A-24327, OCTOBER 10, 1928, 8 COMP. GEN. 174

A-24327: Oct 10, 1928

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MAY BE CONSIDERED AS BEGINNING FROM THE DATE A CONVERTED POLICY OF INSURANCE IS MADE EFFECTIVE UNDER REGULATIONS ISSUED BY THE DIRECTOR OF THE VETERANS' BUREAU PURSUANT TO STATUTE. 1928: THERE IS BEFORE THIS OFFICE FOR CONSIDERATION IN THE PREAUDIT OF ACCOUNTS AN ADMINISTRATIVELY APPROVED VOUCHER FOR WAR RISK INSURANCE INSTALLMENTS IN FAVOR OF JOSEPH M. WAS GRANTED $10. 000 WAR RISK TERM INSURANCE UPON WHICH PREMIUMS WERE PAID TO INCLUDE MARCH. 000 TERM INSURANCE WAS REINSTATED AND CONVERTED INTO AN ORDINARY LIFE POLICY. ABOUT WHICH NO QUESTION IS RAISED. THE APPLICATION WAS ACCEPTED BY THE INSURANCE MEDICAL SECTION OF THE VETERAN'S BUREAU ON JUNE 17. THE AFFIDAVIT IN SUPPORT OF PREMIUM LIEN ATTACHED THERETO WAS ACCEPTED JUNE 22.

A-24327, OCTOBER 10, 1928, 8 COMP. GEN. 174

VETERANS' BUREAU - INSURANCE - REINSTATEMENT - INCONTESTABLE CLAUSE THE INCONTESTABLE PERIOD PRESCRIBED BY SECTION 307 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 627, MAY BE CONSIDERED AS BEGINNING FROM THE DATE A CONVERTED POLICY OF INSURANCE IS MADE EFFECTIVE UNDER REGULATIONS ISSUED BY THE DIRECTOR OF THE VETERANS' BUREAU PURSUANT TO STATUTE.

DECISION BY COMPTROLLER GENERAL MCCARL, OCTOBER 10, 1928:

THERE IS BEFORE THIS OFFICE FOR CONSIDERATION IN THE PREAUDIT OF ACCOUNTS AN ADMINISTRATIVELY APPROVED VOUCHER FOR WAR RISK INSURANCE INSTALLMENTS IN FAVOR OF JOSEPH M. GIBLIN AS FOR PERMANENT AND TOTAL DISABILITY BASED ON POLICY NO. K-630328, INVOLVING THE QUESTION AS TO WHEN THE INCONTESTABLE PERIOD PRESCRIBED BY SECTION 307 OF THE WORLD WAR VETERANS' ACT BEGINS TO RUN.

THE VETERAN, WHILE IN THE SERVICE, WAS GRANTED $10,000 WAR RISK TERM INSURANCE UPON WHICH PREMIUMS WERE PAID TO INCLUDE MARCH, 1919. EFFECTIVE FEBRUARY 1, 1927, $5,000 TERM INSURANCE WAS REINSTATED AND CONVERTED INTO AN ORDINARY LIFE POLICY, K-600567, ABOUT WHICH NO QUESTION IS RAISED. MAY 5, 1927, THE VETERAN EXECUTED APPLICATION FOR THE REINSTATEMENT AND CONVERSION OF THE REMAINING $5,000 TERM INSURANCE. THE APPLICATION WAS ACCEPTED BY THE INSURANCE MEDICAL SECTION OF THE VETERAN'S BUREAU ON JUNE 17, 1927, UNDER THE PROVISIONS OF SECTION 304 OF THE WORLD WAR VETERANS' ACT, AND THE AFFIDAVIT IN SUPPORT OF PREMIUM LIEN ATTACHED THERETO WAS ACCEPTED JUNE 22, 1927. ACCORDINGLY, A $5,000 ORDINARY LIFE POLICY WAS ISSUED, EFFECTIVE JUNE 1, 1927, UPON WHICH PREMIUMS WERE PAID TO INCLUDE JANUARY, 1928.

ON DECEMBER 7, 1927, THE VETERAN WAS RATED PERMANENTLY AND TOTALLY DISABLED FROM NOVEMBER 21, 1927, BASED UPON AN EXAMINATION OF THAT DATE. THEREAFTER THE RATING WAS REVIEWED, AND ON MAY 24, 1928, THE VETERAN WAS RATED PERMANENTLY AND TOTALLY DISABLED FROM SEPTEMBER 24, 1923.

NOTWITHSTANDING THE FACT THAT THE VETERAN WAS FOUND TO BE PERMANENTLY AND TOTALLY DISABLED AT AND PRIOR TO THE TIME HE APPLIED FOR REINSTATEMENT, THE BUREAU APPROVED AN AWARD OF INSURANCE BENEFITS ON ACCOUNT OF PERMANENT TOTAL DISABILITY BEGINNING WITH DECEMBER 1, 1927, THE EXPIRATION OF THE SIX MONTHS' PERIOD FOLLOWING THE EFFECTIVE DATE OF THE POLICY, JUNE 1, 1927.

SECTION 307 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 627, PROVIDES, IN PART, 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: * * *.

IT HAS BEEN HELD BY THIS OFFICE THAT A RATING OF PERMANENT TOTAL DISABILITY MADE BEFORE THE EXPIRATION OF THE PERIOD THUS AUTHORIZED FOR CONTESTING INSURANCE, EFFECTIVE AS OF A DATE DURING SUCH PERIOD, STOPS THE RUNNING OF THE PERIOD, AND IF IN SUCH CASES THE BUREAU LATER MAKES ANOTHER RATING OF PERMANENT TOTAL DISABILITY RETROACTIVELY EFFECTIVE AS OF A DATE PRIOR TO APPLICATION FOR REINSTATEMENT AND CONVERSION THERE HAS BEEN NO LAWFUL REINSTATEMENT AND CONVERSION OF THE INSURANCE. 7 COMP. GEN. 248; ID. 551. IT WAS THE PURPOSE AND EFFECT OF THESE DECISIONS TO HOLD THAT THE FIRST RATING OF PERMANENT TOTAL DISABILITY MUST HAVE BEEN DURING THE SIX MONTHS' PERIOD PRESCRIBED BY SECTION 307 OF THE STATUTE TO CONSTITUTE A LAWFUL CONTEST OF THE INSURANCE. THUS THE QUESTION IN THIS CASE IS WHETHER THE RATING OF PERMANENT TOTAL DISABILITY MADE DECEMBER 7, 1927, EFFECTIVE AS OF NOVEMBER 21, 1927, WAS WITHIN THE SIX MONTHS' PERIOD. THE BUREAU APPROVED THE PAYMENTS OF INSURANCE ON THE BASIS THAT THE PERIOD PRESCRIBED BY SECTION 307 BEGAN TO RUN FROM THE EFFECTIVE DATE OF THE POLICY, JUNE 1, 1927, RATHER THAN FROM THE DATE THE APPLICATION FOR REINSTATEMENT WAS FINALLY ACCEPTED, JUNE 22, 1927. IF THE FORMER DATE IS THE BEGINNING OF THE INCONTESTABLE PERIOD, THERE WAS NO TIMELY CONTEST, WHEREAS IF JUNE 22, 1927, IS THE BEGINNING DATE, THE POLICY WAS CONTESTABLE AND INSURANCE WAS NOT LAWFULLY REINSTATED AND CONVERTED.

IT HAS HERETOFORE BEEN HELD BY THIS OFFICE THAT THE INCONTESTABLE PERIOD BEGINS TO RUN FROM THE DATE THE VETERANS' BUREAU HAS DETERMINED THAT ALL CONDITIONS PRECEDENT FOR REINSTATEMENT OF INSURANCE FIXED BY THE STATUTE HAVE BEEN MET. 5 COMP. GEN. 503. SAID HOLDING WAS BASED ON THE SUBMISSION BY THE VETERANS' BUREAU OF A CASE INVOLVING A REINSTATEMENT UNDER SECTION 304 OF THE STATUTE, AS IN THIS CASE, WHEREIN WERE SUGGESTED ONLY TWO ALTERNATIVE DATES AS THE BEGINNING DATE OF THE INCONTESTABLE PERIOD, THE STATEMENT OF THE QUESTION AS SET FORTH IN THE SUBMISSION BEING AS FOLLOWS:

* * * HOWEVER, THIS POSITION HAS BEEN QUESTIONED AND THE OPINION OF YOUR OFFICE IS SOUGHT AS TO WHETHER THE SIX MONTHS' PERIOD REFERRED TO IN SECTION 307 QUOTED SHOULD BE COMPUTED FROM THE DATE THAT THE APPLICATION FOR REINSTATEMENT IS ACTED UPON OR WHETHER, IN VIEW OF THE FACT THAT THE APPLICANT IS COMPELLED TO PAY ALL THE BACK PREMIUMS WITH INTEREST WHERE HE IS SUFFERING FROM A SERVICE CONNECTED DISABILITY, THAT THE SIX MONTHS' PERIOD SHOULD NOT BE COMPUTED FROM THE DATE THAT HE IS COMPELLED TO PAY THE PREMIUMS ON THE POLICY TO EFFECT A REINSTATEMENT * * *.

THERE WERE NOT CONSIDERED IN THAT CONNECTION VETERANS' BUREAU REGULATIONS UNDER WHICH A REINSTATEMENT AND CONVERSION MAY BE MADE EFFECTIVE THE FIRST OF THE MONTH IN WHICH THE REQUIREMENTS OF LAW ARE COMPLIED WITH BY THE APPLICANT. SEE SECTIONS 4097 AND 5020, VETERANS' BUREAU REGULATIONS, 1923, AND REGULATION NO. 138, DATED JULY 1, 1926. IT IS UNDERSTOOD THAT UNDER THE REGULATIONS OF THE VETERANS' BUREAU, ISSUED PURSUANT TO STATUTORY AUTHORITY VESTED IN THE DIRECTOR OF THE VETERANS' BUREAU BY SECTION 5 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 608, THAT A REINSTATED AND CONVERTED POLICY MAY BE MADE EFFECTIVE FROM THE FIRST OF THE MONTH IN WHICH THE APPLICATION FOR REINSTATEMENT AND CONVERSION HAS BEEN FINALLY ACCEPTED BY THE BUREAU. IN THIS CASE COMPLIANCE BY THE INSURED WITH SECTION 304 OF THE STATUTE WAS COMPLETED ON JUNE 22, 1927, AND THE CONVERTED POLICY ISSUED ON THE BASIS THEREOF MAY BE CONSIDERED AS EFFECTIVE FROM THE FIRST OF THAT MONTH. THEREFORE, THE INSURANCE WAS "IN FORCE," WITHIN THE MEANING OF SECTION 307 OF THE STATUTE, FROM AND AFTER JUNE 1, 1927. CONSEQUENTLY, THE INCONTESTABLE PERIOD EXPIRED NOVEMBER 30, 1927, AND THE INSURANCE BECAME INCONTESTABLE DECEMBER 1, 1927, EXCEPT FOR FRAUD OR NONPAYMENT OF PREMIUMS, AND THE PERMANENT AND TOTAL RATING OF DECEMBER 7, 1927, WAS WITHOUT EFFECT AS A CONTEST OF THE INSURANCE.

ACCORDINGLY, THE VOUCHER REPRESENTING INSURANCE INSTALLMENTS ON THE BASIS OF POLICY K-630328 MAY BE APPROVED FOR PAYMENT.