(Oregonian (Portland, OR) Via Acquire Media NewsEdge) Aug. 25--The Oregon Department of Justice jousted for nearly two months with Oracle America over the state's demand for documents from the California software giant relating to the health exchange debacle.
In fact, Oracle flouted state law and stymied the demand, according to DOJ.
The state filed papers in federal court Friday that provide a glimpse into high-stakes jockeying that for months took place largely out of public view.
DOJ filed its federal papers shortly after the state's lawyers sued Oracle in Marion County Circuit Court on Aug. 22.
In its federal filing, DOJ accuses Oracle of "stalling" and attempting to manipulate the legal system by filing its own federal lawsuit against Oregon on Aug. 8.
The filing shows that long before the two sides engaged in the courts this month, they were clashing behind the scenes. And they suggest Oracle is not going to play by DOJ's customary rules of engagement.
The state's suit filed Aug. 22 accuses Oracle of fraud and racketeering in its marketing of $240 million worth of software and services to the state.
That total includes more than $130 million directly paid to Oracle for the Cover Oregon exchange that never worked as planned. It also includes contracts for related projects at other state agencies.
Citing problems with Oracle's work, the state in April decided to use the federal exchange for open enrollment in November.
However, Oracle's preemptive countersuit in federal court accuses Oregon of mismanagement as well as breach of contract. It demands payment of $23 million.
The Oregon DOJ on Friday responded to the Oracle federal suit with a motion to dismiss it, saying the company was "forum shopping" between courts to gain legal advantage. The state argued that Oracle would have ample opportunity to make its claims in the court action Oregon filed.
The state in particular took aim at Oracle's refusal to turn over documents demanded. Civil investigative demands issued by DOJ are a routine step prior to suing, and must be complied with under state law.
The state issued its civil investigative demand, or CID, to Oracle on June 30 under the Oregon False Claims Act. The law requires production of documents even if a lawsuit has not been filed yet. In this case, Oracle was given until July 22 to comply.
But according to a sworn declaration filed in federal court, Oracle responded that it wanted a confidentiality agreement before it produces documents. The state offered its standard confidentiality provisions, but the firm refused to provide documents until it had more guarantees. The documents were never turned over.
"Rather than produce documents responsive to the CID, Oracle sent an 'Objections and Responses' to the CID (for which there is no provision under the statute)," wrote DOJ lawyer Lisa Kaner in the declaration. "Oracle refused to produce any responsive documents until it obtained a confidentiality agreement. However, Oracle was unwilling to agree to the Department of Justice's standard confidentiality agreement and continued to insist on the inclusion of terms beyond the scope of the policy of the Department of Justice."
Oracle also hired a Portland firm, Orrick Herrington & Sutcliffe, to represent three former employees who also received investigative demands from the state, Kaner wrote. Two of those asked to postpone their sworn statements to the state.
The state's suit, as well as its response to Oracle's countersuit, were prepared on behalf of DOJ by the Portland firm Markowitz, Herbold, Glade & Mehlhaf, which has been deputized as a special assistant attorney general for the case.
Attorney General Ellen Rosenblum, who oversees DOJ, has refused to release the DOJ demand to Oracle or the company's response, although DOJ has routinely released such correspondence in the past.
Now that a lawsuit has been filed, Markowitz and the state's attorneys -- as well as Oracle -- will have ample opportunity to demand documents. And the firm can ask a judge to seal them.
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