Gatesville: Contractor ‘surprised and disappointed’ by hospital’s suit

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GATESVILLE, Texas (KWTX) Adolfson & Peterson Inc., the general contractor overseeing a multi-million-dollar expansion of Coryell Memorial Hospital said Monday it was “surprised and disappointed” by the hospital’s decision “to pursue a litigation strategy.”

The $44 million dollar, 17-thousand-square-foot addition to the hospital remains unfinished. (Photo by John Carroll)

The hospital is suing the contractor and Zurich American Insurance Company for millions of dollars in a dispute over the settlement in the wake of the June 26, 2018 explosion that killed three workers and injured 13 others at the Central Utilities Plant under construction on the hospital’s campus.

The suit, filed in State District Court in Gatesville, seeks a temporary injunction to prevent Adolfson & Peterson Inc., from negotiating with the insurance company.

Zurich American declined an offer to respond, saying it doesn’t comment on pending litigation, but on Monday the contractor disputed the hospitals claim that it broke contractual agreements by walking off the job on Oct. 4, 2018.

"Since the June 26 explosion, we closely partnered with Coryell Health to reach a resolution that would allow us to rebuild the impacted area and complete the expansion project," Corbett Nichter, Gulf States president of Adolfson & Peterson Construction, said Monday.

"In fact, over six months ago, Coryell requested that AP evaluate two alternate central utility plant designs, which were substantially different than the original design,” he said.

“Since that time, we have diligently worked to develop the project scope, pricing, and phasing and were told the hospital would select its desired option. We would then commence construction and complete the rebuild which has been our stated desire and contractual right from the onset."

“AP disagrees with Coryell's allegation that our team breached any of its contractual duties. In fact, AP was forced to issue a "stop work" notice on October 4 for non-payment of millions of dollars,” he said.

"As of today, AP, its subcontractors and suppliers are owed more than $3.5 million for work completed for Coryell Health, much of which is unrelated to the central utility plant explosion,” he said.

The hospital said it sued after it discovered that Zurich had negotiated with the contractor and paid the company $2 million without consulting the hospital, which is also on the policy.

"In December 2018, Zurich presented AP and Coryell an 'undisputed settlement offer' of $9,139,966.58 for the CUP remediation and reconstruction work. In doing so, it reflected the 'net' amount of this offer as $7.1 million-- predicated on the unsubstantiated prior advance to AP of $2 million. Both Zurich and AP again failed to provide any material details or information to Coryell concerning this purported advance,” the suit says.

“Our goal of this system has always, ever since the day of the explosion, is to get this facility back open and complete it so what we're trying to do today is secure the restoration of the assets that we lost on that day as we continue to move forward at this point in time to complete this project,” Coryell Memorial Health System Chief Executive Officer David Byrom said Friday.

"Certainly this facility was not responsible for that explosion. Certainly we expect to be able to work through that entire process we don't want any more or any less than what we're entitled to," Byrom said on Friday.

"We're the ones that lost the asset probably close to $10 million is what we recognize today and so we believe that these funds should be coming to Coryell as we make the necessary steps to restore service complete the project and provide the adequate supervision of the project,” he said.

The Central Utilities Plant was just about complete when the explosion occurred, but the $44 million dollar, 17-thousand-square-foot addition to the hospital remains unfinished after Adolfson & Peterson walked off the job in October 2018.

“We plan on moving forward soon to get someone else to finish the complex that will double the amount of beds the hospital offers, from 25 to 50, including a new physical therapy department and administration offices,” Byrom said.

Emails, voice messages and calls to AP and Zurich by KWTX on Friday were not returned.