Insurance Company Sued by AG’s Office for More Than $3 Million After Bridge Collapses in Grafton
XL Specialty Insurance Fails to Pay After “Reckless” Construction Work
SUFFOLK – An insurance company has been sued for failing to compensate the Commonwealth more than $3 million after a bridge in Grafton collapsed due to shoddy construction work, Attorney General Martha Coakley announced today.
The lawsuit filed today in Suffolk Superior Court alleges that XL Specialty Insurance Company (XL) and its agent Fasano Acchione and Associates (“Fasano”) violated the False Claims Act and the Consumer Protection Act by submitting false statements to avoid their obligation of paying $3 million under a construction contract and performance bond with the Massachusetts Department of Transportation (MassDOT) in June 2007.
“When businesses defraud the Commonwealth they defraud taxpayers,” AG Coakley said. “Our office will work to hold accountable those who attempt to circumvent their legal obligations and recover any damages sustained by the Commonwealth as well as penalties for their unlawful conduct.”
“When we spend taxpayer dollars on bridge repairs we fully expect the work to be done in a high quality, safe and efficient manner,” said Secretary of Transportation and CEO Richard A. Davey. “In this case, none of those standards were met. I appreciate the Attorney General’s office pursuing this important matter.”
When the Commonwealth outsources a significant public works construction project, the contractor must obtain a performance bond guaranteeing the project. This is a vital requirement of the public bid process, as it protects the Commonwealth from reckless contractors whose abandonment of a project may result in losses from re-bidding at a higher cost and money already paid to the original contractor.
According to the complaint, MassDOT entered into a contract with Roads, Inc. and a performance bond with XL concerning the $1.7 million restoration of a historic 100-year-old stone arch bridge over the Blackstone River in Grafton in April 2005. After work started, Roads abandoned the project and XL assumed control, employing Bridges, Inc., to complete the restoration. Through “recklessness and negligence,” Bridges allegedly caused the historic bridge to collapse by failing to ensure proper support of the bridge during a crucial step in its reconstruction. After its collapse, XL was bound by contract to rebuild or replace the bridge.
Ultimately the cost of replacement totaled more than $3 million above the sum already paid to Roads and XL. Rather than reimbursing the state, XL claimed that the original design provided was not “constructible” and further accused the Commonwealth of “certain misrepresentations or concealments.” The complaint alleges that these statements by XL were false and contends that they were made to avoid compensating the Commonwealth. The lawsuit further alleges that XL and its agent Fasano – an insurance consulting company – engaged in a cover-up designed to obscure the cause of the bridge failure and transfer blame to the Commonwealth.
The complaint seeks to recover from XL and Fasano the cost to construct the new bridge, penalties, and investigation and litigation costs.
This matter is being handled by Assistant Attorneys General Matthew T. Connolly and Jeffrey Walker of Attorney General Coakley’s Consumer Protection Division.