INDIANAPOLIS (AP) -
IBM Corp. must post a $25 million bond as it appeals a $78 million judgment
in a long-running case that stems from the company’s failed effort to
automate much of Indiana’s welfare services, a judge has ruled.
Court Judge Heather Welch issued the order Tuesday while granting IBM’s
request to halt enforcement of the full monetary judgment as its appeal is
pending. The company has two weeks to post the $25 million, which is
Indiana’s maximum for an appeals bond.
York-based IBM has appealed Welch’s finding in August that the technology
and consulting giant owes Indiana $78 million in damages from its botched
attempt to privatize and automate the processing of Indiana’s welfare
The judge said in
Tuesday’s order that IBM had argued that its “financial strength proves that
it will have the means to pay” about $90 million - the amount the award is
expected to grow to, with interest, over the two years its appeal will
likely take before Indiana’s Court of Appeals.
She noted in
approving the $25 million bond that Indiana’s attorneys had sought “more
certainty” that IBM would be able pay up if its appeal fails. But Welch
wrote that Indiana’s concerns about IBM’s long-term viability, and its
ability to pay the full amount, seem “highly unlikely except under extreme
circumstances” given the company’s annual revenues in the billions of
“To no longer be
viable, IBM would have to suffer a disaster or Enron-level scandal to no
longer be a viable company in the approximately two-year appeal process,”
John Maley, a
private attorney representing Indiana, praised the judge’s “prompt ruling”
coming a month after she heard arguments in the matter. “We’re pleased that
IBM, like all others, is required to post this bond,” he said Wednesday.
IBM spokesman Clint
Roswell said the company is happy with the ruling, and planned to release a
statement later Wednesday.
Indiana and IBM
sued each other in 2010 after then-Gov. Mitch Daniels cancelled the
company’s $1.3 billion contract under which an IBM-led team of vendors
worked to process applications for food stamps, Medicaid and other benefits.
Indiana pulled that
contract in late 2009, less than three years into the 10-year deal,
following complaints about long wait times, lost documents and improper
The Indiana Supreme
Court ruled in 2016 that IBM breached its contract and directed the trial
court to calculate the damages. The justices affirmed an award of nearly $50
million to IBM in state fees, but allowed Indiana to seek more than $172
million in damages from IBM.