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Ind. court sets hearing on IBM welfare lawsuit

INDIANAPOLIS (AP) -- The state's legal fight with IBM Corp. over a failed attempt to overhaul Indiana's welfare system will go before the Indiana Court of Appeals in November.

The state is appealing a Marion County judge's rulings last year awarding $52 million to IBM after then-Gov. Mitch Daniels canceled in 2009 what was a 10-year, $1.37 billion contract to process applications for food stamps, Medicaid and other programs.

State officials sought to recoup roughly $170 million from IBM, but Judge David Dreyer ruled Indiana failed to prove the company breached its contract.

The appeals court late last week scheduled oral arguments in the case for Nov. 25 before a three-judge panel.

Dreyer ruled following a trial on the lawsuit last year that neither side deserved to win the dispute, and awarded IBM only a small fraction of what it was seeking.

The 2006 decision to outsource the intake of welfare clients to a team of private contractors led by IBM, along with other efforts by the Daniels administration at privatization, such as leasing the Indiana Toll Road to a private company.

The project introduced call centers, the Internet and fax machines as means by which residents could apply for benefits, and it removed specific state case workers assigned to each household.

Dreyer blamed "misguided government policy and overzealous corporate ambition" for the failure of the system, which he called an "untested theoretical experiment."