A-12963, MARCH 1, 1926, 5 COMP. GEN. 672

A-12963: Mar 1, 1926

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ARE POSSIBLE OF FULFILLMENT AND HAVE BEEN MET WITH THE ONE EXCEPTION OF THE CONDITION WITH RESPECT TO PAYMENT OF ALL BACK PREMIUMS WITH INTEREST. THE FAILURE TO MEET THE ONE CONDITION WAS DUE TO AN ADMINISTRATIVE ERROR AND NOT BECAUSE OF ANY FAULT OF THE INSURED. THE ADMINISTRATIVE ERROR WILL NOT BE HELD TO RENDER INVALID THE REINSTATEMENT OF THE TERM INSURANCE. THAT SHOULD HAVE BEEN PAID. 1926: I HAVE YOUR LETTER OF FEBRUARY 2. WHICH WAS ACCEPTED BY THE BUREAU THROUGH ERROR. THIS CASE IS TYPICAL OF OTHERS PRESENTING THE SAME QUESTION WHERE MISTAKE WAS MADE BY THE BUREAU. AT THAT TIME HE WAS SUFFERING FROM A SERVICE- CONNECTED DISABILITY. WAS NOT PERMANENTLY AND TOTALLY DISABLED. THE APPROVAL OF HIS APPLICATION FOR REINSTATEMENT WAS MADE UNDER SECTION 408 OF THE WAR RISK INSURANCE ACT.

A-12963, MARCH 1, 1926, 5 COMP. GEN. 672

VETERANS' BUREAU - INSURANCE - REINSTATEMENT IF THE CONDITIONS OF SECTION 408 OF THE WAR RISK INSURANCE ACT OF AUGUST 9, 1921, 42 STAT. 156, SUPERSEDED BY SECTION 304 OF THE WORLD WAR VETERANS' ACT, AMENDED MARCH 4, 1925, 43 STAT. 1310, GRANTING TO DISABLED VETERANS A RIGHT TO REINSTATEMENT OF LAPSED OR CANCELED TERM INSURANCE UNDER CERTAIN CONDITIONS, ARE POSSIBLE OF FULFILLMENT AND HAVE BEEN MET WITH THE ONE EXCEPTION OF THE CONDITION WITH RESPECT TO PAYMENT OF ALL BACK PREMIUMS WITH INTEREST, AND THE FAILURE TO MEET THE ONE CONDITION WAS DUE TO AN ADMINISTRATIVE ERROR AND NOT BECAUSE OF ANY FAULT OF THE INSURED, THE ADMINISTRATIVE ERROR WILL NOT BE HELD TO RENDER INVALID THE REINSTATEMENT OF THE TERM INSURANCE, THE AMOUNT OF BACK PREMIUMS, WITH INTEREST, THAT SHOULD HAVE BEEN PAID, TO BE DEDUCTED FROM THE AMOUNT OF INSURANCE DUE UNDER THE POLICY.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, MARCH 1, 1926:

I HAVE YOUR LETTER OF FEBRUARY 2, 1926, AS FOLLOWS:

IN THE ADMINISTRATION OF THE BUREAU THERE ARISES THE QUESTION OF THE EFFECT TO BE GIVEN THE APPLICATION FOR REINSTATEMENT OF INSURANCE MADE BY JOS. L. MALEY, C-214,922, WHICH WAS ACCEPTED BY THE BUREAU THROUGH ERROR. THIS CASE IS TYPICAL OF OTHERS PRESENTING THE SAME QUESTION WHERE MISTAKE WAS MADE BY THE BUREAU.

ON FEBRUARY 8, 1923, MALEY APPLIED FOR REINSTATEMENT OF $7,000 YEARLY RENEWABLE TERM INSURANCE. AT THAT TIME HE WAS SUFFERING FROM A SERVICE- CONNECTED DISABILITY, BUT WAS NOT PERMANENTLY AND TOTALLY DISABLED, AND THE APPROVAL OF HIS APPLICATION FOR REINSTATEMENT WAS MADE UNDER SECTION 408 OF THE WAR RISK INSURANCE ACT. DUE TO ERROR ON THE PART OF THE BUREAU, HOWEVER, THIS APPLICATION FOR REINSTATEMENT WAS APPROVED ON THE PAYMENT OF TWO PREMIUMS ONLY AND THIS AMOUNT WAS TENDERED AND PAID BY MALEY INSTEAD OF THE AMOUNT REQUIRED BY SECTION 408, NAMELY, ALL BACK PREMIUMS WITH INTEREST. OTHER CONDITIONS TO REINSTATEMENT UNDER THE RULES AND REGULATIONS OF THE BUREAU AS REQUIRED BY SECTION 408 WERE MET BY THE APPLICANT FOR REINSTATEMENT. AFTER THE APPROVAL OF THE REINSTATEMENT BY THE BUREAU MONTHLY PREMIUMS WERE REGULARLY PAID BY MALEY TO AND INCLUDING THE MONTH OF SEPTEMBER, 1925, SAID PREMIUMS BEING PAID FOR A PERIOD OF MORE THAN SIX MONTHS, WHICH UNDER ORDINARY CIRCUMSTANCES WOULD RENDER THE INSURANCE INCONTESTABLE UNDER THE PROVISIONS OF SECTION 411 OF THE WAR RISK INSURANCE ACT, CORRESPONDING TO SECTION 307 OF THE WORLD WAR VETERANS' ACT.

THE INSURED HAS BEEN RATED AS PERMANENTLY AND TOTALLY DISABLED FROM DECEMBER 11, 1923, AND THE CLAIM HAS BEEN PRESENTED FOR INSTALLMENTS OF INSURANCE FROM THAT DATE. AFTER THE PRESENTATION OF SAID CLAIM, THE QUESTION OF THE VALIDITY OF THE REINSTATEMENT WAS RAISED FOR THE FIRST TIME.

YOUR OPINION AS TO MY AUTHORITY TO MAKE PAYMENT OF INSURANCE IN THIS CASE AND SIMILAR CASES IS REQUESTED.

AS ONE OF SEVERAL CONDITIONS TO ACCEPTANCE OF AN APPLICATION FOR REINSTATEMENT OF A LAPSED OR CANCELED TERM INSURANCE POLICY UNDER SECTION 408 OF THE WAR-RISK INSURANCE ACT, AUGUST 9, 1921, 42 STAT. 156, SUPERSEDED BY SECTION 304 OF THE WORLD WAR VETERANS' ACT, AMENDED MARCH 4, 1925, 43 STAT. 1310, THE APPLICANT IS REQUIRED TO PAY ALL THE BACK MONTHLY PREMIUMS WHICH WOULD HAVE BEEN PAYABLE IF SUCH INSURANCE HAD NOT LAPSED TOGETHER WITH INTEREST AT THE RATE OF 5 PERCENT PER ANNUM COMPOUNDED ANNUALLY ON EACH PREMIUM FROM THE DATE SAID PREMIUM IS DUE BY THE TERMS OF THE POLICY. APPLICATIONS FOR REINSTATEMENT MAY BE FILED UNDER THIS PROVISION OF LAW ONLY WHERE THE INSURED IS SUFFERING FROM A SERVICE CONNECTED DISABILITY LESS THAN PERMANENT AND TOTAL, BUT IS OTHERWISE AN INSURABLE RISK. SEE DECISION OF JANUARY 20, 1926, A-12487, 5 COMP. GEN. 503.

AS ONE OF THE CONDITIONS TO REINSTATEMENT OF TERM INSURANCE UNDER THE REGULATIONS OF THE VETERANS' BUREAU, IN CASES WHERE THE INSURED IS IN GOOD HEALTH, THE INSURED MUST TENDER THE AMOUNT OF TWO MONTHLY PREMIUMS ONLY. IT IS APPARENT THAT THE ERROR OF THE ADMINISTRATIVE OFFICERS OF THE VETERANS' BUREAU IN REQUIRING THE INSURED IN THIS CASE TO PAY ONLY TWO PREMIUMS WAS IN CONSIDERING THE APPLICATION FOR REINSTATEMENT AS FILED UNDER THE PROVISIONS OF THE REGULATIONS RATHER THAN UNDER THE REQUIREMENTS OF THE STATUTE.

THE STATUTE HERE INVOLVED GRANTS A BENEFIT OR RIGHT TO DISABLED VETERANS IN ADDITION TO THAT ARISING UNDER THE CONTRACT TERMS OF THE POLICY. THE VALIDITY OF THE REINSTATED POLICY DEPENDS ON THE RIGHT OF THE INSURED TO HAVE HIS TERM INSURANCE REINSTATED UNDER THE TERMS OF THE STATUTE. IF ALL THE CONDITIONS OF THE STATUTE WERE POSSIBLE OF FULFILLMENT AND WERE MET WITH THE ONE EXCEPTION OF THE CONDITION WITH RESPECT TO PAYMENT OF ALL BACK PREMIUMS WITH INTEREST, AND THE FAILURE TO MEET THIS ONE CONDITION WAS DUE TO AN ERROR OF THE ADMINISTRATIVE OFFICE AND NOT BECAUSE OF ANY FAULT, ACTUAL OR CONSTRUCTIVE, ON THE PART OF THE INSURED, THE ADMINISTRATIVE ERROR WILL NOT BE HELD TO RENDER INVALID THE REINSTATEMENT OF THE TERM INSURANCE, THE ERROR BEING SUCH AS MAY NOW BE CORRECTED BY DEDUCTION OF THE AMOUNT OF THE BACK PREMIUMS WITH INTEREST, THAT SHOULD HAVE BEEN PAID, FROM THE AMOUNT OF INSURANCE DUE UNDER THE POLICY. COMP. GEN. 656, 658.

YOU ARE ADVISED, THEREFORE, THAT UPON THE BASIS OF YOUR SUBMISSION PAYMENT OF INSURANCE UNDER THE POLICY ISSUED TO JOSEPH L. MALEY LESS DEDUCTIONS AS INDICATED IS AUTHORIZED.