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.
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 could be whether the state collects more than $175 million in
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.
state owes IBM nearly $50 million in agreed-upon fees, the judges said.
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.
John Maley, one
of the attorneys who represented the state in the lawsuit, said the ruing
confirmed the state's contention that IBM breached its contract.
Indiana can go back to court and try again to collect more than $175
million in damages from IBM. The local court had ruled that IBM did not
violate the terms of its deal with the state, taking those damages off the
"It now sends
case back to where it started, with the state seeking damages," Maley
A spokesman for
IBM didn't immediately return messages from The Associated Press Thursday