VideoHartwig says that the lawyers see corporations as "the quintessential deep pockets," with liability limits often in the tens or even hundreds of millions of dollars. And plaintiffs suing companies can seek compensation for personal injuries and violations of federal air-quality rules, among other things, while also making workers'-compensation claims. If there's a mold exclusion in the property/casualty policy, of course, that's the company's problem.
Juries and Hard Science
There's general agreement that mold can be hazardous to health, especially for the lungs, and that it aggravates allergies. The approach many defense attorneys take in court, though, is to point out how few solid medical links tie mold to the specific diseases that plaintiffs may have contracted. A July 2002 report from the Centers for Disease Control and Prevention, for example, says that illness can result "when people are exposed to extensive mold growth indoors." But the report also states that there is "inadequate evidence that molds caused people to become asthmatic," adding: "we do not know whether molds cause other adverse health effects, such as pulmonary hemorrhage, memory loss, or lethargy."
Environomics's Nassof, who frequently serves as an expert witness in mold-related litigation — 90 percent of the time on the defense side — thinks that "you lose the jury when you start talking about hard science; all they see, unfortunately, is someone who claims to be sick."
Nassof thinks office-related cases are likely to increase, although they won't reach the level of homeowner suits. He sees even more potential for suits involving the health-care and hospitality industries. (Several hotel-related cases have been filed around the country, including some growing out of a mold-damage issue at Hilton Hotels Corp.'s Hawaiian Village in Honolulu. Hilton declines to comment about the case, noting that it is both a defendant and a plaintiff in various suits.) Manufacturing plants, which generally are well ventilated and better regulated, are less-likely areas for mold litigation, he says.
The number of mold-damage claims isn't calculated by the insurance industry. One reason, says the III's Hartwig, is that mold comes up in multiple types of litigation, including workers' comp, personal injury, product liability, and defective construction. Further, insurers report their results by line of coverage, not by cause of loss. And for their part, insured companies often don't want to talk about mold "because they don't want people to think they have issues," says Hartwig. "But the truth is that there are issues in every building, and the best thing you can do is to respond to them promptly."
At Engineering and Fire Investigations, a unit of claims adjuster GAB Robins, only 20 percent of its mold-related engineering work used to be for commercial buildings. "But recently the amount of commercial has doubled," and now constitutes about half of EFI's $8.5 million of mold-related work, says EFI president and CEO Michael Thompson.
The Risk of Going Bare
Simply deciding not to purchase stand-alone mold insurance is, of course, an option for companies. Indeed, says Hartwig, "if they don't have the coverage, claims — and litigation — fall off." But going bare comes with real risks. Consider what is facing IBM in North Carolina, and the city and county officials who operate Denver International Airport.
In addition to several workers'-comp complaints relating to IBM's Building Nos. 61 and 205 at Research Triangle Park, the company is confronting federal-court claims from senior financial analyst Julie Ord, now on disability leave, and program manager Linda Allen. The two claim that in the wake of flooding one weekend in April 2000 at the campus, they contracted toxic encephalitis, a swelling of internal organs, along with fatigue, memory loss, vertigo, and respiratory ailments.
The local newspaper launched a study of the "sick buildings" at IBM, where, the plaintiffs claim, the company delayed cleaning up waterlogged carpets. Charlotte attorney Martin Horn, who represents Ord and Allen, says the 25-year-old buildings have problems with their flat roofs and their heating and air conditioning. "You can't just let mold and fungus grow; you wouldn't do it in your clothes or in your house," he says. (Citing its policy against commenting on pending litigation, an IBM spokesman will say only that the company's "first priority is, and always has been, the health and safety of our employees.")
In Denver, United Airlines employees Terri Crandall and JoAnn Hubbard allege in a suit—representing a class of "thousands of others" who worked at and passed through Denver International—that health hazards resulted from raw-sewage leaks in Concourse B, and extensive mold, "covering an entire wall...an area of growth at least 20 feet high by 80 feet long in the Center Core, Basement Level," to name only a few claims. (A spokesman for the airport says he won't comment on the litigation beyond saying that "there is no danger to the traveling public out here.")
George Lang, an attorney representing the plaintiffs, notes that the litigation has evolved. On the plaintiffs' side, there is "a better understanding of the injuries related to mold," he says (contradicting the claims made by defense attorneys). "On the defense side, the litigation has evolved because of the resistance of insurance companies to paying for this additional damage."
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