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Prior to and throughout the years in issue, for financial
statement and Annual Statement reporting purposes, and in
calculations of its financial loss reserves, Blue Cross
subtracted COB savings in its calculations of its unpaid losses.
Blue Cross therefore maintained financial reserves relating to
unpaid losses only for its estimated primary and secondary
payment responsibilities due on claims after primary insurers had
made their primary payments. In other words, Blue Cross did not
maintain financial reserves with respect to its COB savings
amounts.
Prior to and throughout the years in issue, Blue Cross also
included language in its health insurance plans that entitled
Blue Cross to recovery or subrogation of amounts Blue Cross had
paid on claims (1) where the injury was caused by third-party
tortfeasers or (2) where, under the COB provisions, the amounts
should have been paid by other health insurance companies. Such
amounts received from tortfeasers and from other health insurance
companies are treated and referred to by insurance companies as
“subrogation recoverable”.
The COB guidelines promulgated by the National Association
of Insurance Commissioners treat COB savings differently from
subrogation recoverable. Blue Cross also treats COB savings
differently from subrogation recoverable, and Blue Cross
maintains separate departments for each.
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Last modified: May 25, 2011