Oregon Obamacare Rollout "Incompetent" and "Atrocious"

Oregon's has filed a lawsuit against Oracle over Oracle's failed Obamacare healthcare insurance exchange.

Aug 30, 2014 at 1:07PM

Last year's launch of the Affordable Care Act's insurance exchanges was anything but smooth, but troubles facing insurance marketplaces weren't limited to the federal exchange. State exchanges like the one built by Oracle (NYSE:ORCL) for Oregon failed at the fingertips of people eager to take advantage of new healthcare insurance subsidies, too.

As a result, states like Oregon are abandoning ill-fated state-run exchanges in favor of the Federal exchange, but a key question remains: What happens when hundreds of millions of dollars worth of software doesn't work?

G

Source: State of Oregon

Plagued with problems
Oregon's insurance exchange never went live, so the state is suing Oracle, the software Goliath it hired to build its marketplace.

The lawsuit marks the latest in a series of failures and lawsuits that have dogged the Obamacare marketplaces.

In January, the Department of Health and Human Services tossed aside CGI Federal, the software company responsible for Healthcare.gov. The HHS replaced CGI Federal with Accenture, agreeing to pay the company $90 million to revamp the site prior to Obamacare's second open enrollment period, which kicks off in November.

Maryland has also struggled with its contractor after its state exchange failed just moments after going live last October. Maryland's exchange remains hobbled and its troubles have resulted in back-and-forth lawsuits between subcontractor EngagePoint and lead contractor Noridian. EngagePoint alleges that Noridian "lacked the expertise, resources, and commitment actually required" to develop and operate the website, while Noridian has sued EngagePoint over a failure to deliver a working marketplace. After months of in-fighting, Maryland fired Noridian in February, but not before Noridian pocketed $65 million of the $193 million contract to build the exchange.

Like the HHS, Massachusetts also contracted with CGI Federal to build its state exchange, so it's not surprising to learn that the Massachusetts exchange also struggled. Massachusetts parted ways with CGI in March and although there was chatter that the state may sue CGI, the two agreed to a settlement in June in which Massachusetts paid $35 million in outstanding invoices in exchange for CGI's help in transitioning the Mass exchange to a new solution offered by the privately held hCentive.

And that brings us to Oregon whose exchange is even more wonky (and its battle with its contractor more contentious) than these others.

Oregon parted ways with Oracle after its Oracle-built exchange failed to work. As a result, Oregon has signed on a bevvy of programmers to fix its marketplace and application processors to manually process applications. In July, the state announced it had inked an $18 million contract with consultant-giant Deloitte to salvage Oregon's failed exchange for use in the state's Medicaid program.

Clear as mud
Oracle doesn't appear to have any intention of handing the state back any of the $240 million it paid for the failed exchange, fixes, and workarounds. Instead, Oracle has countersued the state claiming that Oregon's bureaucracy gutted its ability to fulfill its contract and that Oregon still owes it $23 million for services already performed.

Oregon thinks that's hogwash.

The state maintains that Oracle was in charge and that Oracle's work was "abysmal" and its programming "atrocious." The state's attorney general went as far as to claim that "Oracle sold the State of Oregon a lie."

But that's not the half of it. In the state's lawsuit (some of summer's most entertaining reading) Oregon claims that Oracle personnel were "poorly trained" and provided "incompetent" work.

Those accusations offer a scathing indictment of Oracle, especially given Oracle's reputation as a go-to software and database solution.

Fool-worthy final thoughts
Neither Oracle nor Oregon seem willing to budge when it comes to refunding any money (in Oracle's case) or paying outstanding invoices (in Oregon's case). The he-said-she-said mentality isn't likely to result in a resolution anytime soon, but it would appear to me that it's Oracle, not Oregon, that stands to lose the most given the risk to its reputation and the fact that Oregon will have a working site in November because it's swapping over to Healthcare.gov. Having said that, Oracle has already been paid and memories, at least when it comes to government contracts, can be notoriously short.

These top dividend stocks for the next decade have fewer question marks than Oracle
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. 

The Motley Fool recommends Accenture. The Motley Fool owns shares of Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers