EXHIBIT 10.03(d)(iii)


                            PERSONAL AND CONFIDENTIAL





                                     January 31, 1997


Mr. David H. Fater
751 Saint George's Court
Naples, FL 33963

Dear David:

This is to summarize our agreement  concerning the terms of your separation from
Community Care of America, Inc. (the "Company").  By signing this document,  you
agree to the following:

1.   By your  execution  hereof,  you  hereby  confirm  your  resignation  as an
     employee and officer of the Company and its subsidiaries, and as a director
     of its  subsidiaries,  effective  as of January 31, 1997 (the  "Termination
     Date").

2.   In full satisfaction of any and all amounts now or hereafter payable to you
     under the Company's  Supplemental  Deferred  Compensation Plan, the Company
     shall pay to you a total sum of $25,000, payable in four equal installments
     of $6,250 each, such  installments to be paid on March 15, 1997,  March 31,
     1997, April 15, 1997, and April 30, 1997,  respectively.  It is agreed that
     the  Company's  agreement to make such payments is in  cancellation  of the
     prior  promissory  note of the Company to you dated  September 13, 1996, in
     the principal  amount of $125,000,  and the replacement note of the Company
     in the same  principal  amount dated January 2, 1997.  You agree to deliver
     back to the Company for cancellation both of the said promissory notes upon
     your execution of this Letter Agreement.

3.   The Company  hereby  agrees:  (i) to pay to you the amount of  $6,000.00 in
     full satisfaction of all obligations owed to you pursuant to the consulting
     arrangement  with ALDA,  Inc.,  which  amount  shall be paid to you in four
     equal  installments  of  $1,500  each,  with each  installment  to be paid,
     respectively,  on the same  installment  dates as provided for the payments
     under  Paragraph  3  hereof,  and  (ii)  to pay to  you or to  health  care
     providers,  as  appropriate,  any amounts  owing  pursuant to the Company's
     health care plans, including the Exec-u-Care Plan, which have accrued as of
     the date hereof.

4.   The Company  will pay to you a  severance  payment  representing  three (3)
     weeks salary in the total amount of $12,454.00,  which amount shall be paid
     in two equal  installments of $6,227 each, the first such installment to be
     paid within five days  following the execution of this  agreement,  and the
     second such installment to be paid on February 28, 1997.


<PAGE>


Mr. David H. Fater
January 31, 1997
Page 2


5.   You agree not to disclose to any person or entity any trade,  technical  or
     technological secrets, details of organization,  business affairs, or other
     information  of a  proprietary  or  confidential  nature  relating  to  the
     business of or belonging to the Company,  its  subsidiaries  or affiliates.
     You agree not to malign or make  negative  statements  about the Company or
     any of its  officers,  directors  or  employees.  You  agree  to make  only
     positive  statements  about the Company  and its  officers,  directors  and
     employees, and to act generally as a goodwill ambassador for the Company.

6.   You, for yourself,  your heirs and assigns,  do hereby  waive,  relinquish,
     release,  acquit and  forever  discharge  the  Company,  its  subsidiaries,
     affiliates, shareholders, directors, officers and employees of and from any
     and all claims or rights that you may have or ever had against any of them,
     whether arising in respect of your employment,  termination,  compensation,
     benefits, or otherwise,  including,  without limitation, any claims arising
     under any  employment  agreement or under the Civil Rights Act of 1964, the
     Civil Rights Act of 1991, the Age  Discrimination in Employment Act, or any
     similar federal or state laws, rules, or regulations.

7.   You agree that you will  continue to be bound by all of the  covenants  and
     restrictions  set forth in Article IV of your Employment  Agreement,  dated
     April__,  1996, with the Company (the "Employment  Agreement").  Except for
     the said Article IV and except for Article VI of the Employment  Agreement,
     the provisions of which shall also be applicable to this Letter  Agreement,
     all remaining  terms and provisions of the Employment  Agreement are hereby
     terminated  effective  as of the  Termination  Date.  For  purposes  of the
     notices  provision of Article VI of the  Employment  Agreement (and for any
     notices  hereunder),  your  address  is as  follows  until we are  notified
     otherwise pursuant to said Article VI:

               751 Saint George's Court
               Naples, FL 33963

8.   In the event that you materially violate any of the covenants  contained in
     this Letter  Agreement,  the Company may, at its election,  forthwith cease
     providing  you with any of the  payments  under this Letter  Agreement.  In
     addition, you acknowledge and agree that the amount of damages in the event
     of  your  breach  of  this  Letter  Agreement  will  be  difficult,  if not
     impossible, to ascertain. You therefore agree that the Company, in addition
     to, and without  limiting any other remedy or right it may have, shall have
     the right to an injunction  enjoining  any breach of the covenants  made by
     you in this Letter Agreement.


<PAGE>


Mr. David H. Fater
January 31, 1997
Page 3

9.   We have  advised  you of your right to consult an  attorney.  If you do not
     choose to consult an attorney  before  execution of this Letter  Agreement,
     you have knowingly waived that right.

10.  You acknowledge  that you have read this Letter  Agreement,  understand its
     contents,  and have been given a period of 21 days to review  and  consider
     this agreement, ask questions and have problems resolved.

11.  You  acknowledge   that  you  are  entering  into  this  Letter   Agreement
     voluntarily and not as a result of any pressure, coercion or duress.

12.  For a period of seven (7) days  following  your  execution  of this  Letter
     Agreement,  you may revoke this Letter  Agreement by written  notice to the
     Company.  The Letter  Agreement  shall not become  effective or enforceable
     until the seven (7) day revocation period has ended.

13.  This Letter  Agreement  sets forth the entire  agreement and  understanding
     between  us  and  shall  supersede  all  prior  agreements,   documents  or
     discussions  with  respect  to the  matters  herein  covered.  This  Letter
     Agreement  may be amended,  modified,  or waived only by an  instrument  in
     writing signed by the parties hereto.

                                             Sincerely,

                                             COMMUNITY CARE OF AMERICA, INC.


                                             By:/s/ Gary W. Singleton
                                                ------------------------
                                             Title:CEO

AGREED TO AND ACCEPTED:


 /s/ David H. Fater     2/20/97
 ------------------------------
David H. Fater          Date


cc: Personnel File