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IBM Will Pay $14.8M To Settle Allegations Over Maryland Health Exchange

The settlement stems from IBM's 2011 acquisition of Curam Software, after which the combined company allegedly misrepresented Curam's software's ability to provide the necessary services and integrate with another sub-contractor.

IBM and its subsidiary Curam Software have agreed to pay $14.8 million to settle charges that they allegedly violated the federal False Claims Act in relation to a contract Curam signed with the Maryland Health Benefit Exchange, that state’s health insurance marketplace.

The U.S. Department of Justice on Friday reported the agreement, which stems from DOJ allegations that Curam Software made material misrepresentations when the state of Maryland was looking to award a contract for the development of Maryland's Health Insurance Exchange (HIX) website and IT platform.

IBM on Dec. 20, 2011 unveiled the closing of its acquisition of Curam Software, an Ireland-based developer of software used by worldwide health and human services, workforce services, and social security organizations, with a focus on helping governments and providers looking to reduce program costs while ensuring they provide needed services.

[Related: IDC: Increased Services, Pullback From Public Clouds Huge IT Disrupters]

According to the DOJ, the acquisition closed on Dec. 19, 2011, the same day Curam Software submitted a proposal to the state of Maryland to support its HIX. The proposal included Curam as a sub-contractor for software and services.

The following month, Curam, with IBM's knowledge, made a presentation to the state of Maryland to show how its software could help with health assistance coverage, calculating applicable text credits, address life event changes, and integrate with another sub-contractor's health plan shopping software.

The contract, awarded in February of 2012, included Curam-IBM as a sub-contractor, the DOJ said. However, the DOJ alleged, Curam through May 31, 2014 made material misrepresentations to the state regarding the development status of its software, the ability of its software to meet Maryland's technical requirements, and the integration of its software needed for a properly functioning HIX website. The contract was terminated following the launch of the HIX website in October of 2013.

CBS Baltimore reported that the U.S. attorney's office said IBM in the settlement did not admit liability, and that the State of Maryland will receive $2.8 million for its share of the settlement.

Officials of IBM and the DOJ did not reply to requests for further information by press time.

However, in a prepared statement, Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division said her department is committed to protection American taxpayers from false claims.

"Making misleading statements to win contract awards violates fundamental tenets of government contracting and harms the government and taxpayers, Hunt said in her statement.

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