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                                                                    EXHIBIT 10.1

                               SEVERANCE AGREEMENT


                  THIS SEVERANCE AGREEMENT dated as of January 1, 2002 (the
"Agreement") is made between HEALTHCARE RECOVERIES, INC. (including all of its
subsidiaries, the "Company") and _________________ (the "Employee").


                                   WITNESSETH:

                  WHEREAS, the Employee is a key employee of the Company; and

                  WHEREAS, the Company desires to provide the Employee with
severance benefits under the conditions set forth in this Agreement;

                  NOW, THEREFORE, the Company and the Employee agree as follows:

                  1.       Term of Agreement. The Employee's rights under this
Agreement shall commence as of the date hereof and shall terminate upon the
earlier of [i] the voluntary termination by the Employee of the Employee's
employment with the Company or [ii] the date on which the Employee ceases to
be a member of the Management Group (the period during which this Agreement is
in effect being hereinafter referred to as the "Term"). Employee's membership in
the Management Group is subject to the approval of the Compensation Committee of
the Board of Directors.

                  2.       Severance Pay.

         2.1      Amount & Timing of Severance Pay. If there is a Termination,
as defined in Section 2.2, with regard to the Employee, [i] the Company will
continue the Employee's base salary in effect on the date of the Termination for
a period of one year following the day on which the Termination occurs (the
"Severance Pay ") and [ii] for a period of one year after the day on which the
Termination occurs, the Company shall continue to pay, or reimburse the Employee
for, the Company-paid portion of medical premiums under the Company's group
health plan that would apply to the Employee had he not terminated, provided
that the Employee makes a timely election of such continuation coverage under
COBRA.; provided, however, that the Employee shall not be entitled to payment of
the Severance Pay upon a Termination if upon that Termination the Employee is
entitled to a Change-in-Control Payment, as defined in Section 9. The Severance
Pay shall: [x] be paid and delivered to the Employee on the same basis that the
Employee's regular base salary was paid and delivered immediately prior to
Termination; [y] be subject to reduction to the extent that during the one year
after the Termination the Employee receives compensation as an employee from an
entity other than the Company; and [z] not include any amounts of incentive
compensation.


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         2.2      Definition. "Termination" means a termination of the
Employee's employment, during the Term, other than for "Cause." "Cause" means
the occurrence of any of the following:

                  a.       the Employee materially breaches the provisions of
this Agreement or any other employment-related agreement between the Employee
and the Company, and the Employee fails to cure such breach within ten days
after the Employee's receipt from the Company of written notice of such breach,
which notice shall describe in reasonable detail the Company's belief that the
Employee is in breach (notwithstanding the foregoing, no cure period shall be
applicable to breaches by the Employee of the provisions of Section 3, 4, 5, 6,
7 or 8 of this Agreement);

                  b.       the Employee commits any other act in bad faith
materially detrimental to the business or reputation of the Company; or

                  c.       the Employee intentionally engages in dishonest or
illegal activities or commits or is convicted of (or pleads nolo contendere to)
any crime involving fraud, deceit or moral turpitude.

         The Employee's death or disability shall be deemed a Termination. For
purposes of this Section, "disability" means that the Employee becomes mentally
or physically incapacitated or disabled so as to be unable to perform Employee's
duties. Without limiting the generality of the foregoing, Employee's inability
adequately to perform services for a period of 60 consecutive days will be
conclusive evidence of such mental or physical incapacity or disability, unless
such inability adequately to perform services under this Agreement is pursuant
to a mental or physical incapacity or disability covered by the Family Medical
Leave Act, in which case such 60-day period shall be extended to a 120-day
period.

                  3.       Non-Disclosure of Proprietary Information. The
Employee recognizes and acknowledges that the Trade Secrets and Confidential
Information (as such terms are defined below) of the Company and all physical
embodiments of the same (as they may exist from time-to-time, collectively, the
"Proprietary Information") are valuable, special and unique assets of the
Company's businesses. The Employee further acknowledges that access to such
Proprietary Information is essential to the performance of the Employee's duties
under this Agreement. Therefore, in order to obtain access to such Proprietary
Information, the Employee agrees that the Employee shall hold in confidence all
Proprietary Information and will not reproduce, use, distribute, disclose,
publish or otherwise disseminate any Proprietary Information, in whole or in
part, and will take no action causing, or fail to take any action necessary to
prevent causing, any Proprietary Information to lose its character as
Proprietary Information, nor will the Employee make use of any such information
for the Employee's own purposes or for the benefit of any person, firm,
corporation, association or other entity (except the Company) under any
circumstances.


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For purposes of this Agreement, the term "Trade Secrets" means the whole or any
portion of any scientific or technical or other information, design, process,
procedure, formula, computer software product, documentation or improvement
relating to the Company's or its affiliates' businesses which [i] derives
economic value, actual or potential, from not being generally known to other
persons who can obtain economic value from its disclosure or use; and [ii] is
the subject of efforts that are reasonable under the circumstances to maintain
its secrecy or confidentiality. The term "Confidential Information" means any
and all data and information relating to the Company's or its affiliates'
"Business," other than Trade Secrets, [a] which has value to the Company or its
affiliates; [b] is not generally known by its competitors or the public; and [c]
is treated as confidential by the Company or its affiliates. The term "Business"
means the provision of any of the business or services that the Company is
engaged in on the date that the Employee leaves employment by the Company,
including without limitation subrogation and related recovery services, provider
bill auditing, contract compliance review, identification of certain other
insurance-related payments and cost management consulting for healthcare payors
or property and casualty insurers of any kind The provisions of this Section 3
will apply during the Employee's employment by the Company and for a two-year
period thereafter with respect to Confidential Information, and during the
Employee's employment by the Company and at any and all times thereafter with
respect to Trade Secrets. These restrictions will not apply to any Proprietary
Information which is in the public domain provided that the Employee was not
responsible, directly or indirectly, for such Proprietary Information entering
the public domain without the Company's consent. This Section 3, together with
Sections 2, 4, 5, 6, 7, 8 and 9 of this Agreement, shall survive termination of
this Agreement.

                  4.       Non-Competition and Related Covenants.

         4. 1      Non-Competition. During the Employee's employment by the
Company and for a period of two years following any termination of the
Employee's employment, the Employee will not, directly or indirectly, on the
Employee's own behalf or in the service of or on behalf of any other individual
or entity, compete with the Company within the Geographical Area (as defined).
The term "compete" means to engage in, have any equity or profit interest in,
make any loan to or for the benefit of, or render any services of any kind to,
directly or indirectly, on the Employee's own behalf or in the service of or on
behalf of any other individual or entity, either as a proprietor, employee,
agent, independent contractor, consultant, director, officer, partner or
stockholder (other than a stockholder of a corporation listed on a national
securities exchange or whose stock is regularly traded in the over-the-counter
market, provided that the Employee at no time owns, directly or indirectly, in
excess of one percent of the outstanding stock of any class of any such
corporation) any business which provides Business services. For purposes of this
Agreement, the term "Geographic Area" means the territory located within a 75
mile radius of each facility for which the Employee has management
responsibility during the Employee's employment with the Company.


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         4.2      Non-Interference. During the Employee's employment by the
Company and for a period of two years following the termination of the
Employee's employment, the Employee will not, directly or indirectly, on the
Employee's own behalf or in the service of or on behalf of any other individual
or entity, interfere with, disrupt, or attempt to disrupt the past, present or
prospective relationships, contractual or otherwise, between the Company and any
supplier, consultant, or client of the Company with whom the Employee had
material contact during the Employee's employment by the Company. The term
"prospective relationship" is defined as any relationship where the Company has
actively sought an individual or entity as a prospective supplier, consultant,
or client.

         4.3      Non-Solicitation of Clients Covenant. The Employee agrees that
during the Employee's employment by the Company and for a period of two years
following the termination of the Employee's employment, the Employee will not,
directly or indirectly, on the Employee's own behalf or in the service of or on
behalf of any other individual or entity, divert, solicit or attempt to solicit
or accept business from any individual or entity [i] who is a client of the
Company at any time during the six-month period prior to the Employee's
termination of employment with the Company ("Client"), or was actively sought by
the Company as a prospective client, or [ii] with whom the Employee had material
contact while employed by the Company to provide Business services to such
Clients or prospects, in either case to provide, directly or indirectly,
Business services.

                  The Employee further agrees that during the Employee's
employment by the Company and for a period of two years following the
termination of the Employee's employment, the Employee will not, directly or
indirectly, as an employee, independent contractor, agent or in any other
capacity, be employed by any Client to provide, directly or indirectly, Business
services.

         4.4      Construction. The parties agree that any judicial authority
construing all or any portion of this Section 4 or Section 5 will be empowered
to sever any portion of the Geographical Area, client base, prospective
relationship or prospect list or any prohibited business activity from the
coverage of such Section and to apply the provisions of such Section to the
remaining portion of the Geographical Area, the client base or the prospective
relationship or prospect list, or the remaining business activities not so
severed by such judicial authority. In addition, it is the intent of the parties
that the judicial authority replace each such severed provision with a provision
as similar in terms to such severed provision as may be possible and be legal,
valid and enforceable. It is the intent of the parties that Sections 4 and 5 be
enforced to the maximum extent permitted by law. If any provision of either such
Section is determined not to be specifically enforceable, the Company shall
nevertheless be entitled to bring an action to seek to recover monetary damages
as a result of the breach of such provision by the Employee.


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                  5.       Non-Solicitation of Employees Covenant. The Employee
agrees and represents that during the Employee's employment by the Company and
for a period of two years following any termination of the Employee's
employment, the Employee will not, directly or indirectly, on the Employee's own
behalf or in the service of, or on behalf of any other individual or entity,
divert, solicit or hire away, or attempt to divert, solicit or hire away [i] any
person employed by the Company or [ii] any person who has left the employment of
the Company within the one-year period which follows the termination of such
employee's employment with the Company, in either case, whether or not such
employee is or was a full-time employee or temporary employee of the Company,
whether or not such employee is or was employed pursuant to a written agreement
and whether or not such employee is or was employed for a determined period or
at will.

                  6.       Existing Restrictive Covenants. The Employee
represents and warrants that the Employee's employment with the Company does not
and will not breach any agreement which the Employee has with any former
employer to keep in confidence confidential information or not to compete with
any such former employer. The Employee will not disclose to the Company or use
on its behalf any confidential information of any other party required to be
kept confidential by the Employee.

                  7.       Return of Confidential Information. The Employee
acknowledges that as a result of the Employee's employment with the Company, the
Employee may come into the possession and control of Proprietary Information,
such as proprietary documents, drawings, specifications, manuals, notes,
computer programs, or other proprietary material. The Employee acknowledges,
warrants and agrees that the Employee will return to the Company all such items
and any copies or excerpts thereof, and any other properties, files or documents
obtained as a result of the Employee's employment with the Company, immediately
upon the termination of the Employee's employment with the Company.

                  8.       Proprietary Rights. During the course of the
Employee's employment with the Company, the Employee may make, develop or
conceive of useful processes, machines, compositions of matter, computer
software, algorithms, works of authorship expressing any such algorithm, or any
other discovery, idea, concept, document or improvement which relates to or is
useful to the Company's Business (the "Inventions"), whether or not subject to
copyright or patent protection, and which may or may not be considered
Proprietary Information. The Employee acknowledges that all such Inventions will
be "works made for hire" under United States copyright law and will remain the
sole and exclusive property of the Company. The Employee assigns and agrees to
assign to the Company, in perpetuity, all right, title and interest the Employee
may have in and to such Inventions, including without limitations all
copyrights, and the right to apply for any form of patent, utility model,
industrial design or similar proprietary right recognized by any state, country
or jurisdiction. The Employee further agrees, at the Company's request and
expense, to do all things and sign all documents or


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instruments necessary, in the opinion of the Company, to eliminate any ambiguity
as to the ownership of, and rights of the Company to, such Inventions, including
filing copyright and patent registrations and defending and enforcing in
litigation or otherwise all such rights.

         The Employee will not be obligated to assign to the Company any
invention made by the Employee while in the Company's employ which does not
relate to any business or activity in which the Company is or may reasonably be
expected to become engaged, except that the Employee is so obligated if the same
relates to or is based on Proprietary Information to which the Employee will
have had access during and by virtue of the Employee's employment or which
arises out of work assigned to the Employee by the Company. The Employee will
not be obligated to assign any Invention which may be wholly conceived by the
Employee after the Employee leaves the employ of the Company, except that the
Employee is so obligated if such Invention involves the utilization of
Proprietary Information obtained while in the employ of the Company. The
Employee is not obligated to assign any Invention which relates to or would be
useful in any business or activities in which the Company is engaged if such
Invention was conceived and reduced to practice by the Employee prior to the
Employee's employment with the Company, and if such Invention is listed on the
attached Exhibit A.

                  9.       Change in Control

         9.1      Definition. A "Change in Control" means the occurrence of any
of the following:

                  a.       the adoption of a plan of merger or consolidation of
         the Company with any other corporation or other entity as a result of
         which the holders of the outstanding voting stock of the Company as a
         group would receive less than 40% of the voting stock or ownership
         interest of the surviving or resulting entity or its parent entity;

                  b.       the adoption of a plan of liquidation or the approval
         of the dissolution of the Company;

                  c.       the sale or transfer of all or substantially all of
         the assets of the Company;

                  d.       the following individuals cease for any reason to
         constitute a majority of the number of directors then serving:
         individuals who, on the date of this Agreement, constitute the Board
         and any new director (other than a director whose initial assumption of
         office is in connection with an actual or threatened election contest,
         including but not limited to a consent solicitation, relating to the
         election of directors of the Company) whose appointment or election by
         the


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         Board or nomination for election by the Company's stockholders was
         approved or recommended by a vote of at least two-thirds of the
         directors then still in office who either were directors on the date of
         this Agreement or whose appointment, election or nomination for
         election was previously so approved or recommended; or

                  e.       any individual, entity, group (within the meaning of
         Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
         and the rules promulgated under such act), or other person acquires in
         a single transaction or a series of transactions more than 30% of the
         outstanding shares of the Company's common stock.

         9.2      Change in Control Payment. Following a Change in Control, the
Company will make a Change in Control Payment under Section 9.3 to the Employee
if within the 2-year following the Change in Control the Employee is terminated
or the Employee voluntarily terminates employment for Good Reason (as such term
is defined below), provided that the Employee is employed by the Company on the
date of the Change in Control and was a member of the Management Group (as such
term may be defined by the Board of Directors) prior to the execution of a
definitive agreement, if any, between the Company and any entity to be combined
with the Company in connection with a Change in Control.

         For purposes hereof, "Good Reason" means the occurrence of any of the
following without the prior express written consent of the Employee:

                  a.       the assignment to the Employee of duties materially
less significant than those normally associated with the position held by the
Employee immediately prior to the Change in Control; or

                  b.       a material reduction in the Employee's base salary or
bonus opportunity from the amount in effect immediately prior to the Change in
Control, or a material change in the employee benefits provided by the Company
to the Employee such that the package of benefits provided after the change is
in the aggregate materially less beneficial to the Employee than the package
provided immediately prior to the Change in Control; or

                  c.       a mandated relocation of the Employee's site of
employment to a site more than 25 miles from 1400 Watterson Tower, Louisville,
Kentucky.

         Notwithstanding the foregoing, no occurrence will constitute Good
Reason unless [i] at least 30 days before the termination of employment, the
Employee notifies the Company's Board of Directors of the conditions which the
Employee believes constitute Good Reason and states in the notice that unless
those conditions are cured the


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Employee will terminate his or her employment with the Company, but those
conditions are not cured prior to the termination of employment, and [ii] the
termination of employment occurs within 60 days after the Employee learns of the
conditions which constitute Good Reason.

         9.3      Amount and Timing of Change in Control Payment. The amount of
the Change in Control Payment will be: [i] if the Employee has been a member of
the Management Group for three years or less on the date of the Change in
Control Event, one year of salary and one year of benefits continuation; and
[ii] if the Employee has been a member of the Management Group for more than
three years on the date of the Change in Control Event, two years of salary and
two years of benefits continuation. The Change in Control Payment shall be paid
as salary continuation in accordance with the provisions applicable to Severance
Pay under Section 2.1. For purposes of calculating the Employee's tenure in
Management Group, all periods in which the Employee was in the Management Group
prior to the Change in Control Event shall be added together.

                  10.      General Provisions

                  10.1     If any provisions of this Agreement are determined to
be invalid, the remaining provisions will remain in full force and effect to the
fullest extent permitted by law.

                  10.2     This Agreement will be binding upon and inure to the
benefit of the Company and any successor of the Company, including any
corporation which acquires (by merger, consolidation or otherwise) all or
substantially all the assets of the Company (which successor, after it acquires
all or substantially all the assets of the Company, will be the "Company" for
the purposes of this Agreement).

                  10.3     This Agreement will be binding upon and inure to the
benefit of (and be enforceable by) the Employee and, after the Employee dies or
is determined not to be competent, the Employee's executors or other legal
representatives.

                  10.4     The Employee will be entitled to the payments
specified in Section 2 without regard to whether the Employee seeks or obtains
other employment after a Termination.

                  10.5     Any notices or other communications under or relating
to this Agreement must be in writing and will be deemed given on the day on
which it is delivered in person or by overnight courier service or sent by
facsimile transmission (with a confirmation from the sending facsimile machine
indicating receipt at the number to which sent), or on the third business day
after the day on which it is sent from within the United States of America by
first class mail, addressed (i) if to the Company or its Board of Directors, at
the principal offices of the Company, attention General Counsel


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and (ii) if to the Employee, to the Employee's office or to the Employee's home
address as shown on the personnel records of the Company, or at such other
address as is specified by the Employee to the Company after the date of this
Agreement in the manner provided in this Section.

                  10.6     This Agreement contains the entire agreement of the
parties with respect to the subject matter of this Agreement and supersedes all
prior severance agreements and other understandings with respect to that subject
matter, whether oral or written.

                  10.7     This Agreement may be amended only by a writing
signed by the Company, with the approval of its Board of Directors, and the
Employee.

                  10.8     The Company may withhold from payments it is required
to make under this Agreement and from other payments of compensation to the
Employee all sums, including taxes, which the Company determines it is required
by law to withhold because of payments made under this Agreement, or debts owed
by the Employee to the Company.

                  10.9     The Company may withhold from payments it is required
to make under this Agreement and from other payments of compensation to the
Employee all sums, including taxes, which the Company determines it is required
by law to withhold because of payments made under this Agreement.

                  10.10    This Agreement will be governed by, and construed
under, the laws of the Commonwealth of Kentucky applicable to contracts made and
to be performed in that state.

                  10.11    The Employee hereby acknowledges that employment by
the Company is "at will," and that nothing in this Agreement shall be deemed to
alter the Employee's "at will" employment by the Company.

                  11.      Remedies. The Employee agrees and acknowledges that
the violation of any of the covenants or agreements contained in Section 3, 4,
5, 6, 7 and 8 of this Agreement would cause irreparable injury to the Company,
that the remedy at law for any such violation or threatened violation thereof
would be inadequate, and that the Company will be entitled, in addition to any
other remedy, to temporary and permanent injunctive or other equitable relief
without the necessity of proving actual damages. The parties each acknowledge
that nothing herein shall limit the remedies for breach of this Agreement to the
amount or value of any Severance Pay.


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                  12.      Excise Tax Limitation. Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Employee
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise) (the "Total Payments") would be subject to the
excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), the payments due hereunder shall be reduced, prior to
reduction of Total Payments under any other agreement or program, such that the
Employee shall be entitled to receive Total Payments not to exceed 2.99 times
the Employee's applicable "base amount" under Section 280G of the Code.

                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year shown on the first page.

                                    HEALTHCARE RECOVERIES, INC.



                                    By
                                      -----------------------------
                                      Patrick B. McGinnis
                                      Chief Executive Officer




                                      -----------------------------



                                             ---------------
                                               "Employee"


                                        -


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                                    EXHIBIT A
                                   INVENTIONS


                                      None




Employee:
         ------------
         Initials


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