2228 CLAIMS GENERATED BY CIVILIAN EMPLOYEES OF THE DEPARTMENT OF DEFENSE

Department of Defense Directive 5515.3 of 18 August 1965 (NOTAL) provides that all Foreign Claims Commissions are designated to settle and pay claims for damage caused by civilian employees of the Department of Defense other than an employee of a military department.

*2229 ADVANCE PAYMENTS

Advance payments may be made pursuant to the provisions of sections 2070-73 and 2080. In addition to the adjudicating authorities authorized by section 2072 to make advance payments, all three-member foreign claims commissions may make advance payments provided such action is approved by the Commanding Officer appointing the commission.

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2301 GENERAL

a. Nonappropriated-fund activities are Federal agencies within the meaning of the Federal Tort Claims Act if charged with an essential function of the Navy Department and if the degree of control and supervision by the Navy Department is more than casual or perfunctory. Compare United States v. Holcombe, 277 F.2d 143 (4th Cir. 1960) and Scott v. United States, 226 F.Supp. 846, (D. Ga. 1963). To the extent that sovereign immunity is waived by the Federal Tort Claims Act, therefore, the United States remains ultimately liable for payment of nonappropriated-fund-activity claims. It is policy to pay these claims from nonappropriated funds and to process them primarily through nonappropriatedfund-activity claims procedures, using as guidelines the regulations and statutes applicable to similar appropriated-fund-activity claims.

b. Claims arising out of the operation of nonappropriated-fund activities, in and outside the United States, shall be investigated in accordance with the procedures for investigating similar claims against appropriated-fund activities. All claims should be submitted to the command having cognizance over the nonappropriated-fund activity involved.

* 2302 NOTIFICATION

Many nonappropriated-fund activities carry commercial insurance to protect them from claims for property damage and personal injury attributable to their operations. The Commandant of the Marine Corps, the Chief of Naval Personnel, and the Naval Supply Systems Command determine whether nonappropriated-fund activities within their cognizance shall carry liability insurance or become selfinsurers, in whole or in part. When the operations of nonappropriated-fund activities result in property damage or personal injury, the insurance carrier, if any, should be given written notification immediately. Notification should not be postponed until a claim is filed. When the activity is self-insured, the self-insurance fund shall be notified of the potential liability.

*2303 PROCESSING CLAIMS

a. Responsibility for processing. The primary responsibility for the negotiation and settlement of

(2) When there is no private insurer and the nonappropriated-fund activity has made no inde pendent arrangements for negotiations, the appropriate Navy adjudicating authority is responsible for conducting negotiations. Under special circumstances, even when there is an insurer, the appropriate Naval adjudicating authority may conduct negotiations, provided the command involved and the insurer agree to it. When an appropriate settlement is negotiated by the Navy, the recommended award will be forwarded to the nonappropriated-fund activity, or its insurer, for payment from nonappropriated funds.

(3) In cases where payment may be authorized under some statute, such as the Foreign Claims Act, but where there is no negligence and neither the nonappropriated-fund activity not its insurer is legally responsible, the claim may be considered for payment from appropriated funds or may be referred to the Judge Advocate General for appropriate action.

c. Denial. Claims resulting from nonappropriatedfund activities may be denied only by the appropriate Naval adjudicating authority, since such a denial is required to begin the 6-month limitation on filing suit under the Federal Tort Claims Act. Claims which have initially been processed and negotiated by a nonappropriated-fund activity or its insurer should not be denied until the activity or its insurer has

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clearly stated in writing that it does not intend to pay the claim and has elected to defend in court. Claimants shall be notified of a denial in accordance with section 2007.

2304 PAYMENT OF CLAIMS

a. Small claims. Any claim not covered by insurance (or if covered by insurance and not paid by the insurer) which can be settled for $100 or less may be adjudicated by the commanding officer of the activity concerned or his designee. The claim will be paid out of funds available to the commanding officer.

b. Other claims. Claims in excess of $100, for which private insurance is not available and which have been negotiated by the Navy, shall be forwarded to the appropriate headquarters command for payment from nonappropriated funds. Private insurance is usually not available to cover losses which result from some act or omission of a mere participant in a nonappropriated-fund activity. In the event the nonappropriated-fund activity declines to pay the claim, the file shall be forwarded to the Judge Advocate General for determination.

2305 CLAIMS BY EMPLOYEES

a. Property. Claims by employees of nonappropriated-fund activities for loss, damage, or destruction of personal property incident to their employment will be processed and adjudicated in

accordance with Chapter XXI and forwarded to the appropriate nonappropriated-fund activity for payment from nonappropriated funds.

b. Personal injury or death of citizens or permanent residents of the United States employed anywhere, or of foreign nationals employed within the United States. The compensation provided by the Longshoremen's and Harbor Workers' Compensation Act (33 USC 901-950) was extended to provide for employees of nonappropriated-fund activities who suffered injury or death arising out of and in the course of their employment (5 USC 8171). If there is a substantial possibility that an employee's injury or death is covered by the Longshoremen's and Harbor Workers' Compensation Act, a claim should first be made under that Act since it is the exclusive basis for Government liability for injuries or deaths which are covered (5 USC 8173).

c. Personal injury or death of foreign nationals employed outside of the Continental United States. Employees who are not citizens or permanent residents, and who are employed outside of the Continental United States, are protected by private insurance of the nonappropriated-fund activity or by other arrangements. (5 USC 8172). When a nonappropriatedfund activity has neglected to obtain insurance coverage or to make other arrangements, the matter will be processed as a foreign claim, or a Federal Tort Claims Act claim if appropriate, and any award will be paid from nonappropriated funds.

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