Yukumoto v. Tawarahara

Facts

Gregory Yukumoto (P) was driving his moped in Honolulu. Ruth Tawarahara (D), who was driving an SUV, attempted to make a left turn in front of Yukumoto and struck him with her vehicle. P sustained serious injuries, including brain injury, traumatic hemorrhagic shock, acute respiratory failure, left tibial fracture, right fibula fracture, L2 compression fracture, multiple wounds, and multiple hematomas. P filed a complaint against D in the Circuit Court of the First Circuit. Hawai'i Medical Service Association (HMSA) subsequently filed its 'Notice of Claim of Lien,' contending that HMSA had paid $325,824.33 for medical expenses associated with P's injuries as of September 20, 2014. P filed a Petition for Determination of Validity of Claim of Lien by HMSA pursuant to Hawai'i Revised Statutes (HRS) § 663-10. P's wage loss and general damages claim was 'approximately $4,000,000.' P contended that D 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.' P and D had agreed to their settlement on November 6, 2011. D did not admit fault for the accident. Coupled with a $50,000 'underinsured motorist claim' that P submitted to GEICO Insurance, the Petition contended that P's 'total recovery, before payment of attorneys' fees and costs, was $1,150,000' and that '[t]hey remain undercompensated by approximately $2,850,000.' P claims that HMSA cannot satisfy the provisions of' HRS § 663-10. Under HRS § 663-10, 'for a health insurer to receive any portion of a plaintiff's recovery from the defendant, the health insurer has the burden of proving that the settlement or recovery duplicates medical expenses that were paid by the health insurer.' HMSA claims that HRS § 663-10 'does not abrogate HMSA's contractual lien or subrogation rights, but provides HMSA with an independent statutory right to assert its lien on any amount that P recovers.' The court ruled that HRS § 663-10 abrogated HMSA's right of subrogation against D, holding that the statute provided HMSA's exclusive remedy 'in this particular type of situation,' based on 'the statute itself, the legislative history, and the absence of any particular case law[.]' HMSA was allowed to file a complaint in intervention in the P v. D lawsuit. HMSA claimed it was a ''lienholder or person claiming a lien' pursuant to applicable laws, including but not limited to HRS § 663-10, and has rights of subrogation and other reimbursement rights arising from its contract with Po and at common law.' HMSA sought judgment against D in the sum of $339,255.40 'with interest thereon at the rate of 10% per annum from date of judgment until paid,' as well as payment of its fees and costs. HMSA also filed a separate complaint against D, seeking to ensure its subrogation claim was preserved and to obtain payment of medical benefits it extended on behalf of P. D filed a motion for partial dismissal of HMSA's Complaint, arguing that HMSA asserted subrogation claims which the court determined 'do not exist as a matter of law.' P filed a substantive joinder to D's motion for partial dismissal and a motion to dismiss Da with prejudice, pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 41(a)(2) (2012). P contended that the HMSA Complaint was barred by HRS § 431:13-103(a)(10) and 663-10, and that because 'P's settlement with D was for general damages only,' HMSA 'cannot meet its burden of proving a duplication of benefits and therefore has no reimbursement rights herein.' HMSA argued that it would be prejudiced by D's dismissal because it would lose its 'contract and common law' rights of subrogation against her. The court granted P's motion to dismiss D, dismissing all claims against her with prejudice. The court also ordered P's counsel to retain $339,255.40 from the settlement funds received from D in their client trust account, as that was the amount set forth in HMSA's Notice of Claim of Lien. D filed a motion to consolidate HMSA's separate lawsuit against her with the underlying P's lawsuit, which HMSA opposed. HMSA filed a supplemental memorandum in opposition to P's Petition. HMSA asserted that it did 'not believe it [would] be able to meet its burden to establish by a preponderance of the evidence that the settlement proceeds paid by D to P duplicate the medical benefits paid by HMSA.' D filed a motion to dismiss the case. D argued that HMSA had no standing to bring an action against her because the court had ruled that HMSA's subrogation rights were abrogated. HMSA argued that 'its right of subrogation against D is separate and independent from its right of reimbursement from P under HRS § 663-10, and will survive the Court's ruling as to a distribution of the proceeds of the pending settlement under HRS § 663-10,' and that 'a ruling by the Court that the settlement does not duplicate the medical benefits paid by HMSA will conclusively establish that D is still liable to HMSA for that element of damages resulting from her tortious conduct.' The court ruled 'HMSA is not entitled to a payment of the amount of its claimed lien,' and permitted P's counsel to release the settlement proceeds that were being held in their client trust account to P. The court entered final judgment on May 28, 2015. HMSA appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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