Maui judge agrees to ask state Supreme Court about barriers to $4B wildfire settlement

HONOLULU (AP) — The Hawaii Supreme Court will be asked to weigh in on an issue that threatens to thwart a $4 billion settlement in last year's devastating Maui wildfires.

Judge Peter Cahill on Maui agreed Friday to ask the state high court questions about how insurance companies can go about recouping money paid to policyholders.

Insurance companies that have paid out more than $2 billion in claims want to bring independent legal action against the defendants blamed for causing the deadly tragedy. It's a common process in the insurance industry known as subrogation.

But Cahill ruled earlier this month they can seek reimbursement only from the settlement amount defendants have agreed to pay, meaning they can’t bring their own legal actions against them. The settlement was reached on Aug. 2, days before the one-year anniversary of the fires, amid fears that Hawaiian Electric, the power company that some blame for sparking the blaze, could be on the brink of bankruptcy. Other defendants include Maui County and large landowners.

Preventing insurers from going after the defendants is a key settlement term.

Lawyers representing individual plaintiffs in hundreds of lawsuits over the deaths and destruction caused by the fires filed a motion asking the judge to certify certain legal questions to the state Supreme Court.

“Given Judge Cahill’s previous orders, his ruling today is appropriate and we look forward to putting these questions into the hands of the Hawaii Supreme Court,” Jake Lowenthal, one of the attorneys representing individual plaintiffs, said after the hearing.

One of those questions is whether state statutes controlling health care insurance reimbursement also apply to casualty and property insurance companies in limiting their ability to pursue independent legal action against those who are held liable.

Lawyers representing the insurance companies have said they want to hold the defendants accountable and aren't trying to get in the way of fire victims getting settlement money.

Individual plaintiffs' attorneys are concerned allowing insurers to pursue reimbursement separately will subvert the deal, drain what is available to pay fire victims and lead to prolonged litigation.

It's a “cynical tactic” to get more money out of the defendants, Jesse Creed, an attorney for individual plaintiffs, said in court of the insurance companies.

The insurance companies should be the ones who want to take the matter directly to the state Supreme Court, he said, but they haven't joined in the motion because they know it would facilitate the settlement.

Adam Romney, an insurance attorney, disagreed, saying that they just want a resolution that works for all parties.

“While we wait to see if the Hawaii Supreme Court will take this matter up, we will continue to work towards a fair settlement through mediation for all parties concerned," Vincent Raboteau, another attorney for the insurance companies, said in a statement after the hearing.