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                                                                    EXHIBIT 10.4

















                          HEALTHCARE RECOVERIES, INC.

                        1998 DEFERRED COMPENSATION PLAN

                                 FOR DIRECTORS
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                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                        Page
                              
<S>        <C>                                                                                          <C>
ss. 1.     PURPOSE.....................................................................................  1

ss. 2.     DEFINITIONS.................................................................................  1
                  2.1.     Account.....................................................................  1
                  2.2.     Beneficiary.................................................................  1
                  2.3.     Board.......................................................................  1
                  2.4.     Compensation Committee......................................................  1
                  2.5.     Director ...................................................................  1
                  2.6.     Fees........................................................................  1
                  2.7.     HRI.........................................................................  1
                  2.8.     Interest Credit Rate........................................................  2
                  2.9.     NCB.........................................................................  2
                  2.10.    Plan........................................................................  2

ss. 3.     DEFERRAL ELECTIONS..........................................................................  2
                  3.1.     First Term Director Deferral Elections......................................  2
                  3.2.     Annual Deferral Elections...................................................  3
                  3.3.     Automatic Election Extension................................................  3
                  3.4.     Account Credits.............................................................  3

ss. 4.     INTEREST CREDITS............................................................................  4

ss. 5.     DISTRIBUTIONS...............................................................................  4
                  5.1.     General.....................................................................  4
                  5.2.     Elections...................................................................  4
                  5.3.     Distribution Forms..........................................................  5
                           (a)      Standard Lump Sum..................................................  5
                           (b)      Five Annual Installments...........................................  5
                           (c)      Ten Annual Installments............................................  5
                  5.4.     Beneficiary.................................................................  6
                           (a)      Designation........................................................  6
                           (b)      Distribution.......................................................  6
                  5.5.     Hardship....................................................................  7
                  5.6.     General Assets..............................................................  7
</TABLE>



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<TABLE>
<S>       <C>                                                                                            <C>
ss.6.     MISCELLANEOUS................................................................................  7
                  6.1.     Making and Revoking Elections...............................................  7
                  6.2.     No Liability................................................................  8
                  6.3.     No Assignment; Binding Effect...............................................  8
                  6.4.     Administration..............................................................  8
                  6.5.     Construction................................................................  8
                  6.6.     Term of Office..............................................................  8
                  6.7.     Amendment and Termination...................................................  9
</TABLE>



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                                     SS. 1.

                                    PURPOSE

                  The purpose of this Plan is to provide a mechanism under
which a Director can elect to defer the payment of his or her Fees that are
otherwise payable to him until after the earlier of his or her death,
resignation, removal or retirement as a Director.

                                     SS. 2.

                                  DEFINITIONS

                  2.1.   Account -- means the bookkeeping account maintained by
HRI as part of HRI's books and records in accordance with ss. 3, ss. 4 and ss.
5 to show as of any date the interest of each Director in this Plan.

                  2.2.   Beneficiary -- means the person or persons designated
as such in accordance with ss. 5.4.

                  2.3.   Board -- means the Board of Directors of HRI.

                  2.4.   Compensation Committee -- means the compensation 
committee of the Board comprising 3 members elected by the Board.

                  2.5.   Director -- means any person (other than a person who
is an employee of HRI) who has been elected a member of the Board and any
former member of the Board for whom an Account is maintained under this Plan.

                  2.6.   Fees -- means any meeting fees and retainer fees which
are payable to a Director for services as a member of the Board.

                  2.7.   HRI -- means Healthcare Recoveries, Inc. and any 
successor to Healthcare Recoveries, Inc.
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                  2.8.   Interest Credit Rate -- means the prime rate of 
interest in effect on the last day of each calendar quarter at NCB.

                  2.9.   NCB -- means National City Bank of Kentucky, 
Louisville, Kentucky or any successor to such bank.

                  2.10.  Plan -- means this Healthcare Recoveries, Inc. 1998
Deferred Compensation Plan for Directors.

                                     SS. 3.

                               DEFERRAL ELECTIONS

                  3.1.   First Term Director Deferral Elections. A person who
is elected a Director or who is nominated for election as a Director (other
than a person who was a Director immediately before such election or
nomination) shall have the right at any time before the end of the 30-day
period immediately following the effective date of his or her election to elect
on the form provided for this purpose to defer the payment of all or any part
of his or her Fees which are otherwise payable after the end of such 30-day
period and before the end of the calendar year which includes the last day in
such 30-day period; provided, however, if a person makes such election before
the effective date of his or her election to the Board, such election shall
apply to all of such Fees which he or she so elects to defer and which are
payable during the first calendar year he or she serves as a Director. Any
election which is made and not revoked before the effective date of a
Director's election shall become irrevocable on such date and an election once
irrevocable shall remain irrevocable through the end of the calendar year which
includes such effective date. Any election which is made after such effective
date and not revoked before the end



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of the 30-day period immediately following such effective date shall become
irrevocable immediately after the last day in such 30-day period, and an
election once irrevocable shall remain irrevocable through the end of the
calendar year which includes the last day in such 30-day period.

                  3.2.   Annual Deferral Elections. A person who is a Director
before the beginning of any calendar year shall have the right to elect on the
form provided for this purpose to defer all or any part of his or her Fees
which are otherwise payable during such calendar year. Any election which is
made and which is not revoked before the beginning of such calendar year shall
become irrevocable on the first day of such calendar year and shall remain
irrevocable through the end of such calendar year.

                  3.3.   Automatic Election Extension. If a Director has made a
deferral election under either ss. 3.1 or ss. 3.2 for any calendar year and has
not revoked such election before the beginning of any subsequent calendar year,
such election shall remain in effect for each such subsequent calendar year and
shall be irrevocable through the end of each such subsequent calendar year.

                  3.4.   Account Credits. The Fees which a Director elects to
defer under this ss. 3 shall be credited to his or to her Account as of the
date HRI determines that such Fees otherwise would have been payable directly
to the Director if no election had been made under this ss. 3.



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                                     SS. 4.

                                INTEREST CREDITS

                   Interest credits shall be made by HRI at the Interest Credit
Rate to each Account as of the first day in each calendar quarter based on the
prime interest rate in effect on the last day of the immediately preceding
calendar quarter at NCB. Such credits shall be made until each Account is
distributed in full in accordance with ss. 5.

                                     SS. 5.

                                 DISTRIBUTIONS

                  5.1.   General. The balance credited to a Director's Account
shall (subject to ss. 5.4(b)) first become distributable to him or to her on
the first day of the calendar year which immediately follows the calendar year
which includes his or her date of death or the effective date of his or her
resignation, removal or retirement as a Director, whichever comes first, and
the distribution shall be made or begin to be made, as the case may be, as soon
as practicable after the beginning of such calendar year. All distributions
under this Plan shall be made in cash.

                  5.2.   Elections. A Director shall have the right to elect 
that his or her Account be distributed in one of the distribution forms
described in ss. 5.3, and any such election shall be effective only if such
election is made at least one full year before his or her Account first becomes
distributable. If a Director elects to revoke a prior election, such revocation
shall be effective only if such revocation is made at least one full year
before his or her Account first becomes distributable. If no election is made
under this ss. 5 or if an election has not become effective when an Account
first becomes distributable, the



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Director shall be deemed to have made an election under this Plan for a
standard lump sum distribution under ss. 5.3(a).

                  5.3.   Distribution Forms.

                  (a)    Standard Lump Sum. A Director shall have the right to
elect that his or her Account be distributed in a standard lump sum, and a
standard lump sum distribution shall be made as soon as practicable after his
or her Account first becomes distributable under ss. 5.1.

                  (b)    Five Annual Installments. A Director shall have the
right to elect that his or her Account be distributed in five annual
installments. If a Director's Account is distributed under this distribution
form, the first annual installment shall be made as soon as practicable after
his or her Account first becomes distributable under ss. 5.1. The amount
distributable each calendar year shall be determined by multiplying the
Director's Account by a fraction, the numerator of which shall be one and the
denominator of which shall be the number of installments remaining after such
installment has been paid plus one. The second annual installment through the
fifth annual installment shall be distributed on or about the anniversary of
the distribution of the first annual installment.

                  (c)    Ten Annual Installments. A Director shall have the 
right to elect that his or her Account be distributed in ten annual
installments. If a Director's Account is distributed under this distribution
form, the first annual installment shall be made as soon as practicable after
his or her Account first becomes distributable under ss. 5.1, and the amount
distributable each calendar year shall be determined by multiplying the
Director's Account by a fraction, the numerator of which shall be one and the
denominator of which



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shall be the number of installments remaining after such installment has been
paid plus one. The second annual installment through the tenth annual
installment shall be distributed on or about the anniversary of the
distribution of the first annual installment.

                  5.4.   Beneficiary.

                  (a)    Designation. A Director shall have the right to 
designate a person, or more than one person, as his Beneficiary to receive the
balance credited to his or her Account in the event of his or her death. Any
such designation shall be made on a form provided for this purpose and shall be
effective when such form is properly completed and delivered (in accordance
with the instructions on such form) by the Director to HRI before his or her
death. A Director may change his or her Beneficiary designation from time to
time and, if a Director changes his or her Beneficiary at any time, his or her
Beneficiary shall be the person or persons designated on the last form which is
effective on his or her date of death. If no Beneficiary designation is in
effect on the date a Director dies or if no designated Beneficiary survives the
Director, the Director's estate automatically shall be treated as his or her
Beneficiary under this Plan.

                  (b)    Distribution. If a Director's Beneficiary is a natural
person, the Director's Account shall be distributed, or shall continue to be
distributed to such person, in accordance with the distribution election in
effect for the Director on the date of his or her death. If a Director's
beneficiary is a person other than a natural person, the balance credited to
the Director's Account shall be distributed to such person in a lump sum as



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soon as practicable after the Director's Account first becomes distributable to
such person under the terms of this Plan without regard to the distribution
form which the Director had elected.

                  5.5.   Hardship. A Director shall have the right to request
that HRI distribute all, or a part of, his or her Account to him or to her in
the event that he or she experiences a severe and unanticipated financial
hardship. If a Director makes such a request, the Compensation Committee shall
review such request and direct HRI to make such distributions, if any, from the
Director's Account as the Compensation Committee deems appropriate in light of
the nature and magnitude of the Director's financial hardship and the other
assets available to the Director to address such hardship. If a Director dies
and his or her Beneficiary is a natural person, such Beneficiary shall be
treated as the Director under this ss. 5.5 if the Beneficiary makes a request
for a distribution under this ss. 5.5.

                  5.6.   General Assets. All distributions to, or on behalf of,
a Director under this Plan shall be made from the general assets of HRI, and
any claim by a Director or by his or her Beneficiary against HRI for any
distribution under this Plan from such assets shall be treated the same as a
claim of any general and unsecured creditor of HRI.

                                     SS. 6.

                                 MISCELLANEOUS

                  6.1.   Making and Revoking Elections. An election shall be
treated as made or revoked under this Plan only when the form provided for
making such election or revocation is properly completed and delivered to HRI
in accordance with the instructions on such form.



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                  6.2.   No Liability. No Director and no Beneficiary of a
Director shall have the right to look to, or have any claim whatsoever against,
any officer, director, employee or agent of HRI in his or her individual
capacity for the distribution of any Account.

                  6.3.   No Assignment; Binding Effect. No Director or
Beneficiary shall have the right to alienate, assign, commute or otherwise
encumber an Account for any purpose whatsoever, and any attempt to do so shall
be disregarded as completely null and void. The provisions of this Plan shall
be binding on each Director and Beneficiary and on HRI.

                  6.4.   Administration. This Plan shall be administered at any
time by the person or persons assigned to do so by the Board and such person by
virtue of such assignment shall have the right and the power and the
responsibility to take such equitable and other action as he or she deems
proper or appropriate under the circumstances to properly administer this Plan.

                  6.5.   Construction. This Plan shall be construed in
accordance with the laws of the State of Kentucky. Headings and subheadings
have been added only for convenience of reference and shall have no substantive
effect whatsoever. All references to sections shall be to sections to this
Plan. All references to the singular shall include the plural and all
references to the plural shall include the singular.

                  6.6.   Term of Office. A Director's participation in this 
Plan shall not constitute a contract for a Director to serve as a member of the
Board for any particular term or for any particular rate of compensation, and
participation in this Plan shall have no bearing whatsoever on such terms or
compensation or on any other conditions for membership on the Board.



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                  6.7.   Amendment and Termination. The Board shall have the
right to amend this Plan from time to time and to terminate this Plan at any
time; provided, however, that the balance credited to each Account immediately
after any such amendment or termination shall be no less than the balance
credited to such Account immediately before such amendment or termination and
no amendment or termination shall adversely affect a Director's right to the
distribution of his or her Account or his or her Beneficiary's right to the
distribution of such Account.

                                        HEALTHCARE RECOVERIES, INC.



                                        By:
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                                        Title
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