A-21445, FEBRUARY 27, 1928, 7 COMP. GEN. 526

A-21445: Feb 27, 1928

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VETERANS' BUREAU - INSURANCE AS THE PHYSICAL CONDITION OF THE INSURED WHILE IN THE ACTIVE MILITARY SERVICE WAS NOT A FACTOR IN DETERMINING THE VALIDITY OF AN APPLICATION FOR TERM INSURANCE FILED AND ACCEPTED WITHOUT MEDICAL EXAMINATION DURING SERVICE. UPON THE INSURANCE FEATURES OF WHICH YOUR DECISION IS REQUESTED. HE WAS HONORABLY DISCHARGED AND AFTER A BRIEF INTERVAL WAS ACCEPTED FOR ENLISTMENT IN THE NAVY AND REENTERED SERVICE IN NOVEMBER. HE WAS DISCHARGED ON A SURGEON'S CERTIFICATE OF DISABILITY ON FEBRUARY 11. A DUPLICATE APPLICATION FOR THE SAME AMOUNT AND FOR THE SAME BENEFICIARY WAS EXECUTED IN DECEMBER. THE TERM INSURANCE WAS ALLOWED TO LAPSE FOR FAILURE TO PAY THE PREMIUM DUE ON MARCH 1.

A-21445, FEBRUARY 27, 1928, 7 COMP. GEN. 526

VETERANS' BUREAU - INSURANCE AS THE PHYSICAL CONDITION OF THE INSURED WHILE IN THE ACTIVE MILITARY SERVICE WAS NOT A FACTOR IN DETERMINING THE VALIDITY OF AN APPLICATION FOR TERM INSURANCE FILED AND ACCEPTED WITHOUT MEDICAL EXAMINATION DURING SERVICE, AS AUTHORIZED AND REQUIRED BY THE CONTROLLING STATUTE, A RETROACTIVE RATING OF PERMANENT TOTAL DISABILITY AS OF A DATE PRIOR TO THE FILING AND ACCEPTANCE OF APPLICATION MAY BE CONSIDERED AS RETROACTIVELY EFFECTIVE ONLY FROM THE DATE OF DISCHARGE FROM WHICH DATE THE POLICY MAY BE CONSIDERED AS HAVING MATURED.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, FEBRUARY 27, 1928:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF JANUARY 24, 1928, REQUESTING DECISION OF A QUESTION PRESENTED AS FOLLOWS:

THE UNITED STATES VETERANS' BUREAU HAS BEFORE IT AT THE PRESENT TIME FOR DETERMINATION THE CASE OF HALLEM SINGER, C-6836, UPON THE INSURANCE FEATURES OF WHICH YOUR DECISION IS REQUESTED.

THIS VETERAN HAD A PERIOD OF SERVICE IN THE UNITED STATES NAVY PRIOR TO THE WORLD WAR. HE WAS HONORABLY DISCHARGED AND AFTER A BRIEF INTERVAL WAS ACCEPTED FOR ENLISTMENT IN THE NAVY AND REENTERED SERVICE IN NOVEMBER, 1914. HE WAS DISCHARGED ON A SURGEON'S CERTIFICATE OF DISABILITY ON FEBRUARY 11, 1918.

ON NOVEMBER 26, 1917, THE VETERAN MADE APPLICATION FOR $10,000 TERM INSURANCE IN FAVOR OF HIS WIFE. A DUPLICATE APPLICATION FOR THE SAME AMOUNT AND FOR THE SAME BENEFICIARY WAS EXECUTED IN DECEMBER, 1917. AFTER THIS VETERAN'S DISCHARGE ON FEBRUARY 11, 1918, THE TERM INSURANCE WAS ALLOWED TO LAPSE FOR FAILURE TO PAY THE PREMIUM DUE ON MARCH 1, 1918. SHORT WHILE AFTER DISCHARGE THIS VETERAN CLAIMED COMPENSATION AND EARLY IN 1920 HE WAS RATED AS TEMPORARILY TOTALLY DISABLED FROM DISCHARGE, WHICH RATING WAS CONTINUED UNTIL SEPTEMBER, 1922, WHEN HE WAS RATED TEMPORARILY TOTALLY DISABLED FROM DISCHARGE TO APRIL 4, 1922, AND TEMPORARILY PARTIALLY DISABLED 75 PERCENT THEREAFTER. ON OCTOBER 31, 1922, HE WAS RERATED AND DECLARED TEMPORARILY TOTALLY DISABLED CONTINUOUSLY FROM DISCHARGE. DEATH OCCURRED ON OCTOBER 28, 1922, AND ON JANUARY 17, 1923, HE WAS RATED TEMPORARILY TOTALLY DISABLED FROM DISCHARGE TO DECEMBER 14, 1920, AND PERMANENTLY AND TOTALLY DISABLED THEREAFTER.

REVERTING TO THE INSURANCE FEATURE OF THE CASE, TERM INSURANCE, AS ALREADY STATED, LAPSED FOR FAILURE TO PAY THE PREMIUM DUE MARCH 1, 1918. THROUGH THE MEDIUM OF UNCOLLECTED COMPENSATION A PORTION OF THE INSURANCE WAS SAVED AND WAS AWARDED TO THE BENEFICIARY OF RECORD, VIZ, THE VETERAN'S WIFE, IN THE SUM OF $8.41 A MONTH, THE NET AMOUNT OF INSURANCE SAVED UNDER SECTION 305, WORLD WAR VETERANS' ACT, HAVING BEEN COMPUTED AS $1,463.18. THE AWARD OF THIS INSURANCE WAS APPROVED IN APRIL, 1925, AND PAYMENTS THEREUNDER WERE MADE FOR MORE THAN SIX MONTHS.

AFTER THE AWARD OF THIS INSURANCE A CLAIM WAS MADE THAT THE VETERAN IN FACT WAS PERMANENTLY AND TOTALLY DISABLED FROM DISCHARGE (FEBRUARY 11, 1918). THE OBJECT OF THIS CLAIM, OBVIOUSLY, WAS TO MAKE POSSIBLE THE PAYMENT OF THE ENTIRE AMOUNT OF INSURANCE WHICH WAS IN FORCE AT THE DATE OF DISCHARGE. THE CASE WAS RERATED AND A PERMANENT AND TOTAL DISABILITY RATING FOR INSURANCE PURPOSES HAS BEEN GIVEN, EFFECTIVE JULY 30, 1917, WHICH DATE IS NOT ONLY PRIOR TO THE DATE OF THE VETERANS' DISCHARGE BUT ALSO PRIOR TO THE DATE OF APPLICATION FOR TERM INSURANCE ON NOVEMBER 26, 1917. IT HAS ALSO BEEN DETERMINED BY THE MEDICAL AUTHORITIES OF THE BUREAU THAT THE RATING OF PERMANENT AND TOTAL DISABILITY FROM JULY 30, 1917, FOR INSURANCE PURPOSES WAS JUSTIFIED UPON THE EVIDENCE THEN OBTAINABLE AND INDEPENDENT OF EVIDENCE SUBSEQUENTLY DEVELOPED.

THE FOREGOING FACTS PRESENT THE QUESTION WHETHER THE TERM INSURANCE IS PAYABLE, OR WHETHER BY REASON OF THE PERMANENT AND TOTAL DISABILITY NOW FOUND, ON EVIDENCE THEN PROCURABLE, TO HAVE EXISTED PRIOR TO THE APPLICATION FOR TERM INSURANCE, AUTOMATIC INSURANCE AS PROVIDED FOR BY SECTION 401 OF THE WAR RISK INSURANCE ACT MAY BE PAID. IF THE APPLICATION FOR TERM INSURANCE IS TO BE REGARDED AS VALID DESPITE THE ANTECEDENT PERMANENT AND TOTAL DISABILITY, THEN AN AWARD TO THE WIDOW WILL BE IN ORDER AND THE FACT OF HER SUBSEQUENT REMARRIAGE, NOT PREVIOUSLY MENTIONED, WOULD BE IMMATERIAL. ON THE OTHER HAND, IF AUTOMATIC INSURANCE IS PAYABLE, THE WIDOW WOULD BE ENTITLED THERETO ONLY DURING HER WIDOWHOOD, SO THAT THE AWARD OF AUTOMATIC INSURANCE IN THE PRESENT CASE WOULD BE MADE TO THE VETERAN'S CHILD AS THE NEXT PERSON WITHIN THE RESTRICTED PERMITTED CLASS OF BENEFICIARIES FOR AUTOMATIC INSURANCE.

UNDER SECTION 400 OF THE WAR RISK INSURANCE ACT OF OCTOBER 6, 1917, 40 STAT. 409, IT WAS AUTHORIZED AND DIRECTED THAT WAR RISK INSURANCE SHOULD BE GRANTED TO PERSONS EMPLOYED IN ACTIVE SERVICE UNDER THE WAR OR NAVY DEPARTMENTS,"UPON APPLICATION TO THE BUREAU AND WITHOUT MEDICAL EXAMINATION.' SECTION 401 OF THE SAME STATUTE PROVIDED THAT THIS INSURANCE MUST BE APPLIED FOR WITHIN 120 DAYS AFTER ENLISTMENT OR AFTER ENTRANCE INTO OR EMPLOYMENT IN THE ACTIVE SERVICE AND BEFORE DISCHARGE OR RESIGNATION,"EXCEPT THAT THOSE PERSONS WHO ARE IN THE ACTIVE WAR SERVICE AT THE TIME OF THE PUBLICATION OF THE TERMS AND CONDITIONS OF SUCH CONTRACT OF INSURANCE MAY APPLY AT ANY TIME WITHIN ONE HUNDRED AND TWENTY DAYS THEREAFTER AND WHILE IN SUCH SERVICE.' THE SECTION OF THE STATUTE THEN PROVIDES FOR WHAT IS TERMED AUTOMATIC INSURANCE, AS FOLLOWS:

* * * ANY PERSON IN THE ACTIVE SERVICE ON OR AFTER THE SIXTH DAY OF APRIL, NINETEEN HUNDRED AND SEVENTEEN, WHO, WHILE IN SUCH SERVICE AND BEFORE THE EXPIRATION OF ONE HUNDRED AND TWENTY DAYS FROM AND AFTER SUCH PUBLICATION, BECOMES OR HAS BECOME TOTALLY AND PERMANENTLY DISABLED OR DIES, OR HAS DIED, WITHOUT HAVING APPLIED FOR INSURANCE, SHALL BE DEEMED TO HAVE APPLIED FOR AND TO HAVE BEEN GRANTED INSURANCE, PAYABLE TO SUCH PERSON DURING HIS LIFE IN MONTHLY INSTALLMENTS OF $25 EACH. IF HE SHALL DIE EITHER BEFORE HE SHALL HAVE RECEIVED ANY OF SUCH MONTHLY INSTALLMENTS OR BEFORE HE SHALL HAVE RECEIVED TWO HUNDRED AND FORTY OF SUCH MONTHLY INSTALLMENTS, THEN $25 PER MONTH SHALL BE PAID TO HIS WIFE FROM THE TIME OF HIS DEATH AND DURING HER WIDOWHOOD, OR TO HIS CHILD, OR WIDOWED MOTHER IF AND WHILE THEY SURVIVE HIM: * * *.

ANALYZING THESE TWO SECTIONS OF THE LAW TOGETHER, THE CONDITIONS FOR GRANTING REGULAR TERM INSURANCE, WITHOUT MEDICAL EXAMINATION, WERE (1) THAT THE INSURED MUST HAVE BEEN IN THE ACTIVE SERVICE UNDER THE WAR OR NAVY DEPARTMENTS; AND (2) AN APPLICATION MUST HAVE BEEN FILED WITHIN THE TIME THEREIN SPECIFIED. THE CONDITIONS FOR GRANTING AUTOMATIC INSURANCE WERE (1) HAPPENING OF TOTAL AND PERMANENT DISABILITY OR DEATH OF THE INSURED WHILE IN ACTIVE SERVICE ON OR AFTER APRIL 6, 1917, AND (2) NO APPLICATION FILED FOR REGULAR TERM INSURANCE AS REQUIRED BY LAW.

THE FACTS SUBMITTED IN THE INSTANT CASE CLEARLY SHOW THAT THE TWO CONDITIONS FOR GRANTING REGULAR TERM INSURANCE WERE PRESENT AND THE INSURANCE WAS IN FACT GRANTED; THAT IS, THE INSURED WAS IN ACTIVE SERVICE UNDER THE NAVY DEPARTMENT AND FILED HIS APPLICATION FOR INSURANCE WITHIN 120 DAYS FROM THE DATE OF PUBLICATION OF THE TERMS AND CONDITIONS OF INSURANCE CONTRACTS ON OCTOBER 15, 1917. 1 COMP. GEN. 757. THE PHYSICAL CONDITION OF THE INSURED WHILE IN THE ACTIVE SERVICE WAS NOT THEN, AND MAY NOT NOW BE CONSIDERED, A FACTOR IN DETERMINING THE VALIDITY OF AN APPLICATION FOR TERM INSURANCE FILED AS REQUIRED BY THE STATUTE. THE COMPTROLLER OF THE TREASURY IN COMMENTING ON SECTION 400 OF THE WAR RISK INSURANCE ACT STATED IN DECISION OF JUNE 28, 1921, 27 COMP. DEC. 1084, 1086, AS FOLLOWS:

* * * PERSONS IN ACTIVE SERVICE ARE ADMITTED TO WAR RISK INSURANCE WITHOUT MEDICAL EXAMINATION OR OTHER EVIDENCE OF PHYSICAL SOUNDNESS. * *

IN ADMITTING APPLICANTS TO INSURANCE WITHOUT MEDICAL EXAMINATION THE STATUTE ASSUMES FOR THE GOVERNMENT THE RISK OF ANY DISQUALIFYING DISEASE OR INJURY EXISTING AT THE TIME THE INSURANCE IS GRANTED, AND ALSO ASSUMES THE RISK OF ANY SUCH DISEASE CONTRACTED OR INJURY SUSTAINED WHILE THE INSURANCE IS IN FORCE EITHER BEFORE OR AFTER DISCHARGE FROM THE SERVICE.

THIS DECISION WAS CONSIDERED BY THIS OFFICE UNDER DATE OF SEPTEMBER 3, 1921, 1 COMP. GEN. 108, AND NO EXCEPTIONS TAKEN TO THE ABOVE STATUTORY CONSTRUCTION. AS A FURTHER INDICATION THAT THE PHYSICAL CONDITION OF THE INSURED WHILE IN THE ACTIVE SERVICE WAS NOT AND IS NOT TO BE CONSIDERED A FACTOR IN DETERMINING THE VALIDITY OF AN APPLICATION FOR TERM INSURANCE FILED WHILE IN THE ACTIVE SERVICE AND OTHERWISE REGULAR, THE CONGRESS AMENDED SECTION 401 OF THE WAR RISK INSURANCE ACT BY THE ACT OF DECEMBER 24, 1919, 41 STAT. 375, TO PROVIDE AS FOLLOWS:

* * * PROVIDED, THAT ANY PERSON IN THE ACTIVE SERVICE ON OR AFTER THE 6TH DAY OF APRIL, 1917, AND BEFORE THE 11TH DAY OF NOVEMBER, 1918, WHO, WHILE IN SUCH ACTIVE SERVICE MADE APPLICATION FOR INSURANCE AFTER THE EXPIRATION OF MORE THAN ONE HUNDRED AND TWENTY DAYS AFTER OCTOBER 15, 1917, OR MORE THAN ONE HUNDRED AND TWENTY DAYS AFTER ENTRANCE INTO OR EMPLOYMENT IN THE ACTIVE SERVICE, AND WHOSE APPLICATION WAS ACCEPTED AND A POLICY ISSUED THEREON, AND FROM WHOM PREMIUMS WERE COLLECTED, AND WHO BECOMES OR HAD BECOME TOTALLY AND PERMANENTLY DISABLED, OR DIES OR HAS DIED, SHALL BE DEEMED TO HAVE MADE LEGAL APPLICATION FOR SUCH INSURANCE AND THE POLICY ISSUED ON SUCH APPLICATION SHALL BE VALID. * * *

IT MUST BE CONCLUDED IN THIS CASE THAT THE RETROACTIVE RATING OF PERMANENT AND TOTAL DISABILITY AS OF JULY 30, 1917, MADE BY THE VETERANS' BUREAU, HAS NO EFFECT TO INVALIDATE THE INSURANCE GRANTED WHILE THE INSURED WAS IN ACTIVE SERVICE UNDER THE NAVY DEPARTMENT, IRRESPECTIVE OF WHAT THE FACTS THEN EXISTANT AND NOW DISCLOSED MAY SHOW AS TO THE PHYSICAL CONDITION OF THE INSURED. SUCH RATING MAY BE CONSIDERED AS RETROACTIVELY EFFECTIVE ONLY FROM THE DATE OF DISCHARGE, FEBRUARY 11, 1918. THE POLICY THEN HAVING BEEN IN FULL FORCE AND EFFECT, THE RATING MAY BE CONSIDERED AS HAVING MATURED THE POLICY AS OF THAT DATE.

ACCORDINGLY, TERM INSURANCE IS NOW PAYABLE TO THE PERSONS LEGALLY ENTITLED ON THE BASIS OF A POLICY FOR $10,000 MATURED AS OF FEBRUARY 11, 1918, LESS AMOUNT OF REVIVED INSURANCE PAID BY THE BUREAU TO THE WIDOW OF THE VETERAN.