Hawai’i’s PIP Subrogation DUI Loophole

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The law of physics known as the “Uncertainty Principle” states that the position and velocity of an object cannot be measured exactly, at the same time, even in theory. The reason for this is that any attempt to measure precisely the velocity of aHawaii Flag subatomic particle, such as an electron, will knock it about in an unpredictable way, so that a simultaneous measurement of its position has no validity. Similarly, Hawai’i Personal Injury Protection (PIP) subrogation is currently in such a vacuum, with trial lawyers and subrogation professionals both uncertain over and unable to measure the current state of the law. It was author R. Fitzhenry who once said, “Uncertainty and mystery are energies of life. Don’t let them scare you unduly, for they keep boredom at bay and spark creativity.” If true, this means that PIP subrogation in Hawai’i will never be mundane, and creatively asserting your rights of PIP subrogation with confidence can and will produce results.

Minnesota and Hawai’i don’t have a lot in common. However, in 2013, the Minnesota Court of Appeals – of all places – laid down some rather novel and earth-shattering law regarding PIP subrogation in Hawai’i. In American Family Mutual Ins. Co. v. American Automobile Ass’n d/b/a Auto Club Ins. Ass’n, 2013 WL 656493 (Minn. 2013), the court single-handedly resurrected common law PIP subrogation in the Aloha State. PIP subrogation in Hawai’i has been dead for years. However, as in the infamous “Bring Out Your Dead” Monty Python skit, PIP subrogation is feebly crying out, “I’m not dead yet!” An article explaining why it still has a pulse can be found HERE.

Even PIP reimbursement rights have been in limbo and most practitioners even argued that it should be given last rites. Because of a statute that limits PIP reimbursement to $5,000 for all practical purposes, as well as a conflict with the “Covered Loss Deductible” (CLD) Statute, which provides that any bodily injury recovery is “reduced by $5,000 or the amount of PIP benefits incurred, whichever is greater, up to the maximum limit,” trial lawyers and the Hawai’i Association for Justice have been arguing that PIP reimbursement has assumed room temperature. The CLD Statute is interpreted by them as requiring up to a $10,000 deduction from any personal injury settlement or judgment, effectively eliminating any PIP subrogation or reimbursement rights, because the portion of the recovery “duplicating” PIP benefits is effectively removed from the recovery. They feel that when you deduct the CLD, there are no PIP benefits duplicated in the recovery subject to reimbursement under § 431:10C-307. Yet, there is some disagreement as to whether the CLD removes only up to the $10,000 maximum limit from the recovery or removes a larger amount in cases where the PIP carrier carried additional coverage in excess of the $10,000 aggregate limit.

PIP subrogation and reimbursement in Hawai’i has been dormant partly because of the confusion underlying the interplay between its no-fault statutes and partly because even if trial lawyers lose their argument that the CLD Statute requires a $10,000 deduction from any personal injury settlement or judgment, making the effort cost-ineffective. There is an “uneasy peace” between liability carriers and PIP carriers with regard to PIP subrogation. The uncertainty and potential cost-ineffectiveness of PIP subrogation, combined with the fact that doctors prefer the reimbursement rates from health plans over those of PIP or Medicare, means that Hawai’i sees relatively little PIP subrogation and reimbursement.

Notwithstanding all the confusion and disagreement overshadowing PIP subrogation and reimbursement, there is a little known “loophole” that makes PIP subrogation simple and straightforward in certain cases. In PIP cases, where the tortfeasor has been convicted of driving under the influence, the PIP subrogation doors open wide for the astute recovery or claims professional. The reason is because the conviction allows for an exception or loophole to the subrogation-strangling effect of Hawai’i’s auto no-fault laws, allowing the PIP carrier to proceed with normal subrogation claims against the third-party tortfeasor either directly via a subrogation action or indirectly via reimbursement.

A driver in Hawai’i is presumed to be driving under the influence (DUI) of alcohol if he or she has a blood alcohol content (BAC) of .08. Haw. Rev. Stat. § 291E-61(a)(4). The BAC limit for minors is zero. Haw. Rev. Stat. § 291E-64. The statute prohibits drivers under the age of 21 from operating a vehicle with any measurable amount of alcohol in their system. Id. A DUI conviction avoids the predicates and limits of Hawaii’s no-fault system. Successful PIP subrogation is as easy as obtaining a certified DUI conviction from ecrim.ehawaii.gov, or a LEXISNEXIS Accurint search. When an accident is caused by the third-party tortfeasor driving under the influence, § 431:10C-306(e)(2)(D) applies. It provides that neither tort immunity nor the CLD are applicable under such circumstances. Section 431:10C-306(e)(2)(D) provides as follows:

(e) No provision of this article shall be construed to exonerate, or in any manner to limit:

(2) The criminal or civil liability, including special and general damages, of any person who, in the maintenance, operation, or use of any motor vehicle:

(D) Causes death or injury to another person in connection with the accident while operating the vehicle in violation of section 291E-61 or section 291-4 or 291-7, as those sections were in effect on or before December 31, 2001.

Therefore, when the tortfeasor drives drunk and causes an accident, PIP subrogation proceeds just as it would in any state without no-fault insurance laws. You can proceed with common law subrogation and/or reimbursement efforts just like you could before the dawn of no-fault and the amendment of § 431:10C-307, removing the words, “right of subrogation.”

It should also be noted that Hawai’i courts have held that an insured does not have the authority to waive the rights of a subrogated carrier and that such a carrier has the right to pursue an at-fault party or their insurer for benefits paid despite any release by their insured to the contrary. Grain Dealers Mutual Insurance Co. v. Pacific Insurance Co., 768 P.2d 226 (Haw. 1989).

Matthiesen, Wickert & Lehrer, S.C. is actively pursuing PIP reimbursement and subrogation rights in Hawai’i. If you are in the market for full, cost-effective Med Pay, PIP, or collision subrogation results anywhere within North America, please contact Hector Salitrero at [email protected].