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For policy years 1987 and 1988, Mr. Biscoglia submitted formal
reports to HCA setting forth his professional and general
liability reserve recommendations for HCA and the sister
subsidiaries based on a range of values. Those reserve
recommendations included the professional and general liability
funded internally by HCA and the sister subsidiaries as well as
the professional and general liabilities transferred to Parthenon
and PCIC. In those reports, Mr. Biscoglia did not attempt to
allocate the reserve recommendations among the various entities.
In supplemental addenda for policy years 1987 and 1988, Mr.
Biscoglia set forth discounted reserve recommendations for
Parthenon and PCIC based on fixed dollar values for the reserves.
Accounting
Parthenon's accounting department recorded and reported the
results of Parthenon's insurance operations. Parthenon
maintained its own separate accounting system from that of HCA,
including its own journals, general and subsidiary ledgers, and
other appropriate accounting records. Those records were kept in
accordance with HCA's Accounting Manual.
From its inception through November 1986, Parthenon's
accounting department prepared monthly financial statements and
reports referred to as "management reports." After 1986, no
management reports were prepared because the need for the reports
ceased.
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