final — instead, that decision may be “adopt[ed] or reject[ed]” by the Treasurer. The bill also purports to limit a court’s ability to review the Treasurer’s decision, providing that judicial review “shall be limited to whether the Treasurer’s determination was supported by substantial evidence on the record.”
Given these limitations, it is questionable as to whether these additional layers of administrative review are worth the time and expense that a holder would have to go through to obtain review of the Treasury’s decision in the audit context. There is the further question of whether this legislation is even constitutional. For example, the plain language of the bill seems to be silent on a court’s ability to review the Treasury Department’s interpretation of the unclaimed property act in the audit context. Judicial review of such legal determinations, however, is generally a right secured by state constitutions – and Michigan appears to be no exception.* Thus, while the availability of an audit appeal process is desirable, the multi-tiered and non-independent review process put forth in this bill might not be the best answer.
* The foregoing is not legal advice. Please contact a Michigan-admitted lawyer if you have questions concerning Michigan law.