IBM and Cúram to Pay Maryland $15M for Health System Debacle

Beset with problems attributed to various contractors, Maryland’s health insurance exchange website launched a saga of investigation and litigation that cost the state tens of millions for the better part of a decade.

by / June 18, 2019

A dispute over the botched rollout of Maryland’s health insurance website ended in a settlement last week, with International Business Machines Corp. (IBM) and its subsidiary, Cúram Software, agreeing to pay the state $14.8 million.

The U.S. Department of Justice announced the settlement in a news release Friday, describing alleged violations of the False Claims Act by Cúram-IBM, a subcontractor on the state’s health exchange platform, between January 2011 and May 2014. These include alleged misrepresentations of the development status of the Cúram for Health Care Reform software; the immediate ability of Cúram’s software to address life events, calculate tax credits under the Affordable Care Act and meet other technical requirements from the state; and the ability of Cúram’s software to integrate with other necessary components of the insurance-exchange website.

Cúram is not the first party to pay a steep price for the many problems with Maryland’s health insurance platform, which resulted in firings, leadership changes, terminated contracts and a federal investigation.

Cúram’s official involvement began Dec. 19, 2011, when Maryland received a proposal for software and services to build the website from Noridian Healthcare Solutions, with Cúram as one of the subcontractors. IBM acquired Cúram the same day.

According to the news release, Cúram gave the state of Maryland a demonstration in January 2012 to prove its software could perform basic necessary tasks for the project, including determining a patient’s eligibility, calculating applicable tax credits, accounting for relevant life events and integrating with another subcontractor’s health-plan shopping software. The following month, Maryland awarded Noridian and Cúram a five-year, $193 million contract to build the website.

As reported in the Baltimore Business Journal, the website crashed the day it launched in October 2013, then had technical problems that forced people to use paper applications. Noridian fired a key subcontractor, EngagePoint, and the two sued each other in federal court.

Further reporting by McClatchy News Service said Maryland officials blamed Cúram’s software for lost applications, as well as inaccurate calculations for about 4,000 applicants. IBM responded by saying Maryland officials didn’t give Noridian enough direction in the development and testing process.

After terminating its contract with Cúram and Noridian in February 2014, having paid $73 million for their services up to that point, the state of Maryland scrapped their website and installed the technology Connecticut used to meet the second open enrollment period later that year. According to The Baltimore Sun, this went smoothly but cost the state about $41 million.

Noridian settled with the state of Maryland for $45 million in July 2015.

The state’s settlement with Cúram and IBM last week wrapped up the involvement of the U.S. Attorney’s Office for the District of Maryland, the Department of Health and Human Services Office of Inspector General, the Office of the Attorney General of Maryland and the DOJ Civil Division’s Commercial Litigation Branch.

“When companies misrepresent their products and capabilities in order to win government contracts, they enrich themselves at taxpayers’ expense,” said U.S. Attorney Robert Hur in the statement last Friday. “Today’s resolution demonstrates our continuing commitment to hold companies accountable for their actions.”

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