Judge to decide fight over first in line for Maui wildfire funds

HONOLULU (HawaiiNewsNow) - The biggest legal test of the $4 billion Maui wildfire settlement will come Tuesday in Maui Circuit Court.

A judge must decide whether fire victims — or the insurance companies that paid out billions — will be first in line for the settlement money.

The way insurance works is customers are not supposed to “double dip” — get paid twice for the same property damage.

Once there has been an insurance payout, the insurer can demand its money back from a court settlement or verdict.

In the case of the Maui fires, multiply that argument by thousands of victims and billions of dollars — and that’s what’s at stake in court, according to Jesse Creed, whose law firm represents hundreds of victim families.

SPECIAL SECTION: MAUI WILDFIRES

“I don’t think the insurance company should get a penny until every victim is fully compensated,” Creed said. “I think that’s not only the right thing to do and the just thing to do, but that is the law of the state of Hawaii.”

The stunningly quick settlement, reached less than a year after the fires, was done without the approval of insurance companies who say they have already paid $2.3 billion in claims and expect to pay another billion. They are demanding to be reimbursed for what they paid from the settlement.

Gov. Josh Green, on Hawaii News Now Sunrise on Monday, said he was concerned about the issue slowing down the settlement, described the dispute.

“Whether or not the insurance companies claw back some of that money and they don’t want to agree to the settlement unless they can get some kind of repayments for the payments that they put out,” he said.

In their court filings, the insurers wrote: “The reports of a global settlement are greatly exaggerated.” They said the announcement of a deal “... is little more than chasing the cheap sugar high of finality while bypassing the actual detailed work that justice demands.”

The companies say Judge Peter Cahill, who has taken control of the dispute over what is called “subrogation,” should not be rushing the dispute. The companies say the lawyers for the victims and those responsible for the fire are using the settlement to deny them what they are owed.

“If they push in court if they appeal it can delay things,” Green said. “Although I feel fairly confident that Judge Cahill feels strongly the money should go to the people.”

RELATED COVERAGE:

• Less than a week before Maui wildfire anniversary, Hawaii governor announces $4 billion settlement
• Victims fear $4B settlement will hide accountability as Maui wildfire investigations continue
• Maui survivors’ attorney: ‘Best deal that’s possible, as quickly as possible’

While the companies are entitled to money back for the property damage claims they paid, if settlement funds are defined as compensation for emotional suffering instead of property damage, it could be difficult for insurers to collect.

Creed said either by ruling or in settlement talks, the issue has to be resolved.

“It has to be done to get the deal done. It has to be done to get people paid in in Maui,” Creed said.

“People paid their insurance premiums for years,” Green said. “Billions of dollars profits have been made by insurance companies and they did pay our claims on this tragic fire, but I think they know what the risks are and so people get to have all of that money based on that settlement.”

Even if they are wrong on the law and in the eyes of the public, the possibility of delaying the settlement gives the companies leverage to negotiate — and that’s often the way judges want things resolved.

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