Mold claims soar
by Douglass Hanks III and Melinda Zisser, Miami Herald
Posted Monday, July 29, 2002
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, Maria 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.
Erin Brockovich, the legal crusader whose life story was made into a Julia Roberts 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.''
Juan 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 Robert 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.
Richard Lipsey, a mold inspector and toxicologist in Jacksonville, 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, Andrew 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 William 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 Miller, 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.''
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