A-24162, SEPTEMBER 6, 1928, 8 COMP. GEN. 104

A-24162: Sep 6, 1928

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THE $60 BONUS IS NOT AVAILABLE AS INSURANCE PREMIUMS TO REVIVE LAPSED TERM INSURANCE IN A CASE WHERE THE INSURED DIED PRIOR TO FEBRUARY 24. THE FACTS ARE STATED IN YOUR SUBMISSION AS FOLLOWS: BRIEFLY. THE VETERAN WAS DISCHARGED FROM SERVICE ON DECEMBER 4. HE WAS KILLED ON FEBRUARY 19. CLAIM WAS MADE BY THE BROTHER. AS THE RECORDS OF THE BUREAU SHOWED A LAPSE OF THE INSURANCE FOR FAILURE TO PAY PREMIUMS DUE FOLLOWING DISCHARGE IT WAS HELD THAT NO PAYMENT COULD BE MADE. AS IT THEN APPEARED THAT THERE WAS DUE THE VETERAN AT DISCHARGE THE SUM OF $5.00 REPRESENTING REFUND ON A LIBERTY BOND PAYMENT. THAT SINCE THE REMAINING $1.50 WAS NOT SUFFICIENT TO KEEP IN FORCE THE OTHER POLICY. WAS MADE AND PAID TO THE BROTHER.

A-24162, SEPTEMBER 6, 1928, 8 COMP. GEN. 104

VETERANS' BUREAU - INSURANCE THE AMOUNT OF ACCRUED PAY OR ALLOWANCES DUE A SOLDIER UPON DISCHARGE FROM THE ARMY MAY NOT BE APPLIED BY THE VETERANS' BUREAU, WITHOUT ACTION OF THE INSURED, AS INSURANCE PREMIUMS ON WAR-RISK TERM INSURANCE FOR PERIODS SUBSEQUENT TO DISCHARGE SO AS TO PREVENT THE LAPSE OF THE INSURANCE. UNDER THE PROVISIONS OF SECTION 309 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF JULY 2, 1926, 44 STAT. 800, THE $60 BONUS IS NOT AVAILABLE AS INSURANCE PREMIUMS TO REVIVE LAPSED TERM INSURANCE IN A CASE WHERE THE INSURED DIED PRIOR TO FEBRUARY 24, 1919, THE DATE OF THE ACT GRANTING THE BONUS.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, SEPTEMBER 6, 1928:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 16, 1928, SUBMITTING FOR CONSIDERATION THE WAR-RISK INSURANCE CASE OF FRANK SULLIVAN, C 176338.

THE FACTS ARE STATED IN YOUR SUBMISSION AS FOLLOWS:

BRIEFLY, THE FACTS OF THE CASE SHOW THAT ON FEBRUARY 1, 1918, WHILE IN SERVICE FRANK SULLIVAN APPLIED FOR $5,000.00 TERM INSURANCE IN FAVOR OF A BROTHER, HARRY P. SULLIVAN. ON MARCH 1, 1918, THE VETERAN APPLIED FOR $5,000.00 ADDITIONAL TERM INSURANCE ALSO IN FAVOR OF HARRY P. SULLIVAN. THE VETERAN WAS DISCHARGED FROM SERVICE ON DECEMBER 4, 1918, AND THEREAFTER PERMITTED HIS TERM INSURANCE TO LAPSE. HE WAS KILLED ON FEBRUARY 19, 1919, AS THE RESULT OF AN ACCIDENT INCURRED AFTER HE HAD RESUMED HIS STATUS AS A CIVILIAN. CLAIM WAS MADE BY THE BROTHER, HARRY P. SULLIVAN, FOR THE $10,000.00 TERM INSURANCE COVERED BY THE TWO APPLICATIONS JUST MENTIONED, BUT AS THE RECORDS OF THE BUREAU SHOWED A LAPSE OF THE INSURANCE FOR FAILURE TO PAY PREMIUMS DUE FOLLOWING DISCHARGE IT WAS HELD THAT NO PAYMENT COULD BE MADE. THE THEN GENERAL COUNSEL OF THE WAR RISK INSURANCE BUREAU CONSIDERED THE CASE ON MARCH 27, 1920, AND AS IT THEN APPEARED THAT THERE WAS DUE THE VETERAN AT DISCHARGE THE SUM OF $5.00 REPRESENTING REFUND ON A LIBERTY BOND PAYMENT, AND REPRESENTING AN ADJUSTMENT OF HIS PAY, HELD $3.50 MIGHT BE APPLIED AS A PREMIUM PAYMENT ON ONE OF THE POLICIES, BUT THAT SINCE THE REMAINING $1.50 WAS NOT SUFFICIENT TO KEEP IN FORCE THE OTHER POLICY, THE LATTER LAPSED. FOLLOWING THIS OPINION AN AWARD OF TERM INSURANCE ON THE BASIS OF $5,000.00, $28.75 A MONTH, WAS MADE AND PAID TO THE BROTHER, HARRY P. SULLIVAN, AS DESIGNATED BENEFICIARY. THIS BROTHER, HARRY P. SULLIVAN, CONTINUED TO PROSECUTE HIS CLAIM FOR THE REMAINING $5,000.00, AND UPON REVIEW OF THE CASE THE PRESENT GENERAL COUNSEL OF THE VETERANS' BUREAU HELD ON MAY 17, 1927, THAT NO PAYMENTS COULD BE MADE ON THE POLICY FOR $5,000.00 NOT PREVIOUSLY AWARDED, AND HELD FURTHER THAT PAYMENTS ON THE $5,000.00 POLICY WHICH HAD BEEN AWARDED SHOULD BE DISCONTINUED, BUT THAT SINCE THE AWARD THEREOF HAS BEEN MADE UNDER AN OPINION OF A FORMER GENERAL COUNSEL WHICH WAS THEN CONSISTENT WITH THE INTERPRETATION OF THE LAW AT THE TIME IT WAS WRITTEN, RECOVERY NEED NOT BE ATTEMPTED OF THE SUMS PAID THE BROTHER, HARRY P. SULLIVAN, UNDER THE AWARD OF $28.75 A MONTH.

THIS SECOND OPINION BY THE GENERAL COUNSEL WAS BASED LARGELY UPON YOUR DECISION OF SEPTEMBER 14, 1920, IN THE CASE OF CLIFTON D. JONES IN WHICH YOU HELD THAT THE PAY FROM WHICH INSURANCE PREMIUMS ARE AUTHORIZED TO BE DEDUCTED WAS THE MONTHLY MILITARY OR NAVAL PAY DUE THE INSURED AT THE TIME THAT PREMIUMS FELL DUE SO THAT THE $60.00 BONUS SO-CALLED MIGHT NOT BE APPLIED EVEN WHEN UNCOLLECTED TO KEEP THE INSURANCE IN FORCE.

THE FIRST OPINION OF THE GENERAL COUNSEL OF MARCH 27, 1920, WHICH PERMITTED THE APPLICATION OF $3.50 OF THE SUM OF $5.00 DUE AS A REFUND ON A LIBERTY BOND REPRESENTED THE POLICY OF THE BUREAU AT THE TIME THAT OPINION WAS WRITTEN, BUT THIS PROCEDURE HAS SINCE BEEN REVISED SO THAT IT IS SUBMITTED THAT THERE IS NO FURTHER JUSTIFICATION FOR CONTINUING THE PAYMENT OF INSURANCE UNDER THE POLICY UPON WHICH AN AWARD AT ONE TIME HAD BEEN MADE. FURTHERMORE, THIS DECISION OF THE GENERAL COUNSEL WAS PRIOR TO YOUR DECISION OF SEPTEMBER 14, 1920, JUST CITED WITH REFERENCE TO THE APPLICATION OF THE SO-CALLED $60.00 BONUS. WHILE IT IS BELIEVED THAT THE VETERANS' BUREAU HAS PROPERLY REFUSED TO RESUME THE AWARD OF THIS INSURANCE ONCE MADE OR TO MAKE AN AWARD UNDER THE ADDITIONAL POLICY OF $5,000.00, THE CASE IS SUBMITTED TO YOU FOR YOUR DECISION BECAUSE OF THE PARTICULAR INTEREST THEREIN OF SENATOR WILLIAM H. KING, OF UTAH, TO WHOM REFERENCE WAS MADE IN THE OPENING PARAGRAPH OF THIS SUBMISSION.

THE TWO QUESTIONS PRESENTED ARE (1) WHETHER THE AMOUNT OF ACCRUED PAY OR DEPOSIT DUE INSURED AT DATE OF DISCHARGE COULD HAVE BEEN APPLIED AS INSURANCE PREMIUMS, AND (2) WHETHER THE $60 BONUS MAY BE APPLIED AS INSURANCE PREMIUMS IN THIS INSTANCE.

DURING MILITARY SERVICE THE PRACTICE WAS AUTHORIZED BY REGULATION OF THE VETERANS' BUREAU FOR THE SOLDIERS TO ALLOT A PORTION OF THEIR PAY TO COVER INSURANCE PREMIUMS AS THEY BECAME DUE EACH MONTH. ALL SUCH ALLOTMENTS TERMINATED UPON DISCHARGE AND DID NOT AUTHORIZE THE APPLICATION OF ACCRUED PAY OR DEPOSIT AT DISCHARGE TO COVER INSURANCE PREMIUMS COMING DUE SUBSEQUENT TO DISCHARGE. SUCH HAS ALWAYS BEEN THE INTERPRETATION PLACED BY THE ACCOUNTING OFFICERS ON THE CONTROLLING LAW AND REGULATIONS. DECISION OF SEPTEMBER 19, 1925, 5 COMP. GEN.208, 209, IT WAS HELD:

IT HAS BEEN REPEATEDLY HELD THAT THE MERE ALLOTMENT OR OTHER FORM OF AUTHORIZATION FOR DEDUCTION FROM THE PAY OF OFFICERS AND ENLISTED MEN IN THE ACTIVE MILITARY OR NAVAL FORCES TO COVER WAR-RISK INSURANCE PREMIUMS IS NOT EQUIVALENT TO ACTUAL PAYMENT OF PREMIUMS AND DOES NOT IPSO FACTO PREVENT LAPSING OF THE POLICY. ARMY OFFICERS, 2 COMP. GEN. 249, AND DECISION OF DECEMBER 5, 1923; NAVY OFFICERS, 4 COMP. GEN. 691; NAVY ENLISTED MEN, 3 COMP. GEN. 202. THERE EXISTS NO SOUND REASON FOR ANY DIFFERENT RULE WITH RESPECT TO ENLISTED MEN OF THE ARMY.

THIS DECISION, OF COURSE, HAD RELATION TO THE PERIOD OF MILITARY OR NAVAL SERVICE WHEN THE ALLOTMENT WAS STILL IN FORCE, BUT THE DECISION IS QUOTED TO SHOW HOW LIMITED AND RESTRICTED THE ALLOTMENT SYSTEM HAS BEEN HELD TO APPLY. SINCE SUCH HAS BEEN THE RULE WITH RESPECT TO THE PERIOD OF SERVICE, IT IS CLEAR THAT SUCH AN ALLOTMENT WOULD NOT BE AVAILABLE TO AUTHORIZE THE APPLICATION OF ACCRUED PAY OR DEPOSIT UPON DISCHARGE TO COVER PREMIUM FOR PERIOD SUBSEQUENT TO DISCHARGE WHEN THE INSURED IS NO LONGER UNDER THE JURISDICTION OR CONTROL OF THE GOVERNMENT AND AMOUNTS REMAINING DUE HIM FROM THE GOVERNMENT ARE NOT SUBJECTED TO ALLOTMENT. SEE ALSO 4 COMP. GEN. 155; ID. 656. IT IS UNDERSTOOD THAT ALL PREMIUMS WERE PAID IN THIS CASE DURING MILITARY SERVICE AND THAT THE PREMIUM NOT PAID WHICH CAUSED THE LAPSE OF THE INSURANCE WAS SUBSEQUENT TO DISCHARGE. VIEW THEREOF, THE VETERANS' BUREAU HAD NO AUTHORITY TO APPLY, SUBSEQUENT TO THE DEATH OF THE INSURED, ANY PORTION OF ACCRUED PAY OR DEPOSIT DUE THE INSURED UPON DISCHARGE AS INSURANCE PREMIUMS DUE THEREAFTER. ACCORDINGLY QUESTION (1) IS ANSWERED IN THE NEGATIVE, AND NOTHING APPEARS TO JUSTIFY OR REQUIRE THIS OFFICE TO QUESTION THE ACTION OF THE VETERANS' BUREAU IN DISCONTINUING PAYMENTS OF INSTALLMENTS UNDER THE FIRST $5,000 OF TERM INSURANCE.

THE DECISION OF SEPTEMBER 14, 1920, 27 COMP. DEC. 242, TO WHICH YOU REFER, CLEARLY AND DEFINITELY HELD THAT THE BONUS OR WAR-SERVICE PAYMENT OF $60 AUTHORIZED TO BE PAID UNDER THE ACT OF FEBRUARY 24, 1919, 40 STAT. 1151, WAS NOT "PAY OR DEPOSIT OF THE INSURED" WITHIN THE MEANING OF THE WAR RISK INSURANCE ACT, FROM WHICH MONTHLY INSURANCE PREMIUMS WERE AUTHORIZED TO BE DEDUCTED. SEE ALSO 27 COMP. DEC. 420, HOLDING TO THE SAME EFFECT WITH RESPECT TO DISABILITY COMPENSATION, AND CRAWFORD V. UNITED STATES, 291 FED.REP. 801, WITH RESPECT TO RETAINER PAY. THESE DECISIONS DEFINED THE PHRASE "PAY OR DEPOSIT OF THE INSURED" APPEARING IN THE CONTROLLING STATUTE, AND AN EXAMINATION OF THE CASES WILL SHOW THAT THE PAY OR DEPOSIT WHICH THE STATUTE AUTHORIZED THE DIRECTOR TO PROVIDE BY REGULATION COULD BE APPLIED AS INSURANCE PREMIUMS WAS NOT CONSIDERED AS INCLUDING THE AMOUNT OF THE $60 BONUS. SEE SECTION 404 OF THE ACT OF OCTOBER 6, 1917, 40 STAT. 410, AND AS AMENDED BY THE ACT OF AUGUST 9, 1921, 42 STAT. 155; ALSO SECTION 301 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43STAT. 624, AND AS AMENDED BY THE ACTS OF MARCH 4, 1925, 43 STAT. 1309; JUNE 2, 1926, 44 STAT. 686; AND MAY 29, 1928, 45 STAT. 968.

SECTION 309 OF THE WORLD WAR VETERANS' ACT AS AMENDED BY THE ACT OF JULY 2, 1926, 44 STAT. 800, PROVIDED AS FOLLOWS:

WHERE ANY PERSON ALLOWED HIS INSURANCE TO LAPSE AND DIED AFTER FEBRUARY 24, 1919, AND PRIOR TO COLLECTING THE $60 BONUS PROVIDED BY THE ACT OF FEBRUARY 24, 1919 (FORTIETH STATUTES AT LARGE, PAGE 1151), THEN IN THAT EVENT HIS INSURANCE SHALL NOT BE CONSIDERED AS LAPSED DURING SUCH PERIOD AS SAID UNCOLLECTED BONUS WOULD, IF APPLIED TO THE PAYMENT OF PREMIUMS WHEN DUE, EQUAL OR EXCEED THE SAME, AND THE UNITED STATES VETERANS' BUREAU IS HEREBY AUTHORIZED AND DIRECTED TO PAY TO HIS BENEFICIARIES UNDER SAID POLICY THE AMOUNT OF SAID INSURANCE, LESS THE PREMIUMS AND INTEREST THEREON AT 5 PERCENTUM PER ANNUM, COMPOUNDED ANNUALLY, IN INSTALLMENTS, AS PROVIDED BY LAW.

THIS STATUTE CHANGES THE RULE ANNOUNCED IN THE DECISION OF THE COMPTROLLER OF THE TREASURY OF SEPTEMBER 14, 1920, SUPRA, ONLY WITH RESPECT TO CASES WHERE THE DEATH OF THE INSURED OCCURRED AFTER FEBRUARY 24, 1919, AND THE OTHER CONDITIONS EXPRESSED IN THE STATUTE HAVE BEEN MET. IN THIS CASE THE INSURED DIED FEBRUARY 19, 1919. HE DID NOT BECOME ENTITLED TO THE BONUS DURING HIS LIFETIME, NEITHER DID HIS ESTATE BECOME ENTITLED TO IT AFTER HIS DEATH. 26 COMP. DEC. 1038. ACCORDINGLY, QUESTION (2) IS ANSWERED IN THE NEGATIVE. HENCE, THE VETERANS' BUREAU HAS NO AUTHORITY TO PAY INSURANCE INSTALLMENTS UNDER THE SECOND $5,000 TERM INSURANCE.