Articles Posted in Insurance Law

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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

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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

Posted in: Insurance Law

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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

Posted in: Insurance Law

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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

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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

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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

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Appellant, a medical doctor, challenged the partial denial of personal injury protection benefits after treating a patient insured by Appellee. While Appellant's request for an administrative hearing was pending in the Insurance Division of the State Department of Commerce and Consumer Affairs, the patient's available benefits under her policy were exhausted on account of payments to Appellant and other medical providers. Because of the exhaustion, the Insurance Division dismissed Appellant's claim. The circuit court and intermediate court of appeals (ICA) affirmed. The circuit court also denied Appellant's request for attorney's fees and costs under Haw. Rev. Stat. 431:10C-211(a), which allows fees and costs to be awarded even when a party does not prevail on its claim for benefits, finding Appellant's pursuit of the benefits to be unreasonable. The ICA affirmed. Appellant appealed the denial of attorney's fees. The Supreme Court vacated the ICA's judgment and the circuit court's final judgment, holding that the circuit court and ICA erred in concluding that Appellant's claim was unreasonable due to exhaustion of benefits where Plaintiff had made his claim prior to that exhaustion. Remanded. View "Jou v. Schmidt" on Justia Law

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Charles and Lisa Hart filed a complaint against TICOR Title Insurance Company for breach of contract after TICOR refused to defend the Harts under their title insurance policy against an escheat claim asserted by the State. The district court entered judgment in favor of TICOR and awarded TICOR attorneys' fees and costs. The Intermediate Court of Appeals (ICA) affirmed. The Supreme Court vacated the ICA's judgment and reversed the judgment of the district court in favor of TICOR and vacated the district court's award of attorneys' fees and costs to TICOR, holding that TICOR owed a duty to defend the Harts under the policy against the State's claim and prayer for affirmative relief. Remanded to the district court with instructions (1) to enter judgment in favor of the Harts, and (2) to determine an award of attorneys fees and costs to the Harts. View "Hart v. TICOR Title Ins. Co." on Justia Law

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Employee was allegedly involved in a work-related accident on property owned by Corporation. Insurer was Employer's insurance carrier. While paying Employee's workers' compensation benefits, Insurer filed suit against Corporation, asserting its right of subrogation. After the statute of limitations period had elapsed, Employee sought to intervene in Insurer's suit, and the circuit court granted Employee's request. Corporation subsequently moved for summary judgment on the ground that Haw. Rev. Stat. 386-8, which governs the right of an employee to intervene in an employer's third party liability lawsuit under workers' compensation law, did not allow an employee to intervene after the statute of limitations had expired. The circuit court granted Corporation's motion and entered judgment against Employee. The Supreme Court vacated the circuit court's judgment and remanded, holding that Employee could intervene in Insurer's action against Corporation because section 386-8 did not limit Employee's right to intervene in Insurer's timely filed lawsuit. View "First Ins. Co. of Haw., Ltd. v. A&B Props., Inc." on Justia Law

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Alohacare, a health maintenance organization (HMO), submitted a proposal to the Department of Human Services to bid for a Quest Expanded Access contract to provide healthcare services for participants in the state's Medicaid program. The Department of Human Services awarded Quest contracts to United HealthCare Insurance (United) and WellCare Health Insurance (Ohana) but not to Alohacare. Alohacare petitioned the Insurance Commissioner of the Department of Commerce and Consumer Affairs for declaratory relief that the Quest contracts required the accident and health insurers to carry an HMO license. The Commissioner concluded that the license was not required to offer the Quest managed care product because the services required under the contracts were not services that could be provided only by an HMO. The circuit court affirmed. The Supreme Court affirmed, holding (1) AlohaCare had standing to appeal the Commissioner's decision; (2) both accident and health insurers and HMOs were authorized to offer the model of care required by the Quest contracts; and (3) this holding did not nullify the Health Maintenance Organization Act. View "Alohacare v. Ito" on Justia Law