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Buildings
Mold: A Growing Menace?
(newyork.construction.com - August 2003 issue)
By Dan
Friedman
At a time when mold-related litigation
is exploding across the country, many contractors are unable
to get mold insurance, approximately 200 general contractors,
specialty contractors, architects, engineers, attorneys, insurance
executives, industrial hygienists and medical doctors were
told at a recent meeting titled "Mold: Fact vs. Fiction."
The symposium, co-sponsored by New York
Construction News and the law firm of Peckar & Abramson,
was held at the McGraw-Hill building at 1221 Avenue of the
Americas. It was one of a number meetings and conferences
held on the topic in recent years by the construction and
real estate industries.
As public perception of mold as a health
hazard has grown over the last decade, so have the efforts
by the industry to minimize the possibility of its growth
during the construction process and to create operating systems
that mediate against its development in a building.
John Onnembro, senior vice president
and general counsel for AMEC Construction Management Inc.,
speaking at the "Mold: Fact vs. Fiction" symposium,
said: "Some general contractors are not aware of that
(the unavailability of insurance). It's become necessary to
put in all contracts that the subcontractor must have mold
insurance. If no one in that trade can get it, you'll at least
know that and take appropriate risk management action."
The issue became immediate at the end
of 2002 when To their chagrin, contractors were being presented
with new policies that excluded coverage of anything that
had to do with mold growth.
Mold had previously been covered in
a contractor's commercial general liability policy. However,
as the policies are coming due, the insurance companies are
phasing the mold coverage out. Some insurers have been willing
to provide limited mold coverage as part of a separately purchased
pollution policy, but at a high cost and with large deductibles.
Not surprisingly, exterior wall contractors,
waterproofing contractors, plumbing contractors and HVAC contractors
are, in particular, being iced out of coverage.
The insurance industry's retreat from
mold coverage has come in the face of an of steadily increasing
amount of mold-related litigation across the country.
Writing in the New York Law Journal
in November of last year, James Frankel and Mark Bloom of
the New York-based law firm of Buchanan Ingersoll, reported
that there were thousands of such cases around the country,
including New York.
William Robert, national underwriting
director for the construction division of The St. Paul Cos.,
speaking at the symposium, reported that his firm alone is
currently involved in 200 mold-related court cases, which
are averaging $124,000 in damage claims.
"The insurance industry doesn't
like to insure anything that's a real risk," Onnembro
said.
Robert countered: "We are in the
business of assuming risk in exchange for a premium. When
the possible reaches the probable, assuming the risk ceases
to be good business, at this point it is impossible to estimate
the cost (resulting from the new wave of mold litigation)
so we can't come up with rates."
William Marino, chairman and CEO of
the Allied Group of Companies, a major insurance and surety
bond agency, who along with Onnembro and Robert participated
in the symposium's panel on insurance issues, said the insurance
industry's response to mold has been informed by its experience
with asbestos.
"With asbestos the insurance companies
were caught off guard and it wound up costing them hundreds
of billions of dollars," he added.
He said mold is a more complex issue
than asbestos. "It's not man-made and that makes it difficult
to find fault and to pinpoint cause," Marino said. "What
we're really looking at is an uninvited guest who's crashed
the party."
The Uninvited
Guest
The "uninvited guest" has always been here.
"Mold has been around since long
before human beings," Dr. Ronald Gots, CEO of the International
Center for Toxicology and Medicine, said while participating
in the symposium's "Science of Mold" panel. "Mold
hasn't changed. What has changed is that a huge engine of
special interests has been built to drive mold as a health
issue."
There are thousands and thousands of
kinds of mold (or to use its scientific name, fungi), including
mushrooms and yeasts. In fact, biologists classify mold as
a separate kingdom of life, distinct from both plants and
animals.
Molds resemble the animal kingdom in
that they cannot produce their own food as plants do. Therefore
they must consume organic, carbon-based compounds to survive;
that is, they have to eat. However, molds resemble the plant
kingdom in that they can't move by themselves. They depend
on animals or the forces of nature, such as the wind, to carry
them to a food source, or the food to them.
Most molds are harmless to humans. People
eat many kinds of mushrooms. Yeast is used in the fermentation
of beer and wine and to make breads rise. A fungus called
shoyu is used to make soy sauce.
Molds are used to produce a wide range
of medicines, including penicillin. In addition, many varieties
of mold consume animal waste. Mold is the most important member
of nature's recycling system.
Still, some molds cause allergic reactions
in some humans. Whether mold can cause more serious and long-lasting
diseases such as asthma and neurological impairment remains
a matter of controversy.
"Much of the hype is pure nonsense,"
Gots said. "Yes, mold can be an allergenic, like leaves,
grass, dogs and cats. That this has become a major health
issue is bizarre."
A report that came out last year by
the American College of Occupational and Environmental Medicine
concluded that, "Despite a voluminous literature on the
subject, the causal association (between mold and symptoms
in humans) remains weak and unproven."
Whatever the actual medical risk posed
by some species of mold, the perception of mold as a health
hazard has grown dramatically in recent years. As a result,
in addition to litigation, there is now the probability of
legislation.
While only California has passed a mold-related
law so far, nine other states, including New York and New
Jersey, now have such legislation pending. On the federal
level, the "United States Toxic Mold Safety and Protection
Act" has been introduced to the House of Representatives.
If passed, it would codify standards pertaining to the prevention,
detection and remediation of mold in residential and commercial
buildings.
"Rules and guidelines are meant
to calm public fears," Dr. Hugh Granger, the laboratory
director of HP Environmental Inc. told the symposium. "The
irony is that the more guidelines, standards and laws you
put in place, the more fear you generate."
Dealing with
the Fear
Mold has become a construction and real estate issue because
some common building materials-including wood, the paper that
clads drywall, OSB board and acoustic tiles-contain organic
matter, food for mold. When this organic material is combined
with water, mold finds a feeding ground.
Thus the two major ways of preventing
mold in buildings are: 1) development and use of building
materials that mold can't eat and 2) prevention of too much
water accumulation in the building and its materials.
Building product manufacturers are working
hard to develop mold-resistant materials. James Murphy, national
product manager for Georgia Pacific, made a presentation to
the symposium about his firm's glass-mat gypsum panels, which
contain, he claimed, "few organics" and therefore
have "superior mold resistance compared to conventional
gypsum board products."
Fiberlock Technologies Inc., at the
Buildings-N.Y. conference held in June, unveiled a clear antimold
sealant. It contains an Environmental Protection Agency-registered
fungicide that prevents mold from growing and seals out moisture.
"After you kill the mold, there
are still a ton of fragments and mold spores on the surface,"
said Cole Stanton, Fiberlock's director of sales. "While
they might not grow again, they are still allergenic. Coating
locks the fragments and spores to the surface so they can't
become airborne."
Brian Feury, senior staff environmental
scientist for Langan Engineering and Environmental Services
Inc., advised contractors at the symposium to periodically
inspect construction materials as they are brought onsite
to make sure that the moisture content is at the level agreed
to with the supplier.
Mold-resistant building products remain
new and not yet widely used. And they cannot completely eliminate
the risk even if widely accepted. Wood and drywall are not
likely to go away any time soon.
Not surprisingly then, the industry
has focused primarily on the control of moisture.
"We can't control mold; it's everywhere.,"
Edward McNeill, vice president of construction operations
for Turner Construction Co., said at the symposium. "What
we can control is water."
Christopher D'Andrea, an industrial
hygienist with the environmental and occupational epidemiology
unit of the New York City Department of Health, added, "If
you keep dry, there will be no mold."
Others at the symposium argued that
it was not so simple.
"Don't have a knee-jerk reaction,"
John Hennessy III, chairman and CEO of Syska Hennessy Group,
warned the audience. "If you eliminate all moisture,
people get sinus infections and you create static electricity
and the computers go out. The whole challenge is, you want
moisture where you want it, not where you don't."
Martin Wizorek, an industrial hygienist
with Dewberry's division of environmental consulting, said
a common problem was inadequate drainage of condensing water
from the cooling tubes of air-conditioning systems.
He told of one apartment complex he
was sent to inspect in Las Vegas. "Las Vegas is obviously
a pretty dry place," he said. "But this building
had closed mechanical rooms which developed clogged drip pans
(in the air-conditioning system). It became like a forest
of mold."
The Blame Game
Carl Galioto, a partner with Skidmore Owings & Merrill
LLP, urged architects and engineers at the symposium to "make
sure general contractors and construction mangers prepare
mold mitigation programs."
Onnembro, in turn, urged general contractors,
to "oblige subcontractors to remove and repair anything
that can cause mold."
McNeill said it had become imperative
for contractors to aggressively seek out possible problems
and, when found, to thoroughly document the remediation.
Steve Charney, a partner with Peckar
& Abramson, who co-hosted the symposium with Heather Hatfield,
publisher of New York Construction News, said that when it
came to mold, "It's become a blame game."
To get past that, Charney said that
the industry must develop protocols so that it would be clear
to everyone involved who was responsible for what in terms
of mold prevention and remediation.
Hennessy took a philosophical
stance. "What building designers and engineers do is
face challenges and threats - wind, gravity, electricity,"
he said. "Mold is simply another challenge and threat
that building systems have to deal with - and that's just
what we're doing."
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