Cleveland Clinic Health System Obligated Group - FMSbonds.com

companies’ loss experience is reviewed annually by an independent actuarial firm, which certifies reserves forliabilities and recommends funding levels. Additionally, CCHSICO issues excess liability insurance policies thatare reinsured with commercial insurance carriers.For the past several years, the Cleveland Clinic has undertaken numerous initiatives to manage its medicalprofessional liability costs and reduce the number of claims and lawsuits. Additional staff devoted to clinical riskmanagement has been hired to promote patient safety and prevent untoward events. The Cleveland Clinic hasexpanded education programs to enhance quality throughout the organization. Furthermore, where appropriate, theCleveland Clinic has taken a more aggressive approach toward defending claims. A series of tort reform measurespassed by the Ohio legislature beginning in 2003 have also aided the Cleveland Clinic’s efforts to manage itsmedical professional liability risk.Compliance ProgramsThe members of the Obligated Group are committed to programs, policies, and procedures to ensure thatthey and their affiliates, members, trustees, directors, officers, independent contractors and employees conductactivities in full compliance with applicable federal, state and local laws, and ethical standards. To promotesatisfaction of this commitment, the Board of Trustees of the Cleveland Clinic has adopted “The Cleveland ClinicCorporate Compliance Program.” The program is intended to prevent and detect violations of federal, state or locallaws by the Cleveland Clinic. Each Affiliate has adopted a comparable program to ensure its compliance withapplicable laws and ethical standards.Professional and General Liability LitigationCurrently, a number of professional and general liability claims and lawsuits are pending against membersof the Obligated Group. Management of the Cleveland Clinic is of the opinion that adequate provision has beenmade, by insurance coverage or otherwise, for such claims and lawsuits and, accordingly, the outcome thereof willnot materially affect the financial condition or results of operations of the Obligated Group, taken as a whole.Other LitigationMembers of the Obligated Group are engaged from time to time in a variety of litigation and regulatorycompliance matters in addition to professional and general liability matters. Cleveland Clinic management is also ofthe opinion that the outcome of these matters will not materially affect the financial condition or results ofoperations of the Obligated Group, taken as a whole.Ohio law permits the owner of real estate to seek an exemption from real estate taxes if the owner is acharitable institution and the property is used in furtherance of or incidental to such owner’s charitable purposes. Inappropriate circumstances, the Cleveland Clinic and other members of the Obligated Group have either obtained orapplied for such an exemption as to many of their respective properties, whether located on hospital campuses oroff-campus, such as most of the Cleveland Clinic’s Family Health Centers. A number of the currently pendingexemption applications have been challenged by local school districts. As of August 1, 2008, these challenges haveresulted in denial of exemptions for the Cleveland Clinic’s Family Health Centers in Beachwood and Independence,Ohio and several properties used for surface parking lots. The Health System is appealing all of these decisions. Ifdenial of an exemption application is ultimately upheld, the affected member of the Obligated Group would berequired to pay all real estate taxes accrued and accruing plus interest with respect to the particular property.Moreover, affirmation of denials could increase the potential for future denials or challenges to existing exemptions.Cleveland Clinic management does not reasonably expect that any such denials or challenges, if successful, wouldoccur, in the aggregate, in such a number or amount as would have a material and adverse effect on the financialcondition or results of operations of the Obligated Group, taken as a whole.L. CHARITY CARE, UNDERINSURED AND UNINSURED PATIENTSThe Cleveland Clinic Health System maintains a charity care policy that applies throughout the HealthSystem. Pursuant to this policy, the Cleveland Clinic accepts all patients, regardless of their ability to pay, whoqualify for charity services under the policy, and under no circumstances is a patient ever denied medical care for alife-threatening emergency because of his or her financial status. For further information concerning the ClevelandA-24