SUFFOLK, Mass. (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a lawsuit on Wednesday against an insurance company for allegedly failing to compensate the state after a bridge in Grafton collapsed due to shoddy construction work.
XL Specialty Insurance Company and its agent Fasano Acchione and Associates allegedly violated the Consumer Protection Act and the False Claims Act by submitting false statements to avoid an obligation to pay $3 million under a June 2007 construction contract and performance bond with the Massachusetts Department of Transportation.
"When businesses defraud the commonwealth they defraud taxpayers," 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 the court outsources a major public works project, the contractor must obtain a performance bond that guarantees the project. This requirement is integral for the public bid process because it protects the state from contractors who might recklessly abandon a project leading to losses from re-bidding at a higher cost and sacrificing money to the original contractor, Coakley says.
MassDOT entered into a contract with Roads Inc. and a performance bond with XL in April 2005. The project was a $1.7 million restoration of a historic century-old stone arch bridge over the Blackstone River in Grafton. Roads abandoned the project after work began and XL assumed control, employing Bridges Inc. to finish the restoration.
Bridges allegedly caused the historic bridge to collapse through "recklessness and negligence" after failing to ensure proper support of the bridge during a major step in the reconstruction. When the bridge collapsed, XL was bound by a contract to replace or rebuild the bridge, Coakley says.
The cost of the replacement eventually totaled more than $3 million more the sum that was paid to XL and Roads. Instead of reimbursing the state, XL claimed that the original design that they were provided with was not constructible and accused the state of making concealments and misrepresentations.
Coakley's lawsuit alleges that the statements made by XL were false and that they were made to avoid compensating the state. In addition, the lawsuit alleges that Fasano, an insurance consulting company, engaged in a cover-up meant to obscure the cause of the bridge failure and transfer blame to the state.
The complaint seeks to recover the cost to construct the new bridge from XL and Fasano, as well as penalties and litigation costs.