HONOLULU (AP) 鈥 Hawaii鈥檚 Supreme Court ruled Monday that insurance companies can鈥檛 bring their own legal actions against those blamed for Maui鈥檚 catastrophic 2023 wildfire, allowing a $4 billion settlement that was on that the verge of collapse to proceed.
Other steps remain in finalizing the deal between thousands of people who lodged lawsuits and various defendants, including Hawaiian Electric Company.
The massive inferno that was the deadliest in the U.S. in more than a century decimated the historic town of Lahaina, killing more than 100 people, destroying and causing in damage. Soon afterward, attorneys began lodging hundreds of lawsuits.
A settlement was announced last summer, but insurance companies held out, insisting that they should have the right to go after the defendants separately to recoup money paid out to policyholders.
Monday鈥檚 ruling resolves a key roadblock to finalizing the deal and sends the case back to a Maui judge to determine next steps.
Insurance companies that want to recoup billions paid to policyholders by pursuing legal action against the defendants said in a statement they're disappointed, but didn't say whether they'll seek review at the U.S. Supreme Court.
A key question that was before was whether state laws controlling health care insurance reimbursement also apply to casualty and property insurance in limiting companies鈥 ability to pursue independent legal action against those held liable. The justices answered yes.
Plaintiff lawyers were worried allowing insurers to pursue reimbursement separately would be a deal-breaker, drain what is available to pay fire victims and lead to prolonged litigation.
Gerald Singleton, one of the many attorneys representing the plaintiffs, said they're still trying to make sense of the ruling but are pleased with it. 鈥淣ow the settlement can take the next step forward," he said.
A few days before the of the Aug. 8, 2023, fire, Gov. Josh Green announced that seven defendants accused of causing the tragedy had agreed to pay $4 billion to resolve claims by thousands of people. They include the main defendant, Hawaiian Electric, as well as the state of Hawaii, Maui County and Kamehameha Schools, the largest private landowner in Hawaii.
Attorneys representing the individual plaintiffs agreed to the deal amid fears that main defendant Hawaiian Electric, the , could be on the brink of bankruptcy.
Victims鈥 attorneys acknowledged that $4 billion wasn鈥檛 enough to make up for what was lost but said the deal was worth accepting, given Hawaiian Electric鈥檚 limited assets.
鈥淭hey need every penny to restitch the fabric to bring the community back together,鈥 attorney Jesse Creed told the justices during a hearing before the state Supreme Court last week.
Creed said he could relate to the losses the victims face because his own home, children鈥檚 schools and place of worship just burned in the Palisades fire, one of the wildfires that last month.
鈥淭oday鈥檚 decision will help our people heal much sooner, as we continue to rebuild and recover,鈥 the governor said in a text message to the AP. Green had previously denounced as unfair insurance companies' moves to recoup money they've paid to policyholders in a legal process that's called 鈥渟ubrogation."
Subrogation is one way companies recover the amount of claims paid to policyholders.
Insurance companies say subrogation is a way to offset costs associated with a catastrophic event so premiums won鈥檛 have to go up. The process isn鈥檛 for natural disasters such as hurricanes, but for when there is someone at fault.
So far they have paid more than $2.3 billion to people and businesses affected by the Maui tragedy and expect to pay $1 billion more.
Subrogation is 鈥渧ital to a healthy and stable insurance market,鈥 and allows insurers to hold at-fault parties legally and financially accountable," the insurance companies said in their statement reacting to the ruling: "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.鈥
Jacob Lowenthal, another attorney representing the individual plaintiffs, said the ruling doesn't totally prevent insurance companies from getting reimbursed. Instead of going after the defendants, insurers will have to prove to a judge that they deserve to be reimbursed because a policyholder received money from the settlement that was more than their claim.
Now that the ruling answered the subrogation question, work can focus on the administrative claims process to determine awards based on facts of each case, he said.
鈥淭he Hawaii Supreme Court鈥檚 ruling was the correct outcome,鈥 Lowenthal said. 鈥淭he resolution of this critical issue allows the global settlement to now move forward, putting money into the hands of the Maui fire victims sooner than later.鈥
