Oregon’s Legal Battle With Oracle Over IT Contracts Heats Up

| February 20, 2015 |

Oregon last week filed a lawsuit in state circuit court against Oracle, asking the judge to force the company to continue to allow the state to use its Medicaid enrollment software after its contract expires at the end of this month, the AP/Sacramento Bee reports.

Previous Legal Issues Between Oregon, Oracle

Oregon in August 2014 filed a lawsuit against Oracle America and several of its top executives, accusing the company of fraud and breach of contract that cost the state hundreds of millions of dollars and left residents without a functioning state-run exchange website.

The state already severed ties with Oracle in March 2014 because the site it developed, Cover Oregon, was so plagued by technological glitches that no residents had been able to enroll in coverage online (iHealthBeat, 8/25/14).

Details of New Lawsuit

According to the new lawsuit, the state’s Medicaid system, which uses Oracle’s technology, processes about 26,000 beneficiaries per week (Wozniacka, AP/Sacramento Bee, 2/18). The lawsuit contends that Oracle promised the state that it would continue to host Medicaid enrollment for the state until December, when a new system, obtained from Kentucky, is expected to be in place. It states that if Oracle is not forced to continue to host the Medicaid enrollment system, “[t]he state will be unable to enroll people in Medicaid” (Budnick, The Oregonian, 2/17).

In addition, the lawsuit requests a permanent injunction that would prohibit Oracle from doing business with Oregon in the future.

Oracle Response

Oracle Senior Vice President and General Counsel Dorian Daley in a letter to state officials said Oregon did not make any binding promises to the state and that the contract to use the company’s software does not have a provision to renew the contract. Oracle said the state is at fault for not having a contingency plan.

Further, the letter states that Oracle does not want to do business with Oregon because of the state’s legal actions against the company.

The letter also said the permanent injunction request “is simply incompatible with continuing to ask Oracle to enter into new agreements with the state.” It added that the state’s “defaming” of the company contrasted with its request to continue to use its software (AP/Sacramento Bee, 2/18).

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