Don’t Let Mold Claims Creep Up on You

Consider this question: If you were to go to your refrigerator for a healthy snack, and you find a light dusting of mold inside your yogurt container, do you scoop out the visible mold and then happily devour the rest? Probably not. If you are like most people you cringe, quickly place the lid back on the container and toss it in the garbage.

By John Getsinger, Leonard, Street and Deinard, P.A., Minneapolis September 1, 2002

Consider this question: If you were to go to your refrigerator for a healthy snack, and you find a light dusting of mold inside your yogurt container, do you scoop out the visible mold and then happily devour the rest? Probably not. If you are like most people you cringe, quickly place the lid back on the container and toss it in the garbage.

This creepy-crawly feeling many people experience regarding mold partly explains the current wave of litigation involving mold and “sick buildings” that is sweeping the design and construction industry. Feelings about mold tend toward the irrational, and it doesn’t take much to tap into those feelings—making mold “black gold” for some aggressive complainants.

The Center for Disease Control and Prevention (CDC) hasn’t helped matters much. In fact, the CDC may be substantially to blame for kicking off the current litigation explosion. In 1994, an outbreak of hemosiderosis, or pulmonary hemorrhaging, among 10 infants in Cleveland caused a stir in the scientific community when the CDC reported the outbreak to be associated with Stachybotrys chartarum mold.

Years later, the CDC assembled a team to re-examine its initial conclusions. In March 2000, the CDC produced this group’s findings in its journal, which retracted its earlier conclusion, as it could not be proven that the mold actually caused the deaths.

By that time, however, the damage was done. A number of scientists willing to hold themselves out as experts to opportunistic plaintiffs had already brandished the CDC’s initial conclusions. As a result, even when testimony concerning any link between mold and disease has been excluded from lawsuits, jury verdicts have sometimes been substantial, as in the case of Ballard v. Fire Insurance Exchange in Texas, where in May 2001, a jury awarded $11,227,525 for the replacement cost of a home, $12 million in punitive damages and $8.9 million in attorneys’ fees.

10,000 lawsuits

Of the 10,000 lawsuits that have been filed in the last few years, it is estimated that as many as 2,000 involve construction and, presumably, design defect claims. About another 1,000 are against former owners of property; about 2,000 involve claims for improper maintenance of the buildings; and another 5,000 or so are against insurance companies. Target defendants in the construction industry include general contractors, construction managers, subcontractors, architects and engineers. Other defendants—sometimes joined in the same litigation—can include insurers, building owners, building operators, maintenance contractors, product manufacturers, employers, sellers of property and agents of sellers.

Some legal commentators have compared the current wave of lawsuits involving mold/sick buildings to the asbestos litigation phenomenon of the 1980s. While the fact that so many mold/sick building lawsuits have arisen in the last few years lends some credence to that comparison, it does not hold up under the spotlight of a more detailed analysis.

In asbestos litigation, only a handful of companies manufactured the flame-retarding material and they were ultimately driven out of business by litigation. Mold, however, is a naturally occurring substance, so there are no “bad guys” to consistently target as defendants. And, unlike asbestos cases, no companies have profited from the sale of mold nor engaged in a cover-up of “smoking gun” documents to protect their profits.

Additionally, mold injuries are generally not as severe as those caused by asbestos. Science has yet to establish a causal link between airborne mold exposure and serious or long-lasting illness, and there are no governmental or scientific standards which establish unacceptable exposure levels. Of course, if science develops to the point where causation is easier to establish, many of the distinctions between the asbestos litigation and the current wave of mold/sick-building litigation may become unimportant.

More to come

Meanwhile, the number of lawsuits continues to mount. Time Magazine recently reported that claims increased by 581% in 2001, and the verdicts have often been substantial.

In the case of Centex-Rooney Construction Co., Inc. v. Martin County , the jury returned an award of $11,550,000 in favor of Martin County for a claim that involved window and exterior wall leaks, mold growth and excessive humidity in the buildings.

In Board of Directors of the Baypoint Condominium Association. v. RML Corp., the manufacturer of an exterior insulation finish system (EIFS) was ordered to pay $2,544,000 to a builder who used the material in a condominium complex where mold complications arose.

In Chicago, students and teachers have filed a class-action lawsuit alleging that mold at a school has made them sick, seeking $50,000 in damages for each of the plaintiffs.

Although much of the litigation has arisen in the warmer regions of the country—Texas and California particularly—it has not been confined to those regions. Recognizing that fact, insurers nationwide have been busy trying to tighten up policy language to exclude mold claims.

For those in the construction or design business, it is prudent to be prepared for litigation. Even in the absence of a claim alleging personal injury, just about everyone will agree that the presence of mold in our homes or work places is undesirable. It doesn’t take a toxicologist to establish that the black slime under the sink is unwanted and is having a negative impact on the property value of a building.

There are important lessons to be learned from the wave of litigation that is sweeping the nation. If someone contacts you, naming you or your firm as a potential defendant in a mold or sick building claim, you should:

  • Respond quickly, professionally and courteously.

  • Promptly investigate the cause.

  • Take prompt remedial action, where appropriate, to eliminate the mold and its cause.

Even if you have insurance to cover the claim and notify your insurance carrier promptly, it is prudent not to sit back to wait for your insurance carrier to respond and provide coverage. The insurer is likely to question coverage and perhaps haggle; meanwhile, the water intrusion or excessive humidity that led to the mold in the first place is likely to cause the mold to proliferate and become far more expensive to remove. That is exactly what happened in the Ballard case, where Farmer’s Insurance prolonged its investigation and response to the claim, used contractors that were inexperienced in appraising mold claims and refused to pay undisputed items merely to increase its bargaining leverage. As a result, the $11.2 million compensatory damages ended up exceeding the value of the home. While you investigate and fix the problem, however, you should keep your insurer apprised of what you are doing and how much it’s costing to avoid issues later relating to “notice” or lack thereof once the dust settles and you want reimbursement.

Because of the need to respond quickly, it is wise to assemble an investigation team before being sued. Consider having an attorney, experienced in handling such claims, assemble an investigation team that will be ready to respond when needed.

It’s important that the response time not be dictated by the time it takes to locate a team with the proper scientific credentials. Depending on the nature of the claim or problem, your response team should also include some or all of the following professionals: a mechanical engineer with HVAC experience; an industrial hygienist to evaluate the need for scientific testing; a mold scientist or microbiologist to help evaluate the results of any testing; and a toxicologist or other medical professional if there are personal injury claims being asserted in the suit.

It is invaluable during this investigation for the team of experts to have the opportunity to interview anyone who is familiar with the history of the building and its maintenance and operation—particularly of the heating, air conditioning, ventilation and plumbing systems. If it’s new construction and the mold problem developed soon after completion, one place to start is to obtain the “as built” drawings to see if there were any significant deviations from the original design that may explain the problem. If the building has been in use for a longer time, with the problem only recently surfacing and the cause is not obvious, you’ll want to explore whether there were any recent modifications to the building, or the way in which it is being used that explains the problem.

Should I test for mold?

One frequent question that comes up is whether to conduct any scientific testing for mold. This is a question that requires input from your attorney, and should be made only after consideration of all the circumstances. Is the amount of mold extensive? Is the mold isolated to a few places or is it spread throughout? Are health claims being made by the occupants? Do the mold colonies appear active and sporulating? Since mold is ubiquitous and buildings are not sterile environments, it is virtually guaranteed that testing will reveal the existence of mold no matter how well the building is designed, built and maintained. Testing is expensive. Once you have tested, identified and fixed the problem, you’ll usually feel compelled to do a follow-up test to allow for a “before and after” comparison. Before you test, consider what it is you hope to accomplish by testing. What will you do if the test shows a certain level of mold? What level will you consider acceptable or unacceptable?

It is also useful to fund the initial investigation and diagnosis of a problem so that your team provides an initial, unbiased conclusion and recommended cure. Doing the right thing in response to a potential mold or other sick building claim may convince a potential plaintiff not to sue. Moreover, many mold problems can be fixed simply and inexpensively, and having your team investigate the claim and recommend the remedial action places you in greater control over the ultimate cost of the clean-up effort. If litigation still ensues, you will be in a stronger position.

Mold in the Schoolhouse

According to the U.S. Environmental Protection Agency, indoor air pollutant levels can be two to five times higher—occasionally even 100 times higher—than outdoor levels. Nearly 55 million Americans—20% of the population—spend their days inside elementary and secondary schools. A 1995 federal government report estimated that 50% of U.S. schools have problems linked to poor indoor-air quality (IAQ). Students are at the greatest risk: children have less developed immune systems.

Indoor air pollutants can cause physical discomfort, not to mention reduced school attendance and productivity. Pollutants can cause or contribute to short- and long-term health problems, including asthma, respiratory tract infection and disease, allergic reactions, headaches, nasal congestion, eye and skin irritations, coughing, sneezing, fatigue, dizziness and nausea. Furthermore, poor IAQ can contribute to closing of schools, create liability problems, and strain relationships among parents, teachers and the school administration.

How mold grows and thrives

Mold is found almost everywhere—outdoors and indoors—and can be a significant contributor to poor IAQ and sick-building syndrome (SBS). Mold spores enter buildings through doors, windows and wall penetrations, or by attaching to people, pets or objects that are brought into buildings. Like all buildings, schools have viable mold spores and the desirable thermal environments and abundant food source—wood, paper, carpet, wall board, ceiling tiles, cafeteria foods—for them to thrive. But mold spores remain dormant until adequate moisture becomes available.

The common mold

Molds are fungi, which serve as breakdown agents of organic matter. Without molds and other fungi, we would be soon overrun with thick layers of dead trees, leaves and other expired organic materials. Found growing on soil, foods, plant matter and various other materials, there are over 645,000 known species of fungus and more than 100,000 mold species. At least 1,000 species of mold are common in the United States, but only a few dozen are thought to be common in buildings.

According to the Center for Disease Control and Prevention (CDC), the most commonly found species of mold are Cladosporium, Penicillium, Aspergillus and Alternaria. Aspergillus and Penicillium are considered toxin producers and have been implicated in some health problems. Stachybotrys chartarum, less common indoors than the others mentioned, is a more notorious toxin producer and is considered by some mycologists to be a cause of SBS.

Most routinely-encountered molds are not considered hazardous for healthy individuals. However, too much exposure to mold may cause or worsen health conditions. Depending on the amount of exposure and individual vulnerability, more serious health effects, such as fevers and breathing problems, can occur but are unusual. Mycologists, physicians, public health officials and attorneys are regularly in conflict about the health effects of mold in buildings because conclusive evidence is hard to find. In fact, the EPA has yet to establish any regulations or guidelines for evaluating the potential health risks associated with molds. However, mold growth in buildings is certainly undesirable and potentially destructive to the facility’s structure.

While there is no practical way to eliminate mold spores from a building’s indoor environment, the best way to stop mold from growing and becoming a potential health problem is to take away the moisture source. When excessive humidity, moisture or water accumulates indoors and goes unnoticed or unaddressed, mold growth will occur. The following steps should be considered to minimize water or moisture accumulation and thus minimize mold growth in schools:

Humidity control: Provide proper air-conditioning and ventilation systems to maintain indoor humidity levels between 30% and 60%. Humid spaces such as restrooms, locker rooms, kitchens and janitor closets and associated fixtures or equipment should be ventilated directly to the outside.

Building inspections: Look for visible signs of mold growth, or investigate areas with noticeable musty odors, discoloration, or fuzzy growths on the surface of building materials. Visible signs of water damage (ceiling tiles, basement walls, etc.) standing water (toilet rooms, mechanical rooms, etc.) or condensation (windows, exterior walls, roofs, floors or piping) should also be investigated for mold growth. Search behind and underneath building materials.

Destructive testing may even be necessary if mold growth is suspected but not visible.

Leaks, spills or flooding: Clean and dry surfaces damaged by water within 24 to 48 hours of occurrence. Fix or repair the moisture problem source or leak. Clean and disinfect mold on hard surfaces with water, detergent or bleach and replace materials heavily damaged by water.

Condensation control: Minimize the potential for condensation on windows, exterior walls, roofs, floors or air-conditioning piping by providing additional insulation or a vapor barrier. For equipment drain pans and piping, ensure that proper drainage is provided and the correct type of insulation is utilized on cold surfaces. Close-celled insulation is preferred over fiberglass insulation on cold pipes and equipment.

Floor and carpet cleaning: Clean up spots and stains as soon as they occur and prevent excess moisture accumulation during cleaning operations. Avoid the use of carpet where moisture problems are regularly anticipated such as for basement floors and beneath drinking fountains and sinks.

Minimize health effects: Once viable mold growth has been determined or suspected, immediate steps should be taken to minimize the potential health effects and the continued damage caused by the mold. The first priority is to identify and correct the moisture source if possible. In some cases, this may require the help of a professional. Laboratory testing, including air, wipe and bulk samples, may be necessary to help determine the types of molds present to establish the potential health risks to the building occupants and to respond to concerns by concerned parties.

Implement a remediation plan: Once the moisture sources have been identified and testing has been completed, a remediation plan should be developed and put into action. This may include cleaning and disinfecting of the contaminated area and partial or total removal of the contaminated materials, depending on how extensive the damage. Most large-scale mold remediation work—including cleaning, disinfecting and removal should be performed by experienced professionals.