“This is a new issue for contractors,” stressed speaker Mark Kerney of Hill York Air Conditioning, Ft. Lauderdale, Fla. “We’ve only recently been alerted to the catastrophic nature of this issue.”

Contractor’s Pointers

Jeff Slivka, director of Environmental Business at Arthur J. Gallagher & Co., Philadelphia, tested the crowd’s knowledge regarding the subject with a five-question quiz. (See “Sidebar: Mold Aptitude Test” below for his quiz.) However, it was Kerney who got the contractor crowd thinking, painting an alarming picture of the current situation.

“All of us have been contractors for a number of years,” he said. “We have all performed many years of construction and service work without the thought of mold as a high-risk, high-liability issue. It’s been on the back burner for us. … Now it’s right in front of us.”

Kerney called the amount of risk “unlimited.”

“The sharks are circling,” he warned. “The latest claim is a class-action suit valued at $1 billion [in Canada]. So, the money is big.”

Kerney also noted this trend: Insurance companies are backing away quickly from providing liability insurance.

“Most of us possibly do not have any coverage for mold liability at this point, unless you’ve done some very proactive steps,” he said. “We are busy trying to make a profit. It’s a very tough economy out there and we are struggling to be competitive. We really don’t have time for this.”

Kerney cited mold litigation expenses, damages, and claims (“including real, fraudulent, or paranoid claims”), reputation damage, and, possibly, workforce health issues (“especially on renovation projects”).

“We’ve never, ever concerned ourselves with the fact our employees may be exposed to the mold issue,” he said. “Before, it’s been no big deal. Let’s clean it up. Put some coil cleaner on. Make it go away. Pour some chlorine. Get rid of it. … Well, that is going to change.”

Target Practice

Kerney provided 10 steps contractors should take to “shrink the bull’s-eye on our back,” as he put it. He first asked contractors to make sure executive management is educated on the subject.

“Do you understand the issues here?” he asked. “Learn as much as you possibly can. You are going to be, whether or not you want to be, a leader in this. You are going to have to take care of these problems. You are going to have to know what Stachybotrys chartarum is.”

While he realized that not every contractor can know everything about mold, he recommended that each owner designate an IAQ “go-to” person.

He also recommended developing a relationship with an “attorney that has IAQ knowledge,” as well as developing protocols for what to do when a customer calls with a mold complaint.

Protocols, he said, should also be established for when an employee detects mold on the job, when an employee complains about health issues related to exposure, and when construction material (like fiberglass duct) gets soaked with water.

“You have to have a working, written plan,” he said. “It proves you are taking steps to avoid problems down the road.”

His other recommendations included educating middle management and sales staff, inserting liability disclaimers in contracts and agreements, developing a team of IAQ professionals (for assessment and remediation purposes), educating field staff and customers (“differentiating the real from the perceived”), and developing a mold program for your company.

This mold program, he said, should include an awareness of the subject (origins of mold, varieties, health effects, etc.), as well as inspection processes, which involve documentation and more documentation.

“In other words, you are going to have to keep score,” said Kerney. “You don’t want to go into a situation and say, ‘OK, I’ve done everything. I’ve cleaned it all up.’ How do you prove it? Well, you want to have some background information before you walk into the place. You want to have information to inform why you are doing what you are doing and afterwards, so you can prove, ‘Hey it was at this point and now it is at this point.’”

Legal, Insurance Perspectives

The session also provided perspectives from the legal and insurance side of the mold issue. Attorney Bill Walsh from Pepper Hamilton LLP concluded that the issue is a manageable one for contractors, “if one gets in front of the situation now.

“There are other analogies, other situations, where industries have been able to minimize the legal risks of a problem,” said Walsh. “Is it [mold] the new asbestos? My view is no, it is not the new asbestos for a number of reasons. There are differences, and if the industry responds and puts together the type of programs that are proactive in their approach, this can become nothing that you are going to like, but it can at least become a manageable amount of risk, rather than the kind of perception it has now in that it is such a big unknown, unquantifiable kind of risk that can be very detrimental to the company.”

Walsh surprised a few when he said, “I am going to take a hard line on one issue in this matter of mold. There is no such thing as ‘toxic’ mold, in my opinion. I believe, if litigated, this would be found true. All one has to do is turn to the Centers for Disease Control and Prevention.”

However, that is not to say one can go about his business as usual, he said. He suggested that contractors treat all molds the same with respect to potential health risks and removal.

“It is serious,” he said. “It [mold] is something like the latex issue. Remember some people were allergic to latex? However, not all people are. It was determined that you could control those risks.”

To minimize mold risks, the attorney suggested that contractors:

Determine the cause.

Train personnel to avoid causing mold.

Document that you did the right thing.

Where possible, allocate the risk to some other party.

Minimize damage once it has occurred.

Seek to share the costs (insurance or litigation).

“No one seems to know why claims have risen in the commercial building sector,” Walsh said. “Spores have always been in the air. There’s no reason to believe mechanical contractors have changed their methods of construction. It may be in the interest of contractors to assess the cause generically.”

Walsh noted a growing body of guidance and guidelines from regulatory agencies, including OSHA. However, he cautioned that regulatory guidance may not be based on “good science.” Therefore, he still recommended that contractors purchase insurance and obtain “warranties” that the design and materials utilized in the construction are fit for use in the building. He pointed out what he thought to be important sample contractor language for mold from Federated Insurance (located at www.naphcc.org/publication/MoldInformation.pdf).

From the insurance industry’s viewpoint, Joel Appelbaum of CNA Insurance shared some alarming statistics in regard to mold claims. He noted the number of mold claims in Texas alone rose 1,306 percent between the first quarter of 2000 and the fourth quarter of 2001. He believed the majority of the confusion and claims are due to “media hype,” but he was not about to downplay the fact that mold can be a contributing factor in a person’s death.

Due to “wild claims,” Appelbaum said the insurance industry, overall, had no choice but to exclude mold coverage. He noted that coverage is still provided by many providers to include water damage, but not bodily injury claims due to mold.

“If you have a mold exclusion that provides coverage for water damage but does not provide coverage for mold, it’s really simple in my mind,” said Appelbaum. “You really have to kiss the customer. I’ve seen this with construction defects, especially in California. If you have a customer complaining about mold, immediately get in there. Handle the issue. Dry it up. Whatever the costs are for them, do it. And, send them flowers. You’d be amazed at the number of cases we litigate where they say, ‘If my contractor just sent me some flowers, I would be happy.’ Take care of the problem immediately.”

What frustrated Appelbaum is the fact that when cases go to court, there seem to be no definitive answers.

“You can be sitting there with your experts vs. their experts,” he said.

Another frustration, he said, concerns mold samplings.

“You have to have high confidence in who you choose and they should have a track record in samplings,” he said. “Stachybotrys chartarum, for instance, is attracted to tomato juice like there is no tomorrow, but if you use a different sampling medium, it might not be attracted to it at all. It varies on the sampling medium you use.”

To secure mold coverage, Appelbaum did state one might have to turn to a special provider.

“If you work in hospitals, hospitals concern me because you can’t compromise here,” he said. “If you work in schools, that concerns me because 18 years from now — and we’ve had a number of school claims and they are just perfect for class action suits, and everybody loves a class action suit — those children can bring a suit 18 years from now. The body of science is evolving around mold and 18 years from now we could probably prove that mold causes asthma. But, right now, we can’t. So you definitely want to buy one of these policies. You definitely want to keep them enforced.”

Sidebar: Mold Aptitude Test

Question 1: Just this year, amongst all the hype about “toxic” mold, the Center for Disease Control (CDC) has identified a brand new species of mold never identified before. True or false?

Question 2: Mold dogs are:

a. Mold-sniffing canines
b. Mold-covered feet
c. Drywall samples pulled by professionals to detect mold and moisture in the stud cavity of a structure
d. None of the above

Question 3: In 2002, what was the biggest contributor to indoor air contamination?

a. Pet dander
b. Dust
c. Automatic ice makers
d. Carpets
e. Human gastrointestinal release

Question 4: Which of the following Hollywood celebrities has made the headlines because mold grew in their homes?

a. Erin Brockovich
b. Ed McMahon
c. Pete Chaney
d. Evan Marriott
e. a & b
f. All of the above

Question 5: Mold remediation standards have recently been developed by various agencies, including the EPA and the NYC Dept. of Health. True or false?

ANSWERS: 1. False; 2. a; 3. c; 4. e; 5. False. (Note: Regarding question #3, Slivka said the source for the answer is an article published in Forensic Analytical Adviser.)

Publication date: 03/17/2003