UI President: We're Paying What we Think We Owe

IOWA CITY, Iowa (KCRG-TV9) — It's become a war of words and legal filings between the University of Iowa and a contractor tasked with helping build the UI Stead Family Children's Hospital.

The latest salvo came from University of Iowa President Bruce Harreld who tried to set the record straight on the matter with the Iowa Board of Regents, Wednesday.

"The conversation often is why aren't we paying contractors," said Herrald, addressing the Regents. "We're paying them all. But we're not paying what we don't think we owe them."

The issues between the two stem from a lawsuit filed by eastern Iowa-based Modern Piping. The company is one of 24 contractors that helped build the more than $360 million dollar hospital. Modern Piping alleges the university still owes millions for work on the healthcare facility.

"The University of Iowa’s numerous design changes on the UICH Project resulted in a cardinal change, costing the contractors millions of dollars for which the University of Iowa is liable," the company said in a statement, Wednesday. "The University of Iowa has paid millions of dollars to some contractors on the UICH project, yet refuses to pay the legally-enforceable judgment owed to Modern Piping."

The dispute is headed to a higher court for appeal after a district judge ruled in favor of the contractor last month saying the University owed $21.5 million dollars.

"We never agreed to the original arbitration," said Harreld. "We didn't agree to the process. A local county judge said we owed the amount disputed here. I'm not at all sure-- in fact, I'm sure we don't. But, we think we have a right to be heard."

The Regents were largely quiet after the president's statement, but Regent Larry McKibben, a former University of Iowa Hospitals and Clinics board member, felt the UI was doing "exactly the right thing" by refusing to pay and appealing the district ruling.

"The reason we have a supreme court in the state of Iowa is for exactly the reason of what we are taking it to now," McKibben said. "There is no question in my mind whatsoever that this deserves to be at the Supreme Court of the State of Iowa to make that final decision."

Modern Piping said in its statement about Harrelds' comments to the board that the company is proud of its work for the UI and that the university "should be ashamed of its conduct."

"The interest is accruing at $2321 per day on the amount due. From the first day of class on August 20 through the last day of finals on December 14, 2018, interest will accrue in the amount of $269,236, or stated differently, for the same dollar amount, Iowa could offer free in-state tuition to about 33 Iowa residents for the fall semester," the statement said. "Especially in tight economic times, the University of Iowa should be focused on its core educational mission, not issuing press releases draft by its General Counsel riddled with false and inaccurate statements."