Oracle reaches $100 million settlement with Oregon over failed exchange site

The state of Oregon paid $240 million for software giant Oracle to create the state’s Cover Oregon insurance exchange site, but the company will be to settle several lawsuits related to the site’s failure for just $100 million.

According to The Oregonian, Oracle will only have to pay Oregon $25 million in cash to cover litigation costs. Much of the value of the settlement will come from a six-year Unlimited Licensing Agreement (ULA) under which Oracle will provide IT products and support to the state government.

It’s a far cry from the $6 billion in damages originally sought by the state, but Oregon Attorney General Ellen Rosenblum said the value goes beyond the licensing agreement.

“This settlement outcome is a 'win-win' for the people of Oregon—without the expense and continued impact on our collective psyche,” Rosenblum said in a statement. “But, the beauty of the deal is that if we choose to take full advantage of the free ULA's, we are uniquely situated to modernize our statewide IT systems over the next six years—something we could not otherwise afford to do. It is a creative solution that allows us to take advantage of Oracle's suites of products that already serve several Oregon state agencies well, and are used by the majority of other state governments."

The failure of Cover Oregon—which never had an operational online enrollment system—was one of the most heavily scrutinized mishaps of the rollout of the Affordable Care Act exchanges. After being forced to process hundreds of thousands of exchange enrollees by paper applications, the state moved to the federal Healthcare.gov site in April 2014 and officially abolished Cover Oregon in 2015.

The Oregonian reported Rosenblum was reluctant to accept Oracle’s original settlement of $25 million worth of software, considering how much the state had paid for a website which never worked. The legal bills, however, were beginning to add, with Oregon spending $16 million to four different law firms handling aspects of the six separate lawsuits.

The price tag would’ve only gotten bigger, as the two sides were set to go to court in January.

For Oracle, the settlement means the company can avoid a trial where the state would’ve been able to seek punitive damages on top of the treble damages awarded if the company lost on racketeering charges.