Mold Spreads

Toxic-mold claims are spreading to the workplace, and insurance coverage is pricey -- if you can get it.

In Denver, United Airlines employees Terri Crandall and JoAnn Hubbard allege in a suit—representing a class of “thousands of others” who worked at and passed through Denver International—that health hazards resulted from raw-sewage leaks in Concourse B, and extensive mold, “covering an entire wall…an area of growth at least 20 feet high by 80 feet long in the Center Core, Basement Level,” to name only a few claims. (A spokesman for the airport says he won’t comment on the litigation beyond saying that “there is no danger to the traveling public out here.”)

George Lang, an attorney representing the plaintiffs, notes that the litigation has evolved. On the plaintiffs’ side, there is “a better understanding of the injuries related to mold,” he says (contradicting the claims made by defense attorneys). “On the defense side, the litigation has evolved because of the resistance of insurance companies to paying for this additional damage.”

Insurers say the inability to prove mold as a causation of disease will keep this issue from becoming the next asbestos. As for companies faced with a choice of whether to buy mold insurance, Environomics’s Nassof says that eventually it will be a simple call. Like lead-based paint, leaking gasoline tanks, and other once-threatening environmental issues, mold one day will gain “acceptability as another line item on a due-diligence checklist when buying insurance,” he says. “It needs to be checked off.”

Roy Harris is a senior editor of CFO.

Man vs. Mold: A Checklist

  1. Insure proper construction and maintenance of the building’s “envelope systems” — roofs and curtain walls — to prevent water infiltration.
  2. Properly design, install, and maintain heating, ventilation, and air-conditioning (HVAC) systems to control temperature, humidity, and air distribution.
  3. Maintain the building’s HVAC systems to minimize biological contamination inside the ductwork.
  4. Properly operate and balance HVAC systems to provide adequate air distribution, outside air, and building exhaust, maintaining a positive pressure for the building.
  5. For any “water event” — whether a pipe leak or break, flooding, sewer backup, sprinkler discharge, or moisture infiltration — provide immediate cleanup, repairs, and any needed dehumidification.
  6. Prepare a formal written mold-management plan, and assure that it is communicated to employees.

Source: Michael Thompson, Engineering and Fire Investigations unit of GAB Robins

A Brief History of Mold

The key to control is water management.

The issue of mold litigation involving nonresidential buildings may be new and fairly limited so far, but the mold fungi themselves are primordial — and ubiquitous. About a quarter of the earth’s biomass is bacterial mold in its thousands of forms, few of them considered toxic.

Inside a building, water and poor ventilation are mold’s great enablers. As mold spreads, it can break down gypsum, ceiling tiles, wood products, and other materials with cellulose. “The claim comes in as mold,” says AIG Environmental chief underwriting officer Julie Hespe, “but when we talk to people about covering them under our environmental policies, we talk to them about water and mold.”

The role of ventilation is especially critical in today’s so-called tight buildings, in vogue since the energy crisis of the 1970s. “You don’t have the air flow you used to have,” says Hespe. “Tight buildings might be better at preventing mold intrusion, but tight buildings won’t let the moisture out.”—R.H.

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