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Class Sues IBM Over Medicaid Disaster

INDIANAPOLIS (CN) - A class action claims thousands of Medicaid recipients were denied benefits or suffered unfair lapses in medical coverage after Indiana handed off the eligibility process to IBM, which screwed up the installation so badly it was fired 7 years early from its $1.3 billion contract.

The class claims that while the state ultimately canceled the $1.3 billion contract to have IBM "privatize and modernize" Medicaid determinations, it has continued to use its subcontractors, which are severely deficient in handling applications and appeals.

The class sued IBM, ACS Human Services, Phoenix Data and Arbor E&T in Marion Superior Court. Indiana is not named as a defendant.

In December 2006, Indiana's Family and Social Services Administration (FSSA) contracted with IBM to "privatize and modernize the public benefits eligibility determination process," according to the complaint.

IBM managed the overall process, while "most of the day-to-day responsibilities to work with beneficiaries to determine their eligibility, and even process their appeals, were delegated to other contractors," such as ACS, Phoenix and Arbor.

One thousand five hundred state workers became employed under the "IBM-coalition," according to the complaint.

While the FSSA had final say in which applicants were approved or denied benefits, it relied on recommendations made through IBM contractors, who hold themselves out to applicants as the Indiana FSSA, the class claims.

"In March 2009, IBM was put on notice by the State of Indiana that its performance in managing the functions critical to eligibility determinations through its subcontractors was grossly deficient, and after an effort to correct the multitude of problems through a Corrective Action Plan, the State terminated its $1.3 billion contract with IBM," the complaint states. "IBM's role was phased out through Dec. 14, 2009, seven years before the expiration of the 10-year contract. FSSA and IBM have sued each other over the termination of the contract."

After IBM was out of the picture, Indiana contracted directly with ACS, Phoenix and Arbor, the class says.

"The contractors were to interview beneficiaries, gather documents, process them, enter facts into the computer systems, explain program requirements, explain appeal rights, assist clients who needed special help to assure that eligibility was correctly and properly determined and that appeal rights were honored," the complaint states.

The class says the contractors have a duty to maintain benefits for recipients who have submitted appeals, until they receive a fair hearing. It adds that the "defendants also undertook to perform FSSA's duty to assess whether a recipient who no longer qualified under one category of Medicaid might qualify under a different category, before cutting off benefits."

But the class says the defendants have "routinely 'lost' client documents, including appeal requests," failed to return clients' phone calls, then denied coverage without adequate information.

It says the defendants' workers also "send demands for client-supplied information that are so poorly worded and non-specific that the client has little guidance on which to base a response," and deny coverage when "the beneficiary responds to the best of their ability but not to the worker's unstated intent, without even calling the beneficiary for clarification."

The class adds that the defendants' call centers are designed so that beneficiaries are blocked from speaking to someone with the authority to solve issues, and that the staff is poorly trained and not permitted to investigate problems. And the defendants have illegally prohibited beneficiaries from access to computerized records with information about the status of their cases.

The class claims that appeals have become "so back-logged that fair hearings have been delayed for months beyond the 90-day time limits."

"As a result of these actions, plaintiffs and thousands of vulnerable Medicaid recipients similarly situated had and are having their benefits interrupted or terminated altogether, losing the value of access to health care and coverage afforded to them under law," the class says.

Plaintiff Courtney Anderson, a 20 year-old woman who suffers from a severe seizure disorder, says her benefits were unfairly cut off when she was switching from one Medicaid program to another, and that the defendants processed her case for termination, despite her two appeals.

Anderson's mother was unable to refill her anti-seizure prescriptions, putting her health in "immediate jeopardy," she. Only with the help of an attorney were her benefits eventually reinstated.

The class demands damages from IBM, ACS, Phoenix and Arbor, for unfair denial of Medicaid benefits. Its lead counsel is Scott Severns.

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