Oregon sues Oracle over failed health care exchange

Oregon sues Oracle over failed health care exchange

Summary: Having spent $240 million for a non-functioning Cover Oregon site, the state is now attempting to recover money in the courts.

SHARE:
19

The state of Oregon has filed suit in state court against Oracle America Inc. and six executives Friday. The suit accuses Oracle of fraud in the company's development of Cover Oregon, the state's health care exchange. It seeks recovery of Cover Oregon's financial losses, plus penalties for damages.

Special Feature

Enterprise software: The big trends and why they matter

Enterprise software: The big trends and why they matter

The applications that run businesses are undergoing profound changes, although there's also a lot of inertia in the system. We examine some of the key trends — including cloud adoption, mobility, consumerisation and business analytics — that are shaping tomorrow's enterprise software landscape.

The suit follows an August 8 suit by Oracle against Oregon, blaming the failed project on the state's management of it. That suit seeks at least $23 million in addition to approximately $130 million Oracle has already collected from the state. In all, the state spent at least $240 million on the project.

The actual Oregon complaint lists the six Oracle executives as Stephen Bartolo (Vice President, Engineered Systems and Hardware), Thomas Budnar (Vice President for North America Government Consulting), Kevn Curry (formerly Group Vice President for North America Public Sector), Safra Catz (President and Chief Financial Officer), Brian Kim (formerly Technical Manager) and Ravi Puri (formerly Senior Vice President for North America Technology and Government Consulting). Also named as a defendant is Mythics, Inc., an Oracle reseller and consulting firm. The complaint is 126 pages long.

Reuters quoted an Oracle statement saying the suit "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."

The language in the Oracle complaint is also indignant, quoting a whistleblowing former Oracle employee who called the company's work "atrocious" and that Oracle's developers "broke every single best practice that Oracle themselves have defined."

In a statement, Oregon Governor John Kitzhaber said "[t]he complaint filed contains serious new allegations of fraud, deceit, and corruption by Oracle. "

Topics: Government US, Oracle

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

19 comments
Log in or register to join the discussion
  • Popcorn time

    The case is definitely interesting. I have no idea who's right and who's wrong, so I'm more than happy to defer to the court. It wouldn't surprise me if there were shady deals involved (given that Oracle is involved), but suspicion is not evidence, so we'll see what happens.

    May the judge(s) and jury do their jobs well.
    John L. Ries
    • Some topical reading material

      What went wrong? Lot's of things went wrong:

      http://www.katu.com/news/investigators/We-look-like-fools-A-history-of-Cover-Oregons-failure-239699521.html

      Who paid for this? U.S. taxpayers paid the bill as the State of Oregon used federal grant moneys from the U.S. Department of Health and Human Services:

      http://www.oregonlive.com/politics/index.ssf/2013/01/oregon_receives_226_million_fe.html

      Happy reading! :)
      Rabid Howler Monkey
  • Article: "$240 million for a non-functioning Cover Oregon site"

    Almost makes the $1 billion for a functioning HealthCare.gov site sound like a bargain. Perhaps, the State of Oregon should not have been so cheap and spent a bit more money. Then, at least, they'd have something that works. [~s, sarcasm flag included for Danny O]

    Interesting that Larry Ellison was not named in the complaint. Otherwise, if the State of Oregon were to win, they could accept Lanai (minus most of Lanai City) as payment in lieu of cash.
    Rabid Howler Monkey
    • Interesting concept

      One state owning a sizable portion of another? Lanai would still be part of Hawaii (so I would think that Hawaii's laws would be in force) and Oregon would be a mere landholder, but would Oregon have to pay property taxes to Hawaii?
      John L. Ries
    • Please...

      "Perhaps, the State of Oregon should not have been so cheap and spent a bit more money."

      Please, they hired Oracle, one of the nation's premier database and software development companies, and paid them $240,000,000 to develop an e-commerce site with a database back end. If Oracle can't deliver a functional site with those sorts of financial incentives, then the company is a joke.
      dsf3g
      • Oracle Competent?

        Isn't that an oxymoron?
        Linux_Lurker
      • They can

        They can and do all the time. The fault for a failed project like this is almost always the people writing the requirements. With government you get a lot of vague, ideology based requirements that are technically unfeasible. They're used to be being about to declare things to be true by voting rather than making them scientifically true.
        Buster Friendly
        • C'mon, Buster

          Here's the list of current State marketplaces under the ACA:

          California
          Colorado
          Connecticut
          District of Columbia
          Hawaii
          Idaho
          Kentucky
          Maryland
          Massachusetts
          Minnesota
          Mississippi
          Nevada
          New Mexico
          New York
          Oregon
          Rhode Island
          Utah
          Vermont
          Washington

          Source:
          http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/state-marketplaces.html

          Thus far, the exchange in only one of these States, Oregon, has been a total and complete wreck. The investigative reporting on this matter by KATU of Portland, Oregon, is both interesting and shocking, to say the least.

          P.S. Next time I'll leave the sarcasm flag out of my post as it didn't seem to matter here.

          P.P.S. As for the U.S. government and science, consider the following:

          o Centers for Disease Control and Prevention
          o NASA
          o National Institutes of Health
          o National Institute of Standards and Technology
          o National Oceanic and Atmospheric Administration
          o National Science Foundation
          o National Weather Service
          o U.S. Geological Survey

          Not the entire list, but this is what comes to mind.
          Rabid Howler Monkey
  • You see these stories all the time

    The public tends to forget them quickly.

    It isn't just Oracle or just a few of these guys, massive expensive mega-project failures are everywhere.

    Part of it comes from these vendors over-promising miracles they know they can't pull off after in-house staff gets cut out of the process as "too negative" when these high visibility, high ticket projects get put into the hands of obtuse sycophants. Requirements quickly spiral to insane levels and professional input is denied.

    So along come the vendors with promises just as unrealistic, a vendor (usually with "an in" already) is picked, and several years and boatloads of cash later the house of cards comes down.
    dilettante
    • Amen brother!

      You nailed it...

      "vendors over-promising miracles"
      "in-house staff gets cut out of the process as "too negative"
      "put into the hands of obtuse sycophants"
      "professional input is denied"

      I've been labeled as "too negative" for stating actual specific real-world facts/problems. And don't get me started on the "obtuse sycophants" who always end up putting the blame on the stubbornly recalcitrant uncooperative end-users (who were never asked for input in the first place).

      Oh well, to quote a great philosopher of the 20th century: "stupid is as stupid does".
      Coogol
  • I guarentee

    I guarantee it has nothing to do with Oracle but the Oregon bureaucracy delivering inaccurate and constantly changing requirements. It's the same as the federal level healthcare site. You don't have to be in the software business very long to know that's almost always the reason for project failure. They're just doing the standard pass the buck tactic to keep their jobs.
    Buster Friendly
  • Let me guess . . . .

    Let me guess . . . .

    Contracted out to the lowest bidder, perhaps?

    Great way to ensure inadequate funding.

    In any case, I suppose the evidence will determine who is right and who is wrong.
    CobraA1
  • Cerner

    But hind sight is 20/20.
    Bill4
  • If it was Microsoft this would not happen

    Maybe its time some of these states and public sector businesses work with Microsoft pure solution from the ground up.
    adacosta38
    • MS?

      MS would in the same situation, poorly written initial specs that are constantly changing without a full understanding of the technical problems. Most of the real backends are none MS.
      Linux_Lurker
    • Microsoft and Accenture teamed up for TradeElect used at the LSE

      where LSE = London Stock Exchange.

      The customer in this case was the LSE. TradeElect was scrapped and replaced by Millennium IT after a massive failure.

      Thus, there's no government entity to blame for this IT failure. Oh, and Oracle Solaris and flagship DBMS were an important part of Millennium IT's solution.
      Rabid Howler Monkey
    • you're right

      Because Microsoft does not do this kind of work for hire. It would also not happen to General Foods or the National Football League, because they don't do IT for hire work either.

      So yes, you're absolutely right.
      Mac_PC_FenceSitter
  • Oregon State Government Corrupt as all Git Out

    Things aren't always what they seem. Below is a recent letter sent to Oregon's Attorney General that was circulating around Oregon's State Data Center. If the contents of this letter contains any truth, then it seems there is more than meets the eye regarding the Cover Oregon fiasco.

    ----------------------------------------
    September 17, 2013

    Dear Attorney General Rosenblum,

    Thank you for Alejandrina Salinas' response (see attached) to my email addressed to you. See below.

    Of all our more colorful episodes over the years working for the State of Oregon, your rather odd and generic response is among the more disappointing and obtuse yet received.

    Yes, some of us recently engaged BOLI. However, surely you are aware that BOLI does not investigate potential crimes and their investigations are limited to retaliation against whistleblowers and civil rights violations and even then BOLI only pursues infractions going back a mere 12 months. Thus leaving only a small remnant of infractions to investigate which amounts to little more than a few dozen pieces of a 1000-piece puzzle.

    In 2009, OCCR deputy commissioner Doug McKean accurately defined the distinctions between BOLI and the DOJ responsibilities when he said,

    “Civil rights laws are under ORS Chapter 659A, which gives BOLI specific jurisdiction / enforcement authority. ORS Chapter 659A includes all civil rights protections relating to employment, housing and public accommodations. The AG handles protections not found in ORS Chapter 659A, such as free speech issues or criminal matters, like hate crimes. “

    Yet, your response gives clear indication that the Department of Justice has zero interest in even hearing about potential criminal activity occurring within state government, much less evaluate or investigate. At best, it seems that you are naïve about the roles and responsibilities of the Department of Justice, BOLI, etc. At worst, it seems you are hoping that we are too naïve to realize the difference.

    In short, a group of DAS employees have been trying to find a legitimate state authority to report 10 years or more of allegations including routine retaliation against whistleblowers, sexual orientation and racial discrimination, defamation, abuse of authority, misuse of state resources, theft of public funds, willfully mutilating state records, mail and wire fraud, defamation, work-out-of-class, nepotism, harassment, intimidation, bullying, unfair workplace standards including hiring, promoting, and training, and numerous other infractions. Not to mention the stolen careers, the defamation of character, the 4 out on stress leave for months at a time now, or those under psychiatric care and medication solely for work-related matters, or the many other benefits of working in a corrupt and hostile work environment, etc., or the others too afraid to come forward for fear of further retaliation.

    Our list of potential wrongdoers continues to grow and presently includes DAS team leads, managers, deputy administrators, administrators, Human Resources personnel, managers, and directors, Chief Operating Office personnel, Labor Relations personnel, Secretary of State personnel, SEIU Union Local 503, and now possibly Oregon Department of Justice personnel.

    Thus far we’ve failed to locate a single legitimate reporting authority within the state. For example, in addition to reaching out to you, we know that the COO has been aware of our many allegations for 9 months or more. Not only is there a lack of evidence the COO has taken a single step to stop the hemorrhaging, matters have grown progressively worse during this time. Last November 5th, I contacted the governor’s office who turned my matter over to Labor Relation who, following standard protocol, turned the matter over to DAS so DAS could investigate DAS. Is it even worth mentioning that DAS found itself innocent of all wrongdoing? And then there’s the SEIU union, whose sole purpose appears to be that of sheepdogs acting on behalf of the shepherd (state management) to gather any stray sheople back into the fold while simultaneously extorting monthly dues from them under the pretense of acting as their advocate.

    Frankly, we’re tired of what seems to be a state government operating without any apparent adult supervision and all its bogus laws, policies, and union contracts used to create a fortress making it near impossible for whistleblowers and victims to penetrate.

    For this reason I’m bcc’ing this email to the FBI, National Labor Relations Board, and others who may well be interested to hear what you apparently want no part of. That at the core of Oregon state government, it seems there exists a thread of personnel in key positions of authority committing routine patterns of civil and criminal wrongdoing and other key authorities running interference just like an organized crime operation. The fact that the outcomes and responses (including your own) from expressing our grievances perhaps without exception are entirely predictable only substantiates our racketeering claims against the enterprise. As would the findings from the recently publicized investigation at Oregon Employment Division whose reported infractions look like child’s play in comparison to those inside DAS.

    Lastly, we are greatly concerned about another key statement made by Mr. McKean at that same 2009 OCCR meeting:

    “DOJ also plays a role in BOLI’s enforcement of civil rights law as the legal representative for all executive branch state agencies. The DOJ represents BOLI as its attorney if decisions made by BOLI are appealed to the Court of Appeals or BOLI needs to seek formal legal advice on an issue.”

    On the surface, this statement sounds legitimate enough, especially if the offending enterprise was a Fortune 100 company. But who’s kidding whom here? If the DOJ cares nothing about alleged criminal infractions occurring inside state government, who in their right mind would think the DOJ is capable of providing objective legal advice regarding civil infractions? The deck doesn’t get any more stacked than this.

    Respectfully,

    (Oregon State Data Center employee's name redacted)

    As for this State of Oregon employee, I know for a fact nothing has been done about any of the concerns raised in this letter. So maybe this knowledge sheds a bit of light between the Oregon vs Oracle matter.
    oregongovtmafia
  • I'd like to see success / failure stats

    for the implementation of large and complex IT projects out of the gate, regardless who the overpaid administrators, contractors, and consultants might be. My guess is the majority of large and complex IT projects, in both the public and private sectors, are expensive disasters that "eventually" get podged to functionality. Then everybody forgets the process and remembers what life was like without the screens.
    I2k4