Modern Piping: UI Wanted Legal Battle

CEDAR RAPIDS, Iowa (KCRG-TV9) -- A Cedar Rapids contractor is alleging the University of Iowa is trying to run it out of business with litigation.

At issue, the ongoing battle over the money Modern Piping says the UI still owes. The contractor alleges the University has yet to pay millions for work on Hancher Auditorium and the Stead Family Children's Hospital.

Modern Piping believes numerous design changes during construction of the children's hospital ended up costing the company. A district judge ruled in favor of the contractor in August saying Iowa owes $21.5 million. The UI has appealed and won't have to pay until a higher court weighs in.

"The conversation often is why aren't we paying contractors," said UI President Bruce Harreld, addressing the Regents on the topic, last week. "We're paying them all. But we're not paying what we don't think we owe them."

Following Harreld's defense of the school's position to Regents, Modern Piping released a trove of documents and to TV9 this week supporting its case.

The company said it believes the UI essentially hid from Regents that the children's hospital was perhaps $6 million over budget, citing emails from 2017. In them, a budget summary sent to the Regents' president which shows a $9 million surplus for the project, but only after accounting for around $15 million in anticipated credit.

Modern Piping believes the UI's info was deliberately complex to hide the deficit, pointing to an email from University of Iowa Health Care CFO Ken Fisher about the budget adjustment and how the Regent's president might react.

"My only real comment," Fisher said in the email, "is that I doubt he will understand what 'unsubstantiated Change authorization Requests' might be and what 'credible back charges' might be."

Modern Piping further alleges the University of Iowa's goal was to get out of paying its debts by withholding money and heading to court.

In another email from April of 2017, an official with the company managing the multiple contractors working the hospital project tells another she had spoken with an Iowa official who "stated that he feels Modern and Merit should be put out of business with the way they handled this project."

Merit Construction is another contractor seeking millions following the completion of the hospital.

Harreld had addressed the University's rationale for fighting the judge's ruling and appealing the Modern Piping decision, saying the school has a right to be heard.

"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."

In that statement, Harreld also said that if the court deems the school still owes money after its final decision, they will pay for it.