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Blistering lawsuit filed in Cover Oregon fiasco

The failure of Cover Oregon — the now-abandoned state-run health insurance exchange — was destined to result in a legal fight over who was responsible for the debacle and who should be stuck with its quarter-billion-dollar cost. When the state's contractor, Oracle Corp., filed the first lawsuit on Aug. 8, the state of Oregon appeared to be at a disadvantage. But on Aug. 22, Attorney General Ellen Rosenblum filed a suit against Oracle and a number of its executives, and if half the claims she makes against the company can be proven the state will be both vindicated and reimbursed.

Oracle's suit, filed in federal court, accuses Gov. John Kitzhaber of conducting a "smear campaign" against the company, and demands a further payment of $23 million on top of the $130 million the state has already paid. It's clear that Kitzhaber, who is in the midst of a re-election campaign, has a strong interest in deflecting blame for the Cover Oregon mess. And it's plausible, as Oracle claims, that one of the world's leading software companies could have succeeded in creating an online insurance exchange were it not for state officials' cluelessness in managing the project.

Rosenblum's lawsuit, filed in Marion County Circuit Court, paints a different picture — a picture of deceit. "Oracle," the civil suit says, "overcharged for poorly trained personnel who performed incompetently, hid from the state the true status of its abysmal progress, made promises it could not fulfill, repeatedly failed to meet critical deadlines, and failed to fix — but demanded to be paid for — shoddy work." The suit demands hundreds of millions of dollars in damages and penalties, and accuses Oracle of fraud, racketeering and submitting false claims for payment.

Those are harsh accusations, but the most effective claim in Rosenblum's suit may be one that punctures the image of software professionals struggling to do their jobs under the yoke of low-tech bureaucrats. In autopsies of Cover Oregon, the state's failure to hire a "systems integrator" to oversee all aspects of software development has been identified as a primary reason the project was stillborn. Rosenblum's suit claims Oracle was "dead set" against hiring a systems integrator, and conducted a "behind-the-scenes" campaign to get the state to hire an Oracle consultant as a subcontractor instead.

"In effect," the lawsuit argues, "Oracle used its purported expertise, coupled with lies and pressing deadlines, to trap the state and Cover Oregon in a deadly spiral: At each juncture Oracle charged more and Oregon got less."

The lawsuits won't be decided before the election, so voters can't expect the courts to assess the degree to which Kitzhaber's administration is culpable for the embarrassing and costly collapse of Cover Oregon. There's a strong possibility that the dispute will end in a settlement in which all parties renounce their claims of wrongdoing.

But Rosenblum's suit makes clear that the state has its version of events — and in this telling, Oregon is the victim and Oracle the villain.