Exhibit 10.16  
Litigation  Agreement  between the Company and Ken Blum, Sr., Ken Blum, Jr., and
Alan Cohn

          Liabilities  associated  with  the  suit by  United  HealthCare,  Inc.
("United") against Ken Blum and Avesis Incorporated ("Avesis") and counterclaims
by Mr. Blum against United, as well as any future suit initiated by United based
upon the FOP contract, will be handled as follows:

1.  Avesis  will pay for legal fees and  expenses,  settlements,  and  judgments
incurred by it and/or Mr. Blum in connection with the United  litigation and Mr.
Blum's counterclaims against United, but only to the extent of 100% of the gross
margin  earned by Avesis on D.C.  Fraternal  Order of Police  ("FOP")  collected
revenues  (including  revenues  from the  current  FOP  contract  and any future
contract(s) between Avesis and the FOP arising from NHE efforts) plus 33 1/3% of
all of the net  pretax  profits of Avesis  during  any fiscal  year in which the
litigation  continues,  whether or not derived from FOP business (as  determined
based on Avesis' audited financial  statements) ("net profits").  "Gross margin"
for this purpose is defined as collected  revenue  from FOP  contracts  less all
incremental expenses paid by Avesis as a result of FOP contracts.

2. To the extent that  collected  gross  margins on FOP business plus 33 1/3% of
net profits are inadequate to cover legal fees and expenses,  settlements and/or
judgments  which may be owing from time to time by Mr. Blum and/or Avesis,  such
amounts  will.  be advanced by Mr.  Blum.  Avesis  will  indemnify  Mr. Blum for
amounts paid by Mr. Blum pursuant to this  paragraph,  but only to the extent of
gross margin earned by Avesis on FOP business from time to time  thereafter plus
33 1/3% of net profits.

3.  Commissions  on FOP  business  will be  deferred by NHE (except for fees and
commissions  payable to M. Levitt and M. Reamer) until the litigation is finally
resolved.  They will ultimately be payable only if, when, and to the extent that
Avesis has  recovered  all of its legal costs  hereunder and has gross profit on
the FOP business after such recovery.

4. Should Mr. Blum make a recovery from counterclaims pursued against United, he
will  first  recoup  his  own  unreimbursed  outlays,  if any,  for  the  United
litigation  and  the   counterclaims,   next  will  reimburse   Avesis  for  any
unreimbursed  outlays made by it, and then will keep one-half of any surplus and
the balance will be paid to Avesis.

          Lest  there be any  misunderstanding,  the net  effect of the above is
that Avesis' exposure under the United litigation is limited to its realized and
collected gross margins on FOP revenues plus 33 1/3% of its net profits.

          It is agreed and understood that representation of Avesis and Mr. Blum
initially shall be handled jointly by Quarles & Brady and Kramon & Graham, P.A.,
provided  that this  agreement  shall be  revisited if joint  representation  is
deemed undesirable as the litigation develops.  All parties waive any applicable
conflicts of interest as necessary to permit the joint representation.

          This letter shall  govern the rights of NHE,  Ken Blum,  Jr., and Alan
Cohn in addition to Ken Blum, Sr. as well as each of their respective spouses.

          No party shall have liability for any settlement  entered into without
the party's written consent, which may not be unreasonably withheld.

          Finally, it is understood that Avesis' indemnification  obligations as
set forth herein shall be to the maximum  extent  permitted by Delaware law, and
that the terms of this  understanding  are  exclusive  and shall  supersede  any
general indemnification provisions in Delaware law, Avesis' bylaws or otherwise.
                                       32
<PAGE>
          The undersigned  agree that the attached  memorandum  represents their
agreement  relating  to the lawsuit  filed by United  HealthCare,  Inc.  against
Kenneth L. Blum, Sr. and Avesis Incorporated.

                                       AVESIS INCORPORATED

Dated:  August, 24, 1994                     By:/s/  Frank Cappadora
                --                              -----------------------
                                             Frank Cappadora, President

Dated:  August 24, 1994                      /s/  Kenneth L. Blum, Sr.
                                             --------------------------
                                             Kenneth L. Blum, Sr.

Dated:  August 24, 1994                      /s/  Kenneth L. Blum, Jr.
                                             --------------------------
                                             Kenneth L. Blum, Jr.

Dated:  August 24, 1994                      /s/ Alan S. Cohn
               --                            --------------------------
                                             Alan S. Cohn
                                       33