Contact:
Vik Ahuja, CIAQP
VAhuja@PureAirControls.com
(800) 422-7873, ext. 804
Attack of the toxic spores: Mold hits headlines
Tom Barry Contributing Writer
Toxic black mold may be the next big litigation wave to hit Georgia. Or it could be the next Y2K, an issue that's all flash and no fire. The millennium turned with nary a glitch, and the fuss and fear over Y2K suddenly seemed as dated as the hula hoop.
Mold is an issue roiling the housing industry in Texas, Florida and California, and now it's creeping its way into Georgia.
"No one knows how big an issue it will be," said Scott Laseter, an environmental attorney with Kilpatrick and Stockton LLP. "Mold has always been with us. What's changing is the amount of attention it's getting. I'm involved in three mold cases myself, and most environmental lawyers have cases, all of which have cropped up in the last two years."
Mold exists in more than 100,000 species, but Public Enemy No. 1 is toxic black mold, which carries a big name in the fungus world: stachybotrys chartarum. Some of its victims have big names, too, fueling the buzz over the fuzz.
Dog death
TV personality Ed McMahon sued his insurance company last spring for $20 million after a flood led to substantial stachybotrys mold in his California home. McMahon contended that he and his wife became seriously ill and that their sheepdog developed respiratory problems and died.
Environmental activist Erin Brockovich — made famous by the movie starring Julia Roberts in her Oscar-winning role — has been in the forefront of efforts to change California law to protect consumers against mold damage.
One big worry for insurers and the home-building industry in Georgia is the potential ripple effect of a $32 million jury award handed down in Texas in June. A couple won the massive judgement against Farmers Insurance Group after alleging that the company failed to respond adequately to a water leak that led to toxic mold. The mold overran their 22-room hilltop mansion.
"Once the ball starts rolling, people in the legal profession naturally will start looking for cases to pursue," said Jeff Rader, vice president of operations and policy for the Greater Atlanta Home Builders Association.
Rader said mold is a serious issue that must be addressed, but said it's a complex, nuanced subject that has been overshadowed by the sensational cases.
"You see the horror stories, where people almost run screaming from their home, and it has to be burned down in what amounts to an exorcism," he said. "That's not the norm. Typically, a pipe breaks or something else is defective and mold results."
Exacerbating matters is the airtight nature of the modern home, experts say. Absent air flow, unattended water damage can lead to rapid mold formation.
Laseter's lone residential case involves water damage in a high-end metro Atlanta home that "could wind up being a total loss." Even when mold is completely removed from a building, he said, a stigma attaches to the property that hurts resale value.
Insurance industry
To minimize risk, insurance companies in some states are seeking to exclude mold from liability coverage or to limit damages. Another looming issue: whether the existence of mold needs to be disclosed when selling real estate.
Property and casualty insurance premiiums, meanwhile, are on the rise due to several factors, including losses sustained by insurance companies post-Sept. 11 as well as shrinking investment portfolios. Mold — a "billion-dollar problem for the insurance industry nationally," in the words of one Atlanta attorney — hasn't helped.
"Insurers are very nervous about mold, and I don't think many of them have decided exactly how to deal with it," said Martin Grace, a professor of risk management at Georgia State University.
Mold is literally everywhere, especially in a hot and humid state like Georgia. Heavy mold can make breathing difficult, and those with chronic respiratory difficulties suffer the most. The relatively few toxic molds produce "mycotoxins" that can cause fatigue, headaches and nausea. Some experts even assert that there is a link between stachybotrys and infant death.
But there's a big difference between common indoor mold and toxic mold. Literature from the Centers for Disease Control and Prevention states that "there are very few case reports that toxic molds ... cause unique or rare health conditions such as pulmonary hemorrhage ...". The CDC adds that "a causal link between the presence of the toxic mold and these conditions has not been proved."
Truth to tell, the science on mold may be nearly as primitive as the fungus itself. Even the CDC admits, "We do not have accurate information about how often stachybotrys chartarum is found in buildings and homes. While it is less common than other mold species, it is not rare."
Attorney Bob Denham, a partner in Powell, Goldstein, Frazer and Murphy LLP, views "toxic mold" as an alarmist term favored by the media and plaintiff's attorneys.
"Mold is mold, and it's been around for thousands of years," he said. "Some molds do emit toxic substances, but for the most part, the effect of mold is to trigger allergies or asthma in people who already have them."
Still, mold "is a very big issue" in the insurance industry, said Van Land, who sells property and casualty insurance in Augusta.
"Problem is, you can't really prevent mold damage or adequately price it," he said. "When the average person goes on vacation, he turns the air conditioning up to 78 degrees or so. If a pipe leaks, he could have a very serious mold problem within 72 hours. Just testing for mold damage in a home usually costs between $1,500 to $3,500. And treating that damage can easily run over $100,000."
Mold cannot be excluded from liability coverage in Georgia, but Land would like to see a formula adopted that limits damages. "What most people want is their home returned to what it was like before," he said.
Phillip Vance, president of the Georgia chapter of the National Association of Insurance and Financial Advisers, said the industry favors liability limits, not excluded coverage. For now, it's taking a wait-and-see attitude on the whole issue.
"At some point, I think we'll have to address it," Vance said. "Mold can be a problem for consumers, but it could be a bigger problem for insurance carriers."
CONTACT:
Vik Ahuja, CIAQP
vahuja@pureaircontrols.com
(800) 422-7873, ext. 804
© 2002 American City Business Journals Inc.
