EDS, Texas Settle Dispute

Electronic Data Systems Corp. is paying Texas $3.4 million to settle out of court a grand jury investigation into whether a company subsidiary overcharged the state for processing Medicaid claims.

In return, the Travis County district attorney's office agreed to close the investigation into the accounting practices of National Heritage Insurance Co. of Austin, Texas, located in Travis County, and drop all charges related to the matter.

EDS of Plano, Texas, also will pay a $250,000 penalty and $232,000 to cover costs related to the investigation. The terms of the settlement were outlined in a June 7 statement by the Travis County district attorney's office.

The settlement was the most expeditious way to conclude the matter, said Gus Friedlander, EDS' senior vice president and general counsel, who said the settlement would benefit both sides.

NHIC and EDS said better communication with the Texas Department of Health regarding the calculation of overhead expenses could have decreased the misunderstandings that led to the grand jury inquiry, according to the statement.