MN Pays $7.25M to Co. It Fired from Software Project

The state has reached a settlement with ACS, a company that sued the state after being fired from a failed health care software program called HealthMatch.

The State of Minnesota, through the Department of Human Services (DHS), has agreed to pay a $7.25 million settlement to resolve a lawsuit filed by ACS State and Local Solutions, Inc. (ACS).

Dallas-based ACS sued the state in Ramsey County District Court, alleging a breach of contract, after it was fired from a failed health care software program called HealthMatch in 2008.

Deputy Human Services Commissioner Anne Barry wrote a letter to lawmakers on Wednesday informing them of the settlement. The letter states that the settlement will be funded by existing DHS administrative accounts and from remaining money in the HealthMatch accounts-meaning it won't influence the governor's current budget recommendations.

Under the terms of the settlement, the DHS has agreed to pay ACS $7.25 million by the end of March. The settlement represents a portion of the cost of partially completed work under a contract with ACS, which the state terminated in March 2008.

Neither the DHS-which had filed counterclaims against ACS-nor ACS admitted to any wrongdoing. The two parties agreed to split mediation costs.

According to an Associated Press report, the failed HealthMatch project-which involved a computer system designed to determine health care eligibility-has cost the state more than $41 million.

Coding problems and other issued delayed the project, and by the time the program was canceled three years ago, the state had paid ACS and other entities $8.3 million. An additional $21 million reportedly went toward staffing, equipment, software, and consultants through 2008.