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Medicare-Related COB Savings
Respondent contends that because Medicare-related benefits
are excluded from coverage under Blue Cross’ health insurance
plans, Blue Cross’ Medicare-related COB savings give rise to no
liability on the part of Blue Cross. Respondent therefore
concludes that the portion of claims covered by Medicare gives
rise to no right of recovery or salvage in favor of Blue Cross
and that the portion of Blue Cross’ claimed salvage recoverable
that is based on and that relates to Medicare-related COB savings
should not, under the special deduction rule, be treated as
salvage recoverable and the claimed loss deductions relating
thereto should not be allowable. We agree with respondent.
The language contained in Blue Cross' medical insurance
plans clearly indicates that Blue Cross is not liable to pay
amounts covered by Medicare. Without contractual liability and
without payment of Medicare-covered benefits, Blue Cross’
Medicare-related COB savings do not constitute estimated salvage
recoverable.
Non-Medicare-Related COB Savings
Because Blue Cross utilized the wait-and-pay approach with
respect to its non-Medicare-related COB savings, respondent
contends that such non-Medicare-related COB savings likewise do
not constitute estimated salvage recoverable under the special
deduction rule. Respondent argues that Blue Cross never expected
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