Surprise! A “Board” Will Decide Your Court Case

Understanding the Board of Claims 

If you think you can sue the Commonwealth of Pennsylvania — or one of its agencies or universities — in court, for breach of contract, think again.

It doesn’t matter if you’re a building contractor, constructing a new building for a state university. Or you’re a hot dog vendor, selling hot dogs to the PA Department of Revenue, to feed it accountants working late during tax season. Same result. 

 

An Example

So let’s say the PA Department of Revenue likes to eat a lot of your hot dogs, and owes you, the vendor, $60,000, but they refuse to pay!  You sue them in court (of course). Only, the PA Attorney General’s office — which defends civil actions against PA entities — files objections to the lawsuit.  A judge sustains the objections and dismisses your case.  The reason?  The courts have no jurisdiction because the “board of claims” has exclusive jurisdiction.  

Wait. What?  

If you’re a lawyer reading this, confused, that’s OK. You’re not alone. In fact, law schools in PA fail to teach about the “board of claims,” because it’s not on the bar exam. But it exists in a big way.  It can make short work of your case for six, seven, or eight figures against the Commonwealth.  It has its own set of rules — and its own very short, six (6) month statute of limitations.  

What is the Board of Claims? 

“The Board of Claims was created by the Legislature in 1937 to decide claims arising from contracts with the Commonwealth,” according to the Commonwealth’s manual.  The Board is not a “court.”  There’s no elected “judge.” But its decisions are binding. It determines how much money the Commonwealth must pay on any given contract.  So who, then, sits on the board, which decides how deeply into the Commonwealth’s pocket a claim can go, for a broken promise to pay?    

According to 62 Pa. C.S. §1721, the board is an “independent” administrative tribunal consisting of three members.  However, “independent” is a stretch. “(b) Composition.–The board shall consist of three members appointed by the Governor by and with the advice and consent of a majority of the elected members of the Senate.”

So in other words, the same people responsible for the Commonwealth’s budget (to pay claims) get to decide who sits on the Board.  But each board member sits for an eight (8) year term, which is longer than the Senate and governor’s terms. Doesn’t that ensure independence?  Not really.

 62 Pa. C.S. § 1721(c) also provides:  “A member of the board may be removed by the Governor for inefficiency, neglect of duty or malfeasance in office. In other words, the Governor (responsible for state spending on his/her watch) decides whether a board member is “efficient.” And, if a board member believes in “justice” (above efficiency) — and justice means, fair compensation for those owed money by the state — then what? 

 

First Rule of Litigation: “Know Thy Judge” 

Being on the Board is a full-time job, spanning an 8 year term. After that, if you want to remain employed, you need to once again please the governor and senate.  Plus, “a [Board] member shall hold no other public position to which a salary is attached.”  Thus, while in power, each Board member must remain keenly aware of the Commonwealth’s interest and financial ability to pay salaries of Commonwealth employees, including the board, itself. And yet, the Board’s power remains far reaching. According to 62 Pa. C.S. § 1724: 

(a) Exclusive jurisdiction.–The board shall have exclusive jurisdiction to arbitrate claims arising from all of the following:

(1) A contract entered into by a Commonwealth agency . . . 

 

How Does the Board “Arbitrate” Claims? 

Regarding your hearing before the Board, the Pennsylvania Rules of Evidence and Procedure apply, supposedly, but you have to get to the hearing first. The procedural hurdles are significant. 

Importantly, you must bring your action before the Board within six (6) months of when your claim accrues.  In other words, when suing the Commonwealth for “breach of contract,” say good-bye to the typical four (4) statute of limitations in PA for breach of contract.  Otherwise, you are “deemed to have waived” your rights.

What about the Content of the Claim?  62 Pa. C.S. § 1712 provides: 

(c)  Contents of claim.–A claim shall state all grounds upon which the contractor asserts a controversy exists.

(d)  Determination.–The contracting officer shall review a claim and issue a final determination in writing regarding the claim within 120 days of the receipt of the claim unless extended by consent of the contracting officer and the contractor. If the contracting officer fails to issue a final determination within the 120 days unless extended by consent of the parties, the claim shall be deemed denied. The determination of the contracting officer shall be the final order of the purchasing agency.

Sound complicated? It is. This is unlike any other kind of “arbitration.” Your legal representative should have at least some experience walking through the “Board of Claim minefield,” or, surprise! (not in a good way).   

 

Let’s Get Started!