Indiana: IBM welfare intake work flawed from start
Indiana's human services agency says it found problems with IBM Corp.'s takeover of welfare intake services early in the project and suggested delays, but yielded to the company's wishes to expand the project.
IBM, meanwhile, claims the Family and Social Services Administration seized more than $9 million worth of its computers, servers and office furniture without paying for them after Gov. Mitch Daniels fired the technology giant last year.
The counter charges are included in filings rebutting and denying claims in the former partners' lawsuits against each other in Marion Superior Court in Indianapolis. The state agency is suing IBM for more than $1.3 billion, claiming the Armonk, N.Y.-based company breached one of the biggest outsourcing deals in state history. IBM wants the state to pay $52.8 million it says it's owed in deferred payments and equipment costs.
The two sides sued each other May 13 over IBM's canceled $1.37 billion contract to automate intake for Medicaid, food stamps and other benefits received by more than a million Indiana children, seniors, elderly and disabled residents.
In its July 14 response to IBM's lawsuit, the state says the social services agency began to observe problems with IBM's performance soon after the project's initial rollout to 10 northern Indiana counties on Oct. 29, 2007, and an expansion to the project's second region was delayed and eventually split into smaller segments.
"FSSA suggested delaying further rollouts until the performance outages could be cured; however, IBM assured FSSA that if the Region 2 rollout was implemented, IBM would recognize some efficiencies and economies of scale that would improve performance. Accordingly, FSSA agreed to the rollout of Region 2," the state's lawyers wrote.
The filing appears to contradict statements public officials made at the time, in which they expressed satisfaction with the project.
Then-FSSA Secretary Mitch Roob told The Associated Press on March 16, 2008 — eight days before the expansion to 27 more counties — that "we're going to get this right and we're not going to do it fast. ... We have to do it with great care."
In the court filing, the state says public statements by Roob and Daniels praising IBM's work were "an effort to be professional and help the Modernization effort succeed ... rather than dwell on its continued shortcomings."
IBM spokesman Clint Roswell challenged that explanation.
"You can't have it both ways. You can't say two things. Which one is the real one?" Roswell told the AP.
FSSA spokesman Marcus Barlow issued a statement saying, "IBM did not live up to its contract promises, despite receiving hundreds of millions of dollars, the encouragement and cooperation of State officials, and numerous opportunities to correct its mistakes."
The project had grown to 59 of the state's 92 counties by May 19, 2008. Three weeks later, flash floods swept through central and southern Indiana, putting any further expansions on hold while the FSSA focused on flood relief including emergency food stamps to affected residents. That created more work for IBM's team of vendors, as did the economic downturn, the court filings say.
Under the contract, "IBM assumed the risk of such natural disasters," the state said. However, the state paid IBM an additional $2 million for disaster relief. Eventually, Indiana paid IBM more than $437 million.
Roob moved on to an economic development position in the Daniels administration in January 2009, and new FSSA Secretary Anne Murphy halted any further rollouts and demanded a corrective action plan from IBM. That led to Daniels canceling IBM's contract in October, saying he wasn't satisfied nearly three years into the 10-year deal.
IBM's contract ended in December, but it did not finish up work until June 13, Roswell said.
It left behind $9.35 million in computer servers and workstations that it had purchased or leased and more than 1,000 desks, chairs and other furniture pieces that it claims the state has seized, continues to use in welfare processing, and owes the company for.
"The State admits that it obtained equipment formerly used by the IBM Coalition," the state said in its response. Barlow declined to elaborate on the matter.
Attorneys for the two sides were scheduled to meet Friday in a case management conference. IBM's attorneys were seeking a shorter timetable to resolve the case and have proposed it go to trial in less than a year, on July 1, 2011. The state's attorneys have proposed a Feb. 1, 2012, trial date.
*************************************************************************************
IBM files court motion to depose Daniels, aide
INDIANAPOLIS
Gov. Mitch Daniels and his chief of staff were both deeply involved in Indiana's decision to outsource the automation of welfare intake, and they should provide depositions in lawsuits over IBM Corp.'s cancelled $1.37 billion contract in the project, a lawyer for the company argues in a brief filed this week in Marion Superior Court.
The brief filed Tuesday by IBM attorney Andrew Hull notes Daniels at one point told a state employee union representative that the decision to upgrade Indiana's welfare eligibility system would "be made by me and me alone" and that Daniels personally signed the contract with Armonk, N.Y.-based IBM.
It also contends Chief of Staff Earl Goode was directly involved in all stages of the project from its inception to, after Daniels fired IBM in October 2009, the creation of a hybrid system that uses both automated intake and more face-to-face contact between state case workers and clients.
"Both Governor Daniels and Mr. Goode were intimately involved in all stages of the project, including key events at issue in this lawsuit," Hull wrote in the brief.
A telephone message seeking comment was left Wednesday with a lawyer representing the state.
The Indiana Family and Social Services Administration is suing IBM for more than $1.3 billion, claiming the company breached one of the biggest outsourcing deals in state history. IBM wants the state to pay more than $50 million it says it's owed in deferred payments and equipment costs.
Attorneys for Daniels and FSSA requested a protective order earlier this month seeking to shield Daniels and Goode from having to provide depositions in the counter lawsuits. It said forcing them to testify would be "unnecessary and burdensome."
The state said a 150-year-old Indiana law shields Daniels from having to provide testimony, but IBM argues the law refers only to being served subpoenas and civil arrests.
It wasn't clear when the judge hearing the lawsuits, Marion Superior Court Judge David Dreyer, would rule on whether Daniels and Goode must provide depositions. He has scheduled a hearing in the case for April 15.
Dreyer ruled last week that the state needed to make available to IBM certain documents it argued were privileged, including e-mail messages from Daniels and other state employees.
Problems including dropped calls, long hold times and missing documents led Daniels to fire IBM as the lead contractor on the automation project.
*********************************************************************************
Indiana accused of cutting aid to food stamp users
For at least a decade, potentially thousands of Indiana's neediest adults have seen some of their state aid payments slashed simply because they receive food stamps — a practice that advocates and legal experts say is a clear violation of federal law.
The policy has affected people with developmental disabilities who need financial help to live independently and who receive additional assistance to buy groceries. The issue apparently went unnoticed for years until this month, when the father of a severely autistic Indianapolis man challenged it in court.
"I've never heard of a state being confused about this before. The law is unambiguous," said Stacy Dean, director of food stamp policy for the Center on Budget and Policy Priorities in Washington.
Under the current system, when the federal government raises food stamp amounts, Indiana officials reduce grocery allowances so a person's total food benefits do not exceed $200 a month.
But since 1964, federal law has barred states from counting food stamps as income or using them to reduce any other public benefits.
"It's clear as could be," said Dennis Frick, an attorney with Indiana Legal Services' Senior Law Project. "I think they got caught."
Both the Department of Agriculture, which administers food stamps, and federal Medicaid officials say they are reviewing the issue. Gov. Mitch Daniels said "it's worth having a look" at the practice in light of the lawsuit filed by the autistic man and his father.
Marcus Barlow, a spokesman for the Indiana Family and Social Services Administration, said agency attorneys do not believe federal law was broken when officials balanced food stamp payments against a state-run supplemental aid program.
Barlow said Indiana has counted food stamps as a "benefit," not as income, as opponents contend, since at least 2000.
"Receiving a benefit reduces their need," Barlow said. "If your need has been reduced, then you should reduce the supplemental program."
The state's philosophy is to use federal dollars first so that the state can stretch its own money, Barlow said.
"We stand behind our practice because we have a finite set of resources, and we have to make sure those resources are going to the most needy," he said.
But legal experts say courts have consistently upheld the law that says other assistance cannot be reduced because someone is receiving food stamps.
Welfare officials in other states said they were surprised Indiana would even try to count food stamps against other benefits.
"Frankly, we're shocked that anyone does," said Brad Deen, a spokesman for the North Carolina Department of Health and Human Services.
Indiana's practice may have gone unnoticed by federal officials because the state's policy did not directly affect food stamp payments.
"When the law is misapplied, it usually is inside the food stamp program, not outside," said Ellen Vollinger, legal director for the Food Research and Action Center in Washington.
The practice is just the latest indictment of how Indiana handles services for its most vulnerable residents.
The federal government levied a $1.2 million penalty last month against the state's social service agency for miscalculating food stamp benefits.
The state also drew criticism from the Department of Agriculture in recent years for not processing food stamps in a timely manner as part of a project to privatize some welfare payment processing. That plan caused countless complaints that ultimately led the state in October to scrap a $1.3 billion contract with IBM in favor of a public-private hybrid system.
In another troubled project, the state tried to reduce payments made to foster parents by shifting many special-needs children into lower-paying categories — a move that outraged advocates.
In the most recent case, the American Civil Liberties Union filed a lawsuit on behalf of Michael Dick, 26, who cannot speak and functions at the level of a 6-year-old.
Dick is enrolled in state programs that provide money to help the developmentally disabled live on their own, including buying groceries.
"You can't use food stamps when you're calculating an entitlement program, but this is a state-run supplemental program," Barlow said.
Michael Dick's father, Steven, said it's time for the state to follow the federal rules.
Steven Dick, an attorney, said his son's only income is a monthly $674 Social Security disability check. Michael lives in a small rented home with another disabled man and pays $350 a month in rent, not including utilities.
He said his son requires a 24-hour caretaker to help him bathe, dress or go anywhere.
"He's a happy child, but he functions as though he's a child," he said.
When his food stamp benefits were raised to as much as $99 a month, Michael Dick's grocery allowance was reduced from $139 to as low as $101.
Steven Dick said he and his son appealed the decision and lost, then decided to sue. The lawsuit was filed July 9 in Marion County Superior Court.
The $200 cap set by the state is arbitrary and has not been adjusted in at least six years, the lawsuit said.
"And $200 a month a decade ago bought a hell of a lot more groceries than it does today," Steven Dick said.
The number of people affected by the policy is not clear.
The lawsuit seeks class-action status for people enrolled in Indiana's Developmental Disabilities Medicaid Waiver Program and estimates thousands of people could be affected. The website of the state's social services agency says about 6,700 people were enrolled in that program as of May.
But Barlow said only about 440 people in that program receive the additional assistance involved, and not all of those get a food allowance.
Regardless of the number, Dick said, the state policy hurts those who often lack recourse.
"The problem this class of people face is they're in a position of either take it or do without as far as the state is concerned, and 90 percent of them don't have the wherewithal to fight the system," Steven Dick said. "They have no way of fighting for what should be a right for them."
*********************************************************************************
Indiana Medicaid cuts likely to be followed by more
Indiana's Medicaid program will reduce dental and vision benefits for adults and cut payments to some providers beginning Saturday, and more cuts are likely in the coming months as the state struggles to control the burgeoning costs of the public health insurance plan.
The Office of Medicaid Policy and Planning has approved without comment a series of emergency rules that it expects to save a total of $4.1 million over the next six months, spokesman Marcus Barlow said.
But that will make up for only a small portion of the $31.4 million shortfall the agency anticipates for the fiscal year that ends June 30.
"This is just one round. We expect more changes in the future," Barlow said. Advocates said the rule changes, including prior authorizations for non-emergency hospital stays and lower reimbursements to podiatrists, chiropractors and home care attendants, will affect elderly and disabled people the most. Services for those groups account for about two-thirds of Medicaid spending in Indiana and provide the biggest targets as lawmakers and the administration of Gov. Mitch Daniels seek to rein in a state Medicaid bill expected to increase by about 25 percent during the current fiscal year and the next one.
Public health insurance advocate David Roos of Covering Kids & Families of Indiana said the rule changes taking effect Saturday were the least controversial and easiest for Indiana Medicaid to make.
"The remaining cuts will be much, much tougher. They will be down to the bone," Roos said Thursday.
The emergency rules were instituted without the usual public notice and comment procedures, but they expire in 90 days. They can be extended once for another 90 days. Barlow said the Medicaid office will aim to make the cuts permanent.
They are expected to save the state $12.3 million during the full 12 months of fiscal year 2012 and $13.3 million in 2013, Barlow said.
Spokeswoman Sally Morris of The Arc of Indiana, which represents developmentally disabled people, said the cuts caused concern but there's more worry about the unspecified ones still to come.
"It is a huge concern what will happen with the Medicaid program," she said. Capping dental services at $1,000 per year for Medicaid members over age 21 will save about $1.5 million over the next six months, Barlow said. The cap is expected to affect fewer than 7,000 of Indiana's roughly 400,000 adults on Medicaid, he said.
However, the cap could have the unintended effect of driving some Medicaid recipients with severe toothaches, infections and other dental emergencies to hospital emergency rooms, thus shifting costs to hospitals, since hospitals are barred by law from turning away patients, said Doug Bush, executive director of the Indiana Dental Association.
"We don't think this is going to result in a net cost savings to the state," Bush said.
Barlow said the dental association was painting "a doomsday scenario."
The Indiana Hospital Association issued a statement noting "the harsh, fiscal realities the state faces and that tough decisions must be made."
"At the same time, it is true that in the absence of routine care, all roads lead to the emergency room," the statement said.
Dr. Bernard Emkes, past president of the Indiana State Medical Association and one of the group's Medicaid experts, said the cuts were fair given the drop in state tax revenues. He noted that all health care providers absorbed an earlier across-the-board cut in Medicaid reimbursements.
"The dilemma is we're caught between a rock and a hard place. The state has no money right now," said Emkes, an Indianapolis family physician.
No comments:
Post a Comment