Oregon Sues Oracle Over Failed Healthcare Website - InformationWeek
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Oregon Sues Oracle Over Failed Healthcare Website

Oracle first sued Oregon, and now the state responds with lawsuit claiming the company's "shoddy" performance is to blame for health insurance exchange website debacle.

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As threatened, the State of Oregon is suing Oracle, blaming the quality of the company's software and consulting services for the state's failure to produce a health insurance exchange website where citizens could sign up to receive coverage.

Although many state health insurance websites and the federal HealthCare.gov failed to perform as intended on October 1, 2013 -- the scheduled start of open enrollment under the Affordable Care Act championed by President Obama -- Oracle was the runt of the litter. The Cover Oregon website never enrolled anyone entirely online, although the state managed to enroll more than 100,000 citizens anyway through back-end processes, including a version of the website available only to insurance agents and other intermediaries.

For months, Oregon Gov. John Kitzhaber has been threatening a lawsuit against Oregon, the lead contractor on the project. It took long enough that, meanwhile, Oracle filed its own lawsuit against the state, suggesting that the state was dragging the company's name through the mud as a political tactic without any legal basis. Oracle disputes many of the basic facts, including the charge that the version of its website intended for public consumption was never functional enough to launch. Oracle says the state elected not to launch it for political reasons.

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Oregon's complaint filed Friday morning in Marion County Circuit Court accuses Oracle of charging hundreds of millions of dollars for software and consulting services and "then repeatedly breached those contracts by failing to deliver on its obligations, overcharging for poorly trained Oracle personnel to provide incompetent work, hiding from the State the true extent of Oracle's shoddy performance, continuing to promise what it could not deliver, and wilfully refusing to honor its warranty to fix its errors without charge."

In response, Oracle released a brief prepared statement: "The lawsuit filed today against Oracle by the Attorney General of Oregon is a desperate attempt to deflect blame from Cover Oregon and the Governor for their failures to manage a complex IT project. The complaint is a fictional account of the Oregon Healthcare Project. Oracle is confident that the truth - and Oracle - will prevail in this action and the one filed by Oracle against Cover Oregon two weeks ago in federal court."

"Today's lawsuit clearly explains how egregiously Oracle has disserved Oregonians and our state agencies," Attorney General Rosenblum said in a prepared statement, part of a press release announcing the lawsuit. "Over the course of our investigation, it became abundantly clear that Oracle repeatedly lied and defrauded the state. Through this legal action, we intend to make our state whole, and make sure taxpayers aren't left holding the bag."

Although the state lays responsibility for the failure of the project on Oracle, one of the counter-claims from Oracle -- and also an observation made in several independent audits and investigative reports -- is that the state took on overall responsibility for the project when it decided against hiring a systems integrator. Oracle never accepted that responsibility, at least not officially, and maintains it was merely the largest contractor among several working on the project. A systems integrator might have acted as the general contractor, keeping everything on schedule and making sure requirements were clearly defined, but because the state was acting as its own integrator it bears the ultimate responsibility for whatever pieces fell through the cracks.

The state's lawsuit claims this structure was the result of behind-the scenes maneuvering early in the project. Oregon's Department of Health Services originally planned to hire a systems integrator, but Oracle personnel argued that doing so would just cause delay. "Oracle recommended to the State that it hire Oracle's own internal consulting unit, Oracle Consulting Services, to play the same role. Oracle also offered to provide training services to State employees, enabling the State to believe that it, along with Oracle, could co-manage the Projects without hiring an independent Systems Integrator. Oracle continued to support the State's decision through the life of the project," reads the complaint.

"Oracle's behind-the-scene scheme paid off, for Oracle," it continues. "Oracle convinced the State to spend millions of dollars more to use Oracle Consulting Services to design, plan, integrate and manage the Projects. Oracle became, in effect, the Systems Integrator, bringing on project managers and taking the lead in proposing system architecture, selecting software and hardware, and managing the Projects. From 2011 on, Oracle was the technical lead on both Projects and was responsible for the development of the technology."

Oracle presented the state with more than $240 million in "false claims," according the lawsuit. In addition to going after Oracle Corp. for penalties and a refund of money paid to it, the suit names six Oracle employees including CEO Safra Catz as having personal responsibility for the alleged failures.

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David F. Carr oversees InformationWeek's coverage of government and healthcare IT. He previously led coverage of social business and education technologies and continues to contribute in those areas. He is the editor of Social Collaboration for Dummies (Wiley, Oct. 2013) and ... View Full Bio

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User Rank: Guru
8/23/2014 | 4:12:54 PM
How could the new systems not 'crash.' I discovered years ago that  some  Partners of the govt programs have been creating illegal offline systems (like Madoff used to fool the SEC) to skim and scam the public and create and manipulate information. I only had 17 Medicare numbers creeted on me  and that partnert is still a govt contractor  with  $4 millln dollar theft  and the call center emplyees who helped document this estimated a tirilion dollar theft in at last two regions and giving the evidence to HHS OIG  was responded to with we are not allowed to investigiate a partner of Medicare. US Atrtorneys; can not do anything unless there is a federal law enforcer ad HHS blocied SSA and FTC from getting the FBI cyber crimes people in.  And what else has gone on> I onlhy foundout as one doctor;s biller was told my number had been changed ot a phony NS AS ONE WHO HAS DONE MEDICaRE FRAUD INVESTIGATIONS IN THE PAST, KNEW CRIMES BEING COMMITTED AND BEGAN INVESIGIATING. TP NOP AVIAL TO THIS DAY. In my case WHEN WE COULDL REALLY DO THEM. MEDICARE is not a pirmary payer, but even to this day Emblm Health  who owns the Common Working file all use to  bill, has ones pirmary employer greourp health plan deleted soon after employers and govt agencies postt he information. AND NO ONE IS NOTIFED OF THIS. A bill just arrived for a co  ay for a dependent on my   plan and it did not get paid  as the info was deleted.   HHS had our evidence before the law was passed  and did nothing as they keep saying Congress will not let them sped any money on criemnal invesitigaitons of govt contractors,. THE FIRST THING I LEARNED AOBUT COMPUTERS WHEN I FIRST SAT DOWN AT ONE IN THE LATW 1960S WAS IT CAN ADD AND SUBTRACT AND  it will crash when the info coming in frim all sources 'DOES NOT COMPUTE" The cloud  is going to crash many times over, in my un expert opinion until all the illegal  DEALS TO DUMP BILLS ONTO A GOVT PLAN  is finally investigated and stopped. The govt does not know as no real internal audits have been done for  about 20 years.  GOT TO STOP THE THEFTS FIRST, THEN SYSTEMS MIGHT BE ABLE TO WORK AS THEY SHOULD.  THE ALL SEEING EYE OF THE CLOUD KNOW WHAT YOU ARE ILLEGALLY DOING AND DOESN'T LIKE IT.   These illegal acts  have created real Death  Panels as ones doctor has no idea whom to bill or ask perisison from to OK treatment and more of this will be going on.   The media keeps misisng the bigger stories on these. Like at the VA. Who designed a system that allowed a deletion without a letter confirming it going out to the vet whose appt got cancelled without their knowledge? Asking them if they would like to reschedule. No one has asked that question at all. But knowing  what due process is to be programmed into govt systems means a new law got passed and the real underlying systems problems never got addressed. Taxpayers keep on paying good money after bad and  illegal acts keep going on.  So the states are starting to sue and will those even get to the real issues of a coup that has occurred where getitng a govt contract means no onersight, no accountability to any laws? We get potical rhetoric and no actions  and software contractors being lied to about what is really going on that will cause the new systems not to work as THEY CAN ADD.  AND I AM ONE PERSON AND NOT 17 is just one example. Linda Joy Adams



User Rank: Apprentice
8/23/2014 | 11:28:02 AM
Cover Oregon vs. Oracle Corp.
Most public institutions ... by that I mean government institutions, are generally quite proficient at the operation, management and support of complex IT infrasructures.  It is not that often that the definition, contracting, resource planning, project management and delivery of large IT initiatives such as Cover Oregon is thrust upon them. As such, the mind set, let alone the internal expertise to successfully implement such systems is generally not up-to-par.

That, of course is the raison d'être for SIs, at least the good ones. They constantly live (and die) for large, intricate development and integration projects and therefore are able to supply the high level of specialized expertise and methodologies necessary for project success. Neither the State of Oregon or Oracle, as far as I can see, had the ability, either practically or contractually, to act as a sytems integrator for Cover Oregon. Consequently, a lot of the critical design, management and implementation details were missed (or ignored).

Cover Oregon was a mission critical project that from Day 1 was under heavy public scrutiny, budgetary pressures and punishing deadlines.  It appears that responsibility and, most importantly, accountability was not properly articulated at the outset in the design and contractural obligations phases.

Cover Oregon is a poingent reminder to all organizations contemplating large, mission critical, public facing IT initiatives: "Buyer beware of your own ability to screw things up"  (D. Henschen).
David F. Carr
David F. Carr,
User Rank: Author
8/22/2014 | 6:04:33 PM
Governor Kitzhaber statement on lawsuit against Oracle over health insurance website
Just saw this from the governor's press office

Governor Kitzhaber today released the following statement in response to Attorney General Ellen Rosenblum and the Oregon Department of Justice filing suit against Oracle:

"When I asked the Attorney General in May to take legal action against Oracle, I thought it was important to hold the company accountable and recover taxpayers' dollars for its flawed and incomplete work. We were all aware of Oracle's poor performance and failure to deliver a working website for Cover Oregon.

Today, after months of investigation, the Attorney General's findings go well beyond disappointing and incomplete work. The complaint filed contains serious new allegations of fraud, deceit, and corruption by Oracle. The details of the complaint, including the admissions of former Oracle employees, are appalling to me.

I fully support the Attorney General's actions against Oracle. I will provide whatever is necessary to protect Oregon taxpayers and hold Oracle accountable." 
Charlie Babcock
Charlie Babcock,
User Rank: Author
8/22/2014 | 6:01:27 PM
Reminiscent of Montclair State?
Not sure Oracle and public agencies are a good mix. Once there's a falling out, the feelings on both sides are quite militant and prone to litigation. The case is very different, but the tone, and Oracle's own militancy, is reminiscent of its dispute with Montclair State University in N.J.
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