U of Iowa ordered to pay $21.5M to children's hospital contractor

Ending a yearslong battle, a judge ordered Iowa City-based University of Iowa to pay the contractor of its new Stead Family Children's Hospital and Hancher Auditorium $21.5 million, plus hundreds and thousands of additional dollars in interest, according to The Gazette.

The university's dispute was with Modern Piping Inc. over the construction of its 14-story children's hospital, which was plagued with design changes, budget overruns, miscommunication and missed deadlines. Those factors pushed the project's budget from $270.8 million to more than $360 million and delayed its opening by months

In March, an arbitration panel awarded Modern Piping $21.5 million, $4.6 million of which was owed for the Hanchor Auditorium, but the university appealed the decision because it lumped together awards for two separate projects. The university claimed the arbitration panel didn't have jurisdiction over the children's hospital project. The university asked the court for extensions to negotiate with Modern Piping over the amount owed. Those negotiations failed. 

University of Iowa officials said the children's hospital was funded entirely with gifts, patient revenue and bonds, which the Iowa Board of Regents, the governing body overseeing the university, had to keep increasing to cover the project's increasing costs. The university, however, is on the hook for the litigation payouts. 

The university has made payments toward the $21.5 million award since the arbitration panel issued it, but it still owes $16.9 million of the initial award. With interest, the amount totals $17.4 million, and interest will accumulate at a rate of $2,321.83 per day. 

The ruling comes as a blow to the university as it has struggled with legislative cuts that forced it to increase tuition, freeze faculty pay and halt new construction projects.

District Judge Ian Thornhill said his ruling marks the final say in this prolonged legal battle. 

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