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#12 University of Iowa Children's Hospital plagued by mismanagement, overspending | The Gazette Top Stories 2018

New year to bring courtroom decisions

Fans wave at the UI Stead Family Children’s Hospital between the first and second quarters of the game against the Northern Illinois Huskies at Kinnick Stadium on Sept. 1, 2018. (Cliff Jette/The Gazette)
Fans wave at the UI Stead Family Children’s Hospital between the first and second quarters of the game against the Northern Illinois Huskies at Kinnick Stadium on Sept. 1, 2018. (Cliff Jette/The Gazette)

In early November 2016, tens of thousands of community members — including nurses, physicians and the smallest of patients — toured a sparkling new 14-story University of Iowa Stead Family Children’s Hospital in anticipation of its opening one month later.

But the planned Dec. 10 debut didn’t happen.

And as the weeks ticked by before officials finally announced a piecemeal opening in February — with several floors coming online as construction continued on others — accusations of mismanagement, misinformation and cost overruns began to surface.

Several contractors sued the university and its governing Board of Regents for failing to pay what they said they’re owed for the years-long endeavor that saw its price tag balloon, from $270.8 million to more than $360 million.

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UI commitments as of June stood at nearly $370 million, and that didn’t include litigation and arbitration costs or an award against the university months earlier.

In March of this year, an arbitration panel ordered the university to pay $21.5 million to one of those suing contractors, Modern Piping Inc. The UI appealed that decision, and a Johnson County judge in August upheld it — tacking on hundreds of thousands of dollars in continually accruing interest.

The university again appealed, although the Iowa Supreme Court hasn’t yet decided whether to weigh in on the case or assign it to the Court of Appeals.

And the same arbitration association that sided with Modern Piping recently considered similar complaints from Merit Construction over its work on the Children’s Hospital — a squabble that hangs another $13 million in the balance.

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Amid the legal back and forth, The Gazette over the summer published a series of reports following its investigation behind the scenes of the Board of Regents’ largest-ever project. It revealed rampant changes, miscommunication, misrepresentation, wasteful spending and even name-calling that plagued the endeavor — which auditors said employed an ill-advised project-delivery method that contributed to its struggles to finish on time and on budget.

With legal battles continuing in the new year, attorneys expect within weeks to learn whether arbitrators will side with Merit Construction in its allegations and if the high court will agree with UI in its complaints of flawed judgment on the lower courts in the Modern Piping case.

l Comments: (319) 339-3158; vanessa.miller@thegazette.com

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