- 65 -
change significantly during the years in issue from the process
used during 1979. Annual approval of Parthenon's premium rates
is not required by the Tennessee captive insurance statute.
Furthermore, contrary to respondent's contention, there is no
indication that HCA used or could use Parthenon's assets except
in conformity with the Tennessee captive insurance statute.
Respondent contends that, from its inception, HCA agreed to
contribute additional capital to Parthenon. Neither HCA nor the
sister subsidiaries, however, agreed to, nor did the Department
of Insurance require HCA or the sister subsidiaries to agree to
be responsible for, any losses of Parthenon when Parthenon was
reincorporated in Tennessee during 1979. Although the Department
of Insurance, and HCA's management, may have expected HCA to
provide financial help if Parthenon were to experience financial
difficulties, there was no legal requirement or binding agreement
that HCA or the sister subsidiaries do so.
Respondent contends that the sister subsidiaries' lack of
choice as to insurer or insurance coverage demonstrates that the
insurance policies purchased by HCA and the sister subsidiaries
from Parthenon were not insurance policies as commonly understood
in the industry and that those policies were not entered into as
bona fide arm's-length contracts by the subsidiaries. Respondent
Page: Previous 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 NextLast modified: May 25, 2011