Hawaii’s Supreme Court ruled Monday that insurance companies cannot file their own lawsuits against those responsible for the deadly 2023 wildfire in Maui. This decision allows a $4 billion settlement, which was in danger of falling apart, to proceed.
The settlement involves thousands of people who sued various defendants, including Hawaiian Electric Company. However, some steps still remain to finalize the deal.
The wildfire, which became the deadliest in the U.S. in over 100 years, devastated the historic town of Lahaina. More than 100 people died, thousands of properties were destroyed, and the damage is estimated at $5.5 billion. In the aftermath, attorneys filed hundreds of lawsuits.
A settlement was announced last summer, but insurance companies disagreed. They argued that they should have the right to sue the defendants separately to recover the money they paid out to policyholders.
Monday’s decision removes a major obstacle to finalizing the settlement and sends the case back to a Maui judge for further action. A representative from the insurance companies said he would respond to The Associated Press later on the ruling and whether they would seek a review by the U.S. Supreme Court.
The central issue before the Hawaii Supreme Court was whether state laws related to healthcare insurance reimbursement also apply to property and casualty insurance. The justices ruled that they do.
Plaintiff lawyers were concerned that allowing insurers to pursue their own claims would drain funds meant for fire victims and lead to lengthy legal battles.
Gerald Singleton, a lead attorney for the plaintiffs, expressed relief after the ruling. “Now the settlement can move forward,” he said.
The $4 billion settlement was announced just before the one-year anniversary of the Aug. 8, 2023, fire. It covers claims made by thousands of people and includes seven defendants. The main defendant, Hawaiian Electric, is blamed for starting the fire. Other defendants include the state of Hawaii, Maui County, and Kamehameha Schools, the state’s largest private landowner.
Victims’ attorneys agreed to the settlement, even though $4 billion won’t cover all the losses. They were concerned that Hawaiian Electric’s financial difficulties could delay or complicate the case further.
Jesse Creed, an attorney for the victims, explained that while the settlement is not ideal, it was necessary due to Hawaiian Electric’s limited resources. He added that the funds are critical to rebuilding the community.
Gov. Josh Green also supported the decision. He said that it would help the people of Maui heal and recover more quickly as they rebuild their lives. Green had previously criticized insurance companies for attempting to recoup funds through a legal process known as “subrogation.”
Subrogation allows insurers to recover money paid out in claims when someone else is at fault. While it’s often used in cases where a third party is responsible for damages, it’s not typically used for natural disasters like hurricanes.
Insurance companies have already paid over $2.3 billion to victims and expect to pay an additional $1 billion. They argue that subrogation helps keep premiums down after catastrophic events like wildfires.
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