[Title 32 CFR 756]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 32 - NATIONAL DEFENSE]
[Subtitle A - Department of Defense (Continued)]
[Chapter Vi - DEPARTMENT OF THE NAVY]
[Subchapter E - CLAIMS]
[Part 756 - NONAPPROPRIATED-FUND CLAIMS REGULATIONS]
[From the U.S. Government Printing Office]


32NATIONAL DEFENSE52002-07-012002-07-01false756PART 756NATIONAL DEFENSEDepartment of Defense (Continued)DEPARTMENT OF THE NAVYCLAIMS
PART 756--NONAPPROPRIATED-FUND CLAIMS REGULATIONS--Table of Contents




Sec.
756.1 Scope.
756.2 Definitions.
756.3 Notification.
756.4 Responsibility.
756.5 Investigation.
756.6 Negotiation.
756.7 Payment.
756.8 Denial.
756.9 Claims by employees.

    Authority: 5 U.S.C. 301; 10 U.S.C. 939, 5013, and 5148; E.O. 11476 
(3 CFR, 1969 Comp., p. 132); 32 CFR 700.206 and 700.1202.

    Source: 57 FR 4736, Feb. 7, 1992, unless otherwise noted.



Sec. 756.1  Scope.

    This part explains how to settle claims for and against the United 
States for property damage, personal

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injury, or death arising out of the operation of nonappropriated-fund 
instrumentalities.



Sec. 756.2  Definitions.

    (a) Nonappropriated-fund instrumentality (NAFI). An instrumentality 
of the Federal Government established to generate and administer 
nonappropriated-funds for programs and services contributing to the 
mental and physical well-being of Department of Defense personnel and 
their dependents. A NAFI is not incorporated under the laws of any State 
and enjoys the privileges and immunities of the Federal Government.
    (b) Nonappropriated-funds. Funds generated through the use and 
patronage of NAFI's, not including funds appropriated by Congress.
    (c) Employees of NAFI. Civilian personnel employed by NAFI's whose 
salaries are paid from nonappropriated-funds. Also, military personnel 
working part-time at NAFI's when compensated from nonappropriated-funds.



Sec. 756.3  Notification.

    (a) Some NAFI's, such as flying clubs, carry private 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 Commander, Naval Supply 
Systems Command determine whether NAFI's within their cognizance shall 
carry liability insurance or become self-insurers, in whole or in part.
    (b) The Marine Corps requires mandatory participation in the Morale, 
Welfare and Recreation (MWR) Composite Insurance Program by the 
following operations: MWR operations and retail services, food and 
hospitality, recreation; and special NAFI activities including flying 
clubs, rod and gun clubs, Interservice Rifle Fund, Marine Corps Marathon 
and Dependent Cafeteria Fund. The following organizations may also 
participate in the MWR Composite Insurance Program, if desired: Child 
welfare centers, billeting funds, chapel funds, and civilian welfare 
funds.
    (c) When the operations of NAFI's result in property damage or 
personal injury, the insurance carrier, if any, should be given 
immediate written notification. 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 by the 
activity.



Sec. 756.4  Responsibility.

    The primary responsibility for the negotiation and settlement of 
claims resulting from nonappropriated-fund activities is normally with 
the NAFI and its insurer. NAFI's, however, are Federal agencies within 
the meaning of the Federal Tort Claims Act if charged with an essential 
function of the Department of the Navy and if the degree of control and 
supervision by the Navy 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). Consequently, to the 
extent sovereign immunity is waived by the Federal Tort Claims Act, 28 
U.S.C. 1346(b), 2671-2672, 2674-2680, the United States remains 
ultimately liable for payment of NAFI claims.



Sec. 756.5  Investigation.

    Claims arising out of the operation of NAFI's, in and outside the 
United States, shall be investigated in accordance with the procedures 
for investigating similar claims against appropriated fund activities in 
order to protect the residual liability of the United States. All claims 
should be submitted to the command having cognizance over the NAFI 
involved.



Sec. 756.6  Negotiation.

    (a) General. Claims from NAFI's should be processed primarily 
through NAFI claims procedures, using as guidelines the regulations and 
statutes applicable to similar appropriated fund activity claims.
    (b) When the NAFI is insured. When a NAFI is insured, the insurer or 
the contracted third-party claims administrator (TPA) will normally 
conduct negotiations with claimants. The appropriate naval adjudicating 
authority as shown in 32 CFR 750.34(c)(2)(ii) has the responsibility of 
monitoring the negotiations conducted by the insurer or TPA. Monitoring 
is normally limited

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to ascertaining someone has been assigned to negotiate, to obtain 
periodic status reports, and to close files on settled claims. Any 
dissatisfaction with the insurer's or TPA's handling of the negotiations 
should be referred directly to the Judge Advocate General for 
appropriate action. Under special circumstances, even when there is an 
insurer or TPA, 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 insurer or TPA for payment.
    (c) When the NAFI is not insured. When there is no private, 
commercial insurer and the NAFI has made no independent arrangements for 
negotiations, the appropriate Navy adjudicating authority is responsible 
for conducting negotiations. When an appropriate settlement is 
negotiated by the Navy, the recommended award will be forwarded to the 
NAFI for payment from nonappropriated-funds.



Sec. 756.7  Payment.

    (a) Claims that can be settled for less than $1000.00. A claim not 
covered by insurance (or not paid by the insurer), that can be settled 
for $1000.00 or less, may be adjudicated by the commanding officer of 
the activity concerned or designee. The claim shall be paid out of funds 
available to the commanding officer.
    (b) Claims that cannot be settled for less than $1000.00. A claim 
negotiated by the Navy, not covered by insurance, that cannot be settled 
for less than $1000.00, shall be forwarded to the appropriate 
nonappropriated-fund headquarters command for payment from its 
nonappropriated-funds.
    (c) When payment is possible under another statute. In some cases 
neither the NAFI nor its insurer may be legally responsible. In those 
instances, when there is no negligence, and payment is authorized under 
some other statute, such as the Foreign Claims Act, 10 U.S.C. 2734-2736, 
the claim may be considered for payment from appropriated funds or may 
be referred to the Judge Advocate General for appropriate action.
    (d) Other claims. A NAFI's private insurance policy 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 
NAFI declines to pay the claim, the file shall be forwarded to the Judge 
Advocate General for determination.



Sec. 756.8  Denial.

    Claims resulting from nonappropriated-fund activities may be denied 
only by the appropriate naval adjudicating authority. Such a denial is 
necessary to begin the 6-month limitation on filing suit against the 
United States for claims filed under the Federal Tort Claims Act. Denial 
of a claim shall be in writing and in accordance with subparts A or B of 
part 750 of this chapter, as appropriate. The appropriate naval 
adjudicating authority should not deny claims which have initially been 
processed and negotiated by a nonappropriated-fund activity, its insurer 
or TPA until the activity or its insurer has clearly stated in writing 
that it does not intend to pay the claim and has elected to defend in 
court.



Sec. 756.9  Claims by employees.

    (a) Personal injury or death of citizens or permanent residents of 
the United States employed anywhere, or foreign nationals employed 
within the United States. Compensation is provided by the Longshore and 
Harbor Workers' Compensation Act (33 U.S.C. 901-950) for employees of 
NAFI's who have suffered injury or death arising out of and in the 
course of their employment (5 U.S.C. 8171). That Act is the exclusive 
basis for Government liability for injuries or deaths that are covered 
(5 U.S.C. 8173). A claim should first be made under that Act if there is 
a substantial possibility the injury or death is covered.
    (b) 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 the continental United 
States, are protected by private insurance of the NAFI or by other 
arrangements (5 U.S.C. 8172). When a nonappropriated-fund activity

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has neglected to obtain insurance coverage or to make other 
arrangements, the matter shall be processed as a Foreign Claims Act or a 
Military Claims Act claim if appropriate, and any award will be paid 
from nonappropriated-funds.