UNITED STATES DISTRICT COURT
                        SOUTHERN DISTRICT OF TEXAS
                             HOUSTON DIVISION
                                                      )   Master File No.
IN RE PARACELSUS CORP.                                )
SECURITIES LITIGATION                                 )
                                                      )     H-96-3464 (EW)
                                                      )
JAMES G. CAVEN, derivatively on behalf of             )
Champion Healthcare Corporation, a Delaware           )
Corporation, and alternatively on behalf of           )
himself and all others similarly situated,            )
                                                      )
          Plaintiff,                                  )
                                                      )
    vs.                                               )
                                                      )
CHARLES R. MILLER, JAMES G.                           )
VANDEVENDER, RONALD R.                                )
PATTERSON, MANFRED GEORGE                             )
KRUKEMEYER, R.J. MESSENGER,                           )
JAMES T. RUSH,  PARACELSUS                            )
HEALTHCARE CORPORATION,                               )
a California corporation, PARK-HOSPITAL               )
GmbH, a German corporation,                           )
                                                      )
          Defendants.                                 )
                                                      )
                                                      )
    And                                               )
                                                      )
PARACELSUS HEALTHCARE                                 )
CORPORATION, a California corporation,                )
CHAMPION HEALTHCARE                                   )
CORPORATION, a Delaware corporation,                  )
                                                      )
          Nominal Defendants.                         )
                                                      )

                           SETTLEMENT AGREEMENT







<PAGE>




This Settlement Agreement is made and entered into this 17th day of March

1999, by and between James G. Caven and Robert Orovitz, derivatively on

behalf of Champion Healthcare Corporation and double derivatively on behalf

of Paracelsus Healthcare Corporation; Paracelsus Healthcare Corporation;

the former shareholders of Champion Healthcare Corporation identified in

the list attached as Exhibit A (the "Champion Shareholders"); Park-Hospital

GmbH, a German corporation; Donaldson Lufkin and Jenrette Securities

Corporation;  Bears Stearns & Co.; Smith Barney, Inc.; and ABN AMRO Chicago

Corporation; Manfred George Krukemeyer; Charles R. Miller; James G.

VanDevender; Ronald R. Patterson; R.J. Messenger; James T. Rush; Robert C.

Joyner; Michael D. Hofmann; Christian A. Lange; and Scott K. Barton, acting

by and through their respective undersigned counsel.

     IN CONSIDERATION OF THE PREMISES AND MUTUAL COVENANTS HEREIN

CONTAINED, the parties agree as follows:

                              1.  DEFINITIONS

1.1  "Champion" means Champion Healthcare Corporation, a Delaware

corporation.

1.2  "Paracelsus" means Paracelsus Healthcare Corporation, a California

corporation.

1.3  "Plaintiffs" means James G. Caven and Robert Orovitz, in their

derivative capacity on behalf of Champion.

1.4  "Released Individual" means Manfred George Krukemeyer, Charles R.

Miller, James G. VanDevender, Ronald R. Patterson, R.J. Messenger, James T.

Rush, Robert C. Joyner, Michael D. Hofmann, Christian A. Lange, or Scott K.

Barton.

1.5  "Released Individuals" means Manfred George Krukemeyer, Charles R.

Miller, James G. VanDevender, Ronald R. Patterson, R.J. Messenger, James T.

Rush, Robert C. Joyner, Michael D. Hofmann, Christian A. Lange, and Scott

K. Barton.

1.6  "Former Champion Management Member" means Charles R. Miller, James G.

VanDevender, or Ronald R. Patterson.  "Former Champion Management Member"

shall have the same meaning as the term "Executive" defined in the Senior

Executive MoU.

1.7  "Former Champion Management Members" means Charles R. Miller, James G.

VanDevender, and Ronald R. Patterson.  "Former Champion Management Members"

shall have the same meaning as the term "Executives" defined in the Senior

Executive MoU.

1.8  "Former Paracelsus Management Member" means R.J. Messenger, James T.

Rush, or Robert C. Joyner.

1.9  "Former Paracelsus Management Members" means R.J. Messenger, James T.

Rush, and Robert C. Joyner.

1.10 "Park" means Park-Hospital GmbH.

1.11 "DLJ" means Donaldson, Lufkin and Jenrette Securities Corporation;

Bear, Stearns & Co., Inc.; Smith Barney, Inc.; and ABN AMRO Chicago

Corporation, on their own behalf and on behalf of the other members of the

underwriting syndicate for the public offering of Paracelsus stock in

conjunction with the Champion/Paracelsus merger.

1.12 "Settling Party" means Plaintiffs, Champion, Paracelsus, Park, the

Champion Shareholders, DLJ, Manfred George Krukemeyer, Charles R. Miller,

James G. VanDevender, Ronald R. Patterson, R.J. Messenger, James T. Rush,

Michael D. Hofmann, Christian A. Lange, Robert C. Joyner, or Scott K.

Barton.

1.13 "Settling Parties" means Plaintiffs, Champion, Paracelsus, Park, the

Champion Shareholders, DLJ, Manfred George Krukemeyer, Charles R. Miller,

James G. VanDevender, Ronald R. Patterson, R.J. Messenger, James T. Rush,

Michael D. Hofmann, Christian A. Lange, Robert C. Joyner, and Scott K.

Barton.

1.14 "Related Parties" means a person's or entity's present, former, or

future employees, officers, directors, partners, principals, parents,

subsidiaries, affiliates, agents, attorneys, heirs, personal or legal

representatives, predecessors, successors, or assigns.

1.15 "Litigation" means collectively (i) the shareholder actions filed in

California state court under the captions GAONKAR V. PARACELSUS, ET AL.,

No. BC 158899 (Cal. Super. Ct., Los Angeles Cty.), and PRESCOTT V.

PARACELSUS, ET AL., No. BC 158979 (Cal. Super. Ct., Los Angeles Cty.); (ii)

the shareholder small claims suit filed in South Orange County Municipal

Court in California under the caption HUTCHENS V. PARACELSUS, ET AL., No.

SC38166; (iii) the shareholder action filed in Texas state court under the

caption ESSEX IMPORTS V. PARACELSUS, ET AL., No 96-51864 (Harris Cty. Dist.

Ct.); (iv) the shareholder actions that are pending in the United States

District Court for the Southern District of Texas consolidated under the

caption IN RE PARACELSUS CORP. SEC. LITIG., Master File No. H-96-3464 (EW)

(S.D. Tex.) (the "Consolidated Class Action"); (v) the shareholder

derivative actions that are pending in the United States District Court for

the Southern District of Texas under the captions CAVEN V. MILLER, No. H-

96-CV-4291 (EW) (S.D. Tex.), and OROVITZ V. MILLER, No. H-97-2752 (EW)

(S.D. Tex.) (the "Derivative Actions"); (vi) the shareholder action pending

in the Delaware Chancery Court under the caption MOLINARI V. MILLER, ET

AL., C.A. No. 14945 (Del. Ch. Ct., New Castle Cty.); and (vii) any other

litigation or investigatory proceedings arising from the merger of

Paracelsus and Champion and the related public offerings.

1.16 "Released Claims" shall mean and include any and all claims, causes of

action, suits, demands, rights, liabilities, damages, losses, fees, costs,

or expenses, including, however described or nominated, but not limited to,

claims for negligence, gross negligence, professional negligence, breach of

duty of care, breach of duty of candor, and/or breach of duty of loyalty,

fraud, breach of fiduciary duty, malpractice, breach of contract, negligent

misrepresentation, corporate waste, mismanagement, unjust enrichment,

violations of any state or federal statutes, rules or regulations and any

Unknown Claims as defined below, that have been or could have been asserted

by any Settling Party, directly, derivatively or otherwise, against any

other Settling Party arising out of, relating to, or in connection with any

of the facts, circumstances, allegations, claims, causes of action,

representations, statements, reports, disclosures, transactions, events,

occurrences, acts, omissions, or failures to act, of whatever kind or

character whatsoever, irrespective of the state of mind of the actor

performing or omitting to perform the same, alleged in any pleading,

amended pleading, argument, complaint, amended complaint, brief, motion,

report, or filing in the Litigation except for the Excluded Claims as

defined below.  Released Claims also include any and all rights of

Paracelsus to seek repayment of the amounts paid for the benefit of the

Released Individuals for liability, reasonable costs and expenses,

including reasonable attorneys' fees, costs, and expenses incurred through

the Effective Date in connection with the Litigation and related matters.

1.17 "Unknown Claims" means any claim that any Settling Party did not

suspect to exist in his, her, or its favor on the Effective Date that, if

known to him, her, or it, might have affected his, her, or its settlement

with and release of some or all of the Settling Parties, or might have

affected his, her, or its decision not to object to this Settlement

Agreement.

1.18 "Excluded Claims" means (i) any and all claims arising out of breaches

of this Settlement Agreement, including but not limited to those matters

referenced in paragraph 7.1, and the Park/Champion Settlement; (ii) any and

all claims arising after the Effective Date for indemnification or

advancement of costs for any claim brought by Paracelsus against any

Released Individual for which such Released Individual would have been

entitled to indemnification under the insurance policies released in paragraph

7.2 hereof; (iii) any and all claims arising after the Effective Date for

breaches of any joint defense agreement in connection with the Litigation

and related matters; (iv) any and all claims arising from the Senior

Executive MoU, as amended by this Settlement Agreement; and (v) any and all

claims for indemnification of reasonable costs and expenses, including

reasonable attorneys' fees incurred before the Effective Date in connection

with the Litigation and related matters, except for any such claims by or

against DLJ.

1.19 "Effective Date" means the first business day ten (10) days after all

the conditions set forth in paragraph 7.11 of this Settlement Agreement have

been fully satisfied.

1.20 "Class MoU" means the Memorandum of Understanding, dated March __,

1999, setting forth the terms of settlement in the Consolidated Class

Action.

1.21 "Park/Champion Settlement" means that certain settlement agreement

between the Champion Shareholders, Park, Dr. Manfred G. Krukemeyer, and

Paracelsus, dated March __, 1999, a copy of which is attached as Exhibit B.

1.22 "Senior Executive MoU" means the Memorandum of Understanding, dated

November 25, 1998, between Paracelsus Healthcare Corporation and Charles R.

Miller, James G. VanDevender, and Ronald R. Patterson, a copy of which is

attached as Exhibit C.

1.23 "Notice" means the Notice of Pendency of Class and Derivative Actions,

Proposed Settlement of Class and Derivative Actions, Settlement Hearings,

and Right to Appear, in a form to be mutually agreed on by all parties.

1.24 "Record Date" means the date on which the Court enters an order

preliminarily approving the settlement set forth in this Settlement

Agreement.

1.25 "Settlement Hearing" means the hearing to be held by the Court to

consider final approval of the settlement pursuant to Rule 23.1 of the

Federal Rules of Civil Procedure.

1.26 The terms "Additional Payment," "Additional Payment Contribution,"

"Sale of the Company," and "Bonus Payment Date" shall be defined as

provided in the Senior Executive MoU.

                       2.  SETTLEMENT PURPOSES ONLY

     This Settlement Agreement is for settlement purposes only, and

notwithstanding anything else in this Agreement, each of the Released

Individuals, Park, Paracelsus, and DLJ denies any wrongdoing, fault,

violation of law, or liability of any kind whatsoever.  Neither the fact

of, nor any provision contained in, this Agreement, nor any action taken

hereunder, shall constitute, be construed as, or be admissible in evidence

as an admission in any proceeding (judicial, administrative, or otherwise)

of any claim or any fact of any wrongdoing, fault, violation of law, or

liability of any kind on the part of any Released Individual, Park,

Paracelsus, or DLJ.

                3.  SETTLEMENT PROVISIONS SPECIFIC TO PARK
                        AND MANFRED GEORGE KRUKEMEYER

3.1  The Park/Champion Settlement is hereby incorporated by reference.  The

Released Individuals who are not parties to the Park/Champion Settlement do

not, by virtue of their agreement hereto, agree to the terms of the

Park/Champion Settlement, even though it is incorporated by reference into

this Settlement Agreement.

3.2  Park's transfer of 9.865 million shares of Paracelsus common stock as

provided in the Park/Champion Settlement is made on behalf and for the

benefit of Park and Dr. Manfred G. Krukemeyer.

3.3  As provided in paragraph VIII.B. of the Park/Champion Settlement,

effective upon the transfer of shares from Park to the Champion

Shareholders pursuant to paragraph I.A. of the Park/Champion Settlement,

Paracelsus and the Champion Shareholders hereby assign to Park any and all

claims or causes of action that Paracelsus and the Champion Shareholders

may have against its independent accountants arising from the work that the

independent accountants performed in connection with the merger of Champion

and pre-merger Paracelsus and in connection with any and all services that

the independent accountants provided to Paracelsus before the merger.  In

connection with such assignment, Park shall hold Paracelsus and all other

parties receiving releases in this Agreement (including all Released

Individuals), the Park/Champion Settlement, and the settlement of the

Consolidated Class Action harmless from any liability, costs, and expenses,

including reasonable legal fees, they may incur as a result of Park's

pursuit of such assigned claims and causes of action.  In addition, to the

extent Paracelsus or any of the other parties held harmless by Park are

required to pay amounts to the independent accountants in connection with

such assigned claims and causes of action, Paracelsus and such other

parties may at their option require that any recovery due Park from the

independent accountants be reduced by such amounts.

3.4  As of the Effective Date, Paracelsus releases Dr. Manfred G.

Krukemeyer from any and all obligations, contractual or otherwise, arising

out of or in any way related to any undertaking to repay reasonable costs

advanced or to be advanced by or on behalf of Paracelsus in connection with

the Litigation and related matters, and Paracelsus agrees that all

reasonable costs and expenses, including reasonable attorneys' fees, costs

and expenses incurred by Dr. Krukemeyer before the Effective Date (and paid

or to be paid by Paracelsus) in connection with the Litigation and related

matters shall not be subject to a claim for repayment.  Such undertakings

specifically include, but are not limited to, any express or implied

undertaking that may be included in:  (i) the November 18, 1996 Letter of

Undertaking executed on behalf of Dr. Manfred G. Krukemeyer; (ii) the

Indemnity and Insurance Coverage Agreement, dated August 16, 1996, between

Dr. Manfred G. Krukemeyer and Paracelsus; (iii) Paracelsus's articles of

incorporation or bylaws; (iv) California law; or (v) Texas law.

3.5  Park and Dr. Manfred G. Krukemeyer agree to take no position with

respect to an application by Plaintiffs' counsel for an award of attorneys'

fees not in excess of two million dollars ($2,000,000.00) plus

reimbursement of reasonable and necessary expenses.

              4. SETTLEMENT PROVISIONS SPECIFIC TO THE FORMER
              PARACELSUS MANAGEMENT MEMBERS, CHRISTIAN A. LANGE,
                   MICHAEL D. HOFMANN, AND SCOTT K. BARTON

4.1  As of the Effective Date, each Former Paracelsus Management Member and

Paracelsus mutually release each other from any and all obligations,

contractual or otherwise, either party may have now or in the future

arising out of or in any way related to Paracelsus's Supplemental Executive

Retirement Plan, effective January 1, 1996, as amended (the "SERP"), or any

other retirement plan, except that Paracelsus shall make payments to Joyner

of $59,780.84 due April 1, 1999; $58,907.62 due July 1, 1999; and $42,323.

91 due October 1, 1999, arising under paragraph 3 of the Agreement, dated June

12, 1997, between Paracelsus and Robert C. Joyner (the "Joyner Agreement"),

as modified herein.

4.2  As of the Effective Date, R.J. Messenger and Paracelsus mutually

release each other from any and all obligations, contractual or otherwise,

arising out of or in any way related to the Employment Agreement, dated

July 17, 1996, between R.J. Messenger and Paracelsus, including, but not

limited to, Paracelsus's obligation to pay R.J. Messenger a base salary and

annual performance bonuses and to provide him with any long-term incentive

or other benefits and any obligations arising out of the Management Rights

Agreement, and such Employment Agreement shall terminate.  R.J. Messenger

shall not exercise, pledge, hypothecate, or otherwise use as security, or

transfer, convey, sell, trade, assign, or otherwise dispose of the Value

Options and Market Options described in paragraph 3(c) of the Employment

Agreement, dated July 17, 1996, between R.J. Messenger and Paracelsus.  As

of the Effective Date, the Value Options and Market Options described in

paragraph 3(c) of the Employment Agreement, dated July 17, 1996, between R.J.

Messenger and Paracelsus without further action shall be released and

canceled and such options shall terminate.

4.3  R.J. Messenger and Paracelsus shall not terminate the Letter

Agreement, dated April 11, 1997, between R.J. Messenger and Paracelsus

before the Effective Date.  As of the Effective Date, R.J. Messenger and

Paracelsus mutually release each other from any and all obligations,

contractual or otherwise, arising out of or in any way related to such

Letter Agreement and such Letter Agreement shall terminate.

4.4  As of the Effective Date, the Former Paracelsus Management Members,

Christian A. Lange, and Michael D. Hofmann release any and all rights each

of them has or may have arising out of or in any way related to the

Indemnity and Insurance Coverage Agreements, dated August 16, 1996, between

him and Paracelsus and such agreements shall terminate and their provisions

shall be null and void.

4.5  As of the Effective Date, James T. Rush and Paracelsus mutually

release each other from any and all obligations, contractual or otherwise,

arising out of or in any way related to the Consulting Agreement, dated

August 16, 1996, between Paracelsus and James T. Rush, including, but not

limited to, Paracelsus's obligation to pay James T. Rush monthly

compensation pursuant to paragraph 4 of that Consulting Agreement.

4.6  James T. Rush and Paracelsus shall not terminate the Letter Agreement,

dated April 14, 1997, between James T. Rush and Paracelsus before the

Effective Date.  As of the Effective Date, James T. Rush and Paracelsus

mutually release each other from any and all obligations, contractual or

otherwise, arising out of or in any way related to such Letter Agreement

and such Letter Agreement shall terminate.

4.7  James T. Rush shall not execute, pledge, hypothecate, or otherwise use

as security, or transfer, convey, sell, trade, assign or otherwise dispose

of the 107,000 options exercisable at a price of $.01 per share he received

pursuant to the Non-Qualified Stock Option Agreement between Rush and

Paracelsus, dated August 9, 1996.  As of the Effective Date, such 107,000

options without further action shall be released and canceled and such

options shall terminate.

4.8  As of the Effective Date, Paracelsus releases each Former Paracelsus

Management Member, Christian A. Lange, Michael D. Hofmann, and Scott K.

Barton from any and all obligations, contractual or otherwise, arising out

of or in any way related to any undertaking to repay reasonable costs

advanced or to be advanced by or on behalf of Paracelsus in connection with

the Litigation and related matters, and Paracelsus agrees that all

reasonable costs and expenses, including reasonable attorneys' fees, costs

and expenses incurred by these individuals before the Effective Date (and

paid or to be paid by Paracelsus) in connection with the Litigation and

related matters shall not be subject to a claim for repayment.  Such

undertakings specifically include, but are not limited to, any express or

implied undertaking that may be included in:  (i) the November 18, 1996

Letter of Undertaking executed on behalf of James T. Rush and Scott K.

Barton; (ii) the Settlement Agreement and Release between Paracelsus and

Scott K. Barton, dated April 14, 1997; (iii) the November 18, 1996 Letter

of Undertaking executed on behalf of R.J. Messenger; (iv) the November 18,

1996 Letter of Undertaking executed on behalf of Michael D. Hofmann; (v)

the November 18, 1996 Letter of Undertaking executed on behalf of Christian

A. Lange; (vi) the April 11, 1997 Letter Agreement between Paracelsus and

R.J. Messenger; (vii) the February 4, 1997 Letter of Undertaking executed

by Robert C. Joyner; (viii) the Indemnity and Insurance Coverage

Agreements, dated August 16, 1996, between Paracelsus and each Former

Paracelsus Management Member, Christian A. Lange, and Michael D. Hofmann;

(ix) Paracelsus's articles of incorporation or bylaws; (x) California law;

or (xi) Texas law.

4.9  Neither any Former Paracelsus Management Member nor Christian A.

Lange, or Michael D. Hofmann shall disclose to any person or entity other

than counsel or an authorized director, officer, employee, or agent of

Paracelsus any confidential business or financial information about

Paracelsus or any of its affiliates unless required by law.  Neither any

Former Paracelsus Management Member nor Christian A. Lange or Michael D.

Hofmann shall waive any privilege, immunity, or right of non-disclosure,

including attorney-client privilege, belonging to Paracelsus or its

affiliates or is authorized to do so.

4.10 Except as otherwise expressly provided, this Settlement Agreement

(including any release provided hereunder) does not affect or limit any

rights under the Settlement Agreement and Release between Paracelsus and

Scott K. Barton, dated April 14, 1997.

4.11 As of the Effective Date, Robert C. Joyner and Paracelsus shall

mutually release each other from any and all obligations, contractual or

otherwise, arising out of or in any way related to the Joyner Agreement and

such agreement shall terminate, except that (a) Paracelsus shall make such

payments arising under the Joyner Agreement as provided in paragraph 4.1

hereof and (b) the releases provided in paragraphs 5 and 6 (but not the

provisions of subparagraph 6(a)) of the Joyner Agreement shall remain valid

and enforceable.

4.12 Robert C. Joyner shall not execute, pledge, hypothecate, or otherwise

use as security, or transfer, convey, sell, trade, assign or otherwise

dispose of the remaining 80,933 options exercisable at a price of $.01 per

share described in paragraph3 of the Employment Agreement, dated July 17,

1996, between with Paracelsus and Robert C. Joyner.  As of the Effective

Date, such 80,933 options without further action shall be released and

canceled and such options shall terminate.

4.13 Michael D. Hofmann shall not execute, pledge, hypothecate, or

otherwise use as security, or transfer, convey, sell, trade, assign or

otherwise dispose of the 56,000 options exercisable at a price of $.01 per

share he received pursuant to the Non-Qualified Stock Option Agreement

between Hofmann and Paracelsus, dated August 9, 1996.  As of the Effective

Date, such 56,000 options without further action shall be released and

canceled and such options shall terminate.

4.14 Christian A. Lange shall not execute, pledge, hypothecate, or

otherwise use as security, or transfer, convey, sell, trade, assign or

otherwise dispose of the 56,000 options exercisable at a price of $.01 per

share he received pursuant to the Non-Qualified Stock Option Agreement

between Lange and Paracelsus, dated August 9, 1996.  As of the Effective

Date, such 56,000 options without further action shall be released and

canceled and such options shall terminate.

             5.  SETTLEMENT PROVISIONS SPECIFIC TO THE FORMER
                         CHAMPION MANAGEMENT MEMBERS

5.1  The Former Champion Management Members (or Executives) shall abide by

the Senior Executive MoU, which is hereby incorporated by reference, as

amended by the express provisions of this Settlement Agreement.  To the

extent that any provisions or terms of the Senior Executive MoU are

inconsistent or conflict with any provisions or terms of this Settlement

Agreement, the terms and provisions of this Settlement Agreement shall

prevail; provided however, nothing in this Agreement shall be construed to

limit the scope of the form of release provided in paragraph 14 of the Senior

Executive MoU.   The Released Individuals who are not parties to the Senior

Executive MoU do not, by virtue of their signatures hereto, agree to the

terms of the Senior Executive MoU, even though it is incorporated by

reference into this Settlement Agreement.

5.2  Paragraph 7 of the Senior Executive MoU is deleted.  At the same time

each Former Champion Management Member relinquishes and terminates his

Value Options as provided in paragraph 6 of the Senior Executive MoU, such

Former Champion Management Member shall relinquish and terminate any rights

he may have to the Market Options described in paragraph 3(c)(ii) of his

Employment Agreement.  Until such time, each Former Champion Management

Member shall not exercise, pledge, hypothecate, or otherwise use as

security or transfer, convey, sell, trade, assign, or otherwise dispose of

any rights he has to such Market Options.

5.3  Paragraph 4 of the Senior Executive MoU is deleted and all references

in the Senior Executive MoU to such paragraph 4, the Additional Payment, or

the Additional Payment Contribution are null and void.  In addition, the

first sentence of paragraph 19 of the Senior Executive MoU is deleted.

Paracelsus and the Former Champion Management Members agree to modify the

Escrow Agreement, dated December 29, 1998, ("Escrow Agreement") between

them and Bank One, N.A., ("Escrow Agent"), to provide that the escrow shall

terminate on disbursement to the Former Champion Management Members of the

Salary & Bonus portions of the Deposit (as such terms are defined in Escrow

Agreement) and the delivery of the releases as provided in the Escrow

Agreement, and on such termination all remaining funds in the escrow,

including the Additional Payment Contribution and all interest accrued with

respect to any funds, shall be paid to Paracelsus.

5.4  Paragraph 16 of the Senior Executive MoU is deleted.  Each Former

Champion Management Member waives any right or claim he may have to receive

any proceeds (including the distribution of moneys and redistribution of

common stock) arising from or related to settlement of the Litigation or a

settlement between Park and the Champion Shareholders; provided that, each

Former Champion Management Member does not waive any claim for indemnity or

right to be held harmless expressly arising from or not released in such

settlements.  Nothing in this paragraph shall affect or limit in any way

the assignment of insurance rights provided in paragraph 7.2 hereof.

5.5  Each Former Champion Management Member waives any right or claim he

may have to receive employment benefits under paragraph 3(b) of his Employment

Agreement.  Any references in the Senior Executive MoU to such paragraph 3(b)

are null and void.  Nothing in this paragraph shall affect, reduce, or

diminish the amounts contributed to the Escrow Account on behalf of each

Former Champion Management Member referred to in paragraph 3 of the Senior

Executive MoU.

5.6  The first sentence of paragraph 23 of the Senior Executive MoU is

deleted.  Each Former Champion Management Member agrees not to terminate

his employment with Paracelsus before the earlier of a Sale of the Company

or June 30, 1999, and, until such time, each Former Champion Management

Member shall perform his duties at the same scope and level of

responsibility as provided in his Employment Agreement, including those

duties, as applicable, described in the Management Rights Agreement.

Notwithstanding the foregoing, each Former Champion Management Member shall

be paid the funds contributed to the Escrow Account allocable to him

referred to in paragraph 3 of the Senior Executive MoU on the earlier of (i)

the Bonus Payment Date as provided in paragraph 18 of the Senior Executive MoU

or (ii) the effective date of a Sale of the Company as provided in paragraph

20 of the Senior Executive MoU.  Without waiver of any rights that the

Former Champion Management Members may have under the Senior Executive MoU,

Paracelsus may terminate each Executive's employment for any reason with

effect after the Bonus Payment Date on giving 30 days' advance written

notice to such Executive.  Each Executive may terminate his employment for

any reason with effect after June 30, 1999, on giving 30 days' advance

written notice to Paracelsus.

5.7  As of the Effective Date, Paracelsus releases each Former Champion

Management Member from any and all obligations, contractual or otherwise,

arising out of or in any way related to any undertaking to repay reasonable

costs advanced or to be advanced by or on behalf of Paracelsus in

connection with the Litigation and related matters, and Paracelsus agrees

that all reasonable costs and expenses, including reasonable attorneys'

fees, costs and expenses incurred by these individuals before the Effective

Date (and paid or to be paid by Paracelsus) in connection with the

Litigation and related matters shall not be subject to a claim for

repayment.  Such undertakings specifically include, but are not limited to,

any express or implied undertaking that may be included in:  (i) the

November 18, 1996 Letter of Undertaking executed on behalf of Charles R.

Miller, James G. VanDevender, and Ronald R. Patterson; (ii) the Indemnity

and Insurance Coverage Agreement, dated August 16, 1996, between each

Former Champion Management Member and Paracelsus; (iii) Paracelsus's

articles of incorporation or bylaws; (iv) California law; or (v) Texas law.

                     6.  SETTLEMENT HEARING AND NOTICE

6.1  As soon as practical after the execution of this Settlement Agreement,

Plaintiffs and defendants Paracelsus, R.J. Messenger, James T. Rush,

Charles R. Miller, James G. VanDevender, Ronald R. Patterson, Manfred G.

Krukemeyer, and Park shall jointly submit the Settlement Agreement to the

Court and request the entry of a Hearing Order in a form to be mutually

agreed on by all parties, which shall:

     (i) Preliminarily approve the proposed settlement set forth in this

     Settlement Agreement and direct that a Settlement Hearing shall be

     held to determine finally (a) whether the proposed settlement should

     be approved as fair, adequate, and reasonable pursuant to Rule 23.1 of

     the Federal Rules of Civil Procedure, (b) whether the terms and

     conditions of the transfer of shares from Park to the Champion

     Shareholders and from Paracelsus to Dr. Manfred G. Krukemeyer as

     provided in the Park/Champion Settlement incorporated by reference

     herein are fair as required for the exemption from registration under

     Section 3(a)(10) of the Securities Act of 1933 to apply, (c) whether

     judgment should be entered dismissing the Derivative Actions with

     prejudice in accordance with this Settlement Agreement, (d) whether

     the application for attorneys' fees and expenses by Plaintiffs'

     counsel should be approved, and (e) whether a Final Order in a form to

     be mutually agreed on by all parties should be entered;

     (ii) Provide that Plaintiffs shall give notice of this settlement and

     the Settlement Hearing (a) to all shareholders of Paracelsus as of the

     Record Date by mailing a copy of the Notice by first class United

     States mail to the addresses appearing on the records maintained by

     Paracelsus's transfer agent for those entitled to receive notice of

     this settlement and (b) to all Champion Shareholders to the extent

     they are not current shareholders of Paracelsus by mailing a copy of

     the Notice to their counsel, Brian S. Rosen of Weil, Gotshal & Manges,

     LLP;

     (iii) Direct that Plaintiffs shall consolidate mailing of the Notice

     to the extent practicable with the provision of notice of the proposed

     settlement of the Consolidated Class Action;

     (iv) Direct Plaintiffs to cause a Summary Notice in a form to be

     mutually agreed on by all parties to be published in the national

     edition of THE WALL STREET JOURNAL approximately one week following

     the mailing of the Notice; and

     (v) Determine that the provision of notice described herein, including

     the form of the Notice and the coordination or consolidation with the

     provision of notice in the Consolidated Class Action satisfies the

     requirements of Rule 23.1 of the Federal Rules of Civil Procedure and

     Section 3(a)(10) of the Securities Act of 1933 and constitutes due and

     sufficient notice of the Settlement Hearing and proposed settlement to

     all persons affected by the settlement.

6.2  Paracelsus shall advance sufficient funds reasonably necessary to

provide for the administration of the preparation, printing, mailing, and

publication required in paragraph 6.1 of this Settlement Agreement; provided

however, that Plaintiffs and Plaintiffs' Counsel shall reimburse such funds

to Paracelsus in the event the conditions of paragraph 7.11 are not satisfied.

                     7.  GENERAL SETTLEMENT PROVISIONS

7.1  Except as otherwise expressly provided, this Settlement Agreement, the

Class MoU, and any bar order entered pursuant to the terms of this

Settlement Agreement or the Class MoU are not intended to and do not create

any obligation on any Settling Party to indemnify Park or any Released

Individual nor do such agreements and orders, except as otherwise expressly

provided,  in any way expand, affect, or abrogate any obligation or right

of indemnification or advancement of costs and expenses that may be owed to

Park or any Released Individual under any contract, Paracelsus's articles

of incorporation or bylaws, California law, or Texas law.  Paracelsus shall

not indemnify Park, DLJ, or any Released Individual for any consideration

given in connection with this Settlement Agreement.  Paracelsus shall

indemnify and hold harmless each Released Individual from and against all

liability, costs and expenses, including claims for contribution and

reasonable attorneys' fees and expenses, incurred in connection with any

claim brought by a current or former Paracelsus securities holder who (i)

either opted out or is not a member of the class in the Consolidated Class

Action and (ii) is not a party to this Settlement Agreement, arising out of

the subject matter of the Litigation or otherwise arising from the merger

of Paracelsus and Champion and the related public offerings.  Paracelsus

shall also indemnify and hold harmless all Released Individuals from and

against all reasonable costs and expenses, including reasonable attorneys'

fees and expenses, (which does not include any fines, penalties,

disgorgements, or other monetary sanctions that may be imposed) in

connection with the currently pending and any other investigation or

enforcement actions by the Securities and Exchange Commission ("SEC") or

any other federal or state agency based on the subject matter of the

Litigation or otherwise arising from the merger of Paracelsus and Champion

and the related public offerings.  The costs and expenses Paracelsus hereby

agrees to pay in connection with (i) SEC or other investigatory matters and

(ii) any claim brought by a current or former Paracelsus security holder

who is not a party to this Settlement Agreement and either opted out or is

not a member of the class in the Consolidated Class Action shall not be

subject to any undertaking to repay nor shall Paracelsus make any claim for

repayment thereof.

7.2  As of the Effective Date, each Released Individual assigns to

Paracelsus any rights he has arising out of or related to the National

Union Directors, Officers, and Corporate Liability Insurance Policy No.

483-79-23 and the Great American Insurance Policy No. DFX0009397, and each

Former Champion Management Member assigns to Paracelsus any rights he has

under National Union Directors, Officers, and Corporate Liability Insurance

Policy No. 482-23-95 arising out of or related to the Litigation or

otherwise arising from the merger of Paracelsus and Champion and the

related public offerings.  Such assignments shall include any rights each

Released Individual may have under such insurance policies -- including any

rights under any settlement, escrow, or other agreement related to such

policies -- for costs of defense and losses incurred in connection with the

Litigation and related matters, including the value of all contract and

option rights released or canceled pursuant to this Settlement Agreement.

Each Released Individual agrees to take all reasonable steps (at

Paracelsus's reasonable request) necessary to permit Paracelsus to collect

amounts due under these polices based upon costs of settlement or losses

suffered by him.  Paracelsus shall reimburse each Released Individual for

all costs and expenses, including actual lost wages and reasonable

attorneys' fees, costs and expenses, incurred pursuant to this provision.

Because the costs of settlement or losses suffered by the Released

Individuals and Paracelsus in connection with the defense and settlement of

the Litigation, including all defense costs, all cash settlement payments

in the Consolidated Class Action and the Derivative Actions, the value of

contract and option rights released and canceled, and the value of all

stock transferred, substantially exceeds the coverage amounts available

under National Union Directors, Officers, and Corporate Liability Insurance

Policy No. 483-79-23, National Union Directors, Officers, and Corporate

Liability Insurance Policy No. 482-23-95, and the Great American Insurance

Policy No. DFX0009397, the Released Individuals and Paracelsus intend that

pursuant to this assignment Paracelsus will have the right to obtain from

the insurers amounts equal to the full limits of these policies or such

other amounts as Paracelsus and the insurers may agree.  In addition, each

Released Individual represents that, except as specified in this paragraph,

he has not and shall not assign any rights he may have arising out of or

relating to any of the insurance policies referred to in this paragraph.

7.3  Each Released Individual acknowledges that Paracelsus shall use

amounts received pursuant to the insurance rights assigned in paragraph 7.2

in part to fund its cash contribution to the settlement of the Consolidated

Class Action.

7.4  All of the Settling Parties agree that Plaintiffs' counsel is entitled

to, and will be awarded, their reasonable attorneys' fees and expenses in

connection with the litigation.  Plaintiffs' counsel will make an

application to the Court for an award of attorneys' fees and expenses and

to establish the time, manner, and form of any such award.  Paracelsus and

any party who has standing may oppose such application subject to the

limitation in paragraph 3.5 hereof.  Paracelsus shall make payment of the full

amount of the award of attorneys' fees and expenses to Plaintiffs' counsel

awarded by the Court at such time and in the form and manner ordered by the

Court.

7.5  In consideration of the mutual covenants made in this Agreement and in

consideration of the contribution by DLJ of one million dollars

($1,000,000) to the settlement of the Consolidated Class Action, as of the

Effective Date, each Settling Party, as to every other Settling Party and

his, her, or its Related Parties, fully, finally, and forever settles and

releases any and all Released Claims, known or unknown, suspected or

unsuspected, contingent or non-contingent, whether or not concealed or

hidden, that now exist or heretofore have existed upon any theory of law or

equity now existing or coming into existence in the future, including, but

not limited to, conduct that is negligent, intentional, with or without

malice, or a breach of any duty, law, or rule, without regard to the

subsequent discovery or existence of such different or additional facts.

In addition, as of the Effective Date, Plaintiffs in their derivative

capacity on behalf of all Paracelsus shareholders release any and all

Released Claims, as described herein, as to each other Settling Party and

his, her, or its Related Parties.  Plaintiffs shall not serve Robert C.

Joyner as a defendant in CAVEN V. ERNST & YOUNG, LLP, ET AL., No. 98-38338

(Harris Cty.) and shall dismiss all claims asserted against Joyner in such

action.  In addition, all Settling Parties who are parties to the

Derivative Actions shall jointly seek the entry of a bar order in a form to

be mutually agreed on by the parties prohibiting the assertion of any

Released Claim (including claims for contribution) by any Settling Party,

any other party in the Litigation, or any shareholder in a derivative

capacity, against any other Settling Party and his, her, or its Related

Parties except as expressly provided in this Agreement, the Park/Champion

Settlement, or the Class MoU.

7.6  As of the Effective Date, each Settling Party, with respect to all

Released Claims potentially assertable against any other Settling Party and

his, her, or its Related Parties, expressly waives and relinquishes, to the

fullest extent permitted by law, the provisions, rights, and benefits of

Section 1542 of the California Civil Code, which provides as follows:

     A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR
     DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF
     EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
     AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

As of the Effective Date, each Settling Party, with respect to all Released

Claims potentially assertable at any time, past or future, against any

other Settling Party and his, her, or its Related Parties, waives any and

all provisions, rights, and benefits conferred by any law of any state or

territory of the United States, or principle of common law that is similar,

comparable, or equivalent to Section 1542 of the California Civil Code.

7.7  Each Released Individual agrees that he will reasonably cooperate with

Paracelsus in connection with any formal or informal, ongoing, or future

investigation, litigation, or proceeding arising out of the subject matter

of the Litigation or otherwise arising from the merger of Paracelsus and

Champion and the related public offerings.  Paracelsus shall reimburse each

Released Individual for all reasonable costs and expenses, including actual

lost wages and reasonable attorneys' fees and expenses, incurred in

connection with such cooperation.  This agreement reasonably to cooperate

shall not constitute an agreement to waive any privilege or immunity.

Nothing in this Settlement Agreement shall prevent a Released Individual

from asserting any privilege or immunity.  Nothing in this paragraph

prevents any Released Individual from cooperating with others in connection

with any civil, government, or other investigation, proceeding, or

litigation.

7.8  As a material inducement for each Settling Party to enter into this

Settlement Agreement, each Settling Party warrants and represents that, as

of the Effective Date, such Settling Party is not aware of any claims

against any other Settling Party that are not covered by the foregoing

releases.  Such warranties and representations shall be enforceable after

the Effective Date.  This paragraph shall not be construed to limit any

right of indemnity that may be held by any of the Released Individuals.

7.9  Each Settling Party warrants and represents that he, she, or it has

full authority to enter into this Settlement Agreement, to make the

releases set forth in this Settlement Agreement, and to enter into the

undertakings and obligations set forth in this Settlement Agreement.  Each

Settling Party warrants and represents that he, she, or it has not assigned

his, her, or its respective claims to any other person or party.  Such

warranties and representations shall be enforceable after the Effective

Date.

7.10 Each Settling Party warrants and represents that the person executing

this Settlement Agreement on his, her, or its behalf is fully authorized to

do so and that the authorized agents of each Settling Party have taken all

steps required by law or the Settling Party's bylaws to grant the signatory

said authority.  In addition, each person executing this Settlement

Agreement warrants and represents that he or she is authorized to do so.

Such warranties and representations shall be enforceable after the

Effective Date.

7.11 The following constitute conditions to all obligations and releases

created and/or effected by this Settlement Agreement: (i) entry of a Final

Order in a form to be mutually agreed on by all parties dismissing with

prejudice all claims against the Settling Parties in the Derivative

Actions; (ii) entry of final orders dismissing all claims against the

Settling Parties in all other private civil actions comprising the

Litigation; (iii) receipt of any required court approval of the Settlement

Agreement, including all releases herein; (iv) receipt of any required

court approval of the proposed settlement agreement in the Consolidated

Class Action; (v) entry of final orders dismissing with prejudice all

claims in the Consolidated Class Action; and (vi) expiration of time for

appeal, or affirmance on appeal, of any order or other court action

contemplated by this paragraph 7.11.

7.12 Except as otherwise required under the Senior Executive MoU, all

disputes hereunder shall be subject to the continuing jurisdiction of the

United States District Court in which this matter is pending and which

approves of this Settlement Agreement.

7.13 Except as otherwise required under the Senior Executive MoU, if any

suit or proceeding shall be brought to enforce or interpret any provision

of this Settlement Agreement, any party hereto who prevails as to material

issues in such suit or proceeding shall be awarded that party's reasonable

attorney's fees, costs and expenses incurred in such suit or proceeding to

be paid by any party hereto against whom such prevailing party has

prevailed as to material issues therein.

7.14 Upon consummation of the transactions contemplated by this Settlement

Agreement, the August 1997 Tolling Agreement between Paracelsus, Park,

certain of the Champion Shareholders, the Released Individuals, and others

shall terminate as to Paracelsus, Park, and all Released Individuals.

7.15 All Settling Parties and their respective counsel agree to cooperate

fully and in good faith with one another (a) to complete expeditiously the

notices, forms of order, and all other documents contemplated by this

Agreement in forms mutually acceptable to all parties and (b) to seek Court

approval of this Settlement Agreement and to use their best efforts to

effect consummation of this Settlement Agreement and the settlement

provided for herein.

7.16 This Settlement Agreement shall be binding on and inure to the benefit

of all Settling Parties and their respective agents, executors,

representatives, heirs, successors, and assigns.

7.17 This Settlement Agreement may be executed in one or more counterparts,

each of which shall constitute an original and all of which together shall

constitute one and the same agreement.

7.18 This Settlement Agreement shall be construed in accordance with and

governed by the laws of the State of Texas without giving effect to any

conflict of laws provisions.

7.19 The section headings contained in this Settlement Agreement constitute

no substantive part thereof and in no way modify or affect the provisions

of this Settlement Agreement.







<PAGE>






Dated:  March __, 1999                        JAMES G. CAVEN AND ROBERT OROVITZ
                                               By:  ___________________________
                                                    Larry R. Veselka
                                                   SMYSER KAPLAN & VESELKA, LLP
                                               By:  ___________________________
                                                    Daniel C. Girard
                                                    GIRARD AND GREEN, LLP
                                              By:  ____________________________
                                                    David Pastor
                                                    Peter A. Lagorio
                                                    GILMAN & PASTOR
                                              By:  ____________________________
                                                    Arthur N. Abbey
                                                  ABBEY, GARDY & SQUITIERI, LLP
                                          Counsel for Plaintiffs James G. Caven
                                                     and Robert Orovitz
Dated:  March __, 1999                        PARACELSUS HEALTHCARE CORPORATION
                                            By:      __________________________
                                            Title:   __________________________







<PAGE>







Dated:  March __, 1999
                                                  DR. MANFRED G. KRUKEMEYER
Dated:  March __, 1999
                                                  R.J. MESSENGER
Dated:  March __, 1999
                                                  JAMES T. RUSH
Dated:  March __, 1999
                                                  SCOTT K. BARTON
Dated:  March __, 1999
                                                  CHRISTIAN A. LANGE
Dated:  March __, 1999
                                                  MICHAEL D. HOFMANN
Dated:  March __, 1999
                                                  ROBERT C. JOYNER
Dated:  March __, 1999
                                                  CHARLES R. MILLER
Dated:  March __, 1999
                                                  JAMES G. VANDEVENDER
Dated:  March __, 1999
                                                  RONALD R. PATTERSON
Dated:  March __, 1999                            PARK-HOSPITAL GmbH
                                           By:  _______________________________
                                                Dr. Heiner Meyer zu Losebeck
                                                  Managing Director
Dated:  March __, 1999                           DONALDSON, LUFKIN AND JENRETTE
                                                 SECURITIES CORPORATION,
                     BEAR STEARNS & CO., INC., SMITH BARNEY, INC., and ABN AMRO
                                                            CHICAGO CORPORATION
                      on their own behalf and on behalf of the other members of
                          the underwriting syndicate for the public offering of
                              Paracelsus Healthcare Corporation stock issued in
                                         connection with the August 1996 merger
                                         By:  _________________________________
                                                  Gerard G. Pecht
                                                  FULBRIGHT & JAWORSKI, LLP
                                     nsel for DLJ (as defined in the Agreement)
Dated:  March __, 1999                            THE CHAMPION SHAREHOLDERS
                                        By:  __________________________________
                                                  Brian S. Rosen
                                                  Weil, Gotshal & Manges LLP
                              Counsel for and on behalf of each of the Champion
                                             Shareholders