Paging Dr. Kitzhaber: What did Gov. know about Cover Oregon collapse?

PORTLAND, Ore. - In a brief interview with KATU in early January, Gov. John Kitzhaber made an incredible claim about the failed launch of Cover Oregon's website.

"In late October was when I first learned about the problems," Kitzhaber said.

The claim was incredible because the website had already missed its Oct. 1 launch date. Kitzhaber was, in effect, saying he didn't know there were problems until weeks after one of the most important projects under his watch had already failed.

It was incredible because mountains of reports from the state's quality-assurance contractor had been raising glaring red flags for almost two years.

It was incredible because the state had implemented a stringent set of checks and balances for the specific purpose of making sure the project didn't spiral without people in power knowing.

And it was incredible because the KATU Investigators have unearthed emails and conducted interviews laying out repeated attempts by lawmakers and others involved with the project to get Kitzhaber's help in righting what was clearly a sinking ship.

KATU's review of thousands of pages of emails and reports, as well as interviews with many of the key people involved, suggest that either Kitzhaber knew more than he has acknowledged, or that he and his staff somehow remained oblivious to the unfolding disaster despite numerous attempts to bring it to their attention.

"The governor's office was not doing anything," said state Rep. Dennis Richardson, R-Central Point. "He's got advisors in his office who are over health policy. None of them were doing any oversight that we can see."

'They promised the governor's office would be very involved'

Let's start with a quick history lesson.

Cover Oregon began life as perhaps the most ambitious state health exchange in the nation. Its website would include not just access to health-insurance plans, but to all state entitlements: things like food stamps, WIC and Medicaid would all be available through one portal.

The strategy was called "No Wrong Door."

The federal government liked the idea so much it offered the state a $48 million "early innovator" grant to fund the project. That amount later ballooned to $59 million.

Not everybody was sold though. With an already tight deadline for building a complicated website, some thought the proposal crossed the line from ambitious to foolhardy.

Richardson, who has announced he will run against Kitzhaber in the fall, was one of those early skeptics. As co-chair of the powerful House Ways & Means Committee in February 2011, he at first blocked the federal grant. He relented only when an agreement was reached to ensure regular independent quality-assurance reports from a company called Maximus and strict oversight of the project.

Richardson sat down for an exclusive interview with KATU in which he revealed new information about Kitzhaber's oversight of Cover Oregon.

"They were just diving in," Richardson told KATU. "It was like trying to paint a car that's already moving instead of making sure that everything's done before you start moving ahead."

{>}{>}Click here to watch Hillary Lake's full interview with Richardson

From the outset, project oversight was designed to be headed by the governor's office.

The KATU Investigators obtained an organizational chart illustrating the oversight structure. At the top is the governor's office, to which several different groups report.

There's the Department of Administrative Services, a government watchdog group that makes sure rules are followed and budgets met.

There's the Cover Oregon board of directors, the members of which Kitzhaber appointed.

And there's a joint oversight committee made up of Cover Oregon managers and the Oregon Health Authority - which was led by Bruce Goldberg, the man who has since became director of Cover Oregon.

Rep. Julie Parrish, R-West Linn, was on the Legislative Health Care Committee when the federal grant was on the table. She, like Richardson, says she only voted yes because she was assured there would be strict oversight.

"They came back and said 'we'll work with you and get some oversight on that piece,'" she told KATU. "They promised that it wouldn't take state money, that there would be oversight, that the governor's office would be very involved in this."

'Responsibility for the $59 million invested rests on your shoulders as Governor'

The very first Maximus report made it clear the project was in serious trouble. From the beginning, it was red-flagged for things like unclear deadlines, being too dependent on other agencies and being too aggressive in scope.

As the KATU Investigators first reported, the overall health was classified as high risk in the first report, the last report and every report in between.

On Sept. 20, 2012, Richardson emailed Kitzhaber to say that he was concerned not only about the alarming findings in Maximus' reports, but by the fact the warnings seemed to be going unheeded by all involved.

"If you were the investor and I your legal counsel, I would be advising you that the QA report makes it abundantly clear, the HIX-IT project is on a path toward failure and disgrace," he wrote.

"Since HIX-IT leadership continues to ignore warnings from me, the QA and (the Legislative Fiscal Office), the success of this project and responsibility for the $59 million invested in it rests on your shoulders as Governor and the Executive Branch's C.E.O."

Richardson also reached out to Goldberg and Department of Administrative Services COO Michael Jordan.

Goldberg emailed Richardson back on Sept 22: "I have discussed with the Governor's office this morning and we will be pulling together the staff from both the Health Insurance Exchange Corporation and the IT side of things within the Oregon Health Authority this coming week to address."

Richardson said he called the governor several days later because he had received no response, and Kitzhaber then returned his call.

"He assured me that he understands the severity of the situation and that he will talk with Goldberg directly and get this taken care of," Richardson told KATU.

Though no phone records are available to verify the call was placed, Richardson wasn't alone when he talked to Kitzhaber. Dave Dotterrer - the strategic budget analyst for the House and Senate Republican caucuses - was there when the governor returned Richardson's call.

"The governor was calling Representative Richardson back and was calling about the issue, about Cover Oregon," Dotterrer said. "I remember Representative Richardson walking him through what his concerns were about the quality assurance report and what he was hearing from the legislative staff on what the various issues were."

'You need to trust the team'

When the history of the 2014 governor's race is written, Cover Oregon seems destined to be featured prominently. Kitzhaber acknowledged as much on Thursday.

"These things happened on my watch and, ultimately, I am accountable for them," he said. "Ultimately, (it will be decided in the Nov. 4 election). That's the ultimate accountability."

The two men who will be fighting it out in that election were in the thick of the disaster.

After the 2012 election, the Democrats claimed the majority in the House, and Dennis Richardson lost his co-chairmanship of the Ways & Means Committee.

Richardson said Kitzhaber told him to have faith the project was in good hands.

"He said 'No, I understand that you're concerned,'" Richardson said. "'You need to trust the team.'"

With majorities in both the House and Senate, there were no powerful politicians to play Devil's Advocate. The project was now entirely on Kitzhaber's plate.

If there was going to be a powerful skeptic to keep Cover Oregon honest, it would have to be the former emergency-room doctor now sitting in the governor's chair.

'Logistically unworkable'

While Cover Oregon was being publicly praised as one of the nation's best state exchanges, two men with doctorates and decades of IT experience were far from convinced.

One was Dr. Bob Cummings, who works for the Legislative Fiscal Office (LFO). He briefed legislators on the project in December 2012.

"During the committee meeting we had in September, we expressed concerns in a number of areas," Cummings told them. "One was the ability to manage, track and oversee this project because it's huge. Secondly, was the lack of foundational documents in place. We estimated - my personal estimate - that we had a 40-50 percent chance of hitting (the go-live date of) October 2013."

Cummings and the Department of Administrative Services' Ying Kwong are the state's top non-partisan IT professionals. As the project grew nearer the deadline, both were predicting Oct. 1 was unworkable.

Kwong emailed Cummings in late May with a laundry list of concerns: The project was being poorly managed; the exchange was making up the rules as it went along; communication was poor; the scope was too broad.

"A single global instance is likely logistically unworkable," Kwong wrote.

Even Cover Oregon's director - at the time, it was Rocky King - knew Cover Oregon was in serious trouble. With six months to go, King wrote Cummings and Kwong that he was "not sure" the project was on track.

"You know the extent of this challenge and the uphill trek for the next 6 months," he wrote. "I am not yet convinced that we can go live Oct. 1 with the quality I think Oregonians will expect."

And yet even as internal warnings were growing direr, Cover Oregon issued a press release on Aug. 9, 2013, assuring Oregonians the project would go live as scheduled on Oct. 1, albeit with limited functionality.

"Again, we are opening our doors and all services/products will be available Oct. 1," acting director Triz delaRosa wrote to Cummings and Kwong.

Kwong emailed Cummings immediately, writing: "I think it is irresponsible to say that CO can launch all services by October 1."

' 'Forced' to go live due to federal and executive branch pressure'

Why would Cover Oregon ignore the red flags and make the announcement?

Kowng speculated that the go-live date was still being presented as achievable due in large part to pressure from the top.

"There appears to be a political need for CO management to implicitly stick with the "party line" that Oct. 1 is somehow unmovable, that there would be embarrassment or disappointment of important stakeholders (Governor, Obama administration, the public ...) if the dates slip," Kwong wrote to Cummings on May 20, 2013. "I think this sort of politically driven denial (as you call it) or intellectual dishonesty (as I call it) is not in the best interest of the State or its citizens.

"Like the old Steve McQueen movie the Blob, you simply don't know how to shoot this beast, because it does not have known anatomy with the normal vital organs that makes it tick."

Ying said the announcement amounted to Cover Oregon "going all-in" in poker parlance. He asked Cummings what to call a poker player who goes all-in with nothing in his hand.

"Either the world's greatest 'bluffer,' or someone who thinks that the reality of the situation will somehow 'fold,'" Cummings wrote back. "I've never found reality willing to 'fold' no matter how badly I wanted it to."

Cummings took their concerns to Richardson, writing that he believed the technical reality of the situation had less to do with the Oct. 1 go-live date than did the political reality.

"I believe that CO was "forced" to go live due to federal and executive branch pressure," Cummings wrote. "I do not think they have done a good job of managing expectations (i.e. the press release is far, far, too optimistic), and I don't think that their backup and manual operation plans are nearly as solid as they would publicly lead everyone to believe."

The governor did step in earlier this month, announcing the state would hire another independent contractor to assess what went wrong.

Still, there is no estimate when the website will go live, and Goldberg has said the state is examining the possibility of melding with either another state exchange's technology or the federal website.

About 90,000 people have used Cover Oregon's paper enrollment to sign up for private insurance and the publicly funded Oregon Health Plan.

But almost six months after the announcement the website would be up and running in October, it still doesn't work.

"They were focused on the goal, not on the reality of how you get there," Richardson said. "They wanted to go to Oz, but they didn't know about the Yellow Brick Road."

Watch the full interview with state Rep. Dennis Richardson:

Part 1:

Part 2:

Part 3:

Full coverage of the troubled Cover Oregon website: