[Federal Register Volume 78, Number 184 (Monday, September 23, 2013)]
[Proposed Rules]
[Pages 58264-58266]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-22977]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 9

RIN 2900-AO42


Servicemembers' Group Life Insurance and Veterans' Group Life 
Insurance Information Access

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
regulations governing Servicemembers' Group Life Insurance (SGLI), 
Family SGLI, SGLI Traumatic Injury Protection, and Veterans' Group Life 
Insurance (all hereafter referred to as SGLI). The purpose is to 
acknowledge and clarify what is implicit in the law: That VA, which has 
the responsibility under the law to oversee the SGLI program and ensure 
its proper operation, also has the right to full access to records held 
by the insurer or on behalf of the insurer from whom VA has purchased a 
policy. These records include all of the insurer's records related to 
the operation and administration of the SGLI programs necessary to 
protect the legal and financial rights of the Government and of the 
persons affected by the activities of the agency and its agents.

DATES: Comments must be received by VA on or before November 22, 2013.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand delivery to Director, Regulation 
Policy and Management (02REG), Department of Veterans Affairs, 810 
Vermont Ave. NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. Comments should indicate that they are submitted in response 
to ``RIN 2900-AO42 Servicemembers' Group Life Insurance and Veterans' 
Group Life Insurance Information Access.'' Copies of comments received 
will be available for public inspection in the Office of Regulation 
Policy and Management, Room 1068, between the hours of 8:00 a.m. and 
4:30 p.m., Monday through Friday (except holidays). Please call (202) 
461-4902 for an appointment. (This is not a toll-free number.) In 
addition, during the comment period, comments may be viewed online 
through the Federal Docket Management System at http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Monica Keitt, Attorney/Advisor, 
Department of Veterans Affairs Regional Office and Insurance Center 
(310/290B), 5000 Wissahickon Avenue, P.O. Box 8079, Philadelphia, PA 
19101, (215) 842-2000, ext. 2905. This is not a toll-free number.

SUPPLEMENTARY INFORMATION: Section 1966(a) of title 38, United States 
Code, authorizes the Secretary of Veterans Affairs (Secretary) to 
purchase one or more group life insurance policies from one or more 
life insurance companies for the purposes of providing the benefits 
specified in 38 U.S.C. 1965-1980A, namely the Servicemembers' Group 
Life Insurance (SGLI), Family SGLI, SGLI Traumatic Injury Protection, 
and Veterans' Group Life Insurance programs (all hereafter referred to 
as SGLI). Under 38 U.S.C. 1966 and the terms of the policy purchased by 
VA pursuant to section 1966(a), the insurer has the responsibility of 
administering the SGLI programs on a day-to-day basis with VA retaining 
oversight responsibility to ensure that the SGLI programs are managed 
in an effective and efficient manner that allows the Secretary to 
fulfill his responsibilities under the law.
    Section 3101 of title 44, United States Code, requires the head of 
each Federal agency to make and preserve records containing adequate 
and proper documentation of the organization, functions, policies, 
decisions, procedures, and essential transactions of the agency and 
designed to furnish the information necessary to ``protect the legal 
and financial rights of the Government and of persons directly affected 
by the agency's activities.'' The records that are created and 
maintained

[[Page 58265]]

by or on behalf of the insurer, reinsurer(s), and their successors 
(jointly referred to hereafter as ``insurer'') under the SGLI policy 
are Federal records created because of the contractual relationship 
between VA and the insurer under 38 U.S.C. 1966. Federal records are 
defined in 44 U.S.C. 3301.
    In order for VA to meet its responsibilities under sections 1966 
and 3101, VA proposes to add Sec.  9.21 to 38 CFR part 9, to clarify 
that VA has the right to complete and unrestricted access to the 
records of any insurer with respect to the policy and related benefit 
programs or services that are derived from the policy. This access 
includes access to any records relating to the operation and 
administration of the benefit programs derived from the policy and 
records related to the organization, functions, policies, decisions, 
procedures, and essential transactions of the insurer. VA's access to 
records includes access to records containing financial information of 
the insurer as these records are considered part of the records that 
encompass the essential transactions performed by the insurer in the 
operation of the SGLI programs. VA's access to these records is 
required to ensure that the legal and financial rights of the 
Government and the persons affected by activities of the insurer are 
protected. VA's access to records shall also include access to records 
of individuals insured under the policy or utilizing other related 
program benefits and services or who may be entitled to benefits 
derived through the SGLI programs, including personally identifiable 
information concerning such individuals and their beneficiaries. 
Implicit in the law and policy is that the insurer will provide this 
access in cooperation with VA to improve the delivery of insurance 
products and benefits under the law for servicemembers, veterans, their 
dependents, and eligible beneficiaries. This proposed rule would 
provide clarity and assurance that there are no barriers or questions 
regarding the extent of VA's unfettered access to appropriate records 
related to the policy.
    Additionally, we note that the insurer must comply with the 
provisions of the Privacy Act, 5 U.S.C. 552a, with regard to Federal 
records held in a Privacy Act system of records on VA's behalf. The 
Federal records held by the insurer are protected by the Privacy Act 
when VA provides by a contract for the operation by or on its behalf of 
a system of records to accomplish a VA function. See 5 U.S.C. 552a(m). 
The operation of the SGLI insurance programs is a VA function 
authorized to be performed by the insurer under section 1966. VA has 
promulgated a system of records notice for SGLI files, ``Veterans and 
Uniformed Services Personnel Programs of U.S. Government Life 
Insurance--VA'' (36VA29), published at 75 FR 65405, October 22, 2010.
    We also note that the provisions of 38 U.S.C. 5701, Confidential 
nature of claims, and 38 U.S.C. 7332, Confidentiality of certain 
medical records, are applicable to records held by the insurer. 
Furthermore, the provisions of 38 U.S.C. 5725 apply to the insurer and 
the policy authorized by section 1966. The Federal records held by the 
insurer, depending on content, may meet the definition of ``VA 
sensitive data'' in 38 U.S.C. 5727(23). The requirements of 38 U.S.C. 
5725 regarding a liquidated damages clause apply to the policy 
purchased by VA under 38 U.S.C. 1966.
    The proposed rule would also clarify VA's authority to require the 
insurer to provide original records to the Secretary or a 
representative of the Secretary at the Secretary's direction. The 
records shall be available in either hard copy or readable electronic 
media. At the Secretary's option, copies may be provided in lieu of 
originals where allowed by the Federal Records Act, 44 U.S.C. chapter 
31. Finally, the proposed rule would include an authority citation to 5 
U.S.C. 552, 552a; 38 U.S.C. 1966, 5701, 5725, 5727, 7332; and 44 U.S.C. 
3101, 3301.
    This proposed rule would apply to the insurer as of the effective 
date of the final rule.

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 proposed rule would have no such 
effect on State, local, and tribal governments or on the private 
sector.

Paperwork Reduction Act

    This proposed rule contains no provisions that would constitute a 
collection of information under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3521).

Executive Order 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and 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'' that requires review by the Office of 
Management and Budget (OMB), unless OMB waives such review, 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 the Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined, and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866. VA's impact analysis can be found as a 
supporting document at http://www.regulations.gov, usually within 48 
hours after the rulemaking document is published. Additionally, a copy 
of the rulemaking and its impact analysis are available on VA's Web 
site at http://www1.va.gov/orpm/, by following the link for ``VA 
Regulations Published.''

Regulatory Flexibility Act

    The Secretary of Veterans Affairs hereby certifies that this 
proposed rule would 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. 601-612. This proposed rule would 
directly affect only individuals and the insurer and would not directly 
affect any small entities. Therefore, pursuant to 5 U.S.C. 605(b), this 
regulatory action is exempt from the initial and final regulatory

[[Page 58266]]

flexibility analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number and title for the 
program affected by this document 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. Jose D. 
Riojas, Chief of Staff, approved this document on September 12, 2013, 
for publication.

List of Subjects in 38 CFR Part 9

    Life insurance, Military personnel, Veterans.

    Dated: September 17, 2013.
Robert C. McFetridge,
Director, Regulation Policy and Management, Office of the General 
Counsel, Department of Veterans Affairs.

    For the reasons stated in the preamble, VA proposes to amend 38 CFR 
part 9 as set forth below:

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.

0
2. Add Sec.  9.21 to read as follows:


Sec.  9.21  VA's access to records maintained by the insurer, 
reinsurer(s), and their successors.

    (a) In order to perform oversight responsibilities designed to 
protect the legal and financial rights of the Government and persons 
affected by the activities of the Department of Veterans Affairs and 
its agents and to ensure that the policy and the related program 
benefits and services are managed effectively and efficiently as 
required by law, the Secretary of Veterans Affairs shall have complete 
and unrestricted access to the records of any insurer, reinsurer(s), 
and their successors with respect to the policy and related benefit 
programs or services that are derived from the policy. This access 
includes access to:
    (1) Any records relating to the operation and administration of 
benefit programs derived from the policy, which are considered to be 
Federal records created under the policy;
    (2) Records related to the organization, functions, policies, 
decisions, procedures, and essential transactions, including financial 
information, of the insurer, reinsurer(s), and their successors; and
    (3) Records of individuals insured under the policy or utilizing 
other related program benefits and services or who may be entitled to 
benefits derived through the Servicemembers' and Veterans' Group Life 
Insurance programs, including personally identifiable information 
concerning such individuals and their beneficiaries.
    (b) Complete access to these records shall include the right to 
have the originals of such records sent to the Secretary of Veterans 
Affairs or a representative of the Secretary at the Secretary's 
direction. The records shall be available in either hard copy or 
readable electronic media. At the Secretary's option, copies may be 
provided in lieu of originals where allowed by the Federal Records Act, 
44 U.S.C. chapter 31.

(Authority: 5 U.S.C. 552, 552a; 38 U.S.C. 1966, 5701, 5725, 5727, 
7332; 44 U.S.C. 3101, 3301).


[FR Doc. 2013-22977 Filed 9-20-13; 8:45 am]
BILLING CODE 8320-01-P