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Hospital, a refund of $10,440.83 was secured from the State of Washington.

By the settlement negotiated by the general counsel under the direction of the director with the Better America Lecture Service, Inc., a contract, the carrying out of which would have involved the bureau in a total expenditure of at least $80,000, was canceled with a saving of $69,159.

ORGANIZATION

The professional personnel of the office of the general counsel consists of 29 attorneys and the nonprofessional personnel consists of 45 employees.

The executive officer exercises general supervision over the office and service staff and acts as contact representative for the general counsel.

The general law office conducts legal research and prepares opinions involving questions of compensation, insurance, vocational rehabilitation, domestic relations, statutory construction, and all other matters of a general legal nature.

The litigation office is charged with the defense, through the Department of Justice, of suits brought against the United States under the provisions of the war risk insurance act, as amended, and the World War veterans' act, 1924. This office also carries on litigation in cases where injury has resulted through the negligence of third parties by reason of which the Government may be required to pay compensation, and prepares for submission to the Department of Justice, evidence in all cases tending to show an actionable violation of penal provisions of the law in connection with matters coming under the jurisdiction of the United States Veterans' Bureau.

GENERAL LAW OFFICE

The past year has seen several important changes of organization in connection with the disposition of the main volume of legal matters presented to the general counsel.

At the beginning of the year, a majority of the opinions rendered by the general counsel were prepared in what was then known as the claims and insurance subdivision. In December, 1923, due to the belief that many of the requests for opinions presented in connection with claims cases were only repetitions of questions previously answered, and with a view to cutting down the volume of work of the legal division, a number of attorneys employed in this subdivision were transferred to the administrative control of the claims and insurance service, where there was formed what is known as the legal advisers' section of that service, whose function it is to render advice in connection with claims upon the basis of precedents already laid down by the general counsel in cases where no new principle of law is involved.

This change was followed in January, 1924, by a consolidation of what was then known as the general law subdivision and the claims and insurance subdivision under the designation "general law division," later changed to "general law office." The general law office continued to handle the main volume of legal work of all description except litigation and matters touching real estate, leases and contracts during the remainder of the year.

The following figures show the work accomplished by the claims and insurance subdivision and its successor, the general law office, during the fiscal year.

Submissions pending in claims and insurance subdivision July 1, 1923..........
Submissions to claims and insurance subdivision and general law office

during the fiscal year...

Submissions disposed of during the fiscal year.
Submissions on hand June 30, 1924...

280

5, 540

5, 667 153

The office of the general counsel has exercised general supervision over all legal matters arising from the administration of the World War adjusted compensation act. Decision has been asked and rendered in several cases dealing with the construction of the act. Such decisions notably have dealt with Title VI of the act covering payments to dependents of deceased veterans. Another decision of importance dealt with the question of deductions from amounts due under the aet on account of debts owed by veterans. Proposed regulations drafted by the adjusted compensation division, under authority by section 306 of Title III of said act, have been referred to this office for approval, and revisions have been made therein for the purpose of their conformity to the views of the general counsel regarding certain questions dealing with the construction of the law.

LITIGATION OFFICE

The litigation office is divided into three units: Litigation, prosecution, and subrogation.

LITIGATION

Section 13 of the war risk insurance act, as amended, provides that n the event of disagreement as to a claim under the contract of insurance between the bureau and any beneficiary or beneficiaries thereunder, an action on the claim may be brought against the United States in the District Court in which any claimant or claimants reside. While the defense of these actions is committed to the Department of Justice, the litigation office prepares the cases for trial, and in most instances the local district attorney requests the presence of an attorney from the bureau to aid in the trial of these cases. Section 19 of the World War veterans' act, 1924, authorizes all persons having an interest in war risk insurance in a given case to be made parties to the suit. This provision is important from the standpoint of this section in that vexatious litigation in different districts over the same insurance may now be avoided. Several important cases were decided by the courts during the past fiscal year which are important from the standpoint of this bureau.

Law v. United States, decided July 13, 1923, and reported in 290 Fed., page 972, was overruled by the Circuit Court of Appeals for the Ninth Circuit in favor of the bureau, the court holding that claimant, who has lost an arm, was not permanently and totally disabled, although this loss incapacitated him from performing his previous occupation as a farmer, because it was shown that since the injury the plaintiff had been in vocational training and learned a profession which enabled him to make a livelihood.

Crawford v. United States, decided July 3, 1923, by the United States District Court for the Northern District of Ohio and reported in 293 Fed., page 801, held that a provision in the application for war risk insurance authorizing necessary monthly deductions from a soldier's pay, referred to the term "pay" as meaning pay for service in the United States Army or Navy, and not to retainer pay.

Helmholz v. Horst et al, decided January 11, 1924, and reported in 294 Fed., page 417 was a case where the Circuit Court of Appeals for the Sixth Circuit upheld the contention of the bureau, as decided by the United States District Court, that the act of December 24, 1919, enlarging the permitted class of beneficiaries was constitutional. This case is important because it holds that there are no vested rights of beneficiaries under a contract of war risk insurance as to the installments of insurance accruing after the death of such beneficiary. This section was delegated to defend certain officials of the bureau who were sued in their individual capacity in connection with their official acts, among which was a libel suit filed in the Supreme Court of the District of Columbia against the manager of district No. 14 and certain other officials. When this case came on for trial November 13, 1923, it was dismissed in open court.

The cases settled by this section during the fiscal year 1924 involved approximately $500,000, and the pending cases on June 30, 1924, involved approximately $2,000,000.

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While the prosecution of criminal cases is committed to the Department of Justice, in several instances the district attorneys have requested the presence of a representative from the prosecution unit of this office to assist in presenting cases before the grand jury and in the trial of criminal cases.

The majority of fraud cases involve a violation of the penal provisions of the war risk insurance act and the World War veterans' act, 1924; however, when these statutes do not cover the particular offense, the case is prepared under the appropriate provision of the Federal criminal code.

The following summary shows the work completed during the past fiscal year:

Cases in process of development for submission to the Department

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The number of cases pending with the Department of Justice on June 30, 1923, together with the submissions during the present fiscal year, the number of cases disposed of by trial, failure to indict, death of parties, failure to locate witnesses, and other reasons, total 211.

A total of 239 submissions were pending with the Department of Justice at the close of the present fiscal year. These were divided as follows:

Indictments returned, trial pending-
Pending submission to grand juries..

SUBROGATION

58

181

Where claimants for compensation received injuries in the service as the result of negligent or wrongful acts of any agency other than that of the United States, for which they claim and receive compensation, they are required to prosecute their causes of action, should the cases show liability, under the provisions of section 313 of the war risk insurance act, against the third party responsible for their injuries for the purpose of recovering damages for such injuries. Under the provisions of the above cited section, a beneficiary of the bureau may be required to assign to the United States any right of action he may have to enforce the liability of third persons. This work devolves upon the subrogation unit as well as that of the handling of cases involving claims for damage to or loss of privately owned property, where the amount of the claim does not exceed $1,000, caused by the negligence of any officer or employee of the Government, acting within the scope of his employment.

The following report shows cases handled by the subrogation unit during the fiscal year ending June 30, 1924:

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Amount collected, distributed, and credited against compensation payments.
Amount collected, undistributed, but credited against compensation payments.

Total.

$81, 472. 28

45, 830. 32

127, 302. 60

Judgments in favor of plaintiffs pending June 30, 1924 (appeals having been taken by defendants) 73, 750.00

CONTACT WITH PRIVATE ATTORNEYS

The statutes under which this bureau is operating, like the pension laws, had their origin in the patriotic service, many hardships, severe suffering, and physical disabilities contracted while in the public service by persons who lost their health and gave their lives for their country without adequate or substantial compensation of a material nature. The practice of protecting pension funds from misappropriation, fraud, and unauthorized conversion to the use of another, and to secure a safe and unimpaired transmission of such funds to

the beneficiary has been claimed and exercised through the whole period since pensions have been granted by Congress.

Likewise, the statutes relating to this bureau follow the practice of protecting funds paid by the Government to ex-service men, and with certain exceptions, the Veterans' Bureau is prohibited by law from recognizing attorneys in the presentation or adjudication of claims. An important feature of the law which private attorneys should not fail to observe is the definite limitation which has been placed upon the fees which may be collected and the penal provisions for the nonobservance of this provision of law. The pertinent sections of the World War veterans' act of 1924 (Public No. 242, 68th Cong., approved June 7, 1924) are as follows:

SEC. 19. That no claim agent or attorney except the recognized representatives of the American Red Cross, the American Legion, the Disabled American Veterans, and the Veterans of Foreign Wars and such other organizations as shall be approved by the Director, shall be recognized in the presentation or adjudication of claims under Titles II, III, and IV, except that in the event of disagreement as to claim under a contract of insurance between the bureau and any beneficiary or beneficiaries thereunder an action on the claim may be brought against the United States either in the Supreme Court of the District of Columbia or in the district court of the United States in and for the district in which such beneficaries or any one of them resides, and that whenever judgment shall be rendered in an action brought pursuant to this provision, the court, as part of its judg ment, shall determine and allow such reasonable attorney's fees, not to exceed 5 per centum of the amount recovered, to be paid by the claimant in behalf of whom such proceedings were instituted to his attorney, said fee to be paid out of the payments to be made to the beneficiary under the judgment rendered at a rate not exceeding one-tenth of each of such payments until paid. All persons having or claiming to have an interest in such insurance may be made parties to said suit, and such as are not inhabitants of or found within the district in which suit is brought, may be brought in by order of the court to be served personally or by publication as the court may direct. The procedure in such suits shall otherwise be the same as that provided for suits in the district courts by the act entitled, "An Act providing for the bringing of suits against the United States," approved March 3, 1887, as amended.

SEC. 500. That payment to any attorney or agent for such assistance as may be required in the preparation and execution of the necessary papers in any application to the bureau shall not exceed $10 in any one case.

Any person who shall, directly or indirectly, solicit, contract for, charge, or receive, or who shall attempt to solicit, contract for, charge, or receive any fee or compensation, except as herein provided, shall be guilty of a misdemeanor, and for each and every offense shall be punishable by a fine of not more than $500 or by imprisonment at hard labor for not more than two years, or by both such fine and imprisonment: Provided, That the provisions of this section shall not apply to professional services required in the prosecution of any action in any court of law.

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