HONOLULU– The Hawaii Supreme Court will consider issues that threaten to thwart a $4 billion award settlement in last year’s devastating Maui wildfires.
A Maui judge last month agreed to ask the state Supreme Court to ask on how insurance companies can recover money paid to policyholders.
The Supreme Court on Wednesday issued an order accepting the queries and asking lawyers for all parties to file documents within 40 days.
The battle over whether the settlement can move forward was expected to reach the state Supreme Court.
Insurance companies that have paid out more than $2 billion in claims want to take independent legal action against the defendants responsible for causing the deadly tragedy. It is a common process in the insurance industry called subrogation.
But Judge Peter Cahill on Maui ruled before they can only seek reimbursement of the settlement amount that defendants agreed to pay, meaning they cannot take their own legal action against them. The settlement was reached on August 2, days before the one year anniversary of the fires, amid fears that Hawaiian Electric, the power company that any guilt for fueling the fire, could be on the brink of bankruptcy. Other defendants include Maui County and major landowners.
Preventing insurers from going after defendants is an important settlement term.
One such question is whether state statutes governing health insurance reimbursement also apply to casualty and property insurers because they limit their ability to pursue independent legal action against those found liable.
Attorneys representing the insurance companies have said they want to hold the defendants accountable and not prevent fire victims from receiving settlement money.
Lawyers for individual plaintiffs are concerned that allowing insurers to separately pursue reimbursement will undermine the deal, take away the resources available to pay fire victims and lead to protracted litigation.