In 2012, the state of Maryland hired Computer Science Corp. (CSC) to upgrade its Medicaid reimbursement system. The contract was supposed to last five years with three possible extensions for a total possible payout of $297 million (with extensions). However, the state claims that it became dissatisfied with the work the company was doing and terminated the contract. Now, the state wants to resolve the business dispute without litigation.
The state stopped paying CSC in February. The Maryland Department of Health and Mental Hygiene claims that it sent letters to the company on at least two occasions to inform CSC that its work was no longer acceptable. The company did receive payments in the approximate amount of $30 million before the state decided to stop paying and terminate the contract.
The state claims that CSC is the one that breached the contract by defaulting on numerous provisions of the contract between the parties. The company claims that it is owed somewhere around $80 million. CSC also contends that it was required to do extra work because the technology standards from the federal government kept changing. The company also claims that it was Maryland's governor that terminated negotiations along with the contract.
How this business dispute will end could be up to a judge if the parties are unable to resolve their issues without litigation. These circumstances might be familiar to other companies who also have government contracts. Having legal representation after a dispute has arisen is already too late. It would be beneficial to make sure that the business and legal considerations are worked out before any contract is signed.
Source: The Baltimore Sun, "Maryland fires firm upgrading Medicaid technology, may seek money back", Meredith Cohn, Dec. 9, 2015