Judge: IBM owes Indiana $78 million for failed automation

INDIANAPOLIS (AP) — IBM Corp. owes Indiana $78 million in damages stemming from the company's failed effort to automate much of the state's welfare services, a judge has ruled in a long-running dispute.

Marion Superior Court Judge Heather Welch issued the ruling dated Friday, nearly six months after she heard arguments from attorneys for the state and IBM. The Indiana Supreme Court ruled last year that IBM had breached its contract and it directed the trial court to calculate the damages.

Indiana and New York-based IBM sued each other in 2010 after then-Gov. Mitch Daniels cancelled the company's $1.3 billion contract to privatize and automate the processing of Indiana's welfare applications.

Under the deal, an IBM-led team of vendors worked to process applications for food stamps, Medicaid and other benefits. Residents could apply for the benefits through call centers, the internet and fax machines. The contact was pulled in late 2009, less than three years into the 10-year deal, following complaints about long wait times, lost documents and improper rejections.

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