Modern Piping saga not quite over? UI reverses promise to pay contractor in Children's Hospital dispute

University of Iowa Stead Family Children's Hospital in Iowa City on Tuesday, Feb. 26, 2019. (Liz Martin/The Gazette)
University of Iowa Stead Family Children’s Hospital in Iowa City on Tuesday, Feb. 26, 2019. (Liz Martin/The Gazette)

IOWA CITY — Backed up by the Board of Regents, the University of Iowa is continuing to refuse making court-ordered payment to one of its contractors for work on the Stead Family Children’s Hospital, accusing the contractor of extortion and indicating young patients could be at risk of a disaster in the towering facility.

UI President Bruce Harreld told regents meeting Thursday at the UI that he’s willing to pay Merit Construction of Cedar Rapids what it still owes but won’t pay a second contractor — Modern Piping, also of Cedar Rapids — until it provides “as-built” documents spelling out how the hospital was built and where electrical wiring, valves, pipes and other infrastructure lies behind the walls.

IOWA CITY - University of Iowa Health Care executives managing construction of the new Stead Family Children's Hospital for years delivered favorable budget projections to the Board of Regents, vowing to spend less than expected.

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Last week, Harreld promised the UI would pay Modern Piping the remaining nearly $18 million of a $21.5 million award confirmed by the Iowa Court of Appeals after years of litigation.

But he amended that promise Thursday, vowing to pay only as soon as the contractor forks over the documents.

“We have talked to them quite a bit over the last few days, maybe over the last year and a half, and to be quite honest with you about it — and maybe it’s a little too blunt for a public forum — but I really feel like they’re playing games,” Harreld told the regents.

He accused Modern Piping of demanding an additional $500,000 to $2 million to deliver the construction documents.

Modern Piping attorney Jeff Stone denied the assertion, saying Harreld “flat lied” to the board.


Stone produced a proposed settlement that offered the UI a $126,000 discount on interest accrued on the debt and vowed to resend the documents — which he said Modern Piping already provided — once the UI signs a settlement deal.

“I have personally confirmed Modern Piping provided to the University of Iowa ‘as-builts’ during the progress of construction,” Stone said, adding the documents were given to the UI and its attorneys in April 2017 — two months after the hospital began treating its first patients.

Stone showed The Gazette an image of a “building information model” folder he said had held the documents.

But Harreld told The Gazette the institution’s attorneys don’t have them. And he warned the regents that Modern Piping would claim to have already provided them.

“We went back through all of our people, in the last 12 hours, and said, ‘Are we sure that we don’t have those? Are we sure that the architect doesn’t have those?’” Harreld said. “We have confirmed we do not have those documents.”

The stakes couldn’t be higher, Harreld said.

“This is not just a normal building. There are patients in this. There are kids. If we have a leak in the gas line, or a water leak, or a fire, and we need to know what’s behind that wall because there are gas lines and if we hit the wrong line … We could create a spark and have a very not good situation,” he said.

When The Gazette asked Harreld if that means patients are in danger, he said:

“There’s not an issue now. But if something were to happen, our response time might really be impacted by not having those drawings. We need the drawings.”

Asked if the university has taken safety precautions until it gets the documents, Harreld said the UI has put security personnel “on a little more alert and said, ‘Hey, let’s be careful here.”


“Super careful,” Harreld said. “We staffed up, if you will, around the emergency reaction.”

Regents have and continue to support Harreld and the UI in the increasingly personal spat over work on the Children’s Hospital, which an investigation by The Gazette revealed was plagued by mismanagement, thousands of design changes, rampant cost overruns, and frequent delays.

Arbitration panels, district court judges, and the Iowa Court of Appeals have repeatedly sided with contractors and against the UI in its disputes — ordering the UI to pay Modern Piping $21.5 million, plus interest, and Merit Construction an additional nearly $10 million.

The board maintained that support Thursday, with outgoing regent Larry McKibben among those telling Harreld to stand firm.

“I can’t believe what I heard, because as far as I’m concerned, that’s extortion,” McKibben said. “I’m not about to have the regents and our universities start taking extortion from people.”

The issue came before the regents Thursday because the UI litigation losses require it to increase the Children’s Hospital budget a third time from its starting point of $270.8 million in 2011 to $392.7 million now. The regents unanimously approved the increase after backing Harreld’s refusal to pay Modern Piping unless it gets the documents.

Harreld told the regents that Modern Piping, as it has done previously, again Thursday threatened to demand that the Johnson County Sheriff’s Office seize the university’s most famous piece of artwork — Jackson Pollock’s “Mural” — from its current display in South Carolina if it doesn’t pay the debt.

“Within 24 or 48 hours after we have this vote, we ought to know whether this is extortion or not,” McKibben said. “If they don’t come up with (the documents), it’s either one of two things. They either didn’t do it, don’t have it, or they’re extorting us. I can’t see it any other way.”

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