Thursday, July 19, 2012
Ind. Decisions - "Judge rules Indiana owes IBM $12M over botched welfare program"
In Dreyer’s ruling, IBM gets $12 million, mostly for equipment the state kept after canceling the contract, on top of the $40 million that he had ordered the state to pay IBM earlier. The state also will have to pay 8 percent interest on that money for the period leading up to the judgment.
That is far short of the $113 million IBM wanted.
The state, which had been trying to recoup more than $150 million of the $437 million it had paid IBM before scrapping the deal, got nothing. Dreyer found that IBM did not breach its contract and that IBM had, in fact, laid the groundwork for the current success.
And he cited trial evidence that showed the state, even while publicly praising IBM, was trying to cancel the contract because it would cost additional money the state didn’t have to adjust what had been a flawed plan.
So far, the state has paid Barnes & Thornburg, the Indianapolis law firm who handled the lawsuit, $9.6 million. Attorney Peter Rusthoven said that represents two years of work leading up to a five-week trial. The cost of an appeal, he said, would probably not exceed $250,000. * * *
It wasn’t Dreyer’s job to judge the merits of privatization in general. But he was critical of Indiana’s experience with welfare.
“Neither party deserves to win this case,” he wrote in his 65-page ruling. “This story represents a ‘perfect storm’ of misguided government policy and overzealous corporate ambition. Overall, both parties are to blame, and Indiana’s taxpayers are left as apparent losers.”