« Ind. Decisions - Court of Appeals issues 5 today (and 8 NFP) | Main | Ind. Gov't. - "LaPorte County jail now offers video visitation" - some complaints »

Wednesday, November 20, 2013

Ind. Decisions - "IBM, state in court Monday"

As noted in this Monday's ILB "Upcoming Oral Arguments," State v. IBM will be heard by the Court of Appeals next Monday, Nov. 25th. Today Tim Evans reports in the Indianapolis Star:

The Indiana Court of Appeals will hear oral arguments Monday in the legal battle over a $52 million judgment the state has been ordered to pay IBM over the failed attempt to privatize public welfare services under former Gov. Mitch Daniels.

The hearing is scheduled for 1:30 p.m. in the Indiana Supreme Court courtroom, with judges John G. Baker, Ezra H. Friedlander and Nancy H. Vaidik hearing the case. Both sides will get 45 minutes to argue their cases.

The state is appealing a Marion Superior Court judge's 2012 ruling awarding $52 million to IBM after the state canceled a contract Daniels had hailed in 2006 as the solution for fixing one of the nation's worst welfare systems.

Instead, the project ended with the state firing IBM in 2009 after hundreds of millions of dollars were spent for a system that generated widespread complaints of delayed benefits and impersonal interactions.

The dispute ended up in court, with the state trying to recoup more than $150 million of the $437 million it had paid IBM before scrapping the deal and IBM asking for $113 million for breach of contract.

Marion Superior Court Judge David Dreyer ruled in July 2012 that IBM should get $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.

In his ruling, Dreyer called taxpayers the losers in a "misguided" privatization experiment. 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.

"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."

At the time the trial concluded, the state had paid Barnes & Thornburg, the Indianapolis law firm that handled the lawsuit, $9.6 million.

The story includes a timeline of the case.

Posted by Marcia Oddi on November 20, 2013 01:34 PM
Posted to Upcoming Oral Arguments