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Oregon v. Oracle Medicaid lawsuit

Oct 08, 2015

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The state of Oregon is suing Oracle over a canceled Medicaid enrollment contract , the latest chapter in an ongoing battle that started over the failed Cover Oregon health insurance exchange.
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  • 1 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    IN THE CIRCUIT COURT OF THE STATE OF OREGON

    FOR THE COUNTY OF MARION

    STATE OF OREGON, by and through the Oregon Health Authority, and the Oregon Department of Human Services,

    Plaintiff,

    vs.

    ORACLE AMERICA, INC., a Delaware corporation, and MYTHICS, INC., a Virginia corporation,

    Defendants.

    No._______________

    COMPLAINT(Promissory Estoppel and

    Breach of Contract)

    CLAIM NOT SUBJECT TO MANDATORY ARBITRATION

    (Prayer for Injunctive Relief)

    Fee Authority: ORS 21.160(1)(d) & 21.160(3)

    Plaintiff for its complaint against defendants alleges as follows:

    INTRODUCTION

    1.

    Oracle America, Inc. (Oracle) hosts the Oregon Health Authoritys (OHA)

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

    promised that it would renew its contract to host that system while Oregon completed a

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

    promise, OHA continues to use Oracles hosting services to enroll and re-enroll over 26,000

    Oregonians in Medicaid every week.

    2.

    Without warning, Oracle sent an email at the close of business February 5, 2015,

    announcing, without explanation, that contrary to its promise, it would not renew OHAs

    contract and would terminate the hosting services at the end of February.

    2/13/2015 4:12:29 PM15CV03287

  • 2 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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

    4.

    The Oregon Department of Human Services (DHS) is the State agency responsible

    for most of the States social service programs. Pursuant to ORS 179.040(2)(a), DHS has the

    authority to sue.

    5.

    The Oregon Health Authority (OHA) is the State agency responsible for managing

    most of the States health care programs, including the Oregon Health Plan, the States

    Medicaid program. Pursuant to ORS 179.040(2)(a), OHA has the authority to sue.

    6.

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

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

    Oregon. This court has jurisdiction over Oracle pursuant to ORCP 4 (A)(4)-(5) and 4 (L)

    because Oracle is engaged in substantial activities within the state and has consented to the

    exercise of personal jurisdiction.

    7.

    Defendant Mythics, Inc. (Mythics) is a Virginia corporation with its principal place

    of business in Virginia. This court has jurisdiction over Mythics pursuant to ORCP 4 (A)(4)-

  • 3 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    (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

    ORS 14.050(1) because the cause of action arose in Marion County and because the address

    for Oracles registered agent is in Marion County. Venue is also proper in Marion County

    because Section O.1 of the Mythics License and Services Agreement signed by Mythics and

    the State provides for venue in the Circuit Court for the State of Oregon for Marion County.

    COMMON ALLEGATIONS

    10.

    Beginning in 2009, the State began a project to modernize its delivery of social

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

    Employment Related Day Care (ERDC), and the Supplemental Nutrition Assistance

    Program (SNAP) (this project was known as the Modernization Project). After passage

    of the Patient Protection and Affordable Care Act in March 2010, the State decided to

    integrate the Modernization Project with a project to create an online health insurance

    exchange (the HIX-IT Project). One of the central goals of both Projects was to create an

    online, one-stop-shop for Oregonians to determine their eligibility for health insurance

    subsidies and State social services, to shop for and purchase health insurance plans, and to

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

  • 4 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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.

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

    implement the Modernization and HIX-IT Projects with the so-called Oracle Solution. The

    Oracle Solution was a combination of allegedly integrated Oracle software and hardware

    products that could be snapped together to create an online, automated system that

    determined eligibility for and enrolled Oregonians in State social service programs, state and

    federal health insurance subsidies, and Medicaid. Oracle also represented that its Oracle

    Solution included a health insurance exchange in which Oregonians could shop for and

    purchase health insurance plans and apply for and enroll in Medicaid. Oracle represented

    that the entire Oracle Solution could be integrated into a single, online, one-stop-shop, just

    as the State envisioned.

    14.

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

    the State decided to purchase the Oracle Solution in May 2011. The State initially

    contracted with Oracle through a third-party Oracle distributor, Mythics, Inc. In June 2011,

    DHS, OHA, and Mythics executed a license and services agreement called the Mythics

    License and Services Agreement (MLSA). Oracle did not sign the MLSA, but it was

    named as a third-party beneficiary of the contract. DHS and OHA executed the MLSA with

  • 5 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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,

    Oracle consulting services to set-up, integrate, and implement that software, and hosting

    services on which to run the software. The State made these purchases to implement the

    Oracle Solution.

    16.

    On February 28, 2012, the State, Mythics, and Dell executed a purchase order

    pursuant to the MLSA for the purchase of Oracle On Demand services (the OHA On

    Demand Contract). Oracles On Demand services provide for the leasing and hosting of

    Oracle servers on which the State can run Oracle software, including software for Medicaid

    enrollment. The OHA On Demand Contract provided for one year of On Demand services,

    with an option to renew for two additional years.

    17.

    Cover Oregon also entered a contract for Oracle On Demand Services (Cover

    Oregon On Demand Contract).

    18.

    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.

  • 6 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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

    scaled-back soft launch failed to function correctly.

    20.

    Despite missing the October 1, 2013 launch date, Oracle continued to promise that

    the exchange would be ready to launch, first by mid-October 2013, then by the end of

    October, then in December, then January 2014, then February. Again and again, Oracle

    broke its promises, missing every promised date.

    21.

    Federal law requires states to make timely Medicaid eligibility determinations and

    enroll eligible citizens in Medicaid. When Cover Oregon was formed, the responsibility to

    determine eligibility and enroll Oregonians into the States Medicaid program was delegated

    from OHA to Cover Oregon. When the Oracle-created health insurance exchange failed to

    launch in October 2013, OHA stepped in to help Cover Oregon create a mitigation plan to

    ensure that the State could continue to provide Medicaid eligibility determinations and

    enrollment, as required by federal law.

    22.

    As part of the mitigation efforts, Cover Oregon salvaged a component of the broken

    health insurance exchange used to determine whether Oregonians are eligible for Medicaid

  • 7 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    (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

    through Mythics. Both the Eligibility and Enrollment Components are required to process

    and enroll Oregonians in Medicaid.

    24.

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

    Component on the Cover Oregon system, the files must be manually transferred to OHA to

    input into the Enrollment Component so that people can enroll in Medicaid coverage to access

    health care. That extra step renders the system terribly inefficient and causes significant delays.

    Medicaid is a government insurance program for persons of all ages whose income and

    resources are insufficient to pay for health care. States are not required to participate in

    Medicaid, but every state in the nation does. States and the federal government jointly fund

    state Medicaid programs and the states manage their Medicaid programs. Oregons Medicaid

    program is known as the Oregon Health Plan. It provides low income Oregonians with access

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

    medical equipment, ambulance services, mental health care, and addiction treatment.

    25.

    On average each week, approximately 26,000 Oregon citizens become eligible or must

    have their eligibility re-determined for continued enrollment in the States Medicaid program.

  • 8 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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.

    28.

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

    provide Medicaid eligibility determination and enrollment for Oregonians during the summer

    of 2014. One of the alternatives the Transition Team considered was trying to fix the Oracle

    system.

    29.

    Beginning in August 2014 and continuing through February 6, 2015, the Transition

    Team had weekly Friday phone calls with Oracle to discuss Oracles role in the transition.

    30.

    In August, the Transition Team made several proposals, including a plan to fix the

    Oracle system. To fix the Oracle system, the State needed access to an Oracle production

    environment. However, Oracle refused to provide one.

    31.

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

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

    Transition Team planned to use this backup equipment to run both the Eligibility and

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

  • 9 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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

    plan, and because litigation was pending between the parties, Oregons Transition Team

    Senior Project Manager specifically asked Oracles Vice President whether Oracle would

    renew the OHA On Demand Contract and the Cover Oregon On Demand Contract. Oracles

    Vice President promised that Oracle would renew both the OHA On Demand Contract and

    the Cover Oregon On Demand Contract. Oracles Vice President said that even though the

    OHA On Demand Contract did not have any further right to renew, Oracle would renew that

    contract, which was set to expire on February 28, 2015, for a 12-month minimum period.

    Oracles Vice President noted that contract would have a right to early termination.

    33.

    In reliance on Oracles promise to renew the On Demand Contracts, OHA and Cover

    Oregon agreed to continue to use the Oracle-hosted systems for ongoing Medicaid eligibility

    determinations and enrollment to ensure uninterrupted service, while the Transition Team

    concurrently sought a long-term solution.

    34.

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

    system, the Transition Team recommended abandoning the Oracle Eligibility and Enrollment

  • 10 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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.

    36.

    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.

    37.

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

    abandoning its efforts to relocate the Cover Oregon backup equipment to a non-Oracle

    datacenter, and executing the year-long Transfer System project. If in September 2014

    Oracle had not agreed to renew the OHA On Demand Contract, the Transition Team would

    have ordered appropriate hardware and located a new hosting provider to transition the

    Enrollment Component away from the Oracle datacenter to meet the February 28, 2015

    termination date.

    38.

    From October 2014 through February 2015, members of the Transition Team

    continued to have weekly phone conferences with Oracle leadership and exchanged email

    with Oracle to prepare the documentation for the contract extension.

  • 11 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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.

    On January 28, 2015, OHA accepted Oracles offer by providing Oracle with a list of

    services to renew.

    42.

    On January 30, 2015, Oracle acknowledged that OHA was proceeding with the

    renewal.

    43.

    On February 4, 2015, OHA requested that Dell process the renewal for Oracle

    services by February 28, 2015.

    44.

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

    confirm the renewal order.

    45.

    Without warning, and after OHA had accepted the offer to renew the On Demand

    Contract, Oracle suddenly announced that it would refuse to follow through on its promise.

    At the close of business on February 5, 2015, Oracle e-mailed the States Transition Team

    that it would not extend the OHA On Demand Contract and would terminate OHAs On

    Demand services at the end of the month, on February 28, 2015. Additionally and similarly,

  • 12 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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.

    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.

    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.

    49.

    If Oracle is permitted to break its promise to renew the OHA On Demand Contract,

    OHA will be unable to enroll Oregonians in Medicaid. Medicaid-eligible Oregonians, are by

    definition, among the neediest of all citizens. Without access to Medicaid, these Oregonians

    will not have access to health care in Oregon.

    50.

    Oracles last minute announcement that it would not extend the OHA On Demand

    Contract after months of working on the extension documents has left OHA with no

    alternatives. There is not sufficient time to find any alternative to Oracles On Demand

    services for Medicaid enrollment before February 28, 2015.

    51.

    If Oracle is allowed to shut-down its hosting services as it has threatened to do,

    Oregon will be in violation of federal mandates to provide Medicaid coverage for its citizens

    and risks losing its federal funding for Medicaid services as well as funding for other

  • 13 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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

    described in paragraphs 32 through 42.

    54.

    In reliance on Oracles promise that it would renew, OHA agreed to continue to use

    the Oracle-hosted system for ongoing Medicaid enrollment for another year, refrained from

    looking for alternative sources for hardware and a hosting provider and continued to invest

    time and resources in the renewal process, and took other acts of reliance as described above.

    55.

    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.

    56.

    Defendants have purported to withdraw their promise to renew, and have refused to

    perform, as described in paragraph 45.

    57.

    Defendants actions constitute a breach of the parties agreement.

    58.

    As a result of defendants threat not to perform its promise, plaintiff will be

    irreparably harmed. Ten of thousands of Oregonians will be unable to enroll in Medicaid,

  • 14 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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.

    Plaintiff and the people of Oregon will suffer irreparable harm as a result of

    defendants wrongful conduct.

    61.

    Plaintiff is entitled to temporary, preliminary, and permanent injunctive relief

    restraining and enjoining defendants from (i) cancelling their promise to renew 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.

    SECOND CLAIM FOR RELIEF

    (Breach of Contract All Defendants)

    Count 1 Breach of Express Agreement to Renew

    62.

    Plaintiff realleges and incorporates by reference the allegations set forth in the

    preceding paragraphs.

    63.

    This count is in the alternative to the First Claim for Relief.

  • 15 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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.

    Plaintiff is ready, willing, and able to comply with all the terms of the agreement, as

    described in paragraph 46.

    67.

    Defendants have purported to withdraw their agreement, and have refused to perform,

    as described in paragraph 45.

    68.

    Defendants actions constitute a breach of the parties agreement.

    69.

    As a result of defendants threat not to perform, plaintiff 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

    Oracle-based system to the Transfer System.

    70.

    Plaintiff has no adequate remedy at law. Plaintiff is entitled to specific performance

    of the renewal of the OHA On Demand Contract on the same terms as provided in the current

    contract for $1.7 million per quarter for one year.

  • 16 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    71.

    Plaintiff and the people of Oregon will suffer irreparable harm as a result of

    defendants wrongful conduct.

    72.

    Plaintiff is entitled to 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 system.

    Count 2 Breach of Express Agreement to Transition

    73.

    Plaintiff realleges and incorporates by reference the allegations set forth in the

    preceding paragraphs.

    74.

    In the OHA On Demand Contract, Oracle agreed that it would perform certain tasks

    upon request for decommission of services, 30 days prior to the departure date, including the

    following:

    A. Provide OHA with copies of written and electronic information that was

    developed for it; and

    B. Publish a transition plan to OHA that details the transition schedule, transition

    activities and applicable deliverables.

    75.

    Oracle has failed and to perform any decommissioning tasks, as described in

    paragraph 47.

    76.

    Defendants inaction constitutes a breach of the parties agreement.

  • 17 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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

    Oracle-based system to the Transfer System.

    78.

    Plaintiff has no adequate remedy at law. Plaintiff is entitled to specific performance

    of defendants contractual obligation to perform the decommissioning tasks.

    79.

    Plaintiff and the people of Oregon will suffer irreparable harm as a result of

    defendants wrongful conduct.

    80.

    Plaintiff is entitled to temporary, preliminary, and permanent injunctive relief

    enjoining defendants from terminating the On Demand Contract prior to performance of their

    contractual obligation of decommissioning tasks and providing adequate time for plaintiff to

    transition without interruption of the States Medicaid enrollment system.

    Count 3 Breach of Implied Covenant of Good Faith and Fair Dealing

    81.

    Plaintiff realleges and incorporates by reference the allegations set forth in the

    preceding paragraphs.

    82.

    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.

  • 18 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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

    relocate Oracle hardware purchased by Cover Oregon to a non-Oracle

    datacenter in August and September, 2014, as described in paragraph 31; and

    D. By unreasonably refusing to renew the OHA On Demand Contract at the

    terms defendants had proposed as described in paragraph 45.

    84.

    As a result of defendants failure to perform, plaintiff 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

    Oracle-based system to the Transfer System.

    85.

    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.

  • 19 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    86.

    Plaintiff and the people of Oregon will suffer irreparable harm as a result of

    defendants wrongful conduct.

    87.

    Plaintiff is entitled to temporary, preliminary, and permanent injunctive relief

    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.

    PRAYER

    WHEREFORE, plaintiff the State of Oregon, by and through OHA and DHS, prays

    for relief against defendants as follows:

    A. On the first claim for relief, for a judgment in favor of the State and against

    Oracle and Mythics:

    1. Providing for specific performance of defendants promise to renew

    the OHA On Demand Contract, including the States requirement to

    make quarterly payments;

    2. Providing for temporary, preliminary, and permanent injunctive relief

    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.

    B. On the second claim for relief:

    1. On count 1, for a judgment in favor of the State and against Oracle and

    Mythics:

  • 20 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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

    system.

    2. On count 2, for a judgment in favor of the State and against Oracle and

    Mythics:

    a. Providing for specific performance of defendants

    decommissioning tasks ;

    b. Providing for temporary, preliminary, and permanent

    injunctive relief enjoining defendants from terminating the

    current contract before performing the decommissioning tasks

    and providing plaintiff with adequate time to transition without

    interruption of the States Medicaid enrollment system.

    3. On count 3, for a judgment in favor of the State and against Oracle and

    Mythics:

    a. Providing for specific performance of the OHA On Demand

    Contract;

    b. Providing for temporary, preliminary, and permanent

    injunctive relief restraining and enjoining defendants from

    (i) cancelling the renewal of the OHA On Demand Contract;

  • 21 - COMPLAINT

    ATTORNEY GENERAL ELLEN ROSENBLUMMARKOWITZ HERBOLD PC

    SPECIAL ASSISTANT ATTORNEYS GENERAL 1211 SW Fifth Avenue, Suite 3000

    Portland, OR 97204 (503) 295-3085

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    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. Such other relief as the Court deems appropriate.

    DATED this 13th day of February, 2015.

    ELLEN ROSENBLUMATTORNEY GENERAL FOR THE STATE OF OREGON

    By: /s/ Lisa A. KanerDavid B. Markowitz, OSB #742046 [email protected] Lisa A. Kaner, OSB #881373 [email protected] Dallas DeLuca, OSB #072992 [email protected] Harry B. Wilson, OSB #077214 [email protected] Special Assistant Attorneys General for Plaintiff

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