<PAGE>   1
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            -------------------------

                                   FORM 10-K/A
                                   (Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998
                                       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 No. ________

                           PHYSICIANS' SPECIALTY CORP.
             (Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S>                                                                                   <C>
         DELAWARE                                                                           58-2251438
(State or other jurisdiction of                                                          (I.R.S. Employer
incorporation or organization)                                                        Identification Number)

1150 LAKE HEARN DRIVE, SUITE 640, ATLANTA, GA                                                30342
  (Address of principal executive offices)                                                 (Zip Code)
</TABLE>

Registrant's telephone number, including area code:  (404) 256-7535

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:  COMMON STOCK,
                                                             $.001 PAR VALUE

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) or 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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10- K or any amendment to
this Form 10-K . [ ]

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant was approximately $47,440,234 based on the last
sales price of the Common Stock as of March 29, 1999.

As of March 29, 1999, 9,172,025 shares of Common Stock, $.001 par value, of the
registrant were issued and outstanding.



<PAGE>   2


                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth the names, ages and positions of our
executive officers and directors:

<TABLE>
<CAPTION>
Name                                     Age              Position
----                                     ---              --------
<S>                                      <C>        <C>
Ramie A. Tritt, M.D.                     49         Chairman of the Board and President
Gerald R. Benjamin(1)                    41         Vice Chairman of the Board, Secretary, Treasurer
                                                      and Director
Richard D. Ballard                       50         Chief Executive Officer and Director
Robert A. DiProva                        51         Executive Vice President and Chief Financial Officer
Lawrence P. Kraska                       34         Chief Operating Officer and Executive Vice
                                                      President
Edward R. Casas, M.D.(1)(2)              39         Director
Sidney Kirschner(1)(2)                   64         Director
Steven L. Posar, M.D.(1)(2)              49         Director
Steven H. Sacks, M.D.                    48         Director
</TABLE>
----------
(1)      Member of Audit Committee
(2)      Member of Compensation Committee

         RAMIE A. TRITT, M.D. has served as our Chairman of the Board and
President since our inception in July 1996. Dr. Tritt serves as President of
Atlanta ENT, a multi-site otolaryngology group practice which is a successor to
a practice founded by Dr. Tritt in 1979. Dr. Tritt also serves as President and
Medical Director of the ENT Center of Atlanta, Inc., Atlanta ENT Center for
Physicians, Inc., and Atlanta AHP, Inc., three otolaryngology provider networks
established to contract with HMOs in greater Atlanta, each of which is a
wholly-owned subsidiary Physicians' Specialty. Dr. Tritt was a founding Member
and currently serves as President of Georgia Multi-Specialty Group, L.L.C., a
consortium of 15 specialty group practices, encompassing approximately 650
physicians, which contracts with payors for specialty medical services
throughout the metropolitan Atlanta area. Dr. Tritt has served on the Medical
Advisory Board of Healthsource of Georgia since June 1996 and the ENT Physician
Advisory Board of the Ambulatory Surgery Division of Columbia HCA since January
1997. Dr. Tritt also serves on our Medical Advisory Board. Dr. Tritt received
his M.D. degree from McGill University.

         GERALD R. BENJAMIN has served as our Vice Chairman and Secretary since
our inception in July 1996 and our Treasurer since June 1998. Mr. Benjamin
serves as Chief Executive Officer


<PAGE>   3


of Premier HealthCare, a division of Bock, Benjamin & Co., a boutique health
care investment banking concern which Mr. Benjamin co-founded in 1993. Prior to
founding Bock, Benjamin & Co., Mr. Benjamin served as Chief Executive Officer of
Premier HealthCare, Inc., a health care venture development and management firm
which Mr. Benjamin co-founded in 1991. Prior to co-founding Premier HealthCare,
Inc., Mr. Benjamin served for ten years as Managing Partner and Director of
Corporate Finance Services for Williams, Benjamin, Benator & Libby, an Atlanta,
Georgia-based Certified Public Accounting firm. Prior to forming Williams,
Benjamin, Benator & Libby in 1982, Mr. Benjamin was a member of the Atlanta
office of Ernst & Young. Mr. Benjamin is a Certified Public Accountant and
received his B.S. degree in accounting from the University of Kentucky, where he
was named a Coopers & Lybrand scholar.

         RICHARD D. BALLARD has served as our Chief Executive Officer and a
director of Physicians' Specialty since November 1996. Prior to joining
Physicians' Specialty, Mr. Ballard served as Vice President of Recruiting for
Physicians' Online, Inc., founding an intranet physician recruiting service.
Prior to joining Physicians' Online in September 1995, Mr. Ballard served as
Executive Vice President, President and Chief Executive Officer of Allegiant
Physician Services, Inc. (formerly Premier Anesthesia, Inc.), an anesthesia
contracting and physician practice management company. Prior to joining Premier
Anesthesia in 1988, Mr. Ballard served for six years as Executive Vice President
of Jackson & Coker Inc., a national physician recruiting firm and for seven
years as director of national recruiting for Spectrum Emergency Care, Inc.

         ROBERT A. DIPROVA has served as an Executive Vice President and our
Chief Financial Officer since March 1997. Mr. DiProva served as Vice President-
Administration, Chief Financial Officer, Secretary and Treasurer of A.D.A.M.
Software, Inc., a publicly traded medical software company, from September 1995
to February 1997. Prior to joining A.D.A.M. Software in 1995, Mr. DiProva served
for six years as Vice President, Chief Financial Officer and Treasurer of DATEQ
Information Network, Inc., a publicly traded data management company. Mr.
DiProva is a Certified Public Accountant and received his M.B.A. from Emory
University.

         LAWRENCE P. KRASKA has served as our Chief Operating Officer and
Executive Vice President since April 1999, following one year terms as our
Executive Vice President-Operations and Vice President-Operations, respectively.
Prior to joining Physicians' Specialty, Mr. Kraska served as Administrator of
Atlanta ENT. Prior to joining Atlanta ENT in June 1994, Mr. Kraska provided
hospital administration, physician recruiting and practice management services
as the Regional Director of Professional Relations for the Atlanta division of
National Medical Enterprises from July 1993 to May 1994, for Charter Medical
Corporation - Charter Peachford Hospital from September 1992 to June 1993 and as
the Administrator for The Center For Psychiatry, a large multi-specialty mental
health group practice, from March 1990 to August 1992. Mr. Kraska received his
M.B.A. from Kennesaw State University.

         EDWARD R. CASAS, M.D. has served as a director of Physicians' Specialty
since November 1996. Dr. Casas currently serves as Managing Director of Casas,
Ellen & White LLC, a venture management and advisory firm. Prior to joining
Casas, Ellen & White in June 1998, Dr. Casas served as Chief Executive Officer
and President of PrimeCare International, Inc., a California-based multi-site
primary care physician practice management concern from September


                                       3
<PAGE>   4


1996 until May 1998. Prior to joining PrimeCare in September 1996, Dr. Casas
served as Vice President of Mergers and Acquisitions for the Physician Practice
Management Division of Caremark International Inc. Prior to joining Caremark
International in December 1992, Dr. Casas completed his active duty service as a
designated Flight Surgeon in support of Marine special operations and as a
clinical Departmental Head in Aerospace Medicine in the United States Navy.
Prior to completing his medical training, Dr. Casas was Executive Vice President
of CES Corporation, an investment banking concern. Dr. Casas is a graduate of
Northwestern University's Medical School and Kellogg Graduate School of
Management where he concurrently earned an M.D., a Masters of Management and a
Masters in Public Health.

         SIDNEY KIRSCHNER has served as a director of Physicians' Specialty
since March 1997. Mr. Kirschner currently serves as President and Chief
Executive Officer of Northside Hospital, a 455 bed tertiary care facility
located in Atlanta, Georgia. Prior to joining Northside Hospital in 1992, Mr.
Kirschner served in numerous executive capacities, including President, Chief
Executive Officer and Chairman of the Board, of National Service Industries,
Inc. a publicly traded diversified manufacturing and industrial services
concern. Mr. Kirschner is a member of the Board of Directors of two public
companies: Fortune Co. and Superior Surgical Manufacturing Company, Inc.

         STEVEN L. POSAR, M.D. has served as a director of Physicians' Specialty
since March 1997. Dr. Posar currently serves as President, Chief Operating and
Chief Medical Officer of For Health International, Inc., a long term care and
insurance services company. Prior to joining For Health International in
November 1997, Dr. Posar served as Senior Vice President, Operations Group of
AHI HealthCare Systems, Inc., a publicly traded independent physician management
company, recently acquired by FPA Medical Management, Inc. Prior to joining AHI
in 1991, Dr. Posar served as Medical Director of Blue Cross of California, a
managed care payor with approximately 2.5 million enrollees in sponsored HMO and
preferred provider organization plans. Prior to joining Blue Cross of
California, Dr. Posar spent three years as Chief of Cigna Medical Center, and
staff medical director of Cigna Healthplan of Los Angeles. Dr. Posar received
his M.D. degree from Michigan State University.

         STEVEN H. SACKS, M.D. has served as a director of Physicians' Specialty
since August 1998. Dr. Sacks currently serves as a Partner of E.N.T. Associates
LLP, an otolaryngology practice in New York, New York. Prior to joining E.N.T.
Associates in June 1998, Dr. Sacks was a principal of Robert P. Green & Steven
H. Sacks M.D., P.C. since October 1981. Dr. Sacks received his M.D. from
Washington University in St. Louis, Missouri.

         All directors hold office until the next annual meeting of stockholders
or until their successors are elected and qualified; vacancies and any
additional positions created by board action are filled by action of the
existing Board of Directors. All officers serve at the discretion of the Board
of Directors.



                                       4
<PAGE>   5


BOARD COMMITTEES

         The Board of Directors has established an Audit Committee and a
Compensation Committee. The Audit Committee consists of Gerald R. Benjamin,
Edward R. Casas, M.D., Sidney Kirschner and Steven L. Posar, M.D. and reviews,
with our independent accountants:

         -        the scope and timing of audit services and any other services
                  that the accountants are asked to perform;
         -        the independent accountants report on our financial statements
                  following completion of their audit; and
         -        our policies and procedures with respect to internal
                  accounting and financial controls.

In addition, the Audit Committee makes annual recommendations to the Board of
Directors for the appointment of independent public accountants for the ensuing
year.

         The Compensation Committee consists of Edward R. Casas, M.D., Sidney
Kirschner and Steven L. Posar, M.D. and:

         -        reviews and recommends to the Board of Directors the
                  compensation and benefits of our officers; and
         -        reviews general policy matters relating to compensation and
                  benefits of our employees.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section 16(a) of the 1934 Act requires our executive officers,
directors and persons who beneficially own more than 10% of a registered class
of our equity securities to file with the Commission initial reports of
ownership and reports of changes in ownership of our common stock and other of
our equity securities. Such executive officers, directors, and greater than 10%
beneficial owners are required by Commission regulation to furnish us with
copies of all Section 16(a) forms filed by such reporting persons.

         To our knowledge, based solely on a review of the copies of such
reports furnished to us and on representations that no other reports were
required, there were no reports required under Section 16(a) ("Section 16(a)")
of the Securities Exchange Act of 1934 which were not timely filed during fiscal
1998, except that a report on Form 4 reporting the acquisition in July 1998 of
shares of our common stock by Gerald R. Benjamin, our Vice Chairman, Secretary
and Treasurer, was filed by Mr. Benjamin on August 13, 1998.



                                       5
<PAGE>   6


ITEM 11.          EXECUTIVE COMPENSATION

         The following summary compensation table sets forth the aggregate
compensation paid or accrued by us to Richard D. Ballard, our Chief Executive
Officer, and to executive officers whose annual compensation exceeded $100,000
for fiscal 1998 for services rendered during the fiscal years ended December 31,
1998, 1997 and 1996:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                       Annual Compensation                     Long-Term Compensation
                                                       -------------------                     ----------------------
                                                                                             Securities
Name and                                                                 Other Annual        Underlying      All Other
Principal Position           Year     Salary ($)          Bonus ($)     Compensation ($)     Options (#)  Compensation (7)
------------------           ----     ----------          ---------     ----------------     -----------  ----------------
<S>                          <C>      <C>               <C>             <C>                  <C>          <C>
Richard D. Ballard           1998      $150,000               0                    --          190,000          $4,225
   Chief Executive           1997      $150,000               0                    --               --          $4,398
   Officer                   1996      $ 10,385 (1)          --                    --          179,968              --
Ramie A. Tritt, M.D          1998      $350,000 (2)           0                    --          250,000              --
   Chairman of the           1997      $263,846 (2)           0                    --               --              --
   Board and President       1996      $      0 (2)          --              $210,268 (3)           --              --
Gerald R. Benjamin           1998      $135,000 (4)           0                    --          190,000              --
   Vice Chairman of          1997      $ 45,231 (4)           0                    --               --              --
   the Board, Treasurer      1996      $      0              --                    --               --              --
   and Secretary
Lawrence P. Kraska           1998      $130,000         $20,000                    --          175,000          $6,005
   Vice President -          1997      $ 98,000 (5)           0                    --               --          $2,829
   Operations                1996      $      0              --                    --           59,992              --
Robert A. DiProva            1998      $120,000               0                    --           80,000          $1,970
   Executive Vice            1997      $104,933 (6)           0                    --          119,980          $2,733
   President and Chief       1996      $      0              --                    --               --              --
   Financial Officer
</TABLE>
----------

(1)      Mr. Ballard's employment commenced as of November 26, 1996 and,
         accordingly, represents amounts accrued from November 26, 1996 to
         December 31, 1996, all of which was paid in 1996. See "-- Employment
         Contracts and Termination of Employment and Change-In-Control
         Arrangements."

(2)      No compensation was paid or accrued by us during 1996 to Dr. Tritt, who
         received compensation in the form of distributions from certain
         subsidiaries which we acquired in March 1997 and one of our affiliated
         practices, Atlanta Ear, Nose and Throat Associates. Dr. Tritt's
         employment commenced as of March 26, 1997 and, accordingly, the amount
         for 1997 represents amounts accrued from March 26, 1997 to December 31,
         1997, all of which was paid in 1997. Excludes compensation received by
         Dr. Tritt from Atlanta Ear, Nose and Throat Associates for medical
         services provided by Dr. Tritt as a physician at Atlanta Ear, Nose and
         Throat Associates during the years ended December 31, 1996, 1997 and
         1998. See "-- Employment Contracts and Termination of Employment and
         Change-In-Control Arrangements."


                                       6
<PAGE>   7


(3)      Represents the fair market value, on the date acquired, of an aggregate
         of 30,945 shares of common stock purchased by Dr. Tritt in November and
         December 1996, less the actual purchase price paid by Dr. Tritt for
         such shares.

(4)      Mr. Benjamin's employment with us commenced as of March 26, 1997 and,
         accordingly, the 1997 amount represents amounts accrued from March 26,
         1997 to December 31, 1997, all of which was paid in 1997. Pursuant to
         an employment agreement effective as March 26, 1997 between Mr.
         Benjamin and us, during 1997 Mr. Benjamin was employed on a part time
         basis by us and was entitled to an annual salary of $60,000, plus a
         performance related bonus to be approved by the Board of Directors. In
         March 1998, Mr. Benjamin's employment agreement was amended to provide
         that Mr. Benjamin would be employed on a full time basis by us and
         would receive an annual salary of $150,000. Excludes amounts paid by us
         during 1997 and 1998 to Premier HealthCare, a division of Bock,
         Benjamin & Co., an entity in which Mr. Benjamin has a 25% ownership
         interest, of approximately $647,000 and $893,000, respectively, for
         consulting services in connection with acquisitions and certain other
         transactions. See "-- Employment Contracts and Termination of
         Employment and Change-In-Control Arrangements" and "Certain
         Relationships and Related Transactions."

(5)      Mr. Kraska's employment commenced as of March 26, 1997 and,
         accordingly, represents amounts accrued from March 26, 1997 to December
         31, 1997, all of which was paid in 1997. See "-- Employment Contracts
         and Termination of Employment and Change-InControl Arrangements."

(6)      Mr. DiProva's employment commenced as of March 26, 1997 and,
         accordingly, represents amounts accrued from March 26, 1997 to December
         31, 1997, all of which was paid in 1997. See "-- Employment Contracts
         and Termination of Employment and Change-In-Control Arrangements."

(7)      Amounts shown in this column represent medical insurance premiums paid
         by us.



                                       7
<PAGE>   8


OPTION GRANTS IN THE LAST FISCAL YEAR

         The following table sets forth certain information regarding stock
options granted to our named executive officers during the fiscal year ended
December 31, 1998. No stock appreciation rights were granted to these
individuals during such year.



<TABLE>
<CAPTION>
                                                     Individual Grants
                             -----------------------------------------------------------------
                                                                                                   Potential Realizable Value
                                 Number of         % of Total                                        at Assumed Annual Rates
                                 Securities          Options                                              of Stock Price
                                Underlying         Granted to        Exercise                        Appreciation for Option
                                  Options         Employees in        Price       Expiration                  Term(3)
Name                             Granted (#)       Fiscal Year        ($/Sh)         Date              5%($)         10%($)
----                             -----------       -----------        ------         ----              -----         ------
<S>                              <C>              <C>                <C>          <C>                <C>           <C>       
Richard D. Ballard                40,000 (1)            4.2%          $10.00       3/26/08           $251,558      $  637,496
                                 150,000 (2)           15.6%          $ 7.75       11/19/08           731,090       1,852,726
Ramie A. Tritt, M.D.              50,000 (1)            5.2%          $11.00       3/26/03            151,955         335,781
                                 200,000 (2)           20.8%          $ 8.53       11/19/03           471,336       1,041,530
Gerald R. Benjamin                40,000 (1)            4.2%          $10.00       3/26/08            251,558         637,496
                                 150,000 (2)           15.6%          $ 7.75       11/19/08           731,090       1,852,726
Lawrence P. Kraska                50,000 (1)            5.2%          $10.00       3/26/08            314,447         796,871
                                 125,000 (2)           13.0%          $ 7.75       11/19/08           609,241       1,543,938
Robert A. DiProva                 30,000 (1)            3.1%          $10.00       3/26/08            188,668         478,122
                                  50,000 (2)            5.2%          $ 7.75       11/19/08           243,696         617,575
</TABLE>
----------

(1)      These options are exercisable in equal annual installments of 25% on a
         cumulative basis commencing on March 27, 1998.

(2)      These options are exercisable in equal annual installments of 25% on a
         cumulative basis commencing on November 20, 1998.

(3)      Calculated by multiplying the exercise price by the annual appreciation
         rate shown (as prescribed by the Securities and Exchange Commission
         rules) and compounded for the term of the options, subtracting the
         exercise price per share and multiplying the gain per share by the
         number of shares covered by the options. These amounts are not intended
         to forecast possible future appreciation, if any, of the price of our
         common stock. The actual value realized upon exercise of the options
         will depend on the fair market value of our common stock on the date of
         exercise.



                                       8
<PAGE>   9


AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

         The following table sets forth certain information with respect to the
exercise of stock options during fiscal 1998 by the named executive officers and
the number and value of unexercised options held by each of the named executive
officers as of December 31, 1998:

<TABLE>
<CAPTION>
                                                              Number of Securities Under-            Value of Unexercised
                                                              lying Unexercised Options at         In the Money Options at
                                                                  Fiscal Year-End (#)               Fiscal Year End ($)(1)
                                                                  -------------------               ----------------------
                                 Shares
                               Acquired          Value
Name                          on Exercise    Realized ($)     Exercisable    Unexercisable       Exercisable    Unexercisable
----                          -----------    ------------     -----------    -------------       -----------    -------------
<S>                           <C>            <C>              <C>            <C>                 <C>            <C>
Richard D. Ballard                 0               0            192,476         177,492           $ 236,025       $ 141,176
Ramie A. Tritt, M.D.               0               0             75,000         175,000                  --              --
Gerald R. Benjamin                 0               0             57,500         132,500              23,438          70,314
Lawrence P. Kraska                 0               0            101,244         133,748              94,303          82,216
Robert A. DiProva                  0               0            117,485          82,495             149,539          70,680
</TABLE>
----------

(1)      Calculated by multiplying the number of unexercised in-the-money
         options outstanding at December 31, 1998 by the difference between the
         fair market value of our common stock at December 31, 1998 ($8.375) and
         the option exercise price.

DIRECTOR COMPENSATION

         Directors who are officers or employees of Physicians' Specialty or a
subsidiary of Physicians' Specialty are not compensated for attending Board of
Directors meetings. Directors who are not officers or employees of Physicians'
Specialty are deemed independent directors and are entitled to compensation of
$1,500 for each Board of Directors or separate committee meeting attended and
are reimbursed for expenses actually incurred in connection with attending such
meetings. Independent directors are also awarded initial grants of non-qualified
stock options to purchase 7,500 shares of our common stock upon joining the
Board of Directors. In June 1998, Edward R. Casas, M.D., Sidney Kirschner and
Steven L. Posar, M.D. each received an automatic grant of options to purchase
2,500 shares of our common stock, all immediately exercisable. In August 1998,
we granted options to purchase 2,500 shares of our common stock, all immediately
exercisable, to Steven M. Sacks, M.D. upon joining the Board. In December 1998,
we granted options to purchase 7,500 shares of our common stock, subject to
annual vesting, to each of Dr. Casas, Mr. Kirschner and Dr. Posar. All options
are granted at the then fair market value.



                                       9
<PAGE>   10


EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS

         On November 26, 1996, we entered into employment agreements with Ramie
A. Tritt, M.D., Richard D. Ballard and Gerald R. Benjamin (effective as of March
26, 1997 with respect to each of Dr. Tritt and Mr. Benjamin). Pursuant to the
employment agreements, Dr. Tritt, Mr. Ballard and Mr. Benjamin agreed to serve
as our President, Chief Executive Officer and Vice Chairman, respectively. The
employment agreements with Dr. Tritt, Mr. Ballard and Mr. Benjamin provide for
an initial term of five, three and three years, respectively, with automatic
renewals for successive one year terms unless terminated by either party.

         The employment agreement with Dr. Tritt provides for an initial annual
base salary of $350,000 plus an annual performance related bonus of up to 50% of
his base salary, to be approved by the Board of Directors, in consideration of
his devoting approximately 50% of his business time each week to serving as our
President. The employment agreement with Dr. Tritt provides for increases in Dr.
Tritt's annual base salary, subject to approval of the Board of Directors, if
the amount of time he devotes as our President is greater than 50%. The
agreement acknowledges that the remaining 50% of Dr. Tritt's business time each
week will be spent performing medical and surgical services at Atlanta Ear, Nose
and Throat Associates pursuant to an employment agreement with Atlanta Ear, Nose
and Throat Associates. Pursuant to the employment agreement with Atlanta Ear,
Nose and Throat Associates, Dr. Tritt will receive compensation from Atlanta
Ear, Nose and Throat Associates pursuant to a formula based upon medical
services provided by Dr. Tritt as a physician at Atlanta Ear, Nose and Throat
Associates. In February 1997, we and Dr. Tritt entered into an amended and
restated employment agreement which provides that Dr. Tritt's annual base salary
from us in any year will be reduced, dollar for dollar, if in such year his
annual compensation from Atlanta Ear, Nose and Throat Associates exceeds
$970,000. For the year ended December 31, 1998, Dr. Tritt's annual compensation
from Atlanta Ear, Nose and Throat Associates did not exceed $970,000, and
therefore, Dr. Tritt's annual base salary from us was not reduced.

         The employment agreement with Mr. Ballard provides for an annual base
salary of $150,000 plus an annual performance related bonus of up to 50% of his
base salary, to be approved by the Board of Directors. The employment agreement
with Mr. Benjamin provided that Mr. Benjamin would work part time for us and his
annual base salary would be $60,000, plus an annual performance related bonus of
up to 50% of his base salary, to be approved by the Board of Directors. In March
1998 Mr. Benjamin's employment agreement was amended and provides that he will
work full time for us and will receive an annual base salary of $150,000, plus
an annual performance related bonus of up to 50% of his base salary, to be
approved by the Board of Directors.

         Each of the employment agreements with Dr. Tritt, Mr. Ballard and Mr.
Benjamin provides for termination of the executive's employment by us prior to
the expiration of its term in the event of the executive's death or disability
or for cause. Each employment agreement also provides that either party may
terminate the employment agreement, effective at the end of the term or any
renewal term, upon 60 days notice of termination. We may terminate each
employment agreement without cause upon notice to the executive and the
executive may terminate the agreement upon a change of control of us by
providing at least 30 days notice of



                                       10
<PAGE>   11


termination by the executive. Upon termination in either such case, the
executive will be entitled to receive his base salary for a period of one year
following the date of termination (subject to a 100% offset for salary received
from subsequent employment during such one year period (subject to certain
exclusions in the case of Dr. Tritt and Mr. Benjamin)). In addition, each
employment agreement provides that upon termination of the employment agreement
by us or our successor following a change of control, the executive will be
entitled to severance compensation in the amount of two times his taxable
compensation for the most recently concluded fiscal year.

         In January 1997, we entered into an employment agreement with Robert A.
DiProva, effective March 26, 1997. The employment agreement provides for an
initial term of three years from the effective date, with automatic renewals for
successive one year terms unless terminated by either party and provides for an
annual base salary of $120,000 plus an annual performance related bonus of up to
50% of his base salary, to be approved by the Board of Directors. In addition to
the terms contained in the agreements with Dr. Tritt, Mr. Ballard and Mr.
Benjamin, Mr. DiProva's employment agreement also permits termination by Mr.
DiProva if his responsibilities are materially diminished or if his base salary
is reduced by 10% or more. If the agreement is terminated for either of these
reasons, Mr. DiProva will be entitled to receive his base salary for a period of
one year following the date of termination (subject to 100% offset for salary
received from subsequent employment during such one year period).

         In February 1997, we entered into an employment agreement with Lawrence
P. Kraska, effective March 26, 1997. The employment agreement provides for an
initial term of three years from the effective date, with automatic renewals for
successive one year terms unless terminated by either party, and provides for an
annual base salary of $130,000 plus an annual performance related bonus of up to
50% of his base salary, to be approved by the Board of Directors. The employment
agreement provides for termination of Mr. Kraska's employment by us prior to the
expiration of its term in the event of Mr. Kraska's death or disability or for
cause. The employment agreement also provides that either party may terminate
the employment agreement, effective at the end of the term or any renewal term,
upon 60 days notice of termination. We may terminate the employment agreement
without cause and, upon termination, Mr. Kraska will be entitled to receive his
base salary for a period of one year following the date of termination (subject
to a 100% offset for salary received from subsequent employment during such one
year period). In addition, the employment agreement provides that upon
termination of the employment agreement by us or our successor following a
change of control, Mr. Kraska will be entitled to severance compensation in the
amount of two times his taxable compensation for the most recently concluded
fiscal year.

         Pursuant to each of the foregoing employment agreements, each of the
executives has agreed not to compete with us, solicit any of our customers or
employees or disclose any confidential information or trade secrets during the
term of their employment agreement and for certain periods of time following the
termination of such employment agreement.

         In the event of certain transactions, including those which may result
in a change in control, as defined under each of the Company's 1996 Stock Option
Plan and 1996 Health Care



                                       11
<PAGE>   12


Professionals Stock Option Plan, unvested installments of options to purchase
shares of our common stock may be subject to accelerated vesting.

LIMITATION ON LIABILITY; INDEMNIFICATION AGREEMENTS

         The General Corporation Law of the State of Delaware permits a
corporation through its Certificate of Incorporation to eliminate the personal
liability of its directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty of loyalty and care as a director, with
certain exceptions. The exceptions include a breach of the director's duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or knowing violation of law, improper declarations of dividends, and
transactions from which the directors derived an improper personal benefit. Our
Certificate of Incorporation exonerates our directors from monetary liability to
the fullest extent permitted by this statutory provision but does not restrict
the availability of non-monetary and other equitable relief. Our By-Laws provide
that we shall indemnify our directors and officers to the fullest extent
permitted by Delaware Law.

         We have entered into Indemnification Agreements with each of our
directors and executive officers. Each such Indemnification Agreement provides
that we will indemnify the indemnitee against expenses, including reasonable
attorney's fees, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any civil or criminal
action or administrative proceeding arising out of the performance of his duties
as an officer, director, employee or agent of Physicians' Specialty. Such
indemnification will be available if the acts of the indemnitee were in good
faith, if the indemnitee acted in a manner he reasonably believed to be in or
not opposed to our best interests and, with respect to any criminal proceeding,
the indemnitee had no reasonable cause to believe his conduct was unlawful.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         During a portion of the fiscal year ended December 31, 1998 Mr.
Ballard, our Chief Executive Officer, served as a member of our Compensation
Committee.

ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
beneficial ownership of our common stock by (i) each stockholder known by us to
own beneficially more than five percent of our outstanding common stock, (ii)
each director and named executive officer and (iii) all of our executive
officers and directors as a group based upon the number of outstanding shares of
common stock as of April 29, 1999.



                                       12
<PAGE>   13



<TABLE>
<CAPTION>
Name and Address of                 Number of Shares              Percentage of Shares
Beneficial Owner(1)                 Beneficially Owned            Beneficially Owned(2)
-------------------                 ------------------            ---------------------
<S>                                 <C>                           <C>  
Ramie A. Tritt, M.D.(3)                 1,839,441                     19.9%
Gerald R. Benjamin(4)                     356,448                      3.9%
Richard D. Ballard(5)                     192,476                      2.1%
Lawrence P. Kraska(6)                     101,244                      1.1%
Robert A. DiProva(7)                      117,485                      1.3%
Edward R. Casas, M.D.(8)                   12,500                        *
Steven L. Posar, M.D.(8)                   12,500                        *
Sidney Kirschner(8)                        12,500                        *
Steven H. Sacks, M.D.(9)                    2,500                        *
BankAmerica Corporation                   566,900                      6.2%
100 North Tryon St
Charlotte, NC 28255(10)
Fleet Financial Group, Inc.               532,410                      5.8%
One Federal Street
Boston, MA 02110(11)
All executive officers and
directors of the Company as a
group (9 persons)(12)                   2,647,094                     27.1%
</TABLE>
----------

*        Less than 1%

(1)      Unless otherwise indicated, the address is c/o Physicians' Specialty
         Corp., 1150 Lake Hearn Drive, Suite 640, Atlanta, Georgia 30342. Except
         as otherwise indicated, each of the parties listed above has sole
         voting and investment power over the shares owned.

(2)      In computing the number and percentage ownership of shares beneficially
         owned by a person, shares of common stock subject to options held by
         that person that are exercisable within 60 days are deemed outstanding.
         Such shares, however, are not deemed outstanding for purposes of
         computing the percentage ownership of stockholders other than such
         person.

(3)      Includes
         -        1,761,257 shares of common stock owned directly by Dr. Tritt;
         -        75,000 shares of common stock issuable upon exercise of
                  options that are exercisable within 60 days; and
         -        3,184 shares of common stock held by members of Dr. Tritt's
                  family. Excludes 175,000 shares of common stock issuable upon
                  exercise of options which are not exercisable within 60 days.



                                       13
<PAGE>   14


(4)      Includes
         -        57,500 shares of common stock issuable upon exercise of
                  options that are exercisable within 60 days; and
         -        293,948 shares of common stock owned by Bock, Benjamin & Co.
                  Partners, L.P. Mr. Benjamin is a principal of Bock, Benjamin &
                  Co. Partners, L.P.

         Excludes 132,500 shares of common stock issuable upon exercise of
         options which are not exercisable within 60 days.

(5)      Represents shares of common stock issuable upon exercise of options
         that are exercisable within 60 days. Excludes 177,492 shares of common
         stock issuable upon exercise of options which are not exercisable
         within 60 days.

(6)      Represents shares of common stock issuable upon exercise of options
         that are exercisable within 60 days. Excludes 133,748 shares of common
         stock issuable upon exercise of options which are not exercisable
         within 60 days.

(7)      Represents shares of common stock issuable upon exercise of options
         that are exercisable within 60 days. Excludes 82,495 shares of common
         stock issuable upon exercise of options which are not exercisable
         within 60 days.

(8)      Represents shares of common stock issuable upon exercise of options
         that are exercisable within 60 days. Excludes 5,000 shares of common
         stock issuable upon exercise of options which are not exercisable
         within 60 days.

(9)      Represents shares of common stock issuable upon exercise of options
         that are exercisable within 60 days.

(10)     Based on information provided by BankAmerica Corporation in a Schedule
         13G filed under the Securities Exchange Act of 1934 dated January 29,
         1999. Represents shares of common stock held by subsidiaries of
         BankAmerica. BankAmerica may be deemed to possess indirect beneficial
         ownership of shares beneficially owned directly by its subsidiaries.
         Similarly, higher tier BankAmerica subsidiaries may be deemed to
         possess indirect beneficial ownership of shares beneficially owned
         directly by lower tier BankAmerica subsidiaries. The power to vote and
         to dispose of shares may be deemed to be shared between entities due to
         their corporate relationships.

(11)     Based on information provided by Fleet Financial Group, Inc. in a
         Schedule 13G filed under the Securities Exchange Act of 1934 dated
         February 12, 1999. Includes shares of common stock held by subsidiaries
         of Fleet Financial Group.

(12)     Includes 583,705 shares of common stock issuable upon exercise of
         options that are exercisable within 60 days. Excludes 716,235 shares of
         common stock issuable upon exercise of options which are not
         exercisable within 60 days.



                                       14
<PAGE>   15


ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

LEASES

         We lease one clinical location from Ramie A. Tritt, M.D., our Chairman
and President. The lease is for approximately 23,000 square feet and provides
for monthly rental payments of approximately $47,000, subject to annual
increases. We also lease one clinical location from Eastside Physicians Center,
L.P., a Georgia limited partnership, of which Dr. Tritt is a limited partner.
The lease is for approximately 4,800 square feet and provides for monthly rental
payments of approximately $8,000, subject to annual increases.

EMPLOYMENT AGREEMENTS

         We have entered into employment agreements with each of our executive
officers and have granted options to certain of our executive officers. See
"Executive Compensation -- Employment Contracts and Termination of Employment
and Change-in-Control Arrangements."

ADVISORY AND CONSULTING AGREEMENTS

         In May 1997, we entered into an agreement with Premier HealthCare, an
affiliate of Gerald R. Benjamin, our Vice Chairman, Secretary and Treasurer,
which agreement was amended in March 1998, pursuant to which Premier HealthCare
will assist us as a financial advisor in connection with acquisitions and
similar transactions. The agreement provides that in the event that we complete
any transaction in which Premier HealthCare performed advisory services, Premier
HealthCare will receive a fee equal to (i) its out-of-pocket expenses and (ii)
5% of the initial $1 million of Transaction Value (as defined below), 4% of the
next $1 million of Transaction Value, 3% of the next $1 million of Transaction
Value, 2% of the next $1 million of Transaction Value and 1% of the amount of
Transaction Value in excess of $4 million. Transaction Value is defined under
the agreement as the product of (i) the pro-forma annual management fee to be
derived by us in connection with the proposed transaction and (ii) 7.5. Pursuant
to the agreement, the fee to be paid to Premier HealthCare for a particular
transaction will be reduced by any finder's fee payable by us to a third party,
which has been approved by Premier HealthCare, and the aggregate fee to be paid
to Premier HealthCare in any given year will be reduced by the product of (i)
$12,500 and (ii) the number of months in any year in which Mr. Benjamin is
employed by us (the "Reduction Amount"). During 1998, based on Mr. Benjamin's
1998 base salary, the Reduction Amount was approximately $115,000. The agreement
may be terminated by either party upon 90 days written notice to the other.

         During the year ended December 31, 1998, we paid an aggregate of
approximately $893,000 to Premier HealthCare, a division of Bock, Benjamin &
Co., an entity in which Mr. Benjamin has a 25% ownership interest, consisting of
(i) $197,000 for consulting services in connection with our public offering in
May 1998, (ii) approximately $696,000 (net of $115,000, the amount of salary
paid to Mr. Benjamin by us during 1998) for consulting services in connection
with the acquisition of assets or equity of physician practices and ancillary
acquisitions.



                                       15
<PAGE>   16


CHICAGO TRANSACTION

         In connection with our acquisition of Otolaryngology Medical & Surgical
Associates, the physician shareholders of such practice granted to Dr. Tritt (or
his designee or assignee) the option to acquire all of the ownership interest of
such physician shareholders in such practice in the event that at any time there
are less than two shareholders who continue as full time physician-employees of
such practice and those shareholders who remain do not, in Dr. Tritt's or our
management's sole discretion, control the operations of such practice in a
manner consistent with the requirements of the management services agreement
between such practice and us. In order to exercise the option, Dr. Tritt or his
designee or assignee must at the time of exercise be licensed to practice
medicine in the State of Illinois.

CREDIT FACILITY

         On July 31, 1998, we entered into our $45 million amended and restated
senior credit facility syndicated by Nationsbanc Montgomery Securities LLC. The
syndicate lenders include NationsBank, N.A., which together with certain of its
affiliates, is a principal stockholder of Physicians' Specialty.

         We believe that all of the transactions set forth above were made on
terms no less favorable to us than could have been obtained from unaffiliated
third parties. All future transactions, including loans, between us and our
officers, directors and principal stockholders and their affiliates will be
subject to approval by a majority of the Board of Directors, including a
majority of the independent directors of the Board of Directors.



                                       16
<PAGE>   17


SIGNATURE


         Pursuant to the requirements of Section 13 of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: April 30, 1999                PHYSICIANS' SPECIALTY CORP.



                                    By:   /s/ Ramie A. Tritt
                                        --------------------------------------
                                          Ramie A. Tritt, M.D.
                                          Chairman of the Board and President



<TABLE>
<CAPTION>
Signature                                     Title                                             Date
---------                                     -----                                             ----


<S>                                 <C>                                                   <C>
 /s/ Ramie A. Tritt                 Chairman of the Board and President                   April 30, 1999
----------------------------        (principal executive officer)
Ramie A. Tritt, M.D.


 /s/ Richard D. Ballard             Chief Executive Officer and Director                  April 30, 1999
----------------------------
Richard D. Ballard


 /s/ Gerald R. Benjamin             Vice Chairman of the Board,                           April 30, 1999
----------------------------        Treasurer and Secretary
Gerald R. Benjamin


 /s/ Robert A. DiProva              Executive Vice President and                          April 30, 1999
----------------------------        Chief Financial Officer (principal
Robert A. DiProva                   financial and accounting officer)



 /s/ Lawrence P. Kraska             Chief Operating Officer and                           April 30, 1999
----------------------------        Executive Vice President
Lawrence P. Kraska


 /s/ Edward R. Casas, M.D.          Director                                              April 30, 1999
----------------------------
Edward R. Casas, M.D.
</TABLE>



                                       17
<PAGE>   18

<TABLE>
<S>                                 <C>                                                   <C>
 /s/ Sidney Kirschner               Director                                              April 30, 1999
----------------------
Sidney Kirschner


 /s/ Steven L. Posar                Director                                              April 30, 1999
----------------------
Steven L. Posar, M.D.


 /s/ Steven H. Sacks                Director                                              April 30, 1999
----------------------
Steven H. Sacks, M.D.
</TABLE>



                                       18