Our estimate on that section is that it would affect approximately 2,000 persons and the annual saving would amount to $6,000,000. I have the draft of that.

The VICE CHAIRMAN. That draft may be inserted in the record, General.

SEC. No additional payments of insurance shall be made under sections 305 and 309 of the World War veterans' act, 1924, as amended, or the third proviso of section 408 of the war-risk insurance act, as amended, except to those persons actually receiving payments on the date of enactment of this act, or in those claims where, prior to the date of the enactment of this act, it has been determined by the Veterans' Administration that all or parts of the insurance is payable under such sections and the interested person or persons entitled thereto have been informed of such determination: Provided, That where a beneficiary receiving insurance payments under such sections dies and there is surviving a widow, child, or children, or dependent mother or father, of the veteran, the remaining unpaid installments shall be paid to the following permitted class of beneficiaries in the following order of preference: (1) To the widow of the veteran if living at date of death of the beneficiary; (2) if no widow, then to the child or children of the veteran, share and share alike; (3) if no wife, child, or children, then to the dependent mother of the veteran; (4) if no wife, child, or children, or dependent mother, then to the dependent father of the veteran, but no payments under this proviso shall be made to the heirs or legal representatives of any beneficiaries in the permitted class who die before receiving the monthly installments to which they are entitled and the remaining unpaid installments shall be paid to the beneficiary or beneficiaries in the order of preference prescribed in this proviso.

General HINES. The next recommendation has to do with section 19 of the World War veterans' act, and the amendment suggested provides that under section 19, which permits the United States to be sued on contracts of Government insurance, the court shall be restricted to receiving testimony from persons who have presented statements to the United States Veterans' Bureau or the Veterans' Administration prior to the denial of the claim sued upon. The amendment would apply to pending suits against the United States

under this section.

Some explanation is required of that section. We feel from our experience in handling cases in court-and we have large numbers of them-that in some cases, quite a substantial number of cases, if the claimant had presented to the bureau the list of witnesses so that we could have had an opportunity of obtaining their evidence, many claims would not go to trial.

SEC. That the first paragraph of section 19 of the World War veterans' act, 1924, as amended (U. S. C., Supp. V, title 38, sec. 445), is hereby amended by striking out the period at the end thereof and inserting in lieu thereof a colon and the following:

“Provided further, That in any suit tried under the provisions of this section the court shall not receive, admit, or entertain the testimony of any person whose statement has not been submitted to the United States Veterans' Bureau or the Veterans' Administration prior to the denial of the claim sued upon, and the date of issuance of the letter of disagreement required by this section shall be the date of the denial of the claim, except that if in a preliminary proceeding prior to trial of claim sued upon, it is shown by the plaintiff to the satisfaction of the court that relevant and material testimony is available from any person whose statement has not been submitted to the United States Veterans' Bureau. or the Veterans' Administration prior to the denial of the claim sued upon, the court shall stay all proceedings in the suit until the statement of such person is submitted to the Administrator of Veterans' Affairs, who shall cause the claim to be immediately reviewed; and in case the administrator allows such claim, the suit shall be dismissed; but if the administrator disallows the claim, such

person may be a witness in the trial of the cause: Provided further, That the last preceding proviso shall apply to all suits pending on the date of the enactment of this amendatory act against the United States under the provisions of the war risk insurance act, as amended, or this act, as amended."

Mr. CHIPERFIELD. General, may I ask a question?
General HINES. Certainly.

Mr. CHIPERFIELD. Is it your practice that if a list of the claimant's witnesses is presented in connection with the claim that you will ascertain the testimony of those witnesses without a reference to any act on the part of the claimant? In other words, you gather the testimony instead of the claimant doing so?

General HINES. Yes; we endeavor to do that. In other words, we first call upon the claimant to give us all the information he possibly can.

Now, the main problem in this whole task generally resolves itself into the question of what the man has been doing since he was discharged, and probably his insurance lapsed. During that intervening period what has been his employment record, because claim is frequently made that the man has been permanently and totally disabled since discharge, although our records may not show that he has stated that prior to the time that the demand has been made upon us for the payment of the insurance.

Now, after we are given the list of witnesses that he is going to produce in court we can develop from those witnesses approximately what they would testify. If it shows that the case is one that is going to be lost in court certainly the Government should not go to the expense of preparing the case and defending it. It would be better not to allow the case to go to trial.

Mr. CHIPERFIELD. Are those statements taken in the form of depositions?

General HINES. That is what we propose to do under the new amendment. Under the present law and practise we endeavor to ascertain the facts by having our field investigation force contact all known witnesses and secure from them statements in the form of affidavits which aid in the administrative consideration both before and after suit is instituted. Many cases are paid after suit has been started upon ascertainment of the full facts. In cases which go to trial these affidavits are used to determine the witnesses who are to testify either personally or by deposition and again they are sometimes used for impeachment purposes.

The VICE CHAIRMAN. The purpose, therefore, seems to be to bring about a settlement of the case rather than to put the Government to the expense of preparing the case for trial.

General HINES. Yes, sir. I feel that the amendment is really in the interest of the veteran because we know that in the large number of cases now filed in the courts it will be a serious problem for those courts to clear their dockets in a number of years. I should say with the suits that they have filed they will have work for 10 years now. Mr. CHIPERFIELD. Before you go any further, General, I would like to ask just one more question and then I won't trouble you any

more.

General HINES. That is all right.

Mr. CHIPERFIELD. Are those statements taken as much with the purpose of establishing the claim as of establishing a defense to the claim?

General HINES. They are taken primarily to check up to see if the claimant has a real claim on his Government insurance. If he has a claim we feel that it should be paid. If he has no claim it should be defended.

The VICE CHAIRMAN. Pardon me, General, I have an announcement to make. For the purpose of the record I submit herewith a supplement to the list of those whose names appear in the proceedings of December 10, as desiring to appear before this committee: Mr. Chester Leasure, representing the United States Chamber of Commerce. Mr. Fred Brenckman, representing the National Grange.

Mr. Alphonse A. Laporte, representing the National Economy League. Mr. Robert Nicholes, representing the Regular and Disabled Service Association.

The American Hospital Association has also requested permission for one of their representatives to appear before this committee next Wednesday morning.

General, we will be on this matter for quite some time. It is now 5 minutes to 12. The Members of the House and Senate will want to be in their Chambers at 12. I suggest that we adjourn until to-morrow morning at 10.30.

Mr. CHIPERFIELD. At the same place?

The VICE CHAIRMAN. Yes.

(Whereupon the committee adjourned to meet at 10.30 o'clock a. m., Friday, December 16, 1932.)

VETERANS' AFFAIRS

JOINT CONGRESSIONAL COMMITTEE ON VETERANS' AFFAIRS,
Friday, December 16, 1932.

The meeting was called to order at 10.30 o'clock, a. m., David I. Walsh, Senator from Massachusetts, the vice chairman, presiding. The VICE CHAIRMAN. The committee will come to order. General, you may proceed with your testimony.

STATEMENT OF GEN. FRANK T. HINES—Resumed

General HINES. Mr. Chairman, in connection with the item that I referred to yesterday, the repeal or amendment, rather, of section 305 and 309, I would like to ask permission of the committee to insert in the record one or two examples of the effects of that section; so that the committee would have probably a clear idea of the operation of that section.

The VICE CHAIRMAN. That request will be granted.

CASE A

This case illustrates the principle that a veteran by his own act may delay the operation of the compensation law with the result that the Government will become liable on a lapsed policy of insurance even though the Government was prepared to pay the compensation whensoever the veteran had asserted and established his claim.

The facts in the case briefly are: The veteran carried a policy of term insurance during his service but at the time of his discharge, November 4, 1918, permitted same to lapse. He was disabled while in the service but died on January 5, 1922, without having filed claim for compensation. He was rated compensably disabled from the date of discharge.

Under the act of May 29, 1928, compensation which would have accrued to him had he filed claim, for the period intervening between the date of discharge and the date of death was available to prevent the lapse of his policy of insurance under section 305.

CASE B

This case illustrates the use of uncollected compensation for the purpose of reviving insurance in accordance with section 305 when section 210 of the World War veterans act, as amended, precludes payment of compensation retroactively for more than one year prior to date of claim for compensation. This veteran enlisted in the military service in February, 1918, and was discharged in November, 1918. He applied for $10,000 insurance. He paid no insurance premiums after discharge and the insurance lapsed. His original claim for compensation was filed in the Veterans' Bureau on June 26, 1926. From the evidence on file he was rated temporary partial 20 per cent and 28 per cent during different periods from date of discharge until he was rated permanently and totally disabled in July, 1926.

The veteran was entitled to the payment of compensation for a period of only one year prior to the date of his filing claim. Consequently, he was awarded disability compensation in the amount of $22.40, commencing June 26, 1925.

When the case was reviewed for insurance purposes, however, a different situation was presented and in accordance with section 305 of the World War veterans act compensation from the date of the veteran's discharge from the military service to May 26, 1925, could be used for the purpose of reviving the insurance. This resulted in the revival of the veteran's entire $10,000 insurance, less premiums and interest. The veteran, therefore, was entitled to monthly installments of insurance in the amount of $52.94 from July 23, 1926.

CASE O

This case illustrates the principle of the revival of insurance in the full amount of the policy by the use of the $60 bonus even though the Government was not at fault in the manner of receipt of payment.

The veteran carried a policy of insurance which lapsed at discharge. He died on April 26, 1919. The Government in due course had mailed to the veteran a check for the $60 bonus but it was received by him while he was on his deathbed and unable to negotiate it. After his death the check was paid to his widow upon her indorsement. Under the act of February 24, 1919, which deals with the payment of the $60 bonus, it is provided that this amount shall not be paid to the heirs or legal representatives of any person entitled to any payment under the said act who has died or may die before receiving such payment.

Under a ruling of the Attorney General it was held that payment of the bonus check in the above manner did not constitute payment, and that the $60 bonus is available to revive the insurance under section 305.

CASE D

This case illustrates the point that the veteran may be the beneficiary of a substantial allowance from the Government sufficient in amount to permit of payment of insurance premiums should the veteran desire to continue such protection, and that despite his failure to do so, section 305 will require the application of any uncollected compensation to the payment of insurance premiums to prevent the lapse of the policy, despite the relatively small amount of the increase in payments from the Government.

The veteran carried $10,000 term insurance which lapsed for nonpayment of premium due April 1, 1919. Compensation was claimed by the veteran on March 7, 1919, and an award was approved in his favor on March 29, 1919, on account of temporary total disability.

The records show that he had entered vocational training on March 17, 1919, which necessitated discontinuance of compensation payment. Vocational training was discontinued in June, 1920. He was reinducted into vocational training for another period during August 29, 1920, to February 15, 1921. Upon discontinuance of vocational training in 1921 compensation was reawarded in the sum of $100 per month to the date of his death on December 24, 1921. The amount of vocational training pay which was received by the veteran was substantial and sufficient to have reinstated his insurance had the veteran desired to do so. This was not done. However, the rate of compensation permissible under the law was slightly in excess of the amount of training allowance to which vocational trainees were entitled. This additional amount of compensation in excess of the amount received by the veteran as a vocational trainee was used to revive his insurance policy, despite the fact he had been in receipt of substantial allowance from the Government from the date of his discharge.

CASE E

This illustrates the situation whereby insurance, specifically canceled by the insured is nevertheless prevented from lapsing under section 305.

The insured was discharged on April 14, 1919. He died on June 9, 1924. He had applied for $10,000 insurance. At discharge he executed a statement "In regards to War Risk Insurance I do not care to continue same * * After death, by a post-mortem rating sufficient compensation was found uncollected to revive the insurance. This was under the amendment to section 305 by the act of July 2, 1926, making canceled insurance eligible for revival.