Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
15CV03287
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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,
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Defendants.
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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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promised that it would renew its contract to host that system while Oregon completed a
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promise, OHA continues to use Oracles hosting services to enroll and re-enroll over 26,000
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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
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
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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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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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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(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.
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Subject matter jurisdiction is conferred on this Court by ORS 14.030 and 14.050(1).
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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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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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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
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The State determined that the best way to implement the Projects was to purchase a
began reviewing potential third-party vendors. Among those vendors was Oracle.
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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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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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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
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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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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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Cover Oregon also entered a contract for Oracle On Demand Services (Cover
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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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19.
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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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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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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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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(the Eligibility Component). OHA engaged Oracle to create a work-around system that
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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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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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medical equipment, ambulance services, mental health care, and addiction treatment.
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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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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.
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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
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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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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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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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Transition Team planned to use this backup equipment to run both the Eligibility and
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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.
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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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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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system, the Transition Team recommended abandoning the Oracle Eligibility and Enrollment
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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,
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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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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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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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COMPLAINT
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
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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
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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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On January 30, 2015, Oracle acknowledged that OHA was proceeding with the
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renewal.
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On February 4, 2015, OHA requested that Dell process the renewal for Oracle
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44.
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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
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
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OHA is ready, willing, and able to perform the On Demand Contract renewal.
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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.
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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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If Oracle is permitted to break its promise to renew the OHA On Demand Contract,
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definition, among the neediest of all citizens. Without access to Medicaid, these Oregonians
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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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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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Medicaid technology projects, including the project to transfer from an Oracle-based system
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Plaintiff realleges and incorporates by reference the allegations set forth in the
preceding paragraphs.
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Defendants promised that they would renew the OHA On Demand Contract, as
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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.
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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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COMPLAINT
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
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of the agreement to renew the OHA On Demand Contract for $1.7 million per quarter for one
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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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restraining and enjoining defendants from (i) cancelling their promise to renew the OHA On
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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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Plaintiff realleges and incorporates by reference the allegations set forth in the
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preceding paragraphs.
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64.
provided in the current contract at a price of $1.7 million per quarter, as described in
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Plaintiff is ready, willing, and able to comply with all the terms of the agreement, as
described in paragraph 46.
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Defendants have purported to withdraw their agreement, and have refused to perform,
as described in paragraph 45.
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Ten of thousands of Oregonians will be unable to enroll in Medicaid, leaving them without
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access to affordable health care. In addition, if the State is unable to provide timely Medicaid
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enrollment to its citizens, it may lose federal funding for Medicaid services as well as
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funding for other Medicaid technology projects, including the project to transfer from an
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of the renewal of the OHA On Demand Contract on the same terms as provided in the current
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71.
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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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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.
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Plaintiff realleges and incorporates by reference the allegations set forth in the
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preceding paragraphs.
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In the OHA On Demand Contract, Oracle agreed that it would perform certain tasks
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upon request for decommission of services, 30 days prior to the departure date, including the
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following:
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A.
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Provide OHA with copies of written and electronic information that was
developed for it; and
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B.
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Publish a transition plan to OHA that details the transition schedule, transition
activities and applicable deliverables.
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77.
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.
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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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80.
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enjoining defendants from terminating the On Demand Contract prior to performance of their
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contractual obligation of decommissioning tasks and providing adequate time for plaintiff to
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81.
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Plaintiff realleges and incorporates by reference the allegations set forth in the
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preceding paragraphs.
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82.
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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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83.
A.
Demand Contract until it was too late for plaintiff to find alternatives, as
B.
paragraph 47;
C.
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D.
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84.
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Ten of thousands of Oregonians will be unable to enroll in Medicaid, leaving them without
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access to affordable health care. In addition, if the State is unable to provide timely Medicaid
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enrollment to its citizens, it may lose federal funding for Medicaid services as well as
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funding for other Medicaid technology projects, including the project to transfer from an
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85.
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of the agreement to renew the OHA On Demand Contract for $1.7 million per quarter for one
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year.
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86.
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Plaintiff and the people of Oregon will suffer irreparable harm as a result of
defendants wrongful conduct.
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
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PRAYER
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WHEREFORE, plaintiff the State of Oregon, by and through OHA and DHS, prays
for relief against defendants as follows:
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A.
On the first claim for relief, for a judgment in favor of the State and against
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2.
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B.
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1.
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a.
b.
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system.
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2.
On count 2, for a judgment in favor of the State and against Oracle and
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Mythics:
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a.
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b.
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3.
On count 3, for a judgment in favor of the State and against Oracle and
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Mythics:
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a.
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b.
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enrollment system.
C.
ELLEN ROSENBLUM
ATTORNEY GENERAL
FOR THE STATE OF OREGON
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By:
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newlak\433045_4
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