Dive Brief:
- A $4.04 billion settlement in principle of roughly 450 state and federal lawsuits from the 2023 Maui wildfires would prohibit insurers from pursuing funds from seven defendants in the litigation, including Hawaiian Electric Industries, which would contribute about half of the total.
- Circuit Judge Peter Cahill ruled Aug. 13 that insurers could not proceed with subrogation claims seeking reimbursement from the defendants, which also include the state, county, West Maui Land Co. and Spectrum/Charter Communications. Lawyers for the plaintiff-fire victims, mostly residents who suffered steep losses from the fires, want the Hawaii Supreme Court to address the question.
- Insurers have paid $2.34 billion on more than 10,000 claims from the Maui fires as of June 30, according to the Hawaii Insurance Division. About $1 billion more in claims is expected, the agency said in a late July update. The August 2023 wildfires that spread across much of Maui killed 102 people and displaced more than 12,000.
Dive Insight:
The settlement came after four months of mediation and was announced about a week before the one-year anniversary of the Aug. 8-9 fires. The defendants – who are believed to have either contributed to the fires’ start or of letting them spread – did not admit liability as part of the settlement.
Cahill’s ruling rested on a 2017 Hawaii Supreme Court case stemming from a Honolulu auto accident, Yukumoto v. Tawarahara. The state Supreme Court ruled that health insurers don’t have “a broad, unrestricted right of subrogation” but are limited to reimbursement rights against third-parties at fault that are established by statute.
The American Property Casualty Insurance Association had no immediate comment on the settlement or Cahill’s ruling.
A lawyer for the insurers, Mark Grotefeld of Grotefeld Hoffmann, said the law allows insurance companies to sue for recovery of paid claims, Honolulu Civil Beat reported Monday.
The insurers do not believe that the medical claims in the Yukumoto case apply to the Maui fire situation and property/casualty insurers’ subrogation rights have never previously been curtailed in U.S. wildfire litigation, according to Grotefeld.
However, the industry wants to be part of a settlement and stands ready “to relinquish what I consider to be a lion’s share of the ability to recover,” Grotefeld said, according to the news site.
Grotefeld did not respond to a message Tuesday from Legal Dive seeking comment on the insurers’ claims.
“We humbly ask the mainland subrogation attorneys to accept what Judge Cahill has made clear, which is no one should stand in the way of our people’s full recovery,” Hawaii Gov. Josh Green wrote Aug. 14 on his Facebook page. The $4 billion is all that the parties could afford to pay, Green has said, including about $800 million from the state.
Separately, Hawaiian Electric alerted investors on Aug. 9 that it did not yet have financing in place to cover its portion of the settlement, and would face “going concern” issues until it secures the funding. The company, which also reported a $1.3 billion net loss for the most recent quarter, provides electricity for about 95% of the state’s residents.
