A-13532, APRIL 27, 1926, 5 COMP. GEN. 864

A-13532: Apr 27, 1926

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WHICH WERE THERETOFORE CONSIDERED AS CANCELED UNDER PRIOR REGULATIONS THEN IN FORCE. ARE UNLAWFUL AND MUST BE DISCONTINUED UNLESS AND UNTIL SPECIFICALLY AUTHORIZED BY STATUTE. RECOVERY OF PAST PAYMENTS OF INSURANCE UNDER SUCH AWARDS IS A MATTER FOR CONSIDERATION UNDER SECTION 28 OF THE WORLD WAR VETERANS' ACT OF JUNE 7. MAY BE CONSIDERED TO HAVE BEEN RETROACTIVE IN EFFECT. WHAT ACTION SHOULD BE TAKEN IN CASES WHERE INSURANCE BENEFITS HAVE BEEN PAID AND ARE BEING PAID UNDER THE CONSTRUCTION BY THE VETERANS' BUREAU THAT SAID REGULATIONS WERE RETROACTIVELY EFFECTIVE. WAS KILLED WHILE IN THE SERVICE ON MAY 20. THE LAST PREMIUM WAS DEDUCTED FROM HIS PAY IN MARCH. IT WAS PROVIDED: THE SAID INSURANCE SHALL.

A-13532, APRIL 27, 1926, 5 COMP. GEN. 864

WAR-RISK INSURANCE - EFFECTIVE DATE OF CANCELLATION REGULATIONS OF THE VETERANS' BUREAU DATED SEPTEMBER 29, 1919, FIXING THE EFFECTIVE DATE OF THE CANCELLATION OF WAR-RISK INSURANCE POLICIES, HAD NO RETROACTIVE EFFECT, AND PAYMENTS OF INSURANCE UNDER POLICIES, WHICH WERE THERETOFORE CONSIDERED AS CANCELED UNDER PRIOR REGULATIONS THEN IN FORCE, ARE UNLAWFUL AND MUST BE DISCONTINUED UNLESS AND UNTIL SPECIFICALLY AUTHORIZED BY STATUTE. RECOVERY OF PAST PAYMENTS OF INSURANCE UNDER SUCH AWARDS IS A MATTER FOR CONSIDERATION UNDER SECTION 28 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 615.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, APRIL 27, 1926:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF MARCH 15, 1926, REQUESTING DECISION WHETHER REGULATIONS DATED SEPTEMBER 29, 1919, FIXING THE EFFECTIVE DATE OF CANCELLATION OF WAR-RISK INSURANCE, MAY BE CONSIDERED TO HAVE BEEN RETROACTIVE IN EFFECT, AND IF NOT, WHAT ACTION SHOULD BE TAKEN IN CASES WHERE INSURANCE BENEFITS HAVE BEEN PAID AND ARE BEING PAID UNDER THE CONSTRUCTION BY THE VETERANS' BUREAU THAT SAID REGULATIONS WERE RETROACTIVELY EFFECTIVE. AS ILLUSTRATIVE OF THE SITUATION YOU STATE THE FACTS IN THE CASE OF ANTON SADAR, AS FOLLOWS:

THE INSURED ENLISTED IN THE NAVY ON OCTOBER 19, 1915, AND WAS KILLED WHILE IN THE SERVICE ON MAY 20, 1919. ON JANUARY 1, 1918, HE APPLIED FOR INSURANCE IN THE AMOUNT OF $5,000, WHICH HE CANCELED FEBRUARY 12, 1918, WHEN HE MADE A SECOND APPLICATION FOR INSURANCE IN THE SUM OF $10,000. MARCH 27, 1919, THE INSURED REQUESTED THE CANCELLATION OF THE SECOND APPLICATION FOR $10,000 INSURANCE. THE LAST PREMIUM WAS DEDUCTED FROM HIS PAY IN MARCH, 1919.

SECTION 13 OF THE WAR-RISK INSURANCE ACT, DATED OCTOBER 6, 1917, 40 STAT. 399, AND AS AMENDED BY THE ACT OF MAY 20, 1918, 40 STAT. 555, AUTHORIZED THE DIRECTOR OF THE BUREAU OF WAR RISK INSURANCE, SUBJECT TO THE GENERAL DIRECTION OF THE SECRETARY OF THE TREASURY,"TO MAKE RULES AND REGULATIONS NOT INCONSISTENT WITH THE PROVISIONS OF THIS ACT, NECESSARY OR APPROPRIATE TO CARRY OUT ITS PURPOSES.'

THE ACT OF AUGUST 9, 1921, 42 STAT. 148, CREATING THE UNITED STATES VETERANS' BUREAU, TRANSFERRED THIS AUTHORITY TO THE DIRECTOR OF THE VETERANS' BUREAU AND IN EXPRESS TERMS GRANTED THE SAME AUTHORITY WITH RESPECT TO PROMULGATION OF REGULATIONS.

BY REGULATION T.D. 33 W.R., DATED SEPTEMBER 20, 1918, IT WAS PROVIDED:

THE SAID INSURANCE SHALL, HOWEVER, LAPSE AND TERMINATE---

(C) UPON WRITTEN REQUEST, DULY WITNESSED AND FORWARDED THROUGH MILITARY CHANNELS TO THE BUREAU OF WAR RISK INSURANCE, FOR CANCELLATION OF THE INSURANCE IN WHOLE, OR IN PART, AND CORRESPONDING CESSATION OR REDUCTION OF THE DEDUCTIONS OF PREMIUMS FROM HIS PAY OR DEPOSIT, IN WHICH CASE THE INSURANCE SHALL TERMINATE OR BE REDUCED, AS THE CASE MAY BE, ON THE REGULAR MONTHLY RENEWAL DATE OF THE POLICY IN THE MONTH FOLLOWING THAT IN WHICH THE REQUEST IS MADE, AND THE REGULAR MONTHLY DEDUCTION WILL ACCORDINGLY BE MADE FROM THE INSURED'S PAY OR DEPOSIT AT THE END OF THE CALENDAR MONTH IN WHICH THE REQUEST FOR CANCELLATION IS MADE.

APPLYING THESE REGULATIONS TO THE CASE OF ANTON SADAR, THE EFFECTIVE DATE OF CANCELLATION WOULD HAVE BEEN APRIL 12, 1919. THAT IS TO SAY THE "REGULAR MONTHLY RENEWAL DATE OF THE POLICY" IS UNDERSTOOD TO HAVE BEEN THE DATE OF THE MONTH CORRESPONDING TO THE DATE OF APPLICATION FOR THE INSURANCE, WHICH WAS FEBRUARY 12, 1918. ACCORDINGLY, APRIL 12, 1919, WOULD HAVE BEEN THE REGULAR MONTHLY RENEWAL DATE OF THE POLICY IN THE MONTH FOLLOWING THAT IN WHICH THE REQUEST FOR CANCELLATION WAS MADE. THE INSURED DIED MAY 20, 1919, SUBSEQUENT TO THE EFFECTIVE DATE OF THE CANCELLATION; THAT IS, THE DATE ON WHICH THE INSURANCE LAPSED OR TERMINATED UNDER SAID REGULATIONS, NO INSURANCE UNDER THE CANCELED POLICY WOULD BE AUTHORIZED.

BY REGULATION T.D. 48 W.R., DATED SEPTEMBER 29, 1919, IT WAS PROVIDED:

IN THE CASE OF TERM INSURANCE CANCELED OR REDUCED, THE TERM INSURANCE, EXCEPTING THAT PORTION OF THE INSURANCE WHICH IS CONVERTED, SHALL BE DEEMED TO BE CANCELED OR REDUCED, AS THE CASE MAY BE, THIRTY ONE DAYS (THE GRACE PERIOD) FROM THE LAST DAY OF THE CALENDAR MONTH ON WHICH THE UNPAID PREMIUM WAS PAYABLE. * * *

BY REGULATION T.D. 54 W.R., DATED SEPTEMBER 29, 1919, IT WAS PROVIDED:

2. ANY PERSON TO WHOM YEARLY RENEWABLE TERM INSURANCE HAS BEEN GRANTED WHO HAS CANCELED HIS TERM INSURANCE, IN WHOLE OR IN PART, EXCEPTING THAT PORTION OF HIS TERM INSURANCE WHICH IS CONVERTED, SHALL BE ENTITLED TO THE GRACE PERIOD FOR THE PAYMENT OF PREMIUMS, DURING WHICH PERIOD THE CANCELED INSURANCE SHALL BE CONSIDERED IN FORCE SUBJECT TO THE DEDUCTION OF THE UNPAID PREMIUMS.

IF THESE REGULATIONS CAN BE REGARDED AS RETROACTIVELY EFFECTIVE DURING APRIL AND MAY, 1919, THE EFFECTIVE DATE OF CANCELLATION IN THE CASE OF ANTON SADAR WOULD HAVE BEEN MAY 31, 1919. THAT IS TO SAY, IT IS UNDERSTOOD THAT APRIL WAS THE CALENDAR MONTH ON WHICH THE UNPAID PREMIUM WAS PAYABLE AND 31 DAYS AFTER THE LAST DAY THEREOF WOULD BE MAY 31, 1919. ON THAT BASIS, THE INSURED HAVING DIED MAY 20, 1919, INSURANCE PAYMENTS UNDER THE POLICY WOULD BE AUTHORIZED.

YOU STATE THAT THE REGULATIONS OF SEPTEMBER 29, 1919, HAVE BEEN GIVEN A RETROACTIVE EFFECT IN THIS PARTICULAR BY THE VETERANS' BUREAU IN ACCORDANCE WITH THE OPINION OF THE THEN GENERAL COUNSEL OF THE VETERANS' BUREAU, DATED NOVEMBER 7, 1919, RESULTING IN PAYMENTS OF INSURANCE IN THE CASE OF ANTON SADAR AND OTHER SIMILAR CASES, UNTIL OCTOBER 24, 1925, WHEN THE PRESENT GENERAL COUNSEL OF THE BUREAU, IN AN OPINION RENDERED IN THE CASE OF SYDNEY SIMPSON, ADVISED THAT THE REGULATIONS OF SEPTEMBER 29, 1919, COULD NOT BE APPLIED RETROACTIVELY.

AS A MATTER OF CONSTRUCTION I MUST AGREE WITH THE VIEW THAT THE REGULATIONS WERE NOT RETROACTIVELY EFFECTIVE. IT HAS BEEN HELD THAT REGULATIONS PROMULGATED BY THE BUREAU OF WAR RISK INSURANCE AND THE UNITED STATES VETERANS' BUREAU PURSUANT TO THE CONTROLLING STATUTE HAVE THE FORCE AND EFFECT OF LAW. SAWYNER V. UNITED STATES, 10 FED.REP./2D), 416. HAS BEEN HELD, ALSO, THAT SUCH REGULATIONS MAY BE MODIFIED, REPEALED, OR CREATED ANEW BY THE SAME AUTHORITY THAT MADE THEM, BUT THAT UNTIL THIS IS DONE THEY ARE BINDING ON THE AUTHORITY THAT MADE THEM AS WELL AS ON OTHERS, THAT THEY CAN HAVE NO RETROACTIVE EFFECT, AND THAT ANY MODIFICATION OR AMENDMENT THEREOF MUST BE OF A GENERAL AND PROSPECTIVE APPLICATION. SEE 26 COMP. DEC. 99 AND COURT DECISIONS THEREIN CITED; AND 4 COMP. GEN. 480 AND COURT DECISIONS THEREIN CITED.

IT WILL BE NOTED THAT THE DECISION IN 26 COMP. DEC. 99 WAS RENDERED BY THE COMPTROLLER OF THE TREASURY AUGUST 5, 1919, PRIOR TO THE OPINION OF THE THEN GENERAL COUNSEL OF THE VETERANS' BUREAU, DATED NOVEMBER 7, 1919, ON THE BASIS OF WHICH A RETROACTIVE APPLICATION WAS GIVEN TO THE REGULATIONS OF SEPTEMBER 29, 1919, RESULTING IN PAYMENTS UNDER INSURANCE POLICIES WHICH THERETOFORE HAD BEEN CONSIDERED AS CANCELED UNDER LAWFUL REGULATIONS OF THE BUREAU IN FORCE AT THE TIME APPLICATION FOR CANCELLATION WAS MADE. THEREFORE, THERE WAS NEITHER AUTHORITY NOR JUSTIFICATION FOR THE ACTION OF THE BUREAU IN ATTEMPTING TO GIVE RETROACTIVE EFFECT TO THE REGULATIONS OF SEPTEMBER 29, 1919.

IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY THEREFOR, POLICIES OF INSURANCE ONCE EFFECTIVELY CANCELED OR TERMINATED CAN NOT BE REVIVED OR REINSTATED. ACCORDINGLY, THE INSURANCE PAYMENTS MADE IN THE CASE OF ANTON SADAR AND IN OTHER LIKE CASES WERE NOT LEGAL OR PROPER PAYMENTS.

WHILE I AM NOT UNMINDFUL OF THE SERIOUSNESS OF THE SITUATION AS PRESENTED IN YOUR SUBMISSION, I HAVE NO ALTERNATIVE BUT TO ADVISE YOU THAT FURTHER PAYMENTS UNDER POLICIES WHICH WOULD HAVE BEEN CONSIDERED AS CANCELED UNDER THE REGULATIONS OF SEPTEMBER 20, 1918, IN FORCE PRIOR TO THE NEW REGULATIONS OF SEPTEMBER 29, 1919, SHOULD BE DISCONTINUED TO ACCORD WITH THE LAW AS NOW EXISTING.

WITH RESPECT TO RECOVERY OF PAST PAYMENTS THERE WOULD BE FOR YOUR CONSIDERATION THE PROVISIONS OF SECTION 28 OF THE WORLD WAR VETERANS' ACT OF SEPTEMBER 7, 1924, 43 STAT. 615.