The insured was injured in an auto accident on the Big Island on March 26, 1998. See First Ins. Co. of Hawaii, Ltd. v. Dayoan, Sr., 2010 Haw. App. LEXIS 697 (Haw. Ct. App. Nov. 18, 2010). He was covered by a Personal Auto Policy issued in February 1998 by First Insurance. The policy provided coverage for wage loss to any insured who suffered "bodily injury" which prevented the insured from engaging in his employment.
The accident left the insured disabled and unable to engage in his usual occupation as a kitchen helper/dishwasher. He was sixty years old at the time of the accident. First extended coverage and in a letter dated April 3, 1998, explained that that the policy included optional wage loss benefits that would terminate upon the insured's death. First commenced to pay $1500 in month wage loss benefits pursuant to the policy.
After paying wage loss benefits for almost seven years, First filed for declaratory relief on April 21, 2005, seeking a judgment that it was no longer obligated to extend wage loss benefits to the insured, now sixty-eight years old. The complaint was based on amendments to the Hawaii Insurance Code in 1997 and 1998.
The purpose of the 1997 Amendments was to reduce motor vehicle insurance premiums and to preserve adequate protection of drivers' rights. Costly mandatory coverage for wage loss was converted to optional coverage. The 1997 Amendments became effective on January 1,1998, after the insured's accident. In 1998, further amendments were made by reducing the wage loss benefit option and permitting wage loss caps per accident. The 1998 Amendments continued to permit insurers to offer higher wage loss coverage limits for a higher premium.
First moved for summary judgment, arguing the 1998 Amendments capped the amount of wage loss benefits to which insureds were entitled. First argued that although the amendments were enacted subsequent to the accident, they clarified the legislature's intent in adopting the 1997 Amendments, and thereby capped the insured's lifetime recovery for wage loss at $9,000. Otherwise, First argued, the statute was illogical because an insurer would have to continue paying benefits to an insured who was no longer able to work and would not have suffered any wage loss.
The Circuit Court denied First's motion for summary judgment and granted summary judgment to the insured. Further, attorney fees were awarded to the insured at the rate of $250 an hour. First appealed the ruling on summary judgment and the fee award.
The Intermediate Court of Appeals affirmed. Under both the 1997 Amendments and the policy, the insured was entitled to $1,500 per month in wage loss benefits. The fact that the legislature amended the statute in 1998 to allow wage loss benefit caps was not sufficient to establish that it meant to require the caps in 1997.
Further, the attorney fees award was appropriate. The statute allowed the insured to recover reasonable fees when the insured contested its liability under a policy and was ordered to pay benefits. Haw. Rev. Stat. 431:10-242. First sought declaratory relief establishing it was no longer responsible for paying the wage loss benefits. The Circuit Court denied relief and ordered that First had an obligation "to pay wage loss benefits." First further argued a rate of $250 an hour was unreasonable because the Insurance Commissioner had approved the rate of $125 per hour in an unrelated administrative proceeding. The Commissioner's decision did not preclude the Circuit Court from determining that $250 per hour was a more appropriate rate under different circumstances. Further, the insured provided evidence that $250 per hour was well within the prevailing rate for experienced attorneys in Hawaii.