How 2 industries stymied justice for young lead paint victims
When Selena Wiley signed the lease for an older rental home in South Bend, Ind., she asked the property manager about lead paint and was assured the house was safe.
But in November 2018 — almost two years after moving in with her partner and three children — Wiley noticed that their 2-year-old’s appetite had vanished and his constant chattering had stopped.
A doctor soon discovered that the boy, Joevonne, known as J.J., had lead poisoning. The level was so high that he immediately began a 19-day treatment to help rid his body of the toxin, which can cause irreversible damage to a child’s brain and nervous system. A health inspector soon found lead paint and dust throughout the family’s rental home.
As J.J. faces an uncertain future, no one has been held responsible so far; the firm that owns the home protected its assets in a tangle of limited liability companies, and the property insurer excluded lead from its coverage. These practices are now the norm across the United States, The New York Times has found, part of a decadeslong campaign by the real estate and insurance industries to shield themselves from liability in lead-poisoning cases. The effort has helped allow what is often considered a problem of the past to remain a silent epidemic today.
Although lead poisoning has decreased substantially since the late 1970s as a result of regulatory actions and public health initiatives, about 500,000 children younger than 6 have elevated blood lead levels in the United States and are at risk of harm.
Not only is the illness a scourge in many of the country’s poorer ZIP codes, but families like J.J.’S have less recourse than ever. Over the years, children often received settlements or court judgments to help pay for health care, therapy and tutoring as they struggled with the life-altering effects of lead poisoning. The payments also served as a warning to landlords to make sure their properties were safe.
But with little public attention and the approval of state officials, insurance companies across the country excluded lead from their policies, declining to pay out when children were poisoned on properties they covered, according to interviews with health and housing officials, regulators and lawyers who represented children and their families. The move also eased pressure on
landlords to fix up their rentals.
Without insurance, there is little chance of recovering money for a child when a landlord has few resources. Property owners who do have substantial holdings have found ways to legally distance themselves from problem rentals, increasingly using LLCS to hide assets and identities. In 2019, for example, a Virginia family that had been awarded a $2 million judgment agreed to accept just $140,000 after the landlord, a major developer, dodged collection efforts.
As a result, plaintiffs’ lawyers — who often work on contingency, fronting costs and collecting payment only if there is a favorable judgment or settlement — are increasingly declining to file lawsuits.
If not for the obstacles, “I would still be getting up in front of juries,” said Richard Serpe, a lawyer who represented the Virginia family and stopped taking lead cases last year after working on them for three decades. “We have shifted the burden to the people least able to handle it, which is these kids.”
No exposure to lead is considered safe, and even low levels have been shown to affect a child’s intelligence, learning ability and behavior, according to the CDC. Repercussions can be lifelong, and taxpayers end up footing much of the cost of care — billions of dollars annually for medical treatment and special education.
The ultimate goal is to fix lead hazards so children are not exposed at all, which local, state and federal agencies address with limited success.
Some states have limited or tried to ban insurance exclusions, but the insurance and real estate industries have opposed such measures. Executives in those businesses say that requiring lead coverage would collapse the insurance market and drive up the cost of housing, without addressing the presence of lead paint before a child is poisoned.
J.J.’S family filed a lawsuit in 2020 against the real estate company that owned their house and are awaiting the outcome of a court dispute over whether the insurer’s lead exclusion was valid.
Once a mellow child who was meeting all his milestones, J.J., now 5, exhibits typical effects of lead poisoning: aggression, attention problems and developmental delays.
Unsafe and uninsured
In 2017, while he was an assemblyman, Sean Ryan — now a state senator in western New York, where high rates of lead poisoning persist — introduced a bill to tackle what he saw as a major factor in the lead crisis: insurance exclusions. Not only did they prevent children from being compensated, but also they reduced landlords’ accountability.
But Ryan’s attempts have been stymied. His bill passed the Assembly twice but faced strong opposition from insurers and has stalled in the Senate’s insurance committee.
New York and other areas around the country with older housing have long had issues with lead poisoning. For decades, the metal was added to make paint more durable and resistant to moisture. The health risks have been known for centuries, but the United States did not ban lead paint for homes until 1978.
Soon after, lawyers began suing landlords on behalf of poisoned children. By the early 1990s, insurers told state insurance commissions that they were facing crushing costs from lead paint verdicts and settlements that could reach into the millions, and sought to exclude lead coverage from their policies.
Regulators appear to have offered little pushback. In 1993, a Department of Housing and Urban Development advisory group noted in a report that Aetna, an industry giant, had gotten approval in 40 states for the exclusions. The American Association of Insurance Services, which developed policy language for hundreds of insurers, had won approval in 32 states to exclude coverage for lead in paint, water and soil, the report said.
By 1999, New York state approved exclusions for 90 companies, records show. They are now common with insurers big and small, and the state no longer keeps track.
The federal housing department estimates that significant lead paint hazards remain in about 29 million housing units and that young children live in approximately 3.3 million of them. The problem spans the country. Minority children are especially affected, given that they are more likely to live in older rental homes that are poorly maintained by landlords.
Insurers argue that banning exclusions now would drive up premiums and would not promote the best way to protect children — correcting lead hazards before residents are exposed, a task they say is better left to landlords and local housing or health regulators.
Advocates for Ryan’s bill contend that insurers can incentivize landlords to take steps before a child is harmed, by requiring them to fix lead hazards before providing coverage.
Ridding homes of lead paint can be costly — though grants and loans are available in many cities. Nonetheless, landlords can take less expensive measures to make houses “lead safe”: removing peeling paint and sealing surfaces with a new coat to prevent children from ingesting toxic flakes and dust, for example.
But often, dangers are identified only after a child has shown symptoms of lead poisoning or been screened in a checkup.
The ‘shell game’
Ronald Stallings was vacationing in Turks and Caicos in 2018 when he found out about a $2 million judgment against one of his companies.
“Bummer,” he recalled thinking. “How am I going to get out of this?”
Nearly a decade earlier, a baby was lead-poisoned at one of the roughly 150 apartments owned by Stallings, a prominent real estate developer in Richmond, Va. The building was held by an LLC, Walker Row Partnership, and Stallings began divesting most of its assets. After Walker Row was sued in the lead case in 2017, it would pay only a pittance of what was owed.
Janae Thompson, who brought the lawsuit, had moved with her daughter into Apartment 15 at the building in 2008. Thompson, then a 21-year-old single mother, was getting her associate degree while juggling a job at a bank; her child, Ziona, was about to turn 1.
Several months after moving in, Ziona started to regress. She cried a lot, often for no apparent reason. Her growing vocabulary stalled over the next year. She began to have trouble picking up her toys.
In June 2009, after the girl had turned 2, she cried for nearly a day and a half straight, so Thompson took her to the doctor. The next day, she was told to rush Ziona to a hospital. Her lead level was nearly six times what the CDC now considers elevated. Afterward, an inspector found peeling paint in the living room and bedrooms, and lead hazards on the doors and windows.
A lawyer, Serpe, took Thompson on as a client and worked for nearly a decade to try to hold Stallings and his company accountable. The case, like many others Serpe had handled, presented almost insurmountable challenges.
In 2010, he sent a letter notifying Stallings of potential legal action but said there was no response. Serpe filed a lawsuit in 2017 and eventually learned that Travelers Insurance, which covered the property, had a lead exclusion.
In 2018, after Stallings failed to show up in state court, a judge awarded Ziona $2 million in damages.
Stallings said in an interview that he had not been personally served the case, a claim Serpe disputed, noting that another company officer was given the complaint. The developer said he had been preoccupied running a local entertainment venue and had not realized there was a lead exclusion in his policy. He also said he had rented the property through the local housing authority, which was supposed to do an inspection.
After the judgment, Stallings resisted paying the $2 million owed by his company. At an October 2018 hearing, he testified that for six years he had been shutting down Walker Row because it was not profitable. When asked in the hearing why his website listed several projects under development, Stallings said the site was old. Asked why it had been updated just months earlier, Stallings said he did not know.
At the hearing, he mentioned four more LLCS associated with his business. But Walker Row, he said, had no pending projects, no employees and no tenants paying rent.
Tax returns from 2016 show Walker Row had $2 million in assets and liabilities. That year, the building where Thompson and Ziona had lived sold for nearly $900,000. By 2019, few assets remained in the LLC. Serpe said he believed that Stallings had executed a “tremendous corporate shell game” to avoid the full judgment — a claim Stallings denies, saying the divestments were unrelated to the lawsuit.
Thompson, worn down by the litigation, agreed to a settlement of $140,000. After court and legal fees, about $70,000 was put into a trust for Ziona.
‘A lifelong thing’
The city of South Bend, where J.J. fell ill, has a program for inspecting rentals, but it is based on complaints or housing code violations. It was not until J.J. was diagnosed in November 2018 with lead poisoning that a health inspector scoured the house where he lived. The health department sent a letter ordering the property owner, Homeworks Funding Group II LLC, to address the lead dangers in January 2019.
An inspector had found lead paint and dust in two bedrooms and the stairway of the home.
Martin Gould, a lawyer for the family, eventually learned that Homeworks’ insurance policy had a lead exclusion. But in February, J.J.’S family seemed to catch a break: A state judge ruled that the exclusion was unenforceable because the language was too broad — meaning the insurer, Indiana Farmers Mutual, might have to pay its policy limit of $1 million if the family wins or settles its lawsuit against Homeworks.
The judge’s decision, which is limited to J.J.’S case, was surprising; lead exclusions are rarely thrown out. About two weeks ago, Farmers Mutual filed a motion asking the judge to reconsider the ruling, saying that he had disregarded cases where similar lead exclusions had been found enforceable.
It is hard to watch J.J. struggle with things that came easily to her other children, Wiley said. He cannot put on pants by himself and does not know the names of his favorite snacks, identifying them instead by the color of their packaging: “orange” for Nacho Cheese-flavored Doritos and “blue” for Cool Ranch. He is easily distracted, overwhelmed and hard to console.
“We know it damaged his brain,” she said. “We know it is irreversible. And we know it is a lifelong thing.”