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State seeks court order to keep Oracle contract

SALEM — Four days before a contract to host Oregon's health insurance system for low-income Oregonians is due to expire, state officials asked a judge on Tuesday to force technology contractor Oracle Inc. to continue running the system.

Lawyers representing Oregon told Marion County Circuit Judge Courtland Geyer during the first of a two-day hearing that Oracle's plans to pull hosting services would result in Medicaid enrollment grinding to a halt. That, in turn, would cause "irreparable harm" to thousands of people who would not be able to enroll in Medicaid and access health services, said attorney Lisa Kaner, who represents the state.

The state wants a court order forcing Oracle to extend the hosting contract.

The Medicaid system runs on parts of the technology that Oracle built for the Cover Oregon health insurance exchange. That exchange portal was never fully functional, but after it failed, the state continued to use parts of it for Medicaid enrollment. The system's hardware resides on servers that are hosted by Oracle. The contract to host that hardware expires Feb. 28.

Witnesses for the state told the judge that Oracle managers orally promised Oregon officials five months ago that the hosting contract would be renewed for 12 months. Oregon officials acknowledged they did not get that promise in writing.

Earlier this month, Oracle informed Oregon it would not renew the contract. Kaner called Oracle's decision a "capricious change of position."

Oracle's lawyers said Oracle made no binding promises to renew the contract, only a promise to negotiate about it. Oracle's attorney Robert Shwarts blamed the Oregon Health Authority, which oversees Oregon's Medicaid program, for not having a contingency plan.

He also said the company isn't obligated to continue hosting, because the contract does not contain a right-to-renew clause.

"While Oracle is sympathetic to the state's issue, Oracle is a commercial actor ... and it has no legal obligation to do business with the state," Shwarts said. "It's the responsibility of Oregon to take care of Oregonians and to ensure that they have a (Medicaid) system in place. The contract expires on Saturday, and they knew that for a long time."

Medicaid serves more than 1 million people in Oregon, about a quarter of the state's population. Coverage is good for 12 months and then must be renewed. Oregonians can sign up for or re-enroll in Medicaid year-round.

Alex Pettit, the state's chief information officer, said at the hearing that the state tried last year to extricate its Medicaid system from Oracle, but the company rejected several proposals to do that. That, he said, left the state with only one option: renewing the hosting contract.

"All our overtures to disengage from Oracle were rejected," Pettit told the judge.

Pettit also said it would take about a year to switch to another hosting vendor, which is why the state didn't pursue that option.