mold has emerged as a high-stakes and hotly contested plague

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http://www.miami.com/mld/miamiherald/business/3744188.htm

Mon, Jul. 29, 2002

Mold claims soar

BY DOUGLAS HANKS III AND MELINDA ZISSER

Amado Valdes, 61, keeps a jar of Cetaphil skin cream by his bed, to soothe

the itchy dark welts on his hands and neck. A humidifier bubbles at night to

moisten his lungs and calm his coughing fits. Recent months have brought new

daily rituals: popping Allegra and Clarinex allergy pills.

Valdes claims he is sick because his house is sick -- infested with toxic

mold that has left the two-story stucco building uninhabitable and possibly

unsalvageable. A clean-up expert has told Valdes and his fiancée,

Fernandez, that their home needs to be stripped bare to the studs and

rebuilt wall by wall.

The cost: $247,000, more than double the $110,000 county tax assessors

estimate as the market value of the Southwest Miami-Dade home.

The house also happens to be insured for $110,000, but that is a moot point

for now. Valdes' insurance carrier has balked at funding a clean-up, thus

creating the kind of fight that has rippled across Florida in recent years.

Once just a chronic nuisance in soggy Florida, mold has emerged as a

high-stakes and hotly contested plague, with insurers predicting a growing

flood of homeowner claims that could bankrupt the industry. They point to

Texas -- which saw $843 million worth of mold claims in 2001, up from $153

million the year before -- and warn that Florida is the next venue for

plaintiffs' lawyers looking to cash in on breathless mold horror stories.

Brockovich, the legal crusader whose life story was made into a

movie, has filed a mold lawsuit against the builder of her Los

Angeles mansion. Ed McMahon is asking for $20 million after mold allegedly

infected his home and killed Muffin, the family dog.

Whether fueled by a rash of wet weather or a flood of media coverage and

profiteering lawsuits, mold has vaulted to the top of the insurance

industry's worry list. Meanwhile, homeowners and their advocates are

accusing insurers of trying to brush off a serious malady only recently

recognized as a persistent problem.

State Farm, Florida's largest insurer, fielded 83 mold claims in 2000; a

year later, that figure jumped to 700, according to the Florida Insurance

Council.

This year, almost all of Florida's home insurers have asked state regulators

for permission to exempt or limit mold damage from homeowners claims, and

the insurance department will convene its first hearing on the requests

Tuesday in Plantation.

This follows congressional hearings on mold earlier this month and the

launching of the federal Centers for Disease Control and Prevention's first

major study on mold health risks.

''Mold is, unfortunately, hot,'' said Roy Oppenheim, a Weston lawyer who has

spent the last year nurturing a budding mold practice. He has talked about

mold dangers on a television station in Tampa, where Oppenheim & Pilelsky

has an office, and posted a primer on mold litigation on the firm's website.

''We've looked at around 20 or 25 [cases] in the past three months,'' he

said. ``People are sending me mold spores.''

Méndez has also looked to mold to boost his business. The Miami public

adjuster negotiates with insurers on behalf of policyholders and typically

keeps 10 percent to 35 percent of any reimbursement as his fee.

Amado Valdes hired Méndez after seeing his full-page advertisement in El

Nuevo Herald, with photos of grimy bathroom grout and a headline about a

Texas family winning a $32 million verdict over mold contamination. Two

years ago Méndez handled no mold claims, but now his 300 mold clients make

up 90 percent of his business.

''I really think it's a matter of the public being more educated and being

aware this could be a cause of many of the health issues out there,'' Méndez

said. ``And the insurance industry is working hard to keep it very

hush-hush. For years the tobacco industry said tobacco doesn't cause cancer.

And people bought that too.''

Certain types of mold, a fungus that thrives in damp places, produce

microscopic airborne spores that can irritate lungs, particularly for people

allergic to mold or with weakened respiratory systems, said Dr. Eleni

Sfakianaki, medical director of the Miami-Dade Health Department.

Those health concerns prompt occasional closings of buildings infested with

mold. Broward County is delaying the opening of Westglades Middle School in

Parkland -- and possibly Park Lakes Elementary in Lauderdale Lakes -- after

discovering mold rotting drywall in both buildings, the latest of the school

system's long-running mold woes.

Five Broward schools are slated for mold repairs this summer and fall, while

officials have given a clean bill of health to Virginia Shuman Young

Elementary, despite complaints from parents.

In May, the city of Opa-locka forced residents to move out of an apartment

building condemned for mold contamination after a gunman broke pipes in a

battle with police. Polk County reached a $35 million with its insurance

company in 1996 over a mold-infected courthouse.

And in Honolulu just last week, Hilton closed all 453 rooms of its new $95

million hotel after discovering a mold outbreak.

But only in the last three years have insurers faced homeowners claiming

mold hazards of their own, industry executives said. The first concentration

of residential mold complaints surfaced two years ago in Texas, which saw

2,472 insurance claims for mold damage in 2000. Mold claims soared to 14,706

there a year later, according to the Insurance Information Institute, an

industry trade group.

''It really began to take off in 2000,'' said Hartwig, senior vice

president of the group. ``That's really when we began to see exponential

growth.''

Hartwig blames plaintiff lawyers looking for ''the next asbestos,'' the

insulation material linked to health problems that formed the basis of

multimillion-dollar verdicts against asbestos companies and building owners

in the 1980s and '90s.

''Mold as we know it has been around in a terrestrial form for 400 million

years,'' Hartwig said. ``Clearly something has changed in the equation.''

Homeowner advocates point to modern home construction as a potential

culprit: houses sealed tight against drafts eliminate regular air flow

inside, making it easier for mold to incubate. And the rise of drywall and

plasterboard walls after World War II provided mold the kind of soft, papery

food it thrives on.

Dr. Kaye Kilburn, a mold researcher at the University of Southern

California, even wonders whether particularly virulent spores have blown

here in recent years from the Sahara or Gobi deserts.

Kilburn, a professor of internal medicine at USC's Keck School of Medicine,

has treated 75 patients he says were afflicted with mold-related symptoms,

including slowed brain activity, near blindness and a loss of balance so

severe they need canes to steady themselves.

''It's like they aged overnight,'' he said.

The insurance industry maintains that only a small portion of people with

allergies suffer health problems with mold. The Centers for Disease Control

in June announced a study of mold medical research this year to help clarify

the issue, an agency spokeswoman said.

Lipsey, a mold inspector and toxicologist in ville, said he

has found that mold ills are hard to predict. ''Mold is an idiosyncratic

problem,'' he said. ``It treats everyone differently.''

Danny Israelian was a month old in 1999 when his family moved into a new

Boca Raton house built by GL Homes, a major South Florida developer. The

Israelians are suing GL and the company's plumber, claiming a drain that

workers failed to connect to a pipe had quietly seeped three years worth of

bath water into their walls, spawning entire colonies of mold without the

family knowing anything was wrong.

The Israelians only discovered the mold when water came through a wall in

their daughter's bedroom in November, three years after they moved in. Talia

suffered coughing spasms while she slept, but her little brother has spent

most of his life in and out of hospitals and clinics being treated for

breathing problems, according to the suit.

GL's lawyer, Green, said the Israelians have not allowed the company

to inspect their home which, according to the suit, they abandoned --

furniture, clothes and all -- after discovering the mold.

Green said the plumbing problem was probably a faulty gasket and not a pipe

that wasn't connected. He did not address the specific allegations in the

suit, but did characterize the mold issue as a manufactured crisis.

''Certainly in South Florida, mold is everywhere,'' said Green, a partner

with Kluger Peretz in Miami. ``Until recently, you would take a little water

and detergent and wipe it out. Now people run to doctors and lawyers.''

Homeowners themselves are often at fault for not tending to a festering

water problem, said Stander, a Florida lobbyist for the Alliance of

American Insurers. ''When people have a leaky pipe they haven't taken care

of for three years,'' it isn't covered, he said.

TEXAS-STYLE STAMPEDE

California is a distant second to Texas in mold claims (industry officials

say the Lone Star State accounts for 70 percent of all mold complaints),

with Florida finishing third. Florida has just begun to see homeowner mold

suits, but insurance executives predict that a Texas-style stampede is sure

to follow.

''Our concern is for the future,'' said Vince Rio, a State Farm lawyer in

Tallahassee. 'Certainly it's possible that if another hurricane hits, we'll

have people coming back years later saying: `Three years ago you didn't

clean up all the mold, and now my house is uninhabitable.' ''

Insurance carriers currently cover mold damage when it results from a sudden

catastrophe, such as a rainstorm, rather than a maintenance problem, such as

a leaky water heater. But insurers have asked the Florida Insurance

Department to let them exempt mold damage from coverage or, as in State

Farm's case, limit reimbursements to between $10,000 and $50,000.

The department has received requests from 431 commercial and homeowner

insurers asking for mold waivers, and State Farm and Allstate have asked for

rate hikes tied in part to rising mold claims.

Twenty-three states already have mold exemptions or limits, according to

Policyholders of America. ''Two years from now you're not going to see a

policy without a mold exclusion,'' said Mark , a partner with

Greenberg Traurig in Washington who represents Florida commercial property

owners in mold disputes with their insurance carriers. ``It won't be

insured. It will be like terrorism insurance.''

Policyholders of America, the insurance industry's main foe on the mold

issue, has opposed the rate hikes and mold exemptions. The group says

Florida insurers have improperly rejected or delayed action on 1,384 mold

claims through February of this year.

President Melinda Ballard said insurers often drag their feet when

confronted with even small mold clean-ups, inaction that allows spores to

multiply into dangerous numbers. That is what she accused Farmers Insurance

of doing in 1999 when she discovered mold inside her family's home in

Dripping Springs, Texas.

Two years later she won $32 million in a civil trial, the largest mold

verdict ever.

Both sides of the mold issue point to the Ballard case as a turning point

for attracting the attention of reporters and litigators, and with them the

public at large. It was the Ballard award that Méndez, the Miami claims

adjuster, cited in his El Nuevo ad.

Sitting in Amado Valdes' living room, Méndez points to the tea-colored ring

on the ceiling and the hole in the wall under it, stuffed with newspaper.

Those are the most visible signs of mold downstairs; upstairs, the tub is

scarred from mold stains and cleansing chemicals.

Valdes and Méndez blame a faulty shower pipe that sent water into the walls.

Valdes and Fernandez, his fiancée, first noticed mold in their shower at the

beginning of the year.

Valdes said his coughing and itching started soon after, while Fernandez

began complaining of headaches. Her 8-year-old grandson, who uses a

wheelchair because of long-standing physical problems, spent several days in

the hospital when he had trouble breathing, Valdes said.

An inspector Méndez hired concluded the mold had spread from the shower to

virtually everywhere in the house, meaning the drywall and much of the

carpet and furniture needs to be replaced for the house to be livable.

Clarendon Insurance has not yet offered any money for repairs and last week

questioned Valdes under oath about the claim, Méndez said.

Clarendon officials did not return phone calls requesting comment for this

story.

Meanwhile, Valdes, Fernandez, and her two children and two grandchildren

continue to live in the house -- grimy spots, skin cream and all.

''I am really afraid we're going to get worse,'' Valdes said. ``We don't ask

for anything more than our health.''