Untitled Document

Trial Lawyers Inc.



   A Report on the Lawsuit Industry in America, 2003

 

Trial Lawyers Inc.
A Message from the Director
Introduction
Attorney’s Fees

Focus: Lines of Business
Mature Product Lines
Class Actions
Asbestos
Medical Malpractice
High-Growth Products
Mold
Regulated Industries
New Product Development
Fast Food
What’s Next?

Government Relations/
Public Relations

Leadership Team
Business Summary
Conclusion
Financial Summary

Other Resources
Masthead
Download PDF (3.4 mb)
Or request a hardcopy
Powerpoint Presentation
Join our mailing list!
The Manhattan Insitute's Center for Legal Policy.
Walter Olson's OverLawyered.com.
 

 

PRINT THIS

 

High-Growth Product: Mold

A PARASITIC PLAGUE SPREADS

Trial Lawyers, Inc. makes more and more money off mold despite the lack of scientific evidence.

Like any business, Trial Lawyers, Inc. continues to explore new opportunities with perceived growth potential. Unfortunately, the out-of-control state of our civil justice system means that the number and size of new ventures in litigation is vast indeed. Current expansion opportunities include lawsuits targeting manufacturers of lead paint—even though the industry supported a voluntary standard to eliminate lead pigments in paint in 1955[108]—and HMOs, the industry everyone loves to hate.[109] But one of the most curious, and largest, new markets for Trial Lawyers, Inc. involves a ubiquitous little fungus we all know well: mold.[110]

Mold has of course grown for millions of years, hardly noticed, thriving in water-soaked niches and colonizing dark and wet places. Until recently, insurance adjusters generally handled mold claims only as a result of a covered incident, such as a burst water pipe.[111] The average mold claim cost several thousand dollars.[112] But now under the aggressive actions of the litigation industry, mold has emerged from its dank corners and become a topic for the front pages and the courts. Mold made the big time when trial lawyers started claiming that some forms of mold caused a variety of health problems, creating a much broader scope of liability for insurers and landlords.[113] Common mold has become an un-common liability problem, driving up the cost of homeowners’ insurance and threatening to slow construction in some areas of the country.[114] The American Bar Association Journal is now predicting that mold could surpass asbestos in case volume and value of awards.[115]

Creating a “Black Gold” Rush

Though it’s been pervasive for centuries, mold only recently has been accused of a huge variety of health ailments. Did mold itself become more toxic than before? Scientific evidence suggests not[116] (see box on next page), since the flood of new claims encompasses both new and old homes and materials in broad geographic areas.

The American Bar Association Journal is now predicting that mold could surpass asbestos in case volume and value of awards.
Despite the lack of scientific evidence, successful mold suits are the newest growth sector for Trial Lawyers, Inc. and for a whole industry of consultants who now work around the issue. The American Bar Association Journal made the case blatantly when it headlined a recent article on the growth of mold litigation MOLD IS GOLD.[117] Law professors use the term in academic papers,[118] while consultants advertise their services claiming mold is “black gold.” The underside of this aggressive ap-proach to common mold is already evident: in Texas, homeowners working with so-called mold remediation firms were reported to have conspired to “cook” houses, that is, to heat them and flood them with water to produce big insurance claims.[119] No doubt they were spurred by increasing reports of big awards.

The Mold Litigation Explosion

The vanguard big-money mold award came from a landmark 1999 Texas lawsuit in which homeowner Melinda Ballard sued her insurer for $100 million after her family allegedly got sick from mold contamination.[120] The New York Times Magazine ran photos of workers in hazard suits combing through her mold-infested Texas mansion. In June 2001, a jury awarded Ballard $32 million, including $12 million in punitive damages, $5 million for mental anguish, and nearly $9 million for attorney fees.[121]

Within months, mold lawsuits proliferated, fed by an uncritical media. Television personality Ed McMahon sued for $20 million, claiming fungus in his home killed his dog;[122] his case ultimately settled for $7 million.[123] Activist Erin Brockovich went to court over mold in the $6 million home she bought with proceeds from her hit movie.[124]

Starting in 1999, mold filings in Texas increased sharply—up by 1,300% from the beginning of 2000 to the end of 2001, according to the Insurance Information Institute.[125] Average mold claims today cost about $35,000, and many exceed $100,000.[126] Through 2001, mold claims had added over $1 billion in costs to the homeowners-insurance system in Texas alone; that’s an annual increase of about $440 for every insured household in Texas.[127]

Although mold litigation caught fire in warm-weather climates like Texas, California, and Arizona, the litigation frenzy has now gone national. One of the biggest cases of 2002 involved an apartment complex in New York City. At Henry Phipps Plaza South, 400 residents sought class action status for an $8 billion lawsuit—the largest mold lawsuit to date. The group settled for $1.2 million.[128]

 

MOLDY CLAIMS

Exposure to mold causes runny noses, itchy eyes, scratchy throats, and other allergic symptoms in susceptible people. Beyond that, as-sertions of serious health effects from mold are unproven.[129]

What the litigation industry calls “toxic molds” are uncommon mold strains releasing substances called mycotoxins, which have been asserted to be a cause of significant health ailments such as asthma, pulmonary damage, and memory loss.[130] Chief among the suspected mold species is stachybotrys chartarum, a black mold variety that requires nearly constant moisture to grow.

Despite the assertions by Trial Lawyers, Inc., medical science has yet to show a significant link between toxic mold and the serious health risks it allegedly causes. Acknowledging that individuals with chronic respiratory disease may be prone to more serious negative effects from mold, the U.S. Centers for Disease Control states the following as the current state of science on “toxic” mold: “There are very few case reports that toxic molds (those containing certain mycotoxins) inside homes can cause unique or rare health conditions such as pulmonary hemorrhage or memory loss. These case reports are rare, and a causal link between the presence of the toxic mold and these conditions has not been proven.”[131]

Much of the mold panic was fueled by earlier U.S. Centers for Disease Control studies in 1994 and 1997 that initially found an association between exposure to stachybotrys chartarum mold and lung damage in a group of infants in Cleveland. In 2000, however, the CDC took the very unusual step of retracting its endorsement of the earlier reports, citing faulty methodology.[132]

 

<<previous section | next section>>


108. See http://www.leadlawsuits.com.

109. See George B. Donnelly, Getting Even with HMOs Will Be Expensive, BOSTON BUS. J., June 11, 2001, available at http://boston.bizjournals.com/boston/stories/2001/06/11/editorial1.html.

110. See Cheryl Powell, Toxic Mold Breeds Lawsuits, THE BEACON J., Oct. 22, 2002, available at http://www.ohio.com/mld/ohio/news/local/4339878.htm.

111. See id.

112. See Mold: A Growing Problem: Joint Hearing Before the Subcomms. on Oversight and Investigations and Housing and Community Opportunity of the House Comm. on Financial Services, 1 (July 18, 2002) (Statement of Gordon Stewart, President, Insurance Information Institute) [hereinafter “Stewart Testimony”].

113. See id.

114. See Lainie Mazzullo, “Mold Is Gold” When Building Owners File Lawsuits, WICHITA BUS. J., July 22, 2002, available at http://wichita.bizjournals.com/wichita/stories/2002/07/22/focus2.html.

115. See Stephanie Francis Cahill, For Some Lawyers, Mold Is Gold, ABA J., Nov. 15, 2001 (quoting plaintiff’s lawyer as stating: “The use of asbestos isn’t oc-curring anymore, and most of the asbestos products were done away with.… With mold, it’s naturally occurring, and the supply is endless”), available at http://rvclaw.com/aba-12-01.asp.

116. See Bryan D. Hardin et al., A Scientific View of the Health Effects of Mold, No. 8 CIV. JUST. RPT. (Manhattan Inst. Center for Legal Pol’y, Sept. 2003), available at http://www.manhattan-institute.org/html/cjr_8.htm; see also Lety Laurel, For Mold, Fear May Overshadow Science, CORPUS CHRISTI CALLER-TIMES (June 24, 2001), available at http://www.caller2.com/2001/june/24/today/localnew/3624.html; Emily Pyle, It Grows on You, AUSTIN CHRON., Oct. 12, 2001, available at http://www.austinchronicle.com/issues/dispatch/2001-10-12/pols_feature6.html.

117. See Cahill, supra note 115.

118. See, e.g., Thelma Jarman-Felstiner, Mold Is Gold: But, Will It Be the Next Asbestos?, 30 PEPP. L. REV. 529 (2003); see also David F. Blundell, Proliferation of Mold and Toxic Mold Litigation: What Is Safe Exposure to Airborne Fungi Spores Indoors?, 8 ENVTL. LAW. 389 (2002) (noting concerns that the “ ‘mold rush’ of personal injury claims could be ‘the next asbestos’ ”).

119. See Dave Thomas, Fraud Cashing in with Struggling Economy, INS. J., Jan. 7, 2003, available at http://www.insurancejournal.com/news/exclusive/national/2003/01/07/25242.htm.

120. See Ballard v. Fire Insurance Exchange, No. 99-05252 (Dist. Ct., Travis Co., Texas, verdict rendered June 1, 2001) ($32 million award).

121. See id.; Kevin Carmody, Court Finds Insurer at Fault in Mold Case, AUSTIN AM.-STATESMAN, June 2, 2001, at A1.

122. See David Alpert, Ed McMahon: ‘Death Mold’ Killed My Dog, ABCNEWS.COM, Apr. 11, 2002, http://abcnews.go.com/sections/entertainment/DailyNews/mcmahon020411.html.

123. See Settlement of Ed McMahon Mold Lawsuit Now at $7 Million, HARRISMAR-TIN PUB. REP. (May 7, 2003).

124. See Anastasia Hendrix, Erin Brockovich Crusades Against Mold, SAN FRAN-CISCO CHRON., Mar. 8, 2001, available at http://www.mindfully.org/Health/Brockovich-Mold-Crusade.htm.

125. See Insurance Information Institute, TX: Estimated Total Number of Mold Claims, in Presentation: How Did We Get Here? Texas: Mold’s Ground Zero (citing Texas Department of Insurance and Insurance Information Institute estimates) [hereinafter “Texas: Mold’s Ground Zero”], available at http://www.iii.org/media/met/mold.

126. See Stewart Testimony, supra note 112, at 1.

127. See Texas: Mold’s Ground Zero, supra note 125, at 16, 18.

128. See Arnold Mann, When Mold Takes Hold, USA WEEKEND.COM (July 21, 2002), http://www.usaweekend.com/02_issues/020721/020721moldapt.html.

129. See generally Hardin et al., supra note 116; QUESTIONS AND ANSWERS ON STACHYBOTRYS CHARTARUM AND OTHER MOLDS, CDC’S NAT’L CENTER FOR EN-VTL. HEALTH [hereinafter “CDC Questions and Answers”], available at http://www.cdc.gov/nceh/airpollution/mold/stachy.htm.

130. See TOXIC MOLD & TORTS NEWS ONLINE, http://www.toxic-mold-news.com (providing toxic mold litigation information to potential plaintiffs).

131. CDC Questions and Answers, supra note 129.

132. See CENTERS FOR DISEASE CONTROL UPDATE: PULMONARY HEMORRHAGE HEMOSID-EROSIS AMONG INFANTS—CLEVELAND, OHIO, 1993-1996 (Mar. 10, 2000), available at http://www.cdc.gov/epo/mmwr/preview/mmwrhtml/mm4909a3.htm.

 

 

 
 

 


[Home] [Trial Lawyers Inc. Original Report] [Media Inquiries/Press] [Multimedia]

 

Center for Legal Policy.

 

Copyright The Manhattan Institute 2013