Oregon v. Oracle Medicaid Lawsuit

2/13/2015 4:12:29 PM
15CV03287
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IN THE CIRCUIT COURT OF THE STATE OF OREGON
FOR THE COUNTY OF MARION
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STATE OF OREGON, by and through the

Oregon Health Authority, and the Oregon
Department of Human Services,
Plaintiff,
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No._______________
COMPLAINT
(Promissory Estoppel and
Breach of Contract)
vs.
ORACLE AMERICA, INC., a Delaware
corporation, and
MYTHICS, INC., a Virginia corporation,
CLAIM NOT SUBJECT TO

MANDATORY ARBITRATION
(Prayer for Injunctive Relief)
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Defendants.
Fee Authority: ORS 21.160(1)(d)

& 21.160(3)
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Plaintiff for its complaint against defendants alleges as follows:
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INTRODUCTION
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1.
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Oracle America, Inc. (Oracle) hosts the Oregon Health Authoritys (OHA)
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system for Medicaid-eligible citizens to enroll in Medicaid. In September 2014, Oracle
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promised that it would renew its contract to host that system while Oregon completed a
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project to transition to a long-term Medicaid enrollment solution. Relying on Oracles
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promise, OHA continues to use Oracles hosting services to enroll and re-enroll over 26,000
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Oregonians in Medicaid every week.
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2.
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Without warning, Oracle sent an email at the close of business February 5, 2015,
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announcing, without explanation, that contrary to its promise, it would not renew OHAs
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contract and would terminate the hosting services at the end of February.
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COMPLAINT
ATTORNEY GENERAL ELLEN ROSENBLUM

MARKOWITZ HERBOLD PC
SPECIAL ASSISTANT ATTORNEYS GENERAL
1211 SW Fifth Avenue, Suite 3000
Portland, OR 97204
(503) 295-3085
3.
Oracles last-minute announcement has left OHA with no alternatives. There is not
sufficient time to find alternative hosting services for Oregons Medicaid enrollment system.
If Oracle breaks its promise to renew its contract with OHA, the State will be unable to enroll
its citizens in Medicaid. Oracles breach of its promise will effectively deny access to health
care to hundreds of thousands of Oregons most vulnerable citizens. Without a court order
restraining Oracle from shutting off OHAs access to the Medicaid enrollment system the
State and Oregonians will be irreparably harmed.
JURISDICTIONAL ALLEGATIONS
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4.
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The Oregon Department of Human Services (DHS) is the State agency responsible
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for most of the States social service programs. Pursuant to ORS 179.040(2)(a), DHS has the
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authority to sue.
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5.
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The Oregon Health Authority (OHA) is the State agency responsible for managing
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most of the States health care programs, including the Oregon Health Plan, the States
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Medicaid program. Pursuant to ORS 179.040(2)(a), OHA has the authority to sue.
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6.
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Defendant Oracle America, Inc. (Oracle) is a Delaware corporation with its
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principal place of business in California. Oracle conducts business in offices in Portland,
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Oregon. This court has jurisdiction over Oracle pursuant to ORCP 4 (A)(4)-(5) and 4 (L)
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because Oracle is engaged in substantial activities within the state and has consented to the
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exercise of personal jurisdiction.
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7.
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Defendant Mythics, Inc. (Mythics) is a Virginia corporation with its principal place
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of business in Virginia. This court has jurisdiction over Mythics pursuant to ORCP 4 (A)(4)-
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COMPLAINT

Portland, OR 97204
(503) 295-3085
(5), 4(C), 4(D), and 4 (L) because Mythics committed acts within and without Oregon giving
rise to injuries to plaintiffs within Oregon and at the time of the injuries, service activities
were carried on within Oregon on Mythics behalf, and because Mythics is engaged in
substantial activities within the state and has consented to the exercise of personal
jurisdiction.
8.
Subject matter jurisdiction is conferred on this Court by ORS 14.030 and 14.050(1).
9.
Venue in Marion County is proper pursuant to ORS 14.080(1) and (2) and
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ORS 14.050(1) because the cause of action arose in Marion County and because the address
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for Oracles registered agent is in Marion County. Venue is also proper in Marion County
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because Section O.1 of the Mythics License and Services Agreement signed by Mythics and
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the State provides for venue in the Circuit Court for the State of Oregon for Marion County.
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COMMON ALLEGATIONS
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10.
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Beginning in 2009, the State began a project to modernize its delivery of social
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services, such as Medicaid, Temporary Assistance for Needy Families (TANF),
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Employment Related Day Care (ERDC), and the Supplemental Nutrition Assistance
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Program (SNAP) (this project was known as the Modernization Project). After passage
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of the Patient Protection and Affordable Care Act in March 2010, the State decided to
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integrate the Modernization Project with a project to create an online health insurance
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exchange (the HIX-IT Project). One of the central goals of both Projects was to create an
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online, one-stop-shop for Oregonians to determine their eligibility for health insurance
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subsidies and State social services, to shop for and purchase health insurance plans, and to
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manage their access to and participation in State social service programs.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
11.
As part of this integrated platform and online web portal, the State planned to include
a single automated system for online Medicaid applications, including both eligibility
determination and enrollment.
12.
The State determined that the best way to implement the Projects was to purchase a
Commercial-off-the-Shelf software and technology package. Starting in 2009, the State
began reviewing potential third-party vendors. Among those vendors was Oracle.
13.
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In meetings, presentations, and written submissions, Oracle proposed that it could
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implement the Modernization and HIX-IT Projects with the so-called Oracle Solution. The
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Oracle Solution was a combination of allegedly integrated Oracle software and hardware
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products that could be snapped together to create an online, automated system that
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determined eligibility for and enrolled Oregonians in State social service programs, state and
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federal health insurance subsidies, and Medicaid. Oracle also represented that its Oracle
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Solution included a health insurance exchange in which Oregonians could shop for and
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purchase health insurance plans and apply for and enroll in Medicaid. Oracle represented
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that the entire Oracle Solution could be integrated into a single, online, one-stop-shop, just
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as the State envisioned.
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14.
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After careful consideration, including a review by an outside, independent consultant,
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the State decided to purchase the Oracle Solution in May 2011. The State initially
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contracted with Oracle through a third-party Oracle distributor, Mythics, Inc. In June 2011,
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DHS, OHA, and Mythics executed a license and services agreement called the Mythics
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License and Services Agreement (MLSA). Oracle did not sign the MLSA, but it was
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named as a third-party beneficiary of the contract. DHS and OHA executed the MLSA with
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COMPLAINT

Portland, OR 97204
(503) 295-3085
Mythics through a Dell Price Agreement. Under the Price Agreement, Dell Marketing LP
facilitates ordering and invoicing Oracle products and services through an LSA. The MLSA
does not itself provide for the purchase of Oracle products and services. Instead, it provides
a contractual framework governing the purchase of Oracle products and services. Actual
purchases were made through a series of purchase orders submitted pursuant to the MLSA
and the Dell Price Agreement.
15.
From June 2011 to present, the State has executed numerous purchase orders through
the MLSA and the Dell Price Agreement for the purchase of Oracle software products,
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Oracle consulting services to set-up, integrate, and implement that software, and hosting
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services on which to run the software. The State made these purchases to implement the
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Oracle Solution.
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16.
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On February 28, 2012, the State, Mythics, and Dell executed a purchase order
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pursuant to the MLSA for the purchase of Oracle On Demand services (the OHA On
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Demand Contract). Oracles On Demand services provide for the leasing and hosting of
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Oracle servers on which the State can run Oracle software, including software for Medicaid
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enrollment. The OHA On Demand Contract provided for one year of On Demand services,
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with an option to renew for two additional years.
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17.
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Cover Oregon also entered a contract for Oracle On Demand Services (Cover
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Oregon On Demand Contract).
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18.
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From 2011 to present, the State and Cover Oregon have paid more than $250,000,000
for Oracle products and services for the Modernization and HIX-IT Projects.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
19.
Federal law required that state health insurance exchanges be operational by
October 1, 2013. During the summer of 2013, the State and Cover Oregon learned for the
first time that Oracle was failing to deliver its promised Oracle Solution. Even after the
State and Cover Oregon agreed to reduce the scope of the Projects Oracle had promised it
could deliver, Oracle fell far behind schedule. By late September 2013, it was evident that
Oracle would not deliver a functioning health insurance exchange on time. Its software
programs failed to seamlessly integrate as promised and its programmers work was riddled
with bugs. On October 1, 2013, the system was not ready to launch and even a sharply
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scaled-back soft launch failed to function correctly.
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20.
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Despite missing the October 1, 2013 launch date, Oracle continued to promise that
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the exchange would be ready to launch, first by mid-October 2013, then by the end of
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October, then in December, then January 2014, then February. Again and again, Oracle
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broke its promises, missing every promised date.
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21.
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Federal law requires states to make timely Medicaid eligibility determinations and
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enroll eligible citizens in Medicaid. When Cover Oregon was formed, the responsibility to
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determine eligibility and enroll Oregonians into the States Medicaid program was delegated
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from OHA to Cover Oregon. When the Oracle-created health insurance exchange failed to
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launch in October 2013, OHA stepped in to help Cover Oregon create a mitigation plan to
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ensure that the State could continue to provide Medicaid eligibility determinations and
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enrollment, as required by federal law.
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22.
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As part of the mitigation efforts, Cover Oregon salvaged a component of the broken
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health insurance exchange used to determine whether Oregonians are eligible for Medicaid
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COMPLAINT

Portland, OR 97204
(503) 295-3085
(the Eligibility Component). OHA engaged Oracle to create a work-around system that
could be used to enroll eligible Oregonians in Medicaid (the Enrollment Component).
OHA fully paid Oracle for the Enrollment Component work-around.
23.
The Eligibility Component is operated on Oracle hardware purchased by Cover
Oregon and physically hosted at an Oracle datacenter for Cover Oregon. Oracle hosts this
hardware pursuant to the Cover Oregon On Demand Contract. The Enrollment Component
is operated on Oracle hardware leased by OHA and physically hosted at an Oracle datacenter
for OHA. Oracle hosts and leases this hardware pursuant to the OHA On Demand Contract
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through Mythics. Both the Eligibility and Enrollment Components are required to process
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and enroll Oregonians in Medicaid.
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24.
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Once an Oregonian is determined to be eligible for Medicaid through the Eligibility
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Component on the Cover Oregon system, the files must be manually transferred to OHA to
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input into the Enrollment Component so that people can enroll in Medicaid coverage to access
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health care. That extra step renders the system terribly inefficient and causes significant delays.
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Medicaid is a government insurance program for persons of all ages whose income and
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resources are insufficient to pay for health care. States are not required to participate in
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Medicaid, but every state in the nation does. States and the federal government jointly fund
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state Medicaid programs and the states manage their Medicaid programs. Oregons Medicaid
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program is known as the Oregon Health Plan. It provides low income Oregonians with access
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to coordinated health care, including emergency treatment, prescriptions, immunizations,
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medical equipment, ambulance services, mental health care, and addiction treatment.
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25.
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On average each week, approximately 26,000 Oregon citizens become eligible or must
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have their eligibility re-determined for continued enrollment in the States Medicaid program.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
26.
Under the OHA On Demand Contract, OHA paid Oracle, Mythics and Dell
$1.76 million per quarter in 2014. OHA is current on its payments for the OHA On Demand
Contract.
27.
In the spring of 2014, the State formed a Transition Team to manage the States
transition of qualified health plan enrollment from Cover Oregon to the federal health
exchange and to ensure the continued functioning of the States Medicaid eligibility
determination and enrollment.
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28.
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The Transition Team considered a number of alternatives for a long-term solution to
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provide Medicaid eligibility determination and enrollment for Oregonians during the summer
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of 2014. One of the alternatives the Transition Team considered was trying to fix the Oracle
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system.
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29.
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Beginning in August 2014 and continuing through February 6, 2015, the Transition
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Team had weekly Friday phone calls with Oracle to discuss Oracles role in the transition.
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30.
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In August, the Transition Team made several proposals, including a plan to fix the
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Oracle system. To fix the Oracle system, the State needed access to an Oracle production
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environment. However, Oracle refused to provide one.
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31.
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Thereafter, the Transition Team engaged Oracle in negotiations to relocate Cover
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Oregons backup equipment from an Oracle datacenter to a non-Oracle datacenter. The
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Transition Team planned to use this backup equipment to run both the Eligibility and
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Enrollment Components on equipment in a non-Oracle datacenter. Oracle, however, refused
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COMPLAINT

Portland, OR 97204
(503) 295-3085
to provide the backup equipment to the State unless Cover Oregon shut down its main
servers running the Eligibility Component. Because shutting down its main servers would
interrupt its ability to make Medicaid eligibility determinations for its citizens, as required by
federal law, Cover Oregon could not agree to shut down its servers. So, the backup
equipment could not be relocated to a non-Oracle data center. Moreover, even if Cover
Oregon could have shut down its main servers, Oracle stated that it would completely wipe
clean the backup hardware before returning it to the State, making it unusable.
32.
On September 22, 2014, in order to provide sufficient time to engage in a transition
10
plan, and because litigation was pending between the parties, Oregons Transition Team
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Senior Project Manager specifically asked Oracles Vice President whether Oracle would
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renew the OHA On Demand Contract and the Cover Oregon On Demand Contract. Oracles
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Vice President promised that Oracle would renew both the OHA On Demand Contract and
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the Cover Oregon On Demand Contract. Oracles Vice President said that even though the
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OHA On Demand Contract did not have any further right to renew, Oracle would renew that
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contract, which was set to expire on February 28, 2015, for a 12-month minimum period.
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Oracles Vice President noted that contract would have a right to early termination.
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33.
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In reliance on Oracles promise to renew the On Demand Contracts, OHA and Cover
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Oregon agreed to continue to use the Oracle-hosted systems for ongoing Medicaid eligibility
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determinations and enrollment to ensure uninterrupted service, while the Transition Team
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concurrently sought a long-term solution.
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34.
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After completing a technical review of the underlying architecture of the Oracle
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system, the Transition Team recommended abandoning the Oracle Eligibility and Enrollment
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COMPLAINT

Portland, OR 97204
(503) 295-3085
Components and adopting a completely new system to handle Medicaid eligibility
determination and enrollment, independent of Oracle software and hardware.
35.
In late fall 2014, the Transition Team determined that the Kentucky Medicaid system
(Transfer System) could be modified to meet Oregons Medicaid needs. The Transfer
System project is currently underway and is scheduled for completion on December 31,
2015. When completed, it will provide a single automated system for online applications,
Medicaid eligibility determinations, and enrollment into Medicaid, independent of any
Oracle products or services.
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36.
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Until the Transfer System project is complete and operational in Oregon, OHA must
continue to use its Oracle-hosted system to enroll Medicaid eligible citizens each day.
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37.
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OHA relied on Oracles promise to renew the OHA On Demand Contract by
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abandoning its efforts to relocate the Cover Oregon backup equipment to a non-Oracle
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datacenter, and executing the year-long Transfer System project. If in September 2014
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Oracle had not agreed to renew the OHA On Demand Contract, the Transition Team would
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have ordered appropriate hardware and located a new hosting provider to transition the
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Enrollment Component away from the Oracle datacenter to meet the February 28, 2015
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termination date.
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38.
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From October 2014 through February 2015, members of the Transition Team
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continued to have weekly phone conferences with Oracle leadership and exchanged email
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with Oracle to prepare the documentation for the contract extension.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
39.
On December 15, 2014, Oracle through Dell and Mythics provided OHA with a quote
of $1.3 million per quarter for the renewal of Oracle services. The quote was valid through
February 28, 2015.
40.
On January 23, 2015, Oracle through Dell and Mythics provided a corrected quote of
$1.7 million per quarter to maintain and renew the same On Demand Contract as provided in
2014. The quote was valid through February 28, 2015.
41.
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On January 28, 2015, OHA accepted Oracles offer by providing Oracle with a list of
services to renew.
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42.
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On January 30, 2015, Oracle acknowledged that OHA was proceeding with the
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renewal.
15
43.
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On February 4, 2015, OHA requested that Dell process the renewal for Oracle
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services by February 28, 2015.
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44.
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On February 5, 2015, OHA provided Dell a spreadsheet to document and further

confirm the renewal order.
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45.
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Without warning, and after OHA had accepted the offer to renew the On Demand
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Contract, Oracle suddenly announced that it would refuse to follow through on its promise.
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At the close of business on February 5, 2015, Oracle e-mailed the States Transition Team
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that it would not extend the OHA On Demand Contract and would terminate OHAs On
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Demand services at the end of the month, on February 28, 2015. Additionally and similarly,
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COMPLAINT

Portland, OR 97204
(503) 295-3085
Mythics will not commit to extend the OHA On Demand Contract without Oracles
agreement even though Mythics had earlier offered to do so by forwarding and facilitating
Oracles offer to the State.
46.
OHA is ready, willing, and able to perform the On Demand Contract renewal.
47.
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The 2014 OHA On Demand Contract requires that Oracle provide a decommissioning
plan 30 days prior to terminating service. Oracle has not provided such a plan.
48.
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OHA has fully paid Oracle, Mythics, and Dell for all services rendered under the
OHA On Demand Contract and is fully compliant with all terms.
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49.
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If Oracle is permitted to break its promise to renew the OHA On Demand Contract,
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OHA will be unable to enroll Oregonians in Medicaid. Medicaid-eligible Oregonians, are by
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definition, among the neediest of all citizens. Without access to Medicaid, these Oregonians
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will not have access to health care in Oregon.
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50.
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Oracles last minute announcement that it would not extend the OHA On Demand
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Contract after months of working on the extension documents has left OHA with no
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alternatives. There is not sufficient time to find any alternative to Oracles On Demand
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services for Medicaid enrollment before February 28, 2015.
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51.
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If Oracle is allowed to shut-down its hosting services as it has threatened to do,
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Oregon will be in violation of federal mandates to provide Medicaid coverage for its citizens
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and risks losing its federal funding for Medicaid services as well as funding for other
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COMPLAINT

Portland, OR 97204
(503) 295-3085
Medicaid technology projects, including the project to transfer from an Oracle-based system
to the Transfer System.
FIRST CLAIM FOR RELIEF
(Promissory Estoppel All Defendants)
52.
Plaintiff realleges and incorporates by reference the allegations set forth in the
preceding paragraphs.
53.
Defendants promised that they would renew the OHA On Demand Contract, as
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described in paragraphs 32 through 42.
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54.
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In reliance on Oracles promise that it would renew, OHA agreed to continue to use
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the Oracle-hosted system for ongoing Medicaid enrollment for another year, refrained from
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looking for alternative sources for hardware and a hosting provider and continued to invest
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time and resources in the renewal process, and took other acts of reliance as described above.
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55.
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Defendants could foresee that OHA would rely on their promise to renew the OHA
On Demand Contract, and actually knew that OHA was relying on its promise.
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56.
20
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Defendants have purported to withdraw their promise to renew, and have refused to
perform, as described in paragraph 45.
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57.
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Defendants actions constitute a breach of the parties agreement.
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58.
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As a result of defendants threat not to perform its promise, plaintiff will be
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irreparably harmed. Ten of thousands of Oregonians will be unable to enroll in Medicaid,
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COMPLAINT

Portland, OR 97204
(503) 295-3085
leaving them without access to affordable health care. 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.
59.
Plaintiff has no adequate remedy at law. Plaintiff is entitled to specific performance
of the agreement to renew the OHA On Demand Contract for $1.7 million per quarter for one
year under the same terms as the prior year.
60.
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Plaintiff and the people of Oregon will suffer irreparable harm as a result of
defendants wrongful conduct.
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61.
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Plaintiff is entitled to temporary, preliminary, and permanent injunctive relief
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restraining and enjoining defendants from (i) cancelling their promise to renew the OHA On
15
Demand Contract and (ii) terminating, changing or otherwise restricting Oregons access to
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and use of the servers, applications and environments necessary for operation of Oregons
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Medicaid enrollment system.
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SECOND CLAIM FOR RELIEF
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(Breach of Contract All Defendants)
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Count 1 Breach of Express Agreement to Renew
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62.
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63.
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This count is in the alternative to the First Claim for Relief.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
64.
Defendants offered to renew OHA On Demand Contract on the same terms as
provided in the current contract at a price of $1.7 million per quarter, as described in
paragraphs 32 and 40.
65.
Plaintiff accepted defendants offer, as described in paragraph 41.
66.
8
9
Plaintiff is ready, willing, and able to comply with all the terms of the agreement, as
described in paragraph 46.
10
67.
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12
Defendants have purported to withdraw their agreement, and have refused to perform,
as described in paragraph 45.
13
68.
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Defendants actions constitute a breach of the parties agreement.
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69.
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As a result of defendants threat not to perform, plaintiff will be irreparably harmed.
17
Ten of thousands of Oregonians will be unable to enroll in Medicaid, leaving them without
18
access to affordable health care. In addition, if the State is unable to provide timely Medicaid
19
enrollment to its citizens, it may lose federal funding for Medicaid services as well as
20
funding for other Medicaid technology projects, including the project to transfer from an
21
Oracle-based system to the Transfer System.
22
70.
23
24
of the renewal of the OHA On Demand Contract on the same terms as provided in the current
25
contract for $1.7 million per quarter for one year.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
71.
2
3
72.
restraining and enjoining defendants from (i) cancelling the renewal of the OHA On Demand
Contract; and (ii) terminating, changing or otherwise restricting Oregons access to and use
of the servers, applications and environments necessary for operation of Oregons Medicaid
enrollment system.
10
Count 2 Breach of Express Agreement to Transition
11
73.
12
13
14
74.
15
In the OHA On Demand Contract, Oracle agreed that it would perform certain tasks
16
upon request for decommission of services, 30 days prior to the departure date, including the
17
following:
18
A.
19
Provide OHA with copies of written and electronic information that was
developed for it; and
20
B.
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Publish a transition plan to OHA that details the transition schedule, transition
activities and applicable deliverables.
22
75.
23
24
Oracle has failed and to perform any decommissioning tasks, as described in

paragraph 47.
25
76.
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Page
Defendants inaction constitutes a breach of the parties agreement.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
77.
As a result of defendants failure to perform, plaintiff is unable to transition without
interruption of the States Medicaid enrollment system, and thereby will be irreparably
harmed. Ten of thousands of Oregonians will be unable to enroll in Medicaid, leaving them
without access to affordable health care. 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
78.
10
11

of defendants contractual obligation to perform the decommissioning tasks.
12
79.
13
14
15
80.
16
17
enjoining defendants from terminating the On Demand Contract prior to performance of their
18
contractual obligation of decommissioning tasks and providing adequate time for plaintiff to
19
transition without interruption of the States Medicaid enrollment system.
20
Count 3 Breach of Implied Covenant of Good Faith and Fair Dealing
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81.
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24
82.
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Page
Implied within the parties agreements was defendants duty to act in good faith and
deal fairly with plaintiff with respect to the rights and obligations of the parties.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
83.
Defendants breached this duty in at least the following ways:
A.
By making misrepresentations about their willingness to renew the OHA On
Demand Contract until it was too late for plaintiff to find alternatives, as
described in paragraph 29 through 45;
B.
By failing and refusing to prepare a decommissioning schedule and transition
plan prior to the termination of the current agreements, as described in
paragraph 47;
C.
By refusing to permit plaintiff to decommission and take possession of and
10
relocate Oracle hardware purchased by Cover Oregon to a non-Oracle
11
datacenter in August and September, 2014, as described in paragraph 31; and
12
D.
13
By unreasonably refusing to renew the OHA On Demand Contract at the

terms defendants had proposed as described in paragraph 45.
14
84.
15
As a result of defendants failure to perform, plaintiff will be irreparably harmed.
16
Ten of thousands of Oregonians will be unable to enroll in Medicaid, leaving them without
17
access to affordable health care. In addition, if the State is unable to provide timely Medicaid
18
enrollment to its citizens, it may lose federal funding for Medicaid services as well as
19
funding for other Medicaid technology projects, including the project to transfer from an
20
21
85.
22
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of the agreement to renew the OHA On Demand Contract for $1.7 million per quarter for one
24
year.
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COMPLAINT

Portland, OR 97204
(503) 295-3085
86.
2
3
87.
restraining and enjoining defendants from (i) cancelling their promise to renew of the OHA
On Demand Contract and (ii) terminating, changing or otherwise restricting Oregons access
to and use of the servers, applications and environments necessary for operation of Oregons
Medicaid enrollment system.
10
PRAYER
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12
WHEREFORE, plaintiff the State of Oregon, by and through OHA and DHS, prays
for relief against defendants as follows:
13
A.
On the first claim for relief, for a judgment in favor of the State and against
14
Oracle and Mythics:
15
1.
Providing for specific performance of defendants promise to renew
16
the OHA On Demand Contract, including the States requirement to
17
make quarterly payments;
18
2.
Providing for temporary, preliminary, and permanent injunctive relief
19
restraining and enjoining defendants from (i) cancelling their promise
20
to renew of the OHA On Demand Contract; and (ii) terminating,
21
changing or otherwise restricting Oregons access to and use of the
22
servers, applications and environments necessary for operation of
23
Oregons Medicaid enrollment system.
24
B.
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1.
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Page
On the second claim for relief:

On count 1, for a judgment in favor of the State and against Oracle and
Mythics:
19 -
COMPLAINT

Portland, OR 97204
(503) 295-3085
a.
Providing for specific performance of the renewal of the OHA
On Demand Contract, including the States requirement to
make quarterly payments;
b.
Providing for temporary, preliminary, and permanent
injunctive relief restraining and enjoining defendants from
(i) cancelling the renewal of the OHA On Demand Contract;
and (ii) terminating, changing or otherwise restricting Oregons
access to and use of the servers, applications and environments
necessary for operation of Oregons Medicaid enrollment
10
system.
11
2.
12
Mythics:
13
a.
14
Providing for specific performance of defendants

decommissioning tasks ;
15
b.
16
injunctive relief enjoining defendants from terminating the
17
current contract before performing the decommissioning tasks
18
and providing plaintiff with adequate time to transition without
19
interruption of the States Medicaid enrollment system.
20
3.
21
Mythics:
22
a.
23
Providing for specific performance of the OHA On Demand

Contract;
24
b.
25
injunctive relief restraining and enjoining defendants from
26
(i) cancelling the renewal of the OHA On Demand Contract;
Page
20 -
COMPLAINT

Portland, OR 97204
(503) 295-3085
and (ii) terminating or changing or otherwise restricting
Oregons access to and use of the servers, applications and
environments necessary for operation of Oregons Medicaid
enrollment system.
C.
DATED this 13th day of February, 2015.
Such other relief as the Court deems appropriate.
ELLEN ROSENBLUM
ATTORNEY GENERAL
FOR THE STATE OF OREGON
8
9
By:
10
11
12
13
14
Special Assistant Attorneys General for

Plaintiff
15
16
/s/ Lisa A. Kaner

David B. Markowitz, OSB #742046
DavidMarkowitz@MarkowitzHerbold.com
Lisa A. Kaner, OSB #881373
LisaKaner@MarkowitzHerbold.com
Dallas DeLuca, OSB #072992
DallasDeLuca@MarkowitzHerbold.com
Harry B. Wilson, OSB #077214
HarryWilson@MarkowitzHerbold.com
newlak\433045_4
17
18
19
20
21
22
23
24
25
26
Page
21 -
COMPLAINT

Portland, OR 97204
(503) 295-3085

Oregon v. Oracle Medicaid Lawsuit

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Oregon v. Oracle Medicaid Lawsuit

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2/13/2015 4:12:29 PM

IN THE CIRCUIT COURT OF THE STATE OF OREGON

FOR THE COUNTY OF MARION

STATE OF OREGON, by and through the

CLAIM NOT SUBJECT TO

Fee Authority: ORS 21.160(1)(d)

Plaintiff for its complaint against defendants alleges as follows:

system for Medicaid-eligible citizens to enroll in Medicaid. In September 2014, Oracle

project to transition to a long-term Medicaid enrollment solution. Relying on Oracles

Oregonians in Medicaid every week.

ATTORNEY GENERAL ELLEN ROSENBLUM

State and Oregonians will be irreparably harmed.

Defendant Oracle America, Inc. (Oracle) is a Delaware corporation with its

principal place of business in California. Oracle conducts business in offices in Portland,

exercise of personal jurisdiction.

ATTORNEY GENERAL ELLEN ROSENBLUM

services, such as Medicaid, Temporary Assistance for Needy Families (TANF),

manage their access to and participation in State social service programs.

ATTORNEY GENERAL ELLEN ROSENBLUM

determination and enrollment.

Commercial-off-the-Shelf software and technology package. Starting in 2009, the State

In meetings, presentations, and written submissions, Oracle proposed that it could

as the State envisioned.

After careful consideration, including a review by an outside, independent consultant,

ATTORNEY GENERAL ELLEN ROSENBLUM

and the Dell Price Agreement.

with an option to renew for two additional years.

Oregon On Demand Contract).

ATTORNEY GENERAL ELLEN ROSENBLUM

Federal law required that state health insurance exchanges be operational by

scaled-back soft launch failed to function correctly.

broke its promises, missing every promised date.

enrollment, as required by federal law.

ATTORNEY GENERAL ELLEN ROSENBLUM

could be used to enroll eligible Oregonians in Medicaid (the Enrollment Component).

OHA fully paid Oracle for the Enrollment Component work-around.

The Eligibility Component is operated on Oracle hardware purchased by Cover

and enroll Oregonians in Medicaid.

Once an Oregonian is determined to be eligible for Medicaid through the Eligibility

to coordinated health care, including emergency treatment, prescriptions, immunizations,

ATTORNEY GENERAL ELLEN ROSENBLUM

determination and enrollment.

The Transition Team considered a number of alternatives for a long-term solution to

environment. However, Oracle refused to provide one.

Thereafter, the Transition Team engaged Oracle in negotiations to relocate Cover

Oregons backup equipment from an Oracle datacenter to a non-Oracle datacenter. The

Enrollment Components on equipment in a non-Oracle datacenter. Oracle, however, refused

ATTORNEY GENERAL ELLEN ROSENBLUM

On September 22, 2014, in order to provide sufficient time to engage in a transition

concurrently sought a long-term solution.

After completing a technical review of the underlying architecture of the Oracle

ATTORNEY GENERAL ELLEN ROSENBLUM

Components and adopting a completely new system to handle Medicaid eligibility

determination and enrollment, independent of Oracle software and hardware.

Medicaid eligibility determinations, and enrollment into Medicaid, independent of any

Oracle products or services.

OHA relied on Oracles promise to renew the OHA On Demand Contract by

with Oracle to prepare the documentation for the contract extension.

ATTORNEY GENERAL ELLEN ROSENBLUM

February 28, 2015.

2014. The quote was valid through February 28, 2015.

services by February 28, 2015.

On February 5, 2015, OHA provided Dell a spreadsheet to document and further