- 21 -
Parthenon had no planned underwriting profit. It was a pure
captive insurance company but nonetheless submitted annual
reports using the NAIC format for all years in issue except 1982
and 1983. Its premium charges for liability and workers'
compensation coverages were made using rates applied to occupied
beds and patient visits for liability coverage and payroll
amounts for workers' compensation coverage. Those amounts were
charged on a hospital by hospital basis.
Hospitals not owned but managed by petitioners (managed
hospitals) could elect to be insured by Parthenon. Only a small
percentage of the managed hospitals were insured by Parthenon.
Parthenon performed the risk selection element of underwriting
with respect to its coverage of managed hospitals. Parthenon
engaged in marketing of insurance to the managed hospitals.
Separate liability insurance policies were issued to each managed
hospital that elected to be insured by Parthenon. Respondent has
not adjusted the insurance transactions of managed hospitals
reported by petitioners on their consolidated tax returns and its
insurance of managed hospitals is not in issue in the instant
case.
During 1981, Parthenon had 16 employees. By 1986, Parthenon
had 47 employees. During January 1987, all of the HCA companies
underwent a reduction in force, and accordingly Parthenon's staff
was reduced by 12 employees.
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011