A-27050, MAY 9, 1929, 8 COMP. GEN. 596

A-27050: May 9, 1929

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IS FINALLY REJECTED ON THE BASIS OF EVIDENCE SUBMITTED TO THE VETERANS' BUREAU SHOWING FAILURE TO MEET THE CONDITIONS OF THE REGULATIONS UNDER WHICH FILED. THE VETERANS' BUREAU IS WITHOUT AUTHORITY TO RECONSIDER THE APPLICATION FOR REINSTATEMENT ON THE BASIS OF NEW EVIDENCE FILED SUBSEQUENT TO JULY 2. AUTHORIZING REINSTATEMENT IN CASES WHERE THE INSURED IS SUFFERING WITH A SERVICE- CONNECTED DISABILITY LESS THAN PERMANENT AND TOTAL. WHEREIN THE FACTS ARE STATED AS FOLLOWS: 1 HAVE THE HONOR TO REQUEST YOUR DECISION AS TO THE STATUS OF CERTAIN CONVERTED INSURANCE IN THE CASE OF CARROLL C. THE VETERAN WAS DISCHARGED ON DECEMBER 13. 000 TERM INSURANCE WERE REPORTED PAID TO INCLUDE OCTOBER. 000 OF THE TERM INSURANCE WAS CONVERTED TO A 30-YEAR ENDOWMENT POLICY IN FAVOR OF THE VETERAN'S WIFE AND SON.

A-27050, MAY 9, 1929, 8 COMP. GEN. 596

VETERANS' BUREAU - INSURANCE - REINSTATEMENT IF AN ORIGINAL APPLICATION FOR REINSTATEMENT OF LAPSED TERM INSURANCE FILED ON OR PRIOR TO JULY 2, 1927, THE TERMINATION DATE FIXED BY STATUTE FOR ALL REINSTATEMENTS OF TERM INSURANCE, IS FINALLY REJECTED ON THE BASIS OF EVIDENCE SUBMITTED TO THE VETERANS' BUREAU SHOWING FAILURE TO MEET THE CONDITIONS OF THE REGULATIONS UNDER WHICH FILED, RECOGNIZED AS AUTHORIZED BY LAW IN CASES WHERE THE INSURED COULD SHOW COMPARATIVE GOOD HEALTH AT DATE OF LAPSE AND DATE OF REINSTATEMENT, THE VETERANS' BUREAU IS WITHOUT AUTHORITY TO RECONSIDER THE APPLICATION FOR REINSTATEMENT ON THE BASIS OF NEW EVIDENCE FILED SUBSEQUENT TO JULY 2, 1927, AND SUBSEQUENT TO THE HAPPENING OF PERMANENT AND TOTAL DISABILITY AND DEATH OF THE INSURED, UNDER SECTION 304 OF THE WORLD WAR VETERANS' ACT, AUTHORIZING REINSTATEMENT IN CASES WHERE THE INSURED IS SUFFERING WITH A SERVICE- CONNECTED DISABILITY LESS THAN PERMANENT AND TOTAL.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, MAY 9, 1929:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF APRIL 25, 1929, SUBMITTING FOR CONSIDERATION THE WAR-RISK INSURANCE CASE OF CARROL C. CLARK, XC- 1401210, WHEREIN THE FACTS ARE STATED AS FOLLOWS:

1 HAVE THE HONOR TO REQUEST YOUR DECISION AS TO THE STATUS OF CERTAIN CONVERTED INSURANCE IN THE CASE OF CARROLL C. CLARK, XC 1401210, NOW PENDING FOR ADJUDICATION BEFORE THIS BUREAU.

THIS VETERAN WHILE IN THE SERVICE APPLIED FOR $10,000 TERM INSURANCE ON NOVEMBER 4, 1918, NAMING HIS FATHER AS SOLE BENEFICIARY. THE VETERAN WAS DISCHARGED ON DECEMBER 13, 1918, AND PREMIUMS ON THE $10,000 TERM INSURANCE WERE REPORTED PAID TO INCLUDE OCTOBER, 1925. ON NOVEMBER 1, 1925, $5,000 OF THE TERM INSURANCE WAS CONVERTED TO A 30-YEAR ENDOWMENT POLICY IN FAVOR OF THE VETERAN'S WIFE AND SON, WITH PREMIUMS PAID TO INCLUDE JANUARY, 1928. THIS POLICY IS NOT NOW IN QUESTION.

THE VETERAN ALLOWED THE REMAINING $5,000 TERM INSURANCE TO LAPSE FOR FAILURE TO PAY THE PREMIUM DUE ON NOVEMBER 1, 1925. ON MAY 13, 1927, HE APPLIED FOR THE REINSTATEMENT OF THIS $5,000 TERM INSURANCE AND BUREAU REGULATIONS, WHICH PROVIDE IN SUBSTANCE THAT THE APPLICANT MUST BE IN GOOD HEALTH, AND SO STATE IN HIS APPLICATION, AND WHICH ALSO PROVIDE THAT THE APPLICANT SHOULD SUBMIT A REPORT OF A COMPLETE MEDICAL EXAMINATION. (VETERANS' BUREAU REGULATION 138, EFFECTIVE JULY 2, 1926.) THIS APPLICATION FOR REINSTATEMENT WAS REJECTED ON JUNE 23, 1927, BECAUSE A MEDICAL EXAMINATION SHOWED THAT THE VETERAN WAS SUFFERING FROM A LUNG DISABILITY NOT CONNECTED WITH SERVICE. SIX DOLLARS AND SEVENTY CENTS COVERING PREMIUMS FOR TWO MONTHS TENDERED WITH THE APPLICATION FOR REINSTATEMENT OF MAY 13, 1927, WERE REFUNDED ON JULY 12, 1927. ON JUNE 29, 1927, THE VETERAN APPLIED FOR THE CONVERSION OF THE $5,000 TERM INSURANCE WHICH HE WAS ATTEMPTING TO REINSTATE, AND HE INDICATED THAT HE WISHED THE BENEFICIARY THEREOF TO BE HIS FATHER. AS THE APPLICATION FOR REINSTATEMENT OF MAY 13, 1927, WAS REJECTED ON JUNE 23, 1927, IT NATURALLY FOLLOWED THAT THE APPLICATION FOR CONVERSION WAS ALSO REJECTED.

THE CLAIMANT FIRST APPLIED FOR DISABILITY COMPENSATION ON MAY 20, 1927, ALLEGING THAT HIS DISABILITY WAS TUBERCULOSIS. ON JUNE 17, 1927, IT WAS HELD THAT THE DISABILITY WAS NOT SERVICE CONNECTED. AFTER THE SUBMISSION OF ADDITIONAL EVIDENCE IN JULY, 1927, THE BUREAU HELD, ON AUGUST 6, 1927, THAT THE DISABILITY WAS SERVICE CONNECTED UNDER THE SECOND PROVISO, SECTION 200, WORLD WAR VETERANS' ACT, 1924. THIS RATING OF AUGUST 6, 1927, SHOWED NO DISABILITY FROM THE DATE OF THE VETERAN'S DISCHARGE, DECEMBER 13, 1918, TO SEPTEMBER 30, 1920; A TEMPORARY PARTIAL 10 PERCENT DISABILITY FROM SEPTEMBER 30, 1920, TO JANUARY 1, 1926; A TEMPORARY PARTIAL 35 PERCENT DISABILITY FROM JANUARY 1, 1926, TO MAY 25, 1927; AND A TEMPORARY TOTAL DISABILITY FROM MAY 25, 1927, SERVICE CONNECTED AS JUST INDICATED.

ON FEBRUARY 16, 1928, THE CASE WAS RERATED AND SERVICE CONNECTION CONTINUED. THE DISABILITIES GIVEN UNDER THIS RATING WERE THE SAME AS THE DISABILITIES UNDER THE RATING ON AUGUST 6, 1927, WITH THE EXCEPTION THAT THE TEMPORARY TOTAL DISABILITY WAS TERMINATED JANUARY 28, 1928, AND A PERMANENT TOTAL DISABILITY DECLARED TO EXIST FROM AND AFTER JANUARY 28, 1928. IN SPITE OF THE RATING OF FEBRUARY 16, 1928, WHICH HAD ESTABLISHED A PERMANENT AND TOTAL DISABILITY FROM JANUARY 28, 1928, THE VETERAN WAS ADVISED ON MARCH 6, 1928, THAT HIS APPLICATION FOR THE REINSTATEMENT OF $5,000 TERM INSURANCE (THAT MADE ON MAY 13, 1927) HAD BEEN RECONSIDERED AND THAT IT WAS ACCEPTABLE FOR APPROVAL UNDER SECTION 304, WORLD WAR VETERANS' ACT, 1924, AS AMENDED, PROVIDED THAT BACK PREMIUMS WITH INTEREST WERE PAID. IN THIS LETTER OF MARCH 6, 1928, INSTRUCTIONS WERE GIVEN AS TO THE ESTABLISHMENT OF A PREMIUM LIEN FOR THE UNPAID PREMIUMS AND ADVICE WAS FURTHER FURNISHED AS TO THE DETAILS OF THE ATTEMPTED CONVERSION. ON MARCH 20, 1928, THE FATHER OF THE VETERAN TENDERED $73.30 IN COMPLIANCE WITH THE BUREAU'S LETTER OF MARCH 6, 1928, TO COMPLETE THE REINSTATEMENT UNDER SECTION 304, WORLD WAR VETERANS' ACT, 1924, AS AMENDED. THIS TENDER WAS FINALLY REJECTED ON MAY 19, 1928, BECAUSE OF THE INTERVENING PERMANENT AND TOTAL DISABILITY, AND BECAUSE OF THE FACT THAT THE VETERAN NEVER MET THE COMPLETE REQUIREMENTS FOR REINSTATEMENT, IN THAT HE DID NOT SUBMIT THE NECESSARY PREMIUMS FOR REINSTATEMENT UNTIL AFTER HE HAD BEEN RATED AS PERMANENTLY AND TOTALLY DISABLED, THE EFFECTIVE DATE OF WHICH WAS JANUARY 28, 1928.

IN ORDER TO COMPLETE THE CHRONOLOGY OF THE CASE IT SHOULD BE STATED THAT THE VETERAN DIED ON APRIL 1, 1928, AND THAT ON JULY 13, 1928, A POST- MORTEM RATING WAS GIVEN WHICH CONFIRMED THE RATING OF FEBRUARY 16, 1928.

IN CONCLUSION, YOU STATE THAT THE GENERAL QUESTION INVOLVED IS "WHETHER THE BUREAU UNDER THE PRESENT CIRCUMSTANCES MAY NOW RECONSIDER AN APPLICATION (FOR REINSTATEMENT OF LAPSED TERM INSURANCE) PREVIOUSLY REJECTED AT A TIME WHEN THE EVIDENCE DID NOT SHOW SERVICE CONNECTION OF THE DISABILITIES.'

APPLICATIONS FOR REINSTATEMENT OF TERM INSURANCE WERE OF TWO GENERAL CLASSES, VIZ, THOSE AUTHORIZED BY REGULATION (NOT EXPRESSLY BUT IMPLIEDLY AUTHORIZED BY STATUTE, 27 COMP. DEC. 1084, 1 COMP. GEN. 109), WHERE THE INSURED WAS IN AS GOOD HEALTH AT DATE OF APPLICATION FOR REINSTATEMENT AS WHEN THE INSURANCE LAPSED, AND THOSE EXPRESSLY AUTHORIZED BY STATUTE (SEC. 408 OF THE WAR RISK INSURANCE ACT AND SEC. 304 OF THE WORLD WAR VETERANS' ACT), WHERE THE INSURED WAS SUFFERING WITH A SERVICE-CONNECTED DISABILITY LESS THAN PERMANENT AND TOTAL.

REFERENCE HAS BEEN MADE, AS POSSIBLY CONTROLLING IN THIS CASE, TO THE DECISION OF THIS OFFICE DATED MARCH 15, 1924, A.D. 8096, INVOLVING REINSTATEMENT OF TERM INSURANCE IN THE CASE OF LONNIE GRAVES, C 530449. THAT WAS A CASE INVOLVING THE AUTHORITY OF THE BUREAU TO RECONSIDER AN APPLICATION FOR REINSTATEMENT OF TERM INSURANCE UNDER SECTION 408 OF THE WAR RISK INSURANCE ACT AFTER THE APPLICATION HAD ONCE BEEN REJECTED, ON THE BASIS OF A SUBSEQUENT RATING OF SERVICE CONNECTION. IT WAS HELD IN EFFECT THAT A FINDING OF TOTAL AND PERMANENT DISABILITY NOT OF SERVICE ORIGIN, MADE BY THE BUREAU, DEFEATING AN APPLICATION FOR REINSTATEMENT OF AN INSURANCE POLICY UNDER SECTION 408 OF THE WAR RISK INSURANCE ACT, MAY BE REVIEWED AND CORRECTED BY THE BUREAU TO SHOW THE DISABILITY TO HAVE BEEN TOTAL AND PERMANENT AT A DATE SUBSEQUENT TO THE APPLICATION FOR REINSTATEMENT OF THE INSURANCE AND OF SERVICE ORIGIN, THE EFFECT OF WHICH WAS TO CONSIDER THE ORIGINAL APPLICATION FOR REINSTATEMENT EFFECTIVE TO VALIDATE THE POLICY AND TO AUTHORIZE LAWFUL PAYMENTS THEREUNDER.

THERE ARE ESSENTIAL DIFFERENCES BETWEEN THE FACTS OF THE TWO CASES AND A MATERIAL CHANGE IN THE TERMS OF THE CONTROLLING STATUTE SINCE THAT DECISION WAS RENDERED.

IN THE LONNIE GRAVES CASE THE RECONSIDERATION OF THE REJECTED APPLICATION WAS MADE UNDER THE SAME PROVISIONS OF LAW, SECTION 408 OF THE WAR RISK INSURANCE ACT, AS THE ORIGINAL CONSIDERATION OF THE APPLICATION. IN THE INSTANT CASE THE RECONSIDERATION OF THE REJECTED APPLICATION MAY ONLY BE MADE UNDER DIFFERENT PROVISIONS OF LAW AND REGULATION THAN THOSE UNDER WHICH THE APPLICATION WAS ORIGINALLY CONSIDERED. IN OTHER WORDS, THE RECONSIDERATION OF THE APPLICATION FOR REINSTATEMENT NOW PROPOSED BY THE BUREAU SUBSEQUENT TO THE HAPPENING OF PERMANENT AND TOTAL DISABILITY, AND EVEN SUBSEQUENT TO THE DEATH OF THE INSURED, WOULD BE BASED ON A DIFFERENT AUTHORITY WITH DIFFERENT CONDITIONS AND REQUIREMENTS DIFFERING ESSENTIALLY FROM THOSE INCIDENT TO THE AUTHORITY UNDER WHICH THE ORIGINAL APPLICATION WAS FILED AND REJECTED.

UNDER REGULATION NO. 138, EFFECTIVE JULY 2, 1926, WHICH APPEARS TO HAVE BEEN CONTROLLING IN THE ORIGINAL CONSIDERATION OF THIS CASE, THE APPLICANT FOR REINSTATEMENT WAS REQUIRED TO SHOW COMPARATIVE HEALTH CONDITION AS OF DATE OF LAPSE AND APPLICATION FOR REINSTATEMENT AND ALSO REQUIRED TO PAY BUT TWO MONTHLY PREMIUMS. UNDER THE STATUTE, SECTION 304 OF THE WORLD WAR VETERANS' ACT, THE APPLICANT MUST SHOW SERVICE-CONNECTED DISABILITY LESS THAN PERMANENT AND TOTAL AND EITHER PAY ALL BACK PREMIUMS WITH INTEREST OR ARRANGE FOR THE AMOUNT THEREOF TO BE CHARGED AGAINST THE INSURANCE. WOULD APPEAR FROM SECTION 4113 OF SAID REGULATION THAT IT WAS USUALLY THE PRACTICE OF THE BUREAU TO PROCEED TO CONSIDER AN APPLICATION UNDER THE STATUTE WHERE THE APPLICANT HAD FAILED TO MEET THE REQUIREMENTS TO AUTHORIZE REINSTATEMENT UNDER THE REGULATION. THAT ADMINISTRATIVE PRACTICE AND THE PRIVILEGE THUS EXTENDED TO THE INSURED TO HAVE HIS APPLICATION FOR REINSTATEMENT AUTOMATICALLY RECONSIDERED UNDER THE STATUTE UPON FAILURE TO MEET THE REQUIREMENTS OF THE REGULATIONS, MAY NOT APPLY TO A CASE WHERE, SUBSEQUENT TO THE ORIGINAL FILING OF THE APPLICATION UNDER THE REGULATION AND PRIOR TO NOTICE TO THE APPLICANT OF HIS PRIVILEGES UNDER THE STATUTE, CONDITIONS AROSE, SUCH AS THE HAPPENING OF PERMANENT AND TOTAL DISABILITY, WHICH DEFEATED HIS RIGHTS UNDER THE STATUTE. THAT IS TO SAY, AN ORIGINAL APPLICATION UNDER THE REGULATION PRESCRIBING CERTAIN SPECIFIED REQUIREMENTS WAS NOT A CONTINUING ONE UNDER THE STATUTE PRESCRIBING ENTIRELY DIFFERENT REQUIREMENTS. IT WAS PROPER FOR THE ADMINISTRATIVE OFFICE TO PROVIDE BY REGULATION THAT AN APPLICATION FOR REINSTATEMENT WOULD BE CONSIDERED, ALSO, UNDER THE STATUTE, BUT THERE WAS NO VESTED RIGHT UNDER THE STATUTE UNLESS AND UNTIL THE APPLICANT HAD BEEN NOTIFIED OF, AND SIGNIFIED HIS INTENTION TO MEET, THE REQUIREMENTS OF THE STATUTE. IN THIS CASE IT WAS IMPROPER FOR THE ADMINISTRATIVE OFFICE TO HAVE NOTIFIED THE INSURED OF RIGHTS UNDER THE STATUTE FOR THE REASON THAT ON DATE OF SUCH NOTICE, MARCH 6, 1928, HE ALREADY HAD BEEN DETERMINED PERMANENTLY AND TOTALLY DISABLED FROM JANUARY 28, 1928, WHICH DESTROYED ANY RIGHT HE MAY PREVIOUSLY HAVE HAD TO THE BENEFITS OF REINSTATEMENT UNDER THE STATUTE.

IT IS BELIEVED ANY DOUBT AS TO THE CORRECTNESS OF THE ABOVE VIEW IS SET AT REST BY THE TERMS OF SECTION 304 OF THE WORLD WAR VETERANS' ACT AS AMENDED BY THE ACT OF JULY 2, 1926, 44 STAT. 799, AND SECTION 301 OF THE SAME STATUTE AS AMENDED BY THE ACT OF MAY 29, 1928, 45 STAT. 969. THE FIRST SECTION CONTAINED THE FOLLOWING PROVISO: "THAT NO YEARLY RENEWABLE TERM INSURANCE SHALL BE REINSTATED AFTER JULY 2, 1927.' THE SECOND SECTION CONTAINED THE FOLLOWING PROVISIONS:

EXCEPT AS PROVIDED IN THE SECOND PARAGRAPH OF THIS SECTION, NOT LATER THAN JULY 2, 1927, ALL TERM YEARLY RENEWABLE INSURANCE HELD BY PERSONS WHO WERE IN THE MILITARY SERVICE AFTER APRIL 6, 1917, SHALL BE CONVERTED, WITHOUT MEDICAL EXAMINATION, INTO SUCH FORM OR FORMS OF INSURANCE AS MAY BE PRESCRIBED BY REGULATIONS AND AS THE INSURED MAY REQUEST. * * *.

ALL YEARLY RENEWABLE TERM INSURANCE SHALL CEASE ON JULY 2, 1927, EXCEPT WHEN DEATH OR TOTAL PERMANENT DISABILITY SHALL HAVE OCCURRED BEFORE JULY 2, 1927. * * *.

CERTAIN EXCEPTIONS WERE NOTED IN THE STATUTE, NOT HERE INVOLVED. THESE PROVISIONS OF LAW WERE ENACTED SUBSEQUENT TO THE DECISION IN THE LONNIE GRAVES CASE. EVEN IF REINSTATEMENT IN THIS CASE WERE OTHERWISE CONSIDERED PROPER UNDER THE RULE ANNOUNCED IN THAT CASE, THESE PROVISIONS OF LAW WOULD NOT PRECLUDE THE RECONSIDERATION OF AN APPLICATION FOR REINSTATEMENT UNDER SECTION 304 OF THE STATUTE ON THE BASIS OF A REJECTED APPLICATION FILED UNDER THE REGULATIONS PRIOR TO THE TERMINATION DATE, JULY 2, 1927, OTHER THAN SUCH CASES AS COME WITHIN THE TERMS OF THE EXCEPTIONS FIXED IN THE STATUTE. WHILE THERE HAS BEEN RECOGNIZED THE RIGHT OF THE BUREAU TO PASS ON ALL APPLICATIONS FOR REINSTATEMENT AND CONVERSION FILED ON OR PRIOR TO JULY 2, 1927 (LETTER OF FEBRUARY 27, 1928, A-21551), THE BUREAU HAS NO AUTHORITY TO RECONSIDER, AFTER JULY 2, 1927, AN APPLICATION FOR REINSTATEMENT OF TERM INSURANCE ONCE FINALLY REJECTED AT A TIME WHEN THE EVIDENCE BEFORE THE BUREAU FAILED TO SHOW COMPLIANCE WITH EITHER THE REGULATIONS OR THE STATUTE. THE FILING OF NEW EVIDENCE AFTER REJECTION AND SUBSEQUENT TO JULY 2, 1927, WOULD BE EQUIVALENT TO A NEW APPLICATION AND NOT FOR CONSIDERATION BY THE BUREAU.

YOU ARE ADVISED, THEREFORE, THAT PAYMENT OF INSURANCE SHOULD NOT BE MADE IN THIS CASE ON THE BASIS OF THE $5,000 WHICH LAPSED FOR NON PAYMENT OF PREMIUMS NOVEMBER 1, 1925.