The madness of mold remediation.
With respect to mold remediation claims, many insurance companies feel like Cinderella teams. They hold out hope that they will get the pricing mad remediation services correct and not be taken advantage of when adjusting claims. Unfortunately for many companies, unless they are lucky, they too will fall short.
This does not have to be the case. Insurers can take steps to raise their mold claim performance levels from Cinderella to Final Four material. The recipe for success in determining the appropriate pricing can be categorized into seven evaluation areas:
Triage Whether using the New York City Department of Health Remediation Guidelines, EPA guidelines, or common sense, certain fundamentals should be evaluated prior to the start of any remediation project. In fact, when assessing a contractor's bid for work, the bid should be compared to the extent of the contamination. This does not mean that sampling or testing costs should be construed on every mold claim. Rather, identify what level of contamination exists and understand die ramifications of that level with regard to necessary remediation services. For example, if less than 30 square feet of mold is visible, NYCDH and EPA guidelines allow any building maintenance staff with respiratory training to perform remediation, greatly reducing the necessity of containment.
Before any services begin, adjusters should determine whether containment is necessary. If it is, can a localized containment device, such as a glove bag or Control Bag, be used to reduce costs in labor and materials? Adjusters also should determine, based upon the substrates affected, to what degree removal and cleaning will be conducted. In addition, they should have a rudimentary knowledge of equipment needs, and whether pack-out services and HVAC remediation are indicated. Finally, adjusters should have a fundamental understanding of the supplies necessary for the remediation effort and customary charges surrounding those supplies.
Containment One of the most ambiguous charges facing claim adjusters is that associated with containment. With many remediation claims, invoices are elevated and, when questioned, reasons include the complexities surrounding containment. A solution to this quandary is to first identify whether containment is even necessary.
Historically, the concept of using containment is founded in the asbestos crisis, a substance typically used in commercial settings in which habitation is ongoing. The significance of this is simply that containment is necessary to protect people or things. However, depending on the level of mold contamination or the impact of the remediation on people or things, containment may not be necessary.
In any remediation bid, therefore, these costs should be specified. Having containment costs isolated allows adjusters to evaluate whether the process is indicated to begin with and whether the amount is reasonable. If not identified prior to the job's starting, it is very difficult to separate these costs later.
Labor Why does it cost $40 an hour more to remove moldy drywall than drywall that is simply wet? This has been the unanswered question for years. Training, personal protective items, and labor efficacy all affect the hourly rate. If the contamination is less than 30 square feet, regular building maintenance staff can perform the remediation, and a labor rate should reflect this fact. If the contamination exceeds 30 square feet, the rate should parallel the labor rates paid for asbestos contractors.
Know how many square feet of drywall are being removed. Identify the number of hours being submitted for removal and divide the number of square feet by the number of hours. Estimating companies calculate that 40 square feet of drywall can be removed in one hour. If we allow for the contractor to equate half an hour of labor every hour of the bid to personal protective gear, conditions, etc., adjusters should expect to see 20 square feet of drywall removed per hour. Remember the labor is being isolated and should be evaluated by itself.
With respect to cleaning, national estimating companies list cleaning rates between 27 cents and 47 cents per square foot per hour, depending upon the definition of cleaning. Therefore, if the approximate area to be cleaned is divided by the number of hours, the amount being charged can be identified. If this figure is compared to a labor efficacy rate of half an hour for every hour charged, charges should never exceed that number of feet per hour for cleaning.
Equipment This is the most volatile of all the areas associated with remediation in mold claims. Became the guidelines do not speak to this issue specifically and no standards are in place, equipment rental can take on a very subjective feel. However, certain distinct rules have been established in the asbestos abatement industry regarding acceptable containment. Those rules center on the number of air exchanges taking place within an hour.
The minimum requirement is four to five air exchanges per hour. Therefore, simple observations of room or building size should allow adjusters to evaluate whether too many machines are being used, based on reasonable criteria. In addition, the fundamental equipment in a remediation project should be outlined in the bid and established on a necessity basis. By agreeing on a figure with contractors before work begins, adjusters can eliminate unnecessary equipment, as well as excess rental days.
Supplies The guidelines call for warm soapy water, yet, many times, insurers find themselves paying for specialized chemicals. Most of the supplies used in remediation projects can be purchased at Home Depot or Lowes. It is easy to check the appropriateness of supply charges if adjusters receive itemized invoices delineating the products used. In addition, this type of invoice or bid allows adjusters to determine whether the supplies being used were necessary.
Pack-Out Many adjusters have dealt with this cost item for as long as coverage has been issued. Unless the conditions inside the building are so deteriorated that personal protective equipment is necessary just to enter the premises, these remediation charges should not differ from those paid in other loss-type situations. It is prudent to check the labor rate breakdown, because the rate for this service is clearly defined in the various estimating software, as is the usual and customary pricing. Once again, having an itemized bid or invoice and checking the seven categories, including pack-out, will identify pricing discrepancies.
HVAC This is an area, like equipment, that is problematic. Standards from the National Air Duct Cleaners Association define the appropriate measures regarding cleaning HVAC systems. It is important to establish the specific recommendations from adjusters or industrial hygienists regarding the HVAC system before payment for remediation is issued. Many times, hygienists provide boilerplate language which does not define the steps that remediation contractors should take. Adjusters need to understand why HVAC remediation is being performed and whether it is in accordance with the scope and the NADCA standards. Cleaning HVAC systems does not necessarily mean removing air handlers and associated duct work. In many instances, the project scope does not support the need to even remediate the systems.
The madness within the mold remediation industry is due mostly to lack of concise direction or communication. As a result, it is imperative that insurance companies prepare their adjusters to delineate cost items within projects. Separating the bid or invoice into seven distinct areas makes it easier to see if costs are appropriate or even necessary.
It is possible to overcome the madness. Look at the NCAA basketball tournament, it is filled with hope and surprises.
Christopher Uhland is the CEO of SkyeTec, an indoor environmental service company. He can be reached at cuhland@SkyeTec.com.