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Oregon sues Oracle, claiming fraud over failed Obamacare website

By Teresa Carson

PORTLAND Ore. (Reuters) - The state of Oregon sued Oracle America Inc. and six of its top executives Friday, accusing the software giant of fraud for failing to deliver a working website for the Affordable Care Act program.

The 126-page lawsuit, filed in Marion County Circuit Court, claims that fraud, lying and "a pattern of racketeering" by Oracle cost the state and its Cover Oregon program hundreds of millions of dollars.

"Not only were Oracle's claims lies, Oracle's work was abysmal," the lawsuit said. Oregon paid Oracle about $240.3 million for a system that never worked, the suit said.

Oracle issued a statement saying the suit "is a desperate attempt to deflect blame from Cover Oregon and the governor for their failures to manage a complex IT project. The complaint is a fictional account of the Oregon Healthcare Project."

The company said it expects to prevail in both the state court lawsuit and in a breach of contract suit it filed against Cover Oregon two weeks ago in federal court.

Oregon was initially enthusiastic about the federal healthcare plan, commonly known as Obamacare. The state plan, called Cover Oregon, ran quirky, engaging television commercials and print ads in advance of the rollout.

But, the Oracle-built site never worked and Oregonians were forced to submit paper applications in a hastily-organized process. In April Oregon moved to an exchange run by the federal government.

The long-expected lawsuit bases some of its claims on information apparently given to the state by a former employee.

The whistle-blower told the state that Oracle "planned ... a behind the scenes effort" to keep the state from hiring an outside systems integrator who would oversee the project.

The suit asks Oracle to pay for Cover Oregon's financial losses, plus penalties for damages.

"The complaint filed contains serious new allegations of fraud, deceit and corruption by Oracle," Oregon Governor John Kitzhaber, a former emergency room doctor, said in a statement.

(Reporting by Teresa Carson in Portland; Editing by Dan Whitcomb and Jim Loney)

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