IBM Corp. and a company it acquired in 2011 have agreed to pay $14.8 million to settle allegations the companies violated the False Claims Act, the Justice Department announced Friday.
IBM-acquired Cúram Software allegedly misrepresented product capabilities during a contract award process with the Maryland Health Benefit Exchange in 2011 and 2012. The exchange is an independent unit of the Maryland government that facilitates purchasing of health insurance, as required by the Affordable Care Act.
The Maryland Health Benefit Exchange in February 2012 awarded a contract—partially funded by federal grants from HHS—to develop the state's health insurance exchange website and information technology platform, with Cúram-IBM named as a subcontractor on the project.
The Maryland Health Benefit Exchange awarded the contract after a January 2012 presentation, during which Cúram showed it software calculating applicable tax credits and integrating with another subcontractor's health plan shopping software, among other functions.
The presentation took place with IBM's knowledge, according to the Justice Department.
However, Cúram allegedly misrepresented the development status and existing functionality of its software, including whether it could meet Maryland's technical requirements for calculating appropriate tax credits and connecting its software with other vendors.
The Maryland Health Benefit Exchange ultimately terminated the contract after repeated problems following the launch of its website in October 2013, and replaced the health insurance exchange website and IT platform, including Cúram's software.
"Making misleading statements to win contract awards violates fundamental tenets of government contracting and harms the government and taxpayers," Jody Hunt, assistant attorney general for the Justice Department's civil division, said in a statement.
The settlement covers a period from January 2011 to May 2014. IBM acquired Cúram in December 2011.
