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| x    Annual      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act      of 1934                                                                                                                                                                          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| For      the fiscal year ended December 31, 2008                                                                                                                                                                                                                                                 |
| OR                                                                                                                                                                                                                                                                                                    |
| o    Transition      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act      of 1934For      the transition period from                 to            |

| Delaware(State      of Incorporation) | 85-0410612(I.R.S.      Employer Identification No). |
|---------------------------------------|----------------------------------------------------------|

| Title of Each ClassCommon      Stock, par value $.01 per share | Name of Exchange on Which      RegisteredThe      NASDAQ Stock Market LLC (Nasdaq Global Select  Market) |
|----------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|

|   |                                                                             |
|--------|----------------------------------------------------------------------------------|
|   | Securities      registered pursuant to Section 12(g) of the Act:  None |

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| (b) | Exhibits |
|-----|----------|

| Exhibit  |                                                                                                                                                                                                                                                                   |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number   | Description      of Exhibits                                                                                                                                                                                                                                           |
|     |                                                                                                                                                                                                                                                                   |
| 2.1(1)   | Agreement      and Plan of Merger dated October 19, 2006 by and among Sun Healthcare      Group, Inc., Horizon Merger, Inc. and Harborside Healthcare      Corporation                                                                                                 |
|     |                                                                                                                                                                                                                                                                   |
| 3.1(2)   | Amended      and Restated Certificate of Incorporation of Sun Healthcare Group, Inc.,      as amended                                                                                                                                                                  |
|     |                                                                                                                                                                                                                                                                   |
| 3.2(3)   | Amended      and Restated Bylaws of Sun Healthcare Group, Inc.                                                                                                                                                                                                         |
|     |                                                                                                                                                                                                                                                                   |
| 4.1(4)   | Sample      Common Stock Certificate of Sun Healthcare Group, Inc.                                                                                                                                                                                                     |
|     |                                                                                                                                                                                                                                                                   |
| 4.2(5)   | Form      of Warrant issued by Sun Healthcare Group, Inc. in February 2004 to each      of the purchasers named on the list of purchasers attached      thereto                                                                                                        |
|     |                                                                                                                                                                                                                                                                   |
| 4.3(5)   | Form      of Registration Rights Agreement dated February 2004 between Sun      Healthcare Group, Inc. and the purchasers named on the list of purchasers      attached thereto                                                                                        |
|     |                                                                                                                                                                                                                                                                   |
| 4.4(6)   | Indenture,      dated as of April 12, 2007, between the Sun Healthcare Group, Inc.,      the subsidiaries of Sun Healthcare Group, Inc., named therein and Wells      Fargo Bank, National Association, as Trustee                                                |
|     |                                                                                                                                                                                                                                                                   |
| 4.4.1(7) | First      Supplemental Indenture, dated as of April 19, 2007, among Sun Healthcare      Group, Inc., Harborside, certain subsidiaries of Harborside named therein      and Wells Fargo Bank, National Association, as Trustee                                         |
|     |                                                                                                                                                                                                                                                                   |
| 4.4.2#   | Second      Supplemental Indenture, dated as of October 31, 2008, among Sun Healthcare      Group, Inc., Harborside, certain subsidiaries of Harborside named therein      and Wells Fargo Bank, National Association, as Trustee                                      |
|     |                                                                                                                                                                                                                                                                   |
| 4.5(6)   | Registration      Rights Agreement, dated April 12, 2007, among Sun Healthcare Group,      Inc., the subsidiaries of Sun Healthcare Group, Inc. named therein and the      Initial Purchasers of the Notes issued pursuant to the above described      Indenture. |
|     |                                                                                                                                                                                                                                                                   |
| 4.5.1(7) | Joinder      to the Registration Rights Agreement, dated April 19, 2007, among      Harborside, the subsidiaries of Harborside named therein and the Initial      Purchasers of the Notes issued pursuant to the above described      Indenture.                       |
|     |                                                                                                                                                                                                                                                                   |
| 4.6(6)   | Escrow      Agreement, dated as of April 12, 2007, between the Company and Wells Fargo      Bank, National Association, as Escrow Agent                                                                                                                                |
|     |                                                                                                                                                                                                                                                                   |
| 4.7      | The      Registrant has instruments that define the rights of holders of long-term      debt that are                                                                                                                                                                  |
|     |                                                                                                                                                                                                                                                                   |

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|       | not      being filed herewith, in reliance upon Item 601(b)(iii) of Regulation S-K.      The Registrant agrees to furnish to the SEC, upon request, copies of these      instruments                                                                                            |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                            |
| 10.1(7)    | Credit      Agreement, dated as of April 19, 2007, among Sun Healthcare Group, Inc.,      the Lenders named therein and Credit Suisse, as Administrative Agent and      Collateral Agent for the Lenders                                                                        |
|       |                                                                                                                                                                                                                                                                            |
| 10.2(8)+   | Amended      and Restated 2002 Non-Employee Director Equity Incentive Plan of Sun      Healthcare Group, Inc.                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                            |
| 10.3#+     | Amended      and Restated 2004 Equity Incentive Plan of Sun Healthcare Group,      Inc.                                                                                                                                                                                         |
|       |                                                                                                                                                                                                                                                                            |
| 10.3.1#+   | Form      of Stock Option Agreement                                                                                                                                                                                                                                             |
|       |                                                                                                                                                                                                                                                                            |
| 10.3.2#+   | Form      of Stock Unit Agreement for employees                                                                                                                                                                                                                                 |
|       |                                                                                                                                                                                                                                                                            |
| 10.3.3#+   | Form      of Stock Unit Agreement for non-employee directors                                                                                                                                                                                                                    |
|       |                                                                                                                                                                                                                                                                            |
| 10.4#+     | Non-employee      Directors Stock-for-Fees Program and Payment Election  Form                                                                                                                                                                                                   |
|       |                                                                                                                                                                                                                                                                            |
| 10.5(9)+   | Peak      Medical Corporation 1998 Stock Incentive Plan                                                                                                                                                                                                                         |
|       |                                                                                                                                                                                                                                                                            |
| 10.6#+     | Amended      and Restated Employment Agreement by and between Sun Healthcare Group,      Inc. and Richard Matros dated as of December 17, 2008                                                                                                                                  |
|       |                                                                                                                                                                                                                                                                            |
| 10.7#+     | Amended      and Restated Employment Agreement by and between Sun Healthcare Group,      Inc. and L. Bryan Shaul dated as of December 17, 2008                                                                                                                                  |
|       |                                                                                                                                                                                                                                                                            |
| 10.8#+     | Amended      and Restated Employment Agreement by and between Sun Health Specialty      Services, Inc. and William A.  Mathies dated as of December 17,      2008                                                                                                     |
|       |                                                                                                                                                                                                                                                                            |
| 10.9#+     | Amended      and Restated Employment Agreement by and between Sun Healthcare Group,      Inc. and Michael Newman dated as of December 17, 2008                                                                                                                                  |
|       |                                                                                                                                                                                                                                                                            |
| 10.10#+    | Amended      and Restated Employment Agreement by and between Sun Healthcare Group,      Inc. and Chauncey J. Hunker dated as of December 17,  2008                                                                                                                             |
|       |                                                                                                                                                                                                                                                                            |
| 10.11(10)+ | Director      Compensation Policy of Sun Healthcare Group, Inc. adopted as of March 18,      2008                                                                                                                                                                               |
|       |                                                                                                                                                                                                                                                                            |
| 10.12#+    | Executive      Bonus Plan                                                                                                                                                                                                                                                       |
|       |                                                                                                                                                                                                                                                                            |
| 10.13(11)  | Second      Amended and Restated Master Lease Agreement among Sun Healthcare Group,      Inc. and certain of its subsidiaries (as Lessees) and Omega Healthcare      Investors, Inc. and certain of its subsidiaries (as Lessors) dated      February 1, 2008                   |
|       |                                                                                                                                                                                                                                                                            |
| 10.13.1#   | First      Amendment to Second Amended and Restated Master Lease Agreement among Sun      Healthcare Group, Inc. and certain of its subsidiaries (as Lessees) and      Omega Healthcare Investors, Inc. and certain of its subsidiaries (as      Lessors) dated August 26, 2008 |
|       |                                                                                                                                                                                                                                                                            |
| 10.13.2#   | Second      Amendment to Second Amended and Restated Master Lease Agreement among                                                                                                                                                                                               |

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|    | Sun      Healthcare Group, Inc. and certain of its subsidiaries (as Lessees) and      Omega Healthcare Investors, Inc. and certain of its subsidiaries (as      Lessors) dated February 26, 2009 |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                             |
| 14.1(2) | Code      of Ethics for Chief Executive Officer, Financial Officers and Financial      Personnel                                                                                                 |
|    |                                                                                                                                                                                             |
| 21.1#   | Subsidiaries      of Sun Healthcare Group, Inc.                                                                                                                                                  |
|    |                                                                                                                                                                                             |
| 23.1#   | Consent      of Ernst & Young LLP                                                                                                                                                            |
|    |                                                                                                                                                                                             |
| 23.2#   | Consent      of PricewaterhouseCoopers LLP                                                                                                                                                       |
|    |                                                                                                                                                                                             |
| 31.1*   | Section      302 Sarbanes-Oxley Certifications by Principal Executive      Officer                                                                                                               |
|    |                                                                                                                                                                                             |
| 31.2*   | Section      302 Sarbanes-Oxley Certifications by Principal Financial and Accounting      Officer                                                                                                |
|    |                                                                                                                                                                                             |
| 32.1#   | Section      906 Sarbanes-Oxley Certifications by Principal Executive      Officer                                                                                                               |
|    |                                                                                                                                                                                             |
| 32.2#   | Section      906 Sarbanes-Oxley Certifications by Principal Financial and Accounting      Officer                                                                                                |

| (1)    | Incorporated      by reference from exhibits to our Form 8-K filed on October 25,      2006  |
|--------|----------------------------------------------------------------------------------------------|
| (2)    | Incorporated      by reference from exhibits to our Form 10-Q filed on May 7,      2004      |
| (3)    | Incorporated      by reference from exhibits to our Form 8-K filed on December 27,      2007 |
| (4)    | Incorporated      by reference from exhibits to our Form 8-A filed on March 6,      2002     |
| (5)    | Incorporated      by reference from exhibits to our Form 8-K filed on February 20,      2004 |
| (6)    | Incorporated      by reference from exhibits to our Form 8-K filed on April 18,      2007    |
| (7)    | Incorporated      by reference from exhibits to our Form 8-K filed on April 25,      2007    |
| (8)    | Incorporated      by reference from exhibits to our Form 10-Q filed on August 16,      2002  |
| (9)    | Incorporated      by reference from exhibits to our Form 8-K filed on January 9,      2006   |
| (10)   | Incorporated      by reference from exhibits to our Form 8-K filed on April 3,      2008     |
| (11)   | Incorporated      by reference from exhibits to our Form 10-K filed on March 7,      2008    |
|   |                                                                                         |

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|   | SUN      HEALTHCARE GROUP, INC.                                                                                                                                                                                            |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                       |
|   | By:    /s/ L. Bryan      Shaul                             |
|   |        L.      Bryan Shaul                                                                                                                                                              |
|   |        Chief      Financial Officer                                                                                                                                                     |

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