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control by the Department of Insurance; (3) approval of the rates
between Parthenon and its sister subsidiaries, and protection of
Parthenon's assets, was not accomplished on an annual basis by
the State of Tennessee; (4) there was an agreement by which the
sister subsidiaries or HCA would contribute additional capital to
Parthenon; (5) HCA's hospital subsidiaries contributed additional
amounts to Parthenon; (6) the insurance policies that Parthenon
issued to the sister subsidiaries did not constitute bona fide
insurance contracts as commonly understood in the insurance
industry; (7) HCA's hospital subsidiaries as corporate entities
did not operate the individual hospitals; (8) the premiums were
both overstated (for 1986, 1987, and 1988) and understated (for
1984) at the whim of HCA based on HCA's needs at the time the
premiums were determined; and (9) Parthenon filed its income tax
return on a consolidated basis with HCA and its subsidiaries but
not on the insurance company forms required by the income tax
regulations. Accordingly, respondent contends that Humana, Inc.
v. Commissioner, supra, does not control the outcome of the
instant case because the facts are distinguishable.
Respondent contends further that HCA's decision during 1985
to use the assets and reserves of Parthenon to organize a surplus
lines company to provide medical malpractice insurance to
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