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                                                                    EXHIBIT 99.1


                          HEALTHCARE RECOVERIES, INC.
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
                        SAFE HARBOR COMPLIANCE STATEMENT
                         FOR FORWARD-LOOKING STATEMENTS
                         ------------------------------

         In passing the Private Securities Litigation Reform Act of 1995 ("the
Reform Act") 15 U.S.C.A. Section 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward looking statements. Healthcare Recoveries, Inc. ("HRI" or the
"Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe harbor
provisions.

         "Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of HRI. The Company
undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, HRI undertakes no obligation to update
or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over
time.

         HRI provides the following risk factor disclosure in connection with
its continuing effort to qualify its written and oral forward-looking statements
for the safe harbor protection of the Reform Act and any other similar safe
harbor provisions. Important factors currently known to management that could
cause actual results to differ materially from those in forward-looking
statements include the following:


REGULATORY AND POLITICAL RISKS

         General. From time to time, legislation is introduced in Congress and
in various state legislatures that would materially affect the Company's
business. The most significant legislation, law and regulation, for clarity, may
be grouped in three categories: (1) legislation that would substantially limit
the ability of healthcare insurers to recover from third-parties
accident-related medical benefits incurred by injured insureds ("Health
Insurance Primacy Law"), (2) legislation that would substantially limit the
Company's ability to receive and utilize individual claim information from
healthcare insurers ("Confidentiality Laws") and (3) other federal and state
laws. The following identify specific risks in those three categories:

         Health Insurance Primacy Laws:

         Auto Choice Reform Act of 1997. On April 22, 1997, Senators McConnell,
Grams, Moynihan, Lieberman and Gorton introduced the Auto Choice Reform Act of
1997. Under this Act, in those states not opting out of its provisions,
individual drivers may choose to be covered by an auto insurance system in which
healthcare insurers, with some exceptions, would be made primarily responsible
for healthcare costs incurred by those injured in automobile accidents.
Consequently, even if the insured's injuries were caused by the negligence of
another driver, the healthcare insurer would have no rights of recovery against
the negligent party or that party's liability insurer. Revenue generated from
recoveries against automobile liability insurers represented approximately 60%
of the Company's 1997 revenues. Similar legislation was introduced, but not
enacted in the previous session of Congress. On June 24, 1997, similar
legislation was introduced in the House of Representatives by Representatives
Armey, Moran, Saxton, Cox and McIntosh. Should this or similar legislation be
enacted it would have a material adverse effect on the Company's business,
results of operations and financial condition.

         The proposed legislation asserts that (i) the costs of operating a
motor vehicle are excessive due to legal and administrative costs associated
with the processing of claims under the fault-based liability system and (ii)
the costly fault-based liability insurance system often fails to provide
compensation commensurate with loss and takes too long to pay benefits.
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         Even if the Auto Choice Reform Act is ultimately abandoned, these
policy reasons may result in future legislation designed to significantly alter
the fault-based liability system used in most states, eliminate recovery rights
of healthcare insurers and adversely affect the Company's business.

         Clinton Administration Healthcare Proposals. In 1993, as part of its
healthcare reform proposals, the Clinton Administration proposed to require in
effect that an injured insured's healthcare insurance provider be primarily
liable for the insured's healthcare costs, for both injuries caused by a
third-party and work related injuries. Although these proposals were never
enacted into law, had they or similar rules been enacted into law, the Company's
services would have been rendered largely unnecessary and the Company's
business, results of operations and financial condition would have been
materially adversely affected. Although the Clinton Administration has abandoned
its healthcare reform proposal, there can be no guarantee that a future
administration or Congress will not propose or enact such a provision or other
regulatory scheme that would diminish or eliminate the value of the Company's
services.

     Certain No Fault Insurance Systems. Certain states have adopted versions of
automobile "no fault" insurance systems in which the injured party's health
insurance carrier or provider is primarily responsible for healthcare related
expenses (and not the responsible party and his or her insurer or the injured
insured's automobile liability insurer). In 1996, California voters rejected a
no-fault automobile insurance measure, Proposition 200, which would have
required drivers with bodily injuries to be compensated by their own healthcare
insurers.  Although Proposition 200 was rejected by the voters, there can be no
assurance that similar measures will not again be presented in a ballot
initiative or as legislation in the future. Growth in the number of states
adopting similar systems could significantly reduce the amounts otherwise
recoverable by the Company in connection with automobile injuries in such
states.

Confidentiality Laws:

         Confidentiality Provisions of the Health Insurance Portability and
Accountability Act of 1996. Section 262 of the Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. s.s. 1177) prohibits any person from
knowingly obtaining or disclosing individually identifiable health information
relating to an individual in violation of the standards relating to the
electronic transmission of healthcare information established by the Secretary
of the Department of Health and Human Services. In September 1997, the Secretary
submitted recommendations to Congress to implement these standards. If Congress
does not enact health information privacy legislation by August, 1999, the
Secretary will be required to issue final regulations on the subject. The
Secretary's recommendations set forth general principals, but do not propose
specific legislation. Several bills pertaining to privacy of individually
identifiable health information have been introduced in this Congress. In
addition, the Secretary recently has issued three proposed rules that outline
security standards for healthcare information specific to an individual that is
maintained or transmitted electronically, including standards for electronic
signatures; electronic transaction standards; a standard employer identification
number and requirements concerning its implementation; and a standard healthcare
provider identifier and requirements concerning its implementation. The
provisions of future legislation or regulations could impair or prevent the
acquisition and use by the Company of claims and insurance information necessary
to process recovery claims on behalf of its clients. In addition to federal law,
state laws and regulations governing privacy of insurance records and related
matters may significantly affect the Company's business. State efforts to
restrict the use of such records, which clients currently provide to the
Company, could impair the Company's business, results of operations and
financial condition.

Other Federal and State Laws:

         Changes in the regulation of insurance and debt collection could also
affect the Company's business. Similarly, changes in law that would bar
healthcare subrogation or impair an injured party's ability to collect insured
damages (that is, an injured person would be prevented from recovering from the
wrongdoer damages for accident-related medical benefits covered by health
insurance) could similarly adversely affect the Company's business. Existing
debt collection laws also may be amended or interpreted in a manner that could
adversely affect the Company's business. Additionally, although the Company does
not believe that it engages in the unauthorized practice of law, changes in the
law or a judicial or administrative decision defining some of the Company's
activities as the practice of law, could have a material adverse effect on the
Company's business.

Certain Legal Doctrines

         With respect to recoverable claims, the rights of subrogation and
reimbursement may be limited in some cases by (i) the "made whole doctrine,"
which may limit the healthcare provider's ability to recover when the
settlement damage award received by the injured party is inadequate to cover
the injured party's damages and (ii) the "common fund doctrine," which permits
plaintiff's attorneys to determine their compensation, based on the entire
amounts covered by a damage award and may, in some cases, proportionally
diminish the amount recoverable by HRI on behalf of the healthcare payor of
that damage award.


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DEPENDENCE ON LARGE CLIENTS

         The Company's clients includes national and regional healthcare payors,
large third-party administrators or self-insured corporations. The Company's
three largest clients represented 31%, 9% and 9% of the Company's revenues in
1997 and 25%, 9% and 8% for the six months ended June 30, 1998. The loss of one
or more of these accounts could have a material adverse effect on the Company's
business, results of operations and financial condition. The Company's revenues
are earned under written contracts with its clients that provide for contingency
fees from recoveries under a variety of pricing regimes. These contracts are
generally terminable on 60 to 180 days' notice by either party. However, the
Company's contracts provide that in the event of termination, the Company is
generally entitled to complete the recovery process on the backlog for that
client. During the six months ended June 30, 1998, HRI covered approximately
38.3 million lives, a decrease of 200,000 lives from December 31, 1997. This
decline resulted from the previously reported loss of 2.0 million lives from
Oxford Health Plans and of 600,000 lives from Healthsource, which was acquired
by CIGNA. The Healthsource contract was terminated by CIGNA, who is not an HRI
client, in order to consolidate vendors. Compared to last year, lives sold at
the end of the current quarter increased 4.0 million, or 12%, over the end of
the same quarter a year ago. Consistent with these changes in lives sold,
installed lives grew by 3.0 million over the end of the comparable quarter last
year, a 9% increase, but decreased by 900,000, or 2%, over the end of the prior
quarter.

LENGTHY REVENUE CYCLE AND FLUCTUATION IN OPERATING RESULTS

         The Company's operating results may fluctuate from time to time as a
result of a number of factors, including additions of new clients, cancellation
of client contracts, postponement of client decisions to enter into contracts,
delays in transmission of clients' claims data, changes in prices offered to new
clients, timing of acquisitions, introduction of new services or introduction of
new technologies to the Company's business processes. HRI expends substantial
time, effort and funds to install lives and generate active files. As a result,
HRI incurs expenses related to its revenue in advance of the time such revenue
is received which can result in fluctuations in operating results.

         In particular, the volume and timing of receipt of clients' claims data
received during a fiscal quarter are difficult to forecast. The Company's
clients continuously update and modify their claims and medical encounter
processing systems, and such changes often create delays in or errors to the
transmission of claims data. Furthermore, the Company's expense levels are based
in part on expectations of future receipt of claims data and the Company has
been significantly increasing and intends to continue to increase operating
expenditures and working capital balances as it expands its operations.
Specifically, material increases in new clients and lives installed, and
consequently client claims data received, will cause the Company to increase its
operating capacity well in advance of its expectation to earn revenues from such
new clients. Operating results in any particular quarter which do not meet the
expectations of securities analysts could cause volatility in the price of the
Company's Common Stock.

LITIGATION

         The Company is engaged in the business of identifying and recovering
subrogation and related claims of its clients, many of which arise in the
context of personal injury lawsuits. As such, the Company operates in a
litigation-intensive environment. The Company has, from time to time, been, and
in the future expects to be, named as a party in litigation incidental to its
business operations. To date, the Company has not been involved in any
litigation which has had a material adverse effect upon the Company, but there
can be no assurance that pending litigation or future litigation will not have a
material adverse effect on the Company's business, results of operations and
financial condition.

         The Company is also party to a putative class action lawsuit that seeks
monetary damages from the Company on the basis that the Company recovered from
responsible parties the "reasonable value" of medical treatment provided by
medical providers rather than the amounts actually paid by certain healthcare
payors, in circumstances where such healthcare payors had a discounted
fee-for-service ("DFS") arrangement, capitation arrangement or other payment
arrangement that did not involve solely fee-for-service arrangements with the
medical providers. Under a typical capitation arrangement a medical provider is
paid a flat periodic fee for each patient referred by a healthcare payor and the
medical provider contractually bears the risk of the amount of services needed
by the potential patient group. Thus, there is no specific amount paid by the
healthcare payor for any service rendered by the medical provider. In addition
to monetary damages, the class action lawsuit seeks injunctive relief preventing
the Company from pursuing recoveries in excess of the amounts actually paid by
its clients regardless of the payment mechanism. Although it is the Company's
current policy not to seek recovery of the "reasonable value" of medical
treatment in DFS arrangements, the Company does collect the "reasonable value"
of medical treatment under capitation and certain other payment arrangements.
The Company's clients determine such "reasonable value" according to their
internal procedures. If this lawsuit or another lawsuit seeking relief under
similar

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theories were to be successful, it could have a material adverse effect on the
Company's business, results of operations and financial condition.

COMPETITION

         HRI competes primarily with the internal recovery departments of
potential customers and other subrogation recovery service vendors. To the
Company's knowledge, there are three smaller, but significant, independent
providers of subrogation recovery services in addition to HRI. All three
independent competitors preceded HRI's entry into the recovery industry, and no
major competitors have entered the market since that time. HRI believes that it
has competitive advantages in the bulk of its market, including process
expertise, capital requirements necessitated by the unusually long revenue cycle
in the recovery industry, a qualified and productive employee base possessing
appropriate industry expertise, and an information processing system designed to
aid investigators and examiners engaged in the recovery process. However, there
are participants in the healthcare insurance and transaction processing
industries that possess sufficient capital, and managerial and technical
expertise to develop competitive services.

DEPENDENCE ON KEY PERSONNEL

         The Company's success depends to a significant degree upon the
continued contributions of members of the Company's senior management and other
key sales, marketing, computer systems and operations personnel, and the loss of
any such persons could have a materially adverse effect on the business of the
Company. The Company's success also depends upon its ability to attract and
retain highly qualified and skilled managerial, sales, marketing and computer
software development and operations personnel, the competition for whom is
intense. There can be no assurance that the Company will be successful in hiring
or retaining the requisite personnel, which could have a material adverse effect
on the Company's business, results of operations and financial condition. The
Company does not maintain key man insurance. The Company has employment
agreements with Patrick B. McGinnis, Chairman and Chief Executive Officer, Debra
M. Murphy, Executive Vice President - Operations, Douglas R. Sharps, Executive
Vice President - Finance and Administration. 

PROSPECTIVE UPGRADE OF INFORMATION MANAGEMENT SYSTEM AND LOSS OF PROPRIETARY
TECHNOLOGY

         The SubroSystem and its Upgrade. Although the SubroSystem, a key
feature of HRI's recovery process, historically served the Company's operational
and management information needs, HRI developed a 3-step plan (the "System
Upgrade") under which it would, over a 24-month to 36-month period, (i) migrate
the SubroSystem from an MS-DOS based environment to a Windows NT operating
environment, (ii) adopt a new database system, and (iii) adopt an
object-oriented programming language, such as C++. The System Upgrade includes a
detailed process for the comprehensive testing of all key elements prior to
implementation of each step. The Company expects that it will spend
approximately $4.4 million on the System Upgrade, of which $4.0 million spent on
hardware and third-party software will be capitalized. HRI's policy is to
expense software development costs as incurred.

         There can be no assurance that the implementation of the System Upgrade
(or any part of it) will be successful, that it will be within budget, or that
the implementation of the System Upgrade (or any part of it) will not have an
adverse effect on the Company's business, results of operations or financial
condition. Furthermore, because the SubroSystem is proprietary,
industry-specific software, the absence of complete and detailed written
documentation with respect to the SubroSystem's functioning and code structure
make the Company dependent on existing staff, who are skilled in its operations
and some of whom participated in its design.

         Dependence on Proprietary Software Applications. The Company's success
depends, in part, upon its proprietary technology, specifically the integrated
software programs comprising the SubroSystem. Although certain elements of the
SubroSystem are protected by federal copyright law, such protection neither
confers a monopoly on the use of subrogation recovery software systems nor
prevents competitors from developing similar systems. The SubroSystem, like all
other software programs, may be subject to a variety of replication techniques
(for example, reverse engineering, logic tracing, disassembly and decompilation)
that would produce a functionally similar software system not covered by the
Company's registered copyright. Therefore, there can be no assurance that the
Company's registered copyright on the SubroSystem will


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preclude or deter circumvention by current or future competitors, with the
effect that the Company might lose any advantage conferred by the SubroSystem.


CONSOLIDATION AMONG HEALTHCARE PAYORS: PRESSURE ON MARGINS

         Consolidation among healthcare payors could increase their bargaining
strength as the number of lives insured or otherwise covered by such healthcare
payors grows, which may place downward pressure on the Company's historic
margins and may create additional competition from such healthcare payors in the
form of better equipped in-house recovery departments. Additionally, existing
clients have been and may in the future be lost through acquisition by
non-client healthcare payors.

LIMITATION ON DIVIDENDS

         From August 28, 1995, the date Medaphis Corporation ("Medaphis")
acquired HRI, until May 1997 when Medaphis sold HRI in an initial public
offering (the "Offering"), the Company paid dividends to Medaphis totaling $13.6
million. Following the Offering, however, the Company has retained earnings to
finance the growth and development of its business and does not anticipate
paying cash dividends on its common stock in the foreseeable future. The
Company's credit facility limits its ability to pay dividends on its common
stock.

ABILITY TO MANAGE GROWTH IN SUBROGATION BUSINESS

         The Company recently has experienced significant growth in both its
revenues and the number of its employees. This growth has resulted in an
increase in responsibilities placed upon the Company's management and has placed
added pressures an the Company's operating systems. The Company expects to
expand its management, systems development and support, marketing, sales and
customer services and to upgrade the SubroSystem, which could place a strain on
the Company's operations. Furthermore, the initial expenses associated with the
addition of new clients may be incurred prior to the recognition of any revenues
from such new clients. There can be no assurance that the Company will
successfully manage its expanding operations or implement its growth strategy;
and if the Company's management is unable to manage growth effectively, the
Company's business, operating results and financial condition could be adversely
affected.

ABILITY TO EXECUTE GROWTH STRATEGY

         In addition to growing its existing subrogation recovery business, HRI
intends to extend its business model and capabilities, through external and
internal development, to other service industries. Although HRI does not, at
present, engage in any line of business other than subrogation recovery, it
believes that future development opportunities are likely to be characterized
by: outsourcing services that produce predictable and recurring revenue streams;
competitive advantages from processes, automation and the provision of
knowledge-rich services; development-stage niche markets; value-based pricing;
and a focus on (non-exclusive) healthcare information services.

         There can be no assurance that the Company will be successful in the
internal development or acquisition of new lines of business or that it will be
able to successfully manage new lines of business which it may develop or
acquire, and if the Company's management is unable either to execute this growth
strategy or to manage the resulting growth, the Company's business, operating
results and financial condition could be adversely affected.

CERTAIN ANTI-TAKEOVER PROVISIONS

         Certain provisions of the Amended and Restated Certificate of
Incorporation and Bylaws of the Company may be deemed to have the effect of
making difficult an acquisition of control of the Company in a transaction not
approved by the Company's Board of Directors. These provisions include the
ability of the Company's board of directors to issue shares of preferred stock
in one or more series without further authorization of the Company's
stockholders. Accordingly, the Company's Board of Directors is empowered,
without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of Common Stock. In the event of
such issuance, the preferred stock could also be utilized, under certain
circumstances, as a method of discouraging delaying or preventing a change in
control of the Company. Although the Company has no current intention to issue
any shares of its preferred stock, there can be no assurance that the Company
will not do so in the future. These provisions may also have the effect of
discouraging a third-party from making a tender offer or otherwise attempting to
obtain control of the Company even though such a transaction might be
economically beneficial to the Company and its stockholders. Furthermore, the
Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law which prohibits the Company from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the time of the transaction in which the person first becomes an
"interested stockholder," unless the business combination is approved in a
prescribed manner. The application of Section 203 could have the effect of
delaying or preventing a change of control of the Company. Certain other
provisions of the Company's Amended and

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Restated Certificate of Incorporation and Bylaws may have the effect of delaying
or preventing changes of control or management of the Company, which could
adversely affect the market price of the Common Stock. Among these are
provisions (i) requiring a classified board of directors, (ii) prohibiting
action by written consent of the stockholders, (iii) limiting the person able 
to, and the procedures for, calling a special meeting of the stockholders and 
(iv) requiring certain supermajority stockholder votes to amend certain of the
foregoing provisions.

PROFESSIONAL LIABILITY AND INDEMNITY OBLIGATIONS TO CLIENTS

         From time to time, the Company may be subject to claims from its
clients that it failed to provide services in accordance with its contract or
that its recovery activities have harmed the client. To date, no client has
terminated its contract with the Company based upon the failure to provide
services, nor has any client asserted that the Company has in any way damaged
its business. The Company has agreed to indemnify and hold certain of its
clients harmless from negligent acts or omissions of the Company in the
performance of recovery services. Although the Company maintains, and intends to
continue maintaining, insurance covering these types of risks, there can be no
assurance that such insurance will be an adequate amount or will be available at
reasonable costs in the future.

STOCK PRICE VOLATILITY

         The Company believes that a variety of factors could cause the price of
the Common Stock to fluctuate, perhaps substantially, including: announcements
of developments related to the Company's business; changes in financial
estimates by securities analysts; and developments in the Company's
relationships with its customers, distributors and suppliers. In addition, in
recent years the stock prices of companies have experienced extreme price
fluctuations which have often been unrelated to the operating performance of
such companies. Similar fluctuations may adversely affect the market price of
the Common Stock in the future. 

YEAR 2000 COMPUTER ISSUES

         The year 2000 presents a problem for computer systems (software and
hardware) that were not designed to handle any dates beyond the year 1999. The
problem is pervasive and complex because virtually every computer operation
will be affected in some way by the rollover of the last two digits of the year
to "00." In consequence, any such software and hardware will need to be
modified some time prior to January 1, 1999 in order to remain functional.
Computer systems that do not properly handle this rollover could generate
erroneous data or fail to function.

         The Company has initiated a company-wide program to identify and
address the modifications to or replacements of computer code (including data
received from clients), hardware and office equipment, the testing, and the
implementation procedures necessary to achieve year 2000 readiness ("Y2K
Readiness" or descriptively, "Y2K Ready"). As a result of this program, 9
different areas or functions within the Company have been surveyed in order
first, to identify software and hardware that are not presently Y2K Ready, and
second, to establish a schedule for remediation or replacement of the items of
software and hardware that are not Y2K Ready.

         The Company has completed its identification of the elements of its
software and hardware that are not Y2K Ready. Included among these elements
are certain fields contained in SubroSystem, the Company's online subrogation
system. The first date of failure for all of these items of software and
hardware, including SubroSystem, is January 1, 2000. The completion date for
replacement or remediation of all elements of Company software and hardware that
are not Y2K Ready, including SubroSystem, is June 30, 1999. To date, the costs
of the Company's efforts to achieve Y2K Readiness have not been material, and
the Company believes that the future costs to complete its program to become Y2K
Ready will not be material.

         Management believes that the greatest risk posed to the Company's Y2K
Readiness lies in the possible failure of its clients and other members of the
healthcare payor industry to achieve Y2K Readiness. The Company relies on its
clients to provide electronic claims data, through electronic data interfaces,
as the source of information from which the Company identifies potentially
recoverable claims. If clients are unable to provide such data because they are
not Y2K Ready, the Company could suffer a slow-down in its recovery efforts,
impairing its ability to make the recoveries from which it derives its revenue.
Moreover, to the extent that payors which are potential clients fail to achieve
Y2K Readiness, HRI's ability to sell to and to install such payors may also be
impaired. With respect to current clients, HRI has undertaken a survey of each
client's state of Y2K Readiness. The Company has not, to date, received its
clients' responses to this survey, and is therefore unable to form an opinion
as to the present level of this risk. Furthermore, the Company is unaware of
any survey speaking to the Y2K Readiness of the healthcare payor industry
at-large, and is thus unable to assess the magnitude of this risk with respect
to potential clients.

         The Company's contingency planning calls for, among other things, early
identification of alternative means of obtaining electronic claims data should
the existing electronic data interfaces with clients fail. However, the Company
does not at present have a developed contingency plan for dealing with clients
that, because of a failure to achieve Y2K Readiness, are unable to process
healthcare claims electronically. This contingency planning will occur on an as
needed, client-specific basis, as part of the client assessment process
described above.


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