Emails further suggest Cover Oregon used 'smoke and mirrors' for fed money

Emails further suggest Cover Oregon used 'smoke and mirrors' for fed money »Play Video
FILE - This Nov. 20, 2013 file photo shows Cover Oregon executive director Rocky King, left, conferring with Oregon Health Authority chief information officer Carolyn Lawson before appearing at legislative hearing on the problems plaguing Cover Oregon, the state's insurance exchange. The disastrous rollout of Cover Oregon was voted Oregon's top news story for 2013. King took a leave of absence for health reasons, and Lawton resigned. (AP Photo/Don Ryan, File)

PORTLAND, Ore. – Was Cover Oregon’s website all just smoke and mirrors from the start?

It’s not a new allegation, but a new batch of emails released to the On Your Side Investigators on Tuesday show a software vendor bidding to work on the project and an analyst in the non-partisan Legislative Fiscal Office echoing what a former state representative told KATU in February.

A company called Exeter, which was working to wrest the project from software vendor Oracle last year as the website went up in flames, suggested that Cover Oregon showed off what amounted to prototypes in an effort to pass a review from the federal government.

Bob Cummings, who works for the state’s non-partisan Legislative Fiscal Office, paraphrased a meeting he had with Exeter officials in an email to Oregon Health Authority CIO Carolyn Lawson.

"Many states better realize that a lot of what Oregon has been doing to date has been ‘smoke and mirrors,'" he reported Exeter as believing. “And what was presented to the feds in the Gate process was little more than what Matthew (Cahir, formerly from Oracle, now with Exeter) had built as a ‘demo’ for Oregon.”

KATU News contacted Cahir, who is a vice president at Exeter, on Tuesday. He happened to be at his attorney’s office at the time, and his attorney advised him not to comment because the FBI is investigating the matter.

Cummings’ email strikes a similar chord to earlier allegations brought forth by former state Rep. Patrick Sheehan, R-Clackamas.

In February, Sheehan told the On Your Side Investigators about a 2012 meeting with the FBI in which he said he’d heard Cover Oregon project managers initiated the design of dummy web pages to convince the federal government the project was further along than it actually was.

Sheehan also used the phrase “smoke and mirrors” in his allegation.

"That could have been the smoke and mirrors that they were showing everyone, which was not a live demo,” Sheehan said at the time. “It would just be wire frames or a mock up.

"If they were able to connect the dots and if it's true, someone's going to prison. It would be fraud. It would be the state of Oregon, actually, willfully, misrepresenting something for federal funding."

Such an action could reach the level of crime because the “gate reviews” in question were part of the process the state agreed to go through in exchange for what’s become more than $300 million in federal funding from the Centers for Medicare and Medicaid Services.

Cummings, in an email to then-Cover Oregon director Rocky King titled, “Serious Concerns,” said early versions of the project were essentially for show.

“The first 7 (iterations) were building the factory and no real development was being done,” he wrote.

While most projects have rough drafts, those early iterations were what the state used to secure its money.

“Oregon is an exception to the typical Gate Review process because the Exchange is so advanced in its IT build,” reads the narrative in the state’s Level Two health exchange grant application, worth $226,442,074.

Formidable problems were seemingly being solved by the design team on a consistent basis, according to quality-assurance contractor Maximus.

“The 6th iteration was reported as successfully completed on 02/03/12 – this resulted in a working build in TEST; iteration #7 was reported as complete on 02/24/2012,” reads the March 2012 QA report.

Maximus staff had even been shown a website build by Oracle staff personally.

Lawson would later give stakeholders a link to the Oracle “Solution Factory” to show off the work that was being done.

Some of this struck Maximus as odd at the time. Earlier, it flagged one of the gate reviews.

“While there was a System Design meeting with CMS using design documents prepared with assistance from Oracle, we cannot determine if this is the official, approved HIX-IT design?” the report reads.

The Government Accountability Office is investigating problems with how the federal funding was spent. More than $304 million has been set aside for Cover Oregon, $134 million of which has been paid to Oracle.

The new batch of emails contains numerous references to shoddy book-keeping, beginning with a note from Lawson’s staff a few days after Cover Oregon failed to launch:

“A few of us met yesterday with (OIS Oracle Integrator) Rich Grace to discuss some Oracle purchase orders from a technical perspective as we sort through the dozens of (purchase orders) to make sense of them all,” reads an email from OHA IT contracts manager Don Wall. “Rich seemed to think we should not be paying for this work - it is something that should have been done a long time ago. As I recall, he seemed to think you have had various conversations with Oracle about this.”

By November, Lawson had launched her own investigation into Oracle’s record keeping.

Steve Powell, one of Lawson’s deputies, wrote her, “I guess I don't understand the comment ‘we are about 20 months behind in quarterly updates...’”

Lawson replied: “This is because I have been asking for an audit of work against what we are paying for. Now they are scrambling."