## Facts

- Gregory Yukumoto was injured when Ruth Tawarahara, driving an SUV, turned left in front of his moped and struck him.
- Yukumoto suffered extensive, serious injuries requiring substantial medical treatment.
- Hawaiʻi Medical Service Association (HMSA), Yukumoto’s health insurer through an employer plan, paid about $325,824.33 in accident-related medical expenses.
- The Yukumotos claimed approximately $4,000,000 in damages, including wage loss and general damages.
- Tawarahara had $1,100,000 in liability coverage, which was paid under a general-damages-only release; the Yukumotos also received $50,000 in underinsured motorist benefits, for a total recovery of $1,150,000 before fees and costs.
- The Yukumotos asserted they remained undercompensated by roughly $2,850,000.
- HMSA filed a lien in the personal injury action, asserting contractual reimbursement/subrogation rights for medical benefits paid.

## Issues

1. Whether a health insurer has equitable subrogation rights, independent of statute, against a third-party tortfeasor who injured the insurer’s insured.
2. Whether contractual subrogation terms in a health-insurance plan may grant broader recovery rights than those allowed by HRS § 663-10 and consistent with HRS § 431:13-103(a)(1).
3. Whether HRS § 663-10 limits a health insurer’s ability to recover from an injured insured’s tort recovery when the insured is not fully compensated.

## Decision

- The Hawaiʻi Supreme Court affirmed the circuit court’s ruling against HMSA.
- The court held health insurers do not possess broad, independent equitable subrogation rights against third-party tortfeasors in personal injury cases.
- The court held health insurers’ reimbursement/subrogation rights are limited to what is authorized under the statutory scheme, including HRS § 663-10 and HRS § 431:13-103(a)(1).
- The court held contractual provisions purporting to expand subrogation beyond statutory limits are unenforceable to the extent they conflict with HRS § 663-10.
- Applying these limits in light of the insureds’ undercompensation, HMSA could not enforce its asserted lien/subrogation claim in the manner sought.

## Legal Principles

- In Hawaiʻi personal injury cases, a health insurer’s recovery for medical payments is confined to statutory reimbursement mechanisms rather than broad, judge-made equitable subrogation.
- HRS § 663-10 reflects legislative policy to protect injured persons who are not fully compensated by limiting medical lien recovery from the tort recovery.
- Contractual subrogation language in a health-insurance plan cannot override or nullify statutory restrictions; conflicting terms are invalid.
- An insurer’s assertion of expansive subrogation in disregard of statutory limits may conflict with Hawaiʻi’s insurance-regulatory provisions, including HRS § 431:13-103(a)(1).

## Conclusion

The Hawaiʻi Supreme Court held that health insurers may not use equitable doctrines or contract terms to pursue broad subrogation against tortfeasors; instead, any reimbursement is limited by Hawaiʻi’s statutory protections for undercompensated injury victims, including HRS § 663-10.


Yukumoto v. Tawarahara, 140 Haw. 285, 400 P.3d 486 (Haw. 2017)