Insurance companies seeking to recover billions of dollars already paid to Maui fire victims are urging a federal judge to intervene in an ongoing legal dispute in state court.
Maui Circuit Court Judge Peter Cahill has, to date, prevented more than 140 insurers from pursuing Hawaiian Electric Co. (HECO), Kamehameha Schools, and other parties in efforts to recover portions of the $2.3 billion paid out in claims. However, the Hawaii Supreme Court has agreed to consider whether insurance companies have the right to sue HECO and other potential responsible parties, even though thousands of wildfire victims have already filed lawsuits.
Now, the insurers are appealing to U.S. District Court Judge Jill Otake to get involved.
At the center of the conflict is a proposed $4 billion settlement between wildfire victims and the defendants. If the insurance companies are granted permission to seek damages independently, it could jeopardize the settlement.
The insurers argue that they are being denied the right to pursue their lawsuits, referred to as subrogation claims.
“We are simply seeking our day in court,” said Adam Romney, an attorney representing the insurers, in a text message.
In a recent motion filed in federal court, Romney and the insurers’ legal team accused the attorneys representing the victims and the defendants of trying to exclude the insurance industry from the settlement.
“These so-called ‘global resolution settlement proceedings’ are just a euphemism for a process that aims to undermine the legal rights of Subrogation Plaintiffs,” the motion stated.
Jesse Creed, a liaison counsel for individual wildfire victims who helped broker the proposed settlement, dismissed the insurers’ claims, accusing them of seeking a new venue after encountering resistance from both Judge Cahill and Oahu Circuit Court Judge Dean Ochiai.
“This is nothing more than blatant forum shopping,” Creed said. “They didn’t like the rulings from Cahill, Ochiai, or the fact that the Hawaii Supreme Court is now involved.”
Creed also pointed out that the insurers only decided to involve the federal court after all these developments.
Subrogation lawsuits, which allow insurers to recover funds from parties allegedly responsible for damages, are a standard practice in the industry. The insurers’ allegations that HECO and Kamehameha Schools may bear responsibility for the fires gained further traction on Wednesday, following a report by Maui County and the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, which supported the insurers’ claims.
The central question is whether the insurers’ right to subrogation is impacted by the proposed settlement. The Hawaii Supreme Court is expected to rule on this matter by the end of the year. Meanwhile, the insurers are turning to the federal court, hoping for what they believe might be a more impartial hearing from Judge Otake.
The insurers include international firms like Lloyds of London, Mitsui Sumitomo, and Swiss Re International, along with major U.S. companies such as State Farm and Allstate, and local insurers such as First Insurance Co., Zephyr Insurance, and Island Insurance.
The defendants, including HECO, the State of Hawaii, Maui County, Spectrum, and Hawaiian Telcom, have collectively agreed to pay $4.04 billion to settle the litigation.
According to the settlement terms, the agreement aims to cover “all Maui Fires Claims of any kind,” including damages, equitable relief, subrogation, lien payments, attorney fees, expert fees, costs, and all related remedies.
However, the insurers have made it clear that they have no intention of relinquishing their claims.
In their court filing, the insurers provided a detailed account of mediation and legal proceedings, where they claim their questions went unanswered. They also highlighted an incident where Judge Cahill held what they described as an “irregular proceeding.”
“At 9:05 a.m., Judge Cahill recessed the hearing and held a private in-chambers meeting with attorneys representing individual plaintiffs and defendants,” the filing stated. “The meeting was not open to the public and was not livestreamed on the Hawaii State Judiciary’s YouTube channel. At 9:57 a.m., Judge Cahill reconvened the public hearing and discussed a ‘plan’ or an ‘idea’ developed during the private meeting.”
Later during the hearing, Cahill issued an order asserting his authority to address subrogation issues.
Shortly after, a “global settlement” was announced, excluding the insurers from the agreement.
Civil Beat’s coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.
