resented to the MidAtlantic Environmental Hygiene Resource Center)

5/4/2004

ADVANCED TOPICS IN MOLD REMEDIATION

Legal Issues

MEHRC, Philadelphia, PA

May 4-5, 2004

David M. Governo

Cynthia J. Stephens

INTRODUCTION

As mold gains more attention and number of lawsuits increase, it has become essential for mold investigation and remediation contractors to have an understanding of the legal issues involved in their daily work. The 3 key issues that remediation contractors need to be aware of are:

1) The numerous and often confusing laws, regulations, standards and guidelines

2) How to avoid lawsuits and limit liability with contract language, well understood and measurable job specifications, and proper documentation

3) Resolving unavoidable disputes

This paper will discuss in detail these three topics with special attention to specific practices and techniques of particular use to mold investigation and remediation contractors.

LAWS, REGULATIONS, INDUSTRY GUIDELINES AND STANDARDS

The lack of a definitive set of comprehensive laws and standards is often blamed as contributing to the rise of cases. How much mold is too much, how to clean it up, and who to hire, are basic questions with no clear answers. It results in confusion, for property owners and remediation contractors alike, as well as delay and needless personal or property damages.

Legislative Updates

A. Federal Law

The proposed Melina Bill (US Toxic Mold Safety and Protection Act of 2003) will require landlords and sellers to perform mold inspections. Punitive damages, fees and costs can be awarded for the failure to do so. The bill also directs: (1) the EPA to promulgate mold standards and disclosure regulations for housing, (2) HUD to enact mold inspection and construction standards for public housing, (3) the NCRP to provide standards for building products that retard mold growth, (4) the IRS to provide for a tax credit for mold remediation, (5) FEMA to form a toxic mold insurance pool, and (6) Medicaid to waive some of its requirements for non-insured mold medical expenses.

B. State Laws

The volatile nature of mold legislation in the county is shown by the fact that there were at least twenty-six mold bills considered by state legislatures in 2003. At least a dozen bills passed, several have failed, and others are still pending. The majority focused on the licensing of investigators and remediators, studies of health impacts, requirements for insurance and real estate transactions, and building code guidelines.

Mold "Standards"

A. Understanding Your Liability Regarding Guidelines and "Standards"

Not only has the lack of laws added to the uncertainties of mold claims, the difference between guidelines, standards, regulations and statutes is also important to an understanding of why mold cases have risen so rapidly. It is crucial to understand your company's obligations and liabilities under each type of rule to mitigate your risk to lawsuits.

Guidelines: A guideline is a statement meant to give advice on to how to deal with a particular problem and is usually based upon an evaluation by a group of experts. It has no force of law, although a breach might be deemed "unreasonable" and could give rise to legal liability.

Industry Standards: A guideline that has been accepted by the majority of an industry can become an "industry standard". The failure to follow an "industry standard" can be used to determine legal liability.

Statutes: A statute, passed by the state or federal legislature, usually authorizes agencies to promulgate regulations (or codes such as a sanitary code or a building code) which describe exactly how to deal with a particular issue, including the penalties for failure. Both have the force of law. Cities and towns can also pass regulations or codes that have a similar effect within the particular municipality.

The lack of a comprehensive set of standards enacted by the states or the federal government, and the different legal effects given to guideline, standards, and laws contributes to the confusion in mold claims.

B. Some Key Mold "Standards"

One of the problems with the mold standards that exist today is the varying levels of complexity and target audiences. Some guidelines, such as the New York City Guidelines, EPA for Schools and Commercial Buildings, and the Institute for Inspection, Cleaning and Restoration Certification (IICRC) standards, are comprehensive and are designed to provide guidance for both the premises owner and the remediator, while others, such as the OSHA guidelines, focus on worker and abater safety. Still others deal with technical issues that are geared toward precise groups, such as air conditioning and refrigeration workers (American Society of Heating Refrigerating and Air-Conditioning Engineers (ASHRAE)) or HVAC cleaners (National Air Duct Cleaners Association (NADCA)). Organizations, such as the American Conference of Governmental Industrial Hygienists (ACGIH) and the International Society of Indoor Air Quality and Climate (ISIAQ), target technical audiences and deal with such complex information that their publications are only available for a purchase price. Some organizations adopt some of the above standards, such as the American Industrial Hygiene Association (AIHA)'s reference to the New York City Guidelines, and make minor adjustments, while others, such as the American Society for Testing and Materials International (ASTM) have guidelines still in the proposal phrase. Lastly, other guidelines, such as the CDC and EPA, are broad and non-specific and promulgated for the general public.

1. Institute for Inspection, Cleaning and Restoration Certification (IICRC) "S520: Standard and Reference Guide for Mold Remediation"

The IICRC guidelines are the comprehensive and the most controversial. The IICRC, which is a non-profit standard setting and certification registry, wrote the new guidelines with the goal of replacing and superceding all existing mold remediation standards including the New York City guidelines. The S520 standard is a collection of industry best practices compiled by and for those in the mold remediation industry. The guidelines call for a building moisture inspection to determine the extent of mold growth and require that moisture be eliminated prior to the mold clean-up, but do not set any standards for mold testing, or discuss heath complaints and risks.

The most notable difference between S520 and other standards is in the categorization of mold contamination. Instead of relying on square footage of mold growth to determine the severity of the problem, the S520 standard examines the overall mold levels, location of increased mold growth, and the types of materials that are infested with mold growth. These assessments are divided into categories called "Conditions".

The standards are also divided into three sections, Structural, HVAC, and Contents Remediation and are devoted to defining each "condition," preparing the work place, removing and disposing of the contaminated materials, cleaning methods, required equipment, and post remediation evaluation and testing for each of the three subcategories. Generally, the guidelines require the removal of materials infested with mold, and in most cases, advise against treatments such as biocides, encapsulants, and ozone or ultraviolet light as a substitute for removal. Due to the uniqueness of the guidelines and their departure from the more familiar standards of measurement, the authors anticipate criticism but are optimistic of achieving their goal of replacing all other mold standards.

2. The New York City Department of Health Guidelines on Assessment and Remediation of Fungi in Indoor Environments

In 1993, the New York City Department of Health promulgated guidelines on mold. They were updated in 2002, and until recently, were probably the most widely used guidelines. They also serve as the basis for other industry standards, such as OSHA, but this is changing as new standards are being proposed and studies. The New York guidelines delineate five different levels of abatement primarily based on the size of the area impacted by the mold and where it is found. The guidelines distinguish between walls and ceiling infestation and the heating systems. In all situations, however, the underlying cause of water accumulation must be rectified. The goal is to remove or clean contaminated materials in a way that prevents the emission of mold and contaminated dust from leaving a work area and entering an occupied or non-abatement area, while protecting the health of workers performing the abatement.

3. U.S. Department of Labor Occupational Safety & Health Administration(OSHA)

OSHA's remediation guidelines mirror New York City's standards and include the identification and correction of the conditions that permit mold growth. They describe how to remove mold damaged materials, and are designed to protect the health of cleanup personnel and other workers during remediation. These guidelines are the essentially the same as the New York standards, except that in certain instances, OSHA does not require air monitoring prior to occupancy.

4. Environmental Protection Agency (EPA) "Mold Remediation in Schools and Commercial Buildings"

These guidelines offer comprehensive information on mold remediation for schools and commercial buildings, including key steps for remediation, the cleanup methods, and personal protective equipment. They are designed to protect the health of cleanup personnel and, similar to New York City and OSHA guidelines, are based on the area impacted by mold contamination.

5. Am. Soc. Heating Refrigerating and Air-Conditioning Engineers(ASHRAE) "Ventilation and Acceptable Indoor Air Quality in Low-Rise Residential Buildings, Standard 62.2"

ASHRAE is an international organization whose sole objective is to advance the sciences of heating, ventilation, air conditioning and refrigeration to serve the evolving needs of the public. Their guideline is intended for use by code bodies, and can be applied to new or existing houses. It provides the minimum requirements necessary to achieve acceptable indoor air quality for dwellings and is the only nationally recognized indoor air quality standard developed solely for residences.

6. National Air Duct Cleaners Association (NADCA) "General Specifications for the Cleaning of Commercial Heating, Ventilating and Air Conditioning Systems"

This publication describes the minimum requirements necessary to coordinate a commercial HVAC system cleaning project and, unlike IICRC's guidelines, recommends biocide agents if active mold growth is reasonably suspected or where unacceptable levels of mold contamination have been verified.

7. American Conference of Governmental Industrial Hygienists (ACGIH) "Bioaerosols: Assessment and Control"

Another example of the myriad publications available are the organizations that do not make their publication free to the public, but require a purchase price since they target very specific audiences. For example, ACGIH published "Bioaerosols: Assessment and Control," as a comprehensive guide to the assessment and control of bioaerosols in the workplace, although much of the information has application beyond the workplace environment. The target audience for the text includes industrial hygienists, indoor environmental specialists, occupational health professionals, teachers, and managers and is available for purchase.

8. International Society of Indoor Air Quality and Climate (ISIAQ) "Control of Moisture Problems Affecting Biological Indoor Air Quality"

Similarly, the ISIAQ publication available for purchase offers guidelines for the control of the growth of fungi and bacteria and the multiplication of mites. The text outlines cleanup and decontamination measures and offers recommendations to control moisture and prevent microbial growth in both cold and hot humid climates.

9. American Industrial Hygiene Association (AIHA) "Report of Microbial Growth Task Force"

Other organizations have "adopted" or used other guidelines as a foundation. The AIHA issued this report as a resource for the industrial hygienist practitioner with the idea that it would be used in conjunction with existing guidance documents. The density and extent of mold growth determine the degree of remediation and procedures. The guiding principles are to identify and correct moisture problems, remove damaged materials, clean the surface of salvageable materials, and remove remaining dust. The AIHA refers to the New York City Guidelines, but cautions against strict adherence to them and encourages innovation and professional judgment by the hygienist and recommends the ACGIH guidelines for determining the level of personal protective equipment.

Final Thoughts Regarding Laws, Regulations, Guidelines and Standards

The nature (broad versus narrow), extent (basic versus technical) and sheer number of these "guidelines" lends itself to the confusion, delay, and hysteria over personal injury, that exists when mold is discovered in the home or workplace. The lack of comprehensive guidelines further complicates this since even the most well-meaning or knowledgeable abater could choose an abatement method that is incompatible with the specific mold problem or location.

Certification

As with the mold guidelines, a host of independent organizations offer their own certification for mold assessors and abaters. In addition, there are a number of standards specifically for mold inspectors and training courses accredited by various state legislatures. One of the most glaring issues is the conflict of interest problems that occur when the same company inspects and then performs the mold clean-up. Many have NOT addressed this issue.

A. Certification by Organizations

Most of the organizations that promulgate mold guidelines also add standards for mold assessors and remediators. Most of these organizations offer two certifications, one for a basic worker and one for a specialist. These organizations do not address the conflict of interest issues.

For example, the IICRC offers certification standards for an applied Microbial Remediation Technician (AMRT), which is a basic certification requiring classes, an exam, but no work experience, together with a certification for an Applied Microbial Remediation Specialist (AMRS), which requires experience in mold remediation and some form of health and safety training.

IAQA also offers certification standards for a Certified Mold Remediator (CMR), which requires experience in the field, a three day training class, and a written exam, while a Mold Remediation Worker (MRW) only requires a two day training course. AmIAQ has similar certifications, but the NADCA only requires the completion of its "Air System Cleaning Specialist" certification.

B. State Licensing

Some states have promulgated more comprehensive certification requirements than the industry organizations. Texas has developed the most comprehensive set of requirements to date.

Texas: Texas has passed three bills relating to indoor mold, which, taken together constitute the most comprehensive state level legislation and regulation to date. Texas has established a four tiered licensing system for mold assessors and remediators. Certified industrial hygienists are exempt, however, from the licensing requirements. The regulations also propose accreditation standards for training courses, minimum work practices for mold assessment, remediation and recordkeeping, and institutes violations and penalties. Mold workers are broken down into categories:

Arizona: Arizona's new law addresses one of the problems in this field. Until the passage of Arizona's law, pest control professionals could also work as mold inspectors with no additional training or certification. Under the new law, a commission will oversee two separate professions, requiring those who wish to do mold inspection to be tested and licensed in that field.

Louisiana: Louisiana's new law, effective in July of 2004, is unique for two reasons. It prohibits licensees and business entities from performing both the assessment and remediation work on the same property and the law requires four hours of instruction in Louisiana's "Unfair Trade Practices and Consumer Protection Law." The law does not exempt certified industrial hygienists from the licensing requirement pertaining to all mold assessors and abaters.

PROTECTING YOURSELF FROM LIABILITY:

Business owners generally view the legal system and attorneys as impediments to success. However, in today's business world, there is no way to avoid the legal system. Instead of trying to avoid dealing with the demands that the legal system imposes on your company, consider putting the system to work for you. Understanding the legal process and incorporating it in your business practice enables you to reduce the risk of liability and increase your competitive edge.

There are a number of basic steps that you can take to protect yourself from legal liability in the cleaning and restoration work you perform. These steps fall into two categories: (1) avoiding lawsuits and (2) protecting yourself from liability in the event you are sued.

AVOIDING LAWSUITS

Over time, some claims and lawsuits are inevitable, which is the purpose of asset protection and insurance coverage. As a preliminary matter, the easiest way to avoid a certain percentage of legal problems is simply to walk away from suspected problem customers. You all know them. These are individuals who, through their questions and demeanor, make you wonder whether the job that you are about to bid on is going to be worth the effort. If the customer is asking you to restore the "unrestorable," take extraordinary or unusual steps or precautions, or otherwise poses what you perceive as a "litigation risk," walk away!

Lawsuits typically arise when there is a difference between a customer's expectations and a customer's perception. A customer thought she was getting "x" but now believes she received "y." You have control over many of these expectations. Some of these expectations you have no control over. Explain what goods and services you will deliver and, in the appropriate situation, the goods and services that you will not deliver. Often, customers undergoing a stressful event will not understand clearly either their needs or what you will be able to deliver to them. Explain, as clearly as possible, what you will do, what steps you will perform, what material you will use, how long it will take and, to the best extent possible, the situation the customer will be left in when you leave. For example, if there will be an odor present during or after the process, explain this in advance.

The most effective way of ensuring that both you and your customers have the same understanding about the work that will be performed and how performance will be measured is by outlining this information in detail. Document exactly what work is to be done, including the materials you will use, how the determination will be made about whether the remediation work is finished, and which tests will be performed to measure the effectiveness or completeness of the work. Review this document with the customer, and obtain their authority in writing before you proceed with the work. If the customer has specific questions, consider documenting both the questions and your response in the contract itself. If any requests or representations are made beyond the preprinted contract, then document the final agreement and get the customer's written approval. Keep these records!

The Contract and Specifications for the Job:

Every interaction that you have with a customer represents an opportunity to market your company. One of the principle interactions is your agreement or contract. The contract you use should maximize this potential. Your contract should be carefully crafted and well laid out. Every word should add to your goal of gaining the customer's confidence, defining the work and getting paid, while minimizing the risk of a lawsuit. It may be possible to limit your company's liability by including or rewording certain clauses in your contract. Contact an experienced attorney to discuss the inclusion of limitation of liability provisions, and whether they are appropriate for your business entity. Review not only the substance of your contract document but also the manner in which you interact with customers to form contracts.

What are you capable of delivering and what have you promised? How are you explaining this to your potential customers? Be certain that your employees are maximizing the opportunity to market, get the job done and get paid while at the same time protecting your company from liability.

How can you improve your procedures? Consider your response to routine questions about the cleaning agents used. Instead of making an "off the cuff" comment, consider establishing a protocol that includes some written documentation of the information conveyed. Perhaps you could develop a "FAQ" information sheet that contains well-formulated answers to routine questions. The benefit of this approach is multidimensional. It allows you to appear professional, it minimizes the time that you need to spend with a customer and, from a litigation perspective, it allows you to prove precisely what information you provided.

Lawsuits that are based on differing versions of reality -- what the customer remembers he was told versus what you say you told him -- are difficult to defend. Imagine how much worse it can be when the employee who gave the instructions is no longer with your company and is no longer a friendly witness! Be prepared by having a procedure in place and documentation confirming that you followed it. Later, when you are called to testify in court, you can refer to your procedure and your documentation. Document the precise "FAQ" information sheet that you provided. Hopefully, this will show that you complied with not only all applicable laws and regulations, but also with all of you industry's "standards" and guidelines. With this evidence in hand, you are well on your way to victory! Be sure your handouts are updated and accurate. Keep a record of the particular version that you submitted to the customer.

In any contract for goods and services, clear communication is key. Questions can arise with respect to the manner and the scope of the work performed. What does "good workmanlike manner" mean? The issue of defining "good workmanlike manner" requires knowledge. Know the state-of-the-art of your industry. Be intimately familiar with the relevant standards and guidelines. Comply with these and document your compliance. Lack of documentation is often one of the weakest links in any legal case. Contemporaneously-made records, particularly those bearing the customer's signature, help you put together the best defense in a subsequent lawsuit.

One of the most crucial customer expectations that you need to manage is the handling of his property. Be certain that the customer understands what will be retained and what will be discarded. Potential evidence in litigation must be retained. If you destroy or lose evidence that can be helpful to your opposition's case, his or her case may be made against you virtually automatically. A jury will be told that the evidence, had it been preserved, would have been helpful to the other side and harmful to you.

RESOLVING DISPUTES:

After clearly communicating the work that you will perform, responding to complaints by customers is the next most important opportunity to reduce legal liability. Often, a customer's perception that you are making every attempt to correct a perceived problem goes a long way toward avoiding litigation thereafter. Timing is key. Respond right away and deal with complaints in a straightforward manner. Beware, however, about admitting liability or making statements that will later be held against you. Train your employees how to handle complaints and establish clear procedures for identifying when to call for assistance. Put them through "mock" complaint training sessions that test and hone their skills. Often getting a manager or supervisor involved is the best approach, as it defuses any unhappiness between the customer and the employee on the job and typically gives a more skilled and capable employee in your company the opportunity to defuse a volatile situation.

1. Investigate Problems Completely and Quickly

A key element for success is to perform quick and comprehensive investigations of the facts surrounding a problem or potential problem. You must understand the dynamics of the building and seek out other potential causes of the problem and other parties responsible for them as soon as possible.

Record and preserve all evidence from your investigation. Videotapes and photographs are key for a successful defense. Know and follow the necessary protocol for collecting, examining and testing items and substances. Establish a chain of custody of these items once they are obtained. You may even want to consider hiring an expert for remediation or an opinion regarding your situation.

Obtain copies of building and operation records as well as permits. Identify and analyze all activities in the building which may have caused or contributed to the property damage or injuries alleged. Consider whether an individual claiming personal injuries was or may have been potentially exposed elsewhere other than the structure in which you performed your work.

2. Take Immediate Action If You Are Sued

If you are sued, notify your insurance agent, and/or insurance carrier immediately. Quick action and quick remediation will only serve to benefit you.

Whether provided by the insurance company or hired on your own, the involvement of an attorney at the earliest stage possible can be a great help in defending/resolving the dispute. If involved from the beginning of the dispute, your attorney will assist in the investigation, help to ensure that all relevant materials are documented and preserved in the proper manner, and offer a legal perspective important to key decisions about collection protocol, and the hiring of experts so that your company's exposure is limited to every extent possible.

Your Insurance Carrier May Defend You

Your insurance carrier will make a determination regarding coverage once it received a Proof of Loss form from you or your agent. If coverage is afforded under your policy, your carrier will retain an attorney to defend you. The attorney has a fiduciary obligation to defend you and your company even though he or she is being paid by the carrier.

If an insurance carrier agrees to provide you with a defense, but reserves its right(s) to indemnify you in full (that is, the carrier makes a determination that some, but not all claims may be covered under the policy) you have right to choose your own counsel or request the insurance carrier retain counsel it chooses as well as counsel you choose. If a claim has the potential to exceed the amount of your coverage, you should hire your own attorney to protect your interests above and beyond the policy limits.

Obtaining Proper Coverage

The insurance industry has been affected by the proliferation of claims for issues relating to mold, indoor-air quality, and other environmental issues. As a result, some insurance companies have adopted limitations or outright exclusions for such claims. These exclusions may not apply, however, when damage results from a covered loss under the policy.

Make sure the scope of your work, and potential foreseeable problems are covered under your insurance policy. You need to be specific with your agent about the work you do, the recurring problems which arise in the course of your work and in the profession generally, and the level of coverage you wish to be afforded.

Understand what your insurance policy covers and where you are vulnerable. Insurance agents may not place the appropriate coverage. Beware! Ask questions and be certain that the coverage you require is the coverage that you receive. If you are concerned about a particular part of your business posing a risk, be absolutely certain that you have the requisite coverage. Protect yourself by understanding the actual policy language that provides you with the insurance and, if there is any question in your mind about its interpretation, have your attorney give you a legal opinion about the coverage. At a minimum, document the crucial coverage issues and the coverage you expect to receive in writing with your agent.

Other Considerations

After the policy is in place, other developments can jeopardize your coverage. Two of the major areas of trouble are changes in the circumstances on which the policy is based and reporting claims. First, insurers define and limit the scope of their risk in the underwriting aspects of the policy. That is, the insurer relies on the description of the business and its operation as described in the application. If your business changes in a manner that increases the risk of liability and the change is not reported to the insurer, then there may be a basis for the insurer to deny a claim later on. As with most aspects of the law, the particulars depend on the policy, the change and the jurisdiction. Second, insurance policies require that the policyholder give the insurance company prompt notice of any claim. This allows the insurance company to take immediate action to minimize the loss. If you do not give the insurance company prompt notice of a potential claim, this may allow the insurance company to disclaim coverage. If in doubt about whether to report a claim, give the insurance company notice.

CONCLUSION

There is no formula that can simply be applied to minimize the risk of operating a business in today's culture. People in our society tend to deny personal responsibility and blame others for a bad situation. In addition, buildings and their HVAC systems become more complicated. Consider the heightened liability risk of working on a sophisticated air purification system designed to protect against terrorist attacks, "catastrophic events" or even the spread of SARS in a hospital.

In the future, the development of uniform mold standards for testing and remediation will have a positive effect on many levels, including the housing, construction, real estate, and insurance industries, and the legal profession. Uniform mold standards will eliminate confusion, resulting in a more efficient and, in the long run, a less expensive way to test and clean up. Most importantly, uniform standards eliminates delay in performing the remediation work, and the confusion that causes disputes between remediators and their customers, both of which reduce the liability of remediation contractors.

For the present, proper training, procedures and documentation remain the key methods to reduce the risk of litigation in any setting. Current and sound legal advice about your company's liability and insurance coverage provide a fundamental foundation that will allow you to be successful and deliver excellent service and products.


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