Maui judge agrees to ask state Supreme Court about barriers to $4B wildfire settlement
HONOLULU — The Hawaii Supreme Court will be asked to rule on an issue that threatens to thwart a $4 billion legislative proposal. settlement during the devastating wildfires on Maui last year.
Maui County Judge Peter Cahill agreed Friday to ask the state Supreme Court questions about how insurance companies can recover money paid to policyholders.
Insurance companies that have paid out more than $2 billion in claims are seeking independent legal action against the defendants blamed for the deadly tragedy. It’s a common insurance industry process known as subrogation.
But Cahill ruled earlier this month, they can only seek reimbursement for the settlement amount the defendants agreed to pay, meaning they cannot file their own lawsuits 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 some blame for starting the fire, could be on the verge of bankruptcy. Other defendants include Maui County and large landowners.
An important part of the settlement is to prevent insurers from prosecuting the defendants.
Attorneys representing individual plaintiffs in hundreds of lawsuits over the deaths and destruction caused by the fires have filed a motion asking the judge to refer certain legal questions to the state Supreme Court.
“Given Judge Cahill’s prior orders, today’s ruling is appropriate and we look forward to placing these questions in the hands of the Hawaii Supreme Court,” Jake Lowenthal, one of the attorneys representing individual plaintiffs, said after the hearing.
One such question is whether state laws governing health insurance reimbursement also apply to property and casualty insurers, because they limit their ability to take 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 settlements.
Lawyers for individual plaintiffs fear the deal will be undermined if insurers are allowed to seek compensation individually, draining the amount available to pay fire victims and leading to lengthy litigation.
It is a “cynical tactic” to get more money out of the defendants, Jesse Creed, an attorney for individual plaintiffs, said in court on behalf of the insurance companies.
According to him, the insurance companies should be the ones to take the case directly to the Supreme Court, but they did not join the motion because they know it would make the settlement easier.
Adam Romney, an insurance lawyer, disagreed, saying they just want a solution that works for all parties.
“While we wait to see whether the Hawaii Supreme Court will take up this case, we will continue to work toward a fair settlement through mediation for all parties involved,” Vincent Raboteau, another attorney for the insurance companies, said in a statement after the hearing.