A-5632, NOVEMBER 13, 1924, 4 COMP. GEN. 443

A-5632: Nov 13, 1924

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WAR RISK INSURANCE - REINSTATEMENT OF LAPSED POLICY WHERE ALL THE CONDITIONS FIXED BY SECTION 408 OF THE WAR RISK INSURANCE ACT AUTHORIZING REINSTATEMENT OF LAPSED INSURANCE POLICIES HAVE BEEN MET BY THE INSURED. THE ERRONEOUS REJECTION OF THE APPLICATION FOR REINSTATEMENT BY THE VETERANS' BUREAU ON THE ASSUMPTION THAT THE INSURED WAS THEN TOTALLY AND PERMANENTLY DISABLED. WHEREAS HE WAS ONLY TEMPORARILY AND TOTALLY DISABLED. WILL NOT DEFEAT THE RIGHTS UNDER THE POLICY. IS AUTHORIZED AS THOUGH THE POLICY HAD ACTUALLY BEEN REINSTATED. 1924: I HAVE YOUR LETTER OF OCTOBER 6. REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO PAY INSURANCE UNDER THE POLICY PREVIOUSLY HELD BY HARRIS RALPH WILLIAMS.

A-5632, NOVEMBER 13, 1924, 4 COMP. GEN. 443

WAR RISK INSURANCE - REINSTATEMENT OF LAPSED POLICY WHERE ALL THE CONDITIONS FIXED BY SECTION 408 OF THE WAR RISK INSURANCE ACT AUTHORIZING REINSTATEMENT OF LAPSED INSURANCE POLICIES HAVE BEEN MET BY THE INSURED, THE ERRONEOUS REJECTION OF THE APPLICATION FOR REINSTATEMENT BY THE VETERANS' BUREAU ON THE ASSUMPTION THAT THE INSURED WAS THEN TOTALLY AND PERMANENTLY DISABLED, WHEREAS HE WAS ONLY TEMPORARILY AND TOTALLY DISABLED, AS EVIDENCED BY THE RATING IN EXISTENCE AT THE TIME OF REJECTION, WILL NOT DEFEAT THE RIGHTS UNDER THE POLICY, BUT PAYMENT OF INSURANCE, LESS PROPER DEDUCTION OF UNPAID PREMIUMS AND INTEREST, IS AUTHORIZED AS THOUGH THE POLICY HAD ACTUALLY BEEN REINSTATED.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, NOVEMBER 13, 1924:

I HAVE YOUR LETTER OF OCTOBER 6, 1924, REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO PAY INSURANCE UNDER THE POLICY PREVIOUSLY HELD BY HARRIS RALPH WILLIAMS, C-505,325.

YOU STATE AS FOLLOWS:

THE FACTS IN THE WILLIAMS CASE ARE THAT WILLIAMS ON OCTOBER 24, 1921, APPLIED FOR THE REINSTATEMENT OF INSURANCE IN THE SUM OF $10,000 AND PAID THE PROPER AMOUNT OF PREMIUMS AND INTEREST TO EFFECT THE REINSTATEMENT. HE ALSO FURNISHED PROOF OF THE SERVICE ORIGIN OF HIS DISEASE. ON APRIL 1, 1922, HIS APPLICATION WAS REJECTED ON THE GROUND THAT HE WAS THEN PERMANENTLY AND TOTALLY DISABLED. PRIOR TO THE REJECTION AND SUBSEQUENT TO THE DATE OF HIS APPLICATION WILLIAMS TENDERED THE PROPER AMOUNT OF PREMIUMS UP TO AND INCLUDING THE MONTH OF MARCH, 1922. UNDER DATES OF APRIL 13 AND 19, 1922, ALL THE MONEY TENDERED BY HIM AS PREMIUMS WAS REFUNDED. HE TENDERED NO PREMIUMS THEREAFTER FOR THE REASON THAT HE WAS NOTIFIED THAT HIS APPLICATION WAS REJECTED.

JUST PRIOR TO THE DATE OF HIS APPLICATION HE HAD BEEN RATED TEMPORARILY AND TOTALLY DISABLED. SUBSEQUENT TO REJECTION OF HIS APPLICATION HIS CASE WAS AGAIN REVIEWED ON SEVERAL OCCASIONS, AND HE WAS FOUND NOT TO HAVE BEEN PERMANENTLY AND TOTALLY DISABLED AT THE DATE OF HIS APPLICATION OR AT THE TIME OF THE SUBSEQUENT EXAMINATIONS AND RATINGS. IN FACT, IN THE RATING MADE ON JANUARY 13, 1923, HE WAS FOUND TO BE TEMPORARILY AND PARTIALLY DISABLED ONLY TO THE EXTENT OF 10 PERCENT. ON MAY 5, 1923, HE AGAIN APPLIED FOR THE REINSTATEMENT OF HIS INSURANCE BUT TENDERED NO PREMIUMS, AND THIS WAS REJECTED ON THE GROUND THAT HE WAS THEN PERMANENTLY AND TOTALLY DISABLED AND HAD BEEN SINCE APRIL 6, 1923.

AT THE TIME OF THE MAKING OF BOTH APPLICATIONS FOR REINSTATEMENT HE HAD FURNISHED THE BUREAU SUFFICIENT EVIDENCE OF THE SERVICE ORIGIN OF HIS DISABILITY, AND AT THE DATE OF HIS FIRST APPLICATION HE HAD FURNISHED THE BUREAU THE EVIDENCE UPON WHICH IT WAS AFTERWARDS FOUND THAT HE WAS NOT AT THAT TIME PERMANENTLY AND TOTALLY DISABLED. IN OTHER WORDS, THE RATING OF PERMANENT TOTAL DISABILITY, WHICH DEPRIVED HIM OF HIS FIRST REINSTATEMENT, WAS AN ERROR. WILLIAMS DIED JUNE 3, 1923.

IT WILL BE OBSERVED THAT THE INSURED DIED PRIOR TO THE PASSAGE OF THE WORLD WAR VETERANS' ACT AND THAT ALL HIS RIGHTS, IF ANY, ACCRUED UNDER THE WAR RISK INSURANCE ACT. THESE ACCRUED RIGHTS, IF ANY, ARE PRESERVED BY SECTION 602 OF THE WORLD WAR VETERANS' ACT.

THIS CASE DOES NOT FALL WITHIN THE FOURTH PROVISO OF SECTION 408 OF THE WAR RISK INSURANCE ACT, FOR THE REASON THAT THE ONSET OF TOTAL PERMANENT DISABILITY AS NOW ESTABLISHED OCCURRED SUBSEQUENT TO MARCH 4, 1923. THE ONLY QUESTION REMAINING IS WHETHER UNDER YOUR DECISION IN THE LONNIE GRAVES CASE THIS INSURANCE IS PAYABLE BY REASON OF THE ERRONEOUS REJECTION OF WILLIAMS' FIRST APPLICATION FOR REINSTATEMENT. IN THIS CONNECTION YOUR ATTENTION IS INVITED TO THE FACT THAT WILLIAMS PERSISTED IN THE TENDERING OF PREMIUMS UP TO THE DATE OF THE REJECTION OF HIS FIRST APPLICATION AND THAT THEREAFTER HE TENDERED NO PREMIUMS.

IN THE DECISION REFERRED TO, INVOLVING THE CASE OF LONNIE GRAVES, DATED MARCH 15, 1924, IT WAS HELD THAT THE FINDING OF TOTAL AND PERMANENT DISABILITY NOT OF SERVICE ORIGIN MADE BY THE BUREAU, DEFEATING THE APPLICATION FOR REINSTATEMENT OF THE 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.

IN THIS CASE YOUR SUBMISSION INDICATES THAT THERE WAS NO RATING IN EXISTENCE SHOWING TOTAL AND PERMANENT DISABILITY AT THE TIME THE FIRST APPLICATION FOR REINSTATEMENT WAS FILED, OCTOBER 24, 1921, OR REJECTED APRIL 1, 1922, BUT IN FACT THE RATING OF TEMPORARY AND TOTAL DISABILITY HAD JUST BEEN MADE PRIOR TO THE DATE OF THE APPLICATION FOR REINSTATEMENT AND SUCH A RATING REMAINED IN EXISTENCE UNTIL APRIL 6, 1923. ACCORDINGLY, THIS IS NOT A CASE FOR DECISION ON THE BASIS OF THE HOLDING MADE IN THE LONNIE GRAVES CASE UNDER THE FOURTH PROVISO OF SECTION 408 OF THE WAR RISK INSURANCE ACT, AS AMENDED MARCH 4, 1923, 42 STAT. 1526. IT IS FOR DETERMINATION UNDER THE FIRST PART OF SECTION 408, INCLUDING THE FIRST TWO PROVISOS THEREOF, ORIGINALLY ENACTED, AND ADDED TO THE WAR RISK INSURANCE ACT BY THE ACT OF AUGUST 9, 1921, 42 STAT. 156, AS FOLLOWS:

SEC. 408. IN THE EVENT THAT ALL PROVISIONS OF THE RULES AND REGULATIONS OTHER THAN THE REQUIREMENTS AS TO THE PHYSICAL CONDITION OF THE APPLICANT FOR INSURANCE HAVE BEEN COMPLIED WITH, AN APPLICATION FOR REINSTATEMENT OF LAPSED OR CANCELED YEARLY RENEWABLE TERM INSURANCE OR APPLICATION FOR UNITED STATES GOVERNMENT LIFE INSURANCE (CONVERTED INSURANCE) HEREAFTER MADE MAY BE APPROVED: PROVIDED, THAT THE APPLICANT'S DISABILITY IS THE RESULT OF AN INJURY OR DISEASE OR OF AN AGGRAVATION THEREOF SUFFERED OR CONTRACTED IN THE ACTIVE MILITARY OR NAVAL SERVICE DURING THE WORLD WAR: PROVIDED FURTHER, THAT THE APPLICANT DURING HIS LIFETIME SUBMITS PROOF SATISFACTORY TO THE DIRECTOR SHOWING THE SERVICE ORIGIN OF THE DISABILITY OR AGGRAVATION THEREOF AND THAT THE APPLICANT IS NOT TOTALLY AND PERMANENTLY DISABLED. AS A CONDITION, HOWEVER, TO THE ACCEPTANCE OF AN APPLICATION FOR THE REINSTATEMENT OF LAPSED OR CANCELED YEARLY RENEWABLE TERM INSURANCE OR UNITED STATES GOVERNMENT LIFE INSURANCE (CONVERTED INSURANCE) THE APPLICANT SHALL BE REQUIRED TO PAY ALL THE BACK MONTHLY PREMIUMS WHICH WOULD HAVE BECOME PAYABLE IF SUCH INSURANCE HAD NOT LAPSED, TOGETHER WITH INTEREST AT THE RATE OF 5 PERCENTUM PER ANNUM COMPOUNDED ANNUALLY ON EACH PREMIUM FROM THE DATE SAID PREMIUM IS DUE BY THE TERMS OF THE POLICY: * * *

IT IS UNDERSTOOD THAT THERE IS INVOLVED IN THIS CASE NO QUESTION OF ACCRUED AND UNPAID INSTALLMENTS OF DISABILITY COMPENSATION HAVING KEPT ALIVE THE INSURANCE.

ALL OF THE CONDITIONS OF THE QUOTED PORTION OF SECTION 408 OF THE WAR RISK INSURANCE ACT WERE MET BY THE APPLICANT WHEN HE FILED HIS APPLICATION FOR REINSTATEMENT OCTOBER 24, 1921, AND THE CONDITIONS REMAINED IN STATUS QUO UNTIL HIS APPLICATION WAS REJECTED APRIL 1, 1922. IT HAS SINCE DEVELOPED THAT THE REJECTION OF HIS APPLICATION WAS AN ADMINISTRATIVE ERROR ON THE PART OF THE UNITED STATES VETERANS' BUREAU, WHICH, IF IT HAD NOT OCCURRED, WOULD HAVE ENTITLED THE APPLICANT TO THE REINSTATEMENT OF HIS INSURANCE POLICY. IN OTHER WORDS, THE INSURED DID ALL THE LAW REQUIRED TO ENTITLE HIM TO THE REINSTATEMENT OF HIS POLICY, AND HIS RIGHT TO SUCH REINSTATEMENT SHOULD NOT BE CONSIDERED AS HAVING BEEN DEFEATED BY AN ERROR IN THE ADMINISTRATIVE OFFICE FOR WHICH HE WAS NOT RESPONSIBLE AND OVER WHICH HE HAD NO CONTROL. THIS IS NOT A CASE, THEREFORE, OF RETROACTIVELY CORRECTING THE ERRONEOUS RATING OF TOTAL AND PERMANENT DISABILITY, AS IN THE CASE OF LONNIE GRAVES, BUT OF GIVING THE PROPER EFFECT TO THE RATING OF LESS THAN TOTAL AND PERMANENT DISABILITY IN EXISTENCE AT THE TIME THE APPLICATION FOR REINSTATEMENT OF INSURANCE WAS FILED AND REJECTED ON THE ERRONEOUS ASSUMPTION THAT THE INSURED WAS THEN TOTALLY AND PERMANENTLY DISABLED.

THE SECOND APPLICATION FOR REINSTATEMENT AND THE REJECTION THEREOF HAD NO BEARING ON THE RIGHTS OF THE INSURED UNDER THE FIRST ATTEMPTED APPLICATION FOR REINSTATEMENT.

ACCORDINGLY, YOU ARE ADVISED THAT LAWFUL PAYMENTS OF INSURANCE ARE AUTHORIZED UNDER THE TERMS OF THE POLICY AS HAVING BEEN REINSTATED, THE AMOUNTS OF UNPAID PREMIUMS AND INTEREST THEREON BEING PROPERLY FOR DEDUCTION.