Fear of the Unknown–The Mold Issue Raises More Questions Than Answers (Part II) By Catherine Tapia

By Catherine Tapia

This is the second installation of a two-part series dealing with the rising issue of toxic mold claims, which continues its exploration of specific mold-related lawsuits in California: determining causation, calling in the experts and getting educated. To view Part I (IJ West, Aug. 27, 2001), click here

Determining causation

A major aspect of the ongoing mold-related lawsuits against Tulare County, Calif., is the issue of liability. And liability in tort requires the determination of causation-that is, did the defendants do anything which caused the plaintiffs to suffer damages and if so, what damages?

“The causation issue will be vigorously contested because there is a lack of medical and scientific evidence to show a correlation between exposure and symptoms,” said Michael Woods, an attorney from McCormick, Barstow, Sheppard, Wayte & Carruth LLP in Fresno, Calif., who was retained by the Tulare County Board of Supervisors to defend the county.

Currently, there are seven lawsuits pending, involving claims alleging personal injury arising out of exposure to toxic molds in three different courthouses: Visalia, Tulare and Dinuba. Of the 115 plaintiffs involved, all but two are represented by Alexander Robertson IV, of the Woodland Hills law firm Robertson, Vick & Capella.

Last October, Robertson indicated that claimants went through a diagnosis by an occupational environmental medicine doctor, who would examine both an individual’s symptoms and the environmental exposure to mold, and then make a diagnosis by basically linking the two. In addition, some of the claimants underwent serology tests, a form of blood testing, to determine what effect, if any, there had been on their immune systems.

Woods had added a serology test used by a Dr. Ordog, who is treating physician for some of the plaintiffs, is not approved by the Food and Drug Administration.

In November 2000, the Environmental Health Investigations Branch of the California DHS released a fact sheet regarding Stachybotrys chartarum biomonitoring, called “Misinterpretation of Stachybotrys Serology.” According to the DHS, the fact sheet “was produced to inform healthcare professionals of the current status of the limited serological procedures that are commercially available.”

An excerpt from the DHS fact sheet reads as follows: “Recently both scientific inquiry and national news media attention have raised concerns about possible health consequences of human exposure to indoor mold growth. Much of this concern has been generated by discovery of toxigenic mold species in water-damaged buildings. Although not supported by the Centers for Disease Control and Prevention (CDC, 2000), recurring news coverage suggesting a link between the fungus, Stachybotrys chartarum (S. chartarum) and a series of infant pulmonary hemorrhage cases in Ohio continues to generate public anxiety about possible toxic fungal exposure in homes, schools and workplaces. Toxigenic fungi, including S. chartarum, may or not produce toxins, depending on several factors, including the specific fungal strain and the organic substrate it is metabolizing. Thus, isolation of a potentially toxigenic fungus from a building does not indicate that occupants have actually been exposed to mycotoxins. As there are no readily available methods to test building air or materials for mycotoxins, some patients have sought their physicians’ help to determine if they have been exposed to toxic indoor fungi.”

In summary, the DHS noted, “The demonstration of mold-specific antibodies alone is generally considered insufficient to prove that health effects reported by individuals in moisture-damaged buildings are caused by mold exposure…S. Chartarum serology tests have no clinical application a this time. They cannot be used to imply the presence of S. chartarum within a home or workplace environment, nor can they be used to prove patient exposure on this specific mold or its toxins.”

“That fact sheet very clearly says you can’t use the serology test to say with complete certainty that a person has been exposed to Stachybotrys, or even if it could, indicate where or when the exposure took place,” said Chris Lozano, also an attorney at McCormick, Barstow, Sheppard, Wayte & Carruth. “Dr. Ordog is a treating physician for a number of the plaintiffs. Whether or not he will be a designated expert remains to be seen.”

Robertson asserted that mold cases are expert-driven, but maintained that Dr. Ordog is at this point solely a treating physician. “It’s safe to say he’s not the only person we’re relying upon,” he said. “We do not rely on that test as a sole diagnostic tool. That blood test has been used in mold litigation around the country…[but] we haven’t hung our hat on it. It’s one diagnostic tool. Probably the most important evidence is the environmental evidence data combined with the plaintiff’s symptoms. …I would anticipate that at trial we would introduce testimony from an occupational environmental medical doctor, a mycologist…There will be a number of different experts that we would tend to call for.”

Calling in the experts

Two certified industrial hygienists were retained at the behest of Tulare County to evaluate and make recommendations as appropriate for remediation for any potential mold-related problems at the Visalia courthouse and to ensure it was safe for use by employees and members of the public. Due to concerns over the objectivity and accuracy of the reports, the Tulare County Superior Court independently retained yet a different certified industrial hygienist, Francis J. Offerman III of Indoor Environmental Engineering of San Francisco. While some remedial steps were recommended, according to the defense, the fundamental findings of all the reports were that there is no indoor air quality problem in the Visalia courthouse that presents a health risk-in particular, none that relates to mold.

Offerman’s report states: “The indoor airborne concentrations of volatile organic compounds, formaldehyde and carbon monoxide measured were below recommended health and irritant guidelines.”

Following that report, Judge Paul Vortmann, who was very active in arranging for that inspection, was quoted in the The Fresno Bee on Feb. 4, 2001 as saying, “We can say the air doesn’t present a risk to people who work here.” Since then many courthouse employees have returned to work, including two of the judges that had filed claims, but did not proceed with a lawsuit. Even Krant, the single plaintiff in one case, has returned to duty, although not in the Superior Court in Visalia but in outlying courts not related to the litigation.

However, Robertson said that the two or three studies done by the County’s own consultants were not performed correctly in that they did not followed guidelines published by the American Conference of Governmental Industrial Hygienists and the American Industrial Hygiene Association. He also maintained that Offerman’s study lists over two dozen separate recommendations on how to improve the indoor air quality in the Visalia courthouse, none of which, Robertson said, have ever been implemented.

By anyone’s estimate, the case is far from over.

“We’re starting to exchange discovery,” Woods said. “A number of additional defendants have been added…There are lots of insurance companies involved because of the construction defect aspects of the case. A number of the construction defendants have several polices because the period when they may have allegedly done some work cover several years, and there are multiple policies, potentially providing coverage. And a number of cross defendants have been brought in. There are 10 different companies involved. The County is self-insured, and they have an excess policy.”

There will also be an opportunity for the plaintiffs to perform further in their own investigation, for example, conducting air sampling in the building and doing reciprocal destructive testing. Furthermore, all the cases handled by Robinson include a public nuisance cause of action, which requests the County to perform “full and complete, [and] proper abatement of the microbiological contamination.”

Getting educated

With such increased awareness, it’s no wonder that a whole slew of mold seminars have been scheduled by various organizations in the coming months. And the interest in such seminars is overwhelming.

“In part, that’s because this is an absolutely new subject area,” Woods said. “The expense factor of this litigation scares people to death, so they want to find out as much as they can. We’ve been inundated with requests for information from people about mold cases [including] attorneys on both sides of the aisle.”

In fact, McCormick, Barstow, Sheppard, Wayte & Carruth has formed a national consultative relationship with a major domestic carrier relating to mold-based litigation.

The mere presence of the industry representatives in attendance at some of the various seminars clearly indicates that substantial aspects of the industry are taking mold seriously. In addition, medical professionals at the conferences are showing a growing interest in doing the basic scientific research that would have to underlie any conclusions that could be made about causal relationship.

But, according to Eric Goldberg, assistant general counsel for the American Insurance Association (AIA), just because there are no standards on mold or mold remediation doesn’t mean that a carrier is going to sit on its hands in responding to claims.

“When the claim comes in, the claims person has to evaluate the situation in which the mold claim arose, check the policy language, and determine if it’s a covered cause of loss,” Goldberg said. “However, there is a concern among carriers that because of the lack of standards, it is harder to determine whether the carrier acted in good faith.”

A sampling of upcoming mold-related seminars hosted by insurance trade associations includes:

National Association of Independent Insurers
“Forum on Mold Issues”
Sept. 19, 2001
Chicago, Ill.
Contact: Dave Golden, (847) 297-7800 or www.naii.org

The NAII invited a broad spectrum of representatives from the property/casualty insurance industry and from other industries affected by the increasing number of mold-related claims to its forum. The meeting’s purpose is to discuss mold-related public policy issues and to consider legislative, regulatory and market-based solutions to the situation. In addition to discussing legislative and regulatory issues, participants will hear a variety of perspectives on the mold issue from groups such as the Institute for Environmental Assessment, National Association of Home Builders, and the Defense Research Institute. The Insurance Information Institute and the Insurance Services Office will also report on mold studies and ongoing research.

National Association of Mutual Insurance Companies
“Is Mold the Next Asbestos?”
Sept. 24-26, 2001
Washington, D.C.,
Contact: (317) 875-5250 or www.namic.org

NAMIC will host an insurance industry panel discussion on mold at its upcoming 106th Annual Convention. The panel will include Dr. Robert Hartwig, chief economist at the Insurance Information Institute; Douglas G. Houser, partner with Bullivant Houser Bailey PC’s Insurance Practice Group, who has represented parties in insurance-related matters across the country, as well as internationally; Barbara Reardon with Educating Underwriters Consulting Inc., a Batavia, Ill.-based education and underwriting consulting firm; and Lyle Hogan, a senior engineer with Geoscience Group Inc.

Property Loss Research Bureau, Liability Insurance Research Bureau
“National Mold Symposium: The Truth About Mold”
Oct. 29-30, 2001 Charlotte, N.C.
Contact: www.plrb.org.

The PLRB and LIRB, affiliates of the Alliance of American Insurers, will hold a National Mold Symposium titled “The Truth About Mold.” The symposium will attempt to cut through and clarify many of the current scientific theories related to mold. Calling mold concerns an “industry-wide crisis,” the AAI said some of the nation’s foremost mold experts are slated to examine the issues behind the phenomenon. Topics to be discussed include: the science of mold, including a description, health effects, life cycles and remediation; practical experiences; air quality and the remediation processes; rapid drying technologies; and the latest trends in case law.

American Insurance Association Mold Seminar
Nov. 8-9, 2001
Washington, D.C.
Contact: Stephanie Hennesy, (202) 828-7139

The AIA will host a seminar to address the emerging issue of mold. The seminar will feature experts on the front lines of the mold issue, covering a broad range of mold-related topics from the health effects to insurance coverage issues to the politics of mold. The panel discussion topics include: “Mold and Health Effects: Allergic, Toxic or Psychosomatic?”; “Impact on the Construction Industry and Real Estate Markets”; “Property Insurance Coverage Issues”; “Liability and other Insurance Coverage Issues”; “The Politics of Mold: Legislative and Regulatory Issues, Insurance Department Filings”; “Inoculating Mold Exposure and Claims.”

Goldberg agreed that the science of mold and its potential health effects is completely unsettled at this point. “I’m not aware that there’s been any government agency that has come out with any permissible exposure limits to mold and the toxins that they may or not produce,” he said. “My understanding is also that there’s been no sort of assessment of the normal level of ambient mold.”

Goldberg noted that AIA doesn’t get involved in what the terms of coverage in an insurance policy ought to be, but does very strongly support rate and form deregulation. “A competitive marketplace will respond to customers’ needs,” he said. “So we strongly support the ability of our individual members and all insurers to be able to have the flexibility to bring new products to market and to price those products accordingly. Therefore, if a carrier wants to create a new product that provides expansive coverage for mold, they ought to be able to do that. If another carrier wants to bring its product to market that provides no coverage for mold and price it accordingly, they ought to be able to do that.”

With regard to what the AIA terms as the politics of mold, Goldberg noted that California is thus far the only state to have introduced legislation on the issue of mold.

SB 732 (Ortiz, D-Sacramento) was introduced in February 2001. The legislation would enact the Toxic Mold Protection Act of 2001, which, as explained during a recent AIA briefing on insurance issues pending in California legislature, would basically have the DHS determine whether or not it is appropriate to set exposure levels and standards for the remediation of toxic mold. It was indicated that the AIA’s concern is to make sure that if any standards are set, those standards are not ahead of existing science.

SB 732 requires the California DHS to consult with a task force, specified in the bill, which would include public health officers; environmental health officers; code enforcement officers; experts on the health effects of mold; medical experts; certified industrial hygienists; mold rebatement experts; affected consumers; attorneys; landlords; builders; realtors; and insurers.

While the bill on its face doesn’t change insurance coverage, if standards were to be established, there could be coverage implications. Furthermore, due to the complexity of the issue and the evolving science, it is anticipated that a couple of years from now, the DHS will probably still be working on the project. The bill does not say standards must be adopted by July 1, 2003, but rather that a report on progress be made by that date.

No consensus

But in the end, it all comes down to the simple fact that there are currently more questions than answers when it comes to mold cases. Will mold morph into an even greater legal behemoth, or will it eventually take its place in the annals of such legal debates as the link between cell phone use and brain tumors? Only time will tell — probably a lot of time.

“I see attorneys perceiving this as an opportunity to open a new area of potential settlements and verdicts,” Woods said. “But until we get some definitive correlation between exposure and medical damage or injury, I don’t think it’s going to advance the way asbestos claims did, because there, there was a more direct correlation between exposures and damage.

“I think the plaintiffs’ bar has done a very good job of working the media and causing enough concern that people are reacting to it,” Woods continued. “We don’t know yet where this is going to wind up, but…if a year from now it’s confirmed there is no medical correlation, then the cases are going to drop off considerably.”

Read this story in the Sept. 10, 2001, issue of IJ West.

To comment on this story, please send e-mail to ctapia@insurancejournal.com

Topics Lawsuits California Carriers Legislation Pollution Medical Professional Liability