Opinion ID: 1953826
Heading Depth: 1
Heading Rank: 4

Heading: shelter's subrogation interest

Text: Frohlich contends that Shelter has no subrogation right as the result of the medical payments provision of Tipton's policy. However, Tipton's policy expressly stated that Shelter shall be subrogated to all the rights of recovery therefor which the injured person or anyone receiving such payment may have against any person or organization. In Milbank Ins. Co. v. Henry, 232 Neb. 418, 441 N.W.2d 143 (1989), Milbank brought an action against its insured, Henry, who had been injured while driving her car. In the suit against Henry, Milbank joined as defendants the other motorist involved in the accident and his insurance company which provided liability coverage. Milbank sought to recover the amount paid to Henry under the medical payments provision of her Milbank policy. At issue was the validity of a subrogation provision in Milbank's policy: `If we make a payment under this policy and the person, to or for whom payment is made recovers damages from another, that person shall hold in trust for us the proceeds of the recovery and shall reimburse us to the extent of our payment.' 232 Neb. at 419, 441 N.W.2d at 144-45. This court stated that `a subrogation clause of this kind which gives an insurer a right to subrogation against a third-party tortfeasor for medical payments actually made is a valid and enforceable contractual provision.'  232 Neb. at 420, 441 N.W.2d at 145 (quoting Travelers Indemnity Co. v. Vaccari, 310 Minn. 97, 245 N.W.2d 844 (1976)). Although the subrogation clause in Shelter's policy differs verbally from the clause presented in Milbank Ins. Co., the difference is immaterial for the purpose of determining whether Shelter's subrogation provision is valid. Both the subrogation provision in Shelter's policy and the provision examined in Milbank Ins. Co. state, in substance, that an insurer has a right of subrogation for a recovery from a tort-feasor when the insurer has made payments to the insured under the medical payments coverage of an insurance policy. Thus, the subrogation clause in the insurance agreement between Tipton and Shelter is valid. The question remains, however, whether Shelter's subrogation right applies when Shelter, under its medical payment coverage, pays medical expenses of one other than its insured. The fact that Frohlich was not one of Shelter's policyholders does not determine whether Shelter is entitled to subrogation. Frohlich became a third-party beneficiary of the policy or insurance contract between Tipton and Shelter when Shelter paid Frohlich's medical expenses as required by the policy which Shelter had issued to Tipton. Therefore, Frohlich, by accepting a contractual benefit, is bound by the subrogation clause contained in the insurance policy. See Haakinson & Beaty Co. v. Inland Ins. Co., 216 Neb. 426, 344 N.W.2d 454 (1984) (a third-party beneficiary who accepts a benefit under a contract also assumes an obligation imposed by the contract conferring the benefit). Thus, under the provisions of Tipton's insurance policy, Shelter obtained a subrogation right or interest concerning money recovered by Frohlich when Shelter paid the debt or obligation owed to Frohlich by Denbestes and their insurer. Yet, the precise nature or extent of Shelter's subrogation interest or right is undefined by Tipton's insurance policy.