B-153679, APRIL 20, 1964, 43 COMP. GEN. 692

B-153679: Apr 20, 1964

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THE PAYMENT TO THE HOSPITAL UNDER THE ASSIGNMENT WAS IN ERROR. IT IS STATED IN YOUR LETTER THAT THE VETERAN EXECUTED THE USUAL ASSIGNMENT WHEREBY HIS RIGHTS. TO REIMBURSEMENT UNDER HIS HOSPITALIZATION INSURANCE WAS ASSIGNED TO THE VETERANS ADMINISTRATION. WAS INSURED WITH THE ABOVE-NAMED CARRIER UNDER A GROUP HOSPITALIZATION INSURANCE POLICY WHICH PROVIDED FOR THE PAYMENT OF HOSPITAL BENEFITS ON A REIMBURSABLE BASIS OF THE AMOUNT OF THE CHARGES INCURRED NOT TO EXCEED THE MAXIMUM FOR WHICH HE WAS INSURED. WHILE IT IS NOT SPECIFICALLY SO STATED IN THE LETTER. WHERE IT WAS RECEIVED AND DEPOSITED. WHEREIN REFUND WAS REFUSED UNDER THE . IT IS STATED THAT AT THE TIME PAYMENT IN THIS INSTANCE WAS DEMANDED AND RECEIVED.

B-153679, APRIL 20, 1964, 43 COMP. GEN. 692

VETERANS - HOSPITALIZATION - INSURANCE COMPANY REFUND CLAIM THE INSURANCE PAYMENT RECEIVED BY A VETERANS ADMINISTRATION HOSPITAL UNDER AN ASSIGNMENT BY A VETERAN WHO INCIDENT TO THE HOSPITALIZATION FURNISHED EXECUTED AN AFFIDAVIT OF FINANCIAL INABILITY TO PAY FOR CARE AND TREATMENT MAY BE REFUNDED TO THE INSURER, THE VETERAN HAVING NO RIGHT TO COLLECT THE INSURANCE UNDER A GROUP POLICY PROVIDING FOR PAYMENT OF HOSPITAL BENEFITS ON A REIMBURSABLE BASIS BY REASON OF THE COURT RULING IN UNITED STATES V. ST. PAUL MERCURY INDEMNITY O., 133 F.SUPP. 726, AFFIRMED 238 F.2D 594, THE PAYMENT TO THE HOSPITAL UNDER THE ASSIGNMENT WAS IN ERROR, AND THE VETERAN OWING NO DEBT TO THE GOVERNMENT, RETENTION OF THE AMOUNT ERRONEOUSLY PAID BY THE INSURER WOULD CONSTITUTE UNJUST ENRICHMENT OF THE GOVERNMENT.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, APRIL 20, 1964:

YOUR LETTER OF MARCH 5, 1964, REQUESTED OUR ADVICE AS TO WHETHER THE VETERANS ADMINISTRATION MAY REFUND TO THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES AN AMOUNT PAID TO YOUR HOSPITAL AT ALTOONA, PENNSYLVANIA, ON SEPTEMBER 25, 1962, FOR HOSPITALIZATION FURNISHED THE VETERAN JOSEPH A. BEAN, C-10 055 179, FROM JULY 5, 1962 THROUGH SEPTEMBER 6, 1962.

IT IS STATED IN YOUR LETTER THAT THE VETERAN EXECUTED THE USUAL ASSIGNMENT WHEREBY HIS RIGHTS, IF ANY, TO REIMBURSEMENT UNDER HIS HOSPITALIZATION INSURANCE WAS ASSIGNED TO THE VETERANS ADMINISTRATION. WAS INSURED WITH THE ABOVE-NAMED CARRIER UNDER A GROUP HOSPITALIZATION INSURANCE POLICY WHICH PROVIDED FOR THE PAYMENT OF HOSPITAL BENEFITS ON A REIMBURSABLE BASIS OF THE AMOUNT OF THE CHARGES INCURRED NOT TO EXCEED THE MAXIMUM FOR WHICH HE WAS INSURED. WHILE IT IS NOT SPECIFICALLY SO STATED IN THE LETTER, HE APPARENTLY ALSO EXECUTED THE AFFIDAVIT OF FINANCIAL INABILITY TO PAY FOR CARE AND TREATMENT.

PURSUANT TO THE ASSIGNMENT, THE CARRIER PAID UPON DEMAND $1,221.17 TO YOUR HOSPITAL, WHERE IT WAS RECEIVED AND DEPOSITED. SUBSEQUENTLY THE CARRIER ADVISED THE HOSPITAL THAT THE PAYMENT HAD BEEN MADE IN ERROR AND REQUESTED REFUND THEREOF. THE CARRIER ALLEGES THAT UNDER THE RULING OF THE COURT IN UNITED STATES V. ST. PAUL MERCURY INDEMNITY CO., 133 F.SUPP. 726, AFFIRMED 238 F.2D 594, THE VETERAN HAD NO RIGHT TO COLLECT UNDER THE TERMS OF HIS INSURANCE AND, HENCE, THE VETERANS ADMINISTRATION HAD NO RIGHT UNDER HIS ASSIGNMENT.

YOUR ADMINISTRATION APPARENTLY AGREES WITH THE CONTENTION OF THE CARRIER, BUT DECLINED TO REFUND THE AMOUNT PAID ON THE BASIS OF A DISALLOWANCE ISSUED BY OUR CLAIMS DIVISION ON MARCH 5, 1958, IN AN IDENTICAL CASE, CLAIM NO. Z-126053 (17), WHEREIN REFUND WAS REFUSED UNDER THE ,VOLUNTARY PAYMENT" DOCTRINE. YOUR LETTER ADVISES THAT THE VETERANS ADMINISTRATION CONSIDERS THE ST. PAUL MERCURY INDEMNITY CO. CASE DECISIVE WITH RESPECT TO HOSPITAL REIMBURSEMENT POLICIES OR CONTRACTS SIMILARLY WORDED AND THAT IN SUCH CASES IT HAS NOT BEEN YOUR PRACTICE TO DEMAND PAYMENT. HOWEVER, IT IS STATED THAT AT THE TIME PAYMENT IN THIS INSTANCE WAS DEMANDED AND RECEIVED, THE VETERANS ADMINISTRATION WAS UNAWARE OF THE PROVISIONS OF THE GROUP INSURANCE POLICY.

THE LETTER OF MARCH 5 CALLS OUR ATTENTION TO TWO LATER SETTLEMENTS OF OUR CLAIMS DIVISION, A-2216129 AND Z-2219609, WHEREIN AMOUNTS COLLECTED FROM CARRIERS IN SIMILAR SITUATIONS WERE REFUNDED. HENCE, YOU REQUEST OUR ADVICE AS TO WHETHER THE PRINCIPLE ESTABLISHED IN THE DISALLOWANCE OF MARCH 5, 1958, SHOULD BE CONSIDERED APPLICABLE IN THIS AND FUTURE SIMILAR SITUATIONS.

WE CONCUR WITH YOUR VIEW THAT THE ST. PAUL MERCURY INDEMNITY CO. CASE IS DECISIVE WITH RESPECT TO HOSPITAL REIMBURSEMENT POLICIES OR CONTRACTS WHOSE WORDING IS SIMILAR TO THAT OF THE POLICY THEREIN CONSIDERED. ALSO, WE NO LONGER CONSIDER THE "VOLUNTARY PAYMENT" DOCTRINE STATED IN THE DISALLOWANCE OF MARCH 5, 1958, TO BE APPLICABLE TO CASES OF THE NATURE HERE INVOLVED. THAT DOCTRINE IS APPLIED GENERALLY TO PAYMENTS MADE AND RECEIVED THROUGH MISTAKE OF LAW, RATHER THAN MISTAKE OF FACT. IN THESE CASES, PAYMENT SEEMS TO BE MADE AND RECEIVED THROUGH MISTAKE OF FACT, THAT IS, THE OVERLOOKING OF THE TERMS OF THE POLICY OR CONTRACT UNDER WHICH THERE CLEARLY IS NO LEGAL OBLIGATION TO PAY. FURTHERMORE, THE DOCTRINE IS APPLIED ONLY WHERE THE RECIPIENT OF THE ,VOLUNTARY PAYMENT" HAD A VALID RIGHT TO BE PAID BY SOMEONE OF AN EXISTING DEBT, BUT WAS PAID VOLUNTARILY BY ONE WHO WAS NOT LEGALLY REQUIRED TO PAY THE DEBT INVOLVED. SEE NATIONAL SHAWMUT BANK OF BOSTON V. FIDELITY MUTUAL LIFE INSURANCE CO., 61 NE 2D 18. IN CASES SUCH AS THAT HERE INVOLVED, IT IS CLEAR THAT THERE IS NO VALID DEBT OWED TO THE GOVERNMENT BY THE VETERAN AND REFUSAL TO REFUND THE AMOUNT ERRONEOUSLY PAID BY HIS INSURER WOULD CONSTITUTE UNJUST ENRICHMENT OF THE GOVERNMENT.

HENCE YOU ARE ADVISED THAT THE AMOUNT RECEIVED FROM THE CARRIER IN THIS AND IN SIMILAR FUTURE CASES SHOULD BE REFUNDED TO THE CARRIER. IN THIS CONNECTION, IT IS NOTED THAT THE DISALLOWANCE OF MARCH 5, 1958, WAS SUBSEQUENTLY REVERSED UPON APPEAL FROM THE CARRIER AND A REFUND VOUCHER WAS CERTIFIED FOR PAYMENT ON NOVEMBER 18, 1958.