Hawaiʻi Supreme Court issues speedy opinion on Maui Wildfires Case questions

The Hawaiʻi Supreme Court issued a speedy opinion in the Maui Wildfires Case, allowing the settlement to continue its course. Insurance companies had sought to intervene in an attempt to recoup payouts made in the wake of the 2023 Maui wildfires.

The order confirms that settlement monies from the defendants will go directly to fire victims rather than to the insurance companies.  

Monday’s decision comes after five justices heard arguments on Thursday morning.

The parties that have agreed to terms of the proposed $4.037 billion settlement with wildfire survivors include Hawaiian Electric and its parent company, Hawaiian Electric Industries (HEI), the State of Hawaiʻi, the County of Maui, Kamehameha Schools, West Maui Land Co., Hawaiian Telcom and Spectrum/Charter Communications.

Jesse Creed of Panish | Shea | Ravipudi LLP, Liaison Counsel for Individual Action Plaintiffs in the Maui Wildfire Cases responded to Maui Now’s request for comment saying: “The Supreme Court simply followed clear Hawaiʻi law that mainland subrogation insurers refused to acknowledge. This is the next step in getting relief to the plaintiffs who are the true victims of the Maui Fire.”

Property insurers for Hawaiʻi, a coalition of 192 property and casualty insurance companies, issued a statement saying: “We are disappointed in the Hawai‘i Supreme Court’s ruling and believe this sets a troubling precedent that could significantly hamper the ability of Hawaiʻi’s property and casualty insurers to pursue claims directly against the parties responsible for causing the Lahaina wildfires.’

The property insurers said subrogation allows insurers to hold at-fault parties legally accountable and financially responsible for negligence when it results in property damage and personal injury losses.

The property insurers said they want those impacted by the tragedy to receive the resources they need to help them recover. “Preserving the rights of insurers to utilize subrogation is of importance to the insurance industry, and is ultimately beneficial to all policyholders and residents statewide,” according to their statement.

Gov. Josh Green said he welcomes the state Supreme Court’s decision to uphold the $4 billion Maui wildfire settlement. “We reached this historic settlement for the wildfire survivors on Maui through a collaborative effort to do what is right (pono), for our people, consistent with our values,” he said. “The settlement came exactly one year after the fire occurred, when most felt it could take five years or more to reach agreement. Today’s decision will help our people heal much sooner, as we continue to rebuild and recover.”

Attorney General Anne Lopez also weighed in saying: “We are very pleased that this hurdle to resolving the claims of the fire victims has been cleared.”

The court answered the following questions:

• Question 1: Does the holding of Yukumoto v. Tawarahara, that limited the subrogation remedies available to health insurers to reimbursement from their insureds under HRS § 663-10 and barred independent actions against tortfeasors who settled with the insureds extend to property and casualty insurance carriers?
  • The court answered yes. “Our opinion in Yukumoto v. Tawarahara, 140 Hawaiʻi 285, 400 P.3d 486 (2017), extends to property and casualty insurers such that, under Hawaiʻi Revised Statutes (HRS) § 431:13-103(a)(10)(A), the lien provided for under HRS § 663-10(a) is the exclusive remedy for a property and casualty insurer to recover claims paid for damages caused by a third-party tortfeasor in the context of a tort settlement between an insured and the tortfeasor.”
• Question 2: Is a property and casualty insurer’s subrogation right of reimbursement prejudiced by its insured’s release of any tortfeasor when the settlement documents and release preserve those same rights under HRS § 663-10?
  • Because the statutory lien under HRS § 663-10 is the exclusive remedy for a property and casualty insurer in the context of a tort settlement, The state Supreme Court answered in the negative.
• Question 3: Under the circumstances of the Maui Fire Cases and the terms of the “Global Settlement,” does the law of the State of Hawai‘i require that insureds be made whole for all claimed injuries or damages before their insurers can pursue a subrogation right of recovery or reimbursement against a third-party tortfeasor?
  • The court answered in the negative to this question “Under the circumstances of this mass tort case, we decline to apply the made whole doctrine to the statutory lien-claim process established by HRS §§ 431:13-103(a)(10) and 663-10,” the court wrote.

This case was remanded back to the second circuit court. The Hawaiʻi Supreme Court retains concurrent jurisdiction to enter an opinion and judgement that will follow.