UNITED STATES
             SECURITIES AND EXCHANGE COMMISSION
                    WASHINGTON, DC  20549

                          Form 10-Q



  {X}    Quarterly Report Pursuant to Section 13 or 15(d) of
             the Securities Exchange Act of 1934
                              
      For the quarterly period ended SEPTEMBER 30, 1996
                              
                             OR
                              
 { }    Transition Report Pursuant to Section 13 or 15(d) of
             the Securities Exchange Act of 1934
                              
    For the transition period from           to _________
                              

              Commission File Number 001-13460


                  COASTAL PHYSICIAN GROUP, INC.
   (Exact name of registrant as specified in its charter)
                              
 DELAWARE                                         56-1379244
 (State or other jurisdiction of               (IRS Employer
incorporation or organization)           Identification No.)
                              
 2828 CROASDAILE DRIVE, DURHAM, NC                    27705
Address of principal executive offices)           (Zip Code)
                              
                       (919) 383-0355
     (Registrant's telephone number including area code)
                              
                            NONE
   (Former name, former address and former fiscal year, if
                 changed since last report)
                              
Indicate by check mark whether the registrant (1) has  filed
all  reports required to be filed by Section 13 or 15(d)  of
the Securities Exchange Act of 1934 during the preceding  12
months  (or for such shorter period that the registrant  was
required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days.
                              
                  { } Yes           {X} No
                              
  As of October 31, 1996 there were outstanding 23,880,239
      shares of common stock, par value $.01 per share.
                              



              COASTAL  PHYSICIAN  GROUP,  INC.
                            INDEX
                              
                              
                              
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
          Consolidated Balance Sheets at December 31,
           1995 and September 30, 1996 (Unaudited)
        Unaudited Consolidated Statements of
           Operations
        Unaudited Consolidated Condensed
           Statements of Cash Flows
        Notes to Consolidated Financial Statements
           (Unaudited)
Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings
Item 4.  Submission of Matters to a Vote of Security Holders
Item 5.  Other Information
Item 6.  Exhibits and Reports on Form 8-K                             11

SIGNATURES

                 COASTAL PHYSICIAN GROUP, INC.
                  Consolidated Balance Sheets
             (In thousands, except per share data)

                                         September     December
                                            30,           31,
                                           1996          1995
                                        (unaudited)   
                Assets                                
Current assets:                                       
 Cash and cash equivalents                    11,205         8,147
 Marketable securities                         9,227         9,303
 Trade accounts receivable, net              111,320       149,891
 Accounts receivable, other                   15,282        11,315
 Notes receivable from shareholders                -         1,879
 Refundable income taxes                           -        12,804
 Prepaid expenses and other current            8,015         3,882
assets
 Deferred income taxes                         4,285         4,265
      Total current assets                   159,334       201,486
Property and equipment, at cost, less                             
    accumulated depreciation                 21,901        33,441
Excess of cost over fair value of net                             
      assets acquired, net                   36,833        53,836
Deferred income taxes                          2,357         2,244
Other assets                                  17,841        22,050
      Total assets                           238,266       313,057
                                                                 
 Liabilities and Shareholders' Equity                            
Current liabilities:                                              
 Current maturities and other short-                              
term                                         83,236         5,210
      borrowings
 Accounts payable                             24,783        19,600
 Accrued physicians fees and medical          30,843        38,468
costs
 Accrued expenses                             24,081        26,138
     Total current liabilities              162,943        89,416
Long-term debt, excluding current              3,064        77,270
maturities
      Total liabilities                      166,007       166,686
Shareholders' equity:                                             
 Preferred stock $.01 par value; shares                           
      authorized 10,000; none issued or                           
      outstanding                                  -             -
 Common stock $.01 par value; shares                              
      authorized 100,000; shares issued                           
      and outstanding 23,880 and                                  
23,754,   respectively                          239           238
 Additional paid-in capital                  142,386       142,345
Common stock warrants                           987             -
 Retained earnings (accumulated             (71,419)         3,626
deficit)
 Unrealized appreciation of available-                            
     for-sale securities                         66           162
      Total shareholders' equity              72,259       146,371
      Total liabilities and                                       
shareholders'                               238,266       313,057
       equity

  See accompanying notes to consolidated financial statements.

                 COASTAL PHYSICIAN GROUP, INC.
        Unaudited Consolidated Statements of Operations
             (In thousands, except per share data)

                                           Three months ended
                                              September 30,
                                           1996          1995
Operating revenue, net:                                           
  Operating revenue, net                     106,681       128,845
  Operating revenue, net-divested and                             
to be                                        31,124        81,144
    divested entities (5)
      Total operating revenue, net           137,805       209,989
Costs and expenses:                                               
 Physician and other provider services        89,189        96,195
 Medical support services                     13,513        15,588
  Professional and consulting fees             5,318         3,073
 Other selling, general and                   24,462        15,394
administrative
  Costs and expenses-divested and to                              
be                                           36,780        82,086
    divested entities (5)
      Total costs and expenses               169,262       212,336
Gain on divested assets, net                   1,780             -
Operating loss                              (29,677)       (2,347)
Other income (expense):                                           
  Proxy and related litigation costs         (5,472)             -
 Interest expense                            (2,474)       (2,449)
 Interest income                                 175           104
  Amortization of debt issuance costs        (1,788)         (323)
 Other, net                                    (567)           102
      Total other expense                   (10,126)       (2,566)
Loss before income taxes and                                      
extraordinary                              (39,803)       (4,913)
  item
Provision (benefit) for income taxes             516       (1,474)
Loss before extraordinary item              (40,319)       (3,439)
Extraordinary item-gain on pooled                                 
portion                                                          
  of south Florida divestiture, net of         1,864             -
  income taxes of $647 (5)
Net loss                                    (38,455)       (3,439)
                                                                  
Net loss per common share:                                        
  Loss before extraordinary item              (1.69)        (0.15)
    Extraordinary gain                          0.08             -
      Net loss                                (1.61)        (0.15)
                                                                  
Weighted average number of shares                                 
 outstanding                                  23,862        23,691

  See accompanying notes to consolidated financial statements.

                 COASTAL PHYSICIAN GROUP, INC.
        Unaudited Consolidated Statements of Operations
             (In thousands, except per share data)

                                            Nine months ended
                                              September 30,
                                           1996          1995
Operating revenue, net:                                           
  Operating revenue, net                     344,021       395,619
  Operating revenue, net-divested and                             
to be                                        92,556       233,571
    divested entities (5)
      Total operating revenue, net           436,577       629,190
Costs and expenses:                                               
 Physician and other provider services       281,202       285,381
 Medical support services                     42,050        50,710
  Professional and consulting fees            11,071         7,623
 Other selling, general and                   62,808        49,005
administrative
  Costs and expenses-divested and to                              
be                                          103,208       239,845
    divested entities (5)
      Total costs and expenses               500,339       632,564
Gain on divested assets, net                   1,780             -
Operating loss                              (61,982)       (3,374)
Other income (expense):                                           
  Proxy and related litigation costs         (5,472)             -
 Interest expense                            (6,573)       (5,500)
 Interest income                                 377           571
  Amortization of debt issuance costs        (2,516)         (571)
 Other, net                                    (226)       (1,931)
      Total other expense                   (14,410)       (7,431)
Loss before income taxes and                                      
extraordinary                              (76,392)      (10,805)
  item
Provision (benefit) for income taxes             516       (3,241)
Loss before extraordinary item              (76,908)       (7,564)
Extraordinary item-gain on pooled                                 
portion                                                          
  of south Florida divestiture, net of         1,864             -
  income taxes of $647 (5)
Net loss                                    (75,044)       (7,564)
                                                                  
Net loss per common share:                                        
  Loss before extraordinary item              (3.23)        (0.32)
    Extraordinary gain                          0.08             -
      Net loss                                (3.15)        (0.32)
                                                                  
Weighted average number of shares                                 
 outstanding                                  23,832        23,630

  See accompanying notes to consolidated financial statements.




                 COASTAL PHYSICIAN GROUP, INC.
   Unaudited Consolidated Condensed Statements of Cash Flows
                         (In thousands)

                                            Nine months ended
                                              September 30,
                                           1996          1995
                                                                  
Net cash used in operating activities       (25,295)      (20,682)
                                                                  
Cash flows from investing activities:                             
Sales of marketable securities and                                 
investments, net                              4,795         3,788
Sales (purchases) of property and                                   
equipment, net                                4,147      (19,225)
 Acquisition of subsidiaries, net of                              
    cash acquired                                 -      (42,183)
 Disposition of subsidiaries, net of                              
    cash disposed                            17,593             -
          Net cash provided by (used                              
          in)investing activities            26,535      (57,620)
                                                                  
Cash flows from financing activities:                             
 Repayments of long-term debt               (41,673)       (1,933)
 Borrowings on long-term debt                 45,819        68,590
Cash payments for debt issue costs          (3,048)             -
 Net proceeds from issuances of common                            
    stock                                       720         1,342
          Net cash provided by                                    
          financing activities                1,818        67,999
                                                                  
                  Net increase (decrease)in                                
cash and cash equivalents                     3,058      (10,303)
                                                                  
Cash and cash equivalents at beginning                            
    of period                                 8,147        14,286
Cash and cash equivalents at end of                               
    period                                   11,205         3,983
                                                                  
                                                                  
Supplemental disclosures of cash flow                             
      information:
      Cash payments (refunds) during                              
      the period for:
             Interest                          7,131         4,690
             Income taxes                   (14,665)       (1,429)
                                                                  
                                                                  

  See accompanying notes to consolidated financial statements.





                COASTAL PHYSICIAN GROUP, INC.
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (UNAUDITED)


Coastal   Physician   Group,  Inc.   (the   "Company")   has
established a Shareholder Value Committee comprised of  non-
management directors to consider and recommend to the  Board
of   Directors  the  best  available  means  for   enhancing
shareholder  value.   The  Company  has  also  retained  the
investment banking firm of Smith Barney, Inc. to  assist  in
evaluating  alternatives for maximizing  shareholder  value,
including the possible sale of the entire Company and  other
strategic  and  financial  transactions.   The  accompanying
financial statements reflect certain divestitures that  have
occurred,  or are planned, in accordance with the  Company's
strategic  plan.   The  Company  is  continuing  efforts  to
revitalize   its   core  businesses,  meet  debt   repayment
obligations, and resolve certain pending litigation.   These
matters  are more fully addressed in the following footnotes
and   Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations.


(1)   BASIS OF PRESENTATION

The  accompanying consolidated financial statements  of  the
Company  are  unaudited and, in the opinion  of  management,
include  all  adjustments which are  necessary  for  a  fair
presentation.    The   unaudited   consolidated    financial
statements should be read in conjunction with the  Company's
audited  consolidated  financial statements  and  the  notes
thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.  Operating results for
the interim periods presented are not necessarily indicative
of  the  results  that may be expected for the  fiscal  year
ending December 31, 1996.


(2)   COMMITMENTS AND CONTINGENCIES

The   Company  procures  professional  liability   insurance
coverage on behalf of its operating subsidiaries on a claims-
made  basis.  The insurance contracts specify that  coverage
is   available  only  during  the  term  of  each  insurance
contract.   Management of the Company presently  intends  to
renew  claims-made coverage annually and expects to be  able
to  obtain such coverage.  When coverage is not renewed, the
subsidiary  companies purchase an extended reporting  period
endorsement to provide professional liability coverage for
                COASTAL PHYSICIAN GROUP, INC.
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         (UNAUDITED)


losses  incurred prior to, but reported subsequent  to,  the
termination of the claims-made policies.

The Company and its independent contractor physicians obtain
their   professional  liability  insurance  coverages   from
various insurance carriers.  Several insurance carriers  who
underwrote certain portions of these coverages from 1986  to
1992 have announced a moratorium on the payment of claims or
have established plans to pay claims in the future based  on
formal plans of arrangement.  As of September 30, 1996,  the
Company had approximately $3,400,000 in receivables relating
to  certain claims for which reimbursement is still  pending
and anticipates that substantially all of these amounts will
be  collected  in  full  from  the  carriers.   The  Company
includes   these  receivables  in  other   assets   in   the
accompanying consolidated balance sheets.


(3)  LITIGATION

The  Company  is  a defendant in certain lawsuits  filed  by
certain   shareholders  with  respect   to   representations
concerning  the  Company's operations and prospects.   These
lawsuits have been consolidated, and class certification has
been  granted,  subject to reexamination  depending  on  the
development  of  the record and the evidence.   The  Company
believes  these  lawsuits  are  without  merit,  intends  to
vigorously  defend its position, and does  not  expect  such
litigation  to  have  a  material  adverse  effect  on   the
Company's financial position or results of operations.

An  operating subsidiary of the Company is a defendant in  a
lawsuit,  related to its operations prior to being  acquired
by  the Company, regarding billings to and collections  from
certain  Federal government insurance programs.  The Company
and  its  counsel are reviewing this lawsuit  and,  at  this
time, exposure to the Company is indeterminable.

Simultaneously  with the initiation of a  proxy  contest  in
July  1996, Steven M. Scott, M.D. ("Dr. Scott") and  Bertram
E.  Walls, M.D., directors and shareholders of the  Company,
commenced, on their own behalf and derivatively on behalf of
the  Company,  an action against the Company and  Joseph  G.
Piemont  ("Mr.  Piemont"),  the  Company's  Chief  Executive
Officer and President (until he terminated his employment
                COASTAL PHYSICIAN GROUP, INC.
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         (UNAUDITED)


agreement on October 21, 1996), Jacque J. Sokolov M.D. ("Dr.
Sokolov"), Chairman of the Board of Directors and the  Chief
Executive Officer of Advanced Health Plans, Inc. ("AHP"),  a
subsidiary  of  the  Company, and Stephen  D.  Corman  ("Mr.
Corman"),  a  director  and  the Company's  Chief  Financial
Officer  (until his resignation from his position  with  the
Company on November 6, 1996).  The plaintiffs alleged, among
other  things,  that certain members of the  Board  breached
their  fiduciary  duties  and  wasted  corporate  assets  by
removing Dr. Scott from his position as President and  Chief
Executive  Officer  of  the Company  and  by  approving  the
Company's  entry  into  an  employment  agreement  with  Mr.
Piemont.   The Company filed an answer and counterclaims  in
response  to  the action.  The counterclaims alleged,  among
other  things, that Dr. Scott breached his fiduciary  duties
to  the  Company  and  engaged in  a  scheme  to  tortiously
interfere with and damage the Company's business.

On October 21, 1996, Mr. Piemont notified the Company of the
termination  of his employment agreement.  The  Company  has
retained counsel to advise the Board of Directors respecting
the  Company's  obligations, if  any,  under  Mr.  Piemont's
employment  agreement  in light of  the  termination  notice
received from Mr. Piemont and the fact that the validity  of
the  agreement  itself is being challenged  in  the  pending
litigation  initiated by Drs. Scott and Walls.  On  November
6,  1996,  the  plaintiffs and Mr.  Corman  entered  into  a
settlement agreement which, subject to court approval, would
result in the dismissal of all claims against Mr. Corman  in
conjunction with his resignation as an officer and director.
Because   the  settlement  agreement,  among  other  things,
obligates  the Company to pay severance and consulting  fees
to Mr. Corman, it was presented to and approved by the Board
of Directors.

To date, the Company estimates that it has incurred costs of
approximately $2.2 million in connection with  this  pending
litigation.  The Company currently does not expect to  incur
substantial additional costs in defending this action or  in
pursuing   its   counterclaims.    However,   the    Company
anticipates that any settlements that may be reached between
the  plaintiffs and the remaining individual defendants may,
subject  to  approval by the Board of Directors,  result  in
additional  costs  to the Company in amounts  not  presently
determinable.
                COASTAL PHYSICIAN GROUP, INC.
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         (UNAUDITED)


In  addition,  as  of  September 30, 1996,  certain  of  the
Company's operating subsidiaries were defendants in  various
malpractice  and other lawsuits.  Management  believes  that
these  lawsuits should not result in judgments which,  after
consideration   of   professional  liability   and   general
insurance coverage, would have a material  adverse effect on
the Company's financial position or results of operations.


(4)  CREDIT FACILITIES

Through  May 1996, the Company had a senior credit  facility
(the  "Senior  Credit Facility") with a group of  commercial
lenders pursuant to which the Company could borrow (prior to
the  restructuring  described  below)  up  to  $161,750,000,
consisting  of  a  $50,000,000 three-year  revolving  credit
facility  to  be  used  for working  capital  purposes  (the
"Working  Capital  Facility") and a $111,750,000  seven-year
reducing   revolving  credit  facility  to   be   used   for
acquisitions   (the  "Acquisition  Facility").    Borrowings
outstanding as of March 31, 1996 under these facilities were
$45,875,000 and $36,625,000, respectively.

Effective May 31, 1996, the Company entered into new  credit
agreements  which restructured the existing Acquisition  and
Working Capital facilities and which provide the Company  up
to $40,000,000 of additional borrowing availability, subject
to  certain limitations, under a new facility (the "Overline
Facility").   Under  the terms of the restructured  existing
Senior   Credit  Facility  (the  "Restructured   Facility"),
outstanding amounts under the Working Capital Facility  were
transferred to the Acquisition Facility, the Working Capital
Facility  was  canceled  and  no additional  borrowings  are
permitted  under the Acquisition Facility.  The Restructured
Facility  and  the  Overline  Facility  (collectively,   the
"Credit Facilities") require total principal payments of  at
least  $40,000,000  by January 2, 1997, at  which  time  the
availability of additional working capital borrowings  under
the  Overline Facility declines to $10,000,000.  Outstanding
amounts under the Credit Facilities are due on July 1, 1997.
Interest  on loans under the Restructured Facility  and  the
Overline Facility accrue at the agent bank's prime rate plus
1.5%  and 2.0%, respectively, payable quarterly and  monthly
in  arrears,  respectively.  Borrowings outstanding  on  the
Restructured Facility and the Overline Facility as of
                COASTAL PHYSICIAN GROUP, INC.
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         (UNAUDITED)


September   30,   1996  were  $69,273,000  and   $8,117,000,
respectively.

The  Overline  Facility  prohibits borrowings  for  purposes
other than working capital requirements, requires compliance
with  financial covenants and imposes limitations on certain
investments, dispositions of assets, additional indebtedness
and  capital expenditures.  As collateral for the loans, the
Company has granted a security interest in substantially all
of  its  assets,  including trade  accounts  receivable  and
contract rights and the common stock of substantially all of
its   subsidiaries,  and  has  provided  a   guaranty   from
substantially all of the Company's subsidiaries  secured  by
the  assets of the guarantor subsidiaries.  The Company  has
also  granted common stock purchase warrants to the  lenders
entitling  them  to purchase at par value  (over  a  vesting
period) up to 5% of its fully diluted common stock, of which
10%  had vested as of September 30, 1996.  A portion of  the
remaining  warrants may be canceled by repayment of  certain
loan principal amounts by certain dates.


(5)  DIVESTITURE PROGRAM

In July 1996, following a study of alternatives available to
the Company, the Board of Directors approved a comprehensive
strategic  and  financial  plan  to  refocus  on  its   core
operations and to divest certain operating units to  address
its  debt  service requirements and improve  the  enterprise
value  of  the Company.  The Company has since sold  certain
assets  and identified other assets as non-core assets  that
the Company has determined to sell.  The Company intends  to
sell  all  non-core  assets,  and  therefore  the  operating
results  of these entities, and the entities divested,  have
been  shown  separately  on the accompanying  statements  of
operations.

Effective  September  30,  1996, the  Company  sold  certain
assets  of Physicians Planning Group, Inc. ("PPG")  and  the
common  stock  of HealthCare Automation, Inc.  ("HCA"),  its
Maryland capitated clinic operations.  Additional assets  to
be   divested  have  been  specifically  identified  as  the
Company's  clinical operations in Florida,  New  Jersey  and
North Carolina, its Preferred Provider Organization (PPO) in
                              
                COASTAL PHYSICIAN GROUP, INC.
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         (UNAUDITED)


North  Carolina, its New York-based prepaid health  services
plan  for  Medicaid  recipients, and an  anesthesia  billing
company  in North Carolina.   As of November 13,  1996,  the
Company  had signed definitive agreements to divest its  New
Jersey-based  clinic operations and its North Carolina  PPO.
Divestiture   activities  related  to   the   other   assets
identified above are actively in process.

MARYLAND DIVESTITURE
The  Company realized a net gain on the sale of PPG and  HCA
(included   in  Gain  on  divested  assets,   net   in   the
accompanying  statements  of operations),  of  approximately
$15,342,000  before  applicable  income  taxes.  Income  tax
expense on the transaction totaled $1,163,000, resulting  in
a gain on an after-tax basis of $14,137,000.

SOUTH FLORIDA DIVESTITURE
In   the   third  quarter  of  1996,  the  Company  received
additional   gross  cash  proceeds  of  $2,800,000   as   an
adjustment to the original sale price for the sale of 47  of
its  south  Florida  clinics on November  30,  1996.   These
proceeds  were based on the settlement of the final  closing
date  balance sheet and were recorded as a gain on the  sale
transaction.  The Company also realized a gain of $1,290,000
resulting  from  other non-cash post-closing  balance  sheet
settlements.   Because the disposition occurred  within  two
years  following  acquisition of  the  entities  which  were
originally  accounted  for  under  the  pooling-of-interests
method   of   accounting  for  business  combinations,   the
component  of  the  gain applicable to the  pooled  entities
sold,  less applicable income tax expense, is classified  as
an  extraordinary  item  in  the  accompanying  consolidated
statements  of  operations.  The gain on  the  sale  of  the
entities originally accounted for under the purchase  method
of accounting for business combinations, gross of applicable
income  taxes, is included in Gain on divested assets,  net,
in the accompanying statements of operations.

GOODWILL IMPAIRMENT
During the third quarter of 1996, the Company recognized  an
impairment  loss (included in Gain on divested assets,  net,
in the accompanying statements of operations) of $15,141,000
related  to  goodwill associated with (i) certain long-lived
assets  of  entities identified for sale by the Company  and
(ii) certain acquired operations.
                COASTAL PHYSICIAN GROUP, INC.
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                         (UNAUDITED)
                              

PENDING  ASSET  DISPOSITIONS  -  In  conjunction  with   the
Company's efforts to sell certain operating units to address
its  debt  service requirements and improve  the  enterprise
value  of the Company, the carrying amount of the long-lived
assets  and identifiable intangibles associated with  assets
specifically  identified  for  sale  was  compared  to   the
estimated fair value of the assets, less estimated costs  to
sell.  Fair value was based on the estimated amount at which
the  assets could be sold in a current transaction based  on
management's evaluations and discussions with the  Company's
outside  financial advisors.  This reevaluation resulted  in
impairment losses recognized in the third quarter of 1996 of
$6,200,000  for  Better Health Plan, Inc., a New  York-based
Medicaid  managed  care entity acquired in 1995,  $1,500,000
for  the  Company's  North  Carolina  clinics,  acquired  at
various  dates, and $800,000 for the remaining south Florida
clinics, also acquired at various dates.

AHP  -  The  primary underlying factor contributing  to  the
decision  to reevaluate the carrying value of AHP's goodwill
was  the  uncertainty associated with the  time  that  AHP's
founder  and  Chief Executive Officer, Dr. Sokolov,  may  be
able  to continue to devote to AHP, and his continuing  role
with AHP.  Dr. Sokolov is also the Company's Chairman of the
Board.   Dr. Sokolov is considered critical to the continued
operations of AHP, and the Company believes that without his
full-time involvement the operations and cash flows  of  AHP
could  decline.  The reevaluation resulted in  a  $6,600,000
write-off of AHP's goodwill balance in the third quarter  of
1996. In determining the amount of the impairment loss,  the
Company developed its best estimate of operating cash  flows
over  the  remaining business life cycle  of  AHP  based  on
earnings   history,   market  conditions   and   assumptions
reflected   in  internal  operating  plans  and  strategies.
Future   cash   flows,  excluding  interest  charges,   were
discounted  using  the Company's weighted  average  cost  of
capital.   These estimates reflected that the present  value
of  the  future cash flows was not adequate to  recover  the
existing  carrying  amount  of goodwill.   Accordingly,  the
goodwill  impairment  loss  was  recognized  to  adjust  the
carrying amount to estimated fair value.




                COASTAL PHYSICIAN GROUP, INC.
           Management's Discussion And Analysis Of
        Financial Condition And Results Of Operations


INTRODUCTION

In July 1996, following a study of alternatives available to
the Company, the Board of Directors approved a comprehensive
strategic  and  financial  plan  to  refocus  on  its   core
operations and to divest certain operating units to  address
its  debt  service requirements and improve  the  enterprise
value  of  the Company.  The Company has since sold  certain
assets  and identified other assets as non-core assets  that
the Company has determined to sell.  The Company intends  to
sell  all  non-core  assets,  and  therefore  the  operating
results  of these entities, and the entities divested,  have
been  shown  separately  on the accompanying  statements  of
operations.

The  differences  shown  on the accompanying  statements  of
operations,  relating to the divested  and  to  be  divested
entities  (for  both operating revenue, net, and  costs  and
expenses),  for  the three months ended September  30,  1996
versus  the three months ended September 30, 1995,  and  for
the  nine  months ended September 30, 1996 versus  the  nine
months  ended September 30, 1995, are due primarily  to  the
divestiture of 47 of the Company's south Florida clinics  on
November 30, 1995.

The following discussion relates to the Company's results of
operations,  excluding  the  divested  and  to  be  divested
entities,  liquidity and capital resources, and  trends  and
uncertainties  and  should be read in conjunction  with  the
consolidated financial statements of the Company  and  notes
thereto included elsewhere in this report.


RESULTS OF OPERATIONS

Third Quarter Ended September 30, 1996 Compared to the Third
Quarter Ended September 30, 1995.

Net  operating revenue ("operating revenue"), excluding  the
operations  of  the  divested and to be  divested  entities,
decreased  $22,164,000, or 17.2%, for the third  quarter  of
1996  to $106,681,000 from $128,845,000 in the third quarter
of 1995. Higher contract attrition rates throughout 1996 and
less new business development during both the second half of
1995  and  the first three quarters of 1996 in the Company's
hospital-based  contract management  division,  as  well  as
lower  net  collections per patient visit and  reimbursement
regulatory changes experienced by the Company's billing  and
accounts  receivable management division, were  the  primary
factors for the decline.

Operating expenses, excluding the operations of the divested
and  to  be  divested entities,   increased  $2,232,000,  or
1.7%,  to  $132,482,000 in the third quarter  of  1996  from
$130,250,000 in the third quarter of 1995.  The increase was
due   primarily  to  increased  investments  in  information
technology  and telecommunications, the write-off  of  notes
receivable, and the increased operating expenses  associated
with  the growth in the number of enrollees in the Company's
health  plans  in  North  Carolina  and  New  York.    These
increased  operating  expenses were partially  offset  by  a
reduction  in  operating  expenses due  to  higher  contract
attrition  rates  throughout 1996  and  lower  new  business
development  during both the second half  of  1995  and  the
first three quarters of 1996 in the Company's hospital-based
contract management division.

Effective September 30, 1996 the Company sold certain assets
of  Physicians Planning Group, Inc. ("PPG") and  the  common
stock  of  HealthCare Automation, Inc. ("HCA"), its Maryland
capitated  clinic operations.  The Company  realized  a  net
gain  of  $15,342,000 on the sale.  In addition, the Company
realized  an  additional gain, before taxes,  of  $4,090,000
during  the third quarter of 1996, on the sale of 47 of  the
Company's south Florida clinics on November 30, 1995, due to
post-closing   settlements.   The  Company   also   recorded
impairment  losses  related  to  its  goodwill  balance  for
Advanced  Health  Plans,  Inc. ("AHP"),  a  California-based
healthcare   consulting  firm,  Better  Health  Plan,   Inc.
("BHP"), a New York-based Medicaid managed care entity,  and
several clinics in North Carolina and Florida (See Note 5 of
Notes  to Consolidated Financial Statements).  The  gain  on
the  sale  of PPG, the goodwill impairment losses,  and  the
portion  of  the gain relating to the south Florida  clinics
acquired  under  the  purchase  method  of  accounting   for
business   combinations,  have   been   disclosed   in   the
accompanying  statements of operations as Gain  on  divested
assets, net.

The  changes  in  operating revenue and operating  expenses,
excluding the operations of the divested and to be  divested
entities,   resulted in an operating loss of $25,801,000 for
the third quarter of 1996, compared to an operating loss  of
$1,405,000 in the third quarter of 1995. In addition to  the
factors  noted  above, contributing to the higher  operating
loss was the increase in physician compensation expense as a
percentage  of operating revenue in the Company's  hospital-
based contract management division.

Other expenses increased $7,560,000, from $2,566,000 for the
third  quarter of 1995 to $10,126,000 for the third  quarter
of  1996.   The  primary reason for this  increase  was  the
addition  of  $5,472,000  for proxy and  related  litigation
costs  during  the  third  quarter  of  1996.  In  addition,
amortization  of  debt issuance costs increased  $1,465,000.
The increase in amortization of debt issuance costs resulted
from  the  costs incurred by the Company to restructure  its
credit  facilities in May 1996.  These costs will  be  fully
amortized by July 1997.

A  net  provision  for  income taxes totaling  $516,000  was
recorded  for  the third quarter of 1996, as compared  to  a
benefit  of $1,474,000 for the third quarter of  1995.   The
net  provision was recorded as a result of the gain  on  the
sale  of  PPG  and HCA.  The Company expects  to  record  no
additional tax expense or benefit, other than due to  future
divestitures, until the Company begins to operate profitably
in the future.

Overall,  the Company incurred a net loss of $38,455,000  in
the  third  quarter of 1996 as compared to  a  net  loss  of
$3,439,000  in  the third quarter of 1995  for  the  reasons
discussed above.

Weighted  average  shares outstanding  increased  0.7%  from
23,691,000 shares in the third quarter of 1995 to 23,862,000
shares  in the third quarter of 1996, primarily as a  result
of  shares issued in connection with the exercise  of  stock
options and the Company's employee stock purchase plan.

Nine  Months Ended September 30, 1996 Compared to  the  Nine
Months Ended September 30, 1995.

Net  operating  revenue, excluding  the  operations  of  the
divested and to be divested entities, decreased $51,598,000,
or  13.0%, for the nine months ended September 30,  1996  to
$344,021,000  from $395,619,000 for the  nine  months  ended
September   30,   1995.  Higher  contract  attrition   rates
throughout 1996 and less new business development during the
second half of 1995 and the first three quarters of 1996  in
the  Company's hospital-based contract management  division,
as  well  as  lower  net collections per patient  visit  and
reimbursement   regulatory  changes   experienced   by   the
Company's   billing   and  accounts  receivable   management
division, were the primary factors for the decline.

Operating expenses, excluding the operations of the divested
and to be divested entities,  increased $4,412,000, or 1.1%,
to $397,131,000 for the nine months ended September 30, 1996
from  $392,719,000 for the nine months ended  September  30,
1995.    The   increase  was  due  primarily  to   increased
investments  in  information technology,  the  write-off  of
notes receivable, and increased expenses associated with the
growth  in  the number of enrollees in each of the Company's
health  plans  in  North  Carolina  and  New  York.    These
increased  operating  expenses were partially  offset  by  a
reduction  in  operating  expenses due  to  higher  contract
attrition  rates  throughout 1996  and  lower  new  business
development  during both the second half  of  1995  and  the
first three quarters of 1996 in the Company's hospital-based
contract management division.

Effective  September  30,  1996, the  Company  sold  certain
assets  of  PPG  and the common stock of HCA,  its  Maryland
capitated  clinic operations.  The Company  realized  a  net
gain  of  $15,342,000 on the sale.  In addition, the Company
realized  an  additional gain, before taxes,  of  $4,090,000
during  the third quarter of 1996, on the sale of 47 of  the
Company's south Florida clinics on November 30, 1995, due to
post-closing   settlements.   The  Company   also   recorded
impairment losses related to its goodwill balance  for  AHP,
BHP,  and several clinics in North Carolina and Florida (See
Note 5 of Notes to Consolidated Financial Statements).   The
gain on the sale of PPG, the goodwill impairment losses, and
the  portion  of  the  gain relating to  the  south  Florida
clinics acquired under the purchase method of accounting for
business   combinations,  have   been   disclosed   in   the
accompanying  statements of operations as Gain  on  divested
assets, net.

The  changes  in  operating revenue and operating  expenses,
excluding the operations of the divested and to be  divested
entities,  resulted in an operating loss of $53,110,000  for
the  nine  months  ended  September 30,  1996,  compared  to
operating  income  of $2,900,000 for the nine  months  ended
September 30, 1995. In addition to the factors noted  above,
contributing  to  the  operating loss was  the  increase  in
physician  compensation expense as a percentage of operating
revenue  in the Company's hospital-based contract management
division.

Other expenses increased $6,979,000, from $7,431,000 for the
nine months ended September 30, 1995 to $14,410,000 for  the
nine months ended September 30, 1996. The primary reason for
this  increase was the addition of $5,472,000 for proxy  and
related  litigation costs during the first  nine  months  of
1996. In addition, interest expense increased $1,073,000 and
amortization   expense  relating  to  debt  issuance   costs
increased  $1,945,000.   The increase  in  interest  expense
resulted  primarily from additional borrowings  required  to
fund   operating   activities,   while   the   increase   in
amortization expense related to debt issuance costs resulted
from  the  costs incurred by the Company to restructure  its
credit  facilities in May 1996. These debt issue costs  will
be  fully  amortized  by July 1997.   These  increases  were
offset  by  a  decline in other, net expenses of  $1,705,000
primarily  due  to  the absence of acquisition  and  related
expenses in 1996.

A  provision for income taxes totaling $516,000 was recorded
for the nine months ended September 30, 1996, as compared to
a  benefit of $3,241,000 for the nine months ended September
30, 1995. The provision was recorded as a result of the gain
on  the  sale of PPG and HCA.  The Company expects to record
no  tax  expense  or  benefit,  other  than  due  to  future
divestitures, until the Company begins to operate profitably
in the future.

Overall, the Company incurred a net loss of $75,044,000  for
the  nine months ended September 30, 1996 compared to a  net
loss  of $7,564,000 for the nine months ended September  30,
1995 for the reasons discussed above.

Weighted  average  shares outstanding  increased  0.9%  from
23,630,000  shares for the nine months ended  September  30,
1995   to  23,832,000  shares  for  the  nine  months  ended
September  30, 1996, primarily as a result of shares  issued
in  connection with both the exercise of stock  options  and
the Company's employee stock purchase plan.


LIQUIDITY AND CAPITAL RESOURCES

Effective May 31, 1996, the Company entered into new  credit
agreements  which restructured its existing Acquisition  and
Working  Capital facilities and provided the Company  up  to
$40,000,000 of additional borrowing availability, subject to
certain  limitations,  under a new facility  (the  "Overline
Facility").   Under  the terms of the restructured  existing
Senior   Credit  Facility  (the  "Restructured   Facility"),
outstanding amounts under the Working Capital Facility  were
transferred to the Acquisition Facility, the Working Capital
Facility  was  canceled,  and no additional  borrowings  are
permitted  under the Acquisition Facility.  The Restructured
Facility and the Overline Facility (collectively the "Credit
Facilities") require total principal payments  of  at  least
$40,000,000   by  January  2,  1997,  at  which   time   the
availability of additional working capital borrowings  under
the  Overline Facility declines to $10,000,000.  Outstanding
amounts under the Credit Facilities are due on July 1, 1997.
Interest  on loans under the Restructured Facility  and  the
Overline Facility will accrue at the agent bank's prime rate
plus  1.5%  and  2.0%, respectively, payable  quarterly  and
monthly in arrears, respectively.  Borrowings outstanding on
the  Restructured Facility and the Overline Facility  as  of
September   30,   1996  were  $69,273,000  and   $8,117,000,
respectively.

The  Overline  Facility  prohibits borrowings  for  purposes
other than working capital requirements, requires compliance
with  financial covenants and imposes limitations on certain
investments, dispositions of assets, additional indebtedness
and  capital expenditures.  As collateral for the loans, the
Company has granted a security interest in substantially all
of  its  assets,  including trade  accounts  receivable  and
contract rights and the common stock of substantially all of
its   subsidiaries,  and  has  provided  a   guaranty   from
substantially all of the Company's subsidiaries  secured  by
the  assets of the guarantor subsidiaries.  The Company  has
also  granted common stock purchase warrants to the  lenders
entitling  them  to purchase at par value  (over  a  vesting
period) up to 5% of its fully diluted common stock, of which
10%  had vested as of September 30, 1996.  A portion of  the
remaining  warrants may be canceled by repayment of  certain
loan principal amounts by certain dates.

Net  cash  used in operating activities for the nine  months
ended September 30, 1996 was $25,295,000 as compared to  net
cash  used in operating activities for the nine months ended
September  30,  1995  of  $20,682,000.   The  net  loss   of
$75,044,000 for the nine months ended September 30, 1996 was
the  primary reason for the significant increase in the  use
of cash.

On  March  19,  1996,  the Board of Directors  approved  the
implementation of a management action plan, as  subsequently
modified  from time to time (the "Management Action  Plan"),
that provides for (i) a continuing review of all aspects  of
the  Company's operations and business units  and  (ii)  the
implementation  of  actions to improve  the  cash  flow  and
financial  results of the Company as a whole and to  improve
the  contribution  of each business unit  to  the  Company's
overall  financial  and strategic objectives.   On  July  8,
1996,  pursuant to the Management Action Plan, and following
a  study of alternatives available to the Company, the Board
of   Directors   approved  a  comprehensive  strategic   and
financial  plan (the "Strategic and Financial  Plan,"  which
together  with  the  Management Action Plan,  comprises  the
"Comprehensive  Business  Plan")  to  maximize   shareholder
value.

The  Company is required to make principal repayments  under
the  Credit  Facilities of $40 million by January  2,  1997.
The Comprehensive Business Plan provides for the divestiture
of  certain assets to generate the funds required to  retire
bank  indebtedness.  The Company sold certain assets of  PPG
and  the  common stock of HCA effective September 30,  1996,
from which approximately $13.8 million in cash proceeds were
used  to  reduce  bank indebtedness.   In  addition,  as  of
November   13,  1996  the  Company  had  signed   definitive
agreements  to sell certain assets of two other subsidiaries
of  the Company, from which approximately $20 million in net
cash proceeds are expected to be available to further reduce
bank  indebtedness.  By continuing its divestiture  program,
the  Company  expects  to achieve the required  $40  million
reduction  in  indebtedness by January 2, 1997.   While  the
Company has identified specific non-core assets that it  has
decided to sell, the Company has also engaged the investment
banking  firm  of Smith Barney, Inc. as the  Company's  lead
financial advisor to assist Coastal in evaluating a possible
sale of the entire Company.

The Company currently anticipates that through the continued
execution of its asset divestiture program, it will be  able
to  reduce the outstanding principal amount under its Credit
Facilities by $40 million by January 2, 1997.  Even  if  the
Company  satisfies  this  debt  reduction  obligation,   the
Company's  available borrowings under the Overline  Facility
will  be  reduced to $10 million on January 2, 1997.   These
available borrowings, together with cash anticipated  to  be
generated from operations and further divestitures, may  not
be adequate to satisfy the Company's anticipated demands and
commitments for cash over the next twelve months unless  the
Company  is  able  to  achieve  other  objectives   of   the
Comprehensive Business Plan.  If the Company  is  unable  to
achieve  these objectives, the Company would be required  to
seek  alternative sources of financing.   There  can  be  no
assurance  that  alternative sources of financing  would  be
available,  or that, if available, such financing  could  be
obtained on terms favorable to the Company.





TRENDS AND UNCERTAINTIES

The  Company experienced a decline in operating revenue  for
the  first nine months of 1996 as compared to the first nine
months  of  1995 when excluding revenues related  to  recent
dispositions  and acquisitions.  The decline  was  primarily
attributable to higher contract attrition rates during  1996
and  lower  new business development during both the  second
half  of  1995 and the first three quarters of 1996  in  the
hospital-based  contract management  division,  as  well  as
lower  net  collections per patient visit and  reimbursement
regulatory changes experienced by the Company's billing  and
accounts  receivable  management division  in  1996.   As  a
result,  the  Company's  accounts  receivable  balance   has
declined,  reflecting  both the decline  in  the  number  of
contracts   and  the  effect  of  the  Company's  aggressive
collection efforts.  The accounts receivable of the hospital-
based contract management division represent a large part of
the Company's borrowing base.  If this balance continues  to
decline  and  the  Company is unable  to  reduce  bank  debt
proportionately,  the  Company  will  likely  experience   a
reduction  in  borrowing  availability  under  the  Overline
Facility.

Many  of  the  terminated contracts  in  the  hospital-based
contract management division over the past nine months  were
unprofitable.  In addition to terminating many  unprofitable
contracts, this division has renegotiated a number of  other
contracts  to  provide a fair profit margin  going  forward.
These  initiatives  are expected, over time,  to  result  in
improvements in  operating results and cash flow.

The  Company believes successful competition in  the  health
care   industry  requires  information  systems  to  rapidly
provide  a broad range of data related to both clinical  and
financial  aspects  of medical practice.   The  Company  has
committed to substantial investments over the next ten years
in  information  technology related to  clinical  management
information  systems, computerized billing  operations,  and
its  own  internal financial reporting systems.  The Company
is  currently  re-evaluating its needs and  its  ability  to
fulfill these commitments.

The  Company  experienced  a decline  in  operating  margins
during  the first nine months of 1996 compared to the  first
nine  months  of 1995.  The operating margin  for  the  nine
months ended September 30, 1996 was negative 14.2% versus  a
negative 0.5% for the same period in the prior year.   These
operating  margins are expected to improve  if  the  Company
achieves the objectives of the Comprehensive Business Plan.

The  Company  operates  in  an  industry  characterized   by
consolidation  and  combination led by  a  number  of  major
health  care  companies.   The  Company  completed  numerous
acquisitions  during 1994 and 1995 but is now directing  its
efforts   and   resources   to  improvements   in   existing
operations,  the execution of certain divestitures  to  meet
debt  obligations, as well as a possible sale of the  entire
Company.   This  strategy  is  being  pursued  due  to   the
deterioration in revenue growth, increases in costs and  the
associated  operating  losses  incurred  in  the   Company's
traditional  lines  of business, as well  as  the  principal
payment requirements of the Credit Facilities.


Coastal's  management team is pursuing  and  evaluating  all
strategic alternatives to maximize shareholder value.  There
can  be  no  assurance that these efforts will lead  to  any
proposed  transaction,  or  that any  proposed  transaction,
which  would  be  subject  to  approval  of  the  Board   of
Directors, would be consummated.

Forward-looking  Information  or  Statements:   Except   for
statements  of historical fact, statements made  herein  are
forward-looking  in  nature and are  inherently  subject  to
uncertainties.  The actual results of the Company may differ
materially  from  those  reflected  in  the  forward-looking
statements  based  on  a number of important  risk  factors,
including,   but  not  limited  to:  receipt  of  sufficient
proceeds  from  divested  assets,  and  the  timing  of  any
divestitures;  the level and timing of improvements  in  the
operations of the Company's core businesses; the possibility
of  poor accounts receivable collection and/or reimbursement
experience;  the  possibility of increased medical  expenses
due  to  increased  utilization; the  possibility  that  the
Company may not be able to improve operations or execute its
divestiture  strategy as planned; the  inability  to  obtain
continued   and/or  additional  necessary  working   capital
financing  as needed; and other important factors  disclosed
from time to time in the Company's Form 10-K, Form 10-Q  and
other Securities and Exchange Commission filings.


PART II - OTHER INFORMATION


Item 1. - Legal Proceedings

In July 1996, Drs. Steven M. Scott ("Dr. Scott") and Bertram
E.   Walls,  directors  and  shareholders  of  the  Company,
commenced, on their own behalf and derivatively on behalf of
the  Company,  an action against the Company and  Joseph  G.
Piemont  ("Mr.  Piemont"),  the  Company's  Chief  Executive
Officer  and  President (until he terminated his  employment
agreement on October 21, 1996), Jacque J. Sokolov M.D. ("Dr.
Sokolov"), Chairman of the Board of Directors and the  Chief
Executive  Officer  of  Advanced  Health  Plans,   Inc.,   a
subsidiary  of  the  Company, and Stephen  D.  Corman  ("Mr.
Corman"),  a  director  and  the Company's  Chief  Financial
Officer  (until his resignation from his position  with  the
Company on November 6, 1996).  The plaintiffs alleged, among
other  things,  that certain members of the  Board  breached
their  fiduciary  duties  and  wasted  corporate  assets  by
removing Dr. Scott from his position as President and  Chief
Executive  Officer  of  the Company  and  by  approving  the
Company's  entry  into  an  employment  agreement  with  Mr.
Piemont.   The Company filed an answer and counterclaims  in
response  to  the action.  The counterclaims alleged,  among
other  things, that Dr. Scott breached his fiduciary  duties
to  the  Company  and  engaged in  a  scheme  to  tortiously
interfere with and damage the Company's business.

On October 21, 1996, Mr. Piemont notified the Company of the
termination  of his employment agreement.  The  Company  has
retained counsel to advise the Board of Directors respecting
the  Company's  obligations, if  any,  under  Mr.  Piemont's
employment  agreement  in light of  the  termination  notice
received from Mr. Piemont and the fact that the validity  of
the  agreement  itself is being challenged  in  the  pending
litigation  initiated by Drs. Scott and Walls.  On  November
6,  1996,  the  plaintiffs and Mr.  Corman  entered  into  a
settlement agreement which, subject to court approval, would
result in the dismissal of all claims against Mr. Corman  in
conjunction with his resignation as an officer and director.
Because   the  settlement  agreement,  among  other  things,
obligates  the Company to pay severance and consulting  fees
to Mr. Corman, it was presented to and approved by the Board
of Directors.

To date, the Company estimates that it has incurred costs of
approximately $2.2 million in connection with  this  pending
litigation.  The Company currently does not expect to  incur
substantial additional costs in defending this action or  in
pursuing   its   counterclaims.    However,   the    Company
anticipates that any settlements that may be reached between
the  plaintiffs and the remaining individual defendants may,
subject  to  approval by the Board of Directors,  result  in
additional  costs  to the Company in amounts  not  presently
determinable.


Item  4.  -  Submission of Matters to  a  Vote  of  Security
Holders

The  Annual Meeting of Shareholders of the Company was  held
on  September  27,  1996.   At such  meeting  the  following
members  were  nominated  for  election  to  the  Board   of
Directors:

                                 NUMBER OF SHARES VOTED
                                   FOR         WITHHOLD

Norman H. Chenven, M.D.*        20,414,101     130,888
Mitchell W. Berger*             10,825,791     118,421
Henry J. Murphy*                10,825,799     118,413
Robert V. Hatcher                     9,588,002     130,888
Joseph G. Piemont                     9,587,113     130,888

* - Members elected to the Board of Directors.


The following director's terms of office continued after the
meeting:

Jacque J. Sokolov, M.D.
Steven M. Scott, M.D.
Bertram E. Walls, M.D.
Stephen D. Corman
John P. Mahoney, M.D.
John A. Hemingway

On October 24, 1996, Dr. Chenven resigned as a member of the
Board  of  Directors  and  was replaced  by  Mr.  Eugene  F.
Dauchert, Jr. on October 29, 1996.  On November 6, 1996, Mr.
Corman  resigned as a member of the Board of  Directors  and
has  not  yet  been  replaced.  On  November  8,  1996,  Mr.
Hemingway resigned as a member of the Board of Directors and
has not yet been replaced.


There  were  three other proposals voted upon at the  Annual
Meeting.   A  summary of these proposals and the votes  cast
are as follows:

                                  NUMBER OF SHARES VOTED
                                FOR      AGAINST    ABSTAIN

1. To adopt the Board's
resolution regarding the
Corporation's Comprehensive
Business Plan                9,727,274  10,824,116  111,712

2. To adopt Steven M. Scott
M.D.'s proposal to establish
a maximize shareholder value
committee of independent non-
management directors         10,935,487  9,616,221  111,395


3. To adopt the proposal to
ratify the appointment of
KPMG Peat Marwick LLP as the
Company's independent certi-
fied public accountants for
the fiscal year ending
December   31,  1996                  20,193,829     201,687
267,586


Item 5. - Other Information

The Board of Directors announced on October 24, 1996 that it
had  appointed Henry J. Murphy, a Board member,  as  interim
President  and Chief Executive Officer, replacing Joseph  G.
Piemont,   who  provided  the  Company  with  a  notice   of
termination  of employment, effective October 21,  1996.   A
committee led by the Company's Chairman,  Jacque J. Sokolov,
M.D.  and  Steven M. Scott, M.D., a Board member,  has  been
formed  to  search for a new, permanent President and  Chief
Executive Officer.

On  November 6, 1996, the Company announced that Stephen  D.
Corman, the Company's Chief Financial Officer and member  of
its  Board  of  Directors since 1991,  had  resigned  as  an
officer  and  director.  His resignation was  related  to  a
settlement  between  the plaintiffs  and  Mr.  Corman  in  a
lawsuit against the Company, Mr. Corman and others initiated
in  July 1996 by Steven M. Scott, M.D. and Bertram E. Walls,
M.D.,  both  of whom are directors and shareholders  of  the
Company.   The Company named Timothy W. Trost  to  serve  as
Chief Financial Officer following Mr. Corman's resignation.


Item 6. - Exhibits and Reports on Form 8-K

(a) Exhibits - None

(b) Reports on Form 8-K

Two  reports  on Form 8-K were filed during the quarter  for
which this report is filed:

1.  On July 19, 1996, the Company filed a report on Form 8-K
dated July 9, 1996, filing under Item 5 thereof.  The report
disclosed  that on July 9, 1996, Drs. Steven  M.  Scott  and
Bertram   E.   Walls  filed,  on  their  own   behalf,   and
derivatively on behalf of the Company, an action against the
Company  and  Dr.  Jacque J. Sokolov and Messrs.  Joseph  G.
Piemont  and  Stephen  D. Corman.  The  plaintiffs  alleged,
among  other  things, that certain members of the  Board  of
Directors   breached  their  fiduciary  duties  and   wasted
corporate assets by removing Dr. Scott from his position  as
President and Chief Executive Officer of the Company and  by
approving  the  entry  by  the Company  into  an  employment
agreement with Mr. Piemont.

2.  On July 29, 1996, the Company filed a report on Form 8-K
dated  July  29,  1996, filing under Item  5  thereof.   The
report disclosed that on July 29, 1996, the Company filed an
answer  and counterclaims in response to the action  brought
by  Drs.  Scott  and Walls referred to  in  1.  above.   The
counterclaims  alleged, among other things, that  Dr.  Scott
breached his fiduciary duties to the Company and engaged  in
a  scheme  to  tortiously  interfere  with  and  damage  the
business of the Company.





                         SIGNATURES



Pursuant to the requirements of the Securities Exchange  Act
of  1934, the Registrant has duly caused this report  to  be
signed  on  its  behalf  by the undersigned  thereunto  duly
authorized.



                              COASTAL PHYSICIAN GROUP, INC.
                              (Registrant)



Date: November 14, 1996        By: /S/TIMOTHY W. TROST
                                Timothy W. Trost
                                 Executive Vice President
                                 and Chief Financial
                                 Officer




Date: November 14, 1996        By: /S/W. RANDALL DICKERSON
                                W. Randall Dickerson
                                 Vice President, Corporate
                                 Controller and Chief
                                 Accounting Officer