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of hindsight, theoretically could reflect salvage recoverable
taken into account as of December 31, 1989.
As previously indicated, for the years in issue and in
subsequent years, Blue Cross generally did not make payments for
which other companies under the COB provisions were primarily
responsible. We conclude that (because Blue Cross used the wait-
and-pay approach before making secondary payments) Blue Cross’
COB savings do not qualify as estimated salvage recoverable and
are not allowable as a deduction under the special deduction
rule.
To qualify as estimated salvage recoverable for purposes of
the special deduction rule there must exist an expectation of
actual payment. The mere fact that a loss has been incurred on
the date of an injury does not mean that health insurance
companies expect to be responsible for and expect to pay the full
amount of claims relating to the injury.
With respect, however, to the 3 percent of the $70,950,582
that Blue Cross calculated as its total estimated salvage
recoverable reflecting amounts Blue Cross actually paid and then
recovered from third-party tortfeasors and other health insurance
companies, such amounts do represent genuine subrogation
recoverable and do qualify as estimated salvage recoverable under
the special deduction rule.
Safe Harbor Relief
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