Oregon has reached a settlement with software giant Oracle over the failed health insurance exchange ‘Cover Oregon.’

Oracle headquarters in Redwood City, Calif.

Oracle headquarters in Redwood City, Calif.

Kristian Foden-Vencil/OPB

The settlement is valued at more than $100 million and includes cash payments to the state, as well as a six-year license agreement for products and services.

That means Oracle will continue running and modernizing Oregon’s software systems.

Oregon originally demanded more than $6 billion in damages. It also accused Oracle executives of fraud, filing false claims and racketeering.

The state’s main concern was that after spending $240 million on a webpage for a health insurance exchange, the site simply didn’t work.

The settlement is a victory for Oregon, even though the figures are smaller.

Oregon ended the Cover Oregon webpage in 2014 and now uses the federal exchange.

Oregon and the software giant Oracle reached an agreement over the failed health insurance exchange ‘CoverOregon,’ Thursday.
Governor Kate Brown said she is grateful to see the slaying of the many-headed-dragon that the litigation had become, “The settlement not only closes a damaging chapter of public finger-pointing and failure. It also provides millions of dollars for science education programs in our K-thru-12 schools.”

Reporter Kristian Foden-Vencil has been following this story and spoke with ATC host Kate Davidson about the settlement.

Kate Davidson: Tell us how this all got started?

Kristian Foden-Vencil: Think back to 2013, Oregon was going to lead the way into Obama Care for the nation. Governor John Kitzhaber had secured almost $2 billion to show how a state could move forward. But gradually it became clear the ‘CoverOregon’ website didn’t work. Despite $240 million dollars of high-tech wizardly, not one person managed to sign-up on it. Hundreds of people were hired to enroll people the old fashioned way, with pen and paper. Oregon was a national embarrassment and by 2014, the website had been closed.

KD: What were those allegations?

KFV: In a nutshell, the state accused Oracle executives of fraud and racketeering, and basically not doing their jobs. Oracle counter sued, saying the state didn’t hire key personnel to get the website working and that it leaked confidential documents to the press. At one point there were six lawsuits flying between them and damage claims of six billion dollars.

KD: So now the two parties have come to a settlement. Can you say who won?

KFV: It’s hard to say because nobody was found liable. It’s a settlement, so there was no actual case.  But $240 million was spent to set up the website and the state’s getting about $100 million dollars back. And while that’s a lot less than the six billion originally discussed, I think it’s fair to say Oregon’s leaders are breathing a sigh of relief.

KD: I see. Well, where’s the money going?

KFV: So first, it’s not $100 million in cash. Oracle will pay $25 million for the cost of litigating the case, so that’s a good indication of who won. Oracle also gives state schools $10 million in science and math grants. But what you have to remember is that many of Oregon’s government agencies, and agencies across the country, run Oracle software: for example the Oregon Department of Health. So part of the deal is that Oregon gets a six-year Unlimited License Agreement for Oracle products and services. Governor Brown says that could save the state hundreds of millions in modernizing software systems. And finally, the state also got another $60 million dollars worth of free customer service support.

KD: So what now?

KFV: Well, there’s some concern the feds might try and claw some of the money back.  After all, it was the feds who paid to set the website up. But off the record, executives say the settlement is carefully structured to stop that. Also, the whole debacle was pretty embarrassing and the feds might not want to stir things up again. Meanwhile, Oregonians continue to sign-up for their health insurance on the federal website.