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What are the details of the lawsuit of Oracle by Oregon for the failed Obamacare website?
The details can be found here in the original PDF of the complaint: http://www.doj.state.or.us/releases/pdf/FINAL_Complaint_8_22_14.pdfI've excerpted the main complaint here:Oracle America, Inc. ("Oracle") fraudulently induced the State of Oregon (the "State") and the Oregon Health Insurance Exchange Corporation ("Cover Oregon") to enter into contracts for the purchase of hundreds of millions of dollars of Oracle products and services that failed to perform as promised. Oracle 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. Over the last three years, Oracle has presented the State and Cover Oregon with some $240,280,008 in false claims under those contracts. Oracle’s conduct amounts to a pattern of racketeering activity that has cost the State and Cover Oregon hundreds of millions of dollars. Accordingly, plaintiff Ellen Rosenblum, the Attorney General for the State of Oregon, along with the State and Cover Oregon, brings this lawsuit to recover losses to the State and Cover Oregon caused by Oracle’s fraud, racketeering, false claims, and broken contracts.In 2011, the State of Oregon had two needs. One was to build a State-run health insurance exchange that met the requirements of the Patient Protection and Affordable Care Act (“ACA”). The other was to modernize its aging social services computer systems. Oracle claimed it had the answer, the so-called “Oracle Solution for Oregon.”Oracle lied to the State about the “Oracle Solution.” Oracle lied when it said the “Oracle Solution” could meet both of the State’s needs with Oracle products that worked “out-of-the-box.” Oracle lied when it said its products were “flexible,” “integrated,” worked “easily” with other programs, required little customization and could be set up quickly. Oracle lied when it claimed it had “the most comprehensive and secure solution with regards to the total functionality necessary for Oregon.”Initially, long before Oracle’s fraud was revealed, the State was impressed with Oracle — and with reason. The Oregon Department of Human Services (“DHS”) and the Oregon Health Authority (“OHA”) held a series of meetings with Oracle throughout 2010 and 2011. Oracle made presentations, provided demonstrations, and answered questions that convincingly addressed all of the State’s concerns about the ability of Oracle to meet its needs. Independent outside evaluators agreed. They reviewed Oracle’s claims and recommended that the State purchase the “Oracle Solution.” Oracle’s fraudulent representations induced DHS and OHA to sign the first contract in June 2011 for Oracle to build a single platform for both a health insurance exchange (the “HIX-IT Project”) and to modernize the State’s social services technology (the “Modernization Project”).As soon as the first contract was signed, Oracle took control of both Projects. DHS and OHA initially planned to hire an independent “Systems Integrator” to manage the Projects and implement the “Oracle Solution.” Oracle was dead set against the State hiring an independent Systems Integrator. According to a former Oracle employee, Oracle advanced a “planned * * * behind-the-scenes effort” to convince the State “that a Systems Integrator would just cause * * * delay.” The former employee explained that “the message was we’ve got to make sure that [the State] doesn’t bring [a Systems Integrator] in because it’s * * * just going to cause us trouble.” 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.Oracle’s behind-the-scene scheme paid off, for Oracle. 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 not only was responsible for all technology, it tightly controlled access to the software development environments, so that the State had to rely on Oracle’s demonstrations and reports to learn about Oracle’s progress on the Projects.In 2013, the State transitioned the HIX-IT Project to Cover Oregon, a State-created public corporation responsible for running Oregon’s health insurance exchange. Cover Oregon needed to launch the exchange to the public on October 1, 2013, to ensure that Oregonians would be able to enroll in health insurance online in time to meet federal deadlines. Oracle assured Cover Oregon that the exchange would be ready to launch on October 1. Oracle presented Cover Oregon detailed spreadsheets showing that the HIX-IT Project was nearly 80% complete. Cover Oregon relied on Oracle’s statements and entered contracts with Oracle to complete the HIX-IT Project.In the spring, summer, and fall of 2013, Oracle failed to deliver. At first, Oracle asked Cover Oregon to reduce the scope of the HIX-IT Project. In order to meet its October 1 launch date, Cover Oregon had no choice but to agree. But even with a reduced scope, Oracle fell far behind schedule. By the summer of 2013, it was evident that, despite its assurances, Oracle would fail to complete by October 1 a key element of the exchange—a website portal for small employers and their employees to shop for and purchase insurance. Nonetheless, Oracle employees assured Cover Oregon that the centerpiece of the HIX-IT Project—a website portal for individual Oregonians to review, compare, and purchase health insurance—would be ready to launch on schedule. By late September, however, when Oracle was unable to demonstrate a working website, Cover Oregon realized that Oracle’s assurances were worthless. On October 1, Oregon’s health insurance exchange was not ready for public launch.Despite Oracle’s failure, its executives continued to demand full payment, while promising the exchange would be ready to launch, first by mid-October 2013, then by the end of October, then in December, then January 2014, then February. Again and again, Oracle broke its promises, missing every promised date. Without the website portal that the State and Cover Oregon had already paid Oracle more than $100,000,000 to build, Cover Oregon and the State each hired hundreds of additional employees and expedited their training, in order to manually enroll Oregonians in health insurance, Medicaid, and other programs by hand processing paper applications.In the spring of 2014, Oracle’s president claimed that the exchange had been ready to launch in February 2014. Her self-serving claim was belied by assessments performed by independent experts. In January, a review conducted on behalf of the federal government reported that “there are still significant performance issues with the system such that, while the core functionality exists, the end user experience would be significantly diminished.” In April, Cover Oregon staff identified 1,198 errors that required repair before the system could be considered for a public launch. That same month, an independent assessment concluded that it would cost tens of millions of dollars and take more than a year to fix Oracle’s abysmal and incomplete work.Oracle willfully refused to fix its defective work under its warranty, continually demanded to be paid, and threatened to walk off the job if it were not paid, jeopardizing Cover Oregon’s ability to meet the needs of Oregonians during open enrollment for health care. Realizing Oracle would never live up to its obligations, Cover Oregon began work to transition to a federally run system. The State and Cover Oregon are unable to use most of Oracle’s shoddy and incomplete work.Oracle sold the State of Oregon a lie. According to a former Oracle employee, “There was no solution.” The cobbled together collection of products that Oracle called the “Oracle Solution” was not flexible, was not integrated, and most importantly, did not work “out-of-the-box.” Oracle’s 2010 and 2011 claims to DHS and OHA were patently and categorically false.Not only were Oracle’s claims lies, Oracle’s work was abysmal. One developer experienced in Oracle products called Oracle’s programming “atrocious.” He added that “they broke every single best practice that Oracle themselves have defined. It is one of the worst assessments I have performed * * *.” The same developer wrote to Oracle, “You are Oracle people, working on an Oracle hardware platform, with Oracle technology products, on an Oracle solution. * * * Oracle should be delivering these environments and products as a solution, like they actually understood the products and owned the solution which has not been the case by a long shot.” According to an independent quality assessment conducted in October 2013, Oracle’s “processes do not meet industry standards. Impact analysis, code review, coding standards and proper parallel development techniques are ad hoc and inconsistently applied or understood.” Another assessment stated simply that “Oracle’s performance is clearly lacking.” A former Oracle employee was more direct saying Oracle’s products were seemingly configured “by a kindergartner.”The cost of Oracle’s lies and appalling work is extraordinary. The State and Cover Oregon paid Oracle approximately $240,280,008 for a health insurance exchange that never worked as promised and a modernization program that never got off the ground. The State has and will spend tens of millions more fixing or compensating for Oracle’s failures, including millions of dollars to process paper applications, to create a manual enrollment and insurance eligibility determination process, to transition to the federal health insurance exchange, to fix Medicaid enrollment, to independently assess and repair Oracle’s failures, and to connect to the federal exchange.In short, Oracle employed false statements to induce the State, and later Cover Oregon, to employ Oracle and related defendants to undertake Projects that were central to the social programs and healthcare needs of hundreds of thousands of Oregonians. In addition, Oracle employed false statements to expand Oracle's role in the Projects and, thus, increase its profits. The result was that Oracle had nearly unfettered control of the Modernization and HIX- IT projects. Then, when problems arose and plaintiffs were in a terrible bind due to the looming deadlines related to the health exchange, Oracle made further false statements to induce the State and Cover Oregon to stay the course. In effect, Oracle used its purported superior expertise, coupled with lies and pressing deadlines, to trap the State and Cover Oregon in a deadly spiral: at each juncture Oracle charged more and Oregon got less.Oracle has never offered to return a penny of $240,280,008 it fraudulently obtained or to pay for any of the millions its failures cost the State. On the contrary, on August 8, 2014, Oracle filed a lawsuit riddled with false and irrelevant allegations against Cover Oregon, claiming that Cover Oregon owes Oracle an additional $23,000,000 for the “Oracle Solution” that never worked.
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