The Boston Globe announced today that Massachusetts officials have officially undertaken a review of their legal options against CGI Group Inc. (NYSE:GIB) (TSE:GIB.A), a Montreal-based information technology company who provided the state’s healthcare website, and will make recommendations on the next steps at a meeting on Jan. 9. GGI Group is the same organization that was responsible for building the troubled Obamacare website HealthCare.gov.

HealthCare

Statement from Massachusetts

The state of Massachusetts has already paid $11 million of its $69 million contract with CGI Group Inc. (NYSE:GIB) (TSE:GIB.A) and “it will not pay a penny more until a functioning website has been delivered”, said Jason Lefferts, a spokesman for the Commonwealth Health Connector.

“CGI has consistently underperformed, which is frustrating and a serious concern,” Lefferts continued. “We are holding the vendor accountable for its underperformance and will continue to apply nonstop pressure to work to fix defects and improve performance.”

Massachusetts’ healthcare insurance website rollout has been plagued with problems and is still not operational. In fact, the state reverted to a backup software system and is sending out paper notifications for those who sign up for new insurance.

CGI problems in other states

CGI Group Inc. (NYSE:GIB) (TSE:GIB.A) is also under fire from officials in other states who are complaining about delays and other problems with their state healthcare websites.

Vermont’s health insurance website roll out has also been highly problematic. “I’ve lost confidence in the contractors that were supposed to deliver a fully functioning website on Oct. 1,” said Governor Peter Shumlin of Vermont. “I’m going to continue to hold their feet to the fire until they get it right.”

It should be noted that health insurance websites built by the CGI Group Inc. (NYSE:GIB) (TSE:GIB.A) in Kentucky, Colorado and California were all up and running close to on time and have performed reasonably well.

Expect more legal action for healthcare website provider

According to legal analysts, the growing storm of public criticism by state officials against CGI Group Inc. (NYSE:GIB) (TSE:GIB.A) is an early indicator of legal problems for major website providers down the road.

“Even states where there was good will, where the government was totally committed to implementing the law, have experienced a mess,” argues Joe Onek, a Washington attorney and noted health law expert.

“I would expect all sorts of litigation related to this, but nobody is interested in filing that now because they need the cooperation of these same people to get their systems up and running,” Onek said.