Opposition Brief — Skovgaard v. United States

Statutes: Page

National Service Life Insurance Act of 1940, 54 Stat. 1008,

as amended, by the Act of August 1, 1946, 60 Stat. 1:

Section 602 (c) (88 U. S. C. 802 (c)) -...--_..-.-._-- 2,5,6

Section 608 (38 U. 8. C. 808) ....-..........-...... 4

Geetion GI7 (66 U. 6..C..827)...............2...... 2,8

World War Veterans’ Act, 1924, 43 Stat. 607, as amended

by Section 4 of the Act of July 3, 1930, 46 Stat. 992:

Beptiin 10:(oe O. O. ©. 460) 62 ce hac ee 3,8

Section 200 (38 U.S. C. 471)__...... 22-22 eee 11

Section 202 (38 U. 8. C. 477) ___.......-..-.--_-- 8. 11

Section 500 (38 U. S. C. 551)__-.._.-.---.2- 2 Lee 2

Miscellaneous:

H. Rep. 2002, 79th Cong., 2d sess., pp. 10, 11... _______- 8

8. Rep. 1705, 79th Cong., 2d sess., pp. 9, 10....________- 8

3 Williston Contracts, Rev. Ed. 1936, § 675A____________ 10

Ynthe Supreme Gourt of the Winited States

OcToBER TERM, 1952

No. 759

VIRGINIA SKOVGAARD, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE DISTRICT OF COLUM-

BIA CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

No opinion was written by the District Court

for the District of Columbia. The opinion of the

Court of Appeals for the District of Columbia

Circuit (R. 88-93) is reported at 202 F. 2d 363.

JURISDICTION

The judgment of the Court of Appeals was en.

tered on February 5, 1953 (R. 94). The petition

for a writ of certiorari was filed April 30, 1953.

The jurisdiction of this Court is invoked under

28 U. S. C. 1254 (1).

(1)

2

QUESTION PRESENTED

Whether an applicant for National Service

Life Insurance who has been denied a policy be-

cause of failure to present evidence satisfactory

to the Administrator of Veterans’ Affairs show-

ing him to be in good health at the time of appli-

cation may (a) sue the United States in the

district court as if a contract of insurance had

been entered into and breached, and (b) intro-

duce evidence of good health never presented to

the Administrator as support for the claim that

a policy should have been issued.

STATUTES INVOLVED

Section 617 of the National Service Life Insur-

ance Act of 1940, 54 Stat. 1014, as amended, 60

Stat. 788-789 (38 U. S. C. 817), provides:

In the event of disagreement as to any

claim arising under this Act, suit may be

brought in the same manner and subject to

the same conditions and limitations as are

applicable to the United States Govern-

ment life (converted) insurance under the

provisions of sections 19 and 500° of the

World War Veterans’ Act, 1924, as

amended.

Section 602 (c) (2) of the National Service

Life Insurance Act, as amended by Section 2 of

1 Section 500 of the World War Veterans’ Act, 1924, 38

U. S. C. 551, restricts attorneys in presenting insurance

claims but contains no authorization for suit.

7

3

the Act of August 1, 1946, 60 Stat. 781 (38

U.S. C. 802 (c) (2)), provides in pertinent part

as follows:

* * * any individual who has had active

service between October 8, 1940, and Sep-

tember 2, 1945, both dates inclusive, shall

be granted such insurance upon application

therefor in writing and upon payment or

authorization for deduction of premiums

and evidence satisfactory to the Adminis-

trator showing such person to be in good

health at the time of such application.

In any case in which application for life or

disability insurance or for reinstatement of

such insurance is made prior to January 1,

1950, the Administrator shall not deny, for

the purposes of this or any other section of

this part, that the applicant is in good

health because of any disability or disabili-

ties, less than total in degree, resulting

from or aggravated by such active serv-

ial et hag

Section 19 of the World War Veterans’ Act,

Act of June 7, 1924, 43 Stat. 612, as amended by

Section 4 of the Act of July 3, 1930, 46 Stat. 992

(38 U. S. C. 445), provides in pertinent part as

follows:

In the event of disagreement as to claim,

including claim for refund of premiums,

under a contract of insurance between the

Veterans’ Administration and any person or

persons claiming thereunder an action on

the claim may be brought against the

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United States either in the district court

of the United States for the District of

Columbia or in the district court of the

United States in and for the district in

which such persons or any one of them

resides, and jurisdiction is hereby conferred

upon such courts to hear and determine all

such controversies. The procedure in such

suits shall be the sume as that provided in

sections 5 and 6 of the Act entitled ‘‘An

Act to provide for the bringing of suits

against the Government of the United

States,’’ approved March 3, 1887, and sec-

tion 10 thereof so far as applicable. * * *

Section 608 of the National Service Life Insur-

ance Act, 54 Stat. 1012, as amended by Section 12

of the Act of August 1, 1946, 60 Stat. 788 (38

U.S. C. 808), provides:

The Administrator, subject to the gen-

eral direction of the President, shall ad-

minister, execute, and enforce the pro-

visions of this Act, shall have power to

make such rules and regulations, not incon-

sistent with the provisions of this Act, as

are necessary or appropriate to carry out

its purposes, and shall decide all questions

arising hereunder. All officers and em-

ployees of the Veterans’ Admin‘stration

; shall perform such duties in connection

with the administration of this Act as may

be assigned to them by the Administrator.

All official acts performed by such officers

and employees designated therefor by the

Administrator shall have the same force

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and effect as though performed by the Ad-

ministrator. Except in the event of suit

as provided in section 617 hereof, or other

appropriate court proceedings, all decisions

rendered by the Administrator under the

provisions of this Act, or regulations prop-

erly issued pursuant thereto, shall be final

and conclusive on all questions of law or

fact, and no other official of the United

States, except a judge or judges of the

United States courts, shall have jurisdic-

tion to review any such decisions.

STATEMENT

Harvey Skovgaard served in the United States

Navy from July 16, 1940, until April 28, 1945,

when he was discharged because of chronic

nephritis. While in the service he applied for

and was granted $1,000 life insurance under the

National Service Life Insurance Act of 1940.

On January 29, 1947, he filed, under Section 602

(ec) (2) of the National Service Life Insurance

Act (supra, pp. 2-3), a written application for

insurance in the additional sum of $9,000, the

remainder of the maximum protection permitted,

and tendered two months premium thereon.

On February 11, 1947, he entered a govern-

ment hospital as an ambulatory patient. His ap-

plication for additional insurance had not been

formally acted upon when he died on May 6, 1947;

it was administratively denied on June 25, 1947,

on the ground that he was not in good health and

6

was totally disabled at the time the application

was filed (R. 8, 42).

His widow, as beneficiary, filed suit against the

United States to recover $9,000, alleging that her

husband had automatically been granted the addi-

tional insurance. A motion to dismiss the com-

plaint for want of consent to suit was denied

(R. 5-6). A subsequent motion to strike the

allegations of the complaint that Skovgaard was

rated by the Veterans’ Administration as less than

totally disabled (for service connected disability) *

was sustained by the same judge on the ground

that such ratings were for compensation purposes

and were unrelated to a National Service Life

Insurance policy claim (R. 10-12), whereupon

the complaint was amended to eliminate the alle-

gations as to the ratings for compensation pur-

poses (R, 12-14). After petitioner’s evidence

was in, the district court found that there was no

contract of insurance under Section 602 (a) (2)

in effect at the time of Skovgaard’s death on

which to base a claim and held that ‘‘An action

against the United States under Section 817

[of Title 38, USC, supra, p. 2] is not a pro-

ceeding in which the Administrator’s exercise

* Section 602 (c) (2) (supra, pp. 2-3), on which petitioner

bases her claim, provides that the Administrator shall not

deny that an applicant (who applies prior to January 1,

1950) is in good health “because of any disability or dis-

abilities, less than total in degree, resulting from or

aggravated by such active service.”

7

of discretion in rejecting the application may be

reviewed’’ (R. 86). The court directed a verdict

for the Government, stating ‘‘I am passing on

the record as a whole. I am saying, on the law

and evidence before me, I do not believe that the

plaintiff in this case is entitled to prevail’’

(R. 87).°

On appeal, the majority of the Court of Ap-

peals, in an opinion by Judge Edgerton, held that

the Government had consented to suit only as to

claims under a contract of insurance and the dis-

trict court was without jurisdiction of a claim, as

here, not based on an existing contract of insur-

ance. Judge Miller, dissenting, agreed that peti-

tioner was not entitled to recover; but held that

petitioner had failed to present evidence, satisfac-

tory to the Administrator, that Skovgaard was

in good health at the time of application and ‘‘the

ease turns on the sufficiency of proof submitted

to the Administrator”? (R. 93).

ARGUMENT

Petitioner asserts that the United States has

consented to suit in the district court in cases in

which the Administrator erroneously refused to

issue a policy of insurance under Section

602 (c) (2). But petitioner cannot successfully

’ Contrary to petitioner’s statement (Pet. 6), the directed

verdict did not overrule the decision on the jurisdictional

motion; it specified that no contract was proved (R. 86-87)

and was based on the law and evidence.

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8

assail the interpretation of the Court of Appeals

that the incorporation of the conditions and limi-

tations of Section 19 of the World War Veterans’

Act, 1924 (38 U.S. C. 445) (supra, pp. 3-4) in the

consent to suit conferred by Section 617 of the

N.S. L. I. Act (supra, p. 2) imported the earlier

statute’s limitation of suability to claims under

an existing contract of insurance. Other courts

have reached the same conclusion. Ginelli v.

United States, 94 F. Supp. 874 (D. Mass.);

Schilling v. United States, 101 F. Supp. 525

(E. D. Mich.) ; ef. Meadows v. United States, 281

U.S. 271; Burlingham v. United States, 34 F. 2d

881 (C. A. 8); Taft v. United States, 127 F. 2d

876 (C. A. 2); United States v. Fitch, 185 F. 2d

*The repeal by implication said to have been effected by

the August 1, 1946, amendment, changing the terms of Sec-

tion 617 of the N.S. L. I. Act (Pet. 8-9), has no foundation.

To permit suit on an insurance policy implied in law would

require apt words.

Petitioner herself (Pet. 8-9) proves that the 1946 amend-

ment to Section 617 (supra, p. 2), changing “claim” to “any

claim”, was to reflect the change whereby questions of waiver

or non-Waiver of premiums under a policy were no longer

to be withheld from judicial review. The committee reports

stress the congressional belief that judicial review should be

authorized when contractual rights and benefits under insur-

ance policies are denied. S. Rep. 1705, 79th Cong., 2d sess.,

pp. 9, 10; H. Rep. 2002, 79th Cong., 2d sess., pp. 10, 11.

There was no concern with judicial review in the absence of

a contractual relationship. Cf. United States v. Zazove, 334

U. S. 602, 611-12. In the face of this legislative history,

expressions as to the effect of “any” in other statrtory con-

texts (see United States v. Yellow Cab Co., 340 vu. S. 543,

548) are not persuasive.

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471 (C. A. 10); Mitchell v. United States, 111 F.

Supp. 104 (D. N. J.). Contra: Unger v. United

States, 79 F. Supp. 281 (E. D. Ill.); compare

Gamez v. United States, 95 F. Supp. 656, 660

(S. D. Texas) (under Section 602 (c) (3)). Pe-

titioner in suing on a refusal to issue a policy

does not claim either on an insurance policy in

effect or on one agreed to be issued. Cf. United

States v. Leahy, 148 F. 2d 462, 466 (C. A. 3).

She has not proved or attempted to prove that an

insurance policy was issued or that the Adminis-

trator was satisfied by what the application

showed. The district court was, therefore, with-

out jurisdiction of her suit.

But even if consent to suit on a nonconsensual

contract might be implied where the Administra-

tor should have been satisfied that applicant was

in good health, petitioner still would have no

prospect of success in this suit, since recovery

would have to be denied on other adequate

grounds. Although the Administrator is admon-

ished not to deny the good health of an applicant

with disabilities less than total in degree, result-

ing from or aggravated by active service between

October 8, 1940, and September 2, 1945, the Act

clearly requires that the evidence satisfy him of

applicant’s good health at the time of the appli-

eation. Cf. Tagg Bros. v. United States, 280

U.S. 420, 444; Bayly v. United States, 99 C. Cls.

098, 605-6; Lanier v. New York Life Ins. Co., 88

F. 2d 196, 198-9 (C. A. 5), certiorari denied,

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10

301 U. 8S. 693. It is not enough that a jury or a

court subsequently be satisfied that the applicant

was not totally disabled.’ If reviewable at all,

the Administrator’s denial must be reviewed in

the light of the evidence presented to him. His

discretion cannot be upset on the strength of evi-

dence he never saw.

Petitioner does not attempt to show that the

Administrator should have been satisfied on the

basis of Skovgaard’s application and the materials

presented with the application. Instead, she

° Berry v. United States, 312 U. S. 450, involved the ques-

tion whether there was sufficient evidence to sustain the

jury verdict that the insured claimant had become totally

and permanently disabied while his war risk insurance was

in effect. No provision requiring that the Administrator

be satisfied of the insured’s disability was involved.

°The complaint does not allege arbitrary or capricious

action, or bad faith (R. 12-13). Cf. Dismuke v. United

States, 297 U. S. 167, 172-38; Byrne v. United States, 97

C. Cls. 412, 423 ; 3 Williston, Contracts, Rev. Ed. 1936, § 675A.

Petitioner’s counsel expressly denied that any abuse of the

Administrator’s discretion had to be shown (R. 81-82).

He took the position that the Administrator’s denial was

without significance. “You have to go to him first to get

your disagreement; and if he denies the claim, you have

the right to go into court * * *. This amendment was put

in so that the thing could be cut wide-open, because the Act

states, under ‘any claim’” (R. 82). Petitioner reads out

of the statute the requirements that suit be on a policy of

insurance and that good health be proved to the satisfac-

tion of the Administrator by evidence accompanying the

application. She reads into the Act that she is entitled to

go outside the application, to rely on ratings for other pur-

poses, to have a trial de novo (R. 38-40), and to require the

Government to prove that a rating of total disability was

made in the lifetime of the applicant.

a Ce

11

relied in the courts below on a rating for compen-

sation purposes’ and now relies on what a jury

could find therefrom. It is beside the point to

insist that during the insured’s lifetime no rating

of total disability had been made (Pet. 5, R.

36-37). Unless petitioner is to be relieved from

proving conditions precedent to insurance liabil-

ity, she must at least show that the applicant

presented to the Administrator evidence showing

he was in good health at the time of his applica-

tion.© The only proof of Skovgaard’s good health

which petitioner introduced at the trial was that

‘the filed the report of a medical examination

7The compensation ratings are made under other pro-

visions (38 U. S. C. 471, 477). They were based on other

and different evidence relating to health at earlier times,

and were appraised by different standards. It has long

been settled that such ratings are inadmissible to prove the

extent of disability for insurance purposes. Demeter v.

United States, 66 F. 2d 188 (C. A. D. C.); United States

v. Thomas, 538 F. 2d 192, 195 (C. A. 4); Lockett v. United

States, 86 F. 2d 1 (C. A. 5); Magenton v. United States, 75

F. 2d 410, 412 (C. A. 8); United States v. Golden, 34 F. 2d

367, 369-70 (C. A. 10); Rose v. United States, 70 F. 2d 68

(C. A. 10); Guihan v. United States, 110 F. Supp. 738

(E. D.N. Y.).

*The ratings for compensation purposes may have been

too unfavorable to Skovgaard by taking his disabilities too

lightly. If they were, that is hardly a reason for substi-

tuting insurance benefits and certainly no basis for an

estoppel against the United States. Wilber National Bank

v. United States, 294 U.S. 120; Federal Crop Ins. Corp. v.

Merrill, 332 U. S. 380; James v. United States, 185 F. 2d

115 (C. A. 4); McDaniel vy. United States, 196 F. 2d 291

(C. A. 5); United States v. Fitch, 185 F. 2d 471 (C. A. 10).

Skovgaard tried to obtain total disability (R. 72).

12

made January 28, 1947, which disclosed chronie

nephritis, albuminuria pius 4, a heart murmur

and arteriosclerosis, and which contained no ex-

pression of opinion by the examiner as to whether

the applicant was then partially or wholly dis-

abled by his ailments’’ (R. 71-72, 93). United

States v. Spaulding, 293 U. 8. 498, cited at Pet.

11, is no authority for the proposition that chronic

nephritis, standing by itself, may never disable,

and the applicant did not present any other evi-

dence showing that he was not totally disabled.

In the circumstances of this case the only ques-

tion is whether the complaint should have been

dismissed for lack of jurisdiction, or for failure

to state a claim upon which relief might be

granted, or whether judgment should have been

entered for the Government for failure of proof.

A different decision from that of the majority

below on the jurisdictional issue would not affect

the outcome.

CONCLUSION

It is respectfully submitted that the petition

for a writ of certiorari should be denied.

Rosert L. STERN,

Acting Solicitor General.

WakRREN E. BurGER,

Assistant Attorney General.

Paut A. SWEENEY,

Huspert H. Margo.igs,

Attorneys.

JUNE 1953.

U. S$. GOVERNMENT PRINTING OFFICE: 1953