WEST PUBLISHING CORPORATION v. STATE OF ILLINOIS (2012)

ORDER

This matter coming to be heard on the motion of Respondent to dismiss. The Court being fully advised in the premises finds that:

Claimant filed this claim as a lapsed appropriation claim in the amount of $84.22. The amount in controversy arises from interest penalties that the State acknowledges it owes under the Illinois Prompt Payment Act. Respondent has filed a departmental report in investigation of this claim that has been prepared by the State's Attorneys Appellate Prosecutor. Pursuant to 74 Ill. Adm. Code 790.140 a Departmental Report is prima facie evidence of the facts set forth therein. The Departmental Report acknowledges that this is a valid claim. However, Respondent argues there are no funds available to pay this claim.

Respondent argues that Section 30 of An Act in Relation to State Finance, 30 ILCS 105/30, prohibits obligating the State to any indebtedness in excess of the money appropriated for a department. For the reasons set forth below we find that claims for interest under the Prompt Payment Act are not governed by Section 30 ILCS 105/30.

The State Prompt Payment Act is set forth in 30 ILCS 540 (30 ILCS 540/1) (from Ch. 127, par. 132.401).

Relevant sections of The Act are as follows:

Sec. 1. This Act applies to any State official or agency authorized to provide for payment from State funds, by virtue of any appropriation of the General Assembly, for goods or services furnished to the State.

Sec. 3-1. The Illinois Court of Claims shall, in its investigation of payments due claimants, provide for interest penalties as prescribed in this Act. (Emphasis Added)

Sec. 3-2. Beginning July 1, 1993, in any instance where a State official or agency is late in payment of a vendor's bill or invoice for goods or services furnished to the State, as defined in Section 1, properly approved in accordance with rules promulgated under Section 3-3, the State official or agency shall pay interest to the vendor in accordance with the following:

(1) Any bill approved for payment under this Section must be paid or the payment issued to the payee within 60 days of receipt of a proper bill or invoice. If payment is not issued to the payee within this 60 day period, an interest penalty of 1.0% of any amount approved and unpaid shall be added for each month or fraction thereof after the end of this 60 day period, until final payment is made.

(2) Where a State official or agency is late in payment of a vendor's bill or invoice properly approved in accordance with this Act, and different late payment terms are not reduced to writing as a contractual agreement, the State official or agency shall automatically pay interest penalties required by this Section amounting to $50 or more to the appropriate vendor. Each agency shall be responsible for determining whether an interest penalty is owed and for paying the interest to the vendor.

The Prompt Payment Act also provides (30 ILCS 540/3-3) (from Ch. 127, par. 132.403-3):

Sec. 3-3. The State Comptroller and the Department of Central Management Services shall jointly promulgate rules and policies to govern the uniform application of this Act. These rules and policies shall include procedures and time frames for approving a bill or invoice from a vendor for goods or services furnished to the State. These rules and policies shall provide for procedures and time frames applicable to payment plans as may be agreed upon between State agencies and vendors. These rules and policies shall be binding on all officials and agencies under this Act's jurisdiction. These rules and policies may be made effective no earlier than July 1, 1993. (Source: P.A. 92-384, eff. 7-1-02.)

Sec. 3-4. The State Comptroller must specify the manner in which State agencies shall record interest penalty payments under this Act. The State Comptroller may require vouchers submitted for payment, including submission by electronic or other means approved by the Comptroller, to indicate the appropriate date from which interest penalties may be calculated as required under this Act.

Those Rules are set forth at 74 Ill. Adm. Code 900 and provide in pertinent part:

900.35 (d) In the event the appropriation originally charged with the Goods or Services is exhausted and the State agency has exhausted its transfer of funds authority pursuant to 30 ILCS 105/13.2, the appropriation has lapsed or the agency has improperly refused to pay interest, Vendors may have recourse before the Court of Claims for payment of interest penalties. (Emphasis Added)

The exceptions to these rules are found in Section 900.120 Exclusions. It is a non-exhaustive list of 16 types of payments that are excluded from the Act and consequently do not qualify for interest penalties. Those exceptions are not evident here.

After a review of the legislation and from the Rules promulgated by a grant of the Legislature, it is clear that vendors may seek recourse in the Court of Claims for interest payments due vendors where an appropriation is exhausted or lapsed. This Court previously held in McLean County vs. State, 42 Ill.Ct.Cl. 92 (1994) that it is beyond the authority of this Court to make awards that exceed the Legislature's appropriation. But here, the Legislature gave a specific grant to the Comptroller to promulgate rules regarding payment of interest claims. Thus we find that the Legislature granted specific authority to pay these interest claims where warranted and that such claims are distinguishable from those lapsed appropriation claims that are rightfully denied where the Department lacks sufficient funds. In the instant case the Departmental Report acknowledges that these monies are owed. Therefore, we deny the Motion to Dismiss and grant the Claimant an award in the amount of $84.22.

BIRNBAUM, J.