A-20947, JANUARY 23, 1928, 7 COMP. GEN. 431

A-20947: Jan 23, 1928

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

AT THE END OF WHICH THE POLICY OF INSURANCE IS INCONTESTABLE. IT IS LEGAL AND PROPER FOR THE GOVERNMENT TO QUESTION THE HEALTH CONDITION OF THE INSURED AT THE TIME OF THE ATTEMPTED REINSTATEMENT. HE WAS DISCHARGED FROM SERVICE ON DECEMBER 2. HIS INSURANCE WAS REPORTED TO HAVE LAPSED ON JANUARY 31. ON THE THEORY THAT THE INSURANCE WAS VALIDLY REINSTATED. AN AWARD WAS MADE TO THE DESIGNATED BENEFICIARY IN THE SUM OF $57.50 PER MONTH AND UPON THE BENEFICIARY'S DEATH THE INSURANCE WAS REAWARDED TO THE VETERAN'S FATHER. WHICH AWARD WAS CONTINUED TO THE LATTER UNTIL THE FATHER'S DEATH ON JUNE 15. THAT THE INSURANCE WAS PROPERLY IN FORCE WHEN THE VETERAN DIED. THE ACTION OF THE BUREAU IN HOLDING THAT THE INSURANCE WAS IN FORCE AND IN MAKING PAYMENTS THEREUNDER FOR A PERIOD OF MORE THAN SIX (6) YEARS RESTS UPON THE THEORY THAT THE REINSTATEMENT WAS PROPER UNDER TREASURY DECISIONS 39 AND 47 AND WAR RISK REGULATION 39.

A-20947, JANUARY 23, 1928, 7 COMP. GEN. 431

VETERANS' BUREAU - INSURANCE - INCONTESTABILITY DEATH STOPS THE RUNNING OF THE PERIOD OF SIX MONTHS FIXED BY SECTION 307 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 627, AT THE END OF WHICH THE POLICY OF INSURANCE IS INCONTESTABLE; HENCE IF DEATH OF THE INSURED OCCURS LESS THAN SIX MONTHS AFTER AN ATTEMPTED REINSTATEMENT, IT IS LEGAL AND PROPER FOR THE GOVERNMENT TO QUESTION THE HEALTH CONDITION OF THE INSURED AT THE TIME OF THE ATTEMPTED REINSTATEMENT.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, JANUARY 23, 1928:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF DECEMBER 13, 1927, REQUESTING DECISION IN THE CASE OF FOREST REED HILL, C-203508, WITH SPECIAL REFERENCE TO THE ACTION OF THE VETERANS' BUREAU IN HOLDING THE REINSTATEMENT OF THE INSURANCE AS VALID. YOU STATE THE FACTS AS FOLLOWS:

THE VETERAN ENTERED MILITARY SERVICE ON MAY 7, 1918, AND APPLIED ON THE FOLLOWING DAY FOR $10,000 TERM INSURANCE, FOR WHICH HE DESIGNATED HIS MOTHER SOLE BENEFICIARY. HE WAS DISCHARGED FROM SERVICE ON DECEMBER 2, 1918, AND HIS INSURANCE WAS REPORTED TO HAVE LAPSED ON JANUARY 31, 1919. ON APRIL 3, 1919, THE VETERAN'S MOTHER, AND THE DESIGNATED BENEFICIARY OF THE INSURANCE, MAILED TO THE BUREAU FROM OKLAHOMA CITY, OKLAHOMA, A NEW YORK DRAFT FOR $27.20, REPRESENTING FOUR (4) MONTHS' PREMIUMS ON THE VETERANS' INSURANCE. IT APPEARS FROM THE CERTIFIED COPY OF THE PUBLIC RECORD OF DEATH THAT THE VETERAN DIED IN OKLAHOMA CITY, OKLAHOMA, AT 3:00 A.M. ON APRIL 4, 1919, FROM PNEUMONIA AND INFLUENZA; DURATION NOT SHOWN. THE PHYSICIAN STATED ON THE CERTIFICATE THAT HE ATTENDED THE DECEASED FROM MARCH 31 TO APRIL 2, 1919.

ON THE THEORY THAT THE INSURANCE WAS VALIDLY REINSTATED, AN AWARD WAS MADE TO THE DESIGNATED BENEFICIARY IN THE SUM OF $57.50 PER MONTH AND UPON THE BENEFICIARY'S DEATH THE INSURANCE WAS REAWARDED TO THE VETERAN'S FATHER, WHICH AWARD WAS CONTINUED TO THE LATTER UNTIL THE FATHER'S DEATH ON JUNE 15, 1925. THE PRESENT VALUE OF THE REMAINING INSURANCE AFTER THE FATHER'S DEATH NOW STANDS FOR PAYMENT IN A LUMP SUM UNDER SECTION 303 OF THE WORLD WAR VETERANS' ACT, AS AMENDED, PROVIDED, OF COURSE, THAT THE INSURANCE WAS PROPERLY IN FORCE WHEN THE VETERAN DIED.

THE ACTION OF THE BUREAU IN HOLDING THAT THE INSURANCE WAS IN FORCE AND IN MAKING PAYMENTS THEREUNDER FOR A PERIOD OF MORE THAN SIX (6) YEARS RESTS UPON THE THEORY THAT THE REINSTATEMENT WAS PROPER UNDER TREASURY DECISIONS 39 AND 47 AND WAR RISK REGULATION 39. TREASURY DECISION 39 WAS PROMULGATED DECEMBER 17, 1918, AND WAS MODIFIED BY TREASURY DECISION 47 PROMULGATED JULY 25, 1919. WAR RISK REGULATION 39 WAS PROMULGATED SEPTEMBER 29, 1919, AND PROVIDED THAT WHERE ANY INSURED, WHOSE INSURANCE HAD BEEN TERMINATED BY LAPSE OR CANCELLATION, HAS PRIOR TO THE DATE OF TREASURY DECISION 47 TENDERED WITHIN HIS LIFETIME TO THE BUREAU OF WAR RISK INSURANCE AN AMOUNT SUFFICIENT TO PAY THE PREMIUMS REQUIRED UNDER TREASURY DECISION 47, AS A CONDITION TO REINSTATEMENT, SUCH INSURANCE SHALL BE DEEMED TO BE REINSTATED AND A WRITTEN APPLICATION, STATEMENT OF GOOD HEALTH, OR OTHER CONDITIONS REQUIRED BY TREASURY DECISION 47, OR PRIOR TREASURY DECISION, SHALL NOT BE REQUIRED.

TAKING THE TWO TREASURY DECISIONS IN CONNECTION WITH THE WAR RISK REGULATION IT MAY BE SAID THAT THE GENERAL EFFECT OF THE LATTER REGULATION WAS TO DECLARE VALID REINSTATEMENTS PRIOR TO TREASURY DECISION 47 (AS IN THE PRESENT CASE) WHERE THERE WAS A SUFFICIENT TENDER OF PREMIUM, EVEN THOUGH THERE MAY NOT HAVE BEEN A WRITTEN APPLICATION OR STATEMENT OF GOOD HEALTH.

THE SEQUENCE OF EVENTS PRECEDING DEATH OF THE INSURED WOULD APPEAR TO HAVE BEEN SUFFICIENT FOR THE THEN BUREAU OF WAR RISK INSURANCE TO HAVE QUESTIONED THE VALIDITY OF THE REINSTATEMENT. IT SEEMS QUITE EVIDENT THAT THE DRAFT FOR PREMIUMS TO REINSTATE THE POLICY WAS MAILED, IF NOT AFTER DATE OF DEATH, AT LEAST AFTER INCEPTION OF THE LAST ILLNESS OF THE INSURED, AT A TIME WHEN HE COULD NOT HAVE BEEN IN GOOD HEALTH AND COULD NOT HAVE FURNISHED A STATEMENT OF GOOD HEALTH AS IT IS UNDERSTOOD WAS THEN REQUIRED BY THE REGULATIONS.

YOU REFER TO THE SOMEWHAT SIMILAR CASE OF ELMER E. TRECHTER, INVOLVING REGULATION NO. 39, AND ALSO REGULATION NO. 46, WAIVING PRIOR REGULATIONS REQUIRING A GOOD HEALTH CERTIFICATE OR STATEMENT DURING THE LIFETIME OF THE INSURED. IN OFFICE LETTER ADDRESSED TO YOU UNDER DATE OF JULY 27, 1927, IN THE TRECHTER CASE, IT WAS SAID:

YOU STATE AT LENGTH THE DIFFICULTIES WITH WHICH THE BUREAU WAS CONFRONTED AT THE TIME THE REGULATION IN QUESTION WAS PROMULGATED, AND ALSO GIVE THE REASONS CONSIDERED BY THE ADMINISTRATIVE OFFICE AS JUSTIFYING SUCH ACTION. WITHOUT REVIEWING YOUR STATEMENTS IN DETAIL, IT IS READILY APPARENT THEREFROM THAT SOME ACTION WAS DEEMED NECESSARY AT THE TIME TO RELIEVE THE CONGESTION IN THE BUREAU CAUSED BY THE FAILURE OF APPLICANTS FOR REINSTATEMENT OF INSURANCE TO FILE GOOD HEALTH STATEMENTS AS REQUIRED BY REGULATIONS IN FORCE AT THE TIME THE APPLICATIONS FOR REINSTATEMENT WERE MADE. WHILE I MUST ADHERE TO THE VIEW THAT THE REGULATION WAS NOT PROPER IN SO FAR AS THE RETROACTIVE FEATURE WAS CONCERNED, AND CANNOT AGREE THAT ADMINISTRATIVE DIFFICULTIES MAY BE SOLVED BY IRREGULAR OR UNLAWFUL ACTIONS, SUCH AS THE PROMULGATION OF RETROACTIVELY EFFECTIVE REGULATIONS, IN VIEW OF THE LENGTH OF TIME DURING WHICH THE ADMINISTRATIVE ACTION HAS BEEN IN FORCE, THIS OFFICE WILL INTERPOSE NO OBJECTION TO INSURANCE PAYMENTS ON THE BASIS OF REINSTATEMENTS APPROVED UNDER SAID REGULATION WITHOUT THE FILING OF A GOOD HEALTH STATEMENT, IF THE REINSTATEMENTS WERE OTHERWISE REGULAR AND LEGAL.

IT WAS NOT THE UNDERSTANDING OF THIS OFFICE IN THE CONSIDERATION OF THE TRECHTER AND SIMILAR CASES THAT THE RETROACTIVELY EFFECTIVE REGULATION WAS TO BE CONSIDERED AS VALIDATING A REINSTATEMENT OF INSURANCE IF THE FACTS CLEARLY SHOWED THE INSURED NOT TO HAVE BEEN IN GOOD HEALTH AT THE TIME OF ATTEMPTED REINSTATEMENT AND THAT HE COULD NOT IN ANY EVENT HAVE FILED A STATEMENT OF GOOD HEALTH WHICH THE RETROACTIVELY EFFECTIVE REGULATION PURPORTED TO WAIVE. THE REASONS STATED IN YOUR SUBMISSION OF JULY 11, 1927, ON WHICH THE QUOTED OFFICE LETTER WAS BASED, LED THIS OFFICE TO BELIEVE THAT THE PURPOSE OF THE RETROACTIVELY EFFECTIVE REGULATION WAS TO ELIMINATE AS MUCH ADMINISTRATIVE PAPER WORK AS POSSIBLE DUE TO THE GREAT INFLUX OF WORK; BUT NOT TO RENDER LAWFUL WHAT CLEARLY APPEARED TO HAVE BEEN UNLAWFUL.

YOU WILL NOTE THE LAST PHRASE OF THE QUOTED PARAGRAPH IN SAID OFFICE LETTER LIMITS THE CASES, IN WHICH THIS OFFICE WOULD INTERPOSE NO OBJECTION TO REINSTATEMENTS NOTWITHSTANDING THE ABSENCE OF A STATEMENT OF GOOD HEALTH, TO THOSE IN WHICH THE "REINSTATEMENTS WERE OTHERWISE REGULAR AND LEGAL.' IF, AS WOULD APPEAR FROM THE STATEMENTS FURNISHED IN YOUR SUBMISSION, FOREST REED HILL WAS ON HIS DEATH BED AT THE TIME HIS MOTHER MAILED THE DRAFT FOR THE AMOUNT OF NECESSARY PREMIUMS TO REINSTATE THE LAPSED POLICY, THIS OFFICE CAN NOT AGREE THAT THE REINSTATEMENT WAS OTHERWISE REGULAR AND LEGAL.

YOU ALSO REFER TO SECTION 307 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 627, AND APPARENTLY CONTEND THAT THE INSURANCE WAS IN FORCE FOR MORE THAN SIX MONTHS' PERIOD, FIXED BY THE STATUTE, WHICH PROVIDES AS FOLLOWS:

ALL SUCH POLICIES OF INSURANCE HERETOFORE OR HEREAFTER ISSUED SHALL BE INCONTESTABLE AFTER THE INSURANCE HAS BEEN IN FORCE SIX MONTHS FROM THE DATE OF ISSUANCE OR REINSTATEMENT, EXCEPT FOR FRAUD OR NONPAYMENT OF PREMIUMS AND SUBJECT TO THE PROVISIONS OF SECTION 23: PROVIDED, THAT A LETTER MAILED BY THE BUREAU TO THE INSURED AT HIS LAST KNOWN ADDRESS INFORMING HIM OF THE INVALIDITY OF HIS INSURANCE SHALL BE DEEMED A CONTEST WITHIN THE MEANING OF THIS SECTION: PROVIDED FURTHER, THAT THIS SECTION SHALL BE DEEMED TO BE IN EFFECT AS OF APRIL 6, 1917.

DEATH STOPS THE RUNNING OF THE SIX MONTHS' PERIOD FIXED IN THIS STATUTE. WHATEVER RIGHTS THE GOVERNMENT OR THE INSURED MAY HAVE HAD WERE DETERMINED AS OF THE DATE OF DEATH WHICH WOULD HAVE MATURED THE POLICY. IT CAN NOT BE SAID THAT THE INSURANCE WAS IN FORCE WITHIN THE MEANING OF THIS STATUTE AFTER THE DEATH OF THE INSURED. THE LONG PERIOD DURING WHICH THE VETERANS' BUREAU HAS MADE PAYMENTS OF INSURANCE MAY NOT BE CONSIDERED, ALONE, AS HAVING ANY BEARING OF THE INCONTESTABILITY OF THE POLICY WITHIN THE MEANING OF THE STATUTE. THEREFORE, AS DEATH OCCURRED LESS THAN SIX MONTHS AFTER AN ATTEMPTED REINSTATEMENT, IT IS LEGAL AND PROPER FOR THE GOVERNMENT NOW TO QUESTION THE HEALTH CONDITION OF THE INSURED AT THE DATE OF THE ATTEMPTED REINSTATEMENT.

THEREFORE, IF THE FACTS DISCLOSE THAT THE INSURED WAS ACTUALLY ON HIS DEATH BED WHEN THE REINSTATEMENT WAS ATTEMPTED, NO FURTHER PAYMENT OF INSURANCE SHOULD BE MADE.