A mold front moving in from the south

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http://www.bizjournals.com/seattle/stories/2002/04/08/story4.html

A mold front moving in from the south

Erb Staff Writer

From Florida to California, builders, property owners and insurers are

contending with soaring numbers of insurance and liability claims related to

mold. In Texas, some insurers - including Seattle-based Safeco Corp. - have

stopped writing homeowners policies because of an avalanche of mold claims,

including a single case that brought a $32 million jury verdict.

In soggy Western Washington, the real estate and insurance industries are

watching these Sun Belt developments with alarm. Although the cases here

remain few, according to attorneys on all sides of the issue, dramatic and

widespread press coverage about homes and schools infected with mold has

awakened the public to the possibility that a greenish-black growth could

make building occupants sick.

Industry groups have briefed anxious members here with seminars such as the

Chartered Property Casualty Underwriters Society's " Mold Mania! " , which drew

more than 200 people last month. At the Master Builders Association of King

and Snohomish Counties, which is putting on two mold workshops, members

" know it's an issue, " said spokeswoman Butcher.

In Olympia, the state Department of Health gets as many as 4,000 calls a

year about indoor air quality; these days, about 90 percent of those calls

involve mold, the agency says. For a while, a Web page about mold was the

most-visited section of the department's Internet site.

But the body of scientific knowledge about the effect of mold on people is

limited; indeed, researchers know more about what happens when farm animals

eat moldy hay. " We don't have a lot of information, " said Tim Hardin, indoor

air quality program manager with the state Department of Health.

That uncertainty, along with a lack of health standards for mold exposure,

has created a gray area in which disputes are flourishing, say attorneys on

both sides of the issue.

As a result, trepidation over mold litigation in Western Washington seems to

be running well ahead of the actual number of disputes.

Anecdotal evidence from insurers and attorneys suggests that the number of

mold-related cases in Western Washington has increased in recent months. The

Washington Insurance Council has noticed a " slight increase " in the number

of insurance claims for mold damage in the last year, a spokesman said.

Still, the level is nowhere near those seen in Texas, California and other

Sun Belt states, insurers and attorneys say.

" I don't think there are that many claims out there, " said Pat Le Pley, a

plaintiffs attorney with the Bellevue firm Le Pley & Koehler PLLC. Le Pley

figures he is one of the more active attorneys on the issue, and his list of

mold cases stops at three. " It's a minuscule part of my practice area. "

Some have suggested that mold could be a litigation growth industry, but

Puget Sound attorneys are skeptical. " If it is, it won't last long, " said

Jeff , a defense attorney and shareholder in charge of the Seattle

office of Bullivant Houser Baily PC. He has seen five mold cases.

To be sure, molds cannot be dismissed as risk to people, health officials

say. " They are not something that we should treat frivolously, " said the

Department of Health's Hardin.

Mold and its spores are everywhere. Nonetheless, reports of toxic molds

causing serious health problems in people are rare, according to the federal

Centers for Disease Control and Prevention.

Most people exposed to mold are more likely to react with symptoms

resembling hay fever, according to the CDC. However, some people with

allergies, respiratory disease and weakened immune systems may be more

sensitive to mold.

Mold stories often feature stachybotrys, a greenish-black mold that is

capable of producing a toxin, particularly when it is being overrun by

another organism. But the toxin is hard to make.

" They are not going to produce these toxins unless they need to, " Hardin

said, adding the frequency with which the mold makes toxins is " difficult to

determine. "

Mold needs water, which is why it grows in buildings that have been flooded,

or have leaks and chronic moisture problems.

Some wonder whether energy codes are making homes and apartments more

susceptible to mold because the buildings are too " tight " - so little air

percolates through the structures that moisture builds up and condenses

inside the walls.

As a result, most mold disputes in Western Washington pit homeowners and

renters against landlords, builders and developers. Insurance companies and

their policyholders have called in attorneys when they disagreed over the

benefits for mold claims.

Mold became an issue in some Seattle and Vancouver, B.C., apartment

buildings and condominiums after they developed water problems, attorneys

say.

Mold remains a much larger concern in the nation's sunbelt. Allstate Corp.

saw its mold-related claims in Texas skyrocket 1,740 percent to 4,600 in the

first nine months of 2001, according to the Birmingham Business Journal, an

affiliated newspaper.

Seattle-based insurer Safeco last year put a moratorium on new homeowners

policies in Texas, blaming the rising number of mold-damage claims.

Some Sun Belt states are either considering or imposing caps on damage

claims. In Alabama, the state Insurance Department let an insurance-rating

organization cap mold damages at $10,000. The insurance industry has filed a

similar request with the California Department of Insurance.

In Texas, a dispute over a homeowner's claim for mold damages turned into a

warning for insurers nationwide. A County jury last year awarded $32

million to a family that claimed a subsidiary of Farmers Insurance Group

mishandled their claim for mold damage.

The County case is considered a cautionary tale among insurers in

Washington, where the industry is taking precautionary measures.

Companies are filing proposed changes to their homeowners policies with the

state Office of the Insurance Commissioner. Some insurers are asking the

state for permission to cap payments for mold damage; others want to offer

supplemental mold coverage for an additional premium, an agency spokeswoman

said.

It's rare that a mere fungus gets the attention of so many industries.

" We're worried, " said Mel Sorensen, a Seattle attorney with clients in the

insurance industry. " I know the industry is quite concerned. "

Reach Erb at 206-447-8505 ext. 116 or gerb@....