- 69 -
An additional distinction between the instant case and
Humana, Inc. v. Commissioner, supra, is that on four separate
occasions during the years in issue HCA and the sister
subsidiaries made reserve strengthening payments to Parthenon
totaling in the aggregate $86,350,100. Respondent contends that
the reserve strengthening payments and a payment by HCA relating
to Florida hospital workers' compensation claims when Ideal
Mutual became insolvent show that the ultimate responsibility for
insurance coverage provided by Parthenon remained with HCA. We
agree that those are factors to consider but conclude they are
not dispositive of the instant case.
HCA and the sister subsidiaries made the reserve
strengthening payments following determinations by Parthenon's
consulting actuary that Parthenon's reserves were not adequate
because its losses were developing more adversely than originally
estimated. The payments were treated as insurance premiums not
only by petitioners but also by the Department of Insurance and
by Blue Cross acting in its capacity as intermediary for HCFA.
The need for the additional payments arose not because Parthenon
13 (...continued)
Parthenon's workers' compensation obligations to the extent and
during the time that the indemnity agreement with Ideal Mutual
was in effect.
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