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Federal investigators have launched preliminary investigations into Oregon's health exchange debacle. Cover Oregon recently pulled the plug to move to the federal exchange in November.
(Nick Budnick/The Oregonian)
The Federal Bureau of Investigation has opened at least a preliminary inquiryinto Cover Oregon, part of what could eventually be an alphabet soup of federalagencies delving into the high-profile failure of Oregon's health insuranceexchange.
The law enforcement arm of the inspector general of the U.S. Department ofHealth and Human Services has also launched at least a preliminary inquiry intopotential spillover from Cover Oregon into the state's Medicaid-funded OregonHealth Plan, The Oregonian has learned.
Meanwhile, both the Government AccountabilityOffice and the U.S. House oversight committee have announced their owninvestigations.
It is unclear how far along the FBI and HHS inquiries are, or how vigorouslythey are being pursued. State and Cover Oregon officials haven't been contactedby either agency, spokespeople said Friday.
Patrick Sheehan, a former Republicanlegislator from Clackamas County who says he relayed allegations of potentialwrongdoing to the FBI in late 2012, says the agency contacted him two monthsago to follow up, leading to a 90-minute meeting with a Portland-based FBIagent.
Sheehan's allegation involvedpassing on suspicions he heard that Oregon had shown the federal government a misleading websitedemonstration to ensure the continued flow of federal money.
The Oregonian has interviewed othersources, who spoke on condition of anonymity, that said the FBI has contacted otherpeople besides Sheehan. However, it remains unclear whether this is afull-blown investigation.
An FBI spokesperson declined tocomment.
The key challenge facing any prosecutor is proving criminal intent, thethreshold needed for a criminal case. Did state officials paint an inaccuratelyrosy picture of the struggling health exchange? And if so, did they do so withintent to defraud the federal government? Or were they just unduly optimisticor out of touch with reality?
Bob Weaver, a former assistant U.S. attorney who specializes in white-collarcrime, said, "It seems to me that this would be a hard, hard case to provecriminally unless there was some sort of false statements made in order to geta drawdown of the money. That would be a nice clear-cut false claims case."
"But if it's just a bunch of people whodon't know what they're doing, that's a really hard criminal case to make,"Weaver said.
The various state exchanges were funded by the U.S. Center for Medicare andMedicaid Services. As of March 28, it had awarded $4.7 billion in grants nationally.Oregon has been awarded $303 million in five increments.
Typically in federally funded projects, states must show evidence they've metcertain milestones before they get additional grants. In Oregon's case, theOregon Health Authority at first, and later Cover Oregon, had several "gatereviews" where federal officials reviewed progress on the project.
Documents show Oregon may have presented a misleading picture to thefederal government.
On May 9, 2012, Legislative IToversight analyst Bob Cummings wrote to the leaders of the Cover Oregonproject, mentioning that he and Ying Kwong, an oversight analyst for the state Departmentof Administrative Services, shared the same concerns about the health insuranceexchange. "Ying and I are very concerned about the overly positive reports thatare coming out that are not consistent with what we are seeing related toproject progress," Cummings wrote.
"The overly positive presentation provided to the feds early this week... provided a skewed (or at least incomplete) picture of where we're actuallyat given what Ying and I have seen over the past couple of months," Cummingswrote. "I recognize the need to be positive with the feds, but I saw majordisconnects from what was stated and where we're at. In addition, I wasconcerned about the statement that (the exchange) 'has completed its last hurdle with the Legislature.' Thissimply is not true."
Another vocal critic was Exeter Group, a Massachusetts technology firm thatwanted to supplant Oracle Corp. as the state's lead technology contractor.
In an Oct. 11, 2012 email, Cummingsrelayed criticism to Carolyn Lawson. He wrote that Exeter felt Oregon had used"smoke and mirrors," including presenting a demonstration to the feds that was"little more than what" an Exeter executive – formerly with Oracle -- "hadbuilt as a 'demo' for Oregon."
Cummings was referring to Matthew Cahir, Exeter senior vice president forglobal sales. Cahir declined to comment for this story.
KATU, which along with The Oregonian obtained the Oct. 11 email, reported April29 that a lawyer for Matthew Cahir said there is an active FBI investigation.
It wasn't just Cummings and Cahir who felt Oregon officials were putting aninaccurately happy face on the situation. A report prepared forGov. John Kitzhaber by Atlanta-based First Data found that, at times, Cover Oregon officials presentedrosier status reports to the federal government than its internal reports did.
Sheehan, the former lawmaker who sat on the Legislature's IT oversightcommittee, is now a close campaign aide to gubernatorial candidate Rep. DennisRichardson, R-Central Point. But he said his political role is not affectinghis message, and noted he did not contact the media.
Sheehan said the FBI agent interviewing him appeared well-prepared and focusedher questions on the gate reviews where the Oregon Health Authority and CoverOregon reported on progress to the federal government.
Another federal office that has expressed interest in the Cover Oregon debacleis the Health and Human Services' inspector general. It employs auditors aswell as a law enforcement arm, that uses special agents to focus on allegedfraud and similar investigations.
In March, a Portland-based special agent for the inspector general opened aninquiry into an anonymous letter sent by state employees to lawmakers, TheOregonian has confirmed.
The anonymous letter alleged that the state's effort to deal with Cover Oregonproblems had compromised the integrity of the Oregon Health Plan, includingthat ineligible applicants, such as undocumented immigrants, had inadvertentlybeen granted full OHP benefits.
The letter also claimed state officialsordered false information to be systematically entered into the state'sMedicaid information system in order to start benefits.
Asked about the letter, Oregon HealthAuthority officials downplayed or disagreed with its claims, but said the statewas in the process of correcting a problem that had led to as many as 3,800ineligible applicants receiving full benefits. OHA has since adjusted thatfigure downward to about 2,300 people, and officials say it has been corrected.
-- Nick Budnick and Jeff Manning
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