Underwood v. Servicemen's Group Ins., 88-1319

• Decision Date: 28 December 1989
• Docket Number: No. 88-1319,88-1319
• Citation: 893 F.2d 242
• Parties: Linda UNDERWOOD, Plaintiff-Appellee, v. SERVICEMEN'S GROUP INSURANCE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 242

893 F.2d 242

Linda UNDERWOOD, Plaintiff-Appellee, v. SERVICEMEN'S GROUP INSURANCE, Defendant-Appellant.

No. 88-1319.

United States Court of Appeals Tenth Circuit.

Dec. 28, 1989.

Richard B. Ferrari (Carolyn Cox with him on the brief), of Watkiss & Campbell, Salt Lake City, Utah, for defendant-appellant.

Stephen L. Johnston, Salt Lake City, Utah, for plaintiff-appellee.

Before BALDOCK, BRORBY and EBEL, Circuit Judges.

PER CURIAM.

This appeal is taken from a judgment of the United States District Court for the District of Utah determining that plaintiff was entitled to an additional $15,000 in insurance proceeds from the defendant. The amount represents an increase in coverage authorized by Congress after plaintiff's husband was discharged from the United States Army but before he died.

The facts are undisputed. Plaintiff's husband was a member of the United States Army, insured under a Servicemen's Group Life Insurance policy as described in 38 U.S.C. Sec. 765, et seq. Sergeant Underwood was discharged on November 18, 1985, as one hundred percent disabled. As of that date, the insurance policy limitation was $35,000. 38 U.S.C. Sec. 767(a) (1981).

On December 3, 1985, Congress amended the statute to increase the policy amount to $50,000. The effective date of that amendment (with a specific exception explained infra) was January 1, 1986. Sergeant Underwood, whose policy continued in effect for one year after his separation from the service, 38 U.S.C. Sec. 768(a)(1)(A), died on January 30, 1986.

Defendant paid plaintiff the $35,000 in April of 1986, and she then filed this action claiming entitlement to $15,000, the difference between the $35,000 paid and the $50,000 provided for in the 1985 amendment. Servicemen's Group Insurance defended the claim on the ground that the statute entitling members of the uniformed service on active duty to $50,000 in life insurance coverage instead of the previous $35,000 did not apply to plaintiff's decedent because he was not on active duty at the time the policy increase became effective. The district court found that the increase in coverage inures to the benefit of a policy holder who holds a policy when the increase becomes effective, whether or not that insured remains eligible to be issued a policy. We disagree and reverse.

The district court's interpretation of the statutory provisions 38 U.S.C. Sec. 765, et seq., is a question of law, subject to de novo review by this court. Marshall v. El Paso Natural Gas Co., 874 F.2d 1373, 1382 (10th Cir.1989); E.E.O.C. v. Cherokee Nation, 871 F.2d 937, 938 n. 1 (10th Cir.1989).

As initially enacted in 1965, the statute provided for $10,000 in insurance coverage to members of the armed services. Since then, Congress has amended the statute on several occasions for a number of reasons. In 1970, 1974, 1981, and 1985 the amount of insurance available to service personnel was increased to $15,000, $20,000, $35,000 and $50,000, respectively. Insurance coverage is effective the first day of active duty "or the date certified by the [Veteran's Administration] Administrator to the Secretary concerned as the date Servicemen's Group Life Insurance or group concerned takes effect, whichever is the later date." 38 U.S.C. Sec. 767(a) (1986).

Pursuant to this section of the statute, the Administrator has promulgated (and amended) corresponding regulations governing the effective date of the increases in insurance coverage. 38 C.F.R. Sec. 9.4 (1988).

For example, accompanying the 1970 increase, the Administrator revised 38 C.F.R. Sec. 9.4 to read that each member of the armed forces "on duty on or after June 25, 1970, is automatically insured against death in the amount of $15,000...." 36 Fed.Reg. 3808, 3809 (February 27, 1971). The June 25, 1970, date is the enactment date of the amendment increasing the amount of coverage from $10,000 to $15,000.

Similarly, the regulations were amended in January of 1975 to reflect the 1974 increase to $20,000. Section 9.4 was changed to provide that "[e]ffective May 24, 1974, Servicemen's Group Life Insurance is issued in the amount of $20,000...." 40 Fed.Reg. 4135, 4137 (January 28, 1975). Again, the May 24, 1974, date is the effective date of the 1974 amendments to the statute.

The effective date of the 1981 increase in coverage (to $35,000) was December 1, 1981. Pub.L. No. 97-66, 95 Stat. 1026, 1037 (approved October 17, 1981). The corresponding amendments to the regulations, however, specifically provided that "[t]he $35,000 coverage does not apply to those members separated or released prior to December 1, 1981...." 38 C.F.R. Sec. 9.4 (1987). See 48 Fed.Reg. 8069, 8070 (February 25, 1983). Finally, the December, 1985, amendment increasing coverage to $50,000 lists the effective date as January 1, 1986. Pub.L. No. 99-166, 99 Stat. 941, 957 (approved December 3, 1985). Again the accompanying regulation provides that the $50,000 coverage "does not apply to those members separated or released prior to January 1, 1986...." 38 C.F.R. Sec. 9.4 (1988); 53 Fed.Reg. 17,698 (May 18, 1988).

The Administrator published the 1983 and 1988 regulations as final, without opportunity for public comment, because the amendments "merely reflect statutory changes in the law" and therefore providing for public comment would have no effect on the changes mandated by Congress. 48 Fed.Reg. 8069 (February 25, 1983); 53 Fed.Reg. 17,698 (May 18, 1988). It therefore appears that, in the Administrator's view, the amendments to the regulations were clear and presumably not subject to misinterpretation.

The language of 38 U.S.C. Sec. 767(a) reads as follows:

(a) Any policy of insurance purchased by the Administrator under section 766 of this title shall automatically insure against death--

(1) any member of a uniformed service on active duty, active duty for training, or inactive duty training scheduled in advance by competent authority;

(2) any member of the Ready Reserve of a uniformed service who meets the qualifications set forth in section 765(5)(B) of this title; and

(3) any member assigned to, or who upon application would be eligible for assignment to, and Retired Reserve of a uniformed service who meets the qualifications set forth in section 765(5)(C) of this title;

in the amount of $50,000 unless such member elects in writing (A) not to be insured under this subchapter, or (B) to be insured in an amount less than $50,000 that is evenly divisible by $10,000. The insurance shall be effective the first day of active duty or active duty for training, or the beginning of a period of inactive duty training scheduled in advance by competent authority, or the first day a member of the Ready Reserve meets the qualifications set forth in section 765(5)(B) of this title, or the first day a member of the Reserves, whether or not assigned to the Retired Reserve of a uniformed service, meets the...