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Appeals Court Overturns IBM v. Indiana Case

The Indiana Court of Appeals Thursday ruled that tech giant IBM did breach its welfare management contract with Indiana.

IBM Building

Photo: Ronald Woan (Flickr)

IBM was contracted with the state to manage its welfare system.

The Indiana Court of Appeals today ruled that tech giant IBM did breach its welfare management contract with Indiana, and that the state is entitled to damages.

That’s a reversal from an earlier court ruling.

Indiana signed a 10-year contract worth more than $1 billion with IBM in 2006 for the firm to modernize and manage the state’s welfare system. That included a shift away from human case workers to a system more reliant on automation.

But three years in, Governor Mitch Daniels canceled the contract, saying the system was plagued with problems.

The state and IBM have since sued each other, seeking lost costs and damages.

A trial court previously ruled that IBM did not breach its contract and awarded the firm more than $60 million.

But in a two-to-one ruling, the Court of Appeals ruled against IBM, finding the company’s performance “consistently missed the mark.”

The Appeals Court’s ruling still awards about $50 million to IBM but also orders the trial court to determine how much should be awarded to the state.

Appeals Court Ruling in Indiana v. IBM

Brandon Smith

Brandon Smith has previously worked as a reporter and anchor for KBIA Radio in Columbia, MO, and at WSPY Radio in Plano, IL as a show host, reporter, producer and anchor. Brandon graduated from the University of Missouri-Columbia with a Bachelor of Journalism in 2010, with minors in political science and history. He was born and raised in Chicago.

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