Judge: IBM Owes Indiana $78m For Failed Welfare Automation

Judge: IBM Owes Indiana $78m For Failed Welfare Automation

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IBM owes Indiana $78 million in damages stemming from the company’s failed effort to automate much of the state’s welfare services, a judge has ruled in a long-running dispute.

Marion Superior Court Judge Heather Welch issued the ruling dated Friday (04), nearly six months after she heard arguments from attorneys for the state and IBM Corp. The Indiana Supreme Court ruled last year that IBM had breached its contract and it directed the trial court to calculate the damages.

New York-based IBM said Monday it will appeal the decision.

Indiana and IBM sued each other in 2010 after then-Gov. Mitch Daniels, a Republican, cancelled the $1.3 billion contract that his administration reached with the company to privatize and automate the processing of Indiana’s welfare applications.

Under the deal, an IBM-led team of vendors worked to process applications for food stamps, Medicaid and other benefits. Residents could apply for the benefits through call centers, the internet and fax machines. The contract was pulled in late 2009, less than three years into the 10-year deal, following complaints about long wait times, lost documents and improper rejections.