[Federal Register Volume 61, Number 18 (Friday, January 26, 1996)]
[Rules and Regulations]
[Pages 2401-2403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1160]



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SMALL BUSINESS ADMINISTRATION
13 CFR Part 114


Policies of General Application

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: In response to President Clinton's regulatory review 
directive, the Small Business Administration has completed a page-by-
page and line-by-line review of its regulations. As a result, SBA is 
clarifying and streamlining its regulations, revising or eliminating 
any duplicative, outdated, inconsistent or confusing provisions. This 
final rule reorganizes the entire Part 114 covering administrative 
claims under the Federal Tort Claims Act to make it clearer and easier 
to use. It also amends the Part to streamline the review and adjustment 
of claims and provide for the use of nonbinding alternative dispute 
resolution in appropriate cases.

EFFECTIVE DATE: This rule is effective February 26, 1996.

FOR FURTHER INFORMATION CONTACT: Jeff Lane, Office of General Counsel, 
at (202) 205-6879.

SUPPLEMENTARY INFORMATION: Part 114 of chapter I, 13 CFR contains 
policies governing the presentment, review and handling of 
administrative claims brought against the Federal Government for money 
damages for injuries or death arising from the negligent or wrongful 
act or omission of any employee of the Small Business Administration. 
The rule reorganizes the entire Part 114 to make it clearer and easier 
to use and amends it to create a more efficient administrative process. 
It eliminates from the process the various boards of survey that now 
investigate and review claims, and gives District Counsel authority to 
review and deny claims of $5,000 or less and use nonbinding alternative 
dispute resolution in appropriate cases. (Boards of Survey would retain 
all other existing responsibilities.)
    The proposed rule was published on November 3, 1995, at 60 FR 
55808. The SBA received four comments on the proposed rule during the 
thirty-day comment period. Two comments questioned generally the need 
for revisions in the existing rule. As indicated, SBA has revised and 
reorganized the rule to streamline its operation and make it more 
understandable to employees and others who may be affected by it. One 
of those two comments supported the proposal to eliminate the boards of 
survey from the review process, but stated that employees should not 
enjoy the benefits of the attorney-client privilege. With regard to 
this latter point, this final rule makes no substantive change in the 
longstanding SBA policy applying the attorney-client privilege in cases 
where Government legal representation is authorized for employees. 
Finally, two commenters suggested changes in section 114.105 that are 
adopted in the final rule. Section 114.105(b) now makes clear that any 
alternative dispute resolution mechanisms must be nonbinding, and 
Sec. 114.105(c) is clarified to state that District Counsel have 
authority to deny claims under $5,000, but may only recommend their 
approval. In addition to this clarification in proposed section 
114.105(c) in response to comments, SBA includes in the final rule an 
administrative change: the recommendation for approval will be made by 
District Counsel to the General Counsel or designee, not to the Senior 
Area Counsel.

Compliance With Executive Orders 12612, 12778, and 12866, the 
Regulatory Flexibility Act (5 U.S.C. 601, et seq.), and the Paperwork 
Reduction Act (44 U.S.C. Ch. 35)

    SBA certifies that this rule involves internal administrative 
procedures and is not a significant rule within the meaning of 
Executive Order 12866 and will not have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. It is not likely to 
have an annual economic effect of $100 million or more, result in a 
major increase in costs or prices, or have a significant adverse effect 
on competition or the United States economy.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
certifies that this rule contains no new reporting or recordkeeping 
requirements.
    For purposes of Executive Order 12612, SBA certifies that this rule 
does not have any federalism implications warranting the preparation of 
a Federalism Assessment.
    For purposes of Executive Order 12778, SBA certifies that this rule 
is drafted, to the extent practicable, in accordance with the standards 
set forth in Section 2 of that Order.

List of Subjects in 13 CFR Part 114

    Claims.

    Accordingly, pursuant to the authority set forth in sections 
5(b)(1) and (b)(6) of the Small Business Act, 15 U.S.C. 634(b)(1) and 
(b)(6), 28 U.S.C. 2672, and 28 CFR 14.11 (31 FR 16616), SBA revises 
part 114 of Title 13, Code of Federal Regulations (CFR), to read as 
follows:

PART 114--ADMINISTRATIVE CLAIMS UNDER THE FEDERAL TORT CLAIMS ACT 
AND REPRESENTATION AND INDEMNIFICATION OF SBA EMPLOYEES

Subpart A--Administrative Tort Claims

Sec.
114.100  Definitions.
114.101  What do these regulations cover?
114.102  When and where do I present a claim?
114.103  Who may file a claim?
114.104  What evidence and information may SBA require relating to 
my claim?
114.105  Who investigates and considers my claim?
114.106  What if my claim exceeds $5,000?
114.107  What if my claim exceeds $25,000 or has other special 
features?
114.108  What if my claim is approved?
114.109  What if my claim is denied?
Subpart B--Representation and Indemnification of SBA Employees
114.110  What is SBA's policy with respect to indemnifying and 
providing legal representation to SBA employees?
114.111  Does the attorney-client privilege apply when SBA employees 
are represented by the Government?

    Authority: 15 U.S.C. 634 (b)(1), (b)(6); 28 U.S.C. 2672; 28 CFR 
14.11.

Subpart A--Administrative Tort Claims


Sec. 114.100  Definitions.

    As used throughout this Part 114, date of accrual means the date 
you know or reasonably should have known of your injury. The date of 
accrual will depend on the facts of each case. Site means the 
geographic location where the incident giving rise to your claim 
occurred.


Sec. 114.101  What do these regulations cover?

    This part applies only to monetary claims you assert under the 
Federal Tort Claims Act, 28 U.S.C. 2671 et seq., for 

[[Page 2402]]
injury to or loss of property, personal injury, or death arising from 
the negligent or wrongful act or omission of any SBA employee acting 
within the scope of his or her employment.


Sec. 114.102  When and where do I present a claim?

    You must present your claim within two years of the date of accrual 
at the SBA District Office nearest to the site and within the same 
state as the site. You must use an official form obtained from SBA or 
give other written notice of your claim, stating the specific amount of 
your alleged damages and providing enough information to enable SBA to 
investigate your claim. Your claim will be considered presented when 
SBA receives this information.


Sec. 114.103  Who may file a claim?

    (a) If a claim is based on factors listed in the first column, then 
it may be presented by persons listed in the second column.

------------------------------------------------------------------------
               Claim factors                      Claim presenters      
------------------------------------------------------------------------
Injury to or loss of property.............  The owner of the property,  
                                             his or her duly authorized 
                                             agent, or legal            
                                             representative.            
Personal injury...........................  The injured person, his or  
                                             her duly authorized agent, 
                                             or legal representative.   
Death.....................................  The executor, administrator,
                                             or legal representative of 
                                             the decedent's estate, or  
                                             any other person entitled  
                                             to assert the claim under  
                                             applicable state law.      
Loss wholly compensated by an insurer with  The parties individually, as
 rights as a subrogee.                       their interests appear, or 
                                             jointly.                   
------------------------------------------------------------------------

    (b) An agent or legal representative may present your claim in your 
name, but must sign the claim, state his or her title or legal 
capacity, and include documentation of authority to present the claim 
on your behalf.


Sec. 114.104  What evidence and information may SBA require relating to 
my claim?

    (a) For a claim based on injury to or loss of property:
    (1) Proof you own the property.
    (2) A specific statement of the damage you claim with respect to 
each item of property.
    (3) Itemized receipts for payment for necessary repairs or itemized 
written estimates of the cost of such repairs.
    (4) A statement listing date of purchase, purchase price and 
salvage value, where repair is not economical.
    (5) Full information about potential insurance coverage and any 
insurance claims or payments relating to your claim.
    (6) Any other information that may be relevant to the government's 
alleged liability or the damages you claim.
    (b) For a claim based on personal injury, including pain and 
suffering:
    (1) A written report from your health care provider stating the 
nature and extent of your injury and treatment, the degree of your 
temporary or permanent disability, your prognosis, period of 
hospitalization, and any diminished earning capacity.
    (2) A written report following a physical, dental or mental 
examination of you by a physician employed by SBA or another Federal 
Agency. If you want a copy of this report, you must request it in 
writing, furnish SBA with the written report of your health care 
provider, if SBA requests it, and make or agree to make available to 
SBA any other medical reports relevant to your claim.
    (3) Itemized bills for medical, dental and hospital expenses you 
have incurred, or itemized receipts of payment for these expenses.
    (4) Your health care provider's written statement of the expected 
expenses related to any necessary future treatment.
    (5) A statement from your employer showing actual time lost from 
employment, whether you are a full or part-time employee, and the wages 
or salary you actually lost.
    (6) Documentary evidence showing the amount of earnings you 
actually lost if you are self-employed.
    (7) Information about the existence of insurance coverage and any 
insurance claims or payments relating to the claim in question.
    (8) Any other information that may be relevant to the government's 
alleged liability or the damages you claim.
    (c) For a claim based on death:
    (1) An authenticated death certificate or other competent evidence 
showing cause of death, date of death, and age of the decedent.
    (2) Evidence of decedent's employment or occupation at the time of 
death, including monthly or yearly salary or earnings, and the duration 
of such employment or occupation.
    (3) Full names, addresses, birth dates, kinship, and marital status 
of the decedent's survivors, including identification of those 
survivors who were dependent upon the decedent for support at the time 
of his or her death.
    (4) Evidence of the support provided by the decedent to each 
dependent survivor at the time of his or her death.
    (5) A summary of the decedent's general physical and mental 
condition before death.
    (6) Itemized bills or receipts for payments for medical and burial 
expenses.
    (7) For pain and suffering damage claims, a physician's detailed 
statement specifying the injuries suffered, the duration of pain and 
suffering, any drugs administered for pain, and the decedent's physical 
condition in the interval between injury and death.
    (8) Any other information that may be relevant to the government's 
alleged liability or the damages claimed.


Sec. 114.105  Who investigates and considers my claim?

    (a) SBA may investigate, or ask another Federal agency to 
investigate, your claim. SBA also may request any Federal agency to 
conduct a physical examination of you and provide a report to SBA. SBA 
will reimburse the Federal agency for the costs of that examination 
when authorized or required by statute or regulation.
    (b) In those cases in which SBA investigates your claim, the SBA 
District Counsel with jurisdiction over the site will conduct an 
investigation and make recommendations or a determination with respect 
to your claim. The District Counsel may negotiate with you and is 
authorized to use alternative dispute resolution mechanisms (nonbinding 
on SBA) when they may promote the prompt, fair and efficient resolution 
of your claim.
    (c) If your claim is for $5,000 or less, the District Counsel may 
deny the claim, or may recommend approval, compromise, or settlement of 
the claim to the General Counsel or designee, who may take final 
action. The District Counsel first must refer the claim to SBA's 
General Counsel or designee for review if SBA should consult with the 
Department of Justice before approving the claim, as required under 
Sec. 114.107.


Sec. 114.106  What if my claim exceeds $5,000?

    The District Counsel must review and investigate your claim and 
forward it with a report and recommendation to the General Counsel or 
designee, who may approve or deny an award, compromise, or settlement 
of claims in excess of $5,000, but not exceeding $25,000. The General 
Counsel or designee will handle claims in excess of $25,000 as required 
by Sec. 114.107. 

[[Page 2403]]



Sec. 114.107  What if my claim exceeds $25,000 or has other special 
features?

    (a) The U.S. Attorney General or designee must approve in writing 
any award, compromise, or settlement of a claim in excess of $25,000. 
For this purpose, a principal claim and any derivative or subrogated 
claim are considered a single claim.
    (b) SBA must consult with the Department of Justice before 
adjusting, determining, compromising, or settling a claim whenever the 
General Counsel or designee determines:
    (1) The claim involves a new precedent or a new point of law; or
    (2) The claim involves or may involve a question of policy; or
    (3) The United States is or may be entitled to indemnity or 
contribution from a third party and SBA is unable to adjust the third 
party claim; or
    (4) Approval of a claim, as a practical matter, will or may control 
the disposition of a related claim in which the amount to be paid may 
exceed $25,000.
    (c) SBA must consult with the Department of Justice before 
adjusting, determining, compromising, or settling a claim whenever SBA 
learns that the United States, or any of its employees, agents, or 
cost-plus contractors, is involved in litigation based on a claim 
arising out of the same incident or transaction.
    (d) SBA, acting through its General Counsel or designee, must make 
any referrals to the Department of Justice for approval or consultation 
by transmitting them in writing to the Assistant Attorney General, 
Civil Division.
    (1) The referral must contain a short and concise statement of the 
facts and the reason for the request or referral, copies of the 
relevant portions of the claim file, and SBA's views and 
recommendations.
    (2) SBA may make this referral at any time after a claim is 
presented.


Sec. 114.108  What if my claim is approved?

    SBA will notify you in writing if it approves your claim. The 
District Counsel will forward to you or your agent or legal 
representative the forms necessary to indicate satisfaction of your 
claim and your acceptance of the payment. Acceptance by you, your agent 
or your legal representative, of any award, compromise or settlement of 
your claim is final and conclusive under the Federal Tort Claims Act. 
It binds you, your agent or your legal representative, and any other 
person on whose behalf or for whose benefit the claim was presented. It 
also constitutes a complete release of your claim against the United 
States and its employees. If you are represented by counsel, SBA will 
designate you and your counsel as joint payees and will deliver the 
check to your counsel. Payment is contingent upon the waiver of your 
claim and is subject to the availability of appropriated funds.


Sec. 114.109  What if my claim is denied?

    SBA will notify you or your agent or legal representative in 
writing by certified or registered mail if it denies your claim. You 
have a right to file suit in an appropriate U.S. District Court not 
later than six months after the date the notification was mailed.

Subpart B--Representation and Indemnification of SBA Employees


Sec. 114.110  What is SBA's policy with respect to indemnifying and 
providing legal representation to SBA employees?

    (a) If an SBA employee engages in conduct, within the scope of his 
or her employment, which gives rise to a claim, and the SBA 
Administrator or designee determines that any of the following actions 
relating to the claim are in SBA's interest, SBA may:
    (1) Indemnify the employee after a verdict, judgment, or other 
monetary award is rendered personally against the employee in any civil 
suit in state or federal court or any arbitration proceeding;
    (2) Settle or compromise the claim; and/or
    (3) Pay for, or request that the Department of Justice provide, 
legal representation to the employee once personally named in such a 
suit.
    (b) If you are an SBA employee, you may ask SBA to settle or 
compromise your claim, provide you with legal representation, or 
provide you with indemnification for a verdict, judgment or award 
entered against you in a suit. To do so, you must submit a timely, 
written request to the General Counsel, with appropriate documentation, 
including copies of any pleadings, verdict, judgment, award, or 
settlement proposal. The General Counsel will decide all requests for 
representation or settlement, and will forward to the Administrator, 
with the accompanying documentation and a recommendation, any requests 
for indemnification.
    (c) Any payments by SBA under this section will be contingent upon 
the availability of appropriated funds.


Sec. 114.111  Does the attorney-client privilege apply when SBA 
employees are represented by the Government?

    When attorneys employed by SBA participate in any process in which 
SBA seeks to determine whether SBA should request the Department of 
Justice to provide representation to an SBA employee sued, subpoenaed, 
or charged in his or her individual capacity, or whether attorneys 
employed by SBA should provide representational assistance for such an 
employee, those attorneys undertake a full and traditional attorney-
client relationship with the employee with respect to the attorney-
client privilege. If representation is authorized, SBA attorneys who 
assist in the representation of an SBA employee also undertake a full 
and traditional attorney-client relationship with the employee with 
respect to the attorney-client privilege. Unless authorized by the 
employee, the attorney must not disclose to anyone other than attorneys 
also responsible for the employee's representation information 
communicated to the attorney by the client-employee during the course 
of the attorney-client relationship. The attorney-client privilege will 
continue with respect to that information whether or not representation 
is provided, and even if the employee's representation is denied or 
discontinued.

    Dated: January 19, 1996.
Philip Lader,
Administrator.
[FR Doc. 96-1160 Filed 1-25-96; 8:45 am]
BILLING CODE 8025-01-P