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Wednesday, January 25, 2012

Ind. Decisions - "Court agrees with state’s position in key issues in IBM case"

That is the heading of this press release issued this evening by Neal Moore of the Ind. Family & Social Services Administration:

(INDIANAPOLIS Jan. 25, 2012) - The Marion Superior Court made summary judgment rulings today on a number of issues in the State's lawsuit against IBM based on IBM's failure to live up to its promises under the contract to modernize Indiana's welfare benefits system. In the most important decisions, the court made these rulings:
  • Rejected IBM's claim that it is entitled to over $43 million in "deferred fees" even if the state had cause to terminate the contract because of IBM's poor performance. The Court agreed with the state that if IBM's poor performance justified terminating the contract, then IBM is not entitled to any "deferred fees" under the contract.

  • Rejected IBM's argument that its poor performance was excused because Indiana experienced an economic downturn and flooding after the contract was signed. The Court said these reasons were simply not valid under the contract, and that evidence about flooding or economic downturn was legally irrelevant.

  • Rejected IBM's argument that it was entitled to return of computers and other equipment used during the contract, which IBM has claimed are worth some $9.3 million.

  • The state may be able recover up to $125 million in damages, based on the contract provisions, and that subcontractor assignment fees may be owed to IBM pending determination of whether IBM was terminated for cause and determination of the State's damages at trial.
The rulings mean that a number of claims IBM has made since the beginning of the lawsuit have been eliminated from the case. “This clears the way for the state to pursue recovery at trial for the damages caused by IBM's substandard performance,” said Peter Rusthoven, an attorney representing the state.
The ILB has not seen a copy of the ruling itself.

This is the latest in a long list of ILB entries on the suit between the State of Indiana and IBM relating to the FSSA welfare outsourcing contract. Earlier today, the ILB posted the Supreme Court's announcement that it had scheduled oral argument on the interlocutory appeal relating to Gov. Daniels' testimony.

Posted by Marcia Oddi on January 25, 2012 09:31 PM
Posted to Ind. Trial Ct. Decisions