How Oregon's Obamacare Website Debacle Turned Into a Legal Blame Game

Oregon charges tech contractor on failed health law website with "racketeering, false claims, and broken contracts."


Cover Oregon

No state fared worse during the launch of Obamacare's health insurance exchanges than Oregon. The Beaver State was the first to announce a major delay in opening its online insurance portal, and the technology for the project—a $240 million project heavily funded through federal grants—never worked.

Earlier this year the state announced that it was scrapping the project in order to join the federal exchange.

What was intended to be one of Obamacare's biggest, boldest state-run exchanges, a model for the nation, turned out to be one of its most spectacular failures. Now the state and its contractor are both trying to escape fault—by blaming it on the other guy. 

Earlier this month, Oracle, the tech contractor behind the state's failed exchange, sued the state of Oregon. Oracle claims it is still owed $23 million for its work and claims that state officials have made the contractor a scapegoat, even while continuing to rely on its expertise behind the scenes. 

Oracle's case is that state authorities bungled the project's management: As the Los Angeles Times reported, the state never hired a project coordinator to make sure the different parts of the system actually worked together. And, as independent assessments of the botched project confirmed, state officials argued amongst themselves and altered the system requirements on multiple occasions. The person put in charge of the project was not tech savvy and did not grasp how serious the problems were. Oracle, which was dropped from the project earlier this summer, continued to attempt to fix the system, even as the state blasted the company's work.

"While flogging Oracle publicly, Cover Oregon continued privately to ask for Oracle's help. (Indeed it continues to this day to seek Oracle's technical help with the project)," Oracle's legal complaint states, according to the Los Angeles Times. "Oracle gave that help for many months, in spite of the public excoriation, because it was committed to helping Cover Oregon complete the project and because Cover Oregon repeatedly promised to pay Oracle for its services. In the end, though, Cover Oregon reneged on its promises, thus prompting this lawsuit."

Oracle has a point. It's clear that state officials were, at minimum, wildly optimistic, and probably pretty clueless about how serious the tech troubles really were long after they ought to have known. Cover Oregon, the organization in charge of the state's exchange, awarded and even expanded a $21 million contract to an advertising company to create a series of goofy, twee ads for the exchange even as the site was publicly failing. A month in, with the site still not working, Democratic Gov. John Kitzhaber could still be found offering confident, positive spin to local media. "I think we're in really good shape here in Oregon," he told KATU News at the end of October. "Do we have some problems? Yes. Are we concerned? Of course. But I believe we'll come through this very well."

Obviously that didn't happen. But according to the state of Oregon, it's Oracle that made false claims about the state of the project. The state's response to the contractor arrived last Friday in the form of a lawsuit of its own. The suit accuses Oracle of performing its contractually obligated duties in a manner so shoddy and negligent that it qualifies as "racketeering, fraud, and broken contracts."

In the suit, the state argues that Oracle "repeatedly breached" contracts worth hundreds of millions of dollars "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 willfully refusing to honor its warranty to fix its errors without charge." The tech company has attempted to bill the state and its exchange for more than $240 million, which given its performance, "amounts to a pattern of racketeering activity that has cost the State and Cover Oregon [the state's exchange] hundreds of millions of dollars."

Judging by the thoroughness of Cover Oregon's failures, there's little doubt that Oracle oversold its capabilities and delivered less-than-stellar work. But it's worth thinking about the state's charges for a moment. What the suit is saying is that when an organization promises a project it can't deliver and then spends hundreds of millions of dollars to produce a shoddy, incomplete product, that's racketeering? One might argue that that's basically what the promise-breaking, false-claim-making federal government did to the taxpayers—and to some extent what it's still doing—with the still-unfinished, still-incomplete, still-working-out-the-kinks federal exchange system. Oregon plans to spend about $5 million to connect to the federal exchange, but crucial back-end payment processing functionality, which was supposed to be complete in January, won't be completed until sometime next year.  

The dueling suits between Oregon and its contractor offer a reminder of how messy Obamacare's launch was, and how long it will take to deal with the damage. 

So who's to blame? We'll have to wait the courts to sort it all out, but neither side is particularly sympathetic. On the one hand is an incompetent bureaucracy attempting an ambitious, expensive vanity project despite the fact that state officials don't really understand how it's supposed to work. And other hand is an over-promising tech contractor attempting to make hundreds of millions of dollars off of taxpayers through a combination of tech-consultant hype-speak and shoddy programming work. It's kind of a shame they can't both lose. 

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  1. It still boggles my mind that anyone would trust Oracle to produce a functional piece of software (aside from their DBMS).

    1. Oracle and SAP are tops in business applications.

      1. Tallest midgets.

        1. As the poor sod who has to maintain some of both, I agree. Worst software I’ve had the misfortune of dealing with (aside from Office since 2007)

      2. SAP is garbage.

  2. Not gonna lie, I’m looking forward to the indie-folk promo about how Oregon strongly and proudly dumped its people onto an uncaring federal exchange after blowing $200 mil on a program that never worked.

    1. I can’t believe that thing is still limping along. If only websites were tangible, they could become ironically valuable collectibles like Edsels and DeLoreans.

  3. Crony capitalism at its finest.

    1. Are all state contracts crony capitalism? Or just when Democrats issue them?

      1. No, all state, county and city.

        I think there are a few fed ones that are just perks to constituent groups rather than directed to specific benificiaries.

  4. Odd, Tony usually gets assigned these threads when they are posted this late in the morning.

    1. When somebody dares to question the Messiah’s 5 Year Plan, Shriek just can’t help himself.

      1. Nothing is more libertarian than defending Democratic cronyism.

    2. At this point Shreek is the only one dumb enough to try and defend Obamacare. They are running out of trolls.

      1. You take that back! Tony is twice the fool one needs to be to defend Obamacare!

      2. Face the facts for once, John. Obamacare landed with a thud and now very few even notice it.


        Where have all those proclamations gone to? People care more about some illegals from Central America now.

        And even that is not sticking.

        BENGHAZI!!!!! BLOOP!!! DERP!!!

        Where is that little Annie Lennox lookalike – Trey Gowdy? He was in charge of some witch hunt, wasn’t he?

        1. It isn’t sentient.

          1. It is a turd.

        2. Turd.Burglar.

        3. Which is why all those Dems in contested districts are running hard on Obamacare right? And why they have a lock on the Senate this fall and are primed to take back the house, right?

          1. Replacing Democrats with Republicans is not much of an improvement.

            It’s like replacing Hitler with Stalin.

            1. Meh, more like Hitler with Mussolini.

        4. Palin’s Buttplug:

          Obamacare landed with a thud and now very few even notice it.


          Where have all those proclamations gone to?

          Palin’s Buttplug, 9/13/2013:

          If it is the disaster that IBC claims Dems will get slaughtered in the 2014 election.

          It’s funny how your own predictions of democrat doom and gloom become everyone else’s predictions of doom and gloom. Revising history is awesome.

        5. and now very few even notice it.

          WTF? I, for one, notice it every fucking day I go without health insurance because it got canceled by Obamacare. Most people are paying higher premiums. Many others won’t have employer provided insurance next year and have to go get royally screwed on the exchanges.

          1. I know very few people that ObamaCare doesn’t inappropriately touch them somehow. It is a topic on the street, just not as much mainstream press, But to PalinBP anything not immediately visible in the mainstream media doesn’t exist?

        6. Please, PB…you of all people do not get to use the word ‘derp’, EVER.

          1. It is a turd; do not expect sentience.

  5. I see a lot of articles about the “failure” of the Affordable Care act and the web site portals. Most articles, including this one, fail to draw the distinction between a problematic technology roll-out and any actual problems with the Affordable Care act. Would capitalism suddenly be suspect if a bank failed to properly implement a web site or major retailers had huge breaches of credit card data? If the largest failures that can be pointed out with the Affordable Care act are failures to properly implement a web site, it must be pretty good.

    1. Or they are separate issues that don’t have to be discussed together in every article to satisfy your hollow complaint.

    2. Grocery store still sells groceries.

      Bank still keeps money.

      Affordable — FAIL*

      Care — FAIL**

      Act — FAIL***

      *See numerous instances of harm to individuals and national budget neutrality.
      **See numerous instances of people losing access to doctors and facilities.
      ***See numerous instances of Obama’s treatment of the law as an Executive hobby rather than legislation with statutory dates, obligations, etc.

    3. At least you recognize that Obamacare is not capitalism.

    4. “Most articles… fail to draw the distinction between a problematic technology roll-out and any actual problems with the Affordable Care act.”

      There are plenty of articles about both here.

      Are you complaining about the shortage of either?

      here’s something where Sheldon Richman isn’t unreadable, and clarifies the basic economic flaws in the ACA’s design

      Here’s a piece showing that “Affordable Care Act” requirements have the obvious effect of *driving people out of the market for providing care*, which will ultimately drive costs *up* (despite the subsidies doing their damndest to hide this)

      The range and depth of criticisms of the ACA are endless. The retort that any single one of them fails to encompass the enormity of the shitshow that Obamacare presents is like saying we should be happy that 9/11 wasn’t as bad as the Firebombing of Tokyo.

    5. I count three logical fallacies in one paragraph, Bravo Idillon, Bravo!

      Could you insert a 4th? I’m working on my fallacy detector and I’d love to see that; thank you in advance.

  6. I know I’ll anger a few posters here but here goes. A reasonable “Root Cause Analysis” points the inability of the Oregon Bureaucracy to figure out what it wanted. Add to that the multitude of changes asked for by personnel that didn’t have the authority to ask for those changes. This governmental cluster f*&k directly affects Oracle’s ability to provide a product. Yes, Oracle may be inept but they would have at least provided some sort of semi-workable product that would have needed multiple and regular updates/fixes. The fault, IMHO, lies squarely on Oregon.

    1. Who did you anger, btw? because i think most people agree with that.

    2. I imagine it’s worse than that. I bet if someone got their hands on the documentation for this project they’d find a jumble of incoherent and conflicting requirements, most of which were requested a week before deployment.

      The most skilled design team in the world can’t turn a turd into rainbows and unicorns.

      And no, Oracle probably wouldn’t have been up to the task even with sane requirements.

    3. A reasonable “Root Cause Analysis” points the inability of the Oregon Bureaucracy to figure out what it wanted. Add to that the multitude of changes asked for by personnel that didn’t have the authority to ask for those changes. This governmental cluster f*&k directly affects Oracle’s ability to provide a product.

      I don’t think anyone here would be pissed at that assessment. It’s pretty much what happened with the federal website, too.

  7. my best friend’s mother makes $66 /hr on the computer . She has been without work for 7 months but last month her payment was $13283 just working on the computer for a few hours. go…..

    ?????? http://WWW.JOBSAA.COM

  8. Oracle f’d up. Oregon as a state provider failed to hire a good project manager. But that position should only have been as a conduit of information – meaning that the state of Oregon would end up not fully understanding how far behind schedule Oracle was. But that still means Oracle was way behind schedule. My guess would be that Oracle saw a cash cow (just like the fed developers) and simply put crappy developers on to it. They were work for hire with little incentive (outside of making sure the milk kept flowing) to keep the project efficient. There’s too much money be thrown around not to blame both sides for a supreme amount of incompetence.

  9. I’m sure Oracle did a less than stellar job and was less than honest with the state of the project. I am also sure they used incompetent offshore personnel to cut their costs everywhere possible but I’m placing the blame here on the state.

    There is no realistic way Oracle could have done a good job even if they had wanted to because the timeline was unrealistic and I’ll bet they were required by law to use cheaper offshore labor but most importantly the lack of official gatekeepers and responsible product managers (who by definition had to be hired by the state not the contractor) to ensure requirements were delivered in clear concise unambiguious language and then keep the requirements from changing significantly after they are finalized and work has started.

  10. Obviously, pissing away $240 million of taxpayer money is not such a big deal in Oregon where the proletariat appears ready to re-elect John “Governor for Life” Kitzhaber to an unprecedented 4th term.

  11. “Oregon charges tech contractor on failed health law website with “racketeering, false claims, and broken contracts.””

    US citizens charge the Obo admin with “racketeering, false claims, and broken contracts.” over O-care!

  12. Having spent a lot of time in Oregon it is easy to believe that the people running the project were arrogantly convinced of their own intellectual superiority while simultaneously demonstrating their incompetence.

    Having worked on projects like the one Oracle was hired for it’s easy for me to believe that they over sold and under delivered.

    In the end though it likely boils down to poor requirements management on both sides and unrealistic schedules providing the nails for this coffin.

  13. well! The Obama health care program has been cost a lot. As you may see, the federal government’s Obamacare enrollment system has cost about $2.1 billion so far.

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