Breaking The Mold

Until the tragedy of September 11 took over the headlines, it seemed that every time we opened a magazine or newspaper or turned on the television, we would be confronted with yet another story about someone’s life having been ruined by “toxic mold,” also known as Stachybotrys chartarum.

Although recent events have replaced the issue (at least for the time being) in the media, the issue has not gone away. Plaintiffs’ lawyers across the country have begun to specialize in these claims and there is even now a monthly publication entitled “Mold Litigation Report” by the same company that has for years published the “Asbestos Litigation Report.” And, as reflected in the chart on page 40, the rate of new mold-related lawsuits filed is on a steep upward curve.

In addition, California recently passed the “Toxic Mold Protection Act of 2001,” which, among other things, will require written mold disclosures under certain circumstances by residential, commercial and public property lessors.
Mold cases are expensive to defend and about half of the cases that actually go to trial result in verdicts for the plaintiffs. These verdicts have ranged from $2,000 to $32 million and reported settlements have ranged from $30,000 to about $9 million.

Unfortunately, the structural pest control industry is not immune from this phenomenon. Although many PCOs wonder whether this is really their problem (since most potentially “toxic” molds like Stachybotrys are not decay fungi), WDO inspectors have already been brought into mold litigation, on a variety of theories.

Should PCOs be concerned? And, if so, how can they protect themselves? What are the health effects of mold?

WHAT IS MOLD? Mold is one category of fungi, which includes yeasts, mildews and molds. The yeasts include organisms that are used to produce bread and beer; the mildews include certain fungi (such as “powdery mildew”) that cause plant diseases. (The common reference to the black stuff that grows in showers as “mildew” is a misnomer.) PCOs generally classify fungi into decay fungi (brown rot, water-conducting fungi and white rot) and non-decay fungi (sap-staining, surface-staining and white pocket rot). Although PCOs typically refer only to surface-staining or superficial fungi as “molds,” all decay and non-decay fungi they encounter are molds.

All fungi require external food sources. Outdoors, decay fungi play an essential role in degrading organic materials and recycling nutrients back into the ecosystem. Indoors, fungi consume such things as the starchy pastes used with wallpaper, the cellulose in paper and fabrics and the lignin in wood products. The “musty” odor often associated with fungi is produced by volatile organic compounds that are created by fungi as they metabolize their food sources. Fungi (including molds) must have water to live; since molds can digest most things, moisture is the factor that limits mold growth. (The term “dry rot”— generally used to describe the crumbly appearance of brown rot damage — is a misnomer, since high moisture levels are generally needed for the development of decay fungi.)

Molds are found everywhere in the environment, and many molds reproduce by releasing microscopic spores. If these spores land on a moist food source, they can germinate and begin producing a branching network of cells called hyphae. Because molds are found everywhere, and because of the abundance of mold nutrients in homes and buildings, unusual interior moisture conditions lasting for more than a few days will almost inevitably lead to the growth of mold.

HEALTH EFFECTS OF MOLDS. People are almost continuously exposed to molds and other fungi through inhalation (i.e., breathing) and ingestion (i.e., eating) with no apparent ill effects. Some fungi are used for foods (e.g., edible mushrooms, the yeasts that ferment alcoholic beverages or the mold in blue cheese) and some are used as medicines (e.g., penicillin). However, it is also recognized that there are adverse health effects associated with many other fungi. Importantly, all molds have the potential to cause health effects.

Allergic reactions by susceptible individuals and infections in people with weakened immune systems have been associated with certain molds. In addition, the “mycotoxins” produced by some fungi can produce toxic effects; the most common examples are the illnesses or hallucinations that can result from eating poisonous mushrooms. Mycotoxins are also found in some molds (such as Stachy-botrys chartarum and Aspergillis versicolor) in indoor environments. Mucous membrane irritation, skin rash, nausea, immune system suppression, liver damage and central nervous system damage have been attributed to the ingestion of mycotoxins. Far less is known, however, about the toxic effects from inhaling mycotoxins (and it is in this latter context in which most of the current litigation has arisen).

Although medical experts are testifying in litigation across the country that inhalation of certain mold spores causes toxic reactions ranging from nausea to brain damage, the fact remains that, as of today, there is no reliable scientific data as to how much exposure is necessary to cause injury and there are no governmental regulations or standards for airborne mold concentrations. Unfortunately, this lack of data has not stopped the litigation from being filed, nor has it stopped juries from giving monumental damage awards.

Because of this, PCOs should be concerned about mold litigation.

When performing WDO inspections, PCOs may identify and report visible and accessible infestations, infections or evidence thereof; visible and accessible wood members found to be damaged by wood destroying pests or organisms; and, visible and accessible conditions usually deemed likely to lead to infestation or infection, such as excessive moisture conditions. Keep in mind that “infections” or “wood destroying organisms” technically refer to decay molds. As a result, every WDO inspection has the potential for turning into a mold claim.

Finally, it is important to keep in mind that the statutory framework governing PCOs sets minimum standards of conduct; there may be circumstances that require conduct that is not expressly stated in the written law. Ultimately, PCOs are responsible for doing what a reasonably prudent PCO would do under the same or similar circumstances, and what that “standard of care” requires will always be the subject of expert testimony (through PCOs retained on behalf of and in opposition to the PCO defendant) at trial.

LITIGATION WATCH. With the above framework in mind, the potential bases of PCO liability in mold litigation include the following:

First, if the PCO fails to identify and report the existence of a decay mold and because allergic reactions have been reported in all major fungi groups, there is potential liability for a claimed allergic injury resulting from exposure to the decay mold. Also, because the excessive moisture conditions leading to development of decay molds are the same as those leading to non-decay molds, the PCO is further vulnerable to the claim that the failure to identify and report the existence of decay mold caused the plaintiffs to be exposed to non-decay mold as well.

Second, it may be claimed that it is not enough for a PCO to merely identify and report upon the existence of decay mold. Rather, at least one plaintiff’s expert has testified that a PCO who identifies decay fungus in the interior of a home must also advise the owner that the existence of that fungus may also indicate the presence of non-decay molds with potential health implications. Plaintiffs’ experts may be expected to argue that PCOs are on notice of the potential health issues associated with molds both by reason of the popular media and by references to the issue in pest control industry magazines and standard reference materials.

Third, it may be claimed that the PCO also has an obligation to report non-decay mold, even in the absence of decay mold. This claim is based upon the argument that the presence of non-decay mold indicates that conditions are right for the development of decay mold. Non-decay mold must therefore be reported as evidence of a condition usually deemed likely to lead to infestation by decay mold.

Fourth, it may be claimed that by failing to identify and report an excessive moisture condition even in the absence of any mold and if that excessive moisture condition leads to the development of non-decay mold, the PCO is liable for the effects attributable to the mold.

Finally, for those pest management professionals who also perform structural repairs, it may be claimed that repairs to structural members containing non-decay molds with known health effects exacerbated the problem by spreading dust and spores to other, previously uncontaminated areas of the structure.

ANY GOOD NEWS? There are actions that PCOs can take to minimize the risk of being sued and to maximize the potential for a favorable outcome in the event that litigation occurs.

First, PCOs should ensure that they are protected against mold litigation with adequate insurance, but, because of policy exclusion and coverage issues, this is not as straightforward as it may seem. Talk with your broker before a claim arises and ensure that you are adequately protected against mold claims, with sufficient liability limits. (See story on page 43.)

Second, a PCO who encounters surface mold may not be able to determine from visual inspection alone whether it is decay mold that has just started or whether it is non-decay mold with possible health implications. As a result, PCOs should report it as surface fungus and should say if they are unable to determine whether it is decay or non-decay fungus. Even if the PCO is confident that it is a non-decay mold, he should report it as evidence of a condition likely to lead to an infection by decay fungi and recommend that the owner contact a qualified professional to correct the excessive moisture condition.

Third (and this is required by statute in California), the WDO report should make clear that the PCO is reporting upon only those conditions which are visible and accessible and that other conditions may exist that he is not in a position to discover. The point is that it is often more important to report what you don’t know than what you do know.

Fourth, keep in mind that the average lay person reading a WDO report will likely not know the limitations of the PCO’s expertise. As a result, every WDO report that makes a finding of decay or non-decay molds should contain an express disclaimer, covering the following:
• There may be health-related implications associated with the findings.
• The PCO is not qualified to, and does not, render opinions concerning health implications.
• The WDO inspection is limited to visible and accessible surfaces only. The PCO is not qualified to, and does not, render opinions as to indoor air quality.
• Questions concerning health implications or indoor air quality arising from your findings should be directed to a qualified professional. (NOTE: Each PCO should consult with his own attorney to ensure that the disclaimer is appropriate to the circumstances and to the requirements of each state.)

Finally, before any structural repairs are undertaken with respect to decay-damaged wood, the PCO should account for the possibility that those repairs may aggravate (or initiate) an airborne mold contamination by releasing spores and spore-laden dust into previously non-contaminated areas during the repair process. The popular mold remediation guidelines that are routinely referred to are those published by the New York City Department of Health and EPA.

Properly remediating a structure with visible surface mold can be a complicated matter and certainly beyond the expertise of the average PCO. Also, before a PCO attempts to undertake structural repairs to interior decay-damaged wood, at least in those situations were there is also visible surface mold present, PCOs should advise owners — in writing, in both the WDO report and the work authorization — that they should consult with a qualified professional regarding health implications that might be associated with those repairs.

CONCLUSION. Although some have referred to mold litigation as “the asbestos of the new millennium,” it is important to recall that similar statements were made about chlordane litigation and that litigation never approached the dimensions that were predicted. It remains to be seen whether mold litigation will be of monumental proportions or a passing trend. Either way, PCOs need to be aware of this new area of potential exposure. And while there is unfortunately no way to prevent lawsuits, good defensive practices can help PCOs minimize their risk of being sued and maximize their chances for a successful outcome if a suit is filed.

The author is a trial attorney specializing in the defense of civil litigation and is a name partner at Niesar & Diamond LLP, a San Francisco law firm. He has represented pest control firms for more than 21 years and can be reached at 415/882-5300 or via e-mail at pdiamond@pctonline.com.

KEEPING WATCH ON INDOOR MOLDS

One species of mold, Stachybotrys chartarum (also known by its synonym Stachybotrys atra), is particularly dangerous. According to the National Center for Environmental Health, “Stachybotrys chartarum is a greenish-black mold. It can grow on material with a high cellulose and low nitrogen content, such as fiberboard, gypsum board, paper, dust and even lint. Growth occurs when there is moisture from water damage, excessive humidity, water leaks, condensation, water infiltration or flooding. Constant moisture is required for its growth. It is not necessary, however, to determine what type of mold you may have. All molds should be treated the same with respect to potential health risks and removal.”

Stachybotrys chartarum may cause fever, nasal stuffiness or eye irritation when individuals are exposed. This is one of the “black molds” that are now feared by homeowners and there are other types of common molds indoors as well.

EPA suggests that if mold spores encounter water sources, there is a potential for growth, either inside of homes, in crawlspaces or basements. EPA further suggests that mold remediation may be completed using bleach water (one cup of bleach per gallon). While this will kill active mold growth, it will not control mold spores in the air. Air sampling can reveal if there are dangerous mold spores in the air. There is even a home test kit currently available at hardware stores.

Since moisture can lead to further reproduction of the dangerous molds, pest management professionals responsible for reporting conditions conducive to termite infestation need to be aware of the importance of reporting high moisture conditions/decay.

Pest management professionals might now need to consider additional respiratory protection requirements in case employees are exposed to toxic molds, which would make inspections much more difficult. — Greg Baumann, Pro-Tech Pest Management, Raleigh, N.C.