Maui wildfire victims are closer to sharing a $4 billion settlement, possibly before the disaster’s second anniversary in August, after a Hawaii Supreme Court ruling Monday.
The state’s high court ruled unanimously in answering three questions of Hawaii law that a Circuit Court judge used to underpin the settlement deal.
The foremost question pertained to whether state law supported Circuit Judge Peter Cahill’s move to ban insurance companies from pursuing separate litigation aimed at having the settlement payers reimburse the insurance companies for claims paid to policyholders for losses in the disaster, which killed 102 people and destroyed most of Lahaina as well as property in Upcountry Maui on Aug. 8, 2023.
All five Hawaii Supreme Court justices said in their written order that the exclusive remedy for a property and casualty insurer to recover claims paid for damages caused by a party deemed responsible for a wrongful act, when there is a settlement between the responsible party and the insured, is recovery from the insured.
The three-page decision pleased lawyers leading the settlement effort on behalf of more than 17,000 victims, including plaintiffs who filed more than 650 lawsuits in Circuit Court on Maui.
“We are absolutely thrilled with this decision from the Hawaii Supreme Court,” Cynthia Wong, a member of the liaison counsel team for the plaintiffs group, said in an email. “Their ruling is a powerful affirmation of the law in Hawaii. They demonstrated an unwavering commitment to justice and fairness.”
Wong said the pending settlement can now be considered for approval by Cahill, and that there is hope payments could start to go to victims before the second anniversary of the tragedy.
A coalition of 192 insurance companies involved in the case expressed disappointment with Monday’s decision and said it sets a troubling precedent that could disturb Hawaii’s insurance industry.
The coalition said in a statement that subrogation, which is the ability to sue and recover compensation from parties that are responsible for damage that leads to insurance claim payouts, is vital to a healthy and stable insurance market.
“Subrogation allows insurers to hold the at-fault parties legally accountable and financially responsible for their negligence when it results in property damage and personal injury losses,” the coalition said. “The property insurers want those impacted by this tragedy to receive the resources they need to help them recover. 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.”
Attorneys representing the insurers had declined to approve the settlement, saying that they were not meaningfully included in the process.
The insurers said they have paid about $2.3 billion in claims so far to fire victims and expect to pay over $1 billion more. Now, through a court process, the insurers may seek reimbursement from policyholders for any amount of compensation that exceeds the value of what policyholders lost.
If the settlement is approved by Cahill, a claims administrator will determine how much victims receive. Attorneys representing victims also will share in the settlement.
Entities that have agreed to pay the settlement are Hawaiian Electric, the state, Kamehameha Schools, Spectrum Oceanic LLC and Hawaiian Telcom. They sided with plaintiffs’ attorneys in the Supreme Court proceeding.
Hawaiian Electric has agreed to cover the biggest piece of the settlement, at $1.99 billion paid out over four years. A company power line damaged in high wind was found to be the cause of a fire that raged through Lahaina after reigniting.
The state and Kamehameha Schools, owners of land with vegetation that allowed the Lahaina fire to spread, agreed to pay $872.5 million each. Spectrum Oceanic LLC and Hawaiian Telcom, companies that share utility infrastructure with Hawaiian Electric, are to collectively pay about $300 million.
Gov. Josh Green, who previously railed against the insurance companies for delaying the settlement, welcomed the decision issued Monday.
“We reached this historic settlement for the wildfire survivors on Maui through a collaborative effort to do what is right (or) pono, for our people, consistent with our values,” he said in a statement. “Today’s decision will help our people heal much sooner, as we continue to rebuild and recover.”
State Attorney General Anne Lopez, who represented the state in the case, added in a statement, “We are very pleased that this hurdle to resolving the claims of the fire victims has been cleared.”
Hawaiian Electric officials said in a statement that Monday’s ruling means the people of Maui are closer to receiving resources needed to continue their recovery.
“The resolution of these questions reinforces the durability of the global settlement and will allow us to fulfill our commitment to thousands of individuals and our community as the collaborative work to rebuild continues,” the company said.
Hawaiian Electric, which has already raised close to $1 billion for the settlement through parent company sales of new stock and American Savings Bank, also said the settlement helps reestablish financial stability it needs to mitigate fire risks through infrastructure improvements and other plans.
Sterling Wong, a spokesperson for Kamehameha Schools, said the settlement will provide relief to families and help bring stability and abundance back to Lahaina.
“Kamehameha Schools continues to support healing and restoration in Lahaina, following the leaders of our Lahaina community and working collaboratively with many who are stepping forward, including the State of Hawaii and the County of Maui,” he said in an email. “The global settlement is an important part of these efforts.”
The settlement payers already have contributed $175 million to a victim compensation fund led by the state that will be credited to settlement funding.
This One ‘Ohana Fund offered to pay surviving family members who lost loved ones $1.5 million, and less than that amount to people who suffered severe injuries if recipients forwent litigation.
Monday’s ruling followed oral arguments presented Thursday during an almost two-hour hearing.
Kevin Morikone, a Circuit Court judge on Oahu, was a substitute for Supreme Court Associate Justice Vladimir Devens. The other members of the high court who issued the ruling were Chief Justice Mark Recktenwald and Associate Justices Sabrina McKenna, Todd Eddins and Lisa Ginoza.
The proposed settlement, announced Aug. 2, was crafted by three independent mediators who suggested the parties agree to $4 billion as a maximum fair and practicable sum for the settlement payers based on facts and circumstances of the disaster.
On Aug. 6, attorneys representing the insurance companies filed an objection over the settlement arrangement, saying they weren’t being treated correctly.
Cahill agreed to have the Supreme Court answer three questions designed to determine whether his decision with regard to how the insurance companies were being treated was allowed under Hawaii law.
