In Wilson v. AIG, 89 Haw. 45, 968 P.2d 647 (1998), the Hawaii Supreme Court held that an insured was not the real party in interest when challenging its auto insurer's refusal to pay benefits to the insured's medical provider. Relying on legislation post-dating its prior decision, the Court overruled Wilson in an unanimous decision authored by Justice McKenna. Ahn v. Liberty Mut. Fire Ins. Co., No. 28314 and Kim v. Liberty Mut. Fire Ins. Co. No. 28315 (Haw. Sup. Ct. Oct. 4, 2011) [Decision here]. Prior posts on Kim and Ahn are here, here and here.

  Liberty Mutual denied Personal Injury Protection ("PIP") benefits to Ms. Kim and Ms. Ahn for treatment after their respective motor vehicle accidents. In proceedings before the Insurance Commissioner, Liberty Mutual's motions for summary judgment were granted because the insureds were deemed to not be the real parties in interest for pursuing PIP benefits. The circuit court concluded Act 198 had legislatively overruled Wilson, and thatthe insureds were real parties in interest to challenge Liberty Mutual's denials. Therefore, the Insurance Commissioner's final order was reversed. The Hawaii Intermediate Court of Appeals affirmed the circuit court.

   Act 198, enacted in 2006, amended the no-fault law in Hawaii. The Act's legislative history expressed its intent to overrule Wilson. Further, the Act specifically stated that if there was a dispute between the provider and the insurer regarding payment of a claim, "the provider, insurer, or claimant may submit the dispute to the commissioner, arbitration, or court . . . ."

    The Supreme Court first held that the ICA erred in affirming the circuit court's reversal of the Insurance Commissioner's final order. Act 198 was not effective until June 14, 2006, after the Insurance Commissioner's final orders. To conclude that Act 198 conferred real party in interest on these insureds, the Act would have to have retrospective effect. Here, the Act was not retrospective because the legislature did not choose to make it so.

    Nevertheless, the Court held that Wilson should be overruled. Even though Act 198 was not retrospective, it was still instructive. The Act's legislative history clearly expressed the Legislature's view that insureds should be real parties in interest to pursue all PIP disputes whether through the Insurance Commissioner, arbitration, or a court.

    Rebecca Copeland (www.recordonappeal.com) gives her appellate perspective on the cases here.