PROCEEDINGS

	IN THE CASE OF:  

	BOARD DATE:           10 February 2000                   
	DOCKET NUMBER:   AR1999029089

	I certify that hereinafter is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in the case of the above-named individual.  

			r	
	Mrs. Nancy Amos		Analyst	

  The following members, a quorum, were present:

	Mr. Van B. Cunningham		Chairperson	
	Mr. James P. Steuve		Member	
	Mr. Kenneth L. Wright		Member	

	The applicant and counsel if any, did not appear before the Board.

	The Board considered the following evidence:

	Exhibit A - Application for correction of military 
                records
	Exhibit B - Military Personnel Records (including
	            advisory opinion, if any)

FINDINGS:

1.  The applicant has exhausted or the Board has waived the requirement for exhaustion of all administrative remedies afforded by existing law or regulations.

2.  The applicant requests that her son, the natural child of her deceased former spouse, a former service member (FSM), be declared the sole beneficiary of the FSM’s Survivor Benefit Plan (SBP).

3.  The applicant states, in effect, that when the FSM retired he elected spouse and children coverage.  He never designated his new wife as his beneficiary.  The Defense Finance and Accounting Center (DFAS) initially awarded her son the SBP but later stated he was not the eligible beneficiary and has now charged her with a debt for the payments he received.  The FSM’s new wife is now receiving his SBP but she was never listed on any of his paperwork.  

4.  The FSM’s military records show that he enlisted in the Regular Army on        1 December 1970 and retired on 1 January 1993.  At that time, he elected SBP spouse and children coverage.  

5.  On an unknown date, the FSM divorced.  The divorce decree states in pertinent part “The Defendant, ____, shall maintain the current survivor’s benefits life insurance policy in existence on his life.  Said life insurance policy shall name the parties’ minor child, ____, as the sole irrevocable beneficiary of said policy.”

6.  On an unknown date, the FSM remarried.  On 6 August 1998, he died.

7.  DFAS Denver Center (DFAS-DE) has confirmed that the FSM’s spouse had been established as the SBP beneficiary on18 September 1998.

8.  The applicant apparently applied for SBP benefits for her son.  In an              11 December 1998 response to the applicant’s Representative in Congress, DFAS Cleveland Center (DFAS-CL) noted that there was no record that either party notified DFAS of the divorce, that her son was the FSM’s sole beneficiary and that he would be paid the SBP annuity retroactive to 1 September 1998. 

9.  On 8 April 1999, DFAS-DE notified the applicant that she owed a debt of $6,046.00 for overpayment of SBP entitlement. 

10.  Public Law 92-425, the SBP, enacted 21 September 1972, provided that military members on active duty could elect to have their retired pay reduced to provide for an annuity after death to surviving dependents.  Elections are made by category and are permanent and irrevocable except in specific instances or authorized by law.

11.  Public Law 99-145, enacted 8 November 1985, permitted a previously participating retiree upon remarriage to elect not to resume spouse coverage or to increase reduced coverage for the latter spouse.  Changes must be made prior to the first anniversary of remarriage or else the previously suspended coverage resumes by default on the first day of the month following the first anniversary of the remarriage, with costs owed from that date.

12.  Title 10, U. S. Code, section 1450 states that an SBP annuity shall be paid to the person’s beneficiaries as follows:  (1)  The eligible surviving spouse or the eligible former spouse.  (2)  The surviving dependent children in equal shares, if the eligible surviving spouse or eligible former spouse is dead, dies or otherwise becomes ineligible.

CONCLUSIONS:

1.  When the FSM elected spouse and dependent children SBP coverage at his retirement, the category of spouse and dependent children became permanent and irrevocable decisions; not the individuals who were named as fitting that category at the time.  

2.  When the FSM and the applicant divorced and the FSM did not change his election to former spouse and dependent children, the applicant’s son became the FSM’s sole beneficiary.  However, when the FSM remarried, his spouse coverage automatically resumed after one year of marriage.  The law does not require a member to request resumption of spouse coverage; it only requires a member to request to decline resumption of spouse coverage if desired.  The evidence of record shows the FSM did not decline resumption of spouse coverage.

3.  Once spouse coverage resumed, the FSM’s spouse at the time of his death became his primary beneficiary.  His SBP annuity is not being given to his spouse and her daughter; it is being given to his spouse.  Should she die or otherwise become an ineligible beneficiary, then the SBP would be given to all his dependent children in equal shares.  

4.  However, the Board concludes that a Government error occurred in paying to the applicant’s son any SBP entitlement.  DFAS-DE established the FSM’s spouse as the legal SBP beneficiary on 18 September 1998.  Since the evidence of record shows that neither the FSM nor the applicant notified DFAS of the divorce (and presumably the FSM never notified DFAS of his remarriage), it is understandable that DFAS-CL, would conclude from the available documents that the applicant’s son was the only SBP beneficiary.  What was in error was DFAS-DE not discovering the fact they had been sending the FSM’s spouse a check for 6 months before they sent the applicant’s son his first, retroactive check.  

5.  The Board concludes that the applicant accepted the SBP payment in good faith and it would be an injustice and hardship not to cancel this debt.  However, it would not be in the interest of justice to deny the SBP to the FSM’s legal beneficiary, his spouse.  The applicant may want to consider civil action against the FSM’s estate to recover benefits and entitlements for her and her son or against her divorce lawyer for failing to protect her interests by requesting a deemed election.

6.  In view of the foregoing, it would be in the interest of justice to correct the records as recommended below.

RECOMMENDATION:

1.  That all of the Department of the Army records related to this case be corrected by canceling the debt charged against the applicant for the erroneous SBP payment for her son and that any monies collected to date for this erroneous payment be refunded as appropriate.

2.  That so much of the application as is in excess of the foregoing be denied.

BOARD VOTE:  

__vbc___  __jps___  __klw___  GRANT AS STATED IN RECOMMENDATION

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

		Van B. Cunningham
		______________________
		        CHAIRPERSON

INDEX

CASE ID	AR1999029089	
SUFFIX		
RECON		
DATE BOARDED	20000210	
TYPE OF DISCHARGE		
DATE OF DISCHARGE		
DISCHARGE AUTHORITY		
DISCHARGE REASON		
BOARD DECISION	(GRANT)	
REVIEW AUTHORITY		
ISSUES         1.	137.01	
2.		
3.		
4.		
5.		
6.