Blurred Lines

How Kitzhaber's re-election campaign secretly shaped state policy around Cover Oregon.

Previously undisclosed records show that the state's official announcements about Cover Oregon were in fact often shaped by Kitzhaber's re-election campaign consultants.

Emails obtained by WW show his campaign advisers went so far as to shape the explanation a Kitzhaber adviser gave to Congress for the Cover Oregon failure.

Kitzhaber's campaign officials were also deeply involved in discussions about settling a dispute with Oracle Corp., the vendor that created the exchange's website. And emails show Kitzhaber provided his campaign staff with confidential information regarding the legal dispute with Oracle.

There's supposed to be clear separation between an elected official's work of governing, which serves the public's interest, and his campaign, which serves the candidate's interest. Some overlap is inevitable. But emails show Kitzhaber's campaign consultants in the past 10 months drove state policy to an unusual degree.

In the end, sources tell WW, consultants for his re-election campaign orchestrated the decision to shut down Cover Oregon and switch to the federal health care exchange. That means hundreds of thousands of Oregonians will now have to re-register in the federal system, and that Kitzhaber surrendered control of a key part of his health care agenda putting politics ahead of policy.

Kitzhaber's chief of staff, Mike Bonetto, acknowledged the governor's office turned to campaign consultants for advice.

"Our office routinely seeks outside advice, review, input and counsel as the governor or I deem necessary," Bonetto wrote in an email. "As it relates to Cover Oregon, I recognized that the multitude of Cover Oregon issues required additional experience and expertise beyond what we had available within our internal communications staff."

Bonetto says seeking outside help was beneficial.  

“As on any other issue, the governor took that advice and counsel and moved forward independently,” he says. “His leadership  around Cover Oregon resulted in a less risky and less expensive move to the federal exchange, and a reduction in overall operating costs at Cover Oregon.”  

Observers say, however, the appearance of campaign consultants shaping state policy is troubling.

"It's problematic," says Paul Gronke, professor of political science at Reed College. "There's supposed to be a bright line, but the lines have gotten so blurred between John Kitzhaber as candidate and as governor that people don't see them anymore."

Political science professor Todd Donovan of Western Washington University says outside advisers should be objective, rather than campaign-driven.

"If Kitzhaber had hired a PR firm that had never done any campaign work and they were doing messaging, I think we'd look at that differently," Donovan says. "But the campaign staff has only one job—to get the governor re-elected."

Kitzhaber won re-election Nov. 4, defeating Republican Dennis Richardson, and is now headed to a historic fourth term as Oregon governor.

He and his fiancee, first lady Cylvia Hayes, face ethics complaints alleging Hayes used her position in Kitzhaber's office for personal gain and used state-paid staff to help run her private consulting business.

The state also faces a legal battle with Oracle. Oregon has accused the high-tech multinational of fraud and racketeering and is seeking $2 billion in damages.

That litigation is likely to provoke an aggressive response as Oracle explores what Kitzhaber knew about Cover Oregon, when he knew it and what he did.

Since at least January, emails show, state officials worked closely with Kitzhaber's campaign staff.

A Feb. 7 email shows Kitzhaber was heavily involved. That day, there was a conference call about campaign strategy, including Bonetto, Kitzhaber spokeswoman Nkenge Harmon Johnson, Kitzhaber staff health care adviser Sean Kolmer and legislative director Dmitri Palmateer, Oregon Health Authority director Bruce Goldberg, OHA communications director Patty Wentz and five campaign consultants to discuss Cover Oregon. 

The conference call included several Kitzhaber campaign consultants: Patricia McCaig, his top campaign adviser; former senior aides Tim Raphael and Scott Nelson, both of whom were paid by the campaign; and campaign consultants Kevin Looper and Mark Wiener.

By late February, the state was holding confidential negotiations to reach a legal settlement with Oracle.

Despite the secrecy of the negotiations, Kitzhaber and his state staff shared confidential information about them with campaign consultants.

On Feb. 28, Bonetto, Kitzhaber's chief of staff, emailed that the governor's general counsel, Liani Reeves, had just given him the latest update on the talks, including details of a potential financial settlement.

Copied on the email were three members of Kitzhaber's re-election team—Raphael, Looper and Wiener—and state employees Harmon Johnson, Wentz and Palmateer.

"We're 10 million apart in numbers and the timing of when that is paid," Bonetto wrote. "We're thinking about offering $16 million—they want it next week and we had offered to pay it in two installments over 60 days."

The state soon decided it would cut off talks and sever its relationship with Oracle. On March 2, Kitzhaber sent an email, labeled "Attorney Client Communication" in the subject line, to state officials and his campaign staff about what the official announcement should say.

"This language is intended to mean that we are ending our current relationship with Oracle," Kitzhaber wrote (his emphasis added), "which does not mean we could not use them as a subcontractor under a system integrator in the future."

Kitzhaber shared the confidential information with three state employees and three campaign consultants—again Raphael, Looper and Wiener.

State-paid officials trying to manage Cover Oregon fallout were also told they must first run their responses to the press through a Kitzhaber campaign consultant.

That consultant was Raphael, formerly the governor's staff spokesman and now with the lobbying and communications firm Strategies 360.

In a March 14 email, Raphael spelled out how two state-paid officials, Kitzhaber spokeswoman Harmon Johnson and OHA spokeswoman Wentz, were to respond to media inquiries.

"We need a process for quick, strategic responses to breaking stories and reporter calls coming into the Governor's Office, Cover Oregon and other agencies," Raphael wrote in the email, which went to Kitzhaber, three state-paid staff members and consultants Looper and Wiener. "Nkenge and Patty agree to contact Tim promptly upon receiving reporter inquiries on anything other than routine Cover Oregon/IT related questions."

The level of control Kitzhaber's campaign staff exerted extended even to communication with Congress, which had provided the $250 million in federal funds spent on the Cover Oregon website that never worked as promised.

In late March, the House Oversight and Government Reform Committee requested that Dr. Bruce Goldberg of the Oregon Health Authority come to Washington, D.C., to testify.

On March 21, Bonetto emailed Kitzhaber's campaign staff for advice.

"Please see email below from House Oversight Cmt to Cover Oregon requesting Bruce as a witness," Bonetto wrote. "Need to make a decision on this by Monday."

Greg Van Pelt, retired CEO of Providence Health and Services' Oregon region and an adviser to Kitzhaber, was selected to go in Goldberg's place, Van Pelt says, because Goldberg had recently broken his leg.

Kitzhaber's campaign consultants made sure Van Pelt was on message.

On April 2, Raphael sent Harmon Johnson changes he and McCaig had made to Van Pelt's testimony.

"Priority changes are attached. Patricia and I have reviewed the testimony and have focused edits in two areas," Raphael wrote. "1) Greg's introduction—with a goal of establishing his private sector health care credibility and volunteer capacity with the state; and 2) The transition from ACA success to broken website and the Governor's action to make sure it is not a barrier to enrollment."

On April 2, the day before Van Pelt's testimony, McCaig sent an email to schedule a meeting that night between Kitzhaber's re-election team and top officials in the governor's office. McCaig made clear that she—not anyone from the governor's office—was in charge.

"I'd like to run tonight's meeting and I think it should be limited to Cover Oregon issues," McCaig wrote. "Specifically: 1) IT recommendation: content, process and timing; 2) Greg Van Pelt's appearance [before Congress] tomorrow; 3) Hamstreet: contract, reporting authority, messaging, spokespeople."

"Hamstreet" is Clyde Hamstreet, a Portland turnaround consultant hired to fix Cover Oregon's problems.

In August, at Kitzhaber's urging, the Oregon Department of Justice filed suit against Oracle.

A June 4 email, after furor over Cover Oregon had cooled, shows a continued mixture of Kitzhaber staff and campaign consultants preparing for a meeting at the governor's Portland campaign headquarters.

"We will be discussing a specific topic area: developing key messages," McCaig wrote in the email, "identifying further research needs, and establishing a timeline and calendar."

In addition to the usual mix of Kitzhaber staffers and campaign consultants, the email went to Christian Gaston and Mike Marshall of the campaign; Duke Shepard, Kitzhaber's state-paid labor adviser; and Steve Bella, a state contractor and associate of first lady Cylvia Hayes.

Over the summer, Hamstreet chafed under the watch of McCaig, who sources say led the push to shut down Cover Oregon. Hamstreet opposed that decision.

"I feel strongly that Oregon should keep its options open," Hamstreet wrote in a report the state released to The Oregonian last month.

Hamstreet also said that political expediency rather than public policy drove Cover Oregon's decision-making. In the report, Hamstreet decried "excessive politicization of health care reform nationally and in the state."

"Need to get politics out of the picture," Hamstreet wrote, as The Oregonian first reported Oct. 14.

Neither McCaig nor any of the other Kitzhaber campaign consultants agreed to be interviewed for this story.

Harmon Johnson also declined to comment. But in a Nov. 3 op-ed in The Oregonian, she wrote that she'd raised concerns about the role of Kitzhaber re-election consultants in running state policy.

"During my tenure, I was adamant that the governor's office and his closest advisers not blur the lines between state interest and other matters," Harmon Johnson wrote. "I was told that as long as things were good it did not matter whether things were right.” 

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