Oregon is again suing the technology company that built its failed insurance exchange because the contractor now wants to bow out of running Oregon's Medicaid enrollment system before the state is ready to switch to a new one.
The state filed the lawsuit against Oracle on Feb. 13 after a number of alleged problems with the company, including the botched launch of the state's health insurance exchange. The state alleges the company suddenly told officials Feb. 5 that it would not renew its contract with the state despite promising otherwise.
“Tens of thousands of Oregonians will be unable to enroll in Medicaid, leaving them without access to affordable health care,” according to the complaint filed in state court. “In addition, if the State is unable to provide timely Medicaid enrollment to its citizens, it may lose federal funding for Medicaid services, as well as funding for other Medicaid technology projects, including the project to transfer from an Oracle-based system to the Transfer System.”
The state already decided late last year to abandon the Oracle system in favor of an online Medicaid enrollment system from Kentucky. But it had planned to continue using the Oracle system until a transfer to the new system was complete at the end of 2015. Oracle has said it plans to terminate its services to the state at the end of February.
Oracle declined to comment on the lawsuit Thursday, but Oracle Senior Vice President, General Counsel and Secretary Dorian Daley sent a letter to Oregon's deputy attorney general Feb. 10 addressing some of the allegations. She said Oracle disagrees that it ever promised to renew its contract with the state. Daley accused Oregon of blaming Oracle for its problems because “it suited the governor's re-election strategy.”
“Indeed, in early December, Oracle learned from reading the newspaper that the State believed the technology Oracle developed could not be salvaged, and the State planned to abandon it in favor of moving to the Kentucky system,” the letter states. “But now you are demanding that Oracle keep that very same system—the system that the State has been telling the world does not work—up and running because it is critical to signing up thousands of Oregonians for Medicaid.”
The lawsuit is not the first legal action between Oracle and Oregon. Oracle sued the state last year, saying government officials were using the company's software despite $23 million in disputed bills. Oregon also filed another lawsuit against the company last year over the bungled insurance exchange website.
The state ultimately decided to abandon the exchange built on Oracle's technology and this year is relying on the federal HealthCare.gov website as its enrollment portal.
Follow Lisa Schencker on Twitter: @lschencker
