IN THE CASE OF:	  

		BOARD DATE:	  1 August 2013

		DOCKET NUMBER:  AR20120022984 


THE BOARD CONSIDERED THE FOLLOWING EVIDENCE:

1.  Application for correction of military records (with supporting documents provided, if any).

2.  Military Personnel Records and advisory opinions (if any).


THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:

The applicant, S____, the daughter of the late widow (Y____) of a deceased former service member (FSM) and the executor of her estate, defers her request to counsel.

COUNSEL'S REQUEST, STATEMENT AND EVIDENCE:

1.  Counsel requests:

	a.  correction of the FSM's records by showing:

* Y____, the FSM's widow and applicant's mother, properly and timely submitted a DD Form 1884 (Application for Retired Serviceman's Family Protection Plan and/or Survivor Benefit Plan (SBP))
* the proper office timely received and processed the DD Form 1884 together with supporting documents

	b.  paying the estate the SBP annuity plus any other funds, retroactive to 6 May 2002, the date the FSM died.

2.  Counsel states:

* the FSM's widow received the arrears of pay and she submitted the DD Form 1884 to the Defense Finance and Accounting Service (DFAS)
* she handwrote a note on 1 August 2002 to DFAS inquiring about her SBP payments
* she also submitted paperwork to the Department of Veterans Affairs (VA) at the same time and she received timely payment from the VA
* DFAS initially denied receiving the paperwork and stated there was an issue with her social security number as the reason for not processing the paperwork
* she was under the impression that she was receiving full benefits from her annuity and pension monies until she died on 12 June 2012
* it is possible there was some confusion regarding the FSM's reentry on active duty and serving an additional 12 years after having served 30 years in 1969 and being retired
* it is also possible the confusion resulted from switching from the DD Form 1884 to the DD Form 2656-7 (Verification for Survivor Annuity) in 2002

3.  Counsel provides:

* statement from the applicant
* FSM's widow's will
* DA Form 4240 (Data for Payment of Retired Personnel)
* letter from the Armed Forces Services Corporation (AFSC)
* letter from the widow to DFAS
* DD Form 1884
* letter from DFAS to a member of Congress
* letter from the VA
* insurance payment receipt
* email from DFAS
* FSM's death certificate
* FSM's widow's death certificate

DISCUSSION AND CONCLUSIONS:

1.  The FSM was born on 5 November 1917.  He and his widow, Y____, were married on 2 October 1943.

2.  He was commissioned in the Regular Army on 12 June 1939.  He served in a variety of stateside or overseas assignments and he was promoted to the rank/
grade of brigadier general/O-7 on 1 May 1965.

3.  He retired on 31 July 1968 and he was placed on the Retired List in the rank/
grade of brigadier general/O-7 on 1 August 1968.

4.  He was recalled to active duty on 20 April 1970 as the Chief of Military History.

5.  In 1972, during the first SBP Open Season, the FSM elected to participate in the SBP for spouse and child coverage, full base amount.

6.  On 25 August 1982 in connection with his release from active duty, he completed a DA Form 4240.  He indicated he was married to Y____ and they had no dependent children.  He elected "spouse" SBP coverage based on the full amount.

7.  He was honorably released from active duty on 30 September 1982 and reinstated on the Retired List.

8.  The FSM died on 5 May 2002.  His death certificate shows he was married to Y____ on the date he died.

9.  On 15 May 2002, an official at DFAS-Denver notified the FSM's widow by letter that the FSM had elected spouse SBP coverage and she would receive a package in the future containing the forms necessary to establish her annuity pay.  She was asked to complete some forms and return them to DFAS-Denver.

10.  Counsel provides a DD Form 1884, dated 27 May 2002.  This form shows the FSM's widow claimed the SBP annuity.  She certified she was married to the FSM on the date of his death and authenticated this form with her signature.

11.  Counsel also provides a letter from the VA, dated 12 July 2002.  This letter states the VA had received her application for benefits and it was being processed.

12.  On 12 March 2004, the FSM's widow named her daughter, S____, the applicant, to be her executor/executrix.

13.  On 12 June 2012, the FSM's widow died.  Her death certificate listed the FSM as her widower and the applicant, S____, as her daughter and informant.

14.  Counsel provides the applicant's self-authored statement/notes wherein she states:

	a.  With the assistance of both AFSC and the Fort Myer Army Casualty Assistance Office, the VA and DFAS were notified of the FSM's death on 6 May 2002.  The Casualty Assistance Office regularly asks DFAS for consideration in assisting the widow with the annuity process as part of the conversation when notifying DFAS of the death of an officer.  A letter from DFAS, dated 15 May 2002, indicated the widow was eligible for a 
100-percent annuity and that forms would be sent.  The letter from DFAS noted that an incorrect social security number was provided for her mother; however, DFAS stated that it was inconsequential.

	b.  The forms arrived and were completed as a complete package with assistance of the AFSC and sent to the VA and DFAS.  These forms included a death certificate, request for pension payment for the 5 days in May that the FSM was alive, the annuity forms (signed 27 May 2002), and automatic deposit information.  Her mother received the 5 days' worth of pay with an Internal Revenue Service Form W-2 with her correct mailing information from DFAS.  She also received insurance funds from AFSC.  The VA did receive the information and determined that she was entitled to the disability portion.  The recent letter from AFSC (September 2012) indicates that their process requires that all forms are sent at one time to DFAS unless there is an indication in the margin that there is a hold on a form for additional information.  Current staff was in the office in 2002 and know the staff person who assisted her in filling out the forms.  The backup sheets were included in their letter to show that a full review was made.  From their notation on the side of the annuity application, all forms were sent by mail at one time on 4 June 2002.  The American Armed Forces Mutual Aid Association had the copy of the annuity application which is how she, the daughter and executor of her mother's estate, knew the forms had been sent to DFAS.

	c.  From June to August 2002, her mother received no further correspondence or funds and was concerned about cash flow.  Her notes in her own pension-related file indicated that she attempted to contact the VA and DFAS (the note says she wrote to DFAS on 1 August with a notation of the VA telephone number) to inquire when funds would be paid).  The VA sent her two letters in August, perhaps in response to her telephone calls, indicating that funds would be coming soon, but there was no apparent response from DFAS.  In August, her mother – who had a house in Washington, DC – told her children that she was concerned about her financial income and had decided to sell the weekend family property in Virginia to build up her assets.  This effort required extensive sorting of the FSM's effects as this is where he kept his military history library and office.  His collection of military writings was given to the Army War College in Carlisle, PA, in the fall and the house was readied for the market.

	d.  By September, it appears that the VA benefits (Dependency Indemnity Compensation (DIC) of $935.00) started arriving.  The SBP benefits, estimated by AFSC at $3,531.00, never came.  Her mother was busy preparing the Virginia house for sale (sold in December).  In October 2002, she was diagnosed with breast cancer and began medical treatment.  By May 2003, she moved into a full-care facility in Williamsburg, VA.  All of this is to say that at 85 years of age, the year of 2002 saw incredible changes in her life and an overwhelming situation where it is understandable that she did not re-engage with DFAS.  For these 10 years, her family thought she was receiving all her annuity and pension payments as she never said differently other than she lamented that she wasn't "receiving enough money."  She never specified that she wasn't receiving funds for the full annuity and her family just assumed that her expenses were more than her pension.  Upon her death on 12 June 2012, her daughter and executor, [Applicant], contacted the VA to cease sending the pension.  She was told by the VA representative that the VA paid only the tax-exempt DIC disability portion of the pension and her mother should contact DFAS to stop payment on the annuity.  Upon calling DFAS, she was told they did not have any record of her mother and they had not been sending any annuity to her.  This was quite a shock to the family.  DFAS continued to say she was not in their system, they had no record of her, no Spousal Benefit Form, and no annuity application forms. 
DFAS did have information on the FSM and the payment of the arrears of pay (AOP) for May 2002.  They said she was not eligible for an annuity and, in fact, they could not trace her by the social security number she (the applicant) gave them.  They said they had another number for her, but that didn't matter as they used the military personnel's number.  They never disclosed what number they had for her, but they said they never received any request for an annuity from her.  It is not clear how they could have received some of the papers in the application group sent by AFSC back in June of 2002 and not the actual annuity request.

	e.  DFAS indicated that the four beneficiaries of her mother's estate could complete a Standard Form 1174 (Claim for Unpaid Compensation of Deceased Member of the Armed Forces) for annuity in arrears which the family did in late June 2012 – and then got the response that since 6 years had passed the statute of limitations was in effect and there was nothing DFAS could do.  DFAS continued to state that they had no SBP form from the FSM and no record except a telephone record that they had received notice from Fort Myer in June of 2002 that the FSM had died.  They did not even know they had sent her mother any correspondence until they were sent a packet of duplicates from her (the applicant) along with an inquiry from Congressman J____ M____ asking for an investigation into the matter.  DFAS claims they never received the annuity application or any follow-up letter from her mother and, besides, the statute of limitations was in effect.  It's interesting that DFAS found the SBP form which they indicated didn't exist and included it in the response to Congressman M____.

	f.  In the early communication with DFAS in July and August 2012, one of the confusions dealt with the name and classification numbers on the forms.  DFAS kept stating they had no DD Form 2656-7 for her mother (actually no information on her) which is the Verification for Survivor Benefits Form currently used.  She spent some time looking in the files for this form and when the packet was sent back with information, it included her mother's DD Form 1884.  It then became clear this was the SBP form.  Staff at DFAS was unaware that the form numbers had been revised (in or around December 2002) and so some time was wasted looking for forms by number, not by content.

15.  Counsel provides another statement from the applicant titled "note to self regarding steps taken for Y____ C____ SBP refund" wherein she states:

	a.  The letter, dated 3 July 2012, from DFAS, states that her mother did not file a DD Form 2656-7, but she did file a DD Form 1884 which is a similar form and may have been the earlier version.  In any case, they have neither.  She has been trying to find a person with whom to discuss the issue.

	b.  On 30 July 2012, she received telephone information for DFAS Customer Care from a friend of an office colleague to have a direct contact regarding the situation with her mother not having received the full pension.  These folks have been very helpful and sympathetic.  Certain DFAS officials went into the records and indicated they do have the Standard Form 1174 and the FSM's death certificate and they paid out the 5 days of pension for May 2002.  This form came to them and was signed by her mother and witnessed by her brother and her on 27 May 2002.  She noted that she was going to check to see if that form was sent by her mother at the same time as other records to the VA office on Vermont Avenue.  This is the same day she signed for the DD Form 1884 which was sent to the VA in DC.  On the side of the form is written "6-4-02- original dea cert to F.C."  One presumes that the VA was sending this form on to the Finance Center (DFAS).  One of the DFAS specialists said there was a telephone note in the file on 11 June 2002 from the VA mortuary affairs office asking if the annuitant was receiving spousal benefits and DFAS answered "No," they did not have any forms.  She tracked that office down and got the Military Casualty Office in Tennessee, which is not the right office.  Another official recommended that they should try and track down the election documents that established how the FSM's pension was to be distributed.  The district that would have helped her mother after the FSM's death would have been at Fort Myer.  He was wondering if there may have been a second form for retired pay that was not properly processed.  Because they deal with current Soldiers and casualty deaths, this was not his area of expertise.

	c.  She called the Military Retirement Services at Fort Myer and ultimately talked to a young woman who said that what appears to be missing was the FSM's SBP election form.  Those are only kept by DFAS and if they don't have the DD Form 2656, there is no way to verify that he ever elected compensation for his wife.  The only way to check that is in his own records if he kept the election form or if the family can prove through his earning statements that he was paying into the benefits program for her.

16.  Counsel provides a letter from a DFAS official to a Member of Congress, dated 17 August 2012, wherein the DFAS official states:

	a.  In response to the inquiry to the Department of the Army on behalf of his constituent, (Applicant), regarding the SBP annuity entitlement of (Applicant's) deceased mother, spouse of the deceased FSM,.since this is a matter for which DFAS has responsibility, the inquiry was referred to DFAS for response.

	b.  Entitlement to retired pay terminates on the date of the retiree's death.  Upon notification of the death of a retiree, a Claim for Unpaid Compensation of Deceased Member of the Uniformed Services (Standard Form 1174) is automatically mailed to all beneficiaries listed on the retiree's account.  If no beneficiary is listed on the member's account, the Standard Form 1174 claim form is mailed to the retiree's correspondence address on file at the time of death.  In addition, if the deceased member had SBP annuity coverage on his or her retired pay account, a letter stating this as well as an annuity application package, is automatically mailed to the member's surviving spouse or children.  The annuity application package which currently consists of the Verification of Survivor Annuity form (DD Form 2656-7), a Direct Deposit Authorization, and Form W-4P, is mailed to the member's correspondence address on file at the time of death.

	c.  DFAS records reflect that the FSM died on 5 May 2002.  The AOP includes all unencumbered amounts due to the deceased member.  DFAS received the mother's completed Standard Form 1174 on 11 June 2002 and issued the FSM's AOP at that time.  DFAS records further indicate that the FSM had elected to participate in the SBP, naming his spouse, the applicant's mother as the spouse beneficiary of his SBP coverage, as shown on the DA Form 4240. 
She became entitled to receive an annuity from the FSM's retired pay account on the day following his death, 6 May 2002.  The applicant enclosed a copy of an Application for Annuity under the Retired Serviceman's Family Protection Plan and/or SBP form completed by her mother; this was the annuity claim form in use at the time of the FSM's death.  However, DFAS never received a copy of this completed form and therefore, her annuity was never established.

	d.  Title 31, U.S. Code, section 3702(b)(I), commonly referred to as the Barring Act, states that a claim against the U.S. Government must be received within 6 years from the date the claim begins to accrue; in this case, the day after the FSM's death.  The claim must be in writing and must contain the signature and address of the claimant if the claim is not made within the 6-year statute of limitations, the Barring Act applies, and any funds that are due as a result of the claim may only be paid retroactively 6 years prior to the date the claim was made.  The burden to make the claim or to demonstrate that a claim was timely filed, falls solely on the claimant.

	e.  Recently, (the applicant) has been in contact with Mr. B____ B____, Manager of Retired and Annuitant Pay's Customer Care Center, as well as Mrs. C____ M____ of the Congressional and Special Interest Department, who together researched her mother's annuity entitlement.  Mr. B____ B____ and Mrs. C____ M____ have thoroughly researched the records DFAS has on file and additional records and documentation provided by the applicant to Mr. B____ B____ on 13 August 2012.  This research confirmed that DFAS did not receive an annuity application from her mother or a written claim for the annuity within 6 years of the FSM's death.  Unfortunately, since no claim for the annuity was received within the 6-year statute of limitations, the Barring Act applies.  Therefore, DFAS did not have the authority to establish her annuity as it falls beyond the statute of limitations for making the claim against the U.S. Government.

	f.  The applicant enclosed a copy of her mother's signed and dated annuity application in her inquiry; this form was also provided in the supplemental documentation the applicant sent to Mr. B____ B____.  Included in the documentation provided by the applicant was a letter sent to her mother, dated 15 May 2002.  This letter states the FSM had an election for spouse SBP coverage and his spouse, her mother, would be receiving a package containing the necessary forms to establish her annuity.  Regretfully, DFAS had no record of receiving her completed annuity package or any written requests from her asking when she would begin to receive the annuity.  In addition, DFAS was not provided with anything that demonstrates that the completed form was received within the 6-year statute of limitations.  Examples of demonstration that the claim was received could be a facsimile confirmation or delivery or signature confirmation provided by the U.S. Postal Service if the claim was mailed.  In addition, DFAS did not have the authority to waive any of the provisions of the Barring Act or make any exception to the time limitations it imposes.  Her only recourse is to apply to the Army Board for Correction of Military Records (ABCMR) to have the FSM's records corrected to reflect that she made a valid claim for the annuity within the 6-year statute of limitations.

	g.  The SBP was enacted on 21 September 1972 to allow retired members of the Uniformed Services an opportunity to provide a portion of their retired pay to their surviving beneficiaries, payable at 55 percent of the SBP cost base amount at the time of death.  Public Law 92-425, enacted 21 September 1972, prohibits an annuitant from receiving the full amount of both an SBP annuity DIC payable by the VA.  The applicant stated in her inquiry that her mother was receiving compensation from the VA; it is likely that this monthly compensation was DIC. An annuitant is entitled to either the amount of SBP that exceeds the DIC payable or the DIC only if it is greater than the SBP.  At this time, the law has not been changed to allow an annuitant to receive SBP and DIC concurrently.  If the applicant had been receiving monthly annuity payments until her death, her monthly annuity entitlement would have been offset by her monthly DIC entitlement.  In addition, depending on the effective date of her DIC award and the monthly amount of her DIC offset from her SBP, she may have been due a full or partial refund of the spouse SBP premiums paid by the FSM, known as an "SBP cost refund."

17.  Counsel also provides an email from a DFAS official, Mrs. C____ M____, dated 7 August 2012, regarding her deceased mother's eligibility for the SBP.  The DFAS official stated:

	a.  She was following up on her conversation regarding the applicant's mother's eligibility to the SBP from the military retired pay account of her father, the FSM.  The SBP, Title 10, U.S. Code, sections 1447-1455, was enacted to provide retired members of the Uniformed Services with an opportunity to provide a portion of their retired pay to their survivors.  The records indicate the FSM elected to participate in the SBP and her mother was the eligible beneficiary of his SBP account as shown on the DA Form 4240.

	b.  The social security number listed on the DA Form 4240 for her mother is correct.  The records reflect her father died on 5 May 2002.  In accordance with Title 31, U.S. Code, section 3792, commonly referred to as the statue of limitations, any claim against the U.S. Government must be made within 6 years from the date the claim is made.  The records do not reflect any documentation pertaining to the request for an annuity from her mother.  Therefore, no annuity was established.  Since it has been over 10 years from the date of her father's death, the statue of limitations applies.  She may wish to apply to the ABCMR to have the FSM's SBP account reviewed.

18.  Public Law 92-425, enacted 21 September 1972, established the SBP.  The SBP 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. 
An election, once made, was irrevocable except in certain circumstances.  Since its creation, it has been subjected to a number of substantial legislative changes.

19.  According to the official VA website:

	a.  DIC is a payment made by the VA to the spouse of a member who dies due to a service-connected illness or injury.  The VA determines entitlement to and the amount of the DIC award.  If DIC is awarded, the SBP annuity must be reduced by the amount of the DIC award.  The SBP annuity is terminated if the DIC is greater than the SBP.  However, if an annuitant receives DIC based on a member other than the one providing SBP, there will not be a DIC reduction.

	b.  Each annuitant signs a DIC authorization statement when he/she submits his/her annuity application.  This allows DFAS to establish his/her SBP annuity prior to notification from the VA regarding his/her entitlement to DIC.  This prevents delays in SBP payments.  If DIC is awarded, the following conditions apply:

		(1)  If the monthly DIC benefit exceeds the SBP monthly annuity, the amount of the SBP annuity paid prior to notification of the DIC award, not including the month of death, is an overpayment.  If the DIC monthly benefit does not exceed the SBP monthly annuity, the amount of SBP overpayment will be the amount of DIC awarded prior to notification.

		(2)  Once DFAS receives all of the necessary information from the VA, the annuitant will be due a refund of all or part of the SBP costs paid into the plan by the member (SBP cost refund) if the DIC award is made retroactive to the date of death.  The SBP cost refund will be applied to any SBP overpayment or other indebtedness and a check for the remaining balance, if any, will be forwarded to the annuitant.  The SBP cost refund may be taxable if the retiree paid the SBP costs from the retired pay taxable income.  Any taxable portion of the cost refund will be included as taxable income on the TD Form 1099-R annuitants receive at the end of the year.

		(3)  Depending on the amount of the overpayment, it will either be collected from the SBP cost refund, referred to the VA for collection from the annuitant's DIC payment, or a combination of both.  Annuitants will be advised of the method of collection and sent an account statement showing the SBP cost refund less any overpayment collected when the SBP cost refund is processed.

		(4)  Annuitant's taxable income will be increased by the taxable portion of the cost refund and reduced by the amount applied to the overpayment.  The taxable income will be adjusted when the overpayment is collected.  An annuitant may receive a tax deduction or tax credit, as appropriate, if the overpayment occurred.

		(5)  Since SBP costs are not paid by members who die while serving on active duty, there will be no refund of costs.  The overpayments will be referred to the VA for collection from the annuitant's DIC.

		(6)  Annuitants can reduce the amount of the SBP overpayment by notifying DFAS at once when DIC has been awarded.  Annuitants must furnish DFAS a copy of the award letter from the VA.

		(7)  Since DIC benefits are nontaxable, VA encourages annuitants to apply for DIC if they have not done so.  If the DIC effective date is past the first day of the month after the member's death and the annuitant has received benefit from receipt of the SBP, no cost refund is due.

DISCUSSION AND CONCLUSIONS:

1.  In 1972 during the first SBP Open Season, the FSM elected to participate in the SBP for spouse and children coverage, full base amount.  (Therefore, his 1982 SBP election was not required and invalid).

2.  The FSM died on 5 May 2002.  His death certificate shows he was married to Y____ on the date he died.  It appears that DFAS paid the AOP to the FSM's (now deceased) widow and advised her that she was entitled to an SBP annuity based on his death.  It is unclear if the (now deceased) widow timely and accurately complied with DFAS's instructions in regard to completing the appropriate forms to claim the SBP annuity or if DFAS mishandled her application.

3.  Nevertheless, the FSM's official records contain his 1972 SBP election as well as his 2002 death certificate.  The FSM's widow at the time would have been entitled to payment of the SBP annuity, less any DIC, had she timely applied for it or if her application, if any, had been properly processed.  Regrettably, the FSM's widow died in 12 June 2012 without having received her SBP annuity.  When the applicant, the daughter and executor/executrix of the estate, inquired about the SBP, the Barring Act stopped her from claiming this annuity.

4.  As such, and only as a matter of equity, the FSM's records should be corrected to show his widow, the applicant's deceased mother, made a timely request for payment of the SBP annuity based on the FSM's death and her request was received and processed by DFAS shortly after the FSM's death.

5.  The applicant should be informed that any SBP annuity due would be offset by any DIC her mother may have received.

BOARD VOTE:

____X____  ___X_____  ____X____  GRANT FULL RELIEF 

________  ________  ________  GRANT PARTIAL RELIEF 

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

BOARD DETERMINATION/RECOMMENDATION:

The Board determined 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:

	a.  showing the FSM's widow timely submitted the DD Form 1884 and this form was timely received and processed by DFAS and

	b.  paying the FSM's widow's estate the SBP annuity, less any DIC, from the date following the FSM's death (6 May 2002) to the date prior to the FSM's widow's death (11 June 2012).



      _____________X____________
       	     CHAIRPERSON
      
I certify that herein is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in this case.

ABCMR Record of Proceedings (cont)                                         AR20120022984



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ABCMR Record of Proceedings (cont)                                         AR20120022984



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