The Hawaiʻi Supreme Court heard arguments Thursday morning over insurance issues tying up a potential $4 billion settlement for Maui’s catastrophic 2023 wildfire.
The massive inferno decimated the historic town of Lahaina, killing more than 100 people, destroying thousands of properties and causing an estimated $5.5 billion in damages. Soon afterward, attorneys began lodging hundreds of lawsuits.
A settlement was announced last summer, but insurance companies held out, insisting that they should have the right to go after the defendants separately to recoup money paid out to policyholders.
The justices said Thursday they would take the matter under advisement and issue a ruling as soon as possible but didn't specify.
Here are things to know about the settlement and the issues that could thwart the deal:
The settlement won't be enough
A few days before the one-year anniversary of the Aug. 8, 2023, fire, Gov. Josh Green announced that seven defendants accused of causing the tragedy had agreed to pay $4 billion to resolve claims by thousands of people.
Attorneys representing the individual plaintiffs agreed to the deal amid fears that main defendant Hawaiian Electric, the power company blamed for sparking the blaze, could be on the brink of bankruptcy. Other defendants include the state, Maui County and Kamehameha Schools, the largest private landowner in Hawaiʻi.
Victims' attorneys acknowledged that $4 billion wasn't enough to make up for what was lost but said the deal was worth accepting, given Hawaiian Electric's limited assets.
"They need every penny to restitch the fabric to bring the community back together,” attorney Jesse Creed told the justices Thursday.
Creed said he could relate to the losses the victims face because his own home, children's schools and place of worship just burned in the Palisades fire, one of the wildfires that brought widespread destruction around Los Angeles last month.
Legal wrangling threatens the deal
Attorneys for the victims asked Maui Circuit Court Judge Peter Cahill to bar insurance companies from going after the defendants separately to recoup money — a requirement that was key to the settlement. Cahill agreed, saying insurers could seek reimbursement only from the $4 billion pool the defendants have already agreed to pay.
That didn't sit well with a group of about 200 property and casualty insurers that remain holdouts to the settlement. So far they have paid more than $2.3 billion to people and businesses and expect to pay $1 billion more. They want to be able to pursue their own claims against the defendants.
Cahill has asked the Hawaiʻi Supreme Court questions about subrogation, or how insurance companies can go about recouping money.
Among the questions before the court is 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.
A last-minute deal between victims' lawyers last week averted a separate trial over how to split the $4 billion between individual plaintiffs and others covered by a class-action lawsuit. Some victims had been ready to take the witness stand, while others submitted pre-recorded testimony describing pain made all the more fresh by the recent destruction in Los Angeles.
The Hawaiʻi Supreme Court hearing on Thursday morning is available to stream on YouTube.
