The Supreme Court of Hawaii this week decided that insurance companies seeking to file their own suits against those deemed responsible for 2023’s devastating wildfires on the island of Maui cannot proceed, paving the way for a $4 billion settlement to continue, according to reporting from the Associated Press (AP).
The wildfires destroyed roughly 80% of the historic town of Lahaina, a cultural showcase and tourist mainstay for the booming Hawaiian tourism industry. There were 102 people killed and thousands of properties destroyed. The devastation came to an estimated $5.5 billion in damages.
A $4 billion settlement stemming from the disaster was announced last August. It was reached by the plaintiffs and seven defendants: the State of Hawaii, the County of Maui, Hawaiian Electric, Kamehameha Schools, West Maui Land Co., Hawaiian Telcom and Spectrum/Charter Communications.
But insurance companies held off on participating, seeking to be able to file their own suits against defendants in an effort to recover some of the costs they paid out to policyholders. This, AP said, served as a “key roadblock” to moving the settlement forward and now that it’s out of the way, the decision returns to a Maui County judge for determination of a path forward.
While insurance companies expressed “disappointment” about the decision to AP, they did not specify whether they would seek an appeal to a higher court, like the U.S. Supreme Court.
“A key question that was before Hawaii Supreme Court was whether state laws controlling health care insurance reimbursement also apply to casualty and property insurance in limiting companies’ ability to pursue independent legal action against those held liable,” AP reported. “The justices answered yes.”
Attorneys for plaintiffs expressed concern that if insurers were allowed to seek their own reimbursements separately, it could be a “deal-breaker” for the existing settlement agreement and prolong the relief timeline for those seeking to rebuild after the fires.
Power company Hawaiian Electric has been singled out by reports investigating the cause of the blaze as a key player. An AP report found that overgrown brush underneath one of its power stations likely led to the outbreak of the fire. But the company’s own shaky financial standing precludes the possibility of a larger settlement. Plaintiffs agreed to the settlement in part due to the potential for the power company’s bankruptcy, despite the total figure not being enough to cover their losses.
But insurance companies themselves are not without recourse, according to Jacob Lowenthal, an attorney representing some of the original plaintiffs.
“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,” the AP report stated based on input from Lowenthal.
