Misrepresentations by IBM and Cúram Software during the contracting process for Maryland’s Health Insurance Exchange website will yield the state a $14.8 million settlement.
The payment resolves a False Claim Act case brought by the state of Maryland after a botched launch of the website and IT platform in 2013.
The resolution was announced by the Justice Department last week.
“When companies misrepresent their products and capabilities in order to win government contracts, they enrich themselves at taxpayers’ expense,” said Robert K. Hur, U.S. Attorney for the District of Maryland. “Today’s resolution demonstrates our continuing commitment to hold companies accountable for their actions.”
Cúram, which was acquired by IBM on the same day a proposal was submitted to the state, served as a subcontractor to Noridian Healthcare Solutions on the five-year $193 million health benefit exchange project.
Federal grants from the U.S. Department of Health and Human Services partially funded the contract.
According to the state’s claims, between January 2011 and May 2014, Cúram-IBM made material misrepresentations during the health exchange contract procurement process, including misrepresentations regarding the development status of Cúram software; the functionality of the Cúram software to meet the state’s technical requirements, such as calculating tax credits under the Patient Protection and Affordable Care Act; and the integration of Cúram software with other software needed to for the health exchange website.
After repeated problems following the launch of the health exchange website in October 2013, Maryland terminated the contract, and replaced the website and IT platform. To that point, the state had paid Cúram $73 million; the cost to launch a new program was about $41 million, according to Government Technology.
The state settled with Noridian in July 2015 for $45 million.
The investigation and settlement of the case came after a coordinated effort by the Justice Department Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Maryland, the Department of Health and Human Services Office of Inspector General, and the Office of the Attorney General of Maryland.
“Making misleading statements to win contract awards violates fundamental tenets of government contracting and harms the government and taxpayers,” Assistant Attorney General Jody Hunt for the Justice Department’s Civil Division, said in a statement. “The Department is committed to protecting the American taxpayer from false claims and preserving the integrity of federal funding decisions.”