Oregon has filed a lawsuit against software giant Oracle that accuses that company of fraud for its role in building the state’s failed health insurance exchange.
Oregon’s suit, filed Friday in state court, alleges that Oracle, the largest tech contractor working on the website, made falsely convinced officials to buy “hundreds of millions of dollars of Oracle products and services that failed to perform as promised.” It is seeking $200 million in damages.
State officials have been targeted with withering criticism for the website, known as Cover Oregon, which never launched because of technical problems. Instead of signing up for insurance online under the Affordable Care Act, residents have had to rely on a hybrid process using print and online materials through the federal government’s website, HealthCare.gov.
Oregon also accuses Oracle of breach of contract, along with civil racketeering, for “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 willfully refusing to honor its warranty to fix its errors without charge.” The state says the Silicon Valley company has presented Oregon with “false claims” for more than $240 million as payment for those contracts over the past three years.
The suit comes weeks after Oracle filed its own lawsuit against the state in which it accuses officials of breach of contract. The company said it is seeking $23 million in supposedly unpaid bills from the state. Oracle’s suit places the blame for the failure of Cover Oregon on the state itself, with the company claiming that Oregon refused to hire a “systems integrator” to manage Oracle’s work on the website. In a statement to The Oregonian newspaper, an Oracle spokeswoman called the state’s lawsuit “a fictional account of the Oregon Healthcare Project.”
But, Oregon counters that claim by saying that Oracle
was, in fact, “dead set against the state hiring an independent systems integrator.” The state even quotes an anonymous former Oracle employee as claiming that the company had an elaborate “behind-the-scenes effort” to convince Oregon that hiring such a manager would only serve to delay the project.
(Comedian John Oliver had some particularly harsh words for Oregon after it spent more than $250 million in federal funds on the website and related items).