State of Nebraska cancels contract after spending $6M; company sues for another $15.5M
Nebraska officials canceled an $84 million Medicaid eligibility and enrollment system upgrade in December after about $6 million in state tax dollars had been spent on the project.
On Monday, the company hired to build the new system — India-based Wipro Limited, which has a U.S. headquarters in New Jersey — sued the state, saying Nebraska failed to pay $15.5 million for work done before the project was halted in September.
In a lawsuit filed in Lancaster County District Court, Wipro is also seeking $3 million in lost revenue from the state, as well as $11.9 million in damages done to its reputation.
Last year, the Nebraska Department of Health and Human Services said it ordered a review of the project that began in 2014 to bring the state in line with Affordable Care Act standards after a manager on the project retired.
In September, DHHS issued a cease-and-desist letter to Wipro, ordering it to stop work on the upgrade to the state’s Medicaid enrollment system, and to vacate its state offices.
Wipro said in its complaint the order to pause work came just a few weeks after the project was determined to be on budget and on schedule by First Data, an Omaha company retained by the state to evaluate the $84 million contract, which was to be paid primarily through federal funds.
The project also received a “green” rating from the Nebraska Information Technology Commission in August 2018, leading it to implement a major milestone on the project as it hurtled toward a state-expedited end date of February 2019, the complaint states.
DHHS’ cease-and-desist letter did not include a “factual basis for the suspension,” Wipro said, and the state agency also indicated it would pay invoices filed by Wipro for ongoing services through Dec. 31, 2018, as agreed to in the contract.
About a week after receiving the letter, Wipro said it was notified that the suspension had come based upon an early brief written by First Data on Aug. 23 — 16 days after First Data had given Wipro a favorable review, the lawsuit states.
That brief was not initially shared with Wipro, the company said. Wipro later received a final draft of the brief dated Aug. 27.
Wipro sent the state three invoices on Oct. 5 for $15.5 million in work completed through Sept. 7 and responded to questions by the state about the invoices on Nov. 5.
The state terminated the contract Dec. 12.
“Despite repeated requests from Wipro, the state has failed to timely pay the Wipro invoices, which remain due and payable by the state, together with unpaid interest,” the complaint reads.
Wipro is also seeking attorneys fees, “plus additional general and special damages” to be proven at trial.
State officials reached Tuesday declined comment.