Mold Remediation
One of my close personal friends is a trial lawyer – yes, they do have friends. But when it comes to these frivolous mold lawsuits claiming severe long-term medical problems there are few friends of the construction industry. I grew up in South Florida where it rains every day and mold is virtually everywhere; on trees, in houses, in schools, in movie theaters, even my brother’s fishing boat was filled with mold and I am still living. My friend best stated the issue. Some people have a severe medical reaction when eating nuts or MSG, a very small percentage of our total population live with these medical conditions. And likewise, a very small percentage of the public react to the one in a thousand types of mold that may foster an adverse medical condition; conditions usually reversed when the exposure ceases. Thus the miniscule numbers of the public that have adverse reactions to toxic mold exposure is incredible small when compared to the vast and increasing numbers of mold related legislation.
According
to a report issued by the Centers for Disease Control and Prevention (CDC),
molds are ubiquitous in nature and grow almost anywhere indoors and outdoors.
The report states that more than 1,000 different kinds of indoor molds
have been found in U.S. properties. Mold spores are easily spread because they
are small, lightweight and able to survive a long time and under most
conditions. Mold growth is stimulated by warm, damp, and humid conditions –
like in Florida. The CDC report also states that people who are exposed to molds
may experience a variety of illnesses. There
are infections caused by certain molds in hospitals, illnesses caused by
ingestion of food contaminated with mold, respiratory illnesses, and allergic
reactions due to mold exposures. But
most disheartening for all but the trial lawyers is that there is no definitive
standard establishing an acceptable level by which type of mold.
The CDC is currently working with federal, state, local, and tribal
governments to investigate and respond to mold-related problems. It has assisted
the U.S. Environmental Protection Agency (EPA) Indoor Environments Division in
the development of a guide for mold remediation in schools and large buildings
and is developing a brief guide to mold for the public.
Possible
health related illnesses and property damage due to mold exposure have caused a
significant increase in the number of lawsuits filed throughout the country. In
2001, a Texas jury awarded $32 million to a homeowner for a property damage
claim, which the appellate court later reduced to $4 million. According
to the May 2003 edition of State Legislatures magazine, this lawsuit
created an insurance frenzy, and resulted in a 1,300 percent
increase in residential mold insurance claims over a one-year period. The
article further states that, according to the Insurance Information Institute,
the rise in claims helped propel $9 billion in losses for homeowners’ insurers
in 2001. Responsibility for mold
related claims can include almost anyone involved in construction and
maintenance of a building including general contractors, home builders, building
subcontractors, architects, engineers, HVAC companies, real estate agents, prior
owners, and management companies. Our
industry installing piping through which water flows is particularly vulnerable.
Insurance companies become a source of recovery in breach of contract and
alleged bad faith lawsuits. The
ability to recover damages depends in a large part on the cause of the mold
contamination. The individual affected must be able to obtain proof of
actual damages, but absent any national standard of an acceptable level by type
of mold, opposing arguments are fruitless. The increase in mold
related claims in Florida has also caused the Florida Insurance Industry to
respond. Historically,
homeowners’ insurance policies issued in Florida have covered mold that
results from a covered peril, such as a covered water loss.
For example, the costs of eradicating mold would be covered if caused by
rain blown into a house during a hurricane, or mold caused by a broken water
pipe. This coverage would be
provided up to the policy limits for the value of the home. However, in 2002, the Florida Office of Insurance Regulation
(OIR) approved policy form changes that limit coverage for mold to a specified
dollar amount. This trend of
limiting mold coverage to a specific dollar amount has found its way from
homeowner’s policies to the insurance policies sought by fire sprinkler
contractors.
Legislation
in the United States
Response
to the mold problem has also come in the form of new legislation throughout the
United States. Six states have
passed laws in the last three years relating to mold and mold remediation.
Congress is also considering the United States Toxic Mold Safety and Protection
Act of 2002. The bill, in part,
directs the CDC, the EPA, and the National Institutes of Health (NIH) to jointly
study the health effects of indoor mold growth and toxic mold.
California passed the Toxic Mold Protection Act in 2001.
The Act requires the California State Department of Health to convene a
task force composed in part of health and science experts, representatives from
school districts, affected consumers, commercial and industrial tenants,
insurers, and builders to advise the department on the development of
permissible exposure limits to mold, standards for assessment of molds in indoor
environments (including alternative standards for hospitals, child care
facilities, and nursing homes), standards for identification, and remediation of
mold. The implementation of this
law depends on when the California State Department of Health determines funds
are available for its implementation. To date, California’s budget has not
allocated any money to establish the task force to establish the standards.
Montana passed a law in 2003 that provides for the disclosure of the
potential for mold in inhabitable property with agreements for the sale and
purchase of inhabitable property. New
Jersey passed a resolution in 2001 urging the New Jersey Commissioner of Health
and Senior Services and the Commissioner of Community Affairs to develop methods
to help residents facing an infestation of Stachybotys atra, the widely accepted
“Bad” variety of mold, to identify the mold, and develop the best strategies
to address the infestation. This resolution also urged the investigation of the
health effects of, and effective clean-up methods for, Stachybotrys atra.
Oklahoma enacted a concurrent resolution in 2003 that creates the Joint
Task Force on Mold and Mold Remediation. The purpose of the task force is to
determine how best to educate the residents of the state about mold and mold
remediation, determine what standards should be applied to mold remediation, and
determine how the issue of liability should be addressed for mold damage in the
state. The task force is to report its findings and recommendations to the
Legislature no later than February 3, 2004.
Tennessee also passed a law in 2003 creating a special joint committee of
the legislature to study mold abatement in public schools. The committee is to
report its findings and recommendations, including any proposed legislation, to
the Tennessee General Assembly no later than March 1, 2004.
Texas
passed legislation in 2003 that regulates mold assessors and remediators.
It includes provisions for civil liability for mold remediation,
insurance coverage on mold claims, and civil and administrative penalties.
Texas’ law is a close to the best solution possible.
Finally, Florida’s legislation echoed that passed in Texas, regulating
the mold remediation industry, requiring them to carry insurance, or in essence,
transfers the mold problem from the fire sprinkler contractor to the mold
remediator. The bill failed and was
sent to a Senate Committee for further review and detailed
analysis of the Florida Mold problem. And
the draft Florida
Mold Remediation Act is expected to be
filed and passed during the next legislative session.
One area of expansion is specificity in the level of insurance coverage
required as the current draft is intended to allow the regulating industry to
establish the appropriate level. Texas
has gone the route of allowing regulatory bodies to establish the amount of
insurance coverage but it is felt that the dollar value of the policy MUST be
sufficiently high to have the litigator move away from the contractor towards
the mold remediator – best done within the law rather than fight another
battle during implementation of the law.
State
Legislature’s should consider regulation for mold assessors and remediators.
The Legislature should also consider establishing a task force to
develop standards for the licensees that address educational requirements,
necessary testing and documentation for the initial assessment of mold
infestation, the conditions under which mold should be remediated, and the
licensure requirements for mold assessors and remediators.
The Texas and Florida laws are the best path to go whose passage has the
force and effect of transferring the mold issue away from the contractor to the
mold remediation company. The task
force should also possess insurance expertise in order to address the insurance
needs of the contractors, or at least see first hand the diminished exposure of
the fire sprinkler contractor to mold litigation – a point that should lead
towards a lower insurance rates and less exclusions in our policies.
Buddy
Dewar