Exhibit 10.7

                           SECTION 1307 LOAN AGREEMENT

      THIS AGREEMENT,  made and entered into as of the ___ day of July, 1998, by
and between LIPH, LLC, a limited liability company duly created,  organized, and
existing under and by virtue of the Laws of the State of New York and having its
principal office at One Huntington  Quadrangle,  Suite 4C01, Melville, New York,
11747  (hereinafter  referred to as  "Lender"),  and MDNY  HEALTHCARE,  INC.,  a
corporation  duly created,  organized,  and existing  under and by virtue of the
Laws of the State of New York and having its principal  office at One Huntington
Quadrangle,  Suite 4C01,  Melville,  New York 11747 (hereinafter  referred to as
"Borrower").

                              W I T N E S S E T H:

      WHEREAS,  Borrower desires to borrow the sum of $1.0 million and Lender is
willing to lend said sum to Borrower upon the terms,  provisions  and conditions
hereinafter set forth; and

      WHEREAS,  the  Insurance  Law  of the  State  of New  York,  Section  1307
(Contingent liability for borrowings) provides that a domestic insurer or health
maintenance  organization may, without pledging any of its assets,  borrow funds
pursuant  to said  Section  1307  upon the  approval  of the  Superintendent  of
Insurance of the State of New York.

      NOW  THEREFORE,  in  consideration  of the premiums and for other good and
valuable  consideration,  and intending to be legally  bound hereby,  Lender and
Borrower agree as follows:

      1. Upon approval of this Agreement by the  Superintendent  of Insurance of
the State of New York,  Pursuant to Section 1307 of the New York  Insurance Law,
Lender  agrees to lend to Borrower,  and Borrower  agrees to borrow from Lender,
the sum of ONE MILLION DOLLAWS  ($1,000,000) (THE "Loan").  Upon receipt of such
approval, Lender shall promptly disburse the full amount of the Loan to Borrower
in good and immediately available funds.

      2.  Interest  shall  accrue on the  principal  amount of the Loan at a per
annum rate equal to the Prime Rate (as  defined in this  Section 2) in effect on
the date hereof,  adjusted as

<PAGE>

of each  Interest  Payment Date (as defined  below in Section 3), until the Loan
has been  repaid  in full.  "Prime  Rate"  means the rate of  interest  publicly
announced by Citibank  N.A.,  New York, New York, or any successor to such bank,
as its prime  rate from time to time.  Notwithstanding  the  foregoing,  the per
annum  rate of  interest  on the Loan  shall at no time  exceed  that  rate then
permitted pursuant to the provisions of Section 5-501 of the General Obligations
Law of the  State of New York and as  further  defined  in  Section  14-a of the
Regulations of the Department of Banking of the State of New York, as amended.

      3. Accrued  interest on the principal  amount of the Loan shall be due and
payable to Lender on the first day of each calendar quarter, commencing with the
calendar  quarter  beginning  on October 1, 1998  (each,  an  "Interest  Payment
Date"), and the principal amount of the Loan shall be repaid to Lender in a lump
sum of July 1, 1999; provided,  however, that in no event shall any principal or
interest  payment in respect of the Loan be made except in  accordance  with the
provisions of Sections 4 and 6 hereof; and provided, further, that no default in
respect of the Loan shall have  occurred  or be deemed to have  occurred  if any
principal  or interest  payment  that would  otherwise be due and payable is not
made by reason of the provision of Sections 4 and 6 hereof.

      4. Notwithstanding anything to the contrary contained herein, repayment of
the  principal  of, and payment of accrued  interest  on, the Loan shall only be
made out of free and  divisible  surplus of the Borrower and all such amounts to
be paid or repaid will be subject to the prior approval of the Superintendent of
Insurance of the State of New York.

      5. The Loan made pursuant to this  Agreement  shall not form a part of the
Borrower's legal liabilities and shall not be a basis of any setoff,  but, until
repaid,  all statements  published or filed with the Superintendent of Insurance
of the State of New York by Borrower  shall  show,  as a footnote  thereto,  the
amount thereof then remaining unpaid.

      6. In the  event of the  liquidation  of the  Borrower,  repayment  of any
outstanding  principal balance of the Loan and payment of any accrued and unpaid
interest then due and owing shall be paid to Lender out of any assets  remaining
after the payment of all policy  obligations  and all other  liabilities  of the
Borrower but before distribution of assets to shareholders.


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<PAGE>

      7. All payments of principal  and interest  payable by Borrower in respect
of the Loan shall be made to Lender at its offices at One Huntington Quadrangle,
Suite 4C01,  Melville,  New York 11747,  or as  otherwise  directed by Lender in
writing.  All interest  payments shall be computed on the basis of a year of 365
days,  in each case for the actual  days  elapsed  (including  the first day but
excluding the last)  occurring in the period for which such interest is payable.
All  payments  in respect of the Loan shall be made in such coin or  currency of
the  United  States  as at the time of  payment  shall be legal  tender  for the
payment of public and private debts.

      8. This  Agreement,  and all of the  comments and  conditions  hereinabove
contained, shall be binding upon and inure to the benefit of Lender and Borrower
and their respective successors,  or assigns, and on request of Lender, Borrower
shall furnish to Lender such note, loan  certificate,  or other evidence of this
indebtedness, as Lender may request.

      9.  This  Agreement,  and  the  rights  and  obligations  of  the  parties
hereunder,  shall  be  construed  in  accordance  with,  and  governed  by,  the
provisions of Section 1307 of the New York Insurance Law.


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<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto have caused these premiums to be
executed by their proper corporation officers as of the day and year first above
written.

BORROWER:

ATTEST:

/s/                                    By: /s/
________________________________           ________________________________
    Secretary                                  President
                                               Board of Director MDNY

LENDER:

ATTEST:

/s/                                    By: /s/
________________________________           ________________________________
    Secretary                                  President
    Treasurer, LIPH


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