Computer Sciences Corp. takes issue with Maryland's fraud claims

By Elizabeth Alt | Jan 16, 2018

BALTIMORE (Legal Newsline) – Los Angeles-based Computer Sciences Corp. (CSC) filed a motion to dismiss the suit brought against it by the state of Maryland that claimed CSC deliberately misrepresented its capabilities in creating a new Medicaid computer system.

CSC said in its Jan. 5 motion to dismiss that "Maryland’s complaint is little more than an attempt to pass off a contractual dispute as a claim of fraud.” The motion was filed in the Northern Division of the U.S. District Court for the District of Maryland.

According to the complaint, Maryland contracted Computer Science Corp. in 2012 to design and implement a new system to replace Maryland Department of Health’s Medicaid Management Information System (MMIS) to manage the state’s Medicaid program payments and process provider claims. The contract was worth more than $300 million.

Maryland sued CSC over allegations of claim of fraud and fraudulent inducement and a claim under Maryland’s False Health Claims Act. CSC filed a motion to dismiss claiming that Maryland did not provide any specifics required to plead fraud.

Maryland alleged that once CSC began work for their new MMIS in April of 2012, it refused to perform certain duties that fell under the agreed upon contract unless paid additional money.

Maryland claims the company wanted more than $26 million to provide new operating rules for Health Insurance Portability and Accountability Act (HIPAA), provide a data identifier element for each HIPAA transaction, and provide for changes to Medicaid eligibility rules. Maryland claims that it had to file change requests, which the change request board denied, saying they fell within the fixed price contract.

Maryland claims CSC refused to work as per its contract while it appealed the board’s decision.

In CSC’s motion to dismiss, it states that Maryland’s claim should be dismissed for failing to plead specifics. 

“Maryland’s vague allegations of fraud are in substance nothing more than an effort to dress up a commonplace breach of contract action as a fraud or false claims action — and to seek the treble damages available under those actions that far exceed any possible contractual remedy,” the motion states.

CSC states that Maryland cannot claim pre-contract fraud because the alleged conduct took place over a year and half after CSC submitted its proposal.

“Maryland appears to believe that the representations CSC made during the RFP (request for proposals) process (what it calls 'defendant’s MMIS representations') evidence fraud because CSC later allegedly failed to perform on the contract…When a plaintiff “allege[s] specific facts relating to contractual nonperformance, . . . they are more appropriately viewed as a basis for a breach of contract action, not a fraudulent inducement claim,'” the motion to dismiss states.

CSC also states that Maryland fails to specify which statements made by CSC were misrepresented, leaving CSC without “sufficient information to formulate a defense…. Maryland’s blanket allegation that all deliverables were necessarily false claims or fraudulent, again betray that Maryland’s true concern is CSC’s alleged contractual nonperformance, and not specific instances of fraud or false claims during the course of that performance.”

CSC is represented by counsel with Kramon & Graham PA in Baltimore and Jenner & Block LLP in Chicago.

Maryland is represented by Attorney General Brian E. Frosch and counsel and Ballard Spahr LLP in Baltimore.

Northern Division of the U.S. District Court for the District of Maryland case number 1:17-cv-03839-ELH

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