The Oregon Obamacare exchange has been plagued by failure. Its exchange chief, Rocky King, took an extended medical leave after his site managed to enroll only 44 people as of last November, even after receiving over $300 million in grants. Well, now we have a more devastating development: allegations of potential fraud.
Allegedly, Cover Oregon project managers may have designed fake web pages on the exchange site "to convince the federal government the project was further along than it actually was," according to KATU.com, a local Portland news outlet.
Former Republican State Representative Patrick Sheehan, who has gone to the FBI with this allegation, says, "If it's true, someone's going to prison. It would be fraud."
Additionally, Rep. Sheehan told radio host Lars Larson that he actually tipped off Gov. Kitzhaber, a Democrat, about the faults in the exchanges site about a year ago. He also suggested that Lawson be fired. It went unheeded. Gov. Kitzhaber now says he was misled about the website's progress.
Early in its life, Cover Oregon was given a $48 million "early innovator" grant from the federal government. That amount would later grow to $59 million.
There were a few strings attached though.
To keep the money flowing, the website would have to hit specific benchmarks between 2011 and 2013. The state needed to show the feds it had picked a company to provide software and technical assistance; it had to demonstrate that the website was safe from hackers; and, most importantly, it had to show that people could actually sign up for insurance on the website.
The evidence these marks had been reached would be presented during a process called "gate reviews."
What that meant for the Cover Oregon website was that it was able to paint a picture of a flashy website - imagine a concept car that looks flashy in the showroom but doesn't actually run.
But documents uncovered by the KATU Investigators show [Carolyn] Lawson hadn't actually figured out how to build the site, even as she was promising the federal government - and her bosses - that Cover Oregon's website was going to work.
Carolyn Lawson was an IT whiz from California, who was brought in to oversee the project in her role as Oregon Health Authority Chief Information Officer CIO, according to KATU. She resigned before Christmas last year, but "her team was in charge of presenting the gate reviews."
Additionally, that was around the same time that former State Rep. Sheehan found out about the alleged dummy pages on Cover Oregon. "It was communicated to me that something - one of these gate reviews having to do with a benchmark for federal funding - that the State of Oregon was not being truthful," said Sheehan. That's when he went to the FBI.
Wherever this investigation goes, questions certainly remain, especially with Lawson:
Despite the fact the website still doesn't work today, the KATU Investigators found evidence Lawson - or members of her staff - reported to the federal government that the project was going well.
In January 2012, for instance, Lawson wrote a project update for the legislator's Ways & Means Committee.
She wrote that staff from the Center for Medicare and Medicaid Services (CMS) had reviewed the design in its entirety on Nov. 16 and 17. She said they were "delighted" with the technical application and level of quality.
"They gave Oregon very high marks, say our design was among the best they had seen," she wrote.
During this same period, however, the independent quality-assurance company the state hired was reporting a disaster in the making.
"All 13 people interviewed believed the project's scope is ill-defined and classify it as a major risk," reported Maximus.
In March, Maximus documented questions about what Lawson was showing CMS during those 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," reads page 27 of the report.
In April 2012, Lawson reported to the State Emergency Board that her team had shown "a working system build to executive stakeholders and sponsors."
The presentation, she wrote, included an individual successfully signing up for insurance through the website.