SERVICE AGREEMENT

     THIS SERVICE AGREEMENT  ("Agreement") is made as of the 5th day of January,
1998 (the "Effective Date") by and between New York Care Plus Insurance Company,
Inc.  ("NYCP"),  with its  principal  place of  business  at 1901  Main  Street,
Buffalo,  New York 14240,  and  CareAdvantage,  Inc.  ("CAI") with its principal
place of business at 485-C Route One South, Iselin, New Jersey 08830.

     WHEREAS, CAI is engaged in the business of providing managed care services,
including medical management services;

     WHEREAS,  NYCP, which provides health  insurance  coverage and managed care
coverage desires to retain CAI to provide certain services;

     NOW,  THEREFORE,  in  consideration  of the mutual  promises and agreements
contained herein, the parties agree as follows:

1.   Services.

     1.1  Generally.  CAI will provide the services  described in Sections  1.2,
1.3, 1.4, and 1.5 ("Services") to NYCP's Buffalo Division.  To the extent NYCP's
Buffalo Division is sharing  resources with its Albany  Division,  CAI will also
provide  Services to the Albany Division.  CAI and NYCP shall consult  regularly
regarding the  allocation of CAI's  resources  between NYCP's Buffalo and Albany
Divisions.

     1.2 Clinical Support.

         a. CAI will provide experienced physician reviewers,  equivalent to one
(1) FTE, to support  NYCP's  medical  directors and the  utilization  management
staff.  Their  services will include case review and policy  development.  These
services  will  be  provided  through  a  combination  of an  on-site  presence,
telephone  access,  and if desired by NYCP,  an  internet  connection.  CAI will
ensure that  physician  reviewers  are available at the same days and times that
NYCP is available to health care providers to conduct  utilization  review.  CAI
further agrees that access to physician  reviewers shall be provided  on-site at
NYCP no less  than  sixty  percent  (60%) of such  NYCP  Utilization  Management
Department  operating hours. The physician  reviewers shall be subject to NYCP's
approval, which shall not be unreasonably withheld.


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         b. CAI will provide NYCP with matched  specialty  review through access
to CAI's Specialty Advisor Panel on an as-needed basis. The parties  contemplate
that emphasis will be on pediatric, oncology, and cardiology cases.

         c. CAI shall  maintain any licensure  required in  connection  with its
activities. The parties acknowledge and agree that NYCP and/or self-insurers, as
applicable,   shall  have  final   decision-making   authority  with  regard  to
utilization  management  decisions,  subject to the right of covered  persons to
appeal  such  determinations  subject to NYCP's  and/or the  self-insurer's,  as
applicable, grievance procedure.

     1.3 Skill Development for Nurse and Physician Reviews.

         a. CAI will  provide  on-site  training  programs  for NYCP's nurse and
physician reviewers to build skills in the following areas:

                    i. Communication skills;

                   ii. Negotiation and review techniques;

                  iii. Anticipating the progression of care; and

                   iv. Triaging to case management.

CAI shall  provide the training in the areas set forth in clauses i and ii above
not later than sixty (60) days after the Effective Date. In advance of training,
CAI will  undertake an  inter-reviewer  reliability  evaluation,  the results of
which will be used to focus the training, as well as to serve as a benchmark for
the post-training assessment.  CAI will train department supervisors as to CAI's
training activities  regarding  reviewers.  CAI will conduct regularly scheduled
chart  audits,  the sample design and schedule to be agreed upon by the parties,
during and after  completion of training to identify  further  opportunities  to
improve the effectiveness of nurse and physician reviewers.

         b. CAI,  through its medical  directors,  will provide on-site clinical
training  sessions for identified  problem areas.  These are expected to include
cardiology,   oncology,  orthopedics,  and  pediatric  care.  CAI  will  develop
additional sessions on an as-needed basis.

     1.4 Operations Review.

         a. CAI will conduct a  comprehensive  review of NYCP's  utilization and
case management operation.  Such review will address those functions that impact
results and productivity,  including but not limited to program focus and scope,
application of review criteria, physician review support, current staff training
program,  timeliness of  notification  and review,  the on-site review  process,
denials, penalties and appeals, and adequacy of systems support.

         b. CAI will  conduct an audit of completed  cases to identify  process,
training, and performance issues. Measures will include application of criteria,
decision making, facilitation of on-going care, and case documentation.


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         c. CAI will  prepare a report  summarizing  the  operations  review and
making recommendations for improvement or change.

         d. CAI will work with NYCP  management  team to identify  opportunities
for achieving improved productivity.

     1.5 Reports. CAI will provide NYCP with activity reports,  bi-weekly during
the first  quarter,  and  monthly  thereafter.  The  content  and  format of the
activity  reports  shall be subject to the approval of NYCP,  which shall not be
unreasonably withheld.

2.   Compensation & Expenses

     2.1 Base Compensation.  CAI's annual compensation for the Services provided
pursuant to this Agreement  shall be Six Hundred  Thousand  ($600,000)  Dollars,
payable in monthly installments of Fifty Thousand ($50,000) Dollars.  NYCP shall
pay CAI the monthly  installment  due on account of a month  within  thirty (30)
days after the last day of such month.

     2.2 Certain  Special  Advisory Panel Fees. In addition to the fees provided
by Section  2.1,  NYCP shall pay CAI one  hundred  ($100)  dollars for each case
reviewed by CAI's Special Advisory Panel in excess of 2000 cases. NYCP shall pay
CAI within thirty (30) days of its receipt of CAI's invoice for such services.

     2.3 Expenses.  NYCP shall reimburse CAI for CAI's reasonable  out-of-pocket
expenses  incurred in connection  with this  Agreement,  including  expenses for
travel,  lodging  and meals.  NYCP shall pay CAI within  thirty (30) days of its
receipt of CAI's invoice for such expenses.

3.   Confidentiality

     3.1  Generally.  Each party hereto hereby  agrees that,  during the term of
this  Agreement  and  after  its  termination,  it shall  (a) not,  directly  or
indirectly,  use (other than for the  purposes  contemplated  hereby  during the
term), (b) keep secret and retain in strictest confidence,  and (c) not disclose
to any third party, Confidential Information as defined herein.  Notwithstanding
the foregoing, a party may disclose Confidential Information: (i) when compelled
to do so by applicable  law,  provided that to the extent  feasible it gives the
other party  advance  notice of its intent to make the  disclosure,  and (ii) to
those of such party's officers,  directors,  partners,  employees and agents who
have a "need to know." In  addition,  each party will  obtain a  confidentiality
agreement  from any  independent  contractor  to which it  discloses  the  other
party's Confidential Information.

     3.2  Definition.  "Confidential  Information"  shall  mean  (a) any  forms,
policies,  procedures,  manuals  and  materials  of any kind  created,  owned or
provided by a party in connection


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with, or with respect to, the Services,  (b) any information or data relating to
the Services or this  Agreement  that is made  available by a party to the other
party  and  (i) is  marked  confidential,  or at the  time  of  its  being  made
available, is otherwise indicated to be confidential, or (ii) within thirty (30)
days after such  information  or data is first made  available,  is indicated in
writing to be  confidential,  (c) any  derivative  works based on the materials,
information  or data  described in  subclauses  (a) and (b) above,  and (d) with
respect to the  confidentiality  obligations  hereunder of CAI only, (i) patient
information, and (ii) any and all information or data (whether patient specific,
account  specific,  aggregates  thereof or  otherwise)  relating  to the cost or
utilization  of health care  services  provided to, or received by an individual
covered by any NYCP health care benefit plan;  provided,  however,  Confidential
Information  shall not mean information or data that (A) was previously known to
the receiving  party at the time of disclosure,  provided that such  information
was acquired  through no fault of the  receiving  party nor was received  from a
person that did not have the legal right to make such information available, (B)
is publicly known through no act or omission by the receiving  party,  or (C) is
disclosed to the receiving party by a third party having the legal right to make
such disclosure.

4.   Term.

     4.1 Generally.  The Effective Date of this Agreement is January 1, 1998 and
CAI will  commence  providing  services to NYCP  including,  but not limited to,
Clinical  Support  Services  referenced  in Section  1.2,  above,  no later than
January 5, 1998.  This  Agreement  shall be for a one (1) year term beginning on
the Effective  Date, and shall renew  automatically  for successive one (1) year
terms,  unless either party  provides the other with notice of  non-renewal  not
less than sixty (60) days prior to the end of the scheduled term.

     4.2  Termination  for Cause.  This Agreement  shall be terminable by either
party for its material breach upon not less than thirty (30) days' prior written
notice to the other  party,  setting  forth in detail the material  breach,  and
providing  that the Agreement is to be terminated  upon the expiration of thirty
(30) days or such longer period which may be set forth in the notice, unless the
material breach is cured within that time period.

     4.3 Right to Early Termination.  Notwithstanding the foregoing,  NYCP shall
have the right to terminate this Agreement on the first six-month anniversary of
the   Effective   Date  in  the  event  that  it  determines  in  its  sole  and
non-reviewable  discretion  that  it is  dissatisfied  with  CAI's  performance;
provided,  however,  that in such event  NYCP  shall give CAI thirty  (30) days'
prior written notice of its intent to terminate this AGREEMENT.


<PAGE>

5.   Insurance; Indemnification; Defense of Litigation

     5.1 Insurance.  CAI shall maintain in full force and effect during the term
of this  Agreement  errors  and  omissions/utilization  review  and  utilization
management insurance in per occurrence and aggregate face amounts of at least $5
million and $10 million,  respectively,  naming NYCP as an  additional  insured,
such policy or policies  not to be  cancelable  upon less than thirty (30) days'
prior  notice,  and providing  that NYCP shall  receive  copies of any notice of
cancellation.

     5.2 Indemnification.  Each party hereto (as such, an "Indemnifying  Party")
agrees to indemnify,  defend and hold harmless  (collectively,  "Indemnify") the
other party and such other  party's  officers,  directors,  employees  or agents
(collectively,  "Indemnified  Parties")  from and  against any and all claims or
portions thereof, suits, costs and expenses, including without limitation, costs
of investigation and defense,  incurred by such Indemnified  Parties as a result
of any willful  misconduct or any negligent act or omission by the  Indemnifying
Party in  connection  with this  Agreement.  This  provision  is not intended to
obligate CAI to Indemnify NYCP for claims, or portions thereof,  under the terms
of NYCP's health insurance policies or HMO agreements which NYCP would have been
obligated to pay regardless of the misconduct or act or omission of CAI.

     5.3 Defense of  Litigation.  Except as provided in Section 5.2,  each party
shall be responsible  at its own expense for defending  itself in any litigation
brought against it, whether or not the other party is also a defendant,  arising
out of any aspect of activities  undertaken in connection  with this  Agreement.
Each party agrees to provide the other party information in its possession which
is necessary to the other party's defense in such litigation.

6.   Additional Requirements

     6.1  Independent  Contractors.  The  relationship of the parties under this
Agreement shall be that of independent contractors. Neither shall have any claim
under this Agreement or otherwise against the other party as a joint venturer or
partner.

     6.2  Proprietary   Rights.   Neither  party  shall  use  the  name,  logos,
trademarks,  or  servicemarks  of the other  without the other's  prior  written
consent, except that CAI may include NYCP in its listing of clients.

     6.3 Nonsolicitation of Employees. During the term of this Agreement and for
an additional  period of two (2) years after the  termination of this Agreement,
neither  CAI nor NYCP shall  solicit  for  employment  or hire any  employee  or
consultant of the other without the other's prior written consent.


<PAGE>

     6.4 No  Guarantee  of  Medical  Results.  Neither  the  execution  of  this
Agreement  nor  the  performance  of  any  of  its  obligations  constitutes  an
undertaking by CAI to guarantee the results of health care provider  services or
that such  services  will be  rendered in  accordance  with  generally  accepted
medical standards or procedures. The parties agree that CAI is not and shall not
be deemed a health care provider as a result of the Services  provided  pursuant
to this  Agreement,  and that all decisions  concerning  the rendering of health
care  services are  determined  by the  patient's  physician,  hospital or other
health care  provider and the patient.  The parties  acknowledge  and agree that
neither CAI nor NYCP shall  intervene in the provision of medical  services,  it
being understood and agreed that the traditional  relationship  between provider
and patient will be maintained.  Thus, a benefit  determination by NYCP and/or a
utilization  management  recommendation  by CAI,  that a  particular  course  of
treatment is not medically necessary and/or is inconsistent with the utilization
management  protocols and, thus not a covered service under the covered person's
benefit plan, shall not be deemed to be a medical  determination or intervention
in the provision of medical services.

7.   Miscellaneous

     7.1 Compliance With Laws and Certain  Regulatory  Requirements.  Each party
shall,  throughout the term of this Agreement,  be in continuous compliance with
all  applicable  laws.  In addition CAI shall be in continuous  compliance  with
applicable requirements of the American Accreditation Healthcare Commission/URAC
and the National Committee on Quality Assurance.

     7.2  Notice.  All notices and other  communications  hereunder  shall be in
writing  and  shall be  deemed to have been  given  upon  receipt,  and shall be
addressed as follows:

     If to NYCP:    New York Care Plus Insurance Company.
                    1901 Main Street
                    Buffalo, New York 14240
                    Attn:   John G. Anderson,
                            Senior Vice President & Chief Operating Officer

     If to CAI:     CareAdvantage, Inc.
                    Metropolitan Corporate Center 485-C
                    Route 1 South
                    Iselin, New Jersey  08830
                    Attn:   Richard Freeman, M.D.,
                            Executive Vice President

or to such other address as any party hereto shall have  designated to the other
parties in accordance with the provisions of this Agreement.


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     7.3 Parties in Interest.  This Agreement is made for the exclusive  benefit
of the parties hereto,  their successors and permitted assigns, and no person or
entity other than CAI, NYCP, their successors or permitted assigns shall acquire
or have any rights under or by virtue of this Agreement.

     7.4  Impossibility  of  Performance.  No  party  shall be  deemed  to be in
violation  of  this  Agreement  if  prevented  from  performing  any  obligation
hereunder  due to  matters  that  are  beyond  its  control,  including  without
limitation  war,  fire,  strikes,  riots,  floods,  storms,  earthquakes,  other
elements or acts of God or the public enemy.

     7.5 Binding Agreement;  Assignability. This Agreement shall be binding upon
and shall  inure to the  benefit  of the  parties  hereto  and their  respective
successors and permitted assigns and subcontractors. No party hereto shall sell,
assign,  transfer,  convey,  subcontract  or otherwise  dispose of its rights or
obligations  under,  title to, or interest  in, this  Agreement,  in whole or in
part, to a third party other than a  wholly-owned  subsidiary  without the prior
written  consent of the other party,  which  consent  shall not be  unreasonably
withheld.

     7.6 Entire Agreement; Amendment. This Agreement and Attachment A embody the
entire agreement and understanding  among the parties hereto with respect to the
subject  matter  hereof.  This  Agreement may not be amended except by a writing
executed by each of the parties hereto.

     7.7  Disputes.  In the event of any  dispute  between  the  parties  hereto
arising out of or  concerning  this  Agreement,  the parties  agree to use their
reasonable best efforts to resolve any such dispute amicably, in good faith, and
expeditiously prior to resorting to litigation.

     7.8 Injunctive  Relief.  The parties  acknowledge  that in the event of the
breach of certain  provisions of this Agreement,  including  Sections 3, 6.2 and
6.3, CAI or NYCP, as the case may be, may not have an adequate remedy at law and
will suffer irreparable damage and injury.  Therefore,  in addition to any other
remedy  available,  CAI and  NYCP  each  agree  that if it  violates  any of the
provisions of Section 3, 6.2 or 6.3, the  non-breaching  party shall be entitled
to injunctive relief, without bond, from a court of competent jurisdiction.

     7.9 Governing Law. This Agreement shall be construed in accordance with and
governed  by the laws of the  State of New York  without  giving  effect  to the
principles of conflicts of laws.

     7.10  Severability.  If any term of this Agreement or  application  thereof
shall be invalid or unenforceable,  the remainder of this Agreement shall remain
in full force and effect.


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         7.11   Counterparts.   This   Agreement  may  be  executed  in  several
counterparts, each of which is an original but all of which shall constitute one
and the same instrument.

         IN WITNESS  WHEREOF,  the parties  hereto have hereunto set their hands
and seals as of the date written above.

CAREADVANTAGE, INC.                                  NEW YORK CARE PLUS
                                                     INSURANCE COMPANY, INC.

BY: /s/ Richard W. Freeman                           BY: /s/ John G. Anderson
    ---------------------------                          -----------------------
        Richard W. Freeman                                   John G. Anderson

TITLE: Executive Vice President                      TITLE:Senior Vice President