PROCEEDINGS

	IN THE CASE OF:  

	BOARD DATE:           26 April 2000                   
	DOCKET NUMBER:   AR1999029614

	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.  

	Mrs. Nancy Amos		Analyst	

  The following members, a quorum, were present:

	Mr. Stanley Kelley		Chairperson	
	Ms. Karol A. Kennedy		Member	
	Mr. Curtis L. Greenway		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 he receive a full refund of his Survivor Benefit Plan (SBP) premiums.

3.  The applicant states that SBP premiums had continued to be deducted from his compensation after his divorce in 1988.  He has received a refund for the past 6 years but feels he should receive the whole amount.

4.  The applicant's military records show that he enlisted in the Regular Army on 3 May 1978.  As a result of a diving accident, he became a quadriplegic and was retired by reason of a 100 percent physical disability on 14 October 1980.  At that time the applicant elected SBP for natural person with insurable interest coverage because he stated his two children (born on 26 July 1977 and             12 January 1980, respectively) were not dependent on him for support.  (The insurable interest person was the mother of his children.)  He could not sign the election form himself.  He had received his SBP counseling from the Physical Evaluation Board Liaison Officer and not from a Retirement Services Officer.

5.  Because the applicant did not sign the election form, his election was closely reviewed by the Retired Pay Operations.  On 22 January 1981, the Retired Pay Operations’ legal office determined that because his two children met the statutory definition of dependent, his election of insurable interest coverage was invalid and therefore he was automatically covered for his children who were eligible beneficiaries.  On 4 February 1981, the applicant was requested to provide to Retired Pay Operations the birth certificates for his children, marriage certificate and divorce decree.  A second request was sent to him on or about June 1981.  He apparently never provided the documents.

6.  The applicant married the mother of his children on 10 June 1982; however, there is no evidence to show he requested his SBP be changed to spouse coverage.  He and she divorced on 14 June 1988.  There is no evidence to show the divorce decree directed former spouse coverage.

7.  Apparently, the applicant’s SBP coverage had never been changed to children only coverage and continued to reflect insurable interest coverage, apparently with the attendant increased SBP premiums, until he provided the Defense Finance and Accounting Service (DFAS) a copy of his divorce decree in 1999 and requested cancellation of his SBP.  Because of the barring statute, DFAS reimbursed him 6-year’s worth of SBP premiums, apparently at the insurable interest rate.

8.  Public Law 92-245, 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.  A person who is not married and does not have a dependent child upon becoming eligible to participate in the SBP may elect to provide an annuity to a natural person with an insurable interest in the member.  The term “dependent child” means a person who is unmarried; is under 18 years of age or at least 18 but under 22 years of age and pursuing a full-time course of study in a high school, college, or comparable recognized educational institution; is incapable of self support because of a mental or physical incapacity existing before the person’s 18th birthday, or is the child of a person to whom the Plan applies including an adopted child, a step or foster child or a recognized natural child who lived with that person in a regular parent-child relationship.  Premiums for insurable interest coverage are generally higher than for any other category of coverage.

9.  Title 32, U. S. Code, section 3702 prohibits the payment of a claim against the Government unless the claim has been received by the Comptroller General within 6 years after the claim accrues. 

10.  In Pride v. United States, the court held that the Board for Correction of Military Records (BCMR) is not bound by the barring act, that the BCMR decision creates a new entitlement to payment and the 6 years starts running over again, and that payment is automatic and not discretionary when a BCMR decision creates an entitlement.

11.  On 21 December 1999, the applicant sent additional correspondence to the Board mentioning that his ex-wife cashed checks totaling $47,000 and that the VA took his pension for over 9 years to recover this money.  He asked that this matter be resolved.

CONCLUSIONS:

1.  The Board concludes that a Government error occurred in this case.

2.  Since the applicant did have dependent children at the time he retired, his election of insurable interest SBP coverage was invalid.  Unlike an automatic default to spouse coverage when a member with a spouse makes an invalid election, the law does not provide for an automatic default to children coverage when there is no spouse but there are children.  DFAS confirmed this interpretation of the law on 7 April 2000.  However, in January 1981, the Retired Pay Operations (forerunner of DFAS) erroneously informed the applicant that his invalid election did default to children coverage.

3.  To compound the Government error, the Retired Pay Operations then improperly deducted SBP premiums from the applicant at the higher, natural person with insurable interest rate instead of the children rate from October 1980 until April 1999, when the applicant requested a refund.  DFAS then refunded to the applicant only 6-year’s worth of premiums, citing the barring statute as prohibiting them from paying any additional refund.

4.  It would be an injustice not to correct the applicant’s finance records to show that he elected no SBP coverage and refunding to him all SBP premiums improperly collected from him since October 1980.

5.  Unfortunately, the matter of the $47,000 erroneously paid to the applicant’s ex-wife appears to be an issue not under the Army’s jurisdiction to resolve.  He should continue to work with the VA to resolve that problem. 

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

RECOMMENDATION:

1.  That all of the Department of the Army records related to this case be corrected by showing that the applicant’s finance records were corrected on       22 January 1981, the date the Retired Pay Operation’s legal office made the erroneous determination that he was automatically had children SBP coverage, to show that, since he had made an invalid election, he had effectively made an election not to participate in the SBP and that his records would show he declined to participate in the SBP. 

2.  That all SBP premiums collected from the applicant from 14 October 1980, the date of his retirement, to the present be refunded to him.  

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

BOARD VOTE:  

__sk____  __kak___  __clg___  GRANT AS STATED IN RECOMMENDATION

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

			Stanley Kelley
		______________________
		        CHAIRPERSON

INDEX

CASE ID	AR1999029614	
SUFFIX		
RECON		
DATE BOARDED	20000426	
TYPE OF DISCHARGE		
DATE OF DISCHARGE		
DISCHARGE AUTHORITY		
DISCHARGE REASON		
BOARD DECISION	(GRANT)	
REVIEW AUTHORITY		
ISSUES         1.	137.04	
2.		
3.		
4.		
5.		
6.