IBM settles FCA allegations for $14.8 million

Last week, IBM and Curam Software have agreed to pay $14.8 million to settle alleged False Claims Act (“FCA”) violations. The settlement was reached after IBM was accused of material misrepresentations to the State of Maryland arising from a contract between Maryland Health Benefit Exchange and Maryland’s Health Insurance Exchange website and IT platform. The Department of Justice said “making misleading statements to win contract awards violates fundamental tenets of government contracting and harms the government and taxpayers.” 

Under the FCA, any person who knowingly submits false claims to the government is liable for three times the government’s damages plus a penalty for each false claim. Companies are expected to be candid about their products and abilities during contract negotiations and misrepresenting these products in order to win over government contracts can be a stark violation of the FCA. 

On December 19, 2011, IBM acquired Curam Software Ltd and a proposal was submitted to the State of Maryland to support the Health Insurance Exchange website and IT platform. Curam was listed as a subcontractor for the services and software. On January 5, 2012, with IBM’s knowledge, Curam participated in a presentation to the State of Maryland where it illustrated Curam conducting software eligibility determinations for health assistance coverage. This included calculating applicable tax credits, addressing income levels, and a demonstration of Curam’s software with another subcontractor’s health plan software. On February 22, 2012, the State, acting through the Maryland Health Benefit Exchange, awarded the contract for development of Maryland’s Health Insurance Exchange website and IT platform. IBM-Curam served as subcontractor on the project where federal grants from the U.S. Department of Health and Human Services partially funded the contract. 

The settlement stated that from January 1, 2011 through May 31, 2014, IBM-Curam was alleged to have materially misrepresented the contract procurement process to the State of Maryland. These misrepresentations included the development status of Curam for the Health Care Reform Software; the current functionality of the Curam software to meet the State’s technical requirements, including income levels and calculation of tax credits; and the integration of Curam software with other software needed to provide a properly functioning Health Insurance Exchange website. The website had repeated problems, which promoted Maryland to terminate the contract.

If you have personal knowledge that your employer has committed fraud against the government, consider speaking with an experienced FCA attorney today to see if you have a viable whistleblower claim. Josh Borsellino represents whistleblowers bringing claims under the False Claims Act and other federal and state statutes.  He offers free consultations and works on a contingency fee basis meaning that he does not get paid unless you get paid. Call him today – 817.908.9861 or 432.242.7118. 

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