UI, Modern Piping continue dispute over Children’s Hospital records

The University of Iowa has placed the remainder of the settlement — more than $13 million — to Modern Piping in an independent trust, to be paid to Modern Piping when the UI receives final construction documents.


The University of Iowa Stead Family Children’s Hospital on Saturday, November 5, 2016. The hospital hosted a weekend open house for the new $364 building. (The Daily Iowan/Olivia Sun)

Brooklyn Draisey & Marissa Payne

The University of Iowa is remaining firm on its stance of not paying the full court-ordered settlement it owes Modern Piping until it receives final construction records for the Stead Family Children’s Hospital.

UI spokeswoman Jeneane Beck said on Monday the UI has placed the remaining settlement — more than $13 million — into an independent attorney’s trust account with instructions to release the funds to Cedar Rapids construction company Modern Piping once architecture firm Heery approves construction documents for work on the Children’s Hospital.

Heery Managing Director Scott Hansche wrote in an email exchange to UI officials last week that the documents needed include corrected as-builts, a building information model, and LEED submittals.

In an email sent to Modern Piping Chief Executive Officer Ken Brown on Sunday, as the UI provided to reporters, UI President Bruce Harreld laid out three paths to Modern Piping receiving the full settlement.

RELATED: UI backtracks on paying Modern Piping, seeks documentation for work on Children’s Hospital

The first option was for the UI, Modern Piping, and state Board of Regents to sign a settlement agreement to “compromise and settle, finally and fully,” the dispute. Under this agreement, both parties would admit no liability and agree all contract terms and conditions are still in effect.

According to the resolution, Modern Piping would submit all final construction records documents, and the UI would pay the remaining settlement. Modern Piping would also agree to “defend, indemnify, and hold Iowa harmless from all claims, demands or liability.”

The second option was for Modern Piping to agree to being a counterparty to an interest-bearing escrow account, where the UI will deposit the full settlement. The funds would be released to Modern Piping once Heery approved the final construction documents, Harreld wrote.

The third option, which the UI executed Monday, was the default option if Modern Piping did not respond to the email by the close of business Monday.

“The University of Iowa continues to seek conclusion to this matter and looks forward to Modern Piping following the same process they did with Hancher — submitting final construction documents to the design professional for approval — per the original contract,” Harreld said in a statement.

RELATED: UI has not yet paid Modern Piping in full, contends as-built documents for Children’s Hospital are needed

Brown shared a Monday email exchange to Harreld sent at 4:48 p.m. in which he said Modern Piping reviewed the UI’s offer to settle.

“Modern Piping will not agree to place the receipt of the payment in an unnamed third party (escrow) when the Arbitration Panel concluded Modern Piping fully completed the project and both the Johnson County District Court and Iowa Court of Appeals agreed,” Brown wrote. “We have offered to provide additional copies to the University of Iowa upon payment similar to other agreements made by the University of Iowa, or you can simply download the documents from iBuild.”

Harreld initially publicized the allegations that the UI has not received the as-builts at the April 18 regents meeting on the UI campus. He accused the contractor of “game playing” and urged Modern Piping to provide the records in dispute.

“This is not just a normal building,” he said at the meeting. “There are patients in this. There are kids.”

Since then, UI officials have contended — with confirmation from Heery — that they are not in possession of the construction records that would fulfill Modern Piping’s contractual obligations. Modern Piping officials contend the as-builts were provided to the UI no later than April 2017.