B-156553, OCT. 31, 1967

B-156553: Oct 31, 1967

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COMPENSATION BENEFITS UNDER 38 U.S.C. 3106 WHICH APPLICATION WAS GIVEN RETROACTIVE EFFECT IS IN DIRECT CONFLICT WITH THE LAW AND THE OPINION OF THE SOLICITOR. THE REESTABLISHMENT OF RETIRED PAY TO THE DATE THAT THE APPLICATION WAS FILED MUST BE EFFECTED. USAF: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 12. YOUR REQUEST FOR AN ADVANCE DECISION WAS ASSIGNED AIR FORCE REQUEST NO. DAVIS WAS PLACED ON THE TEMPORARY DISABILITY RETIRED LIST JULY 31. HE WAS TRANSFERRED TO THE PERMANENT DISABILITY RETIRED LIST EFFECTIVE DECEMBER 31. THEN WAS PAYABLE UNDER THE PROVISIONS OF 38 U.S.C. 3203 (A) (1) ( AND HE WAS ENTITLED TO VETERANS ADMINISTRATION COMPENSATION IN THE AMOUNT OF $195 PER MONTH. THE ELECTION WAS MADE EFFECTIVE AS OF MARCH 1.

B-156553, OCT. 31, 1967

ARMED SERVICES - RETIRED PAY - INCOMPETENT MEMBERS - RETROACTIVE RENOUNCEMENT OF VA BENEFITS DECISION TO AF FINANCE OFFICER CONCERNING PAYMENT OF RETIRED PAY TO BANK AS GUARDIAN FOR A RETIRED MENTALLY INCOMPETENT ENLISTED MEMBER. AN APPLICATION BY A GUARDIAN FOR A RETIRED INCOMPETENT ENLISTED MAN RENOUNCING V.A. COMPENSATION BENEFITS UNDER 38 U.S.C. 3106 WHICH APPLICATION WAS GIVEN RETROACTIVE EFFECT IS IN DIRECT CONFLICT WITH THE LAW AND THE OPINION OF THE SOLICITOR, V.A. SERIAL 362-48 WHICH REQUIRE THAT BENEFITS BE TERMINATED AS OF THE DATE OF RECEIPT OF THE APPLICATION AND THEREFORE, THE REESTABLISHMENT OF RETIRED PAY TO THE DATE THAT THE APPLICATION WAS FILED MUST BE EFFECTED.

TO LIEUTENANT COLONEL J. R. KELLIHER, USAF:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 12, 1967, AND ENCLOSURES (FORWARDED HERE WITH HEADQUARTERS, UNITED STATES AIR FORCE TRANSMITTAL LETTER DATED AUGUST 22, 1967), CONCERNING A PAYMENT PROPOSED TO BE MADE TO THE PIONEER BANK, CHATTANOOGA, TENNESSEE, AS GUARDIAN OF JAMES L. E. DAVIS, A MENTALLY INCOMPETENT RETIRED ENLISTED MEMBER OF THE UNITED STATES AIR FORCE. THE PROPOSED PAYMENT IN THE AMOUNT OF $50 REPRESENTS A PART OF THE RETIRED PAY WITHHELD FROM THE SUBJECT MAN'S RETIRED PAY ACCOUNT IN ACCORDANCE WITH THE HOLDING IN THE DECISION OF THIS OFFICE, B-156553, MAY 14, 1965 (A CASE INVOLVING A MENTALLY INCOMPETENT RETIRED ENLISTED MEMBER OF THE REGULAR ARMY). YOUR REQUEST FOR AN ADVANCE DECISION WAS ASSIGNED AIR FORCE REQUEST NO. DO AF 958 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

MR. DAVIS WAS PLACED ON THE TEMPORARY DISABILITY RETIRED LIST JULY 31, 1954, 100 PERCENT DISABLED (MENTALLY INCOMPETENT). HE WAS TRANSFERRED TO THE PERMANENT DISABILITY RETIRED LIST EFFECTIVE DECEMBER 31, 1956. APPEARS THAT FOR THE PURPOSES OF 38 U.S.C. 3203 (B) (2) HE HAS NEITHER WIFE NOR CHILD. ON FEBRUARY 28, 1958, HIS DULY APPOINTED GUARDIAN, THE PIONEER BANK, EXECUTED VETERANS ADMINISTRATION FORM 8-651 ELECTING ON HIS BEHALF "TO RECEIVE COMPENSATION OR PENSION FROM THE VETERANS ADMINISTRATION IN LIEU OF THE TOTAL AMOUNT OF RETIREMENT PAY.' AT THAT TIME HIS FULL RETIRED PAY AMOUNTED TO $87.75 PER MONTH (ONLY ONE-HALF, $43.87, THEN WAS PAYABLE UNDER THE PROVISIONS OF 38 U.S.C. 3203 (A) (1) ( AND HE WAS ENTITLED TO VETERANS ADMINISTRATION COMPENSATION IN THE AMOUNT OF $195 PER MONTH. THE ELECTION WAS MADE EFFECTIVE AS OF MARCH 1, 1958, AND PAYMENT OF RETIRED PAY WAS DISCONTINUED EFFECTIVE AS OF THAT SAME DATE.

THE VETERANS ADMINISTRATION REGIONAL OFFICE, NASHVILLE, TENNESSEE, IN A LETTER DATED MAY 26, 1960, ADVISED THE AIR FORCE FINANCE CENTER THAT "DISABILITY COMPENSATION PAYABLE TO THE LEGAL GUARDIAN OF JAMES L. E. DAVIS HAS BEEN DISCONTINUED EFFECTIVE NOVEMBER 30, 1959. THIS ACTION WAS NECESSARY BECAUSE THE ESTATE IS OF AN EXCESSIVE AMOUNT.' IT APPEARS THAT ON THE BASIS OF SUCH INFORMATION AND ALSO APPARENTLY WITHOUT GIVING ANY EFFECT TO THE 50 PER CENTUM REDUCTION PROVISIONS OF 38 U.S.C. 3203 (A) (1), THE AIR FORCE FINANCE CENTER REACTIVATED DAVIS' RETIRED PAY ACCOUNT EFFECTIVE AS OF DECEMBER 1, 1959, IN THE FULL AMOUNT THEN PAYABLE AT THE RATE OF $93.02 PER MONTH, INCREASED TO $97.67 EFFECTIVE OCTOBER 1, 1963, AND FURTHER INCREASED TO $101.97 EFFECTIVE SEPTEMBER 1, 1965. DAVIS' RETIRED PAY ACCOUNT WAS RESUSPENDED BY THE AIR FORCE FINANCE CENTER EFFECTIVE MAY 1, 1966, BASED ON THE DECISION OF MAY 14, 1965, B-156553, ABOVE REFERRED TO.

AMONG THE ENCLOSURES RECEIVED WITH YOUR LETTER ARE COPIES OF CORRESPONDENCE EXCHANGED IN THE LATTER PART OF 1966 BETWEEN THE GUARDIAN (PIONEER BANK), THE AIR FORCE FINANCE CENTER AND THE VETERANS ADMINISTRATION. THIS CORRESPONDENCE DISCLOSES THAT ON OCTOBER 27, 1966, THE GUARDIAN EXECUTED VETERANS ADMINISTRATION FORM 21-4138 STATING THEREON THAT "WE WISH TO RE-ELECT RETIREMENT BENEFITS FOR OUR WARD ON THE BASIS OUTLINED IN YOUR LETTER DATED OCTOBER 17, ATTACHED.' THE VETERANS ADMINISTRATION LETTER OF OCTOBER 17, REFERRED TO IN THE ABOVE QUOTATION, IS NOT AMONG THE EXHIBITS FURNISHED US BUT ITS GENERAL CONTENTS ARE OUTLINED AS FOLLOWS BY THE PIONEER BANK IN A LETTER DATED NOVEMBER 10, 1966, ADDRESSED TO THE AIR FORCE FINANCE CENTER:

"ON JUNE 27, 1966, WE SENT A COPY OF YOUR LETTER OF JUNE 24, 1966 (WE HAVE NO JUNE 27 LETTER) TO THE ADJUDICATION OFFICER, VETERANS ADMINISTRATION REGIONAL OFFICE, NASHVILLE, TENNESSEE ALONG WITH A LETTER ELECTING RETROACTIVE RETIREMENT PAY AND WAIVING VETERANS ADMINISTRATION BENEFITS. WE HAD NO FURTHER COMMUNICATION UNTIL WE RECEIVED A LETTER DATED OCTOBER 17, 1966 WHICH WAS ONLY AN EXPLANATION OF THE RESULTS IF THE ELECTION WAS TO BE EFFECTED AND ENCLOSING AN ELECTION FORM WHICH WE COMPLETED AND RETURNED ON OCTOBER 28, 1966.

WE ARE DEPENDING ON THE ELECTION TO LIQUIDATE THE OVERPAYMENT.'

IN A LETTER DATED FEBRUARY 13, 1967, THE VETERANS ADMINISTRATION REGIONAL OFFICE, NASHVILLE, TENNESSEE, NOTIFIED THE AIR FORCE FINANCE CENTER AS FOLLOWS:

"IN REPLY TO YOUR LETTER OF FEBRUARY 1, 1967, OUR RECORDS HAVE BEEN CHANGED TO SHOW THAT COMPENSATION WAS DISCONTINUED EFFECTIVE NOVEMBER 30, 1959 UNDER THE PROVISIONS OF SECTION 3106, TITLE 38 U.S.C.

"NO FURTHER COMPENSATION PAYMENTS WILL BE MADE BY THE VETERANS ADMINISTRATION UNLESS AND UNTIL THE GUARDIAN RE-ELECTS VA BENEFITS AND HIS RETIRED PAY ADJUSTED.'

SECTION 3203 (B) (2), TITLE 38 U.S. CODE, PROVIDES:

"/2) IN ANY CASE IN WHICH SUCH AN INCOMPETENT VETERAN HAVING NEITHER WIFE NOR CHILD IS BEING FURNISHED HOSPITAL TREATMENT, INSTITUTIONAL OR DOMICILIARY CARE WITHOUT CHARGE OR OTHERWISE BY THE UNITED STATES, OR ANY POLITICAL SUBDIVISION THEREOF, AND HIS ESTATE FROM ANY SOURCE EQUALS OR EXCEEDS $1,500, FURTHER PAYMENTS OF PENSION, COMPENSATION, OR EMERGENCY OFFICERS' RETIREMENT PAY SHALL NOT BE MADE UNTIL THE ESTATE IS REDUCED TO $500. THE AMOUNT WHICH WOULD BE PAYABLE BUT FOR THIS PARAGRAPH SHALL BE PAID TO THE VETERAN AS PROVIDED FOR THE LUMP SUM IN PARAGRAPH (1) OF THIS SUBSECTION, BUT IN THE EVENT OF THE VETERAN'S DEATH BEFORE PAYMENT OF SUCH LUMP SUM NO PART THEREOF SHALL BE PAYABLE.' IT IS APPARENT THAT PAYMENT OF VETERANS ADMINISTRATION COMPENSATION WAS DISCONTINUED IN THIS CASE EFFECTIVE DECEMBER 1, 1959, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3203 (B) (2).

AS INDICATED IN PARAGRAPH 6 OF YOUR LETTER OF JULY 12, 1967, THE HOLDING IN THE DECISION OF MAY 14, 1965, B-156553, WAS TO THE EFFECT THAT THE RIGHT TO RECEIVE RETIRED PAY ONCE WAIVED FOR VETERANS ADMINISTRATION BENEFITS DOES NOT AGAIN ACCRUE, IN THE ABSENCE OF A WITHDRAWAL OF SUCH WAIVER, UNLESS THERE IS AN ABSOLUTE TERMINATION OF THE RIGHT TO SUCH VETERANS ADMINISTRATION BENEFITS. THE DECISION ALSO HELD THAT SUSPENSION OF VETERANS ADMINISTRATION COMPENSATION BY THE VETERANS ADMINISTRATION BECAUSE THE MEMBER'S ESTATE EQUALS OR EXCEEDS $1,500 DOES NOT TERMINATE THE RIGHT TO RECEIVE THE AMOUNTS SO WITHHELD AND CONSEQUENTLY THE MEMBER DOES NOT AUTOMATICALLY BECOME ENTITLED TO RECEIVE RETIRED PAY FOR THE PERIOD OF SUCH SUSPENSION. UNDER THE RULE OF THAT DECISION THE PIONEER BANK, AS GUARDIAN OF JAMES L. E. DAVIS, HAS BEEN OVERPAID $7,341.09 COVERING THE PERIOD DECEMBER 1, 1959, TO APRIL 30, 1966, INCLUSIVE.

IN PARAGRAPH 7 OF YOUR LETTER, IT IS STATED THAT IN A LETTER DATED NOVEMBER 10, 1966, THE GUARDIAN REQUESTED TERMINATION OF THE RIGHT TO VETERANS ADMINISTRATION COMPENSATION "RETROACTIVE TO 30 NOVEMBER 1959 UNDER THE PROVISIONS OF SECTION 3106, TITLE 38 U.S. CODE," AND THAT THE VETERANS ADMINISTRATION REGIONAL OFFICE, NASHVILLE, TENNESSEE,"CONFIRMED THIS REQUEST BY LETTER OF 13 FEBRUARY 1967.' IN PARAGRAPH 8 IT IS STATED THAT BASED ON SUCH INFORMATION THE INDEBTEDNESS OF $7,341.09 WAS CANCELLED AND PAYMENT OF RETIRED PAY WAS REESTABLISHED RETROACTIVE TO MAY 1, 1966. HOWEVER, IN PARAGRAPH 9 DOUBT IS EXPRESSED WHETHER THE TERMINATION OF THE RIGHT TO VETERANS ADMINISTRATION COMPENSATION RETROACTIVE TO DECEMBER 1, 1959, IS VALID, WHETHER THE INDEBTEDNESS OF $7,341.09 STILL EXISTS, AND WHETHER REESTABLISHMENT OF RETIRED PAY EFFECTIVE MAY 1, 1966, WAS CORRECT.

YOUR REQUEST FOR DECISION PRESENTS THE FOLLOWING TWO QUESTIONS:

"A. IF THE GUARDIAN OR TRUSTEE OF A MENTALLY INCOMPETENT RETIREE DESIRES TO RENOUNCE HIS RIGHTS TO VA COMPENSATION PAYMENTS RETROACTIVE TO DATE VA COMPENSATION PAYMENTS WERE DISCONTINUED UNDER SECTION 3203 (B) (2), TITLE 38, U.S. CODE, MAY RETIRED PAY BE RETROACTIVELY REESTABLISHED?

"B. IF THE ANSWER TO THIS QUESTION IS IN THE AFFIRMATIVE, WOULD THE FACT THAT THE VA REGIONAL OFFICE MIGHT NOT CONFIRM SUCH ACTION IN A PARTICULAR CASE ALTER YOUR DECISION?

SECTION 3106, TITLE 38, U.S. CODE, UNDER AUTHORITY OF WHICH THE PIONEER BANK AS GUARDIAN OF JAMES L. E. DAVIS, ENDEAVORED TO TERMINATE THE RIGHT TO RECEIVE VETERANS ADMINISTRATION COMPENSATION RETROACTIVELY TO DECEMBER 1, 1959, PROVIDES AS FOLLOWS:

"/A) ANY PERSON ENTITLED TO PENSION, COMPENSATION, OR DEPENDENCY AND INDEMNITY COMPENSATION UNDER ANY OF THE LAWS ADMINISTERED BY THE VETERANS' ADMINISTRATION MAY RENOUNCE HIS RIGHT THERETO. THE APPLICATION RENOUNCING THE RIGHT SHALL BE IN WRITING OVER THE PERSON'S SIGNATURE. UPON THE FILING OF SUCH AN APPLICATION, PAYMENT OF SUCH BENEFITS AND THE RIGHT THERETO SHALL BE TERMINATED, AND SUCH PERSON SHALL BE DENIED ANY AND ALL RIGHTS THERETO FROM SUCH FILING.

"/B) RENOUNCEMENT OF RIGHTS SHALL NOT PRECLUDE ANY PERSON FROM FILING A NEW APPLICATION FOR PENSION, COMPENSATION, OR DEPENDENCY AND INDEMNITY COMPENSATION AT A LATER DATE, BUT SUCH NEW APPLICATION SHALL BE TREATED AS AN ORIGINAL APPLICATION, AND NO PAYMENTS SHALL BE MADE FOR ANY PERIOD BEFORE THE DATE SUCH NEW APPLICATION IS FILED.'

THE LANGUAGE ABOVE UNDERSCORED IS CLEAR AND UNAMBIGUOUS AND PERMITS NO RETROACTIVE EFFECT TO BE GIVEN TO ANY RENOUNCEMENT OF VETERANS ADMINISTRATION BENEFITS PRIOR TO THE DATE OF THE FILING OF THE APPLICATION RENOUNCING SUCH BENEFITS. SEE IN THIS CONNECTION SOLICITOR'S OPINION, VETERANS ADMINISTRATION - SERIAL 362-48, DATED MAY 21, 1948, IN WHICH THE SAME CONCLUSION WAS REACHED WITH RESPECT TO THE SIMILAR PROVISIONS CONTAINED IN PARAGRAPH XXI, VETERANS REGULATION NUMBERED 10-SERIES, AS AMENDED BY SECTION 3, ACT OF JULY 13, 1943, CH. 233, 57 STAT. 554, FROM WHICH SECTION 3106 WAS DERIVED.

THEREFORE, THE INFORMATION RECEIVED BY THE AIR FORCE FINANCE CENTER FROM THE VETERANS ADMINISTRATION REGIONAL OFFICE, NASHVILLE, TENNESSEE, ADVISING THAT THE RENUNCIATION OF VETERANS ADMINISTRATION COMPENSATION UNDER 38 U.S.C. 3106 HAD BEEN GIVEN RETROACTIVE EFFECT AS OF DECEMBER 1, 1959, IS IN DIRECT CONFLICT WITH THE PLAIN LANGUAGE OF THE LAW AND THE SOLICITOR'S OPINION OF MAY 21, 1948.

ON THE BASIS OF THE RECORD WHICH YOU HAVE SUBMITTED TO US IT WOULD APPEAR THAT THE RENUNCIATION APPLICATION (THE GUARDIAN'S STATEMENT ON VETERANS ADMINISTRATION FORM 21-4138 DATED OCTOBER 27, 1966, PREVIOUSLY QUOTED, SEEMS TO HAVE BEEN ACCEPTED BY THE VETERANS ADMINISTRATION REGIONAL OFFICE, NASHVILLE, TENNESSEE, AS CONSTITUTING A RENUNCIATION APPLICATION UNDER THE PROVISIONS OF 38 U.S.C. 3106), PROBABLY WAS RECEIVED BY THE VETERANS ADMINISTRATION IN THE LATTER PART OF OCTOBER 1966. UNDER THE EXPRESS TERMS OF SECTION 3106 AND IN ACCORDANCE WITH THE SOLICITOR'S OPINION OF MAY 21, 1948, VETERANS ADMINISTRATION COMPENSATION BENEFITS MUST BE TERMINATED AS OF THE DATE OF RECEIPT OF THE APPLICATION. COMMENCING THE FOLLOWING DAY PAYMENT OF RETIRED PAY IN THE AMOUNT PROPERLY DUE--- SEE 38 U.S.C. 3203 (A) (1) AND (B) (1/-- WAS AUTHORIZED AND PROPER.

QUESTION (A) IS ANSWERED IN THE NEGATIVE AND HENCE NO ANSWER IS NEEDED TO QUESTION (B).

AS INDICATED ABOVE, REESTABLISHMENT OF RETIRED PAY EFFECTIVE MAY 1, 1966, WAS NOT CORRECT AND THEREFORE AN ADDITIONAL OVERPAYMENT SEEMS TO HAVE BEEN MADE IN THE SUBJECT MAN'S RETIRED PAY ACCOUNT FOR THE PERIOD MAY 1, 1966, TO AND INCLUDING THE DATE THAT THE APPLICATION FOR RENUNCIATION OF VETERANS ADMINISTRATION COMPENSATION WAS FILED WITH THE VETERANS ADMINISTRATION.

ACCORDINGLY, PAYMENT ON THE SUBMITTED VOUCHER IS NOT AUTHORIZED AND IT WILL BE RETAINED HERE.