The policy of the Government in permitting suits on war-risk insurance has been one of liberality; and in the absence of claim or satisfactory evidence explaining or justifying long delay, the failure of an insured to have timely instituted suit at this time might well be interpreted as indicating the weakness of his claim. Such situation could only arise because of the failure of the claimant to file his claim more promptly, and is not in any sense the fault of the Government.

The Veterans' Administration is not able to furnish any estimate of the cost of the proposed measure, but it will revive many claims against which the statute has run, and it is reasonable to presume that a considerable amount of administrative work would result with consequent increase in administrative cost. The Government's liability over and above the premiums received on war-risk (yearly renewable term) insurance now exceeds a billion and threequarter dollars. This legislation potentially would add to the total cost. Extension of the existing limitation would doubtlessly require defense of cases in which lapse of time will have made it difficult, if not impossble, to secure necessary evidence and witnesses.

The matter of the defense of suits filed under contracts of war-risk insurance is charged to the Department of Justice, and it is accordingly believed that you may desire a further report from that Department concerning the proposed

measure.

For the reasons above set forth, the Veterans' Administration is unable to recommend favorable consideration of the bill.

Advice has been received from the Director, Bureau of the Budget, that there would be no objection by that office to the submission of this report to your committee.

Very truly yours,

FRANK T. HINES, Administrator.

REPORT OF THE VETERANS' ADMINISTRATION ON H. R. 7705, A BILL TO PROVIDE MINIMUM RATINGS FOR SERVICE-CONNECTED DISABILITIES INCURRED DURING THE WORLD WAR

Hon. JOHN E. RANKIN,

FEBRUARY 14, 1940.

Chairman, Committee on World War Veterans' Legislation,

House of Representative, Washington, D. C. MY DEAR MR. RANKIN: This is in further reply to your letter dated January 8, 1940, requesting a report on H. R. 7705, Seventy-sixth Congress, third session, a bill to provide minimum ratings for service-connected disabilities incurred during the World War, which provides:

"That the Administrator of Veterans' Affairs is hereby authorized and directed to insert in the rating schedule of the Veterans' Administration a minimum rating of permanent partial 1 per centum for any service-connected disability incurred during the World War.

"SEC. 2. The Administrator of Veterans' Affairs is hereby further authorized and directed to insert in the rating schedule of the Veterans' Administration a minimum rating of permanent partial 10 per centum for wounds incurred in line of duty in active service during the World War."

Section 1 provides a minimum rating of 1 percent permanent partial for any service-connected disability incurred during the World War. It will be noted that service incurrence of disability is the only requirement for entitlement to benefits provided by section 1. There is no specific requirement that serviceconnected disability continue after discharge, or that such disability shall not have resulted from misconduct. As the bill only requires an amendment of the rating schedule of the Veterans' Administration, it might be construed as not conferring any benefit upon a veteran not shown to be disabled at the time of application of the schedule, as amended. It is possible that the 1 percent rating is intended to be applicable in all service-connected cases whether disability continues after discharge from service or not. The language of the bill raises the question as to whether it is intended to require amendment of the 1925 or the 1933 schedule of disability ratings or to require amendment of both schedules. It is suggested that section 1 of the bill be amended for the purpose of clarifying the intent thereof.

If the bill is intended to grant the rating notwithstanding the non-existence of disability, it would permit payment of death compensation in certain cases

under Public, No. 484, Seventy-third Congress, June 28, 1934, as amended, and would also operate to entitle certain persons to disability preference under Civil Service. If the bill is intended to require existence of disability, Public, No. 484, as amended, would not be affected as the law now permits of payment of death compensation where other requirements are met and the veteran at time of death was suffering from a service-connected disability. If such is the intention there could be but a minor effect on civil-service disability preference in World War cases in view of the availability of the 1925 rating schedule and extensions providing ratings from 1 to 100 percent.

Section 2 of the bill would require a minimum rating of permanent partial 10 percent disability for wounds incurred in line of duty in the active service during the World War to be inserted in the rating schedule of the Veterans' Administration.

The Veterans' Administration, under very liberal instructions, is now conducting a review of all ascertainable combat injuries rated less than 10 percent, and of the number reviewed to date only a small percentage has been found disabled to any significant extent.

The phrase "wounds incurred in line of duty in active service" could be construed as including any injury resulting from external violence, or, if limited to its military significance, as meaning an injury incurred in action or by an act of the enemy requiring medical treatment at the time. The latter construction appears to be the logical one and the estimate of cost hereafter made is based upon the assumption that the bill is intended to limit benefits to those injured in action or by act of an enemy. If the bill is to receive further consideration this section should be amended to remove this ambiguity.

The basis of the assignment of percentage ratings for disability requires analysis of specific effects upon the earning capacity and employability of the average man without regard to the circumstances of incurrence.

Veterans Regulation No. 3 (a), promulgated pursuant to Public, No. 2, Seventy-third Congress, March 20, 1933, provides that the schedule of ratings shall be based, as far as practicable, upon the average impairments of earning capacity resulting from such injuries in civil occupations. Section 202 (4) of the World War Veterans' Act, 1924, as amended, contained a similar provision. The bill would require a rating without regard to impairment in earning capacity.

The claims of veterans rated less than 10 percent disabled, including gunshot wounds and other cases, have been repeatedly reviewed by the Veterans' Administration under a policy of extending the benefit of reasonable doubt in all cases, and those now rated as less than 10 percent disabled have been found not to have residual results or symptoms tending, to any appreciable degree, to reduce the earning capacity of the veteran. These veterans are believed, as a class, to be correctly rated at less than 10 percent disabled under any equitable standard based upon economic or industrial impairment.

There are many accidental traumatisms incurred in the performance of military duty, other than wounds incurred in line of duty, now rated as less than 10 percent disabling, which have produced as much disability as a similar wound might have done. Similarly, diseases leaving chronic residuals have resulted in as much or more noncompensable disability as some wounds. As all types of disability incurred in service in line of duty are equally compensable, it is obvious that the singling out of certain circumstances of injury for exceptional consideration will result in inequalities in the amount of compensation payable for the same degree of disability.

If section 1 of the bill is intended to require a 1-percent rating notwithstanding the nonexistence of disability, there would be an additional cost by reason of the widows and children brought in under Public, No. 484, Seventythird Congress, as amended. The Veterans' Administration does not have sufficient data on which to base an estimate of the cost of this section if so intended.

Section 2 of the bill would bring on the rolls an additional group of veterans who have little or no disability as a result of wounds incurred in service. Based upon the estimated number of living veterans who were injured in combat, less the number of combat cases now entitled to compensation, it is estimated that this bill would make eligible for compensation approximately 70,800 veterans not now on the rolls, at a maximum cost of approximately $8,496,000 for the fiscal year 1941.

In view of the fact that the bill may extend the provisions of law as to civil-service preference for veterans, it is suggested that your committee may

desire a report as to the merits of the bill from the Civil Service Commission. For the foregoing reasons, the Veterans' Administration is unable to recommend favorable consideration of the bill to your committee.

Advice has been received from the Bureau of the Budget that the proposed legislation would not be in accord with the program of the President.

Very truly yours,

FRANK T. HINES, Administrator.

REPORT OF VETERANS' ADMINISTRATION ON H. R. 7707, A BILL TO MAKE TEMPORARY DISABILITY RATINGS OF WORLD WAR VETERANS PERMANENT AFTER 10 YEARS

Hon. JOHN E. RANKIN,

FEBRUARY 14, 1940.

Chairman, Committee on World War Veterans' Legislation,

House of Representatives, Washington, D. C.

MY DEAR MR. RANKIN: Further reference is made to your request of January 8, 1940, for a report on H. R. 7707, Seventy-sixth Congress, a bill to make temporary disability ratings of World War veterans permanent after ten years, which provides:

"That when the rating as to the degree of disability of any World War, veteran to whom disability compensation has been or is hereafter allowed under the Act of Congress approved March 20, 1933, as amended and supplemented (U. S. C., 1934 edition, title 38, ch. 1; Supp. II, title 38, ch. 12), has been in effect for a period of ten years, such rating shall become permanent, except in case of fraud affecting the rating and in which the veteran has participated. Such rating may be increased upon the initiative of either the veteran or the Veterans' Administration."

This bill is identical with H. R. 5676, Seventy-sixth Congress, upon which a report was rendered your committee under date of November 20, 1939, except that the period after which a rating would become permanent is ten years, rather than 1 year as prescribed by H. R. 5676.

Under Public, No. 2, Seventy-third Congress, March 20, 1933, and the Veterans Regulations, there is no classification of ratings as temporary or permanent. Under Public, No. 141, which, with limitations, restored certain provisions of the World War Veterans' Act, 1924, as amended, there are two essential differences between permanent and temporary ratings. Permanent ratings are based on a scale of $100 per month for permanent total disability and proportionately lesser amounts for permanent partial disability, without regard to whether the veteran does or does not have dependents. Temporary ratings are based on the scale of $80 per month for total disability and proportionately lesser amounts for partial disability to a veteran without dependents. If the veteran has dependents, certain increases above the scale of $80 are authorized. Because of the differences above pointed out a veteran with dependents may be entitled to more compensation under a temporary rating than he would be entitled to under a permanent rating for the same degree of disability.

It is not clear from the bill whether the word "permanent" as used in line 9 is to be applied in its technical sense, that is, to require a change of a rating on a temporary basis to rating on a permanent basis or whether it is intended in a general sense which would permit the rating, whether on a temporary or permanent basis, to be continued permanently where the rating has been in effect for 10 years except in case of fraud affecting the rating and in which the veteran has participated. If intended in its technical sense, the effect would be to increase compensation to veterans without dependents whose rating is on a temporary basis and would also have the effect of reducing compensation to certain veterans with dependents who are in receipt of compensation on the basis of a temporary rating. It is suggested that the bill should be clarified.

As of September 30, 1939, 87.12 percent of the World War veterans in receipt of compensation were rated on a permanent basis. The policy of the Veterans' Administration has been very liberal with reference to placing ratings on a permanent basis. It is believed the existing regulations will support this conclusion and a copy of paragraph R-1144, Regulations and Procedure, Veterans' Administration, is enclosed for your reference. Pursuant to paragraph R-1165, Regulations and Procedure, copy of which is also enclosed, reexaminations are not requested where a disability rating has been in effect at approximately the same level of severity for 5 years or more unless material improvement in the

near future may be anticipated on the basis of evidence pertinent to the individual case. This, however, does not preclude reexaminations for insurance purposes or on claims for increase in compensation, which information is for consideration for rating purposes. Inasmuch as payment of compensation is based upn the degree of service connected disability, any provision which would require payment of compensation where the disability no longer exists or payment of compensation in excess of that authorized for a particular degree of disability would appear to be open to serious question.

It will be noted that under the provisions of the bill, any rating which has been in effect for a period of 10 years could not be reduced even though such rating were based upon some error or mistake, or even fraud, unless the fraud affected the rating and the veteran participated in such fraud. No reason is perceived which would justify continuation of payment of compensation based upon clear and unmistakable error or fraud whether the veteran has or has not participated in such fraud or was responsible for such error. Insofar as it would require continuation of payment of compensation to a veteran who perpetrated the fraud other than in connection with the rating in his own case, the bill would modify section 15 of Public, No. 2 and section 504 of the World War Veterans' Act, 1924, as amended, which provide for forfeiture of right to benefits because of such fraud. No justification is perceived for exempting veterans of the World War from the penalties imposed upon those who served in periods of peace and war, other than during the World War, for fraud perpetrated in connection with their own or some other veteran's claim for benefits. With regard to the matter of cost, a study of cases where a temporary rating has been in existence for 10 years indicates that there are comparatively few cases of this kind and, therefore, the cost would be negligible.

For the reasons heretofore set forth, the Veterans' Administration is unable to recommend favorable consideration of the bill by your committee. Advice has been received from the Bureau of the Budget, that there would be no objection by that office to the presentation of this report to your committee.

Very truly yours,

FRANK T. HINES, Administrator.

DETERMINATION OF PERMANENCE

1144. (A) The application of the 1925 schedule requires a determination of the permanent or temporary character of each separate disability; however, in the general application of the 1925 schedule permanent ratings will be made wherever possible, compatible with the facts. Under the 1933 schedule disability ratings require a determination of permanence as provided on page 4 thereof. Under both schedules, a permanent disability is one which it is reasonably certain will continue unimproved throughout the disabled person's life. Generally, with disabling diseases and injuries of long standing, the probability of improvement under treatment may be conceded to be remote, and unless specific treatment is indicated for a particular disability, a permanent, and not a temporary, rating is generally in order. A permanent rating may not, however, be granted for a disability under treatment with a good prognosis for permanent improvement, nor for acute infectious disease, recent accident or unhealed injury, unless, in the case of total disability, it is reasonably certain that the subsidence of the acute or temporary symptoms will be followed by irreducible totality of disability by way of residuals. (V. R. 3 (a)). (January 25, 1936.)

[(B) All disability ratings relating to impairments, the lesions and symptoms of which have persisted at approximately the same level of severity as shown by two or more examinations at least five years apart, unless material improvement in the near future may be anticipated on the basis of evidence pertinent to the individual case, will be placed on a permanent basis. Mere differences in descriptive and diagnostic terms, or in emphasis or absence of emphasis on successive examinations, will be disregarded in this connection. With a major disability rated on a permanent basis, minor disabilities will be placed on a permanent rating, without regard to fluctuations in the past, except as set forth below.

(C) In the case of diseases or injuries of fluctuating severity over the past five-year period, where the conversion of the current temporary rating to a permanent rating of the same degree would not be justified, permanent ratings may be made on the basis of the average severity disclosed by examinations covering this five-year period, including a recent examination, or an examination

conducted under R. & P. R.-1265 if necessary.

In such cases the several examinations utilized will be individually cited with dates, in connection with the diagnosis in question.

(D) Nothing herein will prevent rating on a permanent basis the residuals of all healed injuries.] (April 1, 1937.)

REEXAMINATIONS TO BE REQUESTED WHEN NECESSARY

1185. (A) Reexaminations will be requested in cases in which it is indicated by evidence of record that there has been a material decrease in disability since the last examination, and in cases where there is evidence, pertinent to the individual case, that the disability is likely to improve materially in the future. (B) Reexaminations for compensation and pension ratings in service connected cases under Public No. 2 or Public No. 141 will not be requested in cases conforming to the standards of permanence set forth in R. & P. R-1144 (B), (C), or (D). When not conforming to these standards, reexamination will be requested once in thirty months. Examinations at shorter intervals in accordance with anticipated improvement in individual cases may be requested when necessary with service-connected diseases and injuries of recent origin or acute exacerbations temporarily increasing the severity.

(C) In non-service connected cases under Part III, Veterans Regulation No. 1 (a), wherein a permanent total rating may be in effect, or be hereafter granted, based on other than obviously static disabilities, reexaminations will be conducted within thirty months of the date the permanent total rating was first granted, and again within five years of the same date. In cases in which the permanent total disability is confirmed by such examinations, or by examinations covering a five-year period previously conducted, or generally with obviously static disabilities, future reexaminations will not be requested. (April 1, 1937.)

REPORT OF THE VETERANS' ADMINISTRATION ON H. R. 7873, "A BILL TO PERMIT POST MORTEM RATINGS AND PAYMENT THEREON OF ACCRUED AWARDS OF COMPENSATION, PENSION, OR EMERGENCY OFFICERS' RETIREMENT PAY"

Hon. JOHN E. RANKIN,

FEBRUARY 14, 1940.

Chairman, Committee of World War Veterans' Legislation,

House of Representatives, Washington, D. C.

MY DEAR MR. RANKIN: Further reference is made to your request of January 18, 1940, for a report on H. R. 7873, Seventy-sixth Congress, "A bill to permit post mortem ratings and payment thereon of accrued awards of compensation, pension, or emergency officers' retirement pay."

This bill, if enacted into law, would amend paragraph V of part I of Veterans Regulation No. 2 (a), as amended (38 U. S. C., ch. 12, appendix), to read as follows, the proposed amendment being italicized:

"Pension or emergency officers' retirement pay, not paid during the lifetime of the person entitled thereto, shall upon the death of such person be paid as follows: (a) Upon death of the veteran, first, to the widow; second, if there is no widow, to his child or children under the age of eighteen years at his death; (b) upon death of the widow, to her children under the age of eighteen years at her death; (c) upon the death, prior to payment of all or any part of the apportioned amount, of an apportionee of a part of the veteran's pension or emergency officers' retirement pay, such apportioned amount not paid shall be payable to the veteran; (d) in all other cases no payment whatsoever of such pension or emergency officers' retirement pay shall be made or allowed except so much as may be necessary to reimburse the person who bore the expense of burial: Provided, however, That no payment shall be made unless claim therefor be filed within one year from the date of the death of the person entitled and perfected by the submission of the necessary evidence within six months from the date of the request of the Veterans' Administration therefor. Pending claims for compensation, pension, or emergency officers' retirement pay may be adjudicated upon the evidence in file at the time of death or furnished within the period for filing and completing claim as herein prescribed, and any amount found due shall be awarded and paid in the manner hereinbefore provided, except that the aggregate sum allowed in any one case under this paragraph shall not exceed $1,000."