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Court: Ind. Owes IBM Nearly $50M In Welfare Fight

Thu, 02/13/2014 - 2:03pm

INDIANAPOLIS (AP) -- IBM Corp. failed to deliver its part of a deal to privatize Indiana's welfare system, but the company is still entitled to nearly $50 million in fees that the state agreed to pay, the Indiana Court of Appeals found Thursday.

The decision sends the four-year-old dispute between IBM and the Indiana Family and Social Services Administration back to the trial judge to work out the details.

The state and the Armonk, N.Y.-based company sued each other in 2010 after then-Gov. Mitch Daniels canceled the $1.3 billion contract that set up call centers for clients and largely automated parts of the state welfare system, leading to a hail of complaints.

"In the most basic aspect of this contract — providing timely services to the poor — IBM failed," the court said in the 2-1 opinion.

Regardless, the state owes IBM nearly $50 million in agreed-upon fees, the judges said.

However, Chief Judge Nancy H. Vaidik and Judge John G. Baker said IBM was not entitled to nearly $13 million that the trial judge awarded the corporation because the state terminated the contract early. The appellate court also sent the case back to the local court to iron out other details.

An attorney who represented the state and a spokesman for IBM didn't immediately return messages from The Associated Press Thursday seeking comment.

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