Justia Hawaii Supreme Court Opinion SummariesArticles Posted in Insurance Law
Carvalho v. AIG Hawaii Insurance Co.
The Supreme Court affirmed in part and vacated in part the judgment of the intermediate court of appeals (ICA) in this dispute regarding payment of uninsured motorist (UM) and underinsured motorist (UIM) benefits to Plaintiff, holding that the circuit court properly excluded evidence related to an unleaded claim but erred in denying Plaintiff's motion to amend complaint solely on the basis of undue delay.Plaintiff, individually and as personal representative of the estate of her son, who died as a passenger in an automobile accident, brought this action seeking a declaratory judgment, arguing that Defendant improperly failed to recognize that UM and UIM coverages totaling $1.2 million were available to her. At issue before the Supreme Court was whether the circuit court erred in granting Defendant's motion to present evidence or in denying Plaintiff's motion to amend complaint. The ICA affirmed. The Supreme Court vacated in part, holding that the circuit court (1) did not abuse its discretion in granting Defendant's motion to preclude evidence; but (2) erred in concluding that Plaintiff could not amend her complaint due to undue delay. View "Carvalho v. AIG Hawaii Insurance Co." on Justia Law
Moranz v. Harbor Mall, LLC
In this case, the Supreme Court clarified the proper timing of Alvarado calculations, which determines the reimbursement due the insurer from a third-party settlement, and the reimbursement process for an insurer when the amount of workers' compensation (WC) benefits the insurer has already dispensed to the employee is less than the amount it owes the employee for its share of attorney's costs and fees for the third-party action.Petitioner received WC benefits from Respondent. Petitioner brought suit against the owner of the building in which she was injured and reached a settlement. Respondent then sought reimbursement of the WC benefits it had paid to Petitioner under Haw. Rev. Stat. 386-8 and Alvarado v. Kiewit Pacific Co., 993 P.2d 549 (Haw. 2000). At issue was whether certain WC benefits that Respondent owed Petitioner were properly classified as "paid compensation" and whether the process of Respondent's reimbursement of WC benefits exceeded the amount it had previously contributed to Petitioner as "paid compensation." The Supreme Court held (1) Alvarado calculations shall be performed based on the date on which the employee receives the third-party recovery; and (2) an insurer's "share" of the attorney's fees and costs the employee incurs while pursuing third-party recovery is based on the insurer's total WC liability. View "Moranz v. Harbor Mall, LLC" on Justia Law
State Farm Mutual Automobile Insurance Co. v. Mizuno
The Supreme Court answered a certified question by concluding that, under Hawai'i law, a permissive user of an insured vehicle, whose connection to the vehicle is permission to use the vehicle to run errands and drive to work, was entitled to uninsured motorist (UM) benefits under the chain-of-events test because he was injured by an uninsured motorist.The Supreme Court determined that the proper inquiry under the chain of events test was whether a permissive user has retained a sufficient connection to the insured vehicle. The Court then held that, under the chain of events test, the driver at issue was entitled to UM benefits because he was a permissive user of the insured vehicle during the chain of events resulting in his injury caused by an uninsured motor vehicle. View "State Farm Mutual Automobile Insurance Co. v. Mizuno" on Justia Law
Adams v. Hawaii Medical Service Ass’n
The Supreme Court reversed the judgment of the intermediate court of appeals (ICA) affirming the judgment of the circuit court that there were not genuine issues of material fact regarding whether Defendant, Hawaii Medical Service Association (HMSA), acted in bad faith in denying Brent Adams' claim for coverage of an allogenic transplant, holding that there were genuine issues of material fact as to whether HMSA fulfilled its duty of good faith and fair dealing in its handling of Brent's claim.After Brent was diagnosed with stage III multiple myeloma, a life-threatening form of bone marrow cancer, doctors determined that Brent's best chance of survival was first an autologous transplant and then an allogenic transplant. HMSA provided coverage for the first phase of the transplant but denied the claim as to the allogenic transplant. Brent subsequently died. Brent and his wife, Patricia, filed this action alleging that HMSA acted in bad faith in administering Brent's claim for the allogenic transplant. The Supreme Court reversed the lower courts' summary judgment rulings for HMSA, holding that evidence of HMSA's conduct during its relationship with Brent raised genuine issues of material fact as to whether HMSA unreasonably handled Brent's claim for an allogenic transplant. View "Adams v. Hawaii Medical Service Ass'n" on Justia Law
Yukumoto v. Tawarahara
Health insurers do not have a broad, unrestricted right of subrogation against third-party tortfeasors who cause injury to their insureds but, rather, are limited to reimbursement rights established by statute.In this personal injury case, the circuit court ruled that Haw. Rev. Stat. 663-10 and/or Haw. Rev. Stat. 431:13-103(a)(1) abrogated Hawai’i Medical Service Association’s (HMSA) contractual and common law rights in subrogation against a third-party tortfeasors responsible for injury to its insured. The Supreme Court affirmed, holding (1) a health insurer does not have equitable subrogation rights against a third-party tortfeasor in the context of personal injures; (2) a health insurer’s subrogation and reimbursement rights are limited by section 663-10 and section 431-13:103(a)(1); (3) any contractual provision that conflicts with section 663-10 is invalid; and (4) section 663-10 takes precedence over HMSA’s subrogation rights. View "Yukumoto v. Tawarahara" on Justia Law
St. Paul Fire & Marine Ins. Co. v. Liberty Mut. Ins. Co.
Plaintiff, the excess insurer, and Defendant, the primary insurer, issued insurance policies to a travel service company. The company was sued for damages resulting from an accidental death. The case was settled in an amount in excess of Defendant’s policy limit. Plaintiff filed a complaint against Defendant, alleging that Defendant acted in bad faith by rejecting multiple settlement offers within the limit of its primary liability policy. Defendant moved for judgment on the pleadings, arguing that Plaintiff lacked standing to assert a claim for insurer bad faith and that Plaintiff had no claim against Defendant for equitable subrogation. The federal district court certified a question to the Hawaii Supreme Court. The Supreme Court held that an excess liability insurer can bring a cause of action under the doctrine of equitable subrogation against a primary liability insurer who, in bad faith, fails to settle a claim within the limits of the primary liability policy when the primary insurer has paid its policy limit toward settlement. View "St. Paul Fire & Marine Ins. Co. v. Liberty Mut. Ins. Co." on Justia Law
C. Brewer & Co. v. Indus. Indemnity Co. of Am.
C. Brewer and Company, Ltd. (C. Brewer) sold the Kaloko Dam to James Pflueger. The Dam subsequently collapsed, resulting in seven deaths and extensive property damage. Pflueger filed suit seeking damages and indemnification from C. Brewer for claims against him arising out of the Dam’s failure. C. Brewer filed a complaint against James River Insurance Company (James River) seeking a ruling regarding James River’s obligations under a commercial general liability policy issued to C. Brewer that was in effect at the time of the Dam's failure. The circuit court granted summary judgment for James River, concluding that a Designated Premises Endorsement (DPE) precluded coverage. The Intermediate Court of Appeals (ICA) concluded that the intent of the parties as to the DPE was ambiguous and thus remanded for a determination of the parties’ intent as to the DPE. The Supreme Court affirmed in part and vacated in part, holding that the circuit court erred in granting summary judgment for James River and that the ICA erred in concluding it was necessary to determine the parties’ intent as to the DPE, as the DPE did not limit liability to injury and damage occurring on the designated premises. Remanded. View "C. Brewer & Co. v. Indus. Indemnity Co. of Am." on Justia Law
Ito v. Investors Equity Life Holding Co.
In 1994, Investors Equity Life Insurance Company of Hawaii, Ltd. (IEL) was liquidated. The State Insurance Commission was appointed as IEL’s liquidator (Liquidator). In 1996, Investors Equity Life Holding Company (IELHC), the former parent company and sole shareholder of IEL, surrendered all of its shares in IEL to the Commissioner as part of a settlement agreement to resolve claims relating to IEL’s insolvency. The Liquidator proceeded to administer IEL’s estate. In 2008, IELHC wrote to the Liquidator claiming that it held legal or equitable title to all of IEL’s stock and demanding that the Liquidator turn over to IELHC all shares and assets remaining in IEL’s estate. The Liquidator denied the claim. The circuit court affirmed. The Supreme Court affirmed, holding (1) the circuit court did not err in concluding that IELHC asserted a claim against IEL’s estate and that the claim was time barred; (2) the circuit court had subject matter jurisdiction over IELHC’s claim and personal jurisdiction over IELHC; (3) there were no grounds for abating the adjudication of IELHC’s claim; and (4) the circuit court’s procedures met due process requirements. View "Ito v. Investors Equity Life Holding Co." on Justia Law
Nautilus Ins. Co. v. Lexington Ins. Co.
VP & PK purchased an insurance policy from Lexington Insurance Company for work on a construction site. Kila Kila, one of VP & PK’s subcontractors, purchased an insurance policy from Nautilus Insurance Company. Both policies contained an “other insurance” provision and included duties to defend and indemnify. When VP & PK and Kila Kila were sued for damages resulting from the construction, Nautilus funded the defense of both Kila Kila and VP & PK. Lexington satisfied the judgment against VP & PK but did not contribute to the defense costs. Nautilus filed a complaint seeking (1) a declaration that Lexington owed VP & PK a duty to defend, which it breached; and (2) equitable contribution from Lexington for defense costs. The U.S. district court granted summary judgment for Lexington, holding that Lexington’s policy was in excess to Nautilus’s policy, and therefore, Lexington’s duty to defend was not triggered. The Hawaii Supreme Court accepted certified questions from the court of appeals and held, inter alia, that (1) an “other insurance” clause purporting to release an otherwise primary insurer of the duty to defend if the insurer becomes excess as to liability is enforceable, but only as between two or more insurers seeking to allocate or recover defense costs; and (2) an otherwise primary insurer who becomes an excess insurer by operation of an “other insurance” clause has a duty to defend as soon as a claim is tendered to it and there is the mere possibility that coverage of that claim exists under its policy. View "Nautilus Ins. Co. v. Lexington Ins. Co." on Justia Law
Willis v. Swain
Petitioner was a passenger in an uninsured vehicle that was in an accident. At the time, Petitioner had a certificate policy issued by the Department of Human Services through its Joint Underwriting Program (JUP). The JUP Bureau determined Petitioner was entitled to receive benefits under the JUP and assigned Petitioner's claim to Respondent. Respondent, however, denied Petitioner's request for coverage because Petitioner's certificate policy did not include uninsured motorist coverage. Petitioner sued Respondent, alleging claims of, inter alia, bad faith. The circuit court entered summary judgment for Respondent. The intermediate court of appeals (ICA) affirmed, concluding that an underlying insurance contract was required to assert a claim of bad faith against an insurer. The Supreme Court vacated the judgments of the lower courts, holding (1) under the JUP, the insurer assigned to a claim owes the same rights to the person whose claim is assigned to it as the insurer would owe to an insured to whom the insurer had issued a mandatory motor vehicle insurance policy; (2) the insurer's good faith covenant implied in such motor vehicle policies applies to claimants under the assigned claim procedure despite the absence of an insurance policy; and (3) accordingly, Respondent owed Petitioner a duty of good faith.View "Willis v. Swain " on Justia Law