No. SCAP-15-0000460, Thursday, March 17, 2016, 11:15 a.m.

GREGORY SHIGEO YUKUMOTO and DIANE YUKUMOTO, Respondents/Plaintiffs-Appellees, vs. RUTH TAWARAHARA, Respondent/Defendant-Appellee, and JOHN DOES 1-10, DOE CORPORATIONS 1-10, DOE PARTNERSHIPS 1-10, and DOE ENTITIES 1-10, Respondents/Defendants.  HAWAII MEDICAL SERVICE ASSOCIATION, Petitioner/Intervenor-Plaintiff-Appellant, vs. RUTH TAWARAHARA, Respondent/Defendant-Appellee, and JOHN DOES 1-10, DOE CORPORATIONS 1-10, DOE PARTNERSHIPS 1-10, and DOE ENTITIES 1-10, Respondents/Defendants.
 
The above-captioned case has been set for argument on the merits at:

Supreme Court Courtroom
Ali`iolani Hale, 2nd Floor
417 South King Street
Honolulu, HI 96813

Attorneys for Petitioner HMSA:
    Dianne Winter Brookins and Morgan Lisa Early

Attorneys for Respondents Yukumoto, et al.:
    Woodruff K. Soldner, Michael R. Cruise, and R. Aaron Creps

NOTE: Order granting Application for Transfer, filed 10/13/15.

COURT: MER, CJ; PAN, SSM, RWP, and MDW, JJ.

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Brief Description:

Petitioner-Intervenor/Plaintiff-Appellant Hawai`i Medical Service Association (HMSA) appeals from the Circuit Court of the First Circuit’s May 28, 2015 judgment ruling that HRS § 663-10 provides HMSA’s sole avenue to pursue reimbursement of funds paid to an insured when the insured settles with a third-party tortfeasor.

This case arises from a motor vehicle accident between Plaintiff Gregory Yukumoto and Defendant Ruth Tawarahara in March 2014. Tawarahara, who was driving an SUV, struck Yukumoto, who was attempting to make a left turn on his moped. Yukumoto sustained several serious injuries, and he and his wife filed a negligence complaint against Tawarahara on May 27, 2014.

Tawarahara had only $1,100,000 of insurance coverage through a State Farm Insurance policy, which State Farm agreed to pay pursuant to a “general damages only” release.  HMSA, which insured Yukumoto through his employer, the State of Hawai`i, filed a Notice of Claim of Lien on October 1, 2014, contending that it had paid Yukumoto $325,824.33 for his injuries.

On October 17, 2014, the Yukumotos filed a Petition in circuit court to determine the validity of HMSA’s lien, pursuant to HRS § 663-10. HMSA intervened to protect its subrogation rights against Tawarahara.   

After a period of discovery, HMSA conceded that it could not meet its burden under HRS § 663-10 to show that the settlement proceeds paid by Tawarahara to the Yukumotos duplicated the medical benefits paid by HMSA. On May 6, 2015, the circuit court ruled that HMSA was not entitled to a payment of the amount of its claimed lien and permitted Plaintiffs’ counsel to release to the Yukumotos the settlement proceeds that were being held in their Client Trust Account. HMSA filed its Notice of Appeal against the Yukumotos and Tawarahara on June 15, 2015.  HMSA subsequently filed a transfer application to the Hawai`i Supreme Court, which was granted on October 13, 2015.  HMSA presents the following question to this court:

Whether HRS § 663-10 and/or HRS § 431:13-103(a)(10) abrogate an insurer’s right of subrogation against a third-party tortfeasor responsible for injury to its insured.