[Termite Control] Adding Insult to Injury

In a one-two punch less than 30 days apart, Hurricanes Katrina and Rita rearranged lives, homes and futures across south Louisiana, Texas and Mississippi. While not underestimating the suffering of our pest management professional brethren to our east and west, the damage to Louisiana was uniquely devastating, and as a native Louisianan, felt particularly (and literally) “close to home.” We’ve all seen the aerial footage of rescues from rooftops of the 300,000 homes flooded in the New Orleans area, and have received a refresher course in the Big Easy’s below-sea-level geography. The effect on pest management professionals has been largely told only by their faithful and concerned trade press.
Across Louisiana, about 40 percent of the state’s pest management professionals were affected, most severely south of I-10, the east-west corridor connecting Lake Charles, Lafayette, Baton Rouge and New Orleans — the most heavily populated area of the state. As of this magazine’s publication date, more than 80 of the state’s “pre-hurricane” 580 companies are still unaccounted for — presumably temporarily or permanently “closed for business,” with their owners relocated in other parts of Louisiana or elsewhere. Some of those remaining in business (especially in New Orleans Parish), are reporting about 10 percent of last year’s income, doing business in temporary offices, employing skeleton crews and enduring sporadic utility services.
One challenge to homeowners and their pest management service providers is determining which homes are salvageable and which will be slated for demolition. It is estimated that almost 200,000 homes will eventually be deemed uninhabitable and, as it’s referred to locally, “knocked down.”
The massive flooding, which covered a land area the size of Great Britain, elicited prompt and unprecedented response from Louisiana pest management professionals and their regulatory body, the Louisiana Department of Agriculture. Shortly after the passage of the second storm, Commissioner Bob Odom issued a press release on the department’s position on termite soil and bait retreatments. The release stated that homeowners who experienced flooding should contact their pest management professional for an inspection and that any structure that suffered soil erosion or relocation of untreated soil atop of treated soil should be retreated. Bait material in submerged stations should be replaced. Because pest management professionals are allowed to charge for retreatments, Commission Odom urged homeowners to ask their insurance agents about reimbursements for these costs. The department’s retreatment position was consistent with the post-hurricane positions issued by several termiticide manufacturers.

TROUBLE LIES AHEAD. Despite the “good news from bad” opportunity presented by a wave of retreatments, several liability issues for have recently emerged.
Pest management professionals’ offices were among the hundreds of thousands of flooded structures; these business people returned to find wholesale destruction of their offices, including treatment contracts, graphs, billing records, product manifests, payroll records and personnel files.
Without electronic back-up and off site (meaning out-of-town storage, in the case of New Orleans), some pest management professionals lost all of their customer and treatment files. In today’s litigious climate, an absence of “defendable” files creates tremendous liability.
The discovery of termite damage during restoration is a likely (and an already encountered) situation. Most Louisiana treatment contracts specify responsibility for damage repair only when “live termites” are found in the damaged areas. Damage without live termites is considered “pre-existing,” and not the responsibility of the pest management professional. In fact, Louisiana’s preconstruction contracts provide for damage repair and a five-year renewal option, exclusive to the customer. That provision, required by the Structural Pest Control Commission, is one of the most consumer-oriented of any state in the country and holds Louisiana pest management professionals to a high degree of responsibility.
Damage discovered during reconstruction would have been hidden and therefore unseen and unreported at the time of treatment and/or WDIR inspection; this damage would be revealed during the “tearout” of wet walls of flooded homes.
Louisiana is one of the states with “manifestation theory” case law; this legal precedent assumes that the date of loss (such as termite damage) is the same as the date of its discovery, meaning that a pest management professional could be held responsible for hidden damage that occurred months or years before a treatment or inspection.
Only 40 percent of flooded homes had any kind or amount of flood insurance; homeowners’ policies normally exclude flood damage to structures and contents. Even flood-insured homes have a limit of $250,000, well below the replacement cost of damaged structures. Given the absence or inadequacy of flood insurance, desperate homeowners may attempt to use revealed termite damage repair claims to fund their restoration efforts. It’s not unforeseeable that homeowners will claim that live termites were in the structure before the storms and were killed by the floodwaters so pest management professionals should be held responsible for the existing damage.
According to Dr. Gregg Henderson, a leading termite researcher at Louisiana State University, termite populations were “knocked down” but not “knocked out” by the flooding. Colonies probably sought refuge in tops of trees and buildings and will rebound in the next few years. In fact, the author observed healthy populations of Formosan termites in ground stations of French Quarter structures three weeks after Katrina and one week before Rita, presumably seeking high ground, while much of the city was still under water.
Formosans were presumably distributed by wind and in floating and relocated infested trees and construction debris. After the storms, Commissioner Odom issued quarantines to keep hundreds of thousands of cubic yards of debris in “green” landfills in already-declared “Formosan zones” to prevent the unintentional spread of termites.

MOLD TREATMENTS. Flooded structures created an instant and immediate demand for mold treatments, and some pest management professionals in impacted areas considered adding this service as a replacement for lost income from traditional pest management sources. Despite a declaration by Commissioner Odom allowing pest management professionals to perform microbial treats under their structural licenses, the Louisiana Licensing Board for Contractors retained authority for “mold remediation” contracting. Regardless of their location, PCOs contemplating adding this service should consider several critical factors:
• The use of well-written contracts that contain disclaimers and hold harmless clauses to protect them from “bodily injury” claims.
• The acquisition of adequate mold insurance — most pest management professional general liability policies provide little or no coverage for this service. Because of the history of claims and litigation, mold insurance premiums and deductibles are priced well above what pest management professionals have experienced with their general liability coverage.
• The strict adherence to state licensing laws. By statute, some states have created or deemed boards or commissions responsible for mold treatment licensure; these bodies are often outside the purview of pest management professionals’ structural entities.
The long, slow recovery of hurricane-ravaged areas is creating new challenges — and opportunities — for the survival of the pest management industry. Cities across south Louisiana, especially those around the Big Easy, have experienced massive population shifts, housing shortages and traffic gridlock. Resourceful and entrepreneurial pest management professionals will ride out the turbulence of the reshuffled, post-Katrina/Rita economy like they rode out the actual storms.

Author’s note: Thank you to all that have rendered assistance, made donations and offered prayers to those pest management professionals impacted by the storms; I have been touched by your concern, compassion and generosity. To those pest management professionals whose lives and businesses were changed by the unwelcome visitors of August and September ’05, I offer my assistance and encouragement in your recovery.

The author is vice president of marketing for LIPCA, Baton Rouge, La. LIPCA is an insurance provider dedicated to the pest control industry. He can be reached at afugler@giemedia.com.