Prime Contractor for Maryland Health Exchange Website to Repay State $45 Million
State recoups majority of funds paid to vendor who helped build broken system
ANNAPOLIS, MD – Governor Larry Hogan today announced that the prime contractor hired to build Maryland’s flawed health exchange website will pay $45 million to avoid legal action over its performance. Maryland’s health exchange program garnered national attention last year when Maryland had one of the worst sign-up rates for private health care plans in the country.
Noridian Healthcare Solutions LLC has agreed to pay $20 million upfront, and an additional $25 million in annual installments of $5 million over five years. The payments represent a recovery of 61 percent of the total paid to the company for the failed website development and launch in 2013.
“The roll-out of Maryland’s Health Exchange was a debacle that could have been avoided,” said Governor Larry Hogan. “I have been one of the most vocal critics of this fiasco, and I am pleased that the process of recouping taxpayer losses has begun. This settlement represents only the first step in the process and we’ll continue to aggressively pursue other avenues to recover damages.”
The agreement, which is subject to regulatory approvals, will lead to the recovery of funds for both Maryland and the federal Centers for Medicare and Medicaid Services, which provided significant funding to develop the exchange.
Given the constraints on Noridian Healthcare Solutions’ finances, it was highly unlikely Maryland would have recouped the settlement amount from the company, even if an equal or higher judgment was obtained following years of litigation. Due to their inability to reimburse the full amount, this agreement represents a fair deal for Maryland taxpayers.
Noridian Healthcare Solutions’ parent company has agreed to guarantee at least $40 million of the settlement payment. The settlement agreement also releases Maryland from all contractual obligations with Noridian Healthcare Solutions.
Investigation of claims against other companies involved in the development and implementation of the Maryland exchange is continuing.