Kevin Sullivan

The following is information regarding recent and ongoing developments in the area of indoor mold and health that we will share with clients with interests in this area.


A. The Institute of Medicine Study: “Damp Indoor Spaces and Health”

In May 2004, the Institute of Medicine of the National Academies released “Damp Indoor Spaces and Health,” a report studying the link between indoor mold exposure and various health effects. The Institute of Medicine is a non-profit, non-governmental institution that "provides unbiased, evidence-based, and authoritative information and advice concerning health and science policy to policy-makers, professionals, leaders in every sector of society, and the public at large." At the request of the Centers for Disease Control and Prevention, the Institute of Medicine conducted this study by completing a thorough evaluation of recent and significant scientific literature that analyzed the relationship between the presence of mold and harmful health effects.

The study concluded that there was no evidence of a connection between mold and serious illnesses, such as neurological problems, cancer, reproductive problems, or rheumatologic diseases. In addition, the study found no evidence of a link between mold and the following health effects: shortness of breath, asthma development, airflow obstruction, mucous membrane irritation syndrome, chronic obstructive pulmonary disease, inhalation fevers, lower respiratory (trachea and lungs) illness in otherwise health adults, acute idiopathic pulmonary hemorrhage in infants, skin symptoms, gastrointestinal tract problems, or fatigue. The study found limited evidence of an association between mold and lower respiratory illness in otherwise healthy children.

Though the study failed to find conclusive evidence of a causal relationship between the presence of mold and health problems, the study found sufficient evidence of an association between mold and upper respiratory tract (nasal and throat) symptoms, cough, and wheeze. Similarly, though the general population is not susceptible, the study found an association between mold and asthma symptoms and hypersensitivity pneumonitis (lung disease with symptoms of dry cough, shortness of breath and fever) in certain persons, who have a predisposition to those conditions.

The study also offered general recommendations for the prevention and clean up of mold; however, it stressed that further research is needed to evaluate the effectiveness of mold remediation. The Institute reviewed established remediation programs developed in the U.S. and Canada, including those produced by the New York City Department of Health and the Environmental Protection Agency. The study found that the most effective way to manage mold is to design, operate, and maintain buildings to eliminate or limit the conditions that foster mold growth, e.g. preventing water intrusion, reducing moisture accumulation. On the other hand, clean up, or remediation, of mold contamination should involve eliminating the moisture underlying the mold growth, cleaning the mold growth if possible or discarding the contaminated materials, using containment measure to prevent the spread of mold to non-contaminated areas, and taking steps to limit the exposure of residents and workers conducting the remediation.

The Institute of Medicine indicated that further research is necessary in order to learn more about the connection, if any, between mold and adverse health effects. Further, more research is needed in order to identify safe and effective methods for mold remediation.

B. Texas Medical Association

Chairman of the Texas Medical Association's (TMA) Council on Scientific Affairs, Edwin McClusky, MD, presented to the Council a report entitled "Black Mold and Human Illness." In the report, Dr. McClusky concluded that available peer-reviewed medical reports do not support the claim that inhalation of black mold spores causes adverse health effects in humans other than in the following two types of cases: (1) traditional Type I immune reactions (allergies); and (2) rare Type II immune reactions (hypersensitivity pneumonitis). Dr. McClusky then recommended that the TMA support continued research needed to determine the full impact of molds on human health. He also recommended educating the TMA's members and communicating the information in his report to the appropriate state governmental agencies. The TMA's governing body, the House of Delegates, approved the conclusions and recommendations of the report as policy and forwarded the report to the Texas Legislature.

After receiving the report, the Texas Legislature passed two mold-related bills during the 2003 session. The Legislature passed House Bill 329, requiring persons performing mold inspections to be licensed, and House Bill 730, requiring, among other things, that home builders provide certain warranties against mold and that new construction meet certain building and performance standards regarding the presence of mold. However, there appears to be no available evidence that either of these bills was inspired by Dr. McClusky's report. Actually, in contradiction to the report, the bills grant additional public protection against mold, an action apparently motivated by public concern about negative effects of mold on human health. We do not yet know what additional bills may be proposed in the next legislative session in 2005.

Texas appears to have followed California's lead in enacting legislation aimed at protecting citizens from the effects of mold in residential buildings. California was the first state to enact "toxic mold" legislation with the California Toxic Mold Protection Act which was signed into law in October of 2001. This Act required the California Department of Health Services to undertake a series of tasks, including the development of standards or guidelines for permissible mold exposure levels, mold remediation, and disclosure of the presence of mold growth in real property at rental or sale. The implementation of the Act depends on the provision of funding, and the required level of funds has not yet been reached. California also enacted another law requiring the California Department of Health to develop educational and training programs to teach citizens about mold related issues.

C. Other States’ Actions

Other states have either passed or have pending legislation aimed at public protection from mold. Virginia recently passed the Virginia Residential Landlord Tenant Act, which took effect on July 1, 2004. The Act requires a landlord to provide written disclosure of visible mold growth to prospective tenants. A Georgia legislative bill, currently in committee, would establish a joint committee to study the toxic effects of mold and make recommendations for legislation. Another pending bill in New York would establish a task force to study the effect of mold on health and, subsequently, make recommendations to address any concerns.

On the other hand, Louisiana has taken measures to protect contractors from liability for mold-related claims. Passed by both legislative houses in Louisiana, House Bill 793 provides immunity from civil liability for contractors, architects, and engineers for mold-related claims so long as the mold problem did not arise from defects in workmanship. This bill was sent to the Governor in June 2004 and has not yet been signed.

Stronger legislation protecting occupants of residential and commercial buildings from the potential threat of mold has been enacted even though the scientific evidence available does not demonstrate a need for such protection. However, much of this legislation was enacted prior to the comprehensive Institute of Medicine study discussed in this article.

D. The U.S. Toxic Mold Safety and Protection Act of 2002 (the Melina Bill)

If passed, this house resolution (H.R. 1268) would direct: (1) the Center for Disease Control (CDC), the Environmental Protection Agency (EPA) and the National Institute of Health (NIH) to jointly study the health effects of indoor mold growth and "toxic mold;" (2) the EPA to promulgate standards for preventing, detecting, and remediating indoor mold growth; and (3) the EPA, NIH and the U.S. Department of Housing and Urban Development (HUD) to sponsor mold-related public education programs. Among other directives and amendments, the resolution would amend the Internal Revenue Code to allow an annual tax credit for 60% of non-reimbursed mold inspection and remediation expenses (with a $50,000 annual maximum). Further, the resolution would require the director of the Federal Emergency Management Agency (FEMA) to establish and carry-out a toxic mold insurance program, with priority for one to four family residential properties and to establish in the U.S. Treasury a National Toxic Mold Hazard Insurance Fund.

For developers and construction companies, the most relevant aspects of the resolution would be the requirements that: (1) rental property lessors conduct annual indoor mold inspections and notify the occupants of the results; (2) the Secretary of HUD and the Administrator of the EPA promulgate mold hazard disclosure regulations with respect to housing offered for sale or lease; (3) the Secretary of HUD establish inspection requirements for mold in existing and new public housing; and (4) the Secretary of HUD establish model construction standards and techniques for mold prevention in new buildings. Finally, the resolution would establish a requirement that an indoor toxic mold inspection be conducted and passed for all federally made or insured mortgages.

House Resolution 1268 is sponsored by Michigan Representative John Conyers Jr. and currently co-sponsored by thirty-four other representatives. After being introduced to the 107th Congress, the resolution was referred to the House Subcommittee on Housing and Community Opportunity on March 28, 2003. No further action has been taken with respect to the bill. While it is difficult to determine whether this resolution will ever be passed especially in light of the recent study, it is almost certain not to be passed soon.

E. The Maryland State Task Force on Indoor Air Quality

During the 2001 legislative session, then Gov. Parris Glendening signed a new law, establishing the Maryland State Task Force on Indoor Air Quality (IAQ). The Task Force was created to examine the nature, location, and extent of health and environmental risks posed to workers as a result of molds, spores, and other organisms located in the HVAC systems of office buildings and to issue a final report making recommendations to alleviate those risks. The Task Force is made up of representatives from the HVAC industry, the MD Industrial Hygiene Council, health professionals, local government officials, building owners/managers, design professionals, and concerned citizens.

In its final report, filed on July 1, 2002, the Task Force made four recommendations:

1. That the primary authority for regulating IAQ should be granted to the Maryland Department of the Environment (MDE). The Task Force recommended that this authority should be vested in a new "Office of Indoor Air Quality," within the MDE, that would enforce new IAQ regulations and provide technical assistance and outreach to building owners and operators.

2. That regular preventative maintenance programs be adopted to identify and correct problems. The Task Force recommended that owners and operators of buildings greater than 2,500 square feet where office activities make up at least 50% of the activity should be required to develop operation and maintenance plans that are consistent with the current guidelines of the American Society of Heating, Refrigerating and Air Conditioning Engineers, Inc. At a minimum, these plans would include regular inspection and maintenance of the HVAC system and other building systems where water leaks or intrusion could occur and a description of how the building owner or operator responds to occupant concerns about IAQ problems.

3. That a permanent Maryland Advisory Council on Indoor Air Quality be established to advise the Secretary of the Environment on new scientific findings and technical developments that could affect IAQ policy.

4. That the new Maryland Advisory Council on Indoor Air Quality consider how to implement an effective IAQ surveillance program. The Task Force recommended that this new Advisory Council should have the discretion to determine what criteria should be used for reporting, whether the reporting system should rely on voluntary reporting or employ active outreach and whether it should use representative sampling or be universally applied.

While this Task Force and its recommendations were only targeted at office buildings, this may well be a first step in regulating the IAQ of all commercial and residential buildings. During the legislative process, there was a significant push to expand the Task Force to address all commercial and residential buildings. The creation of this Task Force and the recommendations it made represent a willingness to consider, and likely to create, regulations despite the lack of health-based knowledge needed to establish standards for human exposure to mold and other similar substances.

Since the Task Force’s final report, two bills have been proposed in this area, SB 173 and SB 592. SB 173 was to require the State Department of Education, in consultation with the MDE, to create and distribute an indoor air quality standards guide and required each county board of education to develop a system of monitoring indoor air quality for each school under the county board’s jurisdiction using the guidelines. SB 592 was to establish the Office of Indoor Air Quality within the MDE and required the Office to implement and enforce specified standards, procedures and requirements regarding indoor air quality. SB 592 would have also established the Indoor Air Quality Advisory Council, provided for the membership of the Council and requiring the Council to develop and make specified recommendations to the Secretary of the Environment concerning indoor air quality. Neither SB 173 nor SB 592 has been enacted into law. SB 173 received an unfavorable report from Education Health and Environmental Affairs and no action has since been taken. SB 592 was withdrawn on March 17, 2003. No effort was made to re-introduce these bills during the 2004 session.

F. Mold Exclusions in Homeowner's Insurance Policies

1. Nationally

Nationally, the number of mold claims made on homeowner and commercial insurance policies has increased dramatically over the last few years. Just three or four years ago, mold claims were almost non-existent. However, in 2002 they were a major expense and concern for essentially all insurance companies. In California and Texas, these claims have been particularly large and numerous. Largely as a result of these claims and the fear generated by them, insurance companies have raised premiums on homeowner and commercial property policies significantly. While, nationally, homeowner policy premiums increased 9% in 2002, in California and Texas, they increased significantly more.

In response to pleas from insurance companies, 38 states have amended their laws to allow mold exclusions. Generally, insurance companies are being permitted to exclude mold coverage from new policies as well as existing policies. When excluding mold from existing policies, insurance companies are generally only allowed to add the exclusion when the policy is renewed and then only if notice is given to the policyholder. Other states have allowed insurance companies to limit mold coverage, rather than allow exclusions. This rapid response from state regulators and legislators appears to represent a successful campaign by insurance companies to convince lawmakers that allowing limits and exclusions for mold claims is a good way to control rapidly increasing premium costs.

2. Locally/ Maryland

After consistently denying requests to exclude or limit mold coverage in homeowner and commercial insurance policies in Maryland, on March 18, 2003, then Commissioner of the Maryland Insurance Administration, Steven B. Larsen, agreed to allow insurance companies to limit mold removal coverage to $15,000 and liability to $50,000. At that time, insurance companies had pushed hard to convince the Insurance Administration to allow mold exclusions and remained disappointed despite the new limits on mold related coverage. Commissioner Larsen argued that there was not enough evidence of an increase in mold related claims to justify mold exclusions in homeowner and commercial policies.

In early July of 2003, Commissioner Alfred W. Redmer Jr., in one of his first actions after being appointed by Governor Ehrlich, ruled to allow mold exclusions in Maryland. Maryland joined the 38 other states that have recently allowed mold exclusions. Redmer reasoned that his office does not have the authority to limit insurance companies in their ability to exclude mold from homeowner and commercial policies. Further, he predicted that the marketplace will provide safeguards for consumers by lowering insurance premiums and providing mold coverage for those who choose to obtain it.

In the 2004 legislative session, a House bill was introduced, which required insurers who issue homeowners’ policies in Maryland to provide coverage for mold-related loss under certain circumstances. However, this bill received an unfavorable report in from Economic Matters in April 2004 and no further action has been taken.

If you have questions about mold related claims or recent developments in the area of mold litigation, please contact Michael Skojec or Kevin Sullivan in our Litigation Group by clicking on the links below.