State spends $6.6 million on Cover Oregon legal fees

The State of Oregon has spent more than $6.6 million on legal fees for ongoing lawsuits with the software company Oracle Corp.

The spending is far in excess of the $2 million the state budgeted for the legal battles. Documents from the Oregon Department of Justice released to the Statesman Journal detail individual payments as high as $960,945.96 made between May 2014 and December 2015 to Portland legal firm Markowitz Herbold PC, which is representing the state.

The ongoing nature of the cases makes it difficult to predict total state costs.

"I think there are probably estimates from a lot of different people, but the reality is that litigation like this is ongoing," said Sen. Richard Devlin, D-Tualatin, co-chair of the Legislature's budget committee.

The lawsuits stem from the Cover Oregon health care exchange website. The state hired Oracle to create the site, and the project ultimately failed, which cost the state $300 million. In 2014, Attorney General Ellen Rosenblum sued Oracle for "defrauding Oregonians in connection with Oracle's failure to provide a timely and functional health exchange website."

The state's civil suit, filed in Marion County Circuit Court, seeks to recover financial losses related to Cover Oregon and penalties against Oracle for "broken promises, fraud, racketeering, and false claims for payment." The state's 126-page legal complaint alleges Oracle overcharged for Cover Oregon, misled the state about its progress on the project and demanded payment for "shoddy" work.

The lawsuit names five Oracle executives as responsible in their personal capacities, which Oracle called "akin to hostage-taking" in its court filing. The Oregon Supreme Court eventually allowed the state to sue the executives.

Oracle has filed its own suits against the state. In one, the company alleges that consultants in former Gov. John Kitzhaber's office intentionally interfered with Oracle's business relationship with the state. Another Oracle suit against the state asks for $23 million, and says its computer code is being used illegally by the state. In its response, the state claims the 11th Amendment to the U.S. Constitution makes the state immune from being sued.

Oregon DOJ spokeswoman Kristina Edmunson said Tuesday the agency does not anticipate needing to ask the Legislature for additional money in relation to the cases.

gfriedman2@statesmanjournal.com, (503) 399-6653, on Twitter @gordonrfriedman or Facebook.com/gordonrfriedman