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State will appeal IBM ruling

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The state is going to appeal Wednesday’s decision in Marion Superior Court that it pay IBM $52 million for ending early its billion-dollar contract with the company to update the state’s welfare system.

Marion Superior Judge David Dreyer ordered the state pay IBM $12 million in early termination closeout payments and for equipment it retained after canceling the contract in October 2009. The judge ruled in January that the state owed IBM $40 million in subcontractor assignment fees for terminating the contract.

IBM and the state filed lawsuits against the other over the cancellation of the 10-year contract the state entered into with IBM to update Indiana’s welfare system. The $1.3 billion contract was signed in December 2006, but the state terminated it in October 2009, dissatisfied with IBM’s results.

The state sought more than $437 million from IBM, but Dreyer ruled earlier this year the most the state could recover is $125 million in damages. IBM wanted the state to pay it $100 million for terminating the contract early.

“The largely undisputed evidence shows that the Governor, the Family and Social Services Administration and various State of Indiana officials set out to fix Indiana’s poorly-performing welfare system by inserting an untested theoretical experiment, and substitute personal caseworkers with computers and phone calls,” the order says. “This is now admitted to be an error, and there is nothing in this case, or the Court’s power, that can be done to correct it, or remedy the lost taxpayer money or personal suffering of needy Hoosiers. All that can be done in this case is to take the first step at setting the final numbers among so many millions already spent.”

In a statement released by the governor’s office, the state focused on the improvements to Indiana’s welfare system performed by another vendor, which Gov. Mitch Daniels described as being the state’s most timely, accurate, cost-effective and fraud-free system ever.

Adam Horst, director of the Office of Management and Budget, said even if the ruling stands, it will not impact the state surplus. The state sets aside money for lawsuits.

The state’s attorneys, John Maley and Peter Rusthoven of Barnes & Thornburg LLP, released a statement saying, “Fortunately, the court’s ruling, while mistaken on some issues, has now rejected the great majority of IBM’s claims for additional money. This was another step in the right direction; and we are confident Indiana’s appellate courts will now set aside most if not all of the IBM claims that still remain.”

Wednesday’s ruling awards IBM $52,081,416, plus prejudgment interest and costs. The company is not entitled to damages for deferred fees or mandatory changes. The state got nothing out of its complaint.

 

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  1. Thank you, John Smith, for pointing out a needed correction. The article has been revised.

  2. The "National institute for Justice" is an agency for the Dept of Justice. That is not the law firm you are talking about in this article. The "institute for justice" is a public interest law firm. http://ij.org/ thanks for interesting article however

  3. I would like to try to find a lawyer as soon possible I've had my money stolen off of my bank card driver pressed charges and I try to get the information they need it and a Social Security board is just give me a hold up a run around for no reason and now it think it might be too late cuz its been over a year I believe and I can't get the right information they need because they keep giving me the runaroundwhat should I do about that

  4. It is wonderful that Indiana DOC is making some truly admirable and positive changes. People with serious mental illness, intellectual disability or developmental disability will benefit from these changes. It will be much better if people can get some help and resources that promote their health and growth than if they suffer alone. If people experience positive growth or healing of their health issues, they may be less likely to do the things that caused them to come to prison in the first place. This will be of benefit for everyone. I am also so happy that Indiana DOC added correctional personnel and mental health staffing. These are tough issues to work with. There should be adequate staffing in prisons so correctional officers and other staff are able to do the kind of work they really want to do-helping people grow and change-rather than just trying to manage chaos. Correctional officers and other staff deserve this. It would be great to see increased mental health services and services for people with intellectual or developmental disabilities in the community so that fewer people will have to receive help and support in prisons. Community services would like be less expensive, inherently less demeaning and just a whole lot better for everyone.

  5. Can I get this form on line,if not where can I obtain one. I am eligible.

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