B-146240, AUG. 2, 1961

B-146240: Aug 2, 1961

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VETERANS ADMINISTRATION: THIS IS IN RESPONSE TO YOUR REQUEST OF JUNE 23. FOR MONEYS HELD IN THE TREASURY TO HIS CREDIT WHICH WERE IMPROPERLY DISTRIBUTED UPON THE ERRONEOUS UNDERSTANDING THAT HE HAD DIED. THE FACTS INVOLVED MAY BE SUMMARIZED AS FOLLOWS: THE VETERAN IS HOSPITALIZED AS AN INCOMPETENT IN THE CHICAGO STATE HOSPITAL. WAS IN RECEIPT OF A NONSERVICE CONNECTED PENSION OF $66.15 PER MONTH. WHEREUPON THE VETERAN'S AWARD OF PENSION WAS TERMINATED EFFECTIVE JANUARY 31. A LETTER WAS RECEIVED FROM THE CHICAGO STATE HOSPITAL ADDRESSED TO THE PERSONAL FUNDS OF PATIENTS ACCOUNT REQUESTING FUNDS FOR THE VETERAN. THUS INDICATING THAT HE WAS ALIVE. 865.20 HELD IN TRUST FOR THE VETERAN IN THE PERSONAL FUNDS OF PATIENTS ACCOUNT WAS AUTHORIZED FOR RELEASE TO THE ADMINISTRATOR OF THE ESTATE.

B-146240, AUG. 2, 1961

TO ADMINISTRATOR, VETERANS ADMINISTRATION:

THIS IS IN RESPONSE TO YOUR REQUEST OF JUNE 23, 1961, FOR AN ADVANCE DECISION IN THE MATTER OF REIMBURSING THE ESTATE OF ISAAC T. SMITH, JR., C -1752713, FOR MONEYS HELD IN THE TREASURY TO HIS CREDIT WHICH WERE IMPROPERLY DISTRIBUTED UPON THE ERRONEOUS UNDERSTANDING THAT HE HAD DIED. FROM THE INFORMATION CONTAINED IN YOUR LETTER, THE FACTS INVOLVED MAY BE SUMMARIZED AS FOLLOWS:

THE VETERAN IS HOSPITALIZED AS AN INCOMPETENT IN THE CHICAGO STATE HOSPITAL, CHICAGO, ILLINOIS, AND WAS IN RECEIPT OF A NONSERVICE CONNECTED PENSION OF $66.15 PER MONTH. ON JANUARY 24, 1957, THE VETERANS SERVICE OFFICER, A STATE EMPLOYEE AT THE HOSPITAL, NOTIFIED THE VETERANS ADMINISTRATION THAT THE VETERAN HAD DIED ON THE 16TH OF THAT MONTH, WHEREUPON THE VETERAN'S AWARD OF PENSION WAS TERMINATED EFFECTIVE JANUARY 31, 1957. PURSUANT TO PROVISIONS OF LAW AND REGULATION, THE PENSION PAYMENTS HAD BEEN MADE IN PART TO THE HOSPITAL ON BEHALF OF THE VETERAN AND THE REMAINDER HAD BEEN DEPOSITED TO THE VETERAN'S CREDIT IN A TRUST FUND ACCOUNT ENTITLED ,PERSONAL FUNDS OF PATIENTS.' 31 U.S.C. 725S; 38 U.S.C. 3202 (D); VETERANS ADMINISTRATION REGULATION 1852 (B); AND VETERANS ADMINISTRATION MANUAL MP-4, PART I, CHANGE 24, CHAPTER 3.

ALTHOUGH THE CLAIMS FILE DID NOT CONTAIN A DEATH CERTIFICATE OR OTHER OFFICIAL EVIDENCE OF THE VETERAN'S DEATH AND NOTWITHSTANDING THAT ON JUNE 25, 1957, A LETTER WAS RECEIVED FROM THE CHICAGO STATE HOSPITAL ADDRESSED TO THE PERSONAL FUNDS OF PATIENTS ACCOUNT REQUESTING FUNDS FOR THE VETERAN, THUS INDICATING THAT HE WAS ALIVE, THE FINANCE DIVISION OF THE VETERANS ADMINISTRATION, ON AUGUST 27, 1957, NOTIFIED THE VETERAN'S SISTERS AND THE ATTORNEY FOR THE ADMINISTRATOR OF THE VETERAN'S ESTATE THAT $2,865.20 HELD IN TRUST FOR THE VETERAN IN THE PERSONAL FUNDS OF PATIENTS ACCOUNT WAS AUTHORIZED FOR RELEASE TO THE ADMINISTRATOR OF THE ESTATE, AND THE AMOUNT WAS PAID. THE ENTIRE $2,865.20 WAS COMPRISED OF PENSION PAYMENT ACCRUALS.

ON AUGUST 16, 1960, POSITIVE EVIDENCE THAT THE VETERAN WAS ALIVE WAS RECEIVED BY THE VETERANS ADMINISTRATION AND SUBSEQUENTLY SUBSTANTIATED. ON JANUARY 12, 1961, THE VETERAN'S PENSION WAS REINSTATED RETROACTIVELY TO THE DATE IT WAS ERRONEOUSLY TERMINATED. IT APPEARS UNLIKELY THAT ANY RECOVERY WILL BE MADE OF THE MONEYS ERRONEOUSLY PAID TO THE VETERAN'S SISTERS. OUR OPINION IS REQUESTED AS TO WHETHER, AND FROM WHAT APPROPRIATIONS, THE VETERANS ADMINISTRATION SHOULD REIMBURSE THE TREASURY FOR THE ERRONEOUSLY DISBURSED MONEYS WHICH HAD BEEN ON DEPOSIT TO THE VETERAN'S CREDIT. IF SUCH REIMBURSEMENT IS AUTHORIZED, WE ARE ASKED, FURTHER, WHETHER IT SHOULD BE MADE BEFORE OR AFTER THE RECOVERY, IF ANY, OF THE IMPROPER DISBURSEMENTS.

UNDER THE CIRCUMSTANCES INVOLVED THERE IS SOME QUESTION AS TO WHETHER THE UNITED STATES, AS TRUSTEE OF THE VETERAN'S FUNDS, WOULD BE LIABLE FOR THE DEFICIENCY IN THE TRUST ACCOUNT OCCASIONED BY THE ERRONEOUS PAYMENTS MADE ON THE BASIS OF NOTICE FROM THE STATE HOSPITAL THAT THE VETERAN HAD DIED. GENERALLY, THE STANDARD OR MEASURE OF CARE, DILIGENCE, AND SKILL REQUIRED OF A TRUSTEE IN THE ADMINISTRATION OF A TRUST IS THAT OF AN ORDINARILY PRUDENT MAN IN THE CONDUCT OF HIS PRIVATE AFFAIRS UNDER SIMILAR CIRCUMSTANCES, AND WITH A SIMILAR OBJECT IN VIEW. THE VIEW HAS BEEN TAKEN THAT SUCH STANDARD IS TO BE APPLIED LIBERALLY IN FAVOR OF THE TRUSTEE; AND THE DEGREE OF CARE AND DILIGENCE REQUIRED MAY VARY UNDER THE CIRCUMSTANCES OF EACH CASE. A COURT WOULD LOOK TO THE NUMBER AND NATURE OF THE DUTIES TO BE PERFORMED, AND IT WOULD NOT BE ASTUTE TO HUNT OUT AND SEIZE UPON EVERY SLIGHT DEPARTURE FROM THE STRICT LINE OF DISCRETION AND GOOD MANAGEMENT. 54 AM.JUR., TRUSTS, SEC. 322, 323.

BUT IN THE ABSENCE OF A CLAIM BY A PROPER PARTY IN INTEREST AND IN VIEW OF THE REMOTE LIKELIHOOD THAT SUCH A CLAIM WILL EVER ARISE--- THE VETERAN BEING 63 YEARS OF AGE AND INCOMPETENT AND THERE BEING NO KNOWN RELATIVES TO WHOM THE AMOUNT TO HIS CREDIT IN THE PERSONAL FUNDS OF PATIENTS TRUST ACCOUNT COULD PASS, IN LIGHT OF THE PROVISIONS OF 38 U.S.C. 3202 (D/--- THERE IS NOT THE NECESSITY FOR DETERMINING WHETHER THE UNITED STATES USED THE REQUIRED DEGREE OF CARE IN HANDLING THE TRUST FUNDS INVOLVED. SECTION 3202 (D) PROVIDES, IN PART, THAT:

"* * * IN THE EVENT OF THE DEATH OF A MENTALLY INCOMPETENT OR INSANE VETERAN, ALL GRATUITOUS BENEFITS UNDER LAWS, ADMINISTERED BY THE VETERANS' ADMINISTRATION DEPOSITED BEFORE OR AFTER THE DATE OF ENACTMENT OF THIS SENTENCE IN THE PERSONAL FUNDS OF PATIENTS TRUST FUND ON ACCOUNT OF SUCH VETERAN SHALL NOT BE PAID TO THE PERSONAL REPRESENTATIVE OF SUCH VETERAN, BUT SHALL BE PAID TO THE FOLLOWING PERSONS LIVING AT THE TIME OF SETTLEMENT, AND IN THE ORDER NAMED: THE SURVIVING SPOUSE, THE CHILDREN (WITHOUT REGARD TO AGE OR MARITAL STATUS) IN EQUAL PARTS, AND THE DEPENDENT PARENTS OF SUCH VETERAN, IN EQUAL PARTS. IF ANY BALANCE REMAINS, SUCH BALANCE SHALL BE DEPOSITED TO THE CREDIT OF THE APPLICABLE CURRENT APPROPRIATION; EXCEPT THAT THERE MAY BE PAID ONLY SO MUCH OF SUCH BALANCE AS MAY BE NECESSARY TO REIMBURSE A PERSON (OTHER THAN A POLITICAL SUBDIVISION OF THE UNITED STATES) WHO BORE THE EXPENSES OF LAST SICKNESS OR BURIAL OF THE VETERAN FOR SUCH EXPENSES.'

UNDER THESE CODE PROVISIONS, ANY FUNDS OF THE VETERAN IN THE PERSONAL FUNDS OF PATIENTS TRUST ACCOUNT WILL IN ALL PROBABILITY REVERT TO THE APPROPRIATION FOR PAYMENT OF PENSION CURRENT AT THE TIME OF HIS DEATH, AND THUS AN ADJUSTMENT NOW TO HIS ACCOUNT FOR THE IMPROPER DISBURSEMENTS WOULD NOT, IN ANY EVENT, SERVE ANY REAL OR USEFUL PURPOSE. HOWEVER, SINCE, AS TRUSTEE, THE UNITED STATES IS RESPONSIBLE FOR A PROPER ACCOUNTING OF THE VETERAN'S ASSETS HELD IN TRUST, THE VETERAN'S ACCOUNTS SHOULD DISCLOSE THE ERRONEOUS DISBURSEMENT; AND IN THE EVENT THE VETERAN REGAINS COMPETENCY OR AN ELIGIBLE RELATIVE IS DISCOVERED, THE QUESTION OF UNITED STATES LIABILITY NOT RESOLVED HERE MAY HAVE TO BE DECIDED. SEE ALSO THE PROVISIONS OF 31 U.S.C. 3203 (B) (2) RESTRICTING BENEFIT PAYMENTS WHERE VETERANS' ESTATES EXCEED $1,500.

THE QUESTIONS PRESENTED ARE ANSWERED ACCORDINGLY.

IN THE EVENT THE FUNDS ILLEGALLY PAID ARE DETERMINED TO BE UNCOLLECTIBLE THE INDEBTEDNESS SHOULD BE REPORTED TO THE CLAIMS DIVISION, GENERAL ACCOUNTING OFFICE.