SEPTEMBER 30, 1922, 2 COMP. GEN. 249

SEPTEMBER 30, 1922, 2 COMP. GEN. 249

DEDUCTION OF PREMIUMS ON WAR RISK INSURANCE POLICIES FROM ARREARS OF PAY DUE OFFICERS PREMIUMS UPON WAR-RISK INSURANCE POLICIES ARE DEDUCTIBLE FROM THE PAY OF OFFICERS ONLY WHEN AUTHORIZED BY THE OFFICER, AND WHEN SUCH AUTHORIZATION HAS NOT BEEN GIVEN THE FACT THAT AN OFFICER MAY HAVE DUE HIM AT THE TIME OF HIS DEATH ARREARS OF PAY MORE THAN SUFFICIENT TO PAY ANY PREMIUMS FALLING DUE AFTER DISCHARGE, OR MAY HAVE PREVIOUSLY AUTHORIZED THE DEDUCTION OF PREMIUMS FROM HIS PAY AS A PRIVATE, WILL NOT PREVENT THE LAPSING OF THE POLICY WHEN ANY PREMIUM HAS NOT BEEN PAID FOR MORE THAN 31 DAYS AFTER IT FALLS DUE.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, SEPTEMBER 30, 1922:

I HAVE YOUR LETTER OF SEPTEMBER 5, 1922, AS FOLLOWS:

I SUBMIT FOR YOUR CONSIDERATION AND DECISION, THE QUESTION WHETHER OR NOT WILLIAM H. CRAIG, WHO IS NAMED AS BENEFICIARY IN A POLICY OF INSURANCE FOR $10,000, WHICH WAS ISSUED TO HIS SON, LIEUTENANT BRITT CRAIG, JANUARY 31, 1918, IS ENTITLED TO RECEIVE THE AMOUNT OF THE POLICY, BASED ON THE FOLLOWING STATEMENT OF FACTS:

BRITT CRAIG ENLISTED AS A PRIVATE IN THE AVIATION SECTION, SIGNAL CORPS OF THE ARMY, JUNE 21, 1917. HE APPLIED FOR $10,000 INSURANCE, JANUARY 31, 1918, PAYABLE TO HIS FATHER, WILLIAM H. CRAIG. ON AUGUST 14, 1918, HE WAS COMMISSIONED A SECOND LIEUTENANT, AND ON DECEMBER 11, 1918, HE WAS DISCHARGED FROM THE SERVICE FOR CONVENIENCE OF THE GOVERNMENT. HE DIED IN NEW YORK, N.Y., MARCH 18, 1919, OF BRONCHO PNEUMONIA INFLUENZA, WHICH DOES NOT APPEAR TO HAVE BEEN OF SERVICE ORIGIN. MONTHLY DEDUCTIONS OF $6.60 WERE MADE FROM THE PAY OF THE INSURED TO PAY THE PREMIUMS UP TO AND INCLUDING THE MONTH OF DECEMBER, 1918, WHEN HE WAS DISCHARGED FROM THE SERVICE. NO PREMIUMS WERE PAID OR DEDUCTED FROM PAY DUE HIM FROM THE ARMY AFTER HIS DISCHARGE.

AT THE TIME OF THE DEATH OF THE INSURED, ALTHOUGH HE HAD BEEN OUT OF THE SERVICE FOR THREE MONTHS, THERE WAS DUE HIM AS ACTIVE SERVICE PAY, AS EVIDENCED BY THE NOTICE OF SETTLEMENT FROM THE AUDITOR FOR THE WAR DEPARTMENT, DATED SEPTEMBER 23, 1920, THE SUM OF $114.85.

THE POLICY WAS PROPERLY ISSUED, BASED UPON THE INSURED'S APPLICATION FOR INSURANCE, WHICH PROVIDED FOR THE NECESSARY MONTHLY DEDUCTIONS FROM HIS PAY OR FROM ANY DEPOSIT WITH THE UNITED STATES.

AT THE TIME OF THE DEATH OF THE INSURED, TREASURY DECISION NO. 33, W.R., DATED SEPTEMBER 20, 1918, WAS IN FORCE, SECTION 1 OF WHICH PROVIDES THAT INSURANCE GRANTED UNDER ARTICLE IV OF THE WAR RISK INSURANCE ACT WILL NOT BE PERMITTED TO LAPSE FOR NONPAYMENT OF PREMIUMS WHILE THE INSURED IS IN THE ACTIVE MILITARY OR NAVAL SERVICE, AND PREMIUMS THEREFOR ARE AUTHORIZED TO BE DEDUCTED FROM THE INSURED'S PAY OR DEPOSIT. SECTION 2 PROVIDES THAT THE INSURANCE SHALL LAPSE AND TERMINATE * * * IF AT ANY TIME AFTER SO LEAVING THE SERVICE THE WHOLE OR ANY PART OF ANY PREMIUM THEREAFTER ACCRUING IS NOT PAID PROMPTLY WHEN DUE OR WITHIN THIRTY-ONE DAYS THEREAFTER.

IN VIEW OF THE PROVISION, IN THE APPLICATION FOR INSURANCE, TO DEDUCT THE PREMIUMS FROM HIS PAY, OR FROM ANY DEPOSIT WITH THE UNITED STATES, AND THE FACT THAT THE INSURED DID NOT COLLECT OR ATTEMPT TO COLLECT THE SERVICE PAY DUE HIM FROM THE ARMY AFTER HIS DISCHARGE, DID THE POLICY OF INSURANCE LAPSE, OR IS THE BENEFICIARY OF THE POLICY ENTITLED TO THE AMOUNT THEREOF?

THE CASE OF LIEUT. BRITT CRAIG WAS ONE OF TWO CASES DECIDED BY THIS OFFICE MARCH 26, 1922, UPON AN ERRONEOUS STATEMENT OF FACTS. THAT DECISION WAS BASED UPON THE ASSUMPTION THAT NO PREMIUMS HAD BEEN PAID ON THE INSURANCE, AND DECISION RESTED UPON THAT ASSUMPTION. CORRECTION OF THIS ERROR OF FACT BY YOUR PRESENT SUBMISSION RAISES THE QUESTION WHETHER THE FACT THAT THERE WAS DUE TO THIS INSURED AND UNPAID AT THE TIME OF HIS DISCHARGE AND AT THE TIME OF HIS DEATH ARREARS OF PAY TO AMOUNT IN EXCESS OF THE AGGREGATE AMOUNT OF PREMIUMS FALLING DUE BETWEEN HIS DISCHARGE AND DEATH IS SUFFICIENT TO PREVENT A LAPSE OF THE INSURANCE FOR FAILURE TO PAY PREMIUMS.

SECTION 400 OF THE WAR RISK INSURANCE ACT OF OCTOBER 6, 1917, 40 STAT., 409, PROVIDES FOR INSURANCE FOR THE SEVERAL CLASSES OF PERSONS IN THE MILITARY OR NAVAL SERVICE NAMED THEREIN "UPON THE PAYMENT OF THE PREMIUMS AS HEREINAFTER PROVIDED.' SECTION 402 OF THE ACT PROVIDES THAT THE DIRECTOR OF THE BUREAU OF WAR RISK INSURANCE SHALL PROMPTLY DETERMINE UPON AND FIX THE FULL AND EXACT TERMS AND CONDITIONS OF SUCH CONTRACT OF INSURANCE. SECTION 404 PROVIDES THAT REGULATIONS SHALL PRESCRIBE---

THE TIME AND METHOD OF PAYMENT OF THE PREMIUMS THEREON, BUT PAYMENT OF PREMIUMS IN ADVANCE SHALL NOT BE REQUIRED FOR PERIODS OF MORE THAN ONE MONTH EACH AND MAY BE DEDUCTED FROM THE PAY OR DEPOSIT OF THE INSURED OR BE OTHERWISE MADE AT HIS ELECTION.

BULLETIN NO. 1, ISSUED BY THE DIRECTOR UNDER DATE OF OCTOBER 15, 1917, PUBLISHED THE TERMS AND CONDITIONS OF THE STATUTORY INSURANCE CONTRACT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 402. THAT BULLETIN PROVIDES:

PREMIUMS SHALL BE PAID MONTHLY ON OR BEFORE THE LAST DAY OF EACH CALENDAR MONTH AND WILL, UNLESS THE INSURED OTHERWISE ELECTS IN WRITING, BE DEDUCTED FROM ANY PAY DUE HIM/HER FROM THE UNITED STATES OR DEPOSIT BY HIM/HER WITH THE UNITED STATES, AND, IF SO TO BE DEDUCTED, A PREMIUM WHEN DUE WILL BE TREATED AS PAID, WHETHER OR NOT SUCH DEDUCTION IS IN FACT MADE, IF UPON THE DUE DATE THE UNITED STATES OWES HIM/HER ON ACCOUNT OF PAY OR DEPOSIT AN AMOUNT SUFFICIENT TO PROVIDE THE PREMIUM, PROVIDED THAT THE PREMIUM MAY BE PAID WITHIN 31 DAYS AFTER THE EXPIRATION OF THE MONTH, DURING WHICH PERIOD OF GRACE THE INSURANCE SHALL REMAIN IN FULL FORCE. ANY PREMIUM BE NOT PAID, EITHER IN CASH OR BY DEDUCTION AS HEREIN PROVIDED WHEN DUE OR WITHIN THE DAYS OF GRACE, THIS INSURANCE SHALL IMMEDIATELY TERMINATE; BUT MAY BE REINSTATED WITHIN SIX MONTHS UPON COMPLIANCE WITH THE TERMS AND CONDITIONS SPECIFIED IN THE REGULATIONS OF THE BUREAU.

TREASURY DECISION NO. 33, W.R., DATED SEPTEMBER 20, 1918, PROMULGATED REGULATIONS TO GOVERN LAPSATION OR OTHER TERMINATION OF WAR-RISK INSURANCE, AS FOLLOWS:

(1) THE INSURANCE GRANTED UNDER ARTICLE IV OF THE WAR RISK INSURANCE ACT WILL NOT BE PERMITTED TO LAPSE FOR NONPAYMENT OF PREMIUMS WHILE THE INSURED IS IN THE ACTIVE MILITARY OR NAVAL SERVICE, AND PREMIUMS, THEREFORE, ARE AUTHORIZED TO BE DEDUCTED FROM THE INSURED'S PAY OR DEPOSIT.

(2) THE SAID INSURANCE SHALL LAPSE AND TERMINATE IF, AT THE EXPIRATION OF A PERIOD OF 31 DAYS AFTER THE INSURED LEAVES THE ACTIVE MILITARY OR NAVAL SERVICE FOR REASONS OTHER THAN STATED IN SECTION 29 OF THE WAR RISK INSURANCE ACT (ENEMY ALIEN, CONSCIENTIOUS OBJECTOR, DESERTER, ETC.), THE WHOLE OR ANY PART OF ANY PREMIUMS WHICH WERE IN ARREARS AT THE TIME OF HIS SO LEAVING THE SERVICE REMAINS UNPAID, OR IF AT ANY TIME AFTER SO LEAVING THE SERVICE THE WHOLE OR ANY PART OF ANY PREMIUM THEREAFTER ACCRUING IS NOT PAID PROMPTLY WHEN DUE OR WITHIN 31 DAYS THEREAFTER.

IT IS CLEAR THAT THE DEDUCTION OF PREMIUMS FROM PAY CONTEMPLATED AND PROVIDED FOR BY THE STATUTE, THE BULLETIN, AND THE REGULATION IS A DEDUCTION BY DISBURSING OFFICERS OF THE ARMY FROM PAY AS IT ACCRUES MONTHLY TO THE INSURED OF PREMIUMS AS THEY BECOME DUE AND PAYABLE MONTHLY UNDER WAR-RISK LAWS AND REGULATIONS. THE AUTHORIZATION BY THE INSURED OF SUCH DEDUCTION IS NOTHING MORE THAN AN EXERCISE OF THE PRIVILEGE GIVEN BY THE STATUTE OF HAVING PREMIUMS DEDUCTED BY THE DISBURSING OFFICE FROM HIS PAY AS THEY FALL DUE INSTEAD OF HAVING THEM PAID DIRECTLY BY REMITTANCE TO THE BUREAU BY THE INSURED OR BY SOME ONE IN HIS BEHALF. THE PROVISION IN THE BULLETIN THAT, IF PREMIUMS ARE TO BE SO DEDUCTED THEY WILL BE TREATED AS PAID WHETHER DEDUCTED OR NOT, IF UPON THE DUE DATE THE UNITED STATES OWES THE INSURED ON ACCOUNT OF PAY AN AMOUNT SUFFICIENT TO PAY THE PREMIUM, CLEARLY HAS RELATION TO PAY OWING AND SUBJECT TO DEDUCTION ON THE DUE DATE OF THE PREMIUM.

PREMIUMS ARE SUBJECT TO DEDUCTION FROM THE PAY OF OFFICERS OF THE ARMY ONLY UPON THEIR OWN NOTATION ON THEIR PAY ACCOUNTS. THIS OFFICER'S PAY WAS NOT SUBJECT TO SUCH DEDUCTION EXCEPT UPON AUTHORITY OF SUCH NOTATION BY HIM. I GATHER FROM THE SUBMISSION THAT HE DID NOT PRESENT HIS FINAL PAY ACCOUNT TO THE ARMY FOR SETTLEMENT, AND DIED WITHOUT DRAWING HIS FINAL INSTALLMENT OF ARMY PAY. IF, BEFORE HIS DEATH, HE HAD PRESENTED HIS FINAL ACCOUNT WITH PROPER NOTATION FOR DEDUCTION OF SUCH PREMIUM OR PREMIUMS AS BECAME DUE AND PAYABLE BEFORE HIS DEATH, A DIFFERENT QUESTION WOULD ARISE. IT DOES NOT APPEAR, HOWEVER, THAT HE AUTHORIZED THE DEDUCTION OF THESE PREMIUMS FROM HIS PAY. HIS FAILURE TO GIVE SUCH AUTHORIZATION OR TO PROVIDE OTHERWISE FOR PAYMENT OF THE PREMIUMS CAUSED LAPSATION OF THE INSURANCE.

THE GENERAL AUTHORIZATION FOR DEDUCTION OF PREMIUMS FROM HIS PAY GIVEN BY HIM AS AN ENLISTED MAN AT THE TIME OF HIS APPLICATION FOR INSURANCE RELATED ONLY TO HIS PAY AS AN ENLISTED MAN. HIS PAY ACCOUNTS AS AN OFFICER AFTER RECEIPT OF HIS COMMISSION WERE SUBJECT TO SETTLEMENT UNDER THE SAME LAWS AND REGULATIONS GOVERNING SETTLEMENT OF OTHER OFFICERS' ACCOUNTS AND WERE NOT SUBJECT TO DEDUCTION OF PREMIUMS EXCEPT UPON HIS NOTATION TO THAT EFFECT, NOTWITHSTANDING THE AUTHORIZATION GIVEN BY HIM AS AN ENLISTED MAN.