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IBM Agrees To Pay $14.8 Mln To Settle Alleged Violations Of False Claims Act

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International Business Machines Corp. (IBM) and Cúram Software, acquired by the tech giant in 2011, have agreed to pay $14.8 million to settle alleged violations of the False Claims Act, the Justice Department said in a statement.

According to the DOJ, IBM and Cúram allegedly made material misrepresentations to the State of Maryland during a contract award process with the Maryland Health Benefit Exchange in 2011 and 2012.

The contract, funded in part by federal grants, was related to the development of Maryland's Health Insurance Exchange or HIX website and information technology platform. Cúram-IBM was named as a subcontractor on the project.

"Making misleading statements to win contract awards violates fundamental tenets of government contracting and harms the government and taxpayers. The Department is committed to protecting the American taxpayer from false claims and preserving the integrity of federal funding decisions," said Assistant Attorney General Jody Hunt for the Department of Justice's Civil Division.

During bid evaluation, Cúram participated in a presentation to the State of Maryland in January 2012, showing that its software was capable of calculating applicable tax credits and also integrating with another subcontractor's health plan shopping software.

The presentation was made by Cúram with IBM's knowledge. In February 2011, Maryland awarded the contract for the development of the HIX website and IT platform, with Cúram-IBM serving as a subcontractor on the project.

However, Cúram allegedly made misrepresentations regarding the development status and existing functionality of its software, including whether it could meet the State's technical requirements and its software could be integrated with other vendor's software for a properly functioning HIX website.

After encountering repeated problems following the launch of the HIX website in October 2013, Maryland terminated the contract and replaced the HIX website as well as IT platform, including the Cúram software.

The DOJ noted that the settlement covers the time period from January 1, 2011, through May 31, 2014, and resolves allegations against Cúram-IBM regarding material misrepresentations made to Maryland during the HIX contract procurement process.

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