Lawyers: No need for Legislature's approval to ditch Cover Oregon, switch to federal exchange

SALEM, Ore. (AP) - Lawyers for the state Department of Justice say Cover Oregon doesn't need the Legislature's approval to ditch its technology and switch to the federally run enrollment website, according to a memo released Tuesday by Gov. John Kitzhaber's office.

Last week, lawyers for the Legislature raised the specter of a special session when they said the state cannot abandon Cover Oregon without legislative approval or a decertification by the federal government. But lawyers for the Justice Department and the Legislative Counsel office agreed that Cover Oregon wouldn't need legislative signoff to create a "partnership exchange" with the federal government, under certain conditions.

"Cover Oregon has broad, flexible, and unambiguous contracting powers which it may exercise to create a partnership exchange" with the federal government, wrote Theodore C. Falk, attorney in charge of the state Justice Department's Health and Human Services Section.

The memo says Cover Oregon should submit a revised business plan to "the appropriate legislative committee," but doesn't say whether legislative approval would be required. The agency's existing business plan was approved by the House and Senate in 2012.

In response to the state Department of Justice lawyer's memo, Republican House Minority Leader Mike McLane said in a statement to KATU late Tuesday: "The Governor's lawyers say one thing, ours say another. It's his call to make, let's hope he's right."

Cover Oregon's interim managers on Tuesday presented their technology transition plans to a state legislative committee.

Clyde Hamstreet, interim director of Cover Oregon, pushed back against suggestions that Cover Oregon wasted the nearly $250 million in federal grant money it's spent so far to build the technology and run its business operations. While the website never launched for the general public, the back-end systems helped enroll more than 300,000 people in health coverage and some of the software will be salvaged to continue enrolling Oregonians in Medicaid, even after the federal government takes over private insurance enrollment.

"Maybe some of it was wasted, but it wasn't a quarter of a billion dollars," Hamstreet said.

The state will hire a systems integrator to merge Cover Oregon's Medicaid enrollment software with the system already developed for the Oregon Health Authority, which administers the Medicaid program. Independent experts and former Cover Oregon leaders have laid some of the blame for the technology failure on Oregon's decision not to hire a systems integrator, which acts as a sort of general contractor on technology projects.

The state enrollment system being used this year will still be in place if, for some reason, the transition to the federal website,, isn't ready by the next enrollment period, which begins in November, officials said.

(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

Correction: In a story May 6 about Cover Oregon's switch to the federal health insurance website, The Associated Press reported erroneously that a state Department of Justice legal memo contradicted one written by the Office of Legislative Counsel. Both memos concluded that Cover Oregon's board could approve a partnership exchange with the federal government under certain conditions. Above is the corrected version of the story.