October 31, 2002
Mold Rush Days
By CARL H. TEPPER
A home is a man's castle, and every castle needs a moat to dissuade attackers.
In this day and age, instead of a moat the homeowner needs knowledge of current
events, a good insurance company, and common sense to fend off the hoards of
lawyers and unscrupulous contractors who have encircled American communities.
For years, lawyers and contractors have been utilizing scare tactics to swindle
millions of dollars from homeowners and insurance companies.
The use of junk science to cheat homeowners and insurance companies started
with the asbestos scare of the 1960's. Even today American cities are filled
with needlessly abandoned buildings because of lawyers, unscrupulous contractors,
and knee-jerk government reaction causing the evacuation of formerly valuable
assets. When the lawyers, contractors and politicians milked the asbestos issue
for all it was worth, they turned to the myth of radon gas, then radon gas turned
into toxic poisoning, then electromagnetic waves (they're coming back again),
and now mold.
But all is not lost. Scientists and medical experts, who may finally be getting
the attention they deserve, are alerting the public that most mold, including
allergenic mold, is not nearly as dangerous or pervasive as "mold remediation
Gailen Marshall, director of the Division of Allergy and Clinical Immunology
at the University of Texas Medical School in Houston, said, "Mold is everywhere.
For most people, mold is a mostly ignored part of their lives. For some with
mold allergies, the smell can cause nasal allergy or even asthma symptoms. Yet
what is increasingly clear is that their mold-related illness has nothing to
do with toxic substances produced by molds."
Airborne mold spores, much like pollen, dust or animal dander, trigger allergic
reactions. But mold toxins, however potentially harmful, never get into the
body in high enough levels to cause harm. These mycotoxins, secreted by a dozen
or so mold species, are known to be deadly to animals that ingest them in large
amounts (typically while feeding on stored hay or grain).
The Centers for Disease Control and Prevention (CDC) and the Environmental
Protection Agency (EPA) report that very few cases of toxic mold inside homes
have been shown to cause serious human health problems, and they usually involve
someone who ate very old food laced with toxic mold.
A September 17, 2002 Washington Post news story on mold reported, "Although
rampant mold growth in these cases may have caused illnesses, scientists have
been unable to show a clear link between some of the more frightening reported
symptoms, such as memory loss and internal bleeding, and breathing in mold toxins.
Three recent reviews of the medical literature found no support for the claim
that toxic mold levels in the home or office can lead to chronic or life-threatening
health problems. These independently funded reviews were conducted largely to
educate health care professionals and industrial hygienists about mold exposure.
A fourth study is now underway by the Institute of Medicine for the CDC."
The article did note, "Mold is by no means always benign. The most recent
of the completed reviews, conducted in part by Norman King, an epidemiologist
for a Montreal regional public health board, found a strong association between
mold and respiratory problems, such as exacerbation of asthma. Scientists cannot
rule out the possibility that mold levels cause more serious problems, King
said, but no link has yet been demonstrated."
Coreen Robbins, an industrial hygienist with Global Tox Inc., a firm based in
Redmond, Wash., says, "Toxins from mold-such as those from an infamous
black mold called Stachybotrys, which is often cited in lawsuits as causing
grave harm to human health-are not readily airborne, and are therefore not likely
to be breathed in. Even if the toxins piggyback on spores, it's nearly impossible
for them to enter the human body in large enough quantity to cause illness."
Robbins said that Stachybotrys often grows below floors and behind walls, and
we are unlikely to breathe in its toxins because they cling to mold and dust
particles. The mere presence of toxic mold, according to Robbins, is no indication
that the air contains mycotoxins.
"This is a fairly complex topic, so it is ripe for a bit of bamboozlry,"
Robbins said. Cottage industries have sprung up overnight to test for and clean
up toxic mold. She said newly minted "mold consultants" are participating
in what "is like a huge hoax." While common sense tells us we should
clean up moldy stuff indoors, Robbins said, removing floorboards, walls and
ducts upon detection of a few Stachybotrys spores is often unnecessary.
Even if indoor mold in rare cases is harmful, there is the specter of an epidemic
of fraud in mold claims. Jerry Johns, president of the Austin-based Southwestern
Insurance Information Service, which represents the majority of the state's
property-casualty insurers, stated, "Mold remediation fraud is rapidly
becoming a nationwide problem."
For example, a Houston federal grand jury earlier this year indicted a local
area contractor-Johnny Duane Staples, of Baytown, Texas-as heading a group involving
his relatives and associates who perpetrated mold remediation scams that cost
insurers over $7 million dollars as a result of 54 false claims.
The indictment states that the group would generally buy a two-story home in
a residential neighborhood that they would briefly occupy. On weekends, they
would remove most of the good furnishings and replace them with cheaper items.
The windows would be covered with sheets and the house would be left to soak
for eight-to-10 days, and then a damage report would be made.
The indictment charges that Mr. Staples and his group, acting as contractor
remediators, would then generate false invoices to be given to insurers, and
pay other persons to generate fake documents that went to insurers. Their activities
led to charges of conspiracy, mail fraud and money laundering.
Insurers named as victims included Allstate, Farmers Group, Farmers Mutual Protective
Association, General Star Indemnity Company, Heartland Insurance Group, Scottsdale,
State Farm, Texas Farm Bureau, Mt. Vernon, Republic, Heartland Lloyds, Horace
Mann, Kemper, and Prudential Property and Casualty.
The Houston case is currently set for trial, but has been delayed to allow plea
Johns commented, "In addition to getting paid for the replacement of furniture
and appliances, these scammers collected for living expenses, and insurers were
charged two or three times what people were actually paying." He added,
"With a house worth $100,000, an insurer could end up paying two or three
times the cost of a home."
The mold con artists left dozens of homes in a soggy, mold-covered condition
after the plotters cracked water pipes and turned on garden hoses to create
damage claims. In many mold fraud cases, doors and windows of homes were sealed
up to create a warm environment that cooks up mold.
Johns notes that insurance company investigators often find remediators who
offer to check homes for mold sometimes intentionally exacerbate existing mold
conditions after persuading residents to leave, or plant mold where it never
existed. Remediators have their own testers who inspect the work, and frequently
the finding is, "Oops, still got mold-have to go to work again."
Price-gouging contractors will charge insurers five times the norm for building
materials, and hundreds of dollars for protective bio-hazard "moon suits"
made of paper.
Johns says mold remediation fraud frequently involves repairs that are not made
at all, or for which inflated rates are listed. Johns said examples of such
scams involve charging for water extraction units that either are not used or
employed for much less time than is charged for.
The growth in mold cases is being fueled by billboards popping up across the
state, which urge homeowners to bring claims.
The problem of lawsuit abuse makes the fraud even more costly. According to
Johns, adjusters fearing multi-million dollar lawsuits do everything possible,
including settling questionable mold claims, to avoid litigation and the attendant
risk of a huge jury verdict.
Earlier this year, Texas Insurance Commissioner Jose Montemayor started an investigation
into mold fraud, but discussion of the problem has remained largely absent from
the political debate. Moreover, it is Farmers and other insurers that appear
to be the first targets of state legal action. Fraudulent mold claim remediators
should be prosecuted under existing laws that address fraud and the Texas Deceptive
Trade Practices Act.
It is time for Texas politicians in both parties to break the mold and utilize
existing laws, rather than government rate controls, as the solution for a problem
that involves junk science, lawsuit abuse, greed, and fraud. If policy is dictated
by political demagoguery instead of sound science, economics, and common sense,
Texas' insurance industry, a pillar of our economy, will become the proverbial
baby thrown out with the bathwater.
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