Oracle Sues Ore. Over Exchange Site; Three States Give Updates

August 11, 2014 in News

On Friday, Oracle Corporation filed a breach-of-contract lawsuit against Oregon, alleging state officials are continuing to use the technology firm’s software despite $23 million in unpaid bills, AP/Modern Healthcare reports (AP/Modern Healthcare, 8/9).

Earlier this year, state exchange officials made the decision to scrap the exchange site and move to the federal exchange site after technical glitches made the site unusable.

In May, Oregon Gov. John Kitzhaber (D) sent a letter to state Attorney General Ellen Rosenblum (D) asking for the state to file a lawsuit against Oracle over its failed health insurance exchange website (iHealthBeat, 5/30).

Recently, Cover Oregon signed an $18.4 million contact with Deloitte Consulting to act as the state’s systems integrator as it moves over to the federal exchange (Reston, “Nation Now,” Los Angeles Times, 8/9).

Oracle is seeking $23 million plus interest and additional unspecified damages (AP/Modern Healthcare, 8/9). Oracle already has received $130 million for its work.

In a 21-page complaint, Oracle said state officials privately sought its help to fix the website while taking part in a campaign of “constant public slander” against the company. “Oracle gave that help for many months, in spite of the public excoriation” in part because “Cover Oregon repeatedly promised to pay Oracle for its services,” according to the complaint. Oracle noted that Cover Oregon never paid the company for those services.

Oracle also alleges that the state failed to hire a “systems integrator” to coordinate the work of several technology vendors and was consequently overwhelmed by directing dozens of subcontractors.

In addition, the complaint cites disagreements among state officials and then-Cover Oregon Executive Director Rocky King’s failure to understand the extent of the site’s technical issues as reasons for the failed website.

Melissa Navas — spokesperson for Kitzhaber — in a statement said, “The Governor is aware of the lawsuit and isn’t surprised by it; the State fully expected to end up in litigation over Oracle’s failure to deliver” (“Nation Now,” Los Angeles Times, 8/9).

CMS Says Md. On Track To Launch Updated Health Exchange Website

In related news, CMS Administrator Marilyn Tavenner in a letter last week to Maryland’s governor said the state appeared on schedule to transition to new technology for its health insurance exchange website, the Baltimore Sun reports (Cohn, Baltimore Sun, 8/8).

In May, a spokesperson from Maryland Health Connection said that switching to Connecticut’s technology was the cheapest option in fixing exchange glitches, costing the state an estimated $40 million to $50 million (iHealthBeat, 7/17).

The letter noted that CMS has reviewed the cost and practicality of using the same exchange platform as used in Connecticut and expressed confidence in the state’s ability to transition to new technology.

In addition, Tavenner wrote that Maryland has now met 17 of 21 milestones set by the agency.

Maryland’s Health Secretary Joshua Sharfstein said state officials expected the letter and intend to meet the remaining milestones before the next open enrollment period begins Nov. 15 (Baltimore Sun, 8/8).

Mass. To Keep State-Based Exchange

Meanwhile, Massachusetts officials on Friday announced that the state will use an updated state-based exchange website for the Affordable Care Act’s upcoming open enrollment period, rather than transition to, the New York Times reports (Bidgood, New York Times, 8/8).

In May, Massachusetts officials announced that the state was scrapping its glitch-plagued exchange website. The site encountered problems, including difficulties determining enrollees’ eligibility, when state officials began updating it to comply with the ACA (iHealthBeat, 5/6).

According to Maydad Cohen — a special assistant to Massachusetts Gov. Deval Patrick (D) — the state and various stakeholders “moved mountains” to make the necessary improvements to the site. He said that the state has several challenges remaining, including reaching out to consumers and transitioning residents onto exchange plans (Al-Faruque, The Hill, 8/8). He added, “I can’t breathe a sigh of relief right now. Nobody can” (Boston Globe, 8/8).

State officials are planning to reach out to about 450,000 residents who would need to apply for ACA-compliant plans during the upcoming open enrollment period, the Times reports (New York Times, 8/8).

Vt. Hires New Contractor To Fix Exchange Website

In related news, Vermont has announced that it is transitioning to a new contractor to complete work on its state-run exchange website, the AP/Washington Times reports.

The new company, Optum, has been hired to replace CGI because the Vermont Health Connect site still is not fully functional nearly a year after it launched, according to the AP/Times. For example:

  • Consumers cannot record changes to their addresses or names; and
  • Small businesses are unable to sign up for coverage.

CGI, which will continue to host the website, has received $57 million of its $83 million contract and will receive an extra $9.7 million for its work through Sept. 20, at which point Optum will take over (Ring, AP/Times, 8/4).


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