February 24, 2020 – The Hawaii Supreme Court let stand the Rudel v. HMAA ruling of the 9th Circuit Court of Appeals holding that Hawaii health insurers must follow Hawaii law that prohibits health insurers from taking funds from accident victims unless the health insurer can prove a double recovery. This case built upon the law laid down Hawaii Supreme Court case of Yukumoto v. Tawarahara. Mr. Rudel and Mr. Yukumoto were represented by Woody Soldner of Leavitt, Yamane & Soldner.
In reaching the conclusion that challenges to a plan's right to reimbursement are properly characterized as § 502(a) claims, we join the Third, Fourth, and Fifth Circuits. Id.; Singh v. Prudential Health Care Plan, Inc., 335 F.3d 278, 291 (4th Cir. 2003) (characterizing reimbursement as a § 502 claim to ensure that benefits are not "diminished by [a] payment" to insurers).
The Hawai'i Statutes only impact the insurer's subrogation rights against a third party tort settlement fund. There are no statutory provisions of ERISA that address reimbursement limitations. Thus, no conflict exists between the Hawai'i Statutes and ERISA.
Similarly, in Singh, the Fourth Circuit held that a state antisubrogation statute that prohibited insurance providers from seeking reimbursement from a third-party settlement was saved from preemption. 335 F.3d at 281. The Fourth Circuit reasoned that the statute "simply mandat[ed] or prohibit[ed] certain terms of policy coverage" and did not "force a choice between State regulation of insurance and the prescribed remedies of § 502(a)." Id. at 287–88.
The situation is identical here. The Hawai'i Statutes operate to define the scope of a benefit provided by the Plan; they do not create additional remedies not permitted by ERISA. Thus, because the statutes do not impermissibly expand the scope of liability outlined in § 502(a), they are not conflict preempted and can apply the rule of decision.
And, as was true in Singh, the Hawai'i Statutes do not conflict with an ERISA provision because there are no statutory provisions of ERISA that address reimbursement limitations. The Hawai'i Statutes merely regulate the terms that an ERISA plan provider may employ-they do not offer any benefits that conflict with those provided by ERISA.