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<br /> Indian River MemorialHospital , Inc. and Subsidiaries
<br /> Notes to Consolidated Financial Statements
<br /> For the Years Ended September 30 , 2002 and 2 (D1
<br /> Amortization Method
<br /> The amortization of any prior service cost is determined using a. straight line amortization of
<br /> the cost over the average remaining service period of employees expected to receive benefits
<br /> under the Plan.
<br /> Plan assets are invested principally in pooled fixed income and equity funds with certain
<br /> amounts maintained as cash to meet anticipated short term needs .
<br /> 14. Related Party Transactions _
<br /> Facility Lease
<br /> The Hospital leases the Hospital Facility from the District, an-affiliated organization. The -
<br /> lease payments are equal to the debt service requirements on debt issued by the District to
<br /> finance additions or improvements to the Hospital Facility. Lease payments amounted to
<br /> approximately $2,324,000 in 2002 and $2,535,000 in 2001 which includes approximately -
<br /> $944, 000 and $ 1 , 93$,000, respectively, of interest expense.
<br /> 15. Commitments and Contingent Liabilities
<br /> Professional Liability Insurance
<br /> The Hospital currently provides for professional liability insurance through a claims-made
<br /> policy with a commercial insurance carrier which provides primary coverage, with a $50,,000
<br /> deductible per claim, limited ta _$1 ,000,000 per claim. Excess insurance coverage at
<br /> $ 10,000,000 per claim and $ 10,000,000 in the aggregate, annually, is maintained with the
<br /> same carrier. In addition, the Hospital maintains $ 10,000,000 in umbrella coverage.
<br /> During the period October 1 , 1992 through March 31 , 1994, the Hospital rovided for
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<br /> professional liAbility insurance through participation in the Florida Hospital Trust Fund A
<br /> CFHTF A), a pooled risk malpractice trust fund, which provides primary coverage, limited to
<br /> $250, 000 per claim and $ 1 ,000,000 in the aggregate per annum. Excess insurance coverage
<br /> at $ 10, 000 , 000 per claim and $ 10, 000, 000 in the aggregate, annually, is provided for through
<br /> participation in the Florida Hospital Excess Trust Fund B- (FHTF B), a pooled risk
<br /> malpractice trust fund, The FHTF A and B are grantor trust funds and may levy additional
<br /> assessments as determined necessary. Management of the Hospital believes that any future
<br /> potential assessments by the-FHTF A andB , if any, will not be in excess of the amounts
<br /> recorded. '
<br /> Estimated losses from asserted and unassezted claims are accrued when the incidents which
<br /> give rise to the claims occur and the amount of the liability can be reasonably estimated. In
<br /> addition, the Hospital has accrued estimated losses on incurred but not reported claims .
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