dissenting.
I respectfully dissent.
This diversity case poses the single question of how to properly interpret a decision of the Nebraska Supreme Court, Shelter Ins. Cos. v. Frohlich, 243 Neb. 111, 498 N.W.2d 74 (1993). Our duty is to consider this question of state law de novo, giving the district court decision no deference. See Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991). When I do so, I can only conclude that the court has viewed Frohlich too restrictively. The discussion in Frohlich contains language that may be read in two ways. I believe the better interpretation of Frohlich demands that we apply equitable principles to determine if subrogation is appropriate, and that this analysis is essentially a factual one preventing the entry of summary judgment.
Frohlich certainly states in part what the court today says it says. It states that if the “contract provides for subrogation on payment of less than the full amount of a debt or loss, partial payment of the debt or loss may be the basis for subrogation.” 243 Neb. at 117-18, 498 N.W.2d at 78-79. What is significant, however, is that the court goes on to say: “unless a contract specifically provides otherwise, equitable principles apply even when a subrogation right is based on contract.” Id. at 118, 498 N.W.2d at 79 (citations omitted). The Nebraska Supreme Court concludes that “[although Shelter’s subrogation right arises under its insurance policy ... the exact nature and extent of Shelter’s subrogation right is determined by the circumstances of Frohlich’s settlement and the resulting equities.” Id. The court explains its concern:
Allowing an insurer to subrogate against an insured’s settlement when an insured has not been fully compensated would mean that all the insured’s settlement could be applied to a medical payment subrogation claim with nothing left to compensate the insured for excess medical bills or personal injuries. Insurance companies accept premiums in exchange for medical payment coverage and may be obligated to pay medical expenses regardless of their insured’s negligence or whether a third-party tort-feasor is liable and, therefore, must pay damages. In addition, there is little empirical substantiation that possible reimbursement through successful subro-gation is considered in determining insurance premiums for medical payment coverage.
Id. at 123, 498 N.W.2d at 82 (citing Rimes v. State Farm Mut. Auto Ins. Co., 106 Wis.2d 263, 316 N.W.2d 348 (1982)).
The court concluded that the record did not answer the question of whether the insured had been fully compensated as the result of the settlement with the tort-feasor’s insurer, and thus, a factual issue remained for resolution. Frohlich, 243 Neb. at 123-24, 498 N.W.2d at 82.
It is true that the insurance policy in Froh-lich did not contain a provision requiring subrogation even if the third-party had not paid all of the insured’s damages. On the other hand, the principles announced in Frohlich suggest that subrogation is appropriate, even if the subrogation right arises under a policy, only after an examination of the underlying equities and the circumstances of the settlement. Thus, the policy language alone does not foreclose Park’s claim to the funds. As Frohlich repeatedly stresses, the insurer is obligated to provide medical benefits to the insured irrespective of whether the insured or a third-party caused the injuries. 243 Neb. at 122-25, 498 N.W.2d at 81-82. In addition, Park argues with great force that Nebraska law does not permit an insurer to subrogate against its own insured.
Finally, when the circumstances of this settlement are considered, the record shows that Lincoln National’s counsel kept in close touch with Park’s counsel, knew that Park was conducting settlement negotiations, and yet took no steps to preserve its interest. See Neb.Rev.Stat. § 30-2635. These cireum-*713stances are such that there is a question of fact as to whether Lincoln National waived or is estopped from asserting its subrogation claim. See Jelsma v. Scottsdale Ins. Co., 231 Neb. 657, 437 N.W.2d 778, 785 (1989).
For these reasons, I would reverse the order granting summary judgment and remand to the district court for trial on the factual issues presented in this case.