Retirement fund settles dispute with software firm
By Andrew Gomes
Advertiser Staff Writer
The state Employees' Retirement System has settled a dispute with a Mainland software company over a botched $13 million contract to help the pension fund more quickly and accurately process pension benefits.
Neither ERS or Colorado-based Quovadx Inc. would say if the $7.8 billion pension fund paid to settle lawsuits that each party filed against the other a year ago.
Quovadx said it received $1.1 million from "various parties" involved in the suit, but declined to say if ERS contributed to the payment.
ERS said it received software licenses, 5 million imaged member documents and other materials as part of the settlement, which also involved Thermo Electron Corp. and Federal Insurance Co.
The settlement effectively terminates the almost 4-year-old contract to replace an antiquated computer system that contributed to a backlog in processing thousands of retirement benefits for state and county government employees, retirees and beneficiaries.
ERS administrator David Shimabukuro said in a statement that the settlement, advocated by a mediator, avoids lengthy and costly litigation that would have continued to delay implementation of a new computer system. A new contractor is in the process of being hired, he added.
Shimabukuro could not immediately say how much of the Quovadx contract had been completed or how much the company had previously been paid for its work.
The pension fund, which handles benefits for 97,000 people, has been trying to move most of its records and benefit calculations from paper to computer and replace a 1980s-era Wang computer system since 1992.
Because of the outdated system and a shortage of pension examiners who review retirees' pension applications, the benefit calculation backlog had grown to more than a year as of June 2002.
Shimabukuro yesterday said he could not immediately provide an update on the backlog situation.
The pension processing methods were cited in a 1999 state audit for leaving thousands of state retirees facing months of delays and errors in benefit calculations.
Quovadx was hired in February 2000 to help correct the problems, but the $10.7 million contract grew to $12.7 million. By 2001, the ERS was displeased with the increase and a lack of progress and tried to terminate the contract by 2002, which triggered the lawsuits by both parties.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
