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Shelley Allan-Cole, Portland, in front of her rental property on Southeast 33rd Ave., which she said Jack Howk Plumbing & Drain employees said needed a sewer repair. The price for the fix, usually no more than $9,000, ballooned to more than $23,000.
(Brent Wojahn/The Oregonian)
Oregon's Construction Contractors Board concluded an investigation into American Residential Services in 2012 by moving to revoke the plumbing company's license and to levy a record $623,500 fine. Among the company's alleged misdeeds were charges of routinely performing unnecessary work and leaving customers with astronomical bills.
The board accused ARS of 114 violations involving conduct the board said was "dishonest or fraudulent and injurious to the welfare of the public."
Two years later, the City of Portland continues to hire ARS-owned Rescue Rooter, also known as Jack Howk Plumbing and Drain Service, for work on its property.
Just two days after the board released its scathing July 24, 2012 report, the city called Rescue Rooter to unclog a drain on city property. It was just one of 27 jobs, totaling $22,439 in billings, that the embattled company has performed for the city since the CCB laid out the results of its investigation.
In all, since the beginning of 2011, the city has paid ARS nearly $34,000 for 53 jobs.
Despite investigations that year by local television outlet KOIN and The Oregonian that preceded the CCB's findings, the pace of Rescue Rooter's work for the city hasn't changed.
ARS remains licensed with the state; the contractors board case is anticipated to go to an administrative hearing next spring unless the two sides can agree to a settlement. Chris Fairey, general counsel for ARS, denies all charges against the company but says ARS has made some changes on its own as a response.
"I can say, with confidence, I don't think there's another contractor in the state of Oregon operating at the level we do," he said. "We're proud to do work for the city of Portland, and I don't believe that concern is justified."
According to Abby Coppock, spokeswoman for the Office of Management and Finance, the city's Facilities Services office performs no periodic reviews of on-call vendors like Rescue Rooter. The company does plumbing jobs for the city with invoices less than the $5,000 threshold that would require a city contract.
It's up to a technician with Facilities Services to pick which plumber to call when, for example, a women's restroom at the police training center needs fixing or a public toilet on Southwest Naito Parkway needs unclogging.
Asked whether or not Facilities Services was aware of the Construction Contractors Board effort to revoke ARS' license and fine the company $623,500, Coppock is unsure.
"Is there any specific reason why we might hire this particularly company? I don't know," she said.
On Tuesday, Facilities Services' staff discussed the investigation in a meeting. According to Coppock, they agreed that Rescue Rooter has done "quality work."
"The city will definitely monitor projects closely if we hire them in the future," she said in an email.
The Oregonian also employs Rescue Rooter for plumbing jobs.
Oregon isn't the only state where American Residential Services' business practices have been in question. In Arizona, Attorney General Tom Horne fined the company nearly $400,000 in 2012 on allegations it engaged in deceptive sales practices, particularly against older customers. Again, ARS denies any wrongdoing.
In Oregon, the allegations by the contractors board highlighted ARS' commission-based pay scheme in particular as a source of problems.
When the Memphis-based company purchased Jack Howk in 2004, complaints followed, according to the contractors board.
"ARS changed to a commission-based pay structure that paid workers only minimum wage unless they attained certain sales goals... Employees who did not sell enough products and services could be terminated," according to the board's revocation notice, signed by enforcement manager Richard C. Blank.
In one instance highlighted in the board findings, an elderly Northeast Portland resident named Katherine Nims called the company due to a clogged sink.
After finding breaks in the sewer line, the notice of revocation said, ARS employees told her that if the entire sewer and water lines weren't replaced, they could cause a sinkhole and also release deadly methane gas. Based on this false information, Nims ended up having to take out a second mortgage on her home to pay the nearly $25,000 bill, the board said
Fairey, the attorney for Rescue Rooter's corporate parent, described new policies that executives have introduced following the Oregon contractors board investigation.
He said the company now presents customers their options in writing before any work is performed. Additionally, a video showing the inside of a sewer line before and after repairs is available for the customer to review. Prior to the state investigation, Fairey said, ARS already had mandatory ethics and "senior sensitivity" training in place.
According to Coppock, the city runs little risk of the types of behavior that the contractors board has accused Rescue Rooter of committing with residential customers. The jobs are smaller, and the city employs trained professionals who decide which plumber to call.
"These are facilities technicians who assess what needs to be done," she said. "We're a step above the average customer."
-- James Reddick
Read the full Construction Contractors Board document below.