Cover Oregon Scandal Deepens

State officials reportedly lied about progress of site

Cover Oregon employees resort to paper applications due to faulty site / AP
February 11, 2014

OREGON—The story behind the massive failure of the Oregon health exchange website continues to unravel as allegations of fraud and gross mismanagement mount.

Local news agencies have obtained emails and other reports suggesting state officials lied about the progress of the website, possibly even creating dummy sites to present to federal officials.

"It's a scandal much worse than New Jersey," said state GOP representative Dennis Richardson, who is running for governor against incumbent Democrat Gov. John Kitzhaber.

The issue is starting to bubble up to Capitol Hill. Richardson is calling for an audit of the program by the federal Government Accountability Office. That push would likely come from Rep. Greg Walden (R., Ore.), the only Republican in the Oregon delegation.

A spokesman for Walden said the congressman is "aggressively pursuing" more information about the botched rollout of the website.

"Greg is very concerned about failure of Cover Oregon," a spokesman for Walden said in a statement to the Free Beacon. "The breakdown of the exchange is unacceptable, and taxpayers deserve accountability for the more than $300 million the federal government has given the state."

Oregon’s health care exchange recently announced it has enrolled more than 100,000 people, which is impressive considering not a single one enrolled through the exchange website.

The Cover Oregon site was supposed to be a model for other states launching health care exchanges. It received hundreds of millions of dollars in federal grants for the program.

Across the state, billboards advertised the health exchange, and the airwaves carried a series of hipster-tinged TV ads to promote Cover Oregon.

However, when the website launched in October it did not work. Five months later, it still does not. The state had to scramble to hire hundreds of staff to answer phones and process paper applications.

Investigations by local news outlets have unearthed emails and reports showing state officials were warned as early as 2011 that the project was going off the rails.
Much of the controversy surrounds Carolyn Lawson, the former Chief Information Officer of the Oregon Health Authority who was brought in to lead the development of the Cover Oregon website.


Cover Oregon received $59 million in federal funds as part of an "early innovator" grant. To keep that money flowing, however, Lawson and her team had to present federal officials with "gate reviews" to demonstrate progress on the website.

In a project update to a legislative committee, Lawson wrote that staff from the Center for Medicare and Medicaid Services (CMS) had reviewed the website design and were "delighted" with it.
"They gave Oregon very high marks, say our design was among the best they had seen," she wrote.

Lawson told the State Emergency Board in April 2012 that her team had shown "a working system build to executive stakeholders and sponsors."

Yet a quality-assurance report by an independent company from that same time found that "all 13 people interviewed believed the project's scope is ill-defined and classify it as a major risk."

"The report was just scathing," Richardson said. "There was something like 17 different layers, and 14 were in red. It was obvious it was going to be a train wreck if nothing happened."

Richardson said he personally spoke with Kitzhaber over the phone to warm him of the problems with the website in September 2012.

When the website launched in October last year, two-thirds of its elements were still in the "testing" and "development" stages.

"We spent a million dollars on a quality assurance team, and the quality wasn’t assured," Richardson said.

Former state rep. Patrick Sheehan (R.), who is now working for Richardson’s campaign, said he also tried to warn officials.

Kitzhaber has told news agencies he was not aware of the website’s problems until late October of last year, two years after the first quality assurance reports began to predict trouble.

Sheehan said the project took the unusual step of building the website from the ground up.

"Cover Oregon’s direction had to do with them choosing to build the entire system from scratch rather than licensing software," said Sheehan, who has a background in web design. "There was software there."

Sheehan, who is working for Richardson’s campaign, said he brought his complaints to the FBI for possible investigation.

Lawson resigned in December.

The Oregonian reported Monday that Lawson was previously investigated for funneling $500,000 in contracts to her former boss, Steven Powell.

While at the California Public Utility Commission in 2008, Lawson awarded five contracts to Powell’s consulting company, where she previously worked.

Lawson later hired Powell as her senior deputy in Oregon. After Lawson resigned, the state replaced her with Powell.
The scandal has caused headaches for Kitzhaber, who is seeking a fourth term as governor. Kitzhaber walked out of an interview with KATU when a reporter asked him about Lawson.

However, before ending the interview Kitzhaber claimed the exchange is in fact beating expectations.

"We figured that this would be a two-year process," Kitzhaber said. "What we didn’t anticipate was actually this many [people enrolling]."

Kitzhaber has promised another review of what went wrong with the Cover Oregon website. It will cost roughly $225,000.

The Oregon Health Authority did not respond to a request for comment.