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Oracle Assails State’s “False Narrative” Explaining Cover Oregon Debacle

Asserts Oregon has only itself to blame for health insurance website woes

5 min read

Oracle Assails State’s “False Narrative” Explaining Cover Oregon Debacle
This Dec. 10, 2013, file photo shows Cover Oregon Executive Director Dr. Bruce Goldberg at a news conference at Cover Oregon headquarters in Durham, Ore. With the open enrollment deadline approaching, some states running their own health insurance exchanges are focused less on getting robust sign-ups than on avoiding total disaster.
Photo: Gosia Wozniacka/AP Photo

IT Hiccups of the Week

Last week was a very, very quiet week with only a few IT-related errors, malfunctions or problems being reported. So, for this week’s edition of IT Hiccups, we decided to revisit the ongoing and increasingly nasty public dispute surrounding Oregon’s health insurance exchange. Things took an interesting turn last week, courtesy of Oracle’s irate letter telling state government officials to quit lying about the company's role in the debacle.

As I wrote recently, Oregon’s attempt to implement its own health insurance exchange, called Cover Oregon, by 1 October 2013 to support the requirements of the Affordable Care Act (ACA) has not been exactly stellar. The state, after spending $200 million, is still trying to decide whether it will fix its website (no member of the public has ever directly enrolled for state health insurance coverage using it), use another state’s exchange software (like Maryland has decided to do), or default to using the Federal exchange. As I noted last week, news reports state that the number of “most serious programming bugs” discovered in Oregon's healthcare website implementation has reportedly grown from 13 in January to over 300 currently. State officials are supposed to decide any day now which alternative is most appealing.

Oregon state officials have not been shy about blaming its major software supplier, Oracle, for its problems. As a story at MSN last November documented, in a state hearing into the causes behind the Cover Oregon’s woes, Cover Oregon board member Ken Allen said:

“This is their [Oracle’s] failure. . . Their dates have shifted and shifted and shifted. . . The Cover Oregon staff are tremendously dedicated folks who have worked really hard. . . All of that good will and support from the business community is being frittered away because Oracle didn’t get it online. It’s 98% Oracle’s screw up.”

Democratic Oregon Senator Jeff Merkley also pointed the finger in November at Oracle on NBC’s Nightly News television program, saying that:

“Oracle was contracted to write the exchange. They promised it would be fully delivered on time, it would be beautiful and do more than any other exchange in the country, and it's in complete dysfunction.”

Merkley has continued placing the blame on Oracle in subsequent public appearances, as did Cover Oregon’s previous CIO Aaron Karjala, and Governor John Kitzhaber, who also claimed he was in the dark about how bad the problems really were. Kitzhaber did concede that the state may have been a bit at fault, but only in terms of having had an “unrealistically high sense of optimism that Oracle could deliver.”

Early in March, Oregon and Oracle reached an agreement to basically end the contract. The new deal calls for the state to pay Oracle $43.9 million of the $69.5 million the company claimed it was owed for its Cover Oregon work from November last year through February of 2014. Oracle had already been paid some $90 million for its previous project efforts. According to the agreement, at the end of sixty days, both sides could seek legal recourse to recover monies each thought due it.

The rapidly approaching end of the sixty-day period and the recent appointment of a new Cover Oregon executive director, Clyde Hamstreet, may well explain why Oracle President and Chief Financial Officer Safra Catz decided to end the company's silence about what it believed went wrong. Last week, Catz sent what can only be termed a provocative letter (pdf) to Hamstreet demanding the state to quit spreading a “false narrative” that seeks to blame the company for everything wrong with Cover Oregon.

Catz says in her letter that “contrary” to what Oregon officials have been telling the press, Oracle was never the lead in charge of the Oregon Health Exchange effort. In fact, Oregon “by choice and by contract, were squarely in charge of the project,” she writes. And in spite of repeatedly being told by outside experts to hire a system integrator and promises that it would do so, Catz said, Oregon declined to hire one.

Oracle’s only role was to “assist” the state with various tasks, Catz states. In addition, Oracle “provided clear and repeated warnings” for months that the effort was in trouble. A person “with even minimal IT expertise would have known that the system would not, and could not, go live on October 1.” Furthermore, some “critical specifications” were not given to Oracle until November 2013.

Catz goes on to say that the Cover Oregon system is actually working and has been for several weeks, despite the state saying it is not. System availability now usually is “exceeding 99%” and “the current error rate has dropped to 0.7%.” Catz says individuals could indeed sign up using the Cover Oregon website, but for some unexplained reason, the state refuses to let that happen.

Catz finishes her letter with a parting shot telling the state to do itself a favor and hire a systems integrator, as it promised it would do “at the beginning of the project.”

Cover Oregon’s Hamstreet wrote back (pdf) to Catz saying he was still getting up to speed, and couldn’t yet comment directly on the “factual assertions” contained in her letter.  However, he was forwarding her letter to Cover Oregon’s lawyers.

Hamstreet apparently has a great deal of experience in troubled projects, which might be one reason Catz decided to write to him as soon as he was hired. He probably knows that rarely is one party fully to blame for an IT debacle. In addition, Catz probably wanted to try to encourage Hamstreet to look deeper into the history of Cover Oregon, as well as put the state on warning that if a lawsuit ensues, Oracle will be looking to embarrass Cover Oregon and other state officials as much as possible.

In Oracle’s favor is that even a simple Internet search immediately turns up warnings of deep trouble (pdf) with the project dating back to 2012. Also, the Centers for Medicare & Medicaid Services released an independent report (pdf) about Cover Oregon in February of this year that described Oregon’s management of the effort, in not so many words, as abysmally amateurish.

This is not to absolve Oracle in any way, however. The company didn’t seem to have any problems taking the state’s money and running, as it were. If things were really so bad, and Oregon reneged on its promise to hire a systems integrator as Catz claimed, why didn’t Oracle immediately ask to be let out of the contract? In addition, for Catz to claim that Oracle was there to merely “assist” the state is clearly disingenuous. To say that Catz’s letter shows more than a little hubris and hypocrisy is putting it mildly.

It will be interesting to see whether Oregon or Oracle decide to take legal action against the other in the next few weeks. Although it would be fun to watch, my guess is no, since it looks like a real lose-lose situation. Oracle risks more damage to its reputation, as does Gov. Kitzhaber, who is running for reelection.

Amid this contretemps is even more drama: the former CIO for the Oregon Health Authority is contemplating suing Oregon for wrongful discharge and defamation—among other charges—based on what she claims is retribution for refusing to go along with a “cover-up” of the problems with Cover Oregon. Other state officials are probably not anxious to get hauled into court to testify about what they knew and when they knew it.  

So after a bit more public sword play among all the parties to leave a perception of really caring about wasting taxpayer monies, I expect this debacle will eventually be buried and forgotten, like so many other government IT projects before it.

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