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claims or portions thereof. Blue Cross argues that, as injuries
occur and as medical expenses relating thereto are incurred by
insured individuals, Blue Cross accrues the right to recover from
other insurance companies and Medicare that also have insured the
same individuals. In sum, Blue Cross argues that the insured
individuals’ right to recover from other insurance companies and
Medicare is subrogated to Blue Cross where Blue Cross also has
issued insurance plans covering the same individuals.
Blue Cross argues that there is no significant economic
difference between “taking immediate possession” from the insured
individuals of the intangible rights of recovery and salvage with
respect to COB savings (as it does under a pay-and-pursue
approach) and “leaving” with the insured individuals the rights
of recovery and salvage with respect to COB savings (as it does
under a wait-and-pay approach). Blue Cross argues that under
either approach, for Federal income tax purposes, it should be
treated as economically realizing the recovery and salvage rights
with respect to COB savings. Accordingly, Blue Cross contends
that its COB savings relating to incurred but unpaid losses
before January 1, 1990, reflect salvage recoverable and should be
included in the calculations of estimated salvage recoverable
under the special deduction rule.
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