|
Department of Veterans
afffairs
Office of the General Counsel
Washington, DC 20420
October 27, 1992
VA District Counsel (335/02)
Fort Snelling
St. Paul, MN 55111
QUESTION PRESENTED: Whether a VA employee who is a director of a
VA Research Corporation may serve as an unpaid officer of that
Corporation.
DISCUSSION:
1. You asked for a clarification of O.G.C. Advisory 32-91 which
you say is being cited for the proposition that directors of VA
nonprofit research corporations ("Research Corporation") cannot serve
as unpaid officers of the Research Corporation. In O.G.C. Advisory
32-91, the question was posed as to whether the ACOS for Research and
Development at VAMC Martinez may serve and be compensated as
President of the East Bay Institute for Research and Education, the
VAMC's Research Corporation. The ACOS was to receive compensation for
his position as an officer of the Research Corporation. The opinion
stated that the ACOS, who was also a director of the Research
Corporation, could not "with or without compensation" serve as an
officer or employee of the Research Corporation.
2. O.G.C. Advisory 32-91 dealt with the situation involving
payment to a VA employee who was an ex officio member of the Board of
Directors for performing as an officer of the corporation. The
statement that such an employee could not "with or without
compensation" serve as an officer or employee of the Research
Corporation went beyond the facts of the situation. Upon further
consideration, we have concluded that the statement should not be
followed. An ACOS serving without compensation as an officer or
employee of the Research Corporation is not performing an
impermissible outside activity under 38 C.F.R. 0.735-12 because the
unpaid officer position, in light of the harmony between the missions
of VA and the Research Corporation, is compatible with the full and
proper discharge of the VA employee's official duties and
responsibilities.
3. In an opinion letter dated April 13, 1989, and addressed to the
VA Deputy General Counsel (a copy of which is attached) (the "DOJ
Opinion"), the U.S. Department of Justice advised us that, as a
general matter, Research Corporation employees are not "employees of
the Government" and, therefore, do not have liability "protection"
under the Federal Tort Claims Act.
HELD: A VA employee who is serving as a Director of the Research
Corporation may also serve as an unpaid officer of a Research
Corporation and is not thereby in violation of the prohibition
against performing certain outside activities beyond VA employment
listed at 38 U.S.C. 0.735-12. Research Corporation employees are not
protected from liability under the Federal Tort Claims Act.
Audley Hendricks, Assistant General Counsel
(Attachment to Oct. 27, 1992 document follows below)
U.S. Department of Justice
Washington, DC 20530
April 13, 1989
Robert E. Coy
Deputy General Counsel
Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20430
Dear Bob:
This letter responds to your request for my views as to whether
the employees of the nonprofit research corporations to be
established pursuant to 38 U.S.C. 4161 are "employees of the
government" for purposes of coverage under the Federal Tort Claims
Act, 28 U.S.C. 1346(b), 2671. Having reviewed the material that you
forwarded to me, I have concluded that the employees of these
corporations are not federal employees and would, therefore, be
excluded from FTCA coverage.
The statutory scheme of 38 U.S.C. 4161 et.seg., establishes
nonprofit research corporations at VA medical centers to provide a
"flexible funding mechanism" for research conducted at those centers.
38 U.S.C. 4161(a). Although the statute indicates that these
corporations are intended to "facilitate research," 38 U.S.C. 4162,
which would "Contribute to the knowledge about disease and disability," 38 U.S.C.4101, the Principal role of the federal
government in connection with these corporations is that of oversight
and inspection, 38 U.S.C. 4166.
The nonprofit research corporations which are the subject of this
legislation are incorporated under state law and "shall be required
to comply only with those Federal laws, regulations, and executive
orders and directives which apply generally to private nonprofit
corporations." 38 U.S.C. 4161(a). The corporate boards of directors
will have "members who are not officers or employees of the Federal
Government... " 38 U.S.C. 4163. The corporations will hire private
sector employees and receive funding from sources outside of the
Department of Veterans Affairs. 38 U.S.C. 4162, 4164. Moreover, these
corporations must apply for nonprofit tax exempt status as a
condition of their existence. 38 U.S.C. 4161(b).
The exclusion of "any contractor" from the provisions of the FTCA
comprises a basic anchor on FTCA liability which has been reaffirmed
repeatedly by the Supreme court. See United States v. Orleans, 425
U.S. 807, 815-816 (1976). Orleans held that an entity is not
transformed from a "contractor" or a "grantee" into "federal agency"
under the FTCA either by receiving federal funding or by having to
comply with detailed federal standards and regulations. Id. at
815-16, 817-18. See also Letnes v. United States, 820 F.2d 1517 (9th
Cir. 1987).
The House Committee Report accompanying 38 U.S.C. 4161
et.seg.
specifically states that "these corporations would not be considered
for any purposes as corporations owned or controlled by the United
States" except insofar as they would be required to conform to state
corporation law, to abide by general research procedures prescribed
by the Department of Veterans Affairs, to obtain nonprofit tax
exemption status, to file an annual report, to make their records
available for inspection, and to file member conflict of interest
statements. H.Rept. No.100-373, 100th Cong., 1st Sess. 5 (1987).
For these reasons, it is my view that these corporations are
outside of the purview of the Federal Tort Claims Act and that their
employees are not "employees of the government" pursuant to 28 U.S.C.
1346(b), 2671. I trust that the foregoing analysis will be helpful to
you.
Sincerely,
Jeffrey Axelrod
Director, Torts Branch
Tort's Branch, Civil Division
Back
to Compendium
of General Counsel Opinions
|
