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                                                                    EXHIBIT 10.4

                      IN THE UNITED STATE BANKRUPTCY COURT

                          FOR THE DISTRICT OF DELAWARE

In re                               )        Chapter 11
                                    )
MARINER HEALTH GROUP, INC.,         )        Case No. 00-00215 (MFW)
a Delaware corporation,             )
                                    )        (Jointly Administered
and affiliates,                     )        Case Nos. 00-00215 (MFW)
                                    )        through 00-00301 (MFW),
                  Debtors.          )        inclusive)
                                    )

                    ORDER AUTHORIZING DEBTORS TO (1) REPLACE
              THEIR CURRENT SURETY BOND COMPANY WITH RLI INSURANCE
            COMPANY; (2) PROVIDE COLLATERAL TO RLI INSURANCE COMPANY
               TO SECURE CERTAIN BOND OBLIGATIONS; (3) ENTER INTO
               AN INDEMNITY AGREEMENT WITH RLI INSURANCE COMPANY;
              (4) PAY PREPETITION CLAIMS SECURED BY SURETY BONDS;
           (5) ENTER INTO A CONFORMING AMENDMENT TO THE DIP AGREEMENT

         Upon review and consideration of the motion (the "Motion") dated March
19, 2001, of Mariner Health Group, Inc. and its affiliates, the debtors and
debtors in possession in the above-captioned chapter 11 cases (collectively, the
"Debtors"), for an order ("Order") authorizing the Debtors: (1) to replace their
current surety company, AmWest Surety Insurance Company ("AmWest"), with RLI
Insurance Company ("RLI"); (2) to replace the prepetition letter of credit which
currently secures the Debtors' obligations under the surety bonds issued by
AmWest with a new letter of credit which shall secure the Debtors' obligations
under the surety bonds RLI will issue on behalf of the Debtors; (3) to enter
into an indemnity agreement with RLI for all bond obligations; and (4) to pay,
in their discretion,

(a) the Mt. Clare Claim(1), and (b) the prepetition claims which are secured by
surety bonds, subject to the limitations described in the Motion; and the Court
having jurisdiction to consider the Motion and the relief requested therein in
accordance with 28 U.S.C. ss. 157 and 1334; and notice of this Motion having
been provided to: (i) the United States Trustee for the District of

---------------

(1)      If not otherwise defined herein, capitalized terms shall have the
         meaning ascribed to them in the Motion.

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Delaware; (ii) the official committee of unsecured creditors and counsel to the
committee (the "Creditors' Committee"); (iii) PNC Bank and its counsel, in its
capacity as Agent for the Debtors' senior secured prepetition lenders and as
Agent for the Debtors' postpetition debtor in possession lenders ("PNC"); (iv)
the Internal Revenue Service; (v) the Office of the United States Attorney; (vi)
the United States Department of Justice; (vii) RLI; (viii) AmWest; and (ix) all
parties that are on the Debtors' general service list, pursuant to this Court's
prior order limiting notice, and it appearing that no other or further notice
need be provided; and the court having determined that the relief sought is in
the best interests of the Debtors, their creditors, and all parties in interest
and that the Debtors have shown cause for the relief provided herein; and after
due deliberation and sufficient cause appearing therefor,

                  NOW THEREFORE, IS HEREBY ORDER THAT:

                  1.       The Motion is GRANTED;

                  2.       The Debtors are hereby authorized to replace AmWest
with RLI as their surety bond provider and to begin issuing surety bonds
through RLI, subject to the terms and conditions described in the Motion;

                  3.       The Debtors are hereby authorized to cause the LC
Issuing Bank to issue a letter of credit on behalf of the Debtors under the DIP
Agreement to collateralize the surety bonds that RLI may issue on behalf of the
Debtors, in an amount not to exceed $7.85 million;

                  4.       The Debtors are hereby authorized to enter into the
RLI Indemnity Agreement (as defined in the Motion), which indemnity agreement
shall be in substantially the same form as that attached to the Motion as
Exhibit "A";

                  5.       The Debtors are hereby authorized, (i) to pay,
immediately upon entry of this Order, the Mt. Clare Claim; and (ii) to pay, in
their discretion and subject to the limitations described in the next sentence,
any additional Prepetition Bonded Obligations. Prior to making any payments on
account of any Prepetition Bonded Obligations, other than the Mt. Clare Claim,
the Debtors shall obtain the written consent to PNC and First Union National
Bank ("First Union"), as Agents under the DIP Agreement, to the proposed
payment;


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                  6.       The Debtors are hereby authorized to enter into the
10th Amendment, which amendment shall be in substantially the same form as that
attached to the Motion as Exhibit "B"; and

                  7.       The Court retains jurisdiction over any and all
disputes, controversies, claims or other matters arising under or otherwise
relating to this Order.

Dated: April 9, 2001
       Wilmington, Delaware



                                       /s/ Mary F. Walrath
                                       -----------------------------------------
                                       THE HONORABLE MARY F. WALRATH
                                       UNITED STATES BANKRUPTCY JUDGE


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