Exhibit 10.35

                                SERVICE AGREEMENT

      THIS SERVICE AGREEMENT ("Agreement") is made as of the 1st day of January,
1999 (the "Effective  Date"), by and between  HealthNow New York Inc.  ("HNNY"),
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 and HNNY have entered into an agreement  dated as of January
5, 1998 ("Prior Agreement"), which agreement expires December 31, 1998;

      WHEREAS,  the  parties  desire  to  provide  to set  forth  the  terms and
conditions  pursuant to which CAI will  provide  certain  services to HNNY on or
after January 1, 1999;

      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, and 1.4  ("Services") to HNNY. HNNY  acknowledges  that, to the extent that
the Services  set forth in Sections  1.2, 1.3 and 1.4,  below,  require  on-site
presence  at HNNY's  offices,  such  Services  will be  performed  at its Albany
Division. CAI and HNNY shall consult regularly regarding the allocation of CAI's
resources among HNNY's Albany, Buffalo and Central New York Divisions.

      1.2 Clinical Support.

      a. CAI will provide experienced physician reviewers, equivalent to one (1)
FTE, to support HNNY'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 and  telephone
access. CAI will ensure that physician  reviewers are available at the same days
and times that HNNY is available to health care providers to conduct utilization
review. CAI further agrees that access to physician  reviewers shall be provided
on-site  at HNNY no less than  sixty  (60%)  per cent of such  HNNY  Utilization
Management  Department operating hours. The physician reviewers shall be subject
to HNNY's approval, which shall not be unreasonably withheld.

      b. CAI will provide HNNY with matched  specialty  review through access to
CAI's  Specialty  Advisor  Panel on an  as-needed  basis.  All  reviews  must be
coordinated through CAI's physician reviewers.

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      c. CAI shall  maintain  any  licensure  required  in  connection  with its
activities. The parties acknowledge and agree that HNNY 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 HNNY's  and/or the  self-insurer's,  as
applicable, grievance procedure.

      1.3 Staff Performance Audit and Skill Development Program

      a. Staff  Performance  Audit.  CAI will conduct for the Albany  Division a
baseline staff  performance  audit to support the  customization of the training
materials  and to select the  additional  modules most needed for the success of
the Plan's  programs  and  initiatives.  The staff  performance  audit  findings
reports  will show  strengths  and  weaknesses  in the  current  review  staff's
knowledge  and skill  level as well as  quantify  the missed  opportunities  for
proactive and aggressive level and progression of care management.

      b. Skill Development Program.

            i. CAI will  provide  a  comprehensive  training  program  to HNNY's
      clinical  care  management  staff.  This  training  program is designed to
      provide such staff with a thorough  understanding  of the care  management
      process and help them  develop the skills  necessary  to  facilitate  high
      quality, cost-effective care. The training will be conducted by healthcare
      educators and care management professionals,  including an experienced CAI
      medical  director for those  program  modules with  clinical  content.  An
      outline of the training program is set forth in Attachment A.

            ii.  CAI  will  train  approximately  20  clinical  staff,  6-8 case
      managers and 2-3 administrative  support staff. Training will be scheduled
      for mutually agreeable times so as to optimize the learning experience and
      minimize the disruption to HNNY's review process.

            iii. Upon completion of the training, CAI will measure the impact of
      the training through a participant  evaluation and through a post training
      review audit, and will summarize and provide the results to HNNY.

      1.4 Reports.  CAI will provide HNNY with monthly review activity  reports.
The  format  and  content  of these  reports  will be in  accordance  with those
furnished pursuant to the Prior Agreement or as the parties may mutually agree.

2. Compensation & Expenses

      2.1  Base  Compensation.  CAI's  compensation  for the  Services  provided
pursuant to this  Agreement  shall be Two  Hundred  Fifty  Three  Thousand  Five
Hundred  Seventy-Eight  ($253,578) Dollars,  payable in monthly  installments of
Forty Two Thousand Two Hundred Sixty Three 


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($42,263) Dollars.  HNNY 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,  HNNY shall pay CAI one  hundred  ($100)  dollars for each case
reviewed by CAI's Special  Advisory  Panel to the extent in excess of 500 cases.
HNNY shall pay CAI within  thirty (30) days of its receipt of CAI's  invoice for
such services.

      2.3 Expenses. HNNY shall reimburse CAI for CAI's reasonable  out-of-pocket
expenses  incurred in connection  with this  Agreement,  including  expenses for
travel,  lodging  and meals.  HNNY 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  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 HNNY 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.


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4. Term.

      4.1 Generally.  This Agreement shall be for a six (6) month term beginning
on the Effective  Date.  Notwithstanding  the preceding  sentence,  HNNY and CAI
agree that CAI's  obligations  with  respect to Section  1.2(b) and 1.3,  above,
shall  survive the  termination  of the  Agreement  with respect to any services
covered by those subsections (i.e.,  matched specialty review, staff development
audit and skill development  programs) that are in progress but not completed as
of the effective date of termination.

      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.

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 HNNY as an  additional  insured,
such policy or policies  not to be  cancelable  upon less than thirty (30) days'
prior  notice,  and providing  that HNNY 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 HNNY for claims, or portions thereof,  under the terms
of HNNY's health insurance policies or HMO agreements which HNNY 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.


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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 HNNY 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  HNNY  shall  solicit  for  employment  or hire any
employee or consultant of the other without the other's prior written consent.

      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 HNNY 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 HNNY 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:


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         If to HNNY:          New York Care Plus Insurance Company.
                              1901 Main Street
                              Buffalo, New York 14240
                              Attn:   Cheryl Howe,
                                      Vice President

         If to CAI:           CareAdvantage, Inc.
                              485-C Route 1 South
                              Iselin, New Jersey  08830
                              Attn:   Richard Freeman, M.D.,
                                      President & Chief Operating Officer

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

      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, HNNY, 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 HNNY, as the case may be, may not have an adequate remedy at law and
will suffer irreparable damage and injury.  Therefore, 


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in addition to any other  remedy  available,  CAI and HNNY 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.

      7.11 Effect of Prior  Agreement.  The parties  acknowledge  that the Prior
Agreement expired as of December 31, 1998.

      7.12 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.
                                                 HEALTHNOW NEW YORK INC.


BY:_________________________                     BY:_________________________
TITLE:______________________                     TITLE:______________________


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                                                                    ATTACHMENT A

                                TRAINING PROGRAM

Program I Basic Care Management for all clinical staff and administrative staff

1.    Customized levels of care
         a.   Care management continuum
         b.   Levels of care I, II and III
              I:   Outpatient, Observation, Acute
              II:  Subacute, Skilled Nursing Facility
              III: Rehabilitation, Home Care
2.       Facilitating  appropriate  level  and  progression  of care  
         a.  Review process I and II 
         b.  Introduction to standard and clinical guidelines 
         c.  Discharge planning
3.       Communication  and negotiation  skills
         a.  Introduction to communication
         b.  Care management negotiations
         c.  Customer Service  (administrative staff only)

Program II Basic Case Management for case managers

1. Coordination of care
2. Patient advocacy
3. Cost/benefit analysis theories
4. Legal implications
5. Generic care planning

Program III Clinical Training

Two clinical modules (to be selected through staff assessment process)


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