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Federal Grand Jury Seeks Communications From Cover Oregon to CMS on Failed Website

Wednesday, May 28, 2014

By Paul Shukovsky  

May 21 — A federal grand jury is investigating communications between Cover Oregon exchange officials—who spent at least $181.5 million in federal funds on a failed website—and the source of those funds, the Centers for Medicare & Medicaid Services.

In subpoenas dated May 13 to both Cover Oregon and the Oregon Health Authority, the grand jury in Portland, Ore., required that the agencies turn over essentially any communications “or representations about the status or functionality of the health insurance exchange website” that they made to the CMS. The subpoenas also specifically seek communications between and among nine current and former Cover Oregon and OHA officials, as well as Mike Bonetto, Gov. John A. Kitzhaber's (D) chief of staff.

The subpoena lists the Federal Bureau of Investigation as the agency assigned to the investigation under the lead of the U.S. Attorney's Office in Portland.

Cover Oregon and OHA issued this joint statement May 20: “The agencies take this request seriously and will cooperate fully with federal officials. We will work collaboratively with the U.S. Attorney's Office to provide any and all information we have and make any and all staff available to assist.”

Feds Misled?

The governor's communication director, Nkenge Harmon Johnson, said in a statement to Bloomberg BNA May 20: “The Governor sees the U.S. Attorney's work as an important and useful step toward answering critical questions for the public. He is committed to a thorough review of Cover Oregon to ensure the appropriate accountability.”

The question for criminal investigators appears to be whether Oregon state officials misled their federal counterparts in the CMS, whose hands were on the purse strings as the website was being developed.

Kitzhaber's counsel also wrote May 19 to the assistant U.S. attorney on the case offering full cooperation in the investigation and access to staff.

Many of the people named in the subpoena lost their jobs at Cover Oregon over the website debacle. At a March 20 press conference, Kitzhaber announced he had accepted the resignation of Bruce Goldberg, director of the state Health Authority who had been on leave from that job since January, when he stepped in to take the helm of the troubled exchange. Kitzhaber also lambasted Cover Oregon contractor Oracle Corp. for its failure to deliver a fully functional website.

At the press conference, Kitzhaber also shared his disappointment at the findings of an independent review he commissioned by First Data Corp. of the bungled website rollout, which Kitzhaber called “a very credible and sobering critique.” Kitzhaber said his administration's lack of oversight of Oracle was the result of “a series of people who did make bad management decisions. But they made those decisions in the context of a structure that lacked a clear point of accountability; that lacked a coherent, functional set of governance and communications strategies and it was a real mess.”

The question for criminal investigators appears to be whether Oregon state officials misled their federal counterparts in the CMS, whose hands were on the purse strings as the website was being developed.

Governor Wants ‘Thorough Review.’

In the May 19 letter from Kitzhaber's general counsel, Liani J. Reeves, to Assistant U.S. Attorney Seth Uram, Reeves wrote: “The Governor is committed to a thorough review of Cover Oregon to ensure the appropriate accountability and oversight for the public investment made in the Cover Oregon website. He has instructed me to fully comply with your document request” and “help make available any and all executive staff who can help provide relevant information for your inquiries.”

The letter notes that the Kitzhaber administration has provided documentation to investigators from the House Committee on Oversight and Government Reform. And Reeves wrote that the governor supports the call for the Government Accountability Office to review Cover Oregon.

Cover Oregon’s board voted in April to abandon its foundering technology and instead adopt the federal exchange website.

To contact the reporter on this story: Paul Shukovsky in Seattle at pshukovsky@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com

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