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Oregon takes steps toward lawsuit over defunct health exchange website

By Shelby Sebens

PORTLAND Ore. (Reuters) - Oregon is taking the next step toward a possible lawsuit against the company that developed the embattled Cover Oregon website as part of the implementation of the federal healthcare program known as Obamacare, state officials said on Tuesday.

The state issued what are known as civil investigative demands (CIDs) for information on Monday in the potential case against Oracle Corps, which the state paid about $134 million to create technology for the site.

"Beyond that, I cannot comment on the content of the CIDs, who they were issued to or how many were issued," said Kristina Edmunson, communications director for the Oregon Department of Justice.

Oregon, a state that fully embraced the Affordable Care Act, endured one of the rockiest rollouts of President Barack Obama's healthcare law, requiring tens of thousands of applicants to use paper forms since launching on Oct. 1.

The state decided in April to move its troubled state exchange to the federal system. Governor John Kitzhaber, who is up for re-election in November, said last month he wants the state to seek legal action against Oracle.

The potential lawsuit comes as federal prosecutors have subpoenaed documents from Oregon's health exchange agency as part of a grand jury investigation into how the state used federal money to set up the now-failed insurance exchange.

Oracle Corp last month defended its work and said the governor's move was political. Deborah Hellinger, vice president of corporate communications for Oracle, declined to comment for this story.

The state has hired an outside law firm to assist with potential legal action against Oracle, Kitzhaber’s communication director, Nkenge Harmon Johnson, said. She would not say how much the state is paying for potential litigation.

"It is possible that Oracle would be forced to reimburse Oregonians for all of it: legal expenses in addition to damages and the costs of the flawed website," Harmon Johnson said.

State officials would not comment on what the next steps might be, except to say they are working on the case.

"In terms of timing, the Department of Justice continues to consider all legal options, and we, along with our retained counsel, continue to do the necessary legal and investigative background required before making a decision as to how and when to proceed," Edmunson said.

(Writing by Bill Trott Editing by xxxx xxxxx)

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