Weeks after inking a $2-million contract with a private law firm to assist with litigation against Oracle Corp. over the Cover Oregon health insurance exchange fiasco, the state of Oregon on Monday issued its first legal demands for documents in the case, suggesting that a lawsuit may be imminent.
An Oregon Department of Justice spokeswoman confirmed the department has sent out multiple investigative demands for documents. However, she declined to release details of who received them, so the targets -- be they individuals, contractors, or Oracle itself -- remain unclear.
"These are the first," said Kristina Edmunson. "They are in the process of being served."
State officials have accused Oracle, the lead technology vendor on the exchange project, of shoddy work and broken promises. Oracle has denied wrongdoing, instead saying Oregon is at fault for not hiring a systems integrator, sort of a technology general contractor, to direct the project and oversee Oracle's work.
The legal demands cite the false claims act, a law that allows DOJ to sue state contractors over false or fraudulent claims for payment.
In May, Gov. John Kitzhaber asked Attorney General Ellen Rosenblum to initiate legal action against Oracle. Rosenblum's response was noncommittal. Monday's action of issuing legal documents -- similar to a subpoena -- represents a concrete indication that the case is progressing.
It's not the only clue. On May 15, the state entered into a $2-million contract with Markowitz Herbold Glade & Mehlhaf PC, the outside firm hired to assist with exploring litigation against Oracle. The firm's earlier contract had been for $250,000, then was expanded to $550,000.
The state has paid out nearly $365,000 on the earlier contract, according to a contract ledger released by the state. However, that contract only allowed the Markowitz firm to work for Cover Oregon, which oversaw a fraction of the work on the website. The new contract allows Markowitz to represent additional state agencies such as the Oregon Health Authority, which oversaw the bulk of the technology work, as well as Kitzhaber's office.
On June 4, Kitzhaber and his top lawyer, Liani Reeves, met with Rosenblum and representatives of the Markowitz firm to discuss the case.
The new legal demands are not the only legal updates on the Cover Oregon case, according to The Associated Press. The state has also retained a politically connected Washington, D.C. law firm to deal with an investigation by a congressional oversight committee that has been investigating Cover Oregon's data security measures. Moreover, it has hired Bob Weaver, a high-profile Portland white-collar criminal defense lawyer and former federal prosecutor, to represent state employees in an ongoing FBI investigation of the exchange fiasco.
In response to the FBI investigation, which has already targeted the e-mails of 10 current and former employees, the state recently changed its rules for funding current and former employees' legal costs, ensuring that the the state picks up as much as $35,000 each in legal fees for each employee who qualifies for coverage under the new policy. If the employees are convicted of a crime, they must reimburse the money.
©2014 The Oregonian (Portland, Ore.)