State welfare agency sues IBM for up to $1.3 billion



Clock says its time to get a lawyer.
  • Image by Paul Vlaar, via Wikimedia Commons
  • Clock says its time to get a lawyer.

Indiana's Family and Social Services Administration (FSSA) today announced it has filed suit against IBM "for breach of contract and unjust enrichment associated with the company's contract to fix the state of Indiana's broken welfare system."

As written about in this week's issue of NUVO, new information only recently revealed that IBM has continued to bill the state to the tune of $125 dollars since the state's ill-conceived, $1.16 billion dollar contract with IBM to privatize state welfare services was scuttled back in October.

According to reporting by Journal Gazette, in Fort Wayne, the bill from IBM includes "$43 million for an annual 'deferred fee,' $40 million in payments to subcontractors, $8.1 million for computer hardware and $1.2 million for furniture." That information only came to light after JG reporter, Angela Mapes Turner, filed a public information request.

Honestly, I had expected the suit to seek limited reimbursement, or to seek release from the new, $125 million in charges. However, a spokesman for the FSSA told me the state is seeking damages for "everything that we paid IBM."

That includes:

  • — $437 million in payments to IBM
  • — plus attorney fees
  • — plus recompense for overtime paid to employees who had to work extra because the system was failing
  • — plus compensation for any fines, penalties or lawsuits that were shouldered by the state because of IBM's incompetency.

In total, the state intends to sue for triple damages, as it is entitled by law, which the Associated Press reports amounts to $1.3 billion. It's very ambitious to say the least. But without question the right thing to do.

Kudos to the Daniels administration for putting principles first by going all the way on this one. And Kudos to the Journal Gazette for breaking the story.

Papers were filed today in Marion County court, but the spokesman did not yet know when it was expected to go to trial.


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