[Federal Register Volume 77, Number 227 (Monday, November 26, 2012)]
[Rules and Regulations]
[Pages 70374-70376]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28611]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 9
RIN 2900-AO30
Servicemembers' Group Life Insurance--Stillborn Child Coverage
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: This final rule amends the Department of Veterans Affairs (VA)
Servicemembers' Group Life Insurance (SGLI) regulations in order to
provide that, if a stillborn child is otherwise eligible to be insured
by the SGLI coverage of more than one servicemember under SGLI
dependent child coverage, the child would be insured by the coverage of
the child's SGLI-insured biological mother. This final rule will
provide consistency in payment determinations involving SGLI stillborn
child coverage.
DATES: Effective Date: This final rule is effective December 26, 2012.
Applicability Date: This final rule will apply to claims for SGLI
proceeds filed on or after December 26, 2012.
FOR FURTHER INFORMATION CONTACT: Monica Keitt, Attorney-Advisor,
Department of Veterans Affairs Regional Office and Insurance Center
(310/290B), P.O. Box 8079, Philadelphia, Pennsylvania 19101, (215) 842-
2000, Ext. 2905. (This is not a toll free number.)
SUPPLEMENTARY INFORMATION: On January 31, 2012, VA published in the
Federal Register (77 FR 4734) a proposed rule to provide that, if a
stillborn child is insured by the SGLI coverage of more than one
servicemember, the SGLI proceeds would be paid to the child's SGLI-
insured mother. We provided a 60-day public-comment period, which ended
on April 2, 2012, and received comments from five individuals.
Section 1967(a)(4)(B) of title 38, United States Code, prohibits an
insurable dependent who is a child from being insured at any time under
the SGLI coverage of more than one member, i.e., more than one SGLI-
insured parent. If a child is otherwise eligible to be insured by the
coverage of more than one member, under section 1967(a)(4)(B) the child
is insured by the coverage of the member whose eligibility for SGLI
occurred first, ``except that if that member does not have legal
custody of the child, the child shall be insured by the coverage of the
member who has legal custody of the child.'' Congress, however, did not
indicate whether this provision is applicable to a stillborn child. VA
therefore proposed to fill the gap left by Congress subjecting the
coverage of a stillborn child to the limitation that an insurable
dependent who is a child may not be insured at any time by the
insurance coverage of more than one member. We further proposed that a
stillborn child of two SGLI-covered parents will always be insured
under the mother's coverage because state laws do not address legal
custody of a stillborn.
Two commenters wrote in support of the proposed rule. Three of the
commenters raised issues regarding the proposed rule.
One commenter stated that the rule does not take into account a
case in which a stillborn child's parents are the same sex and urged
flexibility in the rule so as not to prejudice homosexual couples. The
premise of this comment, that a stillborn child could have parents of
the same sex, is mistaken. VA has
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defined the term ``member's stillborn child'' in 38 CFR 9.1(k)(1) to
mean ``a member's natural child'' who meets other criteria not relevant
to this discussion. The term ``natural child'' refers to a biological
child. Black's Law Dictionary 272 (9th ed. 2009); see Luke v. Bowen,
868 F.2d 974, 978 (8th Cir. 1989). As a result, this rule is applicable
only if both biological parents of the stillborn child are SGLI-
insured. There can be only two biological parents of a child: The
mother who provided the ovum that was fertilized and the father who
provided the semen that fertilized the ovum. Black's Law Dictionary
1222 (defining ``biological parent'' as woman who provides egg or man
who provides sperm to form zygote that becomes embryo). Thus, there
cannot be two biological parents of the same sex. We make no change
based on this comment.
Other commenters inquired about a case in which a stillborn child
is born to a surrogate for a SGLI-insured. As explained above, in
accordance with 38 U.S.C. 1967, this rule is only applicable if the
stillborn's biological parents are both insured under SGLI. Generally,
there are two types of surrogacy: (1) A surrogate is inseminated with
sperm which fertilizes her own ovum, resulting in a child who is
biologically related to her; and (2) a surrogate is impregnated with an
embryo that is not the product of her ovum, resulting in a child who is
not biologically related to her. If a surrogate is the biological
mother of a stillborn and if both the surrogate and the stillborn's
biological father are SGLI-insureds, the SGLI proceeds would be payable
to the surrogate under this rule. Again, this outcome would be
consistent with one reason provided for the proposed rule, i.e., the
stillborn child was exclusively in the surrogate's physical custody. 77
FR 4734. If however a surrogate is not the biological mother of the
stillborn and if both of the stillborn's biological parents are SGLI-
insureds, the SGLI proceeds would be payable to the stillborn's
biological mother under this rule. To ensure the clarity of the rule in
this regard, we are changing the reference to ``the child's insured
mother'' to read ``the child's insured biological mother.''
One commenter stated that, generally with regard to life insurance,
if an insured mother dies prior to the stillborn or seconds after
giving birth to a stillborn, the proceeds would become part of the
mother's estate and that, if she dies intestate, the proceeds would
pass in accordance with intestacy laws. This situation is covered by 38
U.S.C. 1970(i), which directs that, if a member dies before payment can
be made on account of the member's insurable dependent's death, the
SGLI proceeds payable on account of the insurable dependent's death are
payable to the person or persons entitled to the proceeds payable on
account of the member's death. Therefore, if an insured mother gave
birth to a stillborn and died before payment on account of the
stillborn child could be made to her, the SGLI proceeds payable on
account of the stillborn would be payable to the person or persons
entitled to the proceeds payable on account of the mother's death. Only
if the mother had no designated beneficiary, surviving spouse, child,
or parent would the proceeds be paid to the executor or administrator
of the insured mother's estate. 38 U.S.C. 1970(a).
One commenter also noted that the rule might eliminate the
opportunity for notifying the stillborn child's father about the
stillbirth in some circumstances. This comment is beyond the scope of
the rulemaking, which is intended to explain which member's SGLI would
insure a stillborn who is otherwise eligible to be insured by the SGLI
coverage of more than one member.
This commenter also stated that the rule would impose on the mother
additional burdens associated with insurance coverage on the birth of a
stillborn child. The commenter referenced paperwork to be filled out to
initiate a claim and other fees, deductibles, or administrative
requirements, all of which would have to be borne by the birth mother,
regardless of her preferences or the family's preferences regarding
insurance coverage. As explained in the preamble to the proposed rule,
77 FR 4734, this amendment will obviate the need to establish paternity
following the birth of a stillborn child, which we believe would impose
far more onerous burdens than completing a claim to recover the SGLI
proceeds. Further, there are no fees, deductibles, or other
administrative requirements necessary to file a claim for SGLI family
coverage that would impose a burden on the mother of the stillborn
child. We also believe that this rule will have the beneficial effect
of providing clear, definite guidance to members and their families as
to how SGLI family coverage will be paid in the event of a stillbirth.
We therefore make no change based upon this comment.
Another commenter stated that the rule ignores the fact that the
stillborn child's parents may choose that the father of the child
receive payment of SGLI proceeds instead of the mother. In such
circumstances, the stillborn's mother can simply give the proceeds to
the stillborn's father. We therefore do not believe this rule needs to
be amended to address this situation.
A commenter disagreed with VA's assessment that the rule does not
require a cost-benefit analysis. The commenter stated that, as required
by Executive Orders 12866 and 13563, before promulgating the rule, VA
should complete a cost-benefit analysis of the rule regarding its
effect on same sex couples who use a surrogate. The commenter's premise
is mistaken. In the notice of proposed rulemaking, VA did not state
that a cost-benefit analysis was not required. In fact, VA's analysis
of the proposed rule is publicly available on the VA Web site at http://www.va.gov/ORPM/VA_Regulations_Published_From_Fiscal_Year_FY_2004.asp. Rather VA stated that ``VA has examined the economic,
interagency, legal, and policy implications of this proposed rule and
has determined it not to be a significant regulatory action under
Executive Order 12866.'' 77 FR 4735. We therefore make no change based
on this comment.
Based on the rationale set forth in the proposed rule and upon
consideration of the public comments submitted, we adopt the provisions
of the proposed rule as a final rule, with the changes noted above.
We are also making one non-substantive change to the regulations
governing the birth of a stillborn child. We are substituting the word
``biological'' for the word ``natural'' in the definition of ``member's
stillborn child'' in Sec. 9.1(k)(1). We are not altering the
substantive content of the definition by making this change but rather
are substituting a more current term for an outdated one.
Unfunded Mandates
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C.
1532, that agencies prepare an assessment of anticipated costs and
benefits before issuing any rule that may result in an expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year. This rule would have no such effect on
State, local, and tribal governments or on the private sector.
Paperwork Reduction Act
This final rule contains no provision constituting a collection of
information under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and
[[Page 70376]]
benefits of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, and other advantages; distributive impacts; and equity).
Executive Order 13563 (Improving Regulation and Regulatory Review)
emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility. Executive
Order 12866 (Regulatory Planning and Review) defines a ``significant
regulatory action,'' which requires review by the Office of Management
and Budget (OMB), as ``any regulatory action that is likely to result
in a rule that may: (1) Have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
this Executive Order.''
VA has examined the economic, interagency, legal, and policy
implications of this final rule and has determined that it is not a
significant regulatory action under Executive Order 12866.
Regulatory Flexibility Act
The Secretary hereby certifies that this final rule will not have a
significant economic impact on a substantial number of small entities
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601 et
seq. This final rule will directly affect only individuals and will not
directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b),
this final rule is exempt from the initial and final regulatory
flexibility analysis requirements of sections 603 and 604.
Catalog of Federal Domestic Assistance
The catalog of Federal Domestic Assistance Program number and the
title for this regulation is 64.103, Life Insurance for Veterans.
Signing Authority
The Secretary of Veterans Affairs, or designee, approved this
document and authorized the undersigned to sign and submit the document
to the Office of the Federal Register for publication electronically as
an official document of the Department of Veterans Affairs. John R.
Gingrich, Chief of Staff, approved this document on November 20, 2012,
for publication.
List of Subjects in 38 CFR Part 9
Life insurance, Military personnel, Veterans.
Dated: November 20, 2012.
Robert C. McFetridge,
Director of Regulation Policy and Management, Office of the General
Counsel, Department of Veterans Affairs.
For the reasons stated in the preamble, the Department of Veterans
Affairs is amending 38 CFR part 9 as follows:
PART 9--SERVICEMEMBERS' GROUP LIFE INSURANCE AND VETERANS' GROUP
LIFE INSURANCE
0
1. The authority citation for part 9 continues to read as follows:
Authority: 38 U.S.C. 501, 1965-1980A, unless otherwise noted.
Sec. 9.1 [Amended]
0
2. Amend Sec. 9.1(k)(1) by removing ``natural'' and adding, in its
place, ``biological''.
0
3. Amend Sec. 9.5 by adding paragraph (f) and revising the authority
citation at the end of the section to read as follows:
Sec. 9.5 Payment of proceeds.
* * * * *
(f) If a stillborn child is otherwise eligible to be insured by the
Servicemembers' Group Life Insurance coverage of more than one member,
the child shall be insured by the coverage of the child's insured
biological mother.
(Authority: 38 U.S.C. 501(a), 1965(10), 1967(a)(4)(B))
[FR Doc. 2012-28611 Filed 11-23-12; 8:45 am]
BILLING CODE 8320-01-P