1/1/2016The state of Indiana hired the IBM computer company to design, construct, and implement a welfare intake system. Medicaid, food stamps, and various other programs of public assistance were to be streamlined in Indiana by the computer giant that brought us Deep Blue and Watson.
Now, both sides are suing each other for a breach of contract after Indiana terminated the contract by firing IBM in 2009.
The State of Indiana is suing IBM for the $437 million it has paid the company over the past several years to roll out the welfare computing system. The state claims that IBM was in a breach of contract because the computer program, which was intended to ease the welfare system, was actually less efficient, costing the state time and money. There were reports of long wait times at call centers, poorly handled benefit transactions, and lost paperwork by the company.
IBM, in opening arguments, stated that the state fired the company simply because they could not afford the price of the contract and didn’t want to continue paying the computer company, or pay the termination fees. IBM is suing for the money not yet paid—about $100 million, according to their lawsuit—that was part of the 10-year contract. IBM has invested time, resources, and technology into reforming the systems in Indiana.
Both former parties of the contract are in for a long bout of litigation. There is quite a bit of money involved. State courts will have to make some big decisions that could greatly affect the computer company and the taxpayers of Indiana.
Questions regarding this breach of contract lawsuit or New York contract questions in general can be directed to the Law Offices of Jonathan M. Cooper. The New York business litigation attorney offers free consultations to discuss contracts and what they can mean to you. You can order his book, 3 Reasons That Your Employment Agreement May Not Be Worth The Paper It's Printed On, for free online.