Emails Show Legacy Health CEO and Top Trial Lawyer Urged Kitzhaber to Settle Oracle Litigation

Those emails are some of the thousands of messages Kitzhaber's assistant sought to have deleted from state servers on Feb. 5.

The emails also contain advice to Kitzhaber from a prominent health-care expert about the Cover Oregon legal mess. One of Kitzhaber's top private sector health care advisers, Dr. George Brown, the CEO of the six-hospital Legacy Health chain wanted Kitzhaber to end the war with Oracle. 

To buttress that advice, Brown drew on the advice of Stephen English, one of Oregon's top trial lawyers. English, a partner at the Perkins Coie firm, is a veteran of numerous high-stakes legal battles.

Here's the advice Brown, who served on Cover Oregon's board—and English, who does legal work for Legacy—gave Kitzhaber a month after the election.

"Hope you had a good Thanksgiving holiday. Congratulations and condolences on your reelection...smile," Brown wrote in Dec. 2, 2014 email to Kitzhaber. "I spoke with you regarding the Oracle suit. Below is the assessment from Steve English of Perkins Coie. If you want to discuss or pursue let me know. I will say again that settling the case is a far better alternative than following through with the suit."

Here's a memo English prepared for Brown:

Dr. Brown,

It was a pleasure having lunch with you and Rob yesterday.  Per your request, here are some brief talking points for your discussion with the Governor about bringing in someone who would focus on trying to settle the Oracle/Cover Oregon dispute.

The problem:  This is an incredibly expensive high-profile fight between one of the largest software companies in the world (annual revenues of over $38 billion) and a state with an embarrassing failure of its state insurance plan rollout.  Reviewing both the Oracle lawsuit for breach of contract and the State of Oregon lawsuit for fraud with its accusations of criminal misconduct, this fight, if it goes unchecked, will be both expensive and reputation damaging to both sides.

Exception/Solution:  Work out a settlement before the “litigation machine” gets going too rapidly with a resolution that leaves both sides with their reputation and dignity and allows Oregon’s Insurance Exchange to get up and running.

Trial risks/costs for Cover Oregon:

*Oracle’s breach of contract claim is straightforward and simple – it was hired on a time and materials basis and Cover Oregon has refused to pay approximately $23 million for services rendered (see attached p. 2 of Oracle’s complaint).  As the first-filed suit, it will likely go to trial first, and is likely to be an embarrassing exposure of the alleged ineptitude of OHA and, indirectly, Oregon’s administration.

*Trial won’t resolve the exchange problem and create health coverage.

*A Republican Congress may look negatively on the dispute and seek to get its federal funding back.

*The cost of defending the Oracle suit and prosecuting the AG/Cover Oregon suit will be staggering (millions of dollars) as the litigation and its inevitable appeals drags on for years.  The AG and Cover Oregon have essentially declared war by filing an inflammatory complaint that has accused six of the highest-profile Oracle executives of being criminals.  With 5 times more annual revenue than Oregon’s General Fund, Oracle can and will fund its war chest to fight this dispute to the bitter end.

*It is conceivable that if the individual Oracle executives are successful in defending the case as to them personally, they would consider a claim for malicious prosecution.  This may be remote but Oracle fights to win.

*The hidden costs of litigation of this magnitude can also be staggering.  The AG’s office and other state officials will face tremendous time burdens in the discovery process – including document production and enormous numbers of depositions, not to mention a trial that will very likely get daily front page coverage in certainly the Oregon papers and possibly national coverage – and in trial preparation and trial.

Trial risks/costs for Oracle:

*Although money is no object for its defense fund, Oracle faces enormous risks to its business reputation and to its future government contracts.  Oracle cannot afford to be seen as doing inept or sloppy work or worse, found to be deliberately misleading its customers.

*Oracle has a very real risk of a hometown jury verdict.  The case may well be tried in Marion County - the heart of Oregon’s state employees locale and a Marion County jury will be completely underwhelmed by an aggressive group of California lawyers (Orrick Herrington) who, although they are excellent lawyers, may not sell well to a Salem jury.

*The distraction to Oracle of having six of its top executives having to set aside the time to prepare for depositions, be deposed and then very possibly having to appear at trial, will be a huge time drain on Oracle.

*With respect to the Oracle executives at trial, it will be a delicate situation for individuals who have been named as defendants in a $250 million claim to explain why they aren’t interested enough to sit through the trial.  Oracle faces a real dilemma in this regard.

English proposed that he and his firm could mediate a settlement—an offer Kitzhaber did not accept.

Now, Kitzhaber is the subject of a federal criminal investigation, and the Oracle litigation is problem for his successor, Gov. Kate Brown, to resolve.