**United      States**

**Securities      And Exchange Commission**

**Washington,      DC 20549**

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**FORM      10-Q**

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**(Mark      One)**

| R | **Quarterly                Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange                Act Of                1934** |
|---|------------------------------------------------------------------------------------------------------------------------------------------|

**For      the quarterly period ended September 30, 2007**

**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 Number: 1-8865**

**SIERRA      HEALTH SERVICES, INC.**

**(Exact      Name of Registrant as Specified in Its Charter)**

|                                                                                           |   |                                                    |
|-----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|
| **Nevada**                                                                                          |   | **88-0200415**                                          |
| **(State                or Other Jurisdiction****of                Incorporation or Organization)** |   | **(I.R.S.                Employer Identification No.)** |
|                                                                                                |   |
| **2724                North Tenaya Way, Las Vegas, NV**                                             |   | **89128**                                               |
| **(Address                of Principal Executive Offices)**                                         |   | **(Zip                Code)**                           |

**Registrant's      Telephone Number, Including Area Code: (702) 242-7000**

| Large                accelerated filer R | Accelerated                filer o | Non-accelerated                filer o |
|------------------------------------------|------------------------------------|----------------------------------------|

** **

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**Sierra      Health Services, Inc.**

**Quarterly      Report on Form 10-Q**

**For      The Period Ended September 30, 2007**

|                                                                                                                                                                                                                                                                     | **Page                No.** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
| Part                I.                                      Financial Information                                                                     |                        |
|  Item                1.                                      Financial Statements (Unaudited):                                                   |                        |
|                              Condensed Consolidated Balance Sheets – September 30, 2007                and December 31, 2006                                                                 | 1                           |
|                                  Condensed Consolidated Statements of Income – three and                nine months ended September 30, 2007 and 2006                    | 2                           |
|                                  Condensed Consolidated Statements of Stockholders'                Equity –                nine months ended September 30, 2007 and 2006 | 3                           |
|                                  Condensed Consolidated Statements of Cash Flows – nine                months ended September 30, 2007 and 2006                          | 4                           |
|                                  Notes to Condensed Consolidated Financial                Statements                                                                           | 5-16                        |
| Item                2.                      Management's Discussion and Analysis of Financial                Condition and Results of Operations      | 17-30                       |
| Item                3.                      Quantitative and Qualitative Disclosures About Market                Risk                                 | 31                          |
| Item                4.                      Controls and Procedures                                                                                   | 31                          |
|                                                                                                                                                                                                                                                           |                        |
| **Part                II.                            Other                Information**                                                                                                                 |                        |
|  Item                1.                      Legal Proceedings                                                                                   | 32-33                       |
| Item                1A.                                  Risk Factors                                                                                                     | 33-34                       |
| Item                2.                      Unregistered Sales of Equity Securities and Use                of                Proceeds                 | 34-35                       |
| Item                3.                      Defaults upon Senior Securities                                                                           | 35                          |
| Item                4.                      Submission of Matters to a Vote of Security                Holders                                        | 35                          |
| Item                5.                      Other Information                                                                                         | 35                          |
| Item                6.                                     Exhibits                                                                                        | 35                          |
| Signatures                                                                                                                                                                                                                                                          | 36                          |

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Table          of Contents

**Part      I.  Financial Information**

**Item      1.                      Financial      Statements**

**Sierra      Health Services, Inc. And Subsidiaries**

**Condensed      Consolidated Balance Sheets**

*(in      thousands, except per share data)*

*(Unaudited)*

|                                                                                              |                                                                                                                         | September                30, 2007 |    |     | December                31, 2006 |    |
|---------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|---------|----------|----------------------------------|---------|
| **Assets**                                                                                        |                                                                                                                         |                              |    |     |                             |    |
| Current                assets:                                                                    |                                                                                                                         |                              |    |     |                             |    |
|                                                                                              | Cash                and cash equivalents                                                                                     |                              | $       | 53,160   |                             |    | $ | 58,918 |   |
|                                                                                              | Investments                                                                                                                  |                              |    | 284,420  |                             |    |   | 323,846 |   |
|                                                                                              | Accounts                receivable (less allowance for doubtful accounts:                                                    |                              |    |     |                             |    |   |   |   |
|                                                                                              |                                                                                                                         | 2007-$7,400;2006-$5,518)          |    |     | 30,366                           |    |   |   | 21,308 |   |
|                                                                                              | Current                portion of deferred tax asset                                                                         |                              |    | 33,584   |                             |    |   | 29,861 |   |
|                                                                                              | Prepaid                expenses and other current assets                                                                     |                              |    | 129,475  |                             |    |   | 110,020 |   |
| Total                current assets                                                               |                                                                                                                         |                              | 531,005 |     |                             |    | 543,953 |   |
|                                                                                              |                                                                                                                         |                              |    |     |                             |    |   |   |
| Property                and equipment, net                                                        |                                                                                                                         |                              | 64,197  |     |                             |    | 71,893 |   |
| Restricted                cash and investments                                                    |                                                                                                                         |                              | 17,274  |     |                             |    | 19,428 |   |
| Goodwill                                                                                          |                                                                                                                         |                              | 14,782  |     |                             |    | 14,782 |   |
| Deferred                tax asset (less current portion)                                          |                                                                                                                         |                              | 28,762  |     |                             |    | 18,656 |   |
| Note                receivable (less valuation allowance: 2007 and 2006 -                $15,000) |                                                                                                                         |                              | 47,000  |     |                             |    | 47,000 |   |
| Other                assets                                                                       |                                                                                                                         |                              | 92,006  |     |                             |    | 93,700 |   |
| Total                assets                                                                       |                                                                                                                         | $                                 | 795,026 |     |                             |  $ | 809,412 |   |
|                                                                                              |                                                                                                                         |                              |    |     |                             |    |   |   |
| **Liabilities                and stockholders' equity**                                           |                                                                                                                         |                              |    |     |                             |    |   |   |
| Current                liabilities:                                                               |                                                                                                                         |                              |    |     |                             |    |   |   |
|                                                                                              | Accrued                and other current liabilities                                                                         |                              | $       | 85,389   |                             |    |  $ | 99,314 |   |
|                                                                                              | Trade                accounts payable                                                                                        |                              |    | 2,082    |                             |    |   | 1,552 |   |
|                                                                                              | Accrued                payroll and taxes                                                                                     |                              |    | 29,351   |                             |    |   | 25,925 |   |
|                                                                                              | Medical                claims payable                                                                                        |                              |    | 191,122  |                             |    |   | 222,895 |   |
|                                                                                              | Premium                deficiency reserve                                                                                    |                              |    | 22,081   |                             |    |   | 1,076 |   |
|                                                                                              | Unearned                premium revenue                                                                                      |                              |    | 52,207   |                             |    |   | 52,075 |   |
|                                                                                              | Current                portion of long-term debt                                                                             |                              |    | 153      |                             |    |   | 116 |   |
| Total                current liabilities                                                          |                                                                                                                         |                              | 382,385 |     |                             |    | 402,953 |   |
|                                                                                              |                                                                                                                         |                              |    |     |                             |    |   |   |
| Long-term                debt (less current portion)                                              |                                                                                                                         |                              | 20,535  |     |                             |    | 118,734 |   |
| Other                liabilities                                                                  |                                                                                                                         |                              | 91,062  |     |                             |    | 71,007 |   |
| Total                liabilities                                                                  |                                                                                                                         |                              | 493,982 |     |                             |    | 592,694 |   |
|                                                                                              |                                                                                                                         |                              |    |     |                             |    |   |   |
| Commitments                and contingencies                                                      |                                                                                                                         |                              |    |     |                             |    |   |   |
|                                                                                              |                                                                                                                         |                              |    |     |                             |    |   |   |
| Stockholders'                equity:                                                              |                                                                                                                         |                              |    |     |                             |    |   |   |
|                                                                                              | Preferred                stock, $.01 par value, 1,000 shares authorized;                                                     |                              |    |     |                             |    |   |   |   |
|                                                                                              | none                issued or outstanding                                                                                    |                              |    | ¾   |                             |    |   | ¾ |   |
|                                                                                              | Common                stock, $.005 par value, 120,000 shares authorized; 2007 –                73,582;            |                              |    |     |                             |    |   |   |   |
|                                                                                              | 2006                – 70,835 shares issued; 2007 – 56,180; 2006 – 53,824 shares                outstanding |                              |    | 368      |                             |    |   | 354 |   |
|                                                                                              | Treasury                stock at cost: 2007 – 17,402; 2006 – 17,011 common stock                shares           |                              |    | (614,976 | )                                |    |   | (600,539 | ) |
|                                                                                              | Additional                paid-in capital                                                                                    |                              |    | 469,645  |                             |    |   | 436,643 |   |
|                                                                                              | Accumulated                other comprehensive loss                                                                          |                              |    | (7,408   | )                                |    |   | (8,635 | ) |
|                                                                                              | Retained                earnings                                                                                             |                              |    | 453,415  |                             |    |   | 388,895 |   |
| Total                stockholders' equity                                                         |                                                                                                                         |                              | 301,044 |     |                             |    | 216,718 |   |
| Total                liabilities and stockholders' equity                                         |                                                                                                                         | $                                 | 795,026 |     |                             | $       | 809,412 |   |

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Table          of Contents

**Sierra      Health Services, Inc. And Subsidiaries**

**Condensed      Consolidated Statements Of Income**

*(In      thousands, except per share data)*

*(Unaudited)*

|                                                         |   | Three                Months EndedSeptember                30, |    |   | Nine                Months EndedSeptember                30, |   |
|--------------------------------------------------------------|--------|---------------------------------------------------------------|---------|--------|--------------------------------------------------------------|--------|
|                                                         |   | 2007                                                          |    |   | 2006                                                         |   |   | 2007 |   |   | 2006 |   |
| Operating                revenues:                           |   |                                                          |    |   |                                                         |   |   |   |   |   |   |   |
| Medical                premiums                              |   | $                                                             | 445,680 |   |                                                         | $      | 405,618 |   |   | $ | 1,371,000 |   |   | $ | 1,220,726 |   |
| Professional                fees                             |   |                                                          | 13,483  |   |                                                         |   | 13,300 |   |   |   | 42,519 |   |   |   | 39,097 |   |
| Investment                and other revenues                 |   |                                                          | 9,761   |   |                                                         |   | 11,079 |   |   |   | 32,089 |   |   |   | 32,860 |   |
| Total                                                        |   |                                                          | 468,924 |   |                                                         |   | 429,997 |   |   |   | 1,445,608 |   |   |   | 1,292,683 |   |
|                                                         |   |                                                          |    |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Operating                expenses:                           |   |                                                          |    |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Medical                expenses                              |   |                                                          | 375,075 |   |                                                         |   | 323,694 |   |   |   | 1,172,597 |   |   |   | 981,758 |   |
| General                and administrative expenses           |   |                                                          | 42,264  |   |                                                         |   | 51,291 |   |   |   | 160,984 |   |   |   | 153,052 |   |
| Total                                                        |   |                                                          | 417,339 |   |                                                         |   | 374,985 |   |   |   | 1,333,581 |   |   |   | 1,134,810 |   |
|                                                         |   |                                                          |    |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income                              |   |                                                          | 51,585  |   |                                                         |   | 55,012 |   |   |   | 112,027 |   |   |   | 157,873 |   |
| Interest                expense                              |   |                                                          | (584    | )      |                                                         |   | (1,015 | ) |   |   | (3,576 | ) |   |   | (2,793 | ) |
| Other                income (expense), net                   |   |                                                          | 279     |   |                                                         |   | 14 |   |   |   | 1,773 |   |   |   | (10 | ) |
|                                                         |   |                                                          |    |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                before income taxes                    |   |                                                          | 51,280  |   |                                                         |   | 54,011 |   |   |   | 110,224 |   |   |   | 155,070 |   |
| Provision                for income taxes                    |   |                                                          | (16,654 | )      |                                                         |   | (19,082 | ) |   |   | (37,477 | ) |   |   | (53,936 | ) |
| Net                income                                    |   | $                                                             | 34,626  |   |                                                         | $      | 34,929 |   |   | $ | 72,747 |   |   | $ | 101,134 |   |
|                                                         |   |                                                          |    |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per common share                   |   | $                                                             | 0.62    |   |                                                         | $      | 0.62 |   |   | $ | 1.30 |   |   | $ | 1.78 |   |
|                                                         |   |                                                          |    |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per common share assuming dilution |   | $                                                             | 0.59    |   |                                                         | $      | 0.56 |   |   | $ | 1.24 |   |   | $ | 1.61 |   |

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Table          of Contents

**Sierra      Health Services, Inc. And Subsidiaries**

**Condensed      Consolidated Statements Of Stockholders'      Equity**

*(In      thousands)*

*(Unaudited)*

|                                                                           |                                                                                                                 | Common                Stock |   | In                Treasury |   | AdditionalPaid-in |      | AccumulatedOtherComprehensive |    | Retained |    | TotalStock-holders' |
|--------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|-----------------------------|--------|----------------------------|--------|-------------------|-----------|-------------------------------|---------|----------|---------|---------------------|
|                                                                           |                                                                                                                 |                        |   |                       |   |              |
|                                                                           |                                                                                                                 |                        |   |                       |   |              |
|                                                                           |                                                                                                                 | Shares                      |   | Amount                     |   | Shares            |      | Amount                        |    | Capital  |    | Loss                |   | Earnings |   | Equity |
| Balance,                January 1, 2006                                        | 69,136                                                                                                               | $                           | 346    |                       | 11,006 | $                 | (377,190) | $                             | 400,287 | $        | (1,750) | $                   | 262,559 | $ | 284,252 |
| Common                stock issued in connection with stock plans              | 624                                                                                                                  |                        | 3      |                       | (562)  |              | 19,095    |                          | 8,534   |     | ¾  |                | (13,569) |   | 14,063 |
| Share-based                compensation expense                                | ¾                                                                                                               |                        | ¾ |                       | (1)    |              | 23        |                          | 5,782   |     | ¾  |                | 5 |   | 5,810 |
| Common                stock issued in connection with conversion of debentures | 929                                                                                                                  |                        | 5      |                       | ¾ |              | ¾    |                          | 8,495   |     | ¾  |                | ¾ |   | 8,500 |
| Excess                tax benefits from share-based payment arrangements       | ¾                                                                                                               |                        | ¾ |                       | ¾ |              | ¾    |                          | 11,445  |     | ¾  |                | ¾ |   | 11,445 |
| Repurchase                of common stock shares                               | ¾                                                                                                               |                        | ¾ |                       | 3,136  |              | (127,780) |                          | ¾  |     | ¾  |                | ¾ |   | (127,780) |
| Comprehensive                income:                                           |                                                                                                                 |                        |   |                       |   |              |      |                          |    |     |    |                |   |   |   |
|                                                                           | Net                income                                                                                            | ¾                      |   | ¾                     |   | ¾            |      | ¾                        |    | ¾   |    | ¾              |   | 101,134 |   | 101,134 |
|                                                                           | Other                comprehensive income:                                                                           |                        |   |                       |   |              |      |                          |    |     |    |                |   |   |   |   |
|                                                                           | Net                unrealized holding loss onavailable-for-sale                investments ($746 pretax)   | ¾                      |   | ¾                     |   | ¾            |      | ¾                        |    | ¾   |    | (485)               |   | ¾ |   | (485) |
| Total                comprehensive income                                      | ¾                                                                                                               |                        | ¾ |                       | ¾ |              | ¾    |                          | ¾  |     | (485)   |                | 101,134 |   | 100,649 |
| Balance,                September 30, 2006                                     | 70,689                                                                                                               | $                           | 354    |                       | 13,579 | $                 | (485,852) | $                             | 434,543 | $        | (2,235) | $                   | 350,129 | $ | 296,939 |
|                                                                           |                                                                                                                 |                        |   |                       |   |              |      |                          |    |     |    |                |   |   |   |
|                                                                           |                                                                                                                 |                        |   |                       |   |              |      |                          |    |     |    |                |   |   |   |
|                                                                           |                                                                                                                 |                        |   |                       |   |              |      |                          |    |     |    |                |   |   |   |
| Balance,                January 1, 2007                                        | 70,835                                                                                                               | $                           | 354    |                       | 17,011 | $                 | (600,539) | $                             | 436,643 | $        | (8,635) | $                   | 388,895 | $ | 216,718 |
| Common                stock activity in connection with stock plans            | 204                                                                                                                  |                        | 1      |                       | (194)  |              | 5,444     |                          | 2,833   |     | ¾  |                | (4,158) |   | 4,120 |
| Share-based                compensation expense                                | ¾                                                                                                               |                        | ¾ |                       | ¾ |              | 1,200     |                          | 2,493   |     | ¾  |                | 198 |   | 3,891 |
| Common                stock issued in connection with conversion of debentures | 2,543                                                                                                                |                        | 13     |                       | ¾ |              | ¾    |                          | 23,243  |     | ¾  |                | ¾ |   | 23,256 |
| Excess                tax benefits from share-based payment arrangements       | ¾                                                                                                               |                        | ¾ |                       | ¾ |              | ¾    |                          | 4,433   |     | ¾  |                | ¾ |   | 4,433 |
| Repurchase                of common stock shares                               | ¾                                                                                                               |                        | ¾ |                       | 585    |              | (21,081)  |                          | ¾  |     | ¾  |                | ¾ |   | (21,081) |
| Cumulative                effect from adoption ofFIN                48         | ¾                                                                                                               |                        | ¾ |                       | ¾ |              | ¾    |                          | ¾  |     | ¾  |                | (4,267) |   | (4,267) |
| Comprehensive                income:                                           |                                                                                                                 |                        |   |                       |   |              |      |                          |    |     |    |                |   |   |   |
|                                                                           | Net                income                                                                                            | ¾                      |   | ¾                     |   | ¾            |      | ¾                        |    | ¾   |    | ¾              |   | 72,747 |   | 72,747 |
|                                                                           | Other                comprehensive income:                                                                           |                        |   |                       |   |              |      |                          |    |     |    |                |   |   |   |   |
|                                                                           | Net                unrealized holding gain on available-for-sale investments                ($823  pretax) | ¾                      |   | ¾                     |   | ¾            |      | ¾                        |    | ¾   |    | 535                 |   | ¾ |   | 535 |
|                                                                           | Unfunded                portion of defined benefit pension plan ($1,064 pretax)                                      | ¾                      |   | ¾                     |   | ¾            |      | ¾                        |    | ¾   |    | 692                 |   | ¾ |   | 692 |
| Total                comprehensive income                                      | ¾                                                                                                               |                        | ¾ |                       | ¾ |              | ¾    |                          | ¾  |     | 1,227   |                | 72,747 |   | 73,974 |
| Balance,                September 30, 2007                                     | 73,582                                                                                                               | $                           | 368    |                       | 17,402 | $                 | (614,976) | $                             | 469,645 | $        | (7,408) | $                   | 453,415 | $ | 301,044 |

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Table          of Contents

**Sierra      Health Services, Inc. And Subsidiaries**

**Condensed      Consolidated Statements Of Cash      Flows**

*(In      thousands)*

*(Unaudited)*

|                                                                                                   |   | Nine                Months Ended September 30, |    |
|--------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                   |   | 2007                                           |    |   | 2006 |   |
| Cash                flows from operating activities:                                                   |   |                                           |    |   |   |   |
| Net                income                                                                              |   | $                                              | 72,747  |   |   | $ | 101,134 |   |
| Adjustments                to reconcile net income to net cash                                         |   |                                           |    |   |   |   |   |   |
|     provided                by operating activities:                               |   |                                           |    |   |   |   |   |   |
| Depreciation                                                                                           |   |                                           | 11,615  |   |   |   | 12,327 |   |
| Share-based                compensation expense                                                        |   |                                           | 3,891   |   |   |   | 5,810 |   |
| Excess                tax benefits from share-based payment arrangements                               |   |                                           | (4,433  | ) |   |   | (11,445 | ) |
| Provision                for doubtful accounts                                                         |   |                                           | 5,222   |   |   |   | 1,796 |   |
| Other                adjustments                                                                       |   |                                           | (1,083  | ) |   |   | 213 |   |
| Change                in operating assets and liabilities:                                             |   |                                           |    |   |   |   |   |   |
| Deferred                tax asset                                                                      |   |                                           | (14,105 | ) |   |   | (2,986 | ) |
| Other                current assets                                                                    |   |                                           | (26,810 | ) |   |   | (53,303 | ) |
| Other                assets                                                                            |   |                                           | (3,172  | ) |   |   | (4,270 | ) |
| Accrued                payroll and taxes                                                               |   |                                           | 3,426   |   |   |   | 6,747 |   |
| Medical                claims payable                                                                  |   |                                           | (31,773 | ) |   |   | 21,396 |   |
| Other                current liabilities                                                               |   |                                           | (1,980  | ) |   |   | 14,121 |   |
| Unearned                premium revenue                                                                |   |                                           | 132     |   |   |   | 3,499 |   |
| Premium                deficiency reserve                                                              |   |                                           | 21,005  |   |   |   | ¾ |   |
| Other                liabilities                                                                       |   |                                           | 16,479  |   |   |   | (1,136 | ) |
| Net                cash provided by operating activities                                               |   |                                           | 51,161  |   |   |   | 93,903 |   |
|                                                                                                   |   |                                           |    |   |   |   |   |   |
| Cash                flows from investing activities:                                                   |   |                                           |    |   |   |   |   |   |
| Capital                expenditures, net of dispositions                                               |   |                                           | (2,967  | ) |   |   | (13,183 | ) |
| Purchase                of investments, net of proceeds                                                |   |                                           | 34,832  |   |   |   | 11,500 |   |
| Net                cash provided by (used for) investing activities                                    |   |                                           | 31,865  |   |   |   | (1,683 | ) |
|                                                                                                   |   |                                           |    |   |   |   |   |   |
| Cash                flows from financing activities:                                                   |   |                                           |    |   |   |   |   |   |
| Payments                on debt and capital leases                                                     |   |                                           | (78,494 | ) |   |   | (82 | ) |
| Purchase                of treasury stock                                                              |   |                                           | (21,081 | ) |   |   | (127,780 | ) |
| Excess                tax benefits from share-based payment arrangements                               |   |                                           | 4,433   |   |   |   | 11,445 |   |
| Proceeds                from exercise of stock in connection with stock plans                          |   |                                           | 6,358   |   |   |   | 14,063 |   |
| Net                cash used for financing activities                                                  |   |                                           | (88,784 | ) |   |   | (102,354 | ) |
|                                                                                                   |   |                                           |    |   |   |   |   |   |
| Net                decrease in cash and cash equivalents                                               |   |                                           | (5,758  | ) |   |   | (10,134 | ) |
| Cash                and cash equivalents at beginning of period                                        |   |                                           | 58,918  |   |   |   | 88,059 |   |
| Cash                and cash equivalents at end of period                                              |   | $                                              | 53,160  |   |   | $ | 77,925 |   |
|                                                                                                   |   |                                           |    |   |   |   |   |   |
| Supplemental                condensed consolidated statement of cash flows                information: |   |                                           |    |   |   |   |   |   |
| Cash                paid during the period for interest                                                |   | $                                              | 3,828   |   |   | $ | 2,672 |   |
| Net                cash paid during the period for income taxes                                        |   |                                           | 57,615  |   |   |   | 37,398 |   |
| Non-cash                investing and financing activities:                                            |   |                                           |    |   |   |   |   |   |
| Senior                convertible debentures converted into Sierra common stock                        |   |                                           | 23,256  |   |   |   | 8,500 |   |
| Asset                received in consideration for payment of a loan                                   |   |                                           | 6,815   |   |   |   | ¾ |   |
| Additions                to capital leases                                                             |   |                                           | 212     |   |   |   | ¾ |   |
| Cashless                exercise of restricted stock units                                             |   |                                           | 2,237   |   |   |   | ¾ |   |
| Investments                purchased but not settled (received but not yet purchased)                  |   |                                           | 9,222   |   |   |   | (539 | ) |

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Table          of Contents

**Sierra          Health Services, Inc.**

**Notes            to Condensed Consolidated Financial            Statements**

*(Unaudited)*

**1.           Basis      of Presentation**

**2.           Pending      Business Combination**

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**3.           Medicare      Part D Prescription Drug Program ("PDP")**

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Table          of Contents

**4.           Premium      Deficiency Reserves**

**5.           Investments**

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Table          of Contents

**6.           Long-Term      Debt**

*Sierra      Debentures*

*Revolving      Credit Facility - *

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Table          of Contents

**7.           Employee      and Director Benefit Plans**

*Share-based      Compensation *

|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Three                Months Ended September 30, |   |   | Nine                Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|--------|------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2007                                            |   |   | 2006                                           |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | *(In                thousands)*                 |   |
| Medical                expenses                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                                               | 224    |   |                                           | $      | 250 |   |   | $ | 801 |   |   | $ | 671 |   |
| General                and administrative                expenses                                                                 |   |                                            | 673    |   |                                           |   | 2,518 |   |   |   | 3,090 |   |   |   | 5,139 |   |
| Share-based                compensation expense before income taxes                                                                                                                                                                                                                                                                                                                                                                                               |   |                                            | 897    |   |                                           |   | 2,768 |   |   |   | 3,891 |   |   |   | 5,810 |   |
| Income                tax benefit                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                            | (314   | )      |                                           |   | (969 | ) |   |   | (1,362 | ) |   |   | (2,034 | ) |
| Net                share-based compensation expense                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                                               | 583    |   |                                           | $      | 1,799 |   |   | $ | 2,529 |   |   | $ | 3,776 |   |

*Employee      Stock Purchase Plan and Stock Options*

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Table          of Contents

|                                             |   |                            |   |   |                          |   |   | Weighted                        |   |   |                            |   |
|--------------------------------------------------|--------|---------------------------------|--------|--------|-------------------------------|--------|--------|---------------------------------|--------|--------|---------------------------------|--------|
|                                             |   | Number                          |   |   | Weighted                      |   |   | Average                         |   |   | Aggregate                       |   |
|                                             |   | Of                              |   |   | Average                       |   |   | Contractual                Life |   |   | Intrinsic                       |   |
|                                             |   | Shares                          |   |   | Exercise                Price |   |   | Remaining                       |   |   | Value                           |   |
|                                             |   | *(In                thousands)* |   |   | *(per                share)*  |   |   | *(In                years)*     |   |   | *(In                thousands)* |   |
| Outstanding,                January 1, 2007      |   |                            | 1,775  |   |                          | $      | 12.94  |                            |   |   |                            |   |   |   |
| Granted                                          |   |                            | ¾ |   |                          |   | ¾ |                            |   |   |                            |   |   |   |
| Exercised                                        |   |                            | (322   | )      |                          |   | 9.79   |                            |   |   |                            |   |   |   |
| Cancelled                                        |   |                            | (26    | )      |                          |   | 17.94  |                            |   |   |                            |   |   |   |
| Outstanding,                September 30, 2007   |   |                            | 1,427  |   |                          | $      | 13.56  |                            |   |   | 4.83                            |   |   | $ | 40,845 |   |
|                                             |   |                            |   |   |                          |   |   |                            |   |   |                            |   |   |   |   |   |
| Exercisable                at September 30, 2007 |   |                            | 891    |   |                          | $      | 10.52  |                            |   |   | 4.72                            |   |   | $ | 28,211 |   |

|                                                    |   | Number                          |   |   | Weighted-Average             |   |
|---------------------------------------------------------|--------|---------------------------------|--------|--------|------------------------------|--------|
|                                                    |   | Of                              |   |   | Grant                Date    |   |
|                                                    |   | Shares                          |   |   | Fair                Value    |   |
|                                                    |   | *(In                thousands)* |   |   | *(per                share)* |   |
| Nonvested                shares, January 1, 2007 (1)    |   |                            | 803    |   |                         | $      | 7.34 |   |
| Granted                                                 |   |                            | ¾ |   |                         |   | ¾ |   |
| Vested                                                  |   |                            | (405   | )      |                         |   | 6.42 |   |
| Canceled                                                |   |                            | (12    | )      |                         |   | 6.17 |   |
| Nonvested                shares, September 30, 2007 (1) |   |                            | 386    |   |                         | $      | 8.35 |   |

|   | (1) | Excludes                164,000 and 150,000 shares at January 1, 2007 and September 30, 2007,                respectively, which vested in 2005, but are not exercisable until                2008. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

*Restricted      Stock Units*

|                                                 |   | Number                                      |   |   | Aggregate |
|------------------------------------------------------|--------|---------------------------------------------|--------|--------|-----------|
|                                                 |   | Of                                          |   |   | Intrinsic |
|                                                 |   | Shares                                      |   |   | Value     |
|                                                 |   |   *(In                thousands)* |
| Outstanding,                January 1, 2007(1)(2)    |   |                                        | 104    |   |      |   |
| Granted                                              |   |                                        | 10     |   |      |   |
| Vested                                               |   |                                        | (23    | )      |      |   |
| Canceled                                             |   |                                        | (1     | )      |      |   |
| Outstanding,                September 30, 2007(1)(3) |   |                                        | 90     |   |  $   | 3,797 |

| (1) | The                Units have no exercise price. |
|-----|--------------------------------------------------|

| (2) | Does                not include 540,000 Units that have vested but have not                settled.  These Units are included in outstanding                shares. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Does                not include 296,000 Units that have vested but have not settled.                These                Units are included in outstanding                shares. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

*Supplemental      Executive Retirement Plan ("SERP")*

|                                                      |   | Three                  Months Ended September 30, |   |   | Nine                  Months Ended September 30, |   |
|-----------------------------------------------------------|--------|---------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                      |   | 2007                                              |   |   | 2006                                             |   |   | 2007 |   |   | 2006 |   |
|                                                      |   | *(In                  thousands)*                 |   |
| Components                  of net periodic benefit cost: |   |                                              |   |   |                                             |   |   |   |   |   |   |   |
| Service                  cost                             |   | $                                                 | 139    |   |                                             | $      | 126 |   |   | $ | 417 |   |   | $ | 378 |   |
| Interest                  cost                            |   |                                              | 426    |   |                                             |   | 399 |   |   |   | 1,278 |   |   |   | 1,197 |   |
| Amortization                  of prior service credits    |   |                                              | 303    |   |                                             |   | 302 |   |   |   | 908 |   |   |   | 908 |   |
| Recognized                  actuarial loss                |   |                                              | 52     |   |                                             |   | 32 |   |   |   | 157 |   |   |   | 96 |   |
| Net                  periodic benefit cost                |   | $                                                 | 920    |   |                                             | $      | 859 |   |   | $ | 2,760 |   |   | $ | 2,579 |   |

**8.           Share      Repurchases**

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Table          of Contents

**9.           Earnings      Per Share**

|                                                                         |   |                Three                Months Ended September 30,    |   |   |                Nine Months                Ended September 30,    |   |
|------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------|--------|
|                                                                         |   | 2007                                                                                  |   |   | 2006                                                                                           |   |   | 2007 |   |   | 2006 |   |
|                                                                         |   | *(In                thousands, except per share data)*                                |   |
| Basic                income per share:                                       |   |                                                                                  |   |   |                                                                                           |   |   |   |   |   |   |   |
| Net                income                                                    |   | $                                                                                     | 34,626 |   |                                                                                           | $      | 34,929 |   |   | $ | 72,747 |   |   | $ | 101,134 |   |
|                                                                         |   |                                                                                  |   |   |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average common shares outstanding                    |   |                                                                                  | 56,162 |   |                                                                                           |   | 56,332 |   |   |   | 55,865 |   |   |   | 56,706 |   |
|                                                                         |   |                                                                                  |   |   |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per common share                                   |   | $                                                                                     | 0.62   |   |                                                                                           | $      | 0.62 |   |   | $ | 1.30 |   |   | $ | 1.78 |   |
|                                                                         |   |                                                                                  |   |   |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                income per share:                                     |   |                                                                                  |   |   |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                                    |   | $                                                                                     | 34,626 |   |                                                                                           | $      | 34,929 |   |   | $ | 72,747 |   |   | $ | 101,134 |   |
| Interest                expense on Sierra debentures, net of tax             |   |                                                                                  | 74     |   |                                                                                           |   | 185 |   |   |   | 242 |   |   |   | 562 |   |
| Income                for purposes of computing diluted net income per share |   | $                                                                                     | 34,700 |   |                                                                                           | $      | 35,114 |   |   | $ | 72,989 |   |   | $ | 101,696 |   |
|                                                                         |   |                                                                                  |   |   |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average common shares outstanding                    |   |                                                                                  | 56,162 |   |                                                                                           |   | 56,332 |   |   |   | 55,865 |   |   |   | 56,706 |   |
| Dilutive                options and restricted shares outstanding            |   |                                                                                  | 665    |   |                                                                                           |   | 807 |   |   |   | 701 |   |   |   | 943 |   |
| Dilutive                impact of conversion of Sierra debentures            |   |                                                                                  | 2,214  |   |                                                                                           |   | 5,517 |   |   |   | 2,414 |   |   |   | 5,598 |   |
| Weighted                average common shares outstanding assuming dilution  |   |                                                                                  | 59,041 |   |                                                                                           |   | 62,656 |   |   |   | 58,980 |   |   |   | 63,247 |   |
|                                                                         |   |                                                                                  |   |   |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per common share assuming dilution                 |   | $                                                                                     | 0.59   |   |                                                                                           | $      | 0.56 |   |   | $ | 1.24 |   |   | $ | 1.61 |   |

**10.           Comprehensive      Income**

|                                                                                                  |   | Three                Months Ended September 30, |   |   | Nine                Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|--------|------------------------------------------------|--------|
|                                                                                                  |   | 2007                                            |   |   | 2006                                           |   |   | 2007 |   |   | 2006 |   |
|                                                                                                  |   | *(In                thousands)*                 |   |
| Net                income                                                                             |   | $                                               | 34,626 |   |                                           | $      | 34,929 |   |   | $ | 72,747 |   |   | $ | 101,134 |   |
| Change                in net unrealized holding loss on available-for-sale                investments |   |                                            | 1,892  |   |                                           |   | 1,640 |   |   |   | 535 |   |   |   | (485 | ) |
| Change                in unfunded portion of defined benefit pension plan                             |   |                                            | 230    |   |                                           |   | ¾ |   |   |   | 692 |   |   |   | ¾ |   |
| Comprehensive                income                                                                   |   | $                                               | 36,748 |   |                                           | $      | 36,569 |   |   | $ | 73,974 |   |   | $ | 100,649 |   |

**11.****          **Income      Taxes****

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Table          of Contents

**12.**
**          **Recently      Issued Accounting Standards****

**13.**
**          ****Segment          Reporting******

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Table          of Contents

**14.**
**          **Commitments      and      Contingencies****

*Litigation      and Legal Matters.*

*Shane*

*Shane*

*Shane*

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Table          of Contents

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Table          of Contents

**Management's            Discussion And Analysis Of            Financial**   

**Condition            And Results Of            Operations**

**Item      2.**

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Table          of Contents

**Summary      of Consolidated Results – Three Months Ended September 30, 2007 and      2006**

|                                                                                                                                                                                                                            |                     | Three                Months EndedSeptember                30,                                |    |   | Percent                Of RevenueThree                Months EndedSeptember                30, |   |    | Increase                (Decrease) |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|----------------------------------------------------------------------------------------------|---------|--------|------------------------------------------------------------------------------------------------|--------|---------|------------------------------------|
|                                                                                                                                                                                                                       |                2007 |                                                                                         |    | 2006   |                                                                                           |   | 2007    |                               |   | 2006 |   |   |   2007                vs. 2006 |   |
|                                                                                                                                                                                                                            |                     | *(In                thousands, except percentages, per share and                membership)* |    |
| Operating                revenues:                                                                                                                                                                                              |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |
| Medical                premiums                                                                                                                                                                                                 |                     | $                                                                                            | 445,680 |   |                                                                                           | $      | 405,618 |                               |   |   | 95.0 | % |   |   | 94.3 | % |   | $ | 40,062 |   |   |   | 9.9 | % |
| Professional                fees                                                                                                                                                                                                |                     |                                                                                         | 13,483  |   |                                                                                           |   | 13,300  |                               |   |   | 2.9 |   |   |   | 3.1 |   |   |   | 183 |   |   |   | 1.4 |   |
| Investment                and other revenues                                                                                                                                                                                    |                     |                                                                                         | 9,761   |   |                                                                                           |   | 11,079  |                               |   |   | 2.1 |   |   |   | 2.6 |   |   |   | (1,318 | ) |   |   | (11.9 | ) |
| Total                                                                                                                                                                                                                           |                     |                                                                                         | 468,924 |   |                                                                                           |   | 429,997 |                               |   |   | 100.0 |   |   |   | 100.0 |   |   |   | 38,927 |   |   |   | 9.1 |   |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                expenses:                                                                                                                                                                                              |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Medical                expenses                                                                                                                                                                                                 |                     |                                                                                         | 375,075 |   |                                                                                           |   | 323,694 |                               |   |   | 80.0 |   |   |   | 75.3 |   |   |   | 51,381 |   |   |   | 15.9 |   |
|    Medical                care ratio                                                                                                                                                                             |                     |                                                                                         | 81.7    | %      |                                                                                           |   | 77.3    | %                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4.4 |   |
| General                and administrative expenses                                                                                                                                                                              |                     |                                                                                         | 42,264  |   |                                                                                           |   | 51,291  |                               |   |   | 9.0 |   |   |   | 11.9 |   |   |   | (9,027 | ) |   |   | (17.6 | ) |
| Total                                                                                                                                                                                                                           |                     |                                                                                         | 417,339 |   |                                                                                           |   | 374,985 |                               |   |   | 89.0 |   |   |   | 87.2 |   |   |   | 42,354 |   |   |   | 11.3 |   |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income                                 |                     |                                                                                         | 51,585  |   |                                                                                           |   | 55,012  |                               |   |   | 11.0 |   |   |   | 12.8 |   |   |   | (3,427 | ) |   |   | (6.2 | ) |
| Interest                expense                                                                                                                                                                                                 |                     |                                                                                         | (584    | )      |                                                                                           |   | (1,015  | )                                  |   |   | (0.1 | ) |   |   | (0.2 | ) |   |   | 431 |   |   |   | (42.5 | ) |
| Other                income (expense), net                                                                                                                                                                                      |                     |                                                                                         | 279     |   |                                                                                           |   | 14      |                               |   |   | ¾ |   |   |   | ¾ |   |   |   | 265 |   |   |   | 1892.9 |   |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                before income taxes                                                                                                                                                                                       |                     |                                                                                         | 51,280  |   |                                                                                           |   | 54,011  |                               |   |   | 10.9 |   |   |   | 12.6 |   |   |   | (2,731 | ) |   |   | (5.1 | ) |
| Provision                for income taxes                                                                                                                                                                                       |                     |                                                                                         | (16,654 | )      |                                                                                           |   | (19,082 | )                                  |   |   | (3.5 | ) |   |   | (4.5 | ) |   |   | 2,428 |   |   |   | (12.7 | ) |
| Tax                rate                                                                                                                                                                                                         |                     |                                                                                         | 32.5    | %      |                                                                                           |   | 35.3    | %                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2.8 | ) |
| Net                income                                                                                                                                                                                                       |                     | $                                                                                            | 34,626  |   |                                                                                           | $      | 34,929  |                               |   |   | 7.4 | % |   |   | 8.1 | % |   | $ | (303 | ) |   |   | (0.9 | )% |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per common share assuming dilution                                                                                                                                                                    |                     | $                                                                                            | 0.59    |   |                                                                                           | $      | 0.56    |                               |   |   |   |   |   |   |   |   |   | $ | 0.03 |   |   |   | 5.4 | % |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Membership                                                                                                                                                                                                                      |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| HMO:                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                                                                                                      |                     |                                                                                         | 282,400 |   |                                                                                           |   | 273,600 |                               |   |   |   |   |   |   |   |   |   |   | 8,800 |   |   |   | 3.2 | % |
| Medicare                                                                                                                                                                                                                        |                     |                                                                                         | 56,600  |   |                                                                                           |   | 57,000  |                               |   |   |   |   |   |   |   |   |   |   | (400 | ) |   |   | (0.7 | ) |
| Medicaid                                                                                                                                                                                                                        |                     |                                                                                         | 57,500  |   |                                                                                           |   | 57,000  |                               |   |   |   |   |   |   |   |   |   |   | 500 |   |   |   | 0.9 |   |
| Subtotal                HMO                                                                                                                                                                                                     |                     |                                                                                         | 396,500 |   |                                                                                           |   | 387,600 |                               |   |   |   |   |   |   |   |   |   |   | 8,900 |   |   |   | 2.3 |   |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                PPO and HSA                                                                                                                                                                                           |                     |                                                                                         | 37,900  |   |                                                                                           |   | 31,300  |                               |   |   |   |   |   |   |   |   |   |   | 6,600 |   |   |   | 21.1 |   |
| Medicare                PPO and PFFS                                                                                                                                                                                            |                     |                                                                                         | 3,500   |   |                                                                                           |   | 1,700   |                               |   |   |   |   |   |   |   |   |   |   | 1,800 |   |   |   | 105.9 |   |
| Medicare                Part D-Basic                                                                                                                                                                                            |                     |                                                                                         | 152,400 |   |                                                                                           |   | 183,300 |                               |   |   |   |   |   |   |   |   |   |   | (30,900 | ) |   |   | (16.9 | ) |
| Medicare                Part D-Enhanced                                                                                                                                                                                         |                     |                                                                                         | 45,500  |   |                                                                                           |   | ¾  |                               |   |   |   |   |   |   |   |   |   |   | 45,500 |   |   |   | 100.0 |   |
| Medicare                supplement                                                                                                                                                                                              |                     |                                                                                         | 12,500  |   |                                                                                           |   | 13,700  |                               |   |   |   |   |   |   |   |   |   |   | (1,200 | ) |   |   | (8.8 | ) |
| Administrative                services                                                                                                                                                                                          |                     |                                                                                         | 228,500 |   |                                                                                           |   | 221,100 |                               |   |   |   |   |   |   |   |   |   |   | 7,400 |   |   |   | 3.3 |   |
| Total                membership                                                                                                                                                                                                 |                     |                                                                                         | 876,800 |   |                                                                                           |   | 838,700 |                               |   |   |   |   |   |   |   |   |   |   | 38,100 |   |   |   | 4.5 | % |
|                                                                                                                                                                                                                            |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Member                months                                                                                                                                                                                                    |                     |                                                                                         |    |   |                                                                                           |   |    |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                                                                                                      |                     |                                                                                         | 950,700 |   |                                                                                           |   | 903,600 |                               |   |   |   |   |   |   |   |   |   |   | 47,100 |   |   |   | 5.2 | % |
| Medicare                HMO                                                                                                                                                                                                     |                     |                                                                                         | 170,000 |   |                                                                                           |   | 171,000 |                               |   |   |   |   |   |   |   |   |   |   | (1,000 | ) |   |   | (0.6 | ) |
| Medicaid                                                                                                                                                                                                                        |                     |                                                                                         | 171,800 |   |                                                                                           |   | 171,600 |                               |   |   |   |   |   |   |   |   |   |   | 200 |   |   |   | 0.1 |   |

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Table          of Contents

**Summary      of Consolidated Results – Nine Months Ended September 30, 2007 and      2006**

|                                                                                                                                                                                                                            | Nine                Months Ended September                30,    |   |      | Percent                Of Revenue Nine                Months Ended  September                30,   |   |   | Increase                (Decrease)  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                                                                                                                                                                                            |                2007                                                        |   |      | 2006                                                                                                                             |   |   | 2007                                     |   |   | 2006 |   |   |   2007                vs. 2006 |   |
| *(In                thousands, except percentages, per share and                membership)*                                                                                                                                    |                                                                            |
| Operating                revenues:                                                                                                                                                                                              |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |
| Medical                premiums                                                                                                                                                                                                 |                                                                            | $      | 1,371,000 |                                                                                                                             |   | $      | 1,220,726                                |   |   |   | 94.8 | % |   |   | 94.4 | % |   | $ | 150,274 |   |   |   | 12.3 | % |
| Professional                fees                                                                                                                                                                                                |                                                                            |   | 42,519    |                                                                                                                             |   |   | 39,097                                   |   |   |   | 3.0 |   |   |   | 3.0 |   |   |   | 3,422 |   |   |   | 8.8 |   |
| Investment                and other revenues                                                                                                                                                                                    |                                                                            |   | 32,089    |                                                                                                                             |   |   | 32,860                                   |   |   |   | 2.2 |   |   |   | 2.6 |   |   |   | (771 | ) |   |   | (2.3 | ) |
| Total                                                                                                                                                                                                                           |                                                                            |   | 1,445,608 |                                                                                                                             |   |   | 1,292,683                                |   |   |   | 100.0 |   |   |   | 100.0 |   |   |   | 152,925 |   |   |   | 11.8 |   |
|                                                                                                                                                                                                                            |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                expenses:                                                                                                                                                                                              |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Medical                expenses                                                                                                                                                                                                 |                                                                            |   | 1,172,597 |                                                                                                                             |   |   | 981,758                                  |   |   |   | 81.1 |   |   |   | 76.0 |   |   |   | 190,839 |   |   |   | 19.4 |   |
|    Medical                care ratio                                                                                                                                                                             |                                                                            |   | 83.0      | %                                                                                                                                |   |   | 77.9                                     | %      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 5.1 |   |
| General                and administrative expenses                                                                                                                                                                              |                                                                            |   | 160,984   |                                                                                                                             |   |   | 153,052                                  |   |   |   | 11.2 |   |   |   | 11.8 |   |   |   | 7,932 |   |   |   | 5.2 |   |
| Total                                                                                                                                                                                                                           |                                                                            |   | 1,333,581 |                                                                                                                             |   |   | 1,134,810                                |   |   |   | 92.3 |   |   |   | 87.8 |   |   |   | 198,771 |   |   |   | 17.5 |   |
|                                                                                                                                                                                                                            |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                            |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income                                 |                                                                            |   | 112,027   |                                                                                                                             |   |   | 157,873                                  |   |   |   | 7.7 |   |   |   | 12.2 |   |   |   | (45,846 | ) |   |   | (29.0 | ) |
| Interest                expense                                                                                                                                                                                                 |                                                                            |   | (3,576    | )                                                                                                                                |   |   | (2,793                                   | )      |   |   | (0.2 | ) |   |   | (0.2 | ) |   |   | (783 | ) |   |   | 28.0 |   |
| Other                income (expense), net                                                                                                                                                                                      |                                                                            |   | 1,773     |                                                                                                                             |   |   | (10                                      | )      |   |   | 0.1 |   |   |   | ¾ |   |   |   | 1,783 |   |   |   | (17,830.0 | ) |
|                                                                                                                                                                                                                            |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                before income taxes                                                                                                                                                                                       |                                                                            |   | 110,224   |                                                                                                                             |   |   | 155,070                                  |   |   |   | 7.6 |   |   |   | 12.0 |   |   |   | (44,846 | ) |   |   | (28.9 | ) |
| Provision                for income taxes                                                                                                                                                                                       |                                                                            |   | (37,477   | )                                                                                                                                |   |   | (53,936                                  | )      |   |   | (2.6 | ) |   |   | (4.2 | ) |   |   | 16,459 |   |   |   | (30.5 | ) |
| Tax                rate                                                                                                                                                                                                         |                                                                            |   | 34.0      | %                                                                                                                                |   |   | 34.8                                     | %      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (0.8 | ) |
| Net                income                                                                                                                                                                                                       |                                                                            | $      | 72,747    |                                                                                                                             |   | $      | 101,134                                  |   |   |   | 5.0 | % |   |   | 7.8 | % |   | $ | (28,387 | ) |   |   | (28.1 | )% |
|                                                                                                                                                                                                                            |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                            |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per common share assuming dilution                                                                                                                                                                    |                                                                            | $      | 1.24      |                                                                                                                             |   | $      | 1.61                                     |   |   |   |   |   |   |   |   |   |   | $ | (0.37 | ) |   |   | (23.0 | )% |
|                                                                                                                                                                                                                            |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Member                months                                                                                                                                                                                                    |                                                                            |   |      |                                                                                                                             |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                                                                                                      |                                                                            |   | 2,809,400 |                                                                                                                             |   |   | 2,644,000                                |   |   |   |   |   |   |   |   |   |   |   | 165,400 |   |   |   | 6.3 | % |
| Medicare                HMO                                                                                                                                                                                                     |                                                                            |   | 510,200   |                                                                                                                             |   |   | 509,700                                  |   |   |   |   |   |   |   |   |   |   |   | 500 |   |   |   | 0.1 |   |
| Medicaid                                                                                                                                                                                                                        |                                                                            |   | 527,300   |                                                                                                                             |   |   | 507,600                                  |   |   |   |   |   |   |   |   |   |   |   | 19,700 |   |   |   | 3.9 |   |

**Overview**

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Table          of Contents

**Pending      Business Combination**

**Executive      Summary**

| · | Total                operating revenues increased by 11.8%.  This improvement was                primarily driven by a 12.3% increase in medical premiums due to a                38.0%                increase in premiums for our stand alone Medicare Part D prescription                drug                (PDP) programs, an increase in our commercial membership and premium                rate                increases.  Also contributing to the improvement in operating                revenues was an 8.8% increase in professional fees due to an increase                in                visits to our clinical                subsidiaries. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | HMO                membership increased 2.3% as a result of new accounts and in-case                growth                on commercial membership and growth in Medicaid member                months.  This increase is net of the 11,000 commercial member                terminations effective January 1, 2007, from three large employer                groups                that had been anticipated. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Medical                expenses, as a percentage of medical premiums and professional fees,                or                medical care ratio, increased to 83.0% in 2007 from 77.9% in                2006.  The increase in our medical care ratio is primarily                related to the estimated full year 2007 pre-tax loss of $58.9 million                related to our new enhanced PDP product that was recorded during                the                period, which significantly increased medical expenses.  See                Medical Expenses below for |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | more                details. |
|--------|------------------------------|

| · | General                and administrative (G&A) expenses as a percentage of medical premiums                decreased to 11.7% in 2007 from 12.5% in 2006.  G&A expenses                increased 5.2% primarily due to costs associated with our pending                merger                with UnitedHealth Group, increases in premium taxes and brokers'                fees, and                G&A costs related to our new enhanced PDP                product. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We                had operating income of $112.0 million in 2007 compared to $157.9                million                in 2006.  This decrease is related to the $58.9 million                operating loss recorded during 2007 related to our new enhanced PDP                product.  See Medical Expenses below for more details. This                decrease was partially offset by an increase in operating income                primarily                driven by medical premium revenue growth from new members and premium                rate                increases. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Cash                flows from operating activities decreased to $51.2 million from $93.9                million during 2006.  This decrease is mostly due to the timing                of tax payments and a $19.3 million decrease in operating cash flows                from                our PDP plans during 2007 compared to 2006, which was primarily related                to                the timing of PDP payments during the year and operating losses related                to                our new enhanced PDP product.  See Medical Expenses below for                more details. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Results      Of Operations For The Three Months Ended September 30, 2007 Compared To The      Three Months Ended September 30, 2006**

***Medical      Premiums.***

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***Professional      Fees.***

***Investment      and Other Revenue.***
* *

***Medical      Expenses.***
* *

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***General      and Administrative Expenses.***
* *

***Interest      Expense.***

***Provision      for Income Taxes.***

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Table          of Contents

**Results      Of Operations For The Nine Months Ended September 30, 2007 Compared To The      Nine      Months Ended September 30, 2006**

***Medical      Premiums.***

***Professional      Fees.***

***Investment      and Other Revenue.***
* *

***Medical      Expenses.***
* *

***General      and Administrative Expenses.***
* *

***Interest      Expense.***

***Provision      for Income Taxes.***

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**Liquidity      And Capital Resources**

|                                                            |   | **Nine                Months Ended September 30,** |     |
|-----------------------------------------------------------------|--------|----------------------------------------------------|----------|
|                                                            |   | **2007**                                           |     |   | **2006** |   |
|                                                            |   | (In                thousands)                      |     |
| Sources                of cash:                                 |   |                                               |     |   |   |   |
| Cash                provided by operating activities            |   | $                                                  | 51,161   |   |   | $ | 93,903 |   |
| Purchase                of investments, net of proceeds         |   |                                               | 34,832   |   |   |   | 11,500 |   |
| Exercise                of stock in connection with stock plans |   |                                               | 6,358    |   |   |   | 14,063 |   |
| Other                                                           |   |                                               | 4,433    |   |   |   | 11,445 |   |
| Total                cash sources                               |   |                                               | 96,784   |   |   |   | 130,911 |   |
|                                                            |   |                                               |     |   |   |   |   |   |
| Uses                of cash:                                    |   |                                               |     |   |   |   |   |   |
| Purchase                of treasury stock                       |   |                                               | (21,081  | ) |   |   | (127,780 | ) |
| Payment                on debt and capital leases               |   |                                               | (78,494  | ) |   |   | (82 | ) |
| Other                                                           |   |                                               | (2,967   | ) |   |   | (13,183 | ) |
| Total                cash uses                                  |   |                                               | (102,542 | ) |   |   | (141,045 | ) |
| Net                decrease in cash                             |   | $                                                  | (5,758   | ) |   | $ | (10,134 | ) |

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**Sierra      Debentures**

**Revolving      Credit Facility**

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Table          of Contents

**Sierra      Share Repurchase Program**

**Statutory      Capital and Deposit Requirements**

**Obligations      and Commitments**

**Recently      Issued Accounting Standards**

*.*

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**Ratings**

|                                                            |   | A.M.                  Best Company, Inc. (1) |   | Fitch                  Ratings (2) |
|-----------------------------------------------------------------|--------|----------------------------------------------|--------|------------------------------------|
|                                                            |   | Rating                                       |   | Ranking                            |   | Rating |   | Ranking |   |
| Financial                  strength rating:                     |   |                                         |   |                               |   |   |   |   |   |
| HMO                  and health and life insurance subsidiaries |   | B++                  Good                    |   | 5th                  of 16         |   | A-                  Strong |   | 7th                  of 23 |   |
|                                                            |   |                                         |   |                               |   |   |   |   |   |
| Issuer                  credit ratings:                         |   |                                         |   |                               |   |   |   |   |   |
| HMO                  and health and life insurance subsidiaries |   | bbb+                  Adequate               |   | 8th                  of 22         |   | n/a |   | n/a |   |
|                                                            |   |                                         |   |                               |   |   |   |   |   |
|    Parent                  company               |   | bb+                  Speculative             |   | 11th                  of 22        |   | BBB                  Good |   | 9th                  of 23 |   |
|                                                            |   |                                         |   |                               |   |   |   |   |   |
| Senior                  convertible debentures                  |   | bb+                  Speculative             |   | 11th                  of 22        |   | BBB-                  Investment Grade |   | 10th                  of 23 |   |

|                                             |   |                               | Standard                    & Poor's Corp. (3) |
|--------------------------------------------------|--------|------------------------------------|----------------------------------------------------|
|                                             |   | Rating                             |                                               | Ranking |   |
|                                             |   |                               |                                               |    |   |
| Counterparty                    credit rating    |   | BB+                    Speculative |                                               | 11th                    of 22 |   |
|                                             |   |                               |                                               |   |   |
| Senior                    convertible debentures |   | BB+                    Speculative |                                               | 11th                    of 22 |   |

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**Inflation**

**Critical      Accounting Policies and Estimates**

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**Item      3. Quantitative and Qualitative Disclosures About Market      Risk**

**Item      4. Controls and Procedures**

*Evaluation      of Disclosure Controls and Procedures*

*Change      in Internal Control over Financial Reporting*

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**Part      II.  Other Information**

**Item      1. Legal Proceedings**

*Litigation      and Legal Matters.*

*Shane*

*Shane*

*Shane*

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**Item      1A. Risk Factors**

**There      can be no assurance that the pending merger with UnitedHealth Group will be      completed.**

**Whether      or not the proposed merger with UnitedHealth Group is completed, the      announcement and pendency of the proposed merger could cause disruptions in      our      businesses, which could have a material adverse effect on our operating results,      financial condition and cash flows.**

| • |   | current                and prospective employees may experience uncertainty about their                future                roles with the combined company, which might adversely affect our                ability                to retain key managers and other                employees; |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | the                merger agreement with UnitedHealth Group imposes certain restrictions                on                the operations of our business until completion of the merger;                and |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | current                or prospective customers may experience uncertainty about the consequences                of the merger to them resulting in possible loss of their                business. |
|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Our      actual experience for our Enhanced Plan offered in January 2007 has varied      materially from the actuarial assumptions used to develop the plan design for      our 2007 bid.  As a result, based on our current best estimate we have      a $22.1 million premium deficiency reserve at September 30, 2007 which was      based      on the most current available data.  If the assumptions used in our      estimate are incorrect, it could materially adversely affect our operating      results, financial position and cash flows.**

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**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds**

|   | (c) | Below,                is a summary of stock repurchases for the nine months ended September                30,                2007.  See Note 8, "Share Repurchases", of our Notes to                Condensed Consolidated Financial Statements for information regarding                our                stock repurchase plan. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Period                                                                                               |   | Total                NumberOf                SharesRepurchased                (1) |   |   | AveragePrice                PaidPer                Share |   |   | Total                NumberOf                Shares PurchasedAs                Part Of PubliclyAnnounced                PlanOr                Program |   |   | Approximate                DollarValue                Of SharesThat                May Yet BePurchased                UnderThe                Plan (2) |   |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                 |   | *(In                thousands, except per share data)*                            |   |   |                                                     |   |
| Beginning                approximate dollar value of shares that may yet be                purchased |   |                                                                              |   |   |                                                     |   |   |                                                                                                                                                  |   | $      |                  24,142                                                                                                                           |   |
| January                1, 2007 – January 31, 2007                                              |   |                                                                              | 500    |   |                                                     | $      | 35.80  |                                                                                                                                                  |   |   | 500                                                                                                                                                    |   |   |   | 56,251 |   |
| February                1, 2007 – February 28, 2007                                            |   |                                                                              | 85     |   |                                                     |   | 37.45  |                                                                                                                                                  |   |   | 85                                                                                                                                                     |   |   |   | 53,070 |   |
| March                1, 2007 – March 31, 2007                                                  |   |                                                                              | ¾ |   |                                                     |   | ¾ |                                                                                                                                                  |   |   | ¾                                                                                                                                                 |   |   |   | 53,070 |   |
| April                1, 2007 – April 30, 2007                                                  |   |                                                                              | ¾ |   |                                                     |   | ¾ |                                                                                                                                                  |   |   | ¾                                                                                                                                                 |   |   |   | 53,070 |   |
| May                1, 2007 – May 31, 2007                                                      |   |                                                                              | ¾ |   |                                                     |   | ¾ |                                                                                                                                                  |   |   | ¾                                                                                                                                                 |   |   |   | 53,070 |   |
| June                1, 2007 – June 30, 2007                                                    |   |                                                                              | ¾ |   |                                                     |   | ¾ |                                                                                                                                                  |   |   | ¾                                                                                                                                                 |   |   |   | 53,070 |   |
| July                1, 2007 – July 31, 2007                                                    |   |                                                                              | ¾ |   |                                                     |   | ¾ |                                                                                                                                                  |   |   | ¾                                                                                                                                                 |   |   |   | 53,070 |   |
| August                1, 2007 – August 31, 2007                                                |   |                                                                              | ¾ |   |                                                     |   | ¾ |                                                                                                                                                  |   |   | ¾                                                                                                                                                 |   |   |   | 53,070 |   |
| September                1, 2007 – September 30, 2007                                          |   |                                                                              | ¾ |   |                                                     |   | ¾ |                                                                                                                                                  |   |   | ¾                                                                                                                                                 |   |   |   | 53,070 |   |

|   | (1) | Repurchases                were made pursuant to a 10b5-1                plan. |
|--------|-----|--------------------------------------------------------------------------------|

|   | (2) | At                January 1, 2007, $24.1 million remained available for purchase under                previously approved plans. On January 25, 2007, our Board of Directors                authorized an additional $50.0 million in share                repurchases.  The repurchase program has no stated expiration                date; however we have halted our repurchase program pending the                UnitedHealth Group merger. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (d) | Below,                is a summary of 2¼% senior convertible debenture conversions for the nine                months ended September 30, 2007.  See Note 6, "Long-Term Debt",                of our Notes to Condensed Consolidated Financial Statements for                information regarding our senior convertible                debentures. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Period                                                      |   | Total                Dollar Value Of Debentures Converted |       |   | Average                PricePaid                PerDebenture |                                                                                                       |   | Total                Dollar ValueOf                DebenturesPurchasedAs                Part Of PubliclyAnnounced                PlanOr                Program |   |   | Approximate                DollarValue                Of DebenturesThat                May Yet BePurchased                UnderThe                Plan |   |
|-------------------------------------------------------------|--------|-----------------------------------------------------------|------------|--------|--------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| January                1, 2007 – January 31, 2007     |   | $                                                         | 21,720,000 |   |                                                         | 109.35                shares of common stock for each $1,000 principal amount of                debentures |   |                                                                                                                                                           | none   |   |                                                                                                                                                   | none   |   |
| February                1, 2007 – February 28, 2007   |   |                                                      | ¾     |   |                                                         |                                                                                                       | ¾ |                                                                                                                                                           |   |   | ¾                                                                                                                                                 |   |   |   | ¾ |   |
| March                1, 2007 – March 31, 2007         |   |                                                      | 1,536,000  |   |                                                         | 109.35                shares of common stock for each $1,000 principal amount of                debentures |   |                                                                                                                                                           | none   |   |                                                                                                                                                   | none   |   |
| April                1, 2007 – April 30, 2007         |   |                                                      | ¾     |   |                                                         |                                                                                                       | ¾ |                                                                                                                                                           |   |   | ¾                                                                                                                                                 |   |   |   | ¾ |   |
| May                1, 2007 – May 31, 2007             |   |                                                      | ¾     |   |                                                         |                                                                                                       | ¾ |                                                                                                                                                           |   |   | ¾                                                                                                                                                 |   |   |   | ¾ |   |
| June                1, 2007 – June 30, 2007           |   |                                                      | ¾     |   |                                                         |                                                                                                       | ¾ |                                                                                                                                                           |   |   | ¾                                                                                                                                                 |   |   |   | ¾ |   |
| July                1, 2007 – July 31, 2007           |   |                                                      | ¾     |   |                                                         |                                                                                                       | ¾ |                                                                                                                                                           |   |   | ¾                                                                                                                                                 |   |   |   | ¾ |   |
| August                1, 2007 – August 31, 2007       |   |                                                      | ¾     |   |                                                         |                                                                                                       | ¾ |                                                                                                                                                           |   |   | ¾                                                                                                                                                 |   |   |   | ¾ |   |
| September                1, 2007 – September 30, 2007 |   |                                                      | ¾     |   |                                                         |                                                                                                       | ¾ |                                                                                                                                                           |   |   | ¾                                                                                                                                                 |   |   |   | ¾ |   |

**Item      3.**                      **Defaults      Upon Senior Securities**

**Item      4.**                      **Submission      Of Matters To A Vote Of Security Holders**

**Item      5.**                      **Other      Information**

**Item      6.                      Exhibits**

| (31.1) | Rule                13a – 14(a) or 15d – 14(a) Certification of Chief                Executive Officer.                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (31.2) | Rule                13a – 14(a) or 15d – 14(a) Certification of Chief                Financial Officer.                                                                                               |
| (32.1) | Certification                pursuant to 18 U.S.C. Section 1350 as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                of                Principal Executive Officer. |
| (32.2) | Certification                pursuant to 18 U.S.C. Section 1350 as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                of                Principal Financial Officer. |

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**Signatures**

|   | SIERRA                HEALTH SERVICES, INC.RegistrantBy:                /s/ MARC R. BRIGGSMarc                R. BriggsSenior                Vice President of Finance,Chief                Financial Officer and Treasurer(Principal                Financial and Accounting Officer) |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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