Judge agrees to ask state Supreme Court about barriers to settlement of $4 billion Hawaii wildfires

Hawaii’s Supreme Court will be asked to intervene in a matter that threatens to derail a $4 billion settlement in last year’s devastating Maui wildfires.

Judge Peter Cahill of Maui agreed to ask the state high court questions about how insurance companies can recoup money paid out to policyholders.

Insurance companies that paid out more than $2 billion in claims want to file separate lawsuits against the defendants accused of causing the deadly tragedy. It is a common process in the insurance industry known as subrogation.

Related: Judge bars insurers from pursuing defendants who agreed to $4 billion Maui wildfires settlement

But Cahill ruled earlier this month that they can only seek repayment of the amount the defendants agreed to pay, meaning they cannot bring their own legal action against them. The settlement was reached on Aug. 2, days before the one-year anniversary of the fire, amid fears that Hawaiian Electric, the power company some blame for starting the fire, may be on the brink of bankruptcy. Other defendants include Maui County and large landowners.

Preventing insurers from pursuing defendants is a key regulatory term.

Attorneys representing individual plaintiffs in hundreds of fire death and destruction lawsuits have filed a motion asking the judge to certify certain legal questions to the state Supreme Court.

Related: Hawaii Electric Parts $1.7B Loss From Maui Fire

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

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

Attorneys representing the insurance companies said they want to hold the defendants accountable and are not trying to prevent fire victims from getting settlement money.

Individual plaintiffs’ attorneys are concerned that allowing insurers to pursue reimbursement separately will undermine business, deplete what is available to pay fire victims and lead to protracted litigation.

It’s a “cynical tactic” to extract more money from the defendants, said Jesse Creed, a lawyer for the individual plaintiffs in the insurance companies’ lawsuit.

Insurance companies should be the ones wanting to take the issue directly to the state Supreme Court, he said, but they have not joined the motion because they know it would make it easier to settle.

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

“While we wait to see whether the Hawaii Supreme Court will address this matter, 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.

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