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Approximately 94 percent of the total $70,950,582 claimed by
Blue Cross as estimated salvage recoverable reflected COB
savings. Further, as previously indicated, approximately
85 percent of the COB savings amount reflected Medicare-related
COB savings.
Only approximately 3 percent of the $70,950,582 claimed by
Blue Cross as estimated salvage recoverable reflected amounts
that Blue Cross actually paid and then recovered from tortfeasors
and from other insurance companies.2
The relevant statutory provisions do not define what is
meant by “estimated salvage recoverable”. E.g., OBRA 1990,
sec. 11305(c), 104 Stat. 1388-451. It is therefore necessary to
look beyond the statutory language to the limited regulatory and
case authority on point.
Section 1.832-4(c), Income Tax Regs., provides that
estimated salvage recoverable includes --
2 Approximately 1 percent of the $70,950,582 Blue Cross
calculated as total estimated salvage recoverable reflected
amounts for which it was both primary and secondary insurer, or
“blue on blue”. The parties recognize that with respect to blue-
on-blue duplicate coverage, Blue Cross could not recover salvage
from itself. Another approximate 2 percent reflected amounts for
which Blue Cross did not assume the health insurance risks of
employees and dependents, but provided employers with
administrative services only. Blue Cross concedes that this
2 percent clearly does not represent genuine salvage recoverable.
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