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Oracle slaps Oregon with a lawsuit over troubled Obamacare website

Chris Kanaracus | Aug. 12, 2014
Oracle has sued Oregon for breach of contract, seeking more than US$20 million in fees the state is withholding for its work on Cover Oregon, a troubled insurance exchange website developed as part of President Barack Obama's health care policy overhaul.

"If you have made such changes, please send a written description of each change, including when you made it," Screven said. "Also, please do not make any more changes. [E]ven trivial changes can result in confusion that leads to serious mistakes down the road, and even an expert can make mistakes."

Reynolds' response to Screven was terse.

"I thought Cover Oregon paid for and owned the system ...," he wrote. "Thanks."

Earlier this year, Oregon officials decided to move its exchange to the federal website, rather than complete the Cover Oregon project.

Oracle maintains it hasn't been paid in full for its product and is seeking at least $23 million in restitution for the work it performed, along with additional damages.

A spokesperson for Kitzhaber didn't immediately respond to a request for comment on Monday.

But Kitzhaber spokeswoman Melissa Navas told the Oregonian newspaper that Kitzhaber "is aware of the lawsuit and isn't surprised by it." The state's attorney general will review the complaint "and continue to pursue legal remedies on behalf of the State," Navas added.

"The Oracle lawsuit does not affect Cover Oregon as we move forward to ensure Oregonians can enroll in health insurance in November," a Cover Oregon spokeswoman said via email. "It also doesn't affect Cover Oregon daily operations or customers in any way."

Oracle "is making a pretty strong case" for itself in the complaint, said analyst Michael Krigsman, CEO of consulting firm Asuret and an expert on why many IT projects struggle and fail.

The lawsuit represents a few important things for Oracle, Krigsman added. "It's the money, it's their reputation, and number three is to send a signal to the market that they're not simply going to roll over, they're going to take an aggressive stance in this type of situation," he said.

That's not to say Oracle is entirely without fault, Krigsman added. Independent reports on Cover Oregon have found fault with both Oracle and state officials.

"With these complex IT projects most of the time it's virtually impossible to say that blame or responsibility lies completely on one side or the other," he said. "The two sides are very intertwined during the execution of the project."


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