Mold: The Fungus That's Always Among Us.

Mold has become a hot issue in the legal and popular press in light of the growing number of claims brought in connection with its damaging effects. The number of mold suits has increased so rapidly in recent years that there is now a special reporting service dedicated to track these cases.

Fungus in general, is one of the oldest and most ubiquitous life forms on the earth and has been causing damage for centuries. Individually, mold spores are barely visible to the human eye. Collectively, mold colonies can aggregate to astounding proportions. Molds require little to endure: just about anywhere you find a bit of moisture and organic material some enterprising mold is likely to set up housekeeping.

Some mold provides a valuable service, making cheeses cheesy and the like. But to the average person, molds are clearly organisms non greta. And, indeed, no one welcomes hosting the colonies that grow on the shower curtain, blacken the grout ribbons in tile work, cultivate on book covers, and move rapidly into any environment suffering from water damage or high humidity. Worse yet are the costly effects of mold that has colonized in foodstuffs such as grains, cereals and breads. Unequivocally, mold causes billions of dollars of property damage each year, and some of that translates into an irreplaceable food loss in some parts of the world.

But why is there so much focus on mold now? The most common environmental molds are Penicillium, Aspergillus, Cladosporium and Stachybotris Chartarum. It is the latter that has created the greatest recent attention. While most molds are capable of causing allergy-like symptoms, Stachybotris Chartarum is one of a smaller category of molds that can also produce toxic substances known as mycotoxins. The possible long-term risks associated with exposures to these mycotoxins are unknown and still under investigation. As in so many other areas, advances in the scientific arena in the capacity to measure and raise questions has led to an anxiety about the potential health effects of exposures to molds.

Another possible factor affecting the increase in mold claims may be the way that homes and workplaces are designed and built. For one thing, while molds spores can definitely get into the indoor environment and are generally introduced during construction or drawn in via ventilation and temperature control systems, they are difficult to remove. Once in place, these spores will remain in place and if moisture from leaks, condensation, flood events or other sources is introduced, the mold will proliferate. If a food source such as paper, wallboard, wood or other organic source is available, that growth may go unseen and unstopped. Later cycles of dryness will create airborne spores that can be transported to create new colonies where similar conditions exist.

The message to drew from the prevalence of mold and the present lack of knowledge concerning possible health effects to some extent turns on whether an individual sees the glass as half empty or half full. As long as science has more questions than answers, we can expect and predict that many individuals whose homes or workplaces become host to high levels of mold will file suits seeking complete elimination of the mold, medical monitoring, and compensation for various health problems that they attribute to mold exposures. Plaintiffs act from a mixture of motivations, but fear is a primary factor for many, if not most. These are scary times we live in, and for some people mold is the stuff of which nightmares and litigation are made.

In property damage actions, there already have been numerous victories and settlements for plaintiffs. The claims of serious long-term bodily injury will take longer to resolve at substantially higher litigation costs. The easiest health effects to prove -- respiratory allergy, asthma, dermatitis -- involve relatively low damage amounts. As with other toxic tort litigation, mold actions alleging serious injury will be largely a battle of the experts. Many plaintiffs are unlikely to succeed given the current state of the medical and scientific literature and in reality, many attorneys will be unable to fund their cases adequately. Undoubtedly, some well-funded and highly competent plaintiffs lawyers will bring high damages cases and see them through. The outcome is impossible to predict.

So, what are the lessons for the average business? Certainly mold is one of the topics to consider in corporate risk management. If there is mold in your buildings or products, you should conduct tests and devise a means to eliminate or control proliferation. If your employees can see it, smell it, or claim to be affected by it, you need to address their concerns. If you manufacture foods, pharmaceuticals or products that could become contaminated with harmful, unsightly or unappetizing molds, you need to evaluate the potential of future assertions of liability. If you manufacture building materials or are involved in real estate development or construction, mold liabilities are substantial and merit a comprehensive risk management audit. To the extent that risks cannot be eliminated entirely, insurance is one important and obvious tool for addressing these uncertainties.

Current insurance policies for both businesses and homeowners should cover most mold-related losses but insurers are already resisting many claims and may revise policy forms to introduce new mold damage exclusions in future policies. One estimate of the insurance industry's projected year 200l mold losses exceeds $1.2 billion, and that does not include the recent verdicts in some high-stakes cases. Last month, for example, a Texas jury awarded a homeowner $32.1 million against an insurer that failed to respond fully to a claim that arose from a plumbing leak. And, that verdict did not include the family's asserted health claims -- which are still to follow ins separate suit.

Wondie Russell is a shareholder in the Insurance Coverage and Product Liability National Practice Groups of Heller Ehrman White & McAuliffe LLP.