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Analysis

IBM to Pay $14.8M to Settle False Claims Allegations

By John Commins  
   June 17, 2019

Big Blue and subsidiary Cúram Software allegedly made promises about their IT platform capabilities that they couldn't back up.

IBM Corp. and subsidiary Cúram Software Ltd. will pay $14.8 million to settle allegations that the vendors made "misleading statements" about the abilities of an IT platform they sold the Maryland Health Benefit Exchange, the Department of Justice said.

IBM bought Cúram Software on Dec. 19, 2011. On that same day, Cúram submitted its Cúram for Health Care Reform software proposal to Maryland to support its HIX.

On Jan. 5, 2012, with IBM’s knowledge, Cúram pitched its product to Maryland officials, promising that its platform could provide a plethora of services, including interoperability with other software, eligibility determinations for health assistance coverage, calculating applicable tax credits, and changes in life events.

Maryland awarded the contract to Cúram a month later, paying for the services with grants from the Department of Health and Human Services, DOJ said.

Allegedly, the software did not work as advertised.

From 2011 through mid-2014, DOJ said the vendors misrepresented the ability of the snafu-plagued software to meet the state's technical and interoperability requirements.

"After repeated problems following the launch of the HIX website in October 2013, Maryland, acting through MHBE, terminated the contract and replaced the HIX website and IT platform, including the Cúram software," DOJ said.

"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 DOJ's Civil Division, said in a media release.

The settlement is the latest setback for IBM's venture into the healthcare space. The company's Watson Health has been plagued by problems and overpromises that have come back to haunt the subsidiary since its inception.

When IBM bought Curam in 2011, the computer giant said the acquisition "expands IBM's ability to help cities and governments serve citizens better by adopting more intelligent and efficient ways to assess needs, execute social programs, and maximize program results."

“Making misleading statements to win contract awards violates fundamental tenets of government contracting and harms the government and taxpayers. ”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: Laborant / Shutterstock


KEY TAKEAWAYS

IBM-Cúram pitched its software to Maryland officials, promising that its platform could provide a plethora of services.

Maryland awarded the contract IBM-Cúram, but pulled the plug on the software two years later because it didn't perform as advertised.


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