Technology Firm To Pay $45M To Settle Maryland Exchange Lawsuit

July 22, 2015 in News

Noridian Healthcare Solutions will pay $45 million to the Maryland and federal governments to settle a lawsuit regarding its work on the state’s flawed exchange, according to an announcement Tuesday by Maryland Attorney General Brian Frosh (D), the Washington Post reports (Hicks, Washington Post, 7/21).

Background

In February 2014, the Maryland Health Benefit Exchange board announced that it fired Noridian as the primary contractor for the state’s exchange after the vendor missed a series of deadlines to repair it.

The state’s exchange site crashed shortly after its Oct. 1, 2013, launch and continued to have technical problems. The problems caused Maryland to fall behind of its goal of enrolling 260,000 people before a March 31 deadline and left thousands of state residents’ applications stuck in the exchange system while the website struggled to keep up with increased site traffic.

Maryland officials later decided to switch to a new exchange site (iHealthBeat, 2/25/14).

Settlement Details

Under the settlement, Noridian agreed to pay $20 million immediately and another $5 million annually for five years. The payments will be made to the state and CMS, which contributed funding for the exchange. According to the Post, the settlement is about 61% of what the company received for creating and launching the exchange (Washington Post, 7/21). In total, Noridian received $73 million to develop the exchange.

The settlement also frees Maryland from any contractual obligations it has with Noridian (Noble, Washington Times, 7/21).

The settlement still must gain regulatory approval (Washington Post, 7/21).

Reaction

Frosh in a statement said Noridian “never delivered on what it promised, and, as a result, tens of millions of taxpayer dollars were wasted, and thousands of Marylanders suffered delays and frustration.” He added, “This settlement sends a message that the performance was unacceptable, and that those responsible will be held accountable” (Witte, AP/Sacramento Bee, 7/21).

Frosh called the settlement a “fair deal” for taxpayers, despite not recovering the full amount. He said, “Given the constraints on the company’s finances, it is doubtful that Maryland could have collected this amount from Noridian Healthcare even if it obtained an equal or higher judgment after years of litigation” (Washington Post, 7/21).

According to the Times, a Noridian spokesperson said the company likely would have gone bankrupt if Noridian was ordered to pay more (Washington Times, 7/21).

Frosh noted the state is still investigating other contractors who worked on the exchange.

In a statement, Maryland Gov. Larry Hogan (R) said he is “pleased that the process for recouping taxpayer losses has begun” (Washington Post, 7/21). Hogan added, “This settlement represents only the first step in the process and we’ll continue to aggressively pursue other avenues to recover damages” (Washington Times, 7/21).

Meanwhile, Noridian said the settlement allows the company “to move forward and focus on [its] core business of processing health care claims and providing related administrative services” (Washington Post, 7/21).

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