Insurers claim Bertha contractor misled on true cause of breakdown

SEATTLE — In the strongest challenge yet to the claim that a steel pipe with an 8-inch diameter led to the breakdown of the world's largest tunnel boring machine, the insurance company for Seattle Tunnel Partners argued the contractor digging a new State Route 99 tunnel hid the true cause of Bertha's troubles.

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In a court brief filed last week, lawyers for Great Lakes Reinsurance asked for "an award of damages resulting from STP's misrepresentation, nondisclosure and concealment in violation of the (insurance policy) and the laws of the State of Washington."

The brief claims STP, along with Bertha's manufacturer, Hitachi Zosen, "agreed to publicly blame the failure on the encounter with the steel pipe in order to improve their chances of recovering on their claims for insurance and against WSDOT."

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STP claims the Washington State Department of Transportation did not remove the pipe from Bertha's path, or provide adequate warning.

The contractor has filed a $480 million claim with the state for repairs to Bertha. That amount is six times the original cost of the machine.

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State officials have long maintained that the design-build contract on the SR99 project protects taxpayers from repair costs from the two-year breakdown, putting the financial responsibility on STP.

Bertha chewed through the steel well casing in early December 2013 shortly before breaking down.

According to the insurance company's court filing, Hitachi Zosen employees in November 2013 "reported that the (tunnel boring machine) was suffering a number of issues including clogging, 'abnormal' amount of wear, 'deformation,' and other problems" and that Bertha "had sustained substantial mechanical damage because it was unable to withstand the loads that were anticipated during the drive."

The Great Lakes Reinsurance court filing also says Hitachi Zosen's "investigation into the cause of failure attributed the failure to various causes other than the steel pipe, with a focus on the inadequate reinforcement of the TBM and operator error."

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Seattle Tunnel Partners provided KIRO 7 a response to the filing. It reads in part: "STP has read the insurance filing from last week and found it to be false and misleading. STP has provided all of the information requested by the insurers. The insurers knew that STP's insurance claim was covered under the policy but failed to confirm that fact and instead fabricated a pretense to deny STP's insurance claim.

Chris Dixon, STP's project manager, also wrote, "STP expects to recover all of it's costs for repairing the damage to the TBM"

In a statement, WSDOT said, "Our position on this legal matter remains the same. WSDOT has always denied Seattle Tunnel Partners' claims that an eight-inch steel well-casing caused the tunneling machine damage and that WSDOT did not provide STP with adequate information about the location of the pipe. WSDOT continues to believe the cost and delay associated with the tunneling machine breakdown is Seattle Tunnel Partners' responsibility."

Hitachi Zosen also issued a statement to KIRO 7, calling the insurer's new filing "false and misleading."

Hitachi Zosen's statement reads, in part, "When insurance companies are faced with paying large claims, they sometimes resort to desperate tactics like accusing their policyholders of fraud. These tactics are not unexpected, but they are disappointing. Hitachi Zosen has engaged in a thorough and good-faith investigation into the cause of the TBM damage. The Insurers have isolated statements from a few documents dated very early in Hitachi Zosen's investigation, taken those statements out of context, and fabricated a baseless 'conspiracy theory."

Bertha is being dismantled after finishing digging the new SR99 tunnel. Roadways are being built, with the new tunnel expected to open in 2019, three years late.

Cox Media Group