RECORD OF PROCEEDINGS


         IN THE CASE OF:
        

         BOARD DATE: 16 March 2004
         DOCKET NUMBER: AR2003091002


         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.

Mr. Carl W. S. Chun		Director
Mr. Vic Whitney		Analyst

The following members, a quorum, were present:

Mr. Mark D. Manning		Chairperson
Mr. Richard T. Dunbar		Member
Mr. Hubert O. Fry		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).

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THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:

1. The applicant requests, in effect, that the records of her deceased spouse, a former service member (FSM), be corrected to show he withdrew from the Survivor Benefit Plan (SBP) due to being rated by the Department of Veterans Affairs (VA) at 100 percent disabled.

2. The applicant states that the FSM was 100 percent disabled for over 10 years. He requested withdrawal but the Defense Finance and Accounting Service (DFAS) sent the wrong form.

3. The applicant provides the FSM's disability retirement orders; his DD Form 214 (Report of Transfer or Discharge); death certificate; a letter from DFAS dated 21 March 2003; a DD Form 2656-2 (Survivor Benefit Plan (SBP) Termination Request); a Standard Form 1174 (Claim for Unpaid Compensation of Deceased member of the Uniformed Services); one VA Statement in Support of Claim dated 22 December 1994 and one dated 6 December 1999; a letter from DFAS dated 1 April 2003; a DFAS-CL Form 1741/22 (RSFPP/SBP Action Notice dated 23 November 1999; a DFAS-CL 1741/141 (SBP/RSFPP Premium Statement) dated April 1995; and an undated letter from DFAS reference Public Law 96-402.

CONSIDERATION OF EVIDENCE:

1. The deceased FSM's records show that he was separated from active duty on 15 May 1972 by reason of permanent physical disability rated at 60 percent and placed on the retired list effective 16 May 1972 in the grade of sergeant. He was credited with 11 years, 3 months, and 2 days active duty service. At the time of his retirement he elected to participate in the SBP for spouse only coverage.

2. On 17 June 1993, the VA issued a new rating decision for the FSM. An additional 10 percent rating for low back with osteoarthritis was added from 30 January 1989 and a 20 percent rating for individual unemployability was added from 30 January 1989. This increased the FSM's rating from the VA from 70 percent from 22 August 1988 to 100 percent from 30 January 1989.

3. On 22 December 1994, the FSM noted to the VA that he was rated 100 percent for service-connected disabilities and the amount to be withheld from his VA entitlement to cover his SBP obligation had increased.

4. On 29 April 1999, the FSM and the applicant signed a SBP termination request form that also notes that discontinuance of SBP provides no refund of costs already paid towards SBP coverage.



5. A "Fax Cover Sheet" to DFAS from an agent with the Virginia Department of Veterans' Affairs requests that DFAS take action to terminate the FSM's participation in SBP. An internal DFAS notice of action taken, dated 23 November 1999, shows that SBP withdrawal action for the FSM should have been effective 1 June 1999 but "fell between the cracks." A refund of $420.25 was issued for over payment.

6. On 6 December 1999 the FSM provided a statement to the VA to stop making payments to DFAS for his SBP from his VA compensation because he had cancelled his SBP based on his 100 percent disability rating from the VA.

7. On 1 November 2002 the FSM died as a result of heart disease. On 1 April 2003, the applicant filed a claim for unpaid compensation with DFAS.

8. The applicant submits a letter from DFAS, dated 1 April 2003, that advised her of a possible misunderstanding between DFAS and her former husband when he requested to terminate his SBP participation. The letter noted that withdrawing from SBP after a 10-year period of being 100 percent disabled by the VA is different than terminating SBP participation. If he had withdrawn from participation, and she was qualified for Dependents Indemnity Compensation (DIC) from the VA, she would qualify for a refund of all the prior SBP payments. The letter included a sample letter for withdrawing for that purpose. She was advised to seek relief from this Board on the basis of error.

9. 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.

10. Public Law 96-402, enacted 9 October 1980 but effective 1 December 1980, established a withdrawal clause for members rated totally disabled by the VA.

11. Public Law 105-85, enacted 18 November 1997, established the option to terminate SBP participation. Retirees had a one-year period, beginning on the second anniversary of the date on which their retired pay started, to withdraw from SBP. Members retired for more than two years as of 17 May 1998 were authorized a one-year opportunity (17 May 1998 through 16 May 1999) to disenroll. The spouse’s concurrence is required. No premiums would be refunded to those who elected to disenroll.

12. Title 10, U. S. Code, section 1452(g)(1) provides that a person who has elected to participate in the SBP and who is suffering from a service-connected disability rated by the VA as totally disabling and has suffered from such disability while so rated for a continuous period of 10 or more years (or, if so rated for a lesser period, has suffered from such disability while so rated for a continuous period of not less than 5 years from the date of last discharge) may discontinue participation in the Plan. Discontinuance is effective on the first day of the first month following the month in which the request is received. Participation may not be discontinued without the written consent of the beneficiary or beneficiaries of the person.

13. The Department of Veterans Affairs (VA) booklet, Federal Benefits for Veterans and Dependents, 2002 edition states that Dependency and Indemnity Compensation (DIC) payments may be available for surviving spouses of deceased service members or veterans, who have not remarried. To be eligible, the deceased must have died from (1) a disease or injury incurred or aggravated while on active duty or active duty for training; (2) an injury incurred or aggravated in line of duty while on inactive duty training or (3) a disability compensable by VA.

14. Title 10, U. S. Code, section 1450(e)(1) provides that if an SBP annuity is not payable because the DIC payment is greater, then any amount deducted from the retired pay of the deceased member shall be refunded to the surviving spouse or former spouse.

DISCUSSION AND CONCLUSIONS:

1. The evidence of record shows the FSM enrolled in the SBP on 21 September 1972 and elected spouse coverage.

2. On 17 June 1993 the FSM was rated by the VA as 100 percent disabled from 30 January 1989. He was eligible to withdraw from the SBP 10 years after that, on 30 January 1999.

3. It appears the FSM attempted to express his desire to DFAS to withdraw from the SBP by reason of being 100 percent disabled in 1999. This was also a period during which termination from the SBP was being offered. It appears DFAS misunderstood the FSM's desires and sent him the paperwork to terminate his SBP participation (which allowed for no refund of premiums) under PL 105-85 rather than withdraw from the SBP (which allowed for a refund of premiums to the surviving spouse) under PL 96-402.

4. Based on the circumstances of this case, it would now be appropriate to correct the records of the deceased FSM to show that he and his spouse consented to withdrawal from SBP on 29 April 1999 versus termination of SBP.



BOARD VOTE:

__mm___ __rd____ __hf____ GRANT RELIEF

________ ________ ________ GRANT FORMAL HEARING

________ ________ ________ DENY APPLICATION

The Board determined that the evidence presented was sufficient to warrant a recommendation for relief. As a result, the Board recommends that all Department of the Army records of the individual concerned be corrected by showing that the deceased FSM and his spouse consented to withdrawal from SBP on 29 April 1999 versus termination of SBP and that the applicant is entitled to the appropriate refund of prior SBP payments.




                  ___Mark D. Manning___
                  CHAIRPERSON

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INDEX

CASE ID	AR2003091002
SUFFIX
RECON
DATE BOARDED	20040316
TYPE OF DISCHARGE
DATE OF DISCHARGE
DISCHARGE AUTHORITY
DISCHARGE REASON
BOARD DECISION	GRANT
REVIEW AUTHORITY
ISSUES 1.	137.03
2.
3.
4.
5.
6.