The main points of contention, or rather, differences of opinion, I might say, hinge around a very few sections of this act. The first point is that as to whether it is advisable for the Director of the Veterans' Bureau to have final authority in matters of law, or findings of act, that will be binding upon the Accounting Office and the Comptroller General.

By special authority of law the Director of the Veterans' Bureau is given the right extended to members of the Cabinet, to call upon the Attorney General for opinions, and that right is exercised from time to time by the director. We have found a difference of opinion on points of law between the Comptroller General and the Attorney General when certain findings have gone to the comptroller.

The CHAIRMAN. That same thing applies to nearly all the departments of our Government.

General HINES. Yes; I think it does, sir.

Upon my invitation the comptroller set up in the bureau what is known as a preaudit unit. The purpose of that, and the reason for my request, was because of certain large payments on the adjusted service certificates, and on contracts of insurance. It seemed to me that there should be no question, after a check was issued once, that it would stay issued and that the beneficiary, two or three months later, would not be called upon to make a refund. For that reason I suggested to Judge McCarl that he set up a unit in the bureau himself, and preaudit these accounts before the checks were issued, thereby saving the recall or the difference that might arise when he finally made a postaudit later.

The CHAIRMAN. They were to act under the direction of the comptroller.

General HINES. Yes. They are independent of the bureau. That preaudit has worked satisfactorily so far as I am concerned. We have had some differences of opinion. We have had some delays, but when you consider the number of awards that have gone through and the magnitude of them in dollars and cents, I can not help but feel that the Government's interests have been safeguarded by that procedure, and along with it, any distress that might have been caused by calling upon a beneficiary to refund after payment has been saved in many cases. So, I still feel that that unit is helpful and should be continued.

I feel also that without any further legislation the Comptroller General and the Veterans' Bureau are going to get along and handle the matters just as we are doing now. I think there will be some. cases where probably he will differ on what might be termed a legal question, and we will have arguments back and forth, but they are going to be few. So, my stand would be that if by granting the Director of the Veterans' Bureau final authority when his findings are made, that is going to curtail in any way the general accounting act which is applicable to all the departments, I would then suggest to the committee that we leave it alone, and not upset it, feeling that whatever difficulties we have, we will find a solution for them between Judge McCarl's office and my own.

The next point that was touched upon by those who have testified, where they differed with the recommendation that I had made to the subcommittee, had to do with the time of filing suits, and the extension of the time for filing suits against the Government on war-risk insurance.

I feel sure that there must be some misunderstanding relating to the existing rights of the beneficiaries or the claimants, or they would not advocate a further extension.

Let me point out again—and it is a repetition of what is already printed, but in order to make my point I shall do so that the present law permits a suit within six years of the maturing of the act on which the claimant desires to sue. In other words, if he feels that he was permanently and totally disabled last year, he has six years in which to file his suit. The extension of this provision of law, the statute of limitations, would simply give those who desire to show permanent and total disability back to date of discharge a further opportunity, rather than those whoe policies mature, or who think they have matured, as against the bureau's opinion, since discharge. As I pointed out to the subcommittee, with 5,000 suits filed against the Government at this time, and with the feeling on my part that the bureau at all times most certainly will look for a way to grant a meritorious case and mature the policy, I can not go along with those who recommend a further extension of that act. But if the committee disagrees with me and feels that they should give a longer time, then let me suggest to you that we at least cut down the amount of fees that may be paid to attorneys who specialize in this particular activity.

First, I am sure the committee is aware that while it is claimed that this insurance is all paid for, the basis of most of these suits is brought about by the difference between the claimants, or, at least, the attorneys who specialize in that work, and the bureau, that where we have made a finding of permanent and total disability under this insurance, say, in 1924, they feel that we should have made the finding at date of discharge.

Most of these men immediately dropped their insurance when they left the service. Up to that time it was paid for. The premiums were paid, because generally they were deducted from the pay. At that time we had on the books of the Government $40,000,000,000 worth of Government insurance. The Government's liability under that term insurance now is $1,300,000,000, that is being liquidated at the rate of about $125,000,000 a year. That liability is bound to increase by the number of suits that we are losing, that are now filed against the Government. Each one of those suits means, aside from any expense of defending it, $13,800.

Senator SHORTRIDGE. You say there are 5,000 suits now pending? General HINES. There are now 5,000 cases pending. In order to give the committee a little idea of how the Government is faring in these suits, I desire also to call your attention again to the fact that the Government, in the defense of these suits, not only shares the handicap that commercial insurance companies share, but we also have the additional factors against us of the local community usually being in favor of the veteran, the district attorney not being at all desirous of trying that type of case, and the court and jury unusually sympathetic toward the veteran.

The CHAIRMAN. And the Government can pay it, and it will not hurt them.

General HINES. So that we have found it exceedingly difficult; but the Attorney General is the authority for my saying that so far we have fared very well. But I have a statement here which indicates

that from March 1, 1929, to March 1, 1930, of 690 suits tried the Government won 326 and the plaintiffs 364.

It is rather surprising, however, to note how these suits seemed to congregate in the particular districts where attorneys have made a specialty of filing them against the Government. The fees that we have a record of in the cases that have been tried, indicate that in San Francisco one attorney, over the period that I have just referred to, was successful in obtaining $26,728.97 in fees. In Portland, Oreg.

Senator SHORTRIDGE. What is that firm, General? Is it in the record?

General HINES. It is not in the record, and I did not think I would put it in unless you wish to put it in.

Senator SHORTRIDGE. Very well.

General HINES. I can give it to the committee, if you wish. In Portland there was a firm which succeeded in collecting $23,000 in fees.

Senator SHORTRIDGE. In one year?

General HINES. Yes, sir. One attorney in Denver collected $10,000. A firm in Kansas City collected $13,800.

If we are desirous of helping the veterans-and I know that that is the intent of the Congress and the people, and most certainly the intent of those who work with me-I feel that meritorious cases will finally be allowed, and if they do finally go to court, I feel that if these men who represent the veterans really take these cases in the interest of the veterans, we might modify the law, if you feel that a further extension of it is necessary, by reducing the 10 per cent fee to 5 per cent, and see if that makes the business as attractive.

Let me point out to the committee that the Government is at another great disadvantage. The claimant comes into court, and at this time the bureau has admitted that he is permanently and totally disabled. There is no argument about that. The whole thing is going to rest upon whether the claimant and his attorneys, with his witnesses, can convince the court and jury that his condition at the date of discharge was the same as it is now; that is, that he was permanently and totally disabled. If they can do that, then his policy, which lapsed, probably, years before, is still in force and effect. In other words, it is prevented from lapsing if he was permanently and totally disabled at discharge.

Senator SHORTRIDGE. The law so provides.

General HINES. The law so provides. We are unable, of course, in many instances, to follow that veteran to determine what his industrial record might have been between the time that we finally found him totally disabled and matured his insurance and the time when he was discharged, but we usually have some record of his appearance before the bureau, and of his examinations, which clearly indicates, so far as the bureau's examinations are concerned, that he was not permanently and totally disabled, but without an industrial record, and even in some cases where we have found the industrial record to show that the man has carried on to some extent, we have had findings against the Government.

A recent decision of one of the courts brings up a new phase of the problem and makes it still more difficult for the Government. That is a finding on the part of a judge that under the presumptive pro

visions of the law a man is brought in, so that tuberculosis, which may not have existed at all at discharge, due to the presumptive clause, section 200, is presumed to have existed if he shows up in court with tuberculosis and is permanently and totally disabled. We have had a case decided against us where the presumptive clause was brought in, and there was a finding against the Government that his policy matured at discharge because he had tuberculosis. As a matter of fact, there was no evidence in that case, as I understand it, to show that the man had tuberculosis, but he was brought in under that section, which made it a presumption that he had tuberculosis at the time he was discharged. So, I am sorry that I can not agree with those service organizations which have urged that this law be extended. I think, if you did extend it for another year, the time would come when you would again be requested to extend it further.

Senator SHORTRIDGE. The period now is six years.

General HINES. Yes. It is now six years.

Senator SHORTRIDGE. There are those who ask that it be made

seven.

General HINES. They ask that it be made another year, from May 29, 1929. We feel that in meritorious cases the man has had an opportunity, certainly, to file suit against the Government, and that in view of the specialization on the part of a large number of attorneys, and the disadvantage to which the Government is put in the defense of these suits, together with the lack of uniformity on the part of courts and juries, to my mind it presents a most dangerous problem, and one that the Congress, sooner or later, I am afraid, will have to give further consideration to. For that reason I do not recommend a further extension, but in the event the committee should not agree with me, then by all means I recommend that the fees paid to attorneys in this business be reduced from 10 per cent to 5 per cent, so that the business of specializing in this activity will not be as advantageous as it is at the present time.

Gentlemen, the next important section of the act on which there is much difference of opinion is the question as to whether we should extend the presumptive period, first, for disabilities other than those now provided by law-tuberculosis and neuropsychiatric disabilitiesup to January 1, 1925.

The second proposition is that of extending all the disabilities up to January 1, 1930. There is one thing that is most certainly apparent in this entire discussion, both before the House committee and before this committee, and it must be apparent to you gentlemen, as it is to me that is, that the entire veterans' relief problem requires careful study and some overhauling. We are all desirous of taking care of the veterans. I have a feeling that the desire on the part of the people is to take care of all veterans. We started out with the World War compensation act on certain basic principles, particularly that a man would be compensated for his serviceconnected disability. I might say there that I believe that the original law, in its original form, was very certain and very fair. Distressing cases commenced to arise, and we started to amend the We brought in a presumptive clause, to presume that in the cases of certain men who have certain disabilities, those disabilities

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were due to service, whether there was evidence of that fact or not. Undoubtedly there was considerable merit to the first presumptive clause, which, as I recall, was two years after discharge. The next was for three years.'

Then, when the World War veterans' act was studied by a committee that investigated the bureau in 1923 and 1924, in order to be fair and give every opportunity to those men suffering from tuberculosis and neuropsychiatric disabilities, with respect to which I am sure the committee felt there was great difficulty in proving service connection, it was extended to January 1, 1925.

Manifestly, that left out a number of veterans who feel that their disabilities are just as much due to service as those who have had tuberculosis, or certain mental and nervous disabilities. So, having established that borderline as January 1, 1925, the cases commenced to accumulate which seemed to be meritorious, but where there was a lack of evidence to connect them with the service.

Senator SHORTRIDGE. What diseases, General, were covered, or fell within that presumption?

General HINES. Active tuberculosis, neuropsychiatric diseases, spinal meningitis, paralysis agitans, encephalitis, lethargica, and amoebic dysentery.

Senator SHORTRIDGE. Thank you.

General HINES. The presumption for active tuberculosis and spinal meningitis was considered conclusive, while the neuropsychiatric and other diseases just named could be rebutted by evidence showing that other reasons caused the disability, rather than service.

Some of these cases are very distressing. Members of the Congress have been urged to appeal them. The bureau has been appealed to, and while we have very definite, and I think liberal instructions, that wherever there is a doubt, the benefit of the doubt shall be given to the man, nevertheless, there have grown up a number of cases where there is a feeling, undoubtedly, on the part of a large number of the Members of Congress that those men should be taken in under the law. Otherwise they would not have passed this bill.

Senator WALSH of Massachusetts. You mean, now, those men who are suffering from other chronic diseases.

General HINES. Yes, sir; other chronic diseases.

Senator WALSH of Massachusetts. That are not now in the act. General HINES. Yes, sir; and with respect to which they can not produce evidence showing direct connection with service. I am speaking, first, of the extension up to 1925. Mr. Rankin's bill extended it to 1930.

Mr. RANKIN. Only the chronic cases.

General HINES. But I am speaking first of the extension of those disabilities up to 1925.

Now, there is not any use of any of us for one moment shying at the proposition that if this bill in its present form is passed it is a pension measure dressed up in compensation clothes. Regardless of how we feel about it, or what we desire to do, we can not escape that, because we do know that the best medical advice that we can get, both in this country and abroad, is that we are taking in men whose disabilities are not due to their service. They are holding hearings in Canada on very much the same problem, the question of extension of relief. If we are to do that, my advice has been-and I have offered