Citation NR: 9716821 Decision Date: 05/14/97 Archive Date: 05/22/97 DOCKET NO. 95-01 504 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Philadelphia, Pennsylvania THE ISSUE Entitlement to the proceeds of the veteran’s National Service Life Insurance (NSLI) policy, V [redacted]. ATTORNEY FOR THE BOARD D. Joe, Associate Counsel INTRODUCTION The veteran had active military service from May 1942 to May 1945. He died on September [redacted] 1992. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from a May 1993 administrative determination of the Department of Veterans Affairs (VA) Regional Office and Insurance Center (RO&IC) in Philadelphia, Pennsylvania. This is a contested claim. The appellant is the veteran’s former spouse. The appellees, [redacted], [redacted], and [redacted], are the veteran’s children. CONTENTIONS OF APPELLANT ON APPEAL The appellant contends that she is entitled to the proceeds of the veteran’s NSLI policy, V [redacted]. The appellant argues that, due to the severity of his service-connected psychoneurotic disorder, the veteran lacked testamentary capacity when he changed the designation of beneficiary in favor of the appellees. The appellant further asserts that the appellees exerted undue influence on the veteran, coercing him to change the designation of beneficiary, at a time when the veteran exhibited weakness of mind as a result of the service-connected psychiatric disability. The appellant urges that the Board consider the veteran’s extensive psychiatric history, as revealed in the voluminous clinical reports attached to the claims folder. CONTENTIONS OF APPELLEES ON APPEAL The appellees have made no specific contentions, other than to question the trustworthiness of statements submitted by and on behalf to the appellant. DECISION OF THE BOARD The Board, in accordance with the provisions of 38 U.S.C.A. § 7104 (West 1991 & Supp. 1995), has reviewed and considered all of the evidence and material of record in the veteran's claims files. Based on its review of the relevant evidence in this matter, and for the following reasons and bases, it is the decision of the Board that the preponderance of the evidence is against the appellant’s claim for the proceeds of the veteran’s NSLI policy, V [redacted]. FINDINGS OF FACT 1. All relevant evidence necessary for the disposition of the appellant’s claim has been obtained. 2. In an April 1990 beneficiary designation, the veteran designated the appellant as the principal beneficiary of the proceeds of NSLI policy, V [redacted]. 3. In a designation of beneficiary dated January 2, 1991, the veteran designated the appellees as the principal beneficiaries, with each to receive one-third share of the proceeds of NSLI policy, V [redacted]. 4. The January 2, 1991 beneficiary designation, which was the last beneficiary designation of record for NSLI policy, V [redacted], did not name the appellant as a beneficiary of the policy proceeds. 5. The veteran possessed the testamentary capacity to execute the January 2, 1991, designation of beneficiary, and that beneficiary designation was not obtained by means of undue influence. CONCLUSION OF LAW The appellant is not entitled to the proceeds of NSLI policy V [redacted]. 38 U.S.C.A. §§ 1917, 5107(West 1991); 38 C.F.R. §§ 3.355, 8.22 (1996). REASONS AND BASES FOR FINDINGS AND CONCLUSION Nature of the Claim and Parties This is a contested matter to resolve the conflicting claims to the proceeds of NSLI policy, V [redacted]. The appellant is the veteran’s former spouse, from whom he became divorced in February 1989. The appellees are three of the veteran’s surviving children. All contested claims procedures have been followed, to include notification of the actions taken by the RO&IC, and the matter is ready for appellate disposition. 38 C.F.R. §§ 19.100, 19.101, 19.102 (1996). Factual Background On July 1, 1942, an NSLI policy, N [redacted], was issued on the life of the veteran, with the veteran’s mother and sister designated as the principal and contingent beneficiaries, respectively. On January 4, 1947, a change of beneficiary form was signed by the veteran, canceling all previous designations of beneficiaries and naming the appellant as the sole beneficiary of the NSLI policy. By correspondence dated in February 1947, the veteran was advised that his request for change of designation of beneficiary had been received and recorded. In July 1950, the veteran was advised that a new identifying number, V [redacted], had been assigned to his NSLI policy. That same month, the veteran submitted an application for renewal of the life insurance policy, indicating his desire that the appellant be designated as principal beneficiary and the appellee, [redacted], serve as contingent beneficiary of the policy’s proceeds. In a subsequent change of designation of beneficiary, dated in October 1960, the veteran stipulated that the proceeds of the policy should be awarded to the appellant, if she were alive ten days after his demise, otherwise to his surviving children in equal shares. The appellant was designated as the sole beneficiary of the NSLI policy in April 1984. In January 1988, the veteran designated his son, [redacted], as the principal beneficiary, and the appellant, sons [redacted] and [redacted], and daughter, [redacted], as contingent beneficiaries, with a one-quarter share each. In February 1988, the appellant and the veteran’s four children, including the three appellees, were designated as beneficiaries, each with a one-fifth share of the proceeds. In July 1988, the veteran designated appellees, [redacted] and [redacted] as beneficiaries, each with a one-half share. Of record is a divorce judgment reflecting the final dissolution of the veteran’s marriage to the appellant on February 1, 1989. The divorce decree ordered the veteran to, among other things, immediately reinstate the appellant as beneficiary of NLSI policy, V [redacted]. Thereafter, in December 1989, the RO&IC recorded a change of designation of beneficiary, which named appellees, [redacted] and [redacted], as the principal and contingent beneficiaries, respectively, to the proceeds of NSLI policy V [redacted]. In April 1990, the veteran changed the designation of beneficiary of the NSLI policy, naming the appellant the principal beneficiary. The following month, however, the veteran amended the designation of beneficiary to reflect his decision to assign appellees [redacted] and [redacted] as principal and contingent beneficiaries, respectively. Then, on January 2, 1991, the veteran completed a standard change of beneficiary form, naming the appellees as beneficiaries of the proceeds of NSLI policy, V [redacted], with a one-third share to each. Following the veteran’s death in September 1992, a claim for a one sum payment was submitted by appellee [redacted], in October 1992. Later that month, the RO&IC informed [redacted] that settlement had been authorized to him for a one-third share of the insurance policy proceeds. In November 1992, the appellant submitted a claim for a one sum payment. Still in November 1992, letters were forwarded to appellees [redacted] and [redacted] advising them of their entitlement to one-third shares of the insurance policy proceeds. A letter was also sent to the appellant informing her that her name did not appear on the latest designation of beneficiary dated in January 1991, and that VA was legally obligated to pay insurance proceeds only to the last validly named beneficiaries. Statements prepared by the appellant and the veteran’s son, [redacted], were received at the RO&IC, via facsimile, in January 1993. In her statement, the appellant asserted that the veteran was not of sound mind from January 1, 1991, until his death in September 1992. Acknowledging that the veteran had received disability compensation benefits for a service- connected psychiatric disorder, the appellant also expressed her belief that, “while in an advanced state of delirium and dementia [the veteran] was in fact manipulated and coerced under false pretenses to reassign beneficiary on [January] 2, 1991 to remove me as sole beneficiary.” The appellant also described the veteran’s family medical history, which, according to the appellant, was remarkable for mental illness. The appellant further observed that the veteran had experienced decreased intellectual functioning secondary to uncontrolled diabetes. Further detailing causes of the veteran’s bizarre behavior, the appellant reported that the veteran was a pathological liar, who claimed to have suffered financial losses in the millions, and invented products such as Scotch brand adhesive notes and the disposable syringe. In his sworn affidavit, the veteran’s son, [redacted], recalled a telephone conversation which allegedly occurred in September 1991, while the veteran was under care at a VA medical facility. As recalled by the affiant, the veteran was fearful of the prospect of having no place to go following his release from the VA facility. The affiant further noted that the veteran confided in him that the appellees had agreed to share equally in the care of the veteran, provided that he designate them as the beneficiaries of his NSLI policy. Further describing the September 1991 conversation, the affiant recalled that the veteran reported that he had developed the cure for AIDS. Responding to a request for evidence that the veteran lacked testamentary capacity, the appellant explained that the veteran was not of sound mind since the time a physician diagnosed him as suffering from schizophrenia in May 1988. The appellant also noted that the appellees had demonstrated little concern for the veteran’s welfare. In addition to the statement summarized above, the appellant submitted appended medical records and other documents in February 1993. Among the medical evidence were copies of the veteran’s service medical records reflecting, among other findings, diagnoses of operational fatigue, as well as a determination that the veteran was unfit for service secondary to psychoneurosis, anxiety type. (Appendix A). Also received were clinical records dated from 1979 through 1992, describing difficulties experienced by medical care providers in their efforts to provide treatment to the veteran. As shown by the records, when the veteran was seen in July 1991, he appeared confused about certain details involving money and depended on his son to arrange details. In October 1991, a consulting psychiatrist noted the veteran’s long-standing grandiose and delusional ideas and hypomanic behavior with possible personality disorder. It was believed that the veteran was unable to care for himself and tend to his medical problems without placement in a nursing home. A psychiatric consult dated in January 1992 reveals that when the veteran was referred for treatment at the Addison Gilbert Hospital, for grandiose ideas, pathological lying, and an evaluation of competency, it was determined that he was not competent to adequately evaluate the benefits and limitations of medical or psychiatric treatment, nor to provide for his food and shelter. (Appendices B and C). In a statement received in March 1993, appellee [redacted] recalled that he lived with and cared for the veteran during the period 1988 to 1992. Commenting on the veteran’s state of mental health during that period, [redacted] indicated that the veteran had been in complete control of his faculties. Still in March 1993, a VA questionnaire was returned by [redacted] [redacted], a veterans agent who witnessed the veteran’s January 1991 designation of beneficiary. In his responses, Mr. [redacted] recalled that the January 1991 designation of beneficiary was signed by the veteran, with no one present, after several visits during which the procedures for effecting such change had been discussed. According to Mr. [redacted], the veteran was alert and lucid and was determined to make the changes noted on the designation of beneficiary form. It was Mr. [redacted] observation that the veteran was not intoxicated or otherwise under the influence of medication or drugs on the occasion of the designation of beneficiary change in January 1991. Mr. [redacted] further opined that the veteran acted of his own free will and comprehended the nature and importance of his act. By letter dated in April 1993, the RO&IC requested a statement as to the veteran’s capacity from Zaven Jouhourian, M.D., a specialist in internal medicine, who was the veteran’s physician of record when he was released from a VA facility in January 1991. Responding later in April 1993, Dr. Jouhourian explained that he never treated the veteran in his offices, but rather saw him in the context of providing emergency care. Dr. Jouhourian further recalled that, while the veteran experienced many medical problems, he was mentally sound, alert and oriented times three, and in no mental distress on January 2, 1991. Dr. Jouhourian declined to comment on whether the veteran was able, at that time, to comprehend the nature and importance of changing his designation of beneficiary. He did recall, however, that the veteran was angry and disturbed about some family matters. Based on the evidence on file, the RO&IC determined, in May 1993, that the veteran possessed testamentary capacity on January 2, 1991. Notices of the RO&IC’s decision to award equal shares of the NSLI proceeds to the appellees were sent to the parties later in May 1993. Following her review of the veteran’s extensive medical record, compiled pursuant to her requests, the appellant submitted additional evidence in October 1994. Included among this evidence was a personal statement wherein she attempted to discredit earlier statements made by Dr. Jouhourian and Mr. [redacted] as to the state of the veteran’s mental health at the time of the January 1991 designation of beneficiary. In her statement the appellant explained that Dr. Jouhourian had been furnished with copies of the veteran’s VA psychiatric records in September 1993. Based on his review of those records, the appellant noted, Dr. Jouhourian believed that statements made by the veteran during his care gave rise to questions concerning the veteran’s state of mental health. The appellant also reported that in contacts with Mr. [redacted] it had been discovered that he possessed no medical expertise on the subject of psychiatric disorders. In addition to the above, the appellant submitted a letter prepared in November 1993 by Dr. Jouhourian. In that letter, Dr. Jouhourian acknowledged reviewing medical reports provided by the appellant. Noting that most of the treatment furnished to the veteran was for respiratory and cardiac disorders, Dr. Jouhourian admitted that he did not analyze the veteran for any psychiatric impairment. According to Dr. Jouhourian, the veteran normally appeared to be alert and oriented. Dr. Jouhourian indicated that he was not aware of the veteran’s incompetence for making important decisions. The appellant also submitted selected passages from Diagnostic and Statistical Manual of Mental Disorders, Third Edition-Revised (DSM-III-R), American Psychiatric Association, and articles discussing schizophrenia and psychiatric problems resulting from incurrence and treatment of diabetes. Analysis As previously stated, the appellant contends that she is the rightful beneficiary to the proceeds of NSLI policy, V [redacted]. The appellant concedes that at the time of the veteran’s death on September [redacted] 1992, the appellees were the beneficiaries designated on NSLI policy, V [redacted]. It is urged, however, that when the veteran signed a designation of beneficiary on January 2, 1991, naming the appellees as beneficiaries, he was not of sound mind due to the severity of his psychiatric disability. Therefore, the appellant maintains, the veteran lacked testamentary capacity when the designation of beneficiary was effected in January 1991. Basically, an NSLI policy is a contract between the veteran and the Federal Government, which assigns duties and responsibilities to the parties of the legally binding agreement. The insured shall have the right at any time, and from time to time, and without the knowledge or consent of the beneficiary to cancel or change a beneficiary and/or optional settlement designation. A change of beneficiary to be effective must be made by notice in writing signed by the insured and forwarded to the VA by the insured or designated agent, and must contain sufficient information to identify the insured. Upon receipt by the VA, a valid designation or change of beneficiary or option shall be deemed to be effective as of the date of execution. 38 U.S.C.A. § 1917; 38 C.F.R. § 8.22. Thus, the veteran’s privilege, as the insured party, to change the designation of beneficiary must be recognized by VA so long as the designation of beneficiary is valid. The appellant argues that the January 1991 designation of beneficiary was not valid, insofar as the veteran lacked testamentary capacity due to (1) his service-connected psychiatric disorder and other medical complications, and (2) undue influence exerted by the appellees over the veteran, who was weak of mind and unable to freely determine whether he wished to exclude the appellant as a beneficiary to the proceeds of NSLI policy, V [redacted]. When cases are referred to a rating agency involving the testamentary capacity of the insured to execute designations or changes of beneficiary, or designations or changes of option, the following considerations will apply: (a) Testamentary capacity is that degree of mental capacity necessary to enable a person to perform a testamentary act. This, in general, requires that the testator reasonably comprehend the nature and significance of his act, that is, the subject and extent of his disposition, recognition of the object of his bounty, and appreciation of the consequence of his act, uninfluenced by any material delusion as to the property or persons involved. (b) Due consideration should be given to all facts of record, with emphasis being placed on those facts bearing upon the mental condition of the testator (insured) at the time or nearest the time he executed the designation or change. In this connection, consideration should be given to lay as well as medical evidence. (c) Lack of testamentary capacity should not be confused with insanity or mental incompetence. An insane person might have a lucid interval during which he would possess testamentary capacity. On the other hand, a sane person might suffer a temporary mental aberration during which he would not possess testamentary capacity. There is a general but rebuttable presumption that every testato possesses testamentary capacity. Therefore, reasonable doubts should be resolved in favor of testamentary capacity. 38 C.F.R. § 3.355. The governing regulatory criteria strongly suggest that the evidence of psychiatric pathology alone does not signal impaired capacity to enter into a legally binding agreement, such as a designation of the beneficiary to a life insurance policy. Rather, pertinent medical and lay evidence must be carefully reviewed for the purpose of determining whether, due to mental impairment, the veteran was unable to clearly comprehend the legal effects of his actions on January 2, 1991, or because of a state of mental weakness, he was susceptible to undue pressures exerted by the appellees. Certainly, as the appellant pleads, the veteran’s extensive clinical history should not be disregarded. The voluminous clinical files depict erratic behavior during the 1980’s and 1990’s, including during periods preceding and subsequent to the January 1991 designation of beneficiary. For instance, during a period of hospitalization in May 1988, the veteran was observed to exhibit delusional thinking, believing that he was, alternately, a millionaire, an inventor, and a speech writer for Michael Dukakis. When the veteran was seen in November 1990, it was noted in a teaching record that he was unable to concentrate fully during a medical compliance session. In October 1991, a consulting psychiatrist concluded that the veteran demonstrated long-standing grandiose and delusional ideas and hypomanic behavior with probable cyclothymic personality disorder, which rendered him unable to care for himself and his medical problems without placement in a nursing home. In June 1992, a VA care provider observed that conversations with the veteran did not stay rational or logical for any period of time, and that the veteran had been admitted for long term care in February 1991 for multiple medical problems and inability to function in the community. However, despite the undisputed record of long-term treatment for psychiatric and other disorders, and anecdotal references to episodes of bizarre behavior, the clinical records do not conclusively reveal that the veteran was incapable of comprehending the nature and legal effect of the January 1991 designation of beneficiary. It is readily apparent from review of the medical evidence that the veteran’s level of testamentary capacity was not a matter routinely investigated in treatment situations by the various health care providers. In fact, the question of competence appears to have arisen only in the context of the veteran’s ability to render a decision as to the type of care available to him. In this regard, the Board acknowledges that during a December 1991 period of hospitalization at a VA facility, it was observed that, while the veteran had functioned with difficulty, there was insufficient evidence to conclude that he was not competent to make medical decisions. Subsequently, in January 1992, a private psychiatrist associated with the Addison Gilbert Hospital concluded that the veteran was not competent to adequately evaluate the benefits and limitations of medical or psychiatric care, nor to provide for his basic needs. Those conclusions as to the veteran’s competency were directly contradicted by a VA physician, who, following the veteran’s transfer from the Addison Gilbert Hospital, determined that he was competent. The VA physician’s conclusions were largely mirrored in clinical records dated in August 1992, reflecting findings that the veteran possessed competence for making decisions regarding surgical procedures. Upon viewing the conflicting opinions concerning the veteran’s competency to make decisions pertaining to his medical care, the Board is not compelled to find that the veteran lacked an understanding of the legal effect of his actions in January 1991. Here, the Board notes that, while the governing regulations require that due consideration be given to all facts of record, the potential effect of a finding of incompetency, such as that rendered in January 1992, by the care provider at the Addison Gilbert Hospital, should not be separated from the purpose of the determination. On that occasion, the aim of the analysis was not to determine whether or not he possessed the requisite ability to enter into or execute a legally binding agreement, but rather to decide whether the veteran was capable of evaluating the benefits of care available to him and to meet his basic needs. Consequently, the Board is reluctant to accord significant probative weight to this evidence as it pertains to the question of whether the veteran’s capacity to designate a beneficiary to his NSLI policy had been impaired by a psychiatric disability. Similarly, the Board does not find the conclusion expressed by Dr. Jouhourian in November 1993, to be particularly compelling. While the fact that Dr. Jouhourian allegedly provided treatment during a period close in time to the January 1991 designation of beneficiary is of some importance, any probative weight to be accorded such evidence is diminished by his lack of familiarity with the veteran’s medical psychiatric medical history, as well as the fact that the record does not reflect his training in the field of psychiatry. Moreover, the level of psychiatric impairment described in the veteran’s extensive medical record does not seem to support Dr. Jouhourian’s observations, insofar as the records do not indicate a lack of capacity on the part of the veteran to decide to whom the proceeds of his NSLI policy would inure upon his demise. Also, the record is absolutely devoid of any findings by competent medical professionals that the veteran lacked testamentary capacity as a result of his diabetes or any other physical condition. In the Board’s judgment, the medical evidence received in connection with the appellant’s claim is insufficient to rebut the presumption that the veteran possessed testamentary capacity to execute the designation of the beneficiaries to NSLI policy, V [redacted], on January 2, 1991. As the medical evidence of record does not prove that the veteran lacked testamentary capacity in January 1991, the Board finds that lay evidence proffered by the appellant is insufficient to show that the appellees exercised undue influence over the veteran for the purpose of coercing him into changing the designation of beneficiary in their favor. Without again addressing the question of whether the veteran was stricken by incapacitating mental impairment on January 2, 1991, the record simply does not contain sufficient corroborating evidence of undue influence which would have weakened the veteran’s ability to understand the legal effect of the January 1991 designation of beneficiary. In support of her charges of undue influence by the appellees, the appellant has directed the Board’s attention to medical reports reflecting difficulties experienced by various health care providers in placing the veteran with members of his family, including the appellees, as well as the affidavit provided by the veteran’s son, [redacted]. While [redacted] recalled the details of a phone conversation with the veteran, wherein the veteran complained that the appellees forced him to change the designation of beneficiary in January 1991, in consideration for their promises to provide him with care, that statement is hearsay and is not supported by any objective evidence of record. Clearly, uncorroborated hearsay evidence is insufficient to rebut the presumption that the veteran possessed testamentary capacity in January 1991. Further, an adequate basis for a decision in the appellant’s favor is not provided by the appellant’s suggestion that medical notes reflecting reluctance on the part of members of the veteran’s family, including the appellees, to provide care for him in their homes is uncontrovertible proof that the January 1991 designation of beneficiary came about as the result of some nefarious scheme engineered by the appellees. Again, such assertions are largely uncorroborated by any objective evidence on file, and may not be used as a basis for rebutting the presumption of testamentary capacity for the purpose of reversing the right exercised by the veteran in designating beneficiaries of his choice. Thus, the Board finds that the January 2, 1991 designation of beneficiary was reflective of the veteran’s free exercise of his judgment, and was in no way unduly influenced by actions of the appellees. In light of the foregoing, the preponderance of the evidence is against the appellant’s claim. The record in this case, including the vast clinical reports, does not present an approximate balance of positive and negative evidence with respect to the appellant’s claim. 38 U.S.C.A. § 5107(b). The appeal is denied. ORDER The appellant’s entitlement to the proceeds of the veteran’s NSLI policy, V [redacted], is denied. G. H. SHUFELT Member, Board of Veterans' Appeals The Board of Veterans' Appeals Administrative Procedures Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, 741 (1994), permits a proceeding instituted before the Board to be assigned to an individual member of the Board for a determination. This proceeding has been assigned to an individual member of the Board. NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West 1991 & Supp. 1995), a decision of the Board of Veterans' Appeals granting less than the complete benefit, or benefits, sought on appeal is appealable to the United States Court of Veterans Appeals within 120 days from the date of mailing of notice of the decision, provided that a Notice of Disagreement concerning an issue which was before the Board was filed with the agency of original jurisdiction on or after November 18, 1988. Veterans' Judicial Review Act, Pub. L. No. 100-687, § 402, 102 Stat. 4105, 4122 (1988). The date which appears on the face of this decision constitutes the date of mailing and the copy of this decision which you have received is your notice of the action taken on your appeal by the Board of Veterans' Appeals. - 2 -