As a result, companies that have made or sold wood treated with the arsenic compound - including forest products heavyweights Georgia Pacific Corp. and Universal Forest Products Inc. - are becoming targets of a growing wave of litigation that is worrying investors.

"The issue does make me nervous," said Mark Wilde, who follows forest products firms for Deutsche Bank Securities. "The best case scenario is that it doesn't become any bigger, but it seems to have the momentum making it bigger."

Chromated copper arsenate, or CCA, has been used to protect wood from leaching and erosion for more than 70 years and is most often used outdoors in decks and playgrounds.

For the last 20 years or so, any litigation against the makers of CCA-treated wood has mostly involved individual claims against small, privately held companies.

Walker, for example, sued the chemical maker, the wood treater, and the wood retailer, settling for $150,000 - an amount that did not even cover her medical costs.

"My medical bills are more than that," she said in a phone interview from her home in Clearfield, Utah.

Walker's ailments were traced to splinters that got stuck under her fingernails and could not be completely removed until they were successively amputated within a few years.

WHERE THE MONEY IS AT

Recently, however, several class-action lawsuits have surfaced naming big players in the CCA-treated lumber market, recalling recent legal nightmares including scores of asbestos claims that drove some U.S. firms into bankruptcy. Big Tobacco companies have also been hit by billions of dollars worth of legal claims.

"This could be a substantial litigation in terms of dollars," said Lester Brickman, a professor at Cardozo Law School in New York and an expert on asbestos litigation. "Class actions are where the money is at."

A spokeswoman for Georgia-Pacific, which has made the product since the 1988, said the company has two lawsuits involving CCA-treated wood pending in Alabama, one of which is a class action.

The spokeswoman would not comment on the claims other than to say the company believed they had no merit.

Universal Forest Products also declined to comment on pending litigation, but argued that studies have shown the product is safe when handled correctly.

"Every bit of information that has come out has reaffirmed the safety of CCA-treated wood," said Scott Conklin, vice president of wood preservation at Universal Forest Products.

In February, the Environmental Protection Agency banned the use of CCA-treated wood in residential construction beginning in 2004, but said it "has not concluded that CCA-treated wood poses unreasonable risks to the public" and that it was not necessary to remove or replace existing structures.

Parker Brugge, president of the American Wood Preservers Institute, a trade group named as a defendant in a Florida complaint seeking class-action status, said "no class action has been sustained on allegations of injury due to treated wood." He added that he is "confident that the courts will not sustain any class action on these facts."

EXPLOSIVE ISSUE

Still, even the prospect of litigation is enough to make Wall Street analysts wary.

"The fear that there might be a health issue here makes this quite an explosive issue," said Wilde. "The issue doesn't smell good."

Though Georgia Pacific and Universal Forest Products are now the largest publicly traded players in the treated wood market, other companies including Louisiana-Pacific Corp. and Canada's Domtar Inc. have made the product in the past and could also face legal headaches.

"Products out in the marketplace that are sold for long-term use can generate liability many years after the sale," Brickman said. "You can sue the manufacturer long after if you are the consumer and you claim injury."

But the controversy surrounding CCA-treated wood has not affected its sales despite the availability of alternative products, according to Universal Forest Products' Conklin.

"Frankly, the demand is still for CCA," he said.

A spokesman for home improvement retailer Home Depot Inc., also the target of several lawsuits, echoed Conklin in saying that sales of CCA-treated wood remain strong.

One attorney, however, said most consumers are still in the dark about the chemical's risks, and he expects the number of lawsuits to rise as the issue picks up steam.

"I've filed three cases for people here in this county and this is one county out of 92 in one state out of 50," said David McCrae, an attorney in Bloomington, Indiana. "There have to be a lot of people who have suffered injuries and never knew arsenic was in the wood."

Laurie Walker agrees, and has begun to speak out about the issue in her community, leading one local school district to tear out playground equipment made from CCA-treated wood.

But Walker said she is still not satisfied.

"You can see children grabbing it and swinging around on it," she said. "I wish more would happen."