Judge: Indiana can't collect on IBM welfare lawsuit

INDIANAPOLIS (AP) — Indiana cannot collect millions of dollars it claims IBM owed after its efforts to overhaul the state's welfare system failed but the computer giant is entitled to payment for equipment the state kept, a judge ruled Wednesday.

Marion County Judge David Dreyer said in his 75-page order that neither side deserved to win the dispute.

"Overall, both parties are to blame and Indiana's taxpayers are left as apparent losers," Dreyer wrote, blaming "misguided government policy and overzealous corporate ambition."

Dreyer wrote that Indiana set out to fix a welfare system Gov. Mitch Daniels has called the worst in the nation by "inserting an untested theoretical experiment, and substitute personal caseworkers with computers and phone calls.

"This is now admitted to be an error, and there is nothing in this case, or the court's power, that can be done to correct it, or remedy the lost taxpayer money or personal suffering of needy Hoosiers," he wrote.

He said Indiana failed to prove that IBM breached its contract and denied the state the $437 million it sought.

Dreyer also found that most of IBM's claims for damages were "unreasonable" but awarded the $12 million for equipment the state kept. IBM previously had previously received $40 million in a summary judgment ahead of the trial.

IBM said in a statement that the court ruling validated its arguments and showed the state was not above the law.

Peter Rusthoven, a private Indianapolis attorney who represented the state in the case, said his firm believed the ruling contained "regrettable, unnecessary political commentary that is neither accurate nor relevant."

Dreyer presided over a trial earlier this year of dueling lawsuits concerning the state's cancellation of IBM's nearly $1.4 billion contract with the Family and Social Services Administration.

Daniels killed the contract to automate the state's welfare system in 2009, less than three years into its scheduled 10-year span amid wide-ranging performance complaints from clients, their advocates and federal officials.

Indiana sued IBM for the money it paid the company, and IBM countersued for about $100 million that it claimed it was owed.

Tags: business, courts