updated 01:49 pm EDT, Mon August 25, 2014
Promised lawsuit outlines complaints, promises made by Oracle over failed system
More than two months after Oregon Governor John Kitzhaber promised legal action against the company contracted to build the state's healthcare marketplace, the State of Oregon has sued Oracle. The Oregon Department of Justice filed a complaint last week with the Circuit Court for the State of Oregon, containing 14 claims for relief, including breach of contract, fraud and offenses under the Oregon Civil Racketeer Influenced and Corrupt Organizations Act.
The State of Oregon and Oracle have battled it out since the botched launch of the Cover Oregon healthcare marketplace. The system never worked properly, forcing Oregon residents to fill out paper copies of the forms and mail them in to receive insurance under the guidelines set by the Affordable Care Act. The project cost the state around $160 million, but the state has withheld its $23 million final payment to Oracle as it considered its legal options.
The Oregonian obtained the 138-page filing Oregon made against Oracle. The claims include accusations of fraud based on Oracle's statements of about the "Oracle Solution" the state was getting, seven violations of the Oregon False Claims Act, three breach of contract claims, and two claims under the Oregon Civil Racketeer Influenced and Corrupt Organizations Act. While many of the claims are repeats, they target different defendants in the case, with specific issues tied to those parties included. Claims can also differ from plaintiffs, as they include the Attorney General of Oregon, Cover Oregon, Oregon Health Authority and the Oregon Department of Human Services.
The document points out many of the failures and broken agreements that Oregon said Oracle is responsible for. It goes into explicit detail of why the project failed, and the promises that the state claims Oracle made at every step, including the idea that the system was ready-made and only needed minor modifications to launch. The state is seeking relief starting at $10,000 per count, but up to $420,752,808 per count on racketeering charges. It also provides documentation on the millions of dollars it has paid out for the failed Cover Oregon system, which the state refers to as "false claims."
"Over the last three years, Oracle has presented the State and Cover Oregon with some $240,280,008 in false claims under those contracts," reads the filing. "Oracle's conduct amounts to a pattern of racketeering activity that has cost the State and Cover Oregon hundreds of millions of dollars."
Oracle issued a response to the suit that claimed that state was making "a desperate attempt to deflect blame from Cover Oregon and the Governor for their failures to manage a complex IT project." A spokeswoman for the company stated that the complaint from Oregon "is a fictional account."
Earlier in the month, Oracle beat the State of Oregon to the punch, as it filed its own lawsuit seeking the remaining $23 million it was owed. In the filing obtained by The Oregonian, Oracle cited a number of problems with the management of the project by the state, and a smear campaign that was later launched by Governor Kitzhaber. Two claims were outlined in the filing, including breach of contract and quantum meruit ("what one has earned"). The company is seeking outstanding payments, interest, damages and contract enforcement.