<PAGE>   1
                                                                   Exhibit 10.13

                       CONSULTING AND SETTLEMENT AGREEMENT


                  CONSULTING AND SETTLEMENT AGREEMENT (this "Agreement"), dated
as of March 25, 1998 (the "Effective Date"), between FPA Medical Management,
Inc., a Delaware corporation (the "Company") and Seth Flam (the "Executive").

                  WHEREAS, the Company and the Executive have previously entered
into that certain Employment Agreement, dated as of October 1, 1996 (the
"Employment Agreement");

                  WHEREAS, it is mutually in the best interests of the Executive
and the Company to modify and settle certain provisions of the Employment
Agreement and to provide for its earlier termination;

                  WHEREAS, the Company desires to continue to benefit from the
experience and ability of the Executive in the capacity of a consultant to the
Company upon termination of his employment relationship with the Company and the
Executive is willing to commit himself to serve in the capacity of a consultant
to the Company; and

                  WHEREAS, the parties desire to enter into this Agreement
setting forth the terms and conditions related to the termination of the
Executive's employment relationship with the Company and the terms and
conditions of the retention of the Executive as a consultant to the Company.

                  NOW, THEREFORE, in order to effect the foregoing, in
consideration of the premises and the respective covenants and agreements of the
parties herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows (capitalized terms used but not defined herein having
the meanings ascribed to such terms in the Employment Agreement):

                  1.  Termination of Employment.

                  (a) Effective as of the Effective Date, the Executive hereby
resigns his position as President and Chief Executive Officer and as a director
of the Company and hereby resigns as an officer and director, as applicable, of
each of the Company's direct or indirect subsidiaries and affiliated
professional corporations.
<PAGE>   2
Except as provided in paragraph (b) below, effective as of the Effective Date,
the Employment Agreement shall be terminated and the Company and the Executive
shall have no further rights or obligations under the Employment Agreement. The
Executive shall execute and deliver such further instruments and do such
further acts as may be reasonably necessary to effect the resignation of his
positions pursuant to this Section 1(a).

                         (b) Notwithstanding paragraph (a) above and other
provisions of this Agreement, except as modified herein, the provisions of
Sections 4(a), 4(d), 4(e), 4(f), 4(g), 4(h), 4(i), 4(j), 5 and 6 of the
Employment Agreement shall survive the termination of the Employment Agreement
(the "Surviving Provisions").

                         (c) The Company acknowledges and agrees that, effective
as of the Effective Date, the Executive's employment shall be deemed to have
been terminated for other than Cause and the Executive shall be entitled to
receive the Severance Benefits consistent with the terms of Section 4(a)(ii) of
the Employment Agreement, provided that the severance payments (as described in
Section 4(a)(ii)(A) of the Employment Agreement) to which the Executive would
otherwise be entitled on the Effective Date shall begin on the six (6) month
anniversary of the Effective Date (the "Severance Payment Date"). The Company
acknowledges and agrees that, commencing on the Effective Date, the Company
shall provide all benefits described in Section 4(a)(ii)(B) of the Employment
Agreement for the period of time set forth therein (including but not limited to
the vesting of all stock options then held by the Executive). The Executive
shall be entitled to exercise all of his employee stock options during the
fourteen months following the Effective Date during which the Executive serves
as a consultant to the Company pursuant to Section 2 below and for one (1) month
thereafter, consistent with the terms of the Company's stock option plans.

                         (d) The Company and the Executive acknowledge and agree
that the aggregate amount to be paid to the Executive over the 36 month period
pursuant to Section 4(a)(ii)(A) of the Employment Agreement shall be $3,337,500.
The Company and the Executive acknowledge and agree that the benefit due to the
Executive pursuant to Section 4(ii)(B) relating to Section 3(c)(v) of the
Employment Agreement shall be paid in equal monthly payments. The Company and
the Executive acknowledge and agree that the aggregate amount to be paid to the
Executive pursuant to Section 4(a)(ii)(C) of the Employment Agreement shall be
$213,942, payable within twenty (20) days of the date hereof.



                                       2
<PAGE>   3
                         (e) Notwithstanding Section 1(c) above, in the event of
a Change of Control within six (6) months following the Effective Date, the
Executive shall be entitled to receive, in lieu of the payments and benefits
described in Section 1(c) and 1(d), the Severance Package described in and
payable pursuant to Section 4(a)(iii) of the Employment Agreement and shall have
the right to receive the Gross-Up Payments described in Section 4(a)(iii)(E).
The Executive and the Company acknowledge and agree that the amount payable to
the Executive as part of the Severance Package shall be determined utilizing the
amounts set forth in paragraph (d) above.

                  2.  Retention as a Consultant.

                  (a) The provisions of this Section 2 shall commence upon the
Effective Date and shall expire fourteen (14) months thereafter (the "Consulting
Period").

                  (b) During the Consulting Period, the Executive shall render
such consulting services to the Company and its affiliates as the Executive and
the Company agree upon from time to time; provided, however, that, subject to
Section 3 below, the obligation of the Executive to render such services shall
not preclude his undertaking full-time employment for another employer.

                  (c) The Executive shall perform his duties hereunder at such
locations as are acceptable to him and the Company and consistent with the
nature of the services or by telephone consultation.

                  3.  Non-Competition.

                  In consideration of the payments to be made to the Executive
pursuant to Section 4 below and the mutual covenants contained herein, the
Executive agrees not to compete with the Company pursuant to the terms set forth
in Section 4(e) of the Employment Agreement; provided that the "Non-Competition
Period" set forth in Section 4(e) of the Employment Agreement for purposes of
this Agreement shall begin on the Effective Date and continue for a period of
eighteen (18) months thereafter.

                                       3
<PAGE>   4
                  4.  Compensation and Related Matters.

                         (a) As compensation for services rendered during the
course of the Consulting Period and in consideration of the Executive's
agreement not to compete with the Company pursuant to Section 3 above, the
Company shall pay the Executive $1,250,000, payable as follows:

                           (i)      the Company shall make a total of six (6)
                                    monthly payments to the Executive of $41,667
                                    on the 15th of each month following the
                                    Effective Date commencing on April 15, 1998;
                                    and

                           (ii)     On the date which is the six month
                                    anniversary of the Effective Date, the
                                    Company shall pay to the Executive a cash
                                    lump sum, paid by wire transfer in
                                    accordance with instructions to be provided
                                    to the Company by the Executive in writing,
                                    in an amount equal to $1,000,000.

                  (b) The Company shall reimburse the Executive for reasonable
business expenses incurred in the performance of the Executive's duties
hereunder; provided, that such expenses shall be incurred and accounted for in
accordance with the policies and procedures established by the Company from time
to time for its senior executives.

                  5.  Releases.

                  (a) As a material inducement to enter into this Agreement, the
Executive hereby knowingly and voluntarily, fully and finally releases, acquits
and forever discharges as of the Effective Date, the Company and its affiliates,
and their past and present officers, directors, shareholders, partners,
trustees, beneficiaries, managers, employees, attorneys, agents, successors or
assigns (the "Company Released Parties") from any and all claims, charges,
complaints, liens, demands, causes of action, obligations, damages and
liabilities, known or unknown, suspected or unsuspected, that he had, has, or
may claim to have against the Company Released Parties arising out of or
relating in any way to the Executive's relationship with the Company as an
employee, officer, director, or representative or the termination thereof, or
the termination of the Employment Agreement (including without limitation the
federal Age Discrimination in Employment Act or equivalent state



                                       4
<PAGE>   5
law). Notwithstanding the generality of the foregoing, nothing contained herein
shall release the Company or in any way impair the Executive's rights to the
benefits of insurance coverage or reimbursement or indemnification from the
Company arising from or relating in any way to the Executive's service as an
employee, officer or director as provided by law or under the Company's bylaws,
or under any applicable indemnification agreement or insurance policy to which
the Company is a party, including, but not limited to, the Executive's rights to
reimbursement, coverage or indemnification in connection with any current or
future litigation matter arising from or relating in any way to the Executive's
services as an employee, officer, director or representative of the Company; nor
shall the foregoing release the Company from any claim relating to the breach by
the Company of its obligations set forth herein, or set forth in the Surviving
Provisions, or the right to receive any payments or benefits to which the
Executive is entitled pursuant to any Company employee benefit plan.
Notwithstanding the foregoing, nothing in this Agreement shall be construed to
effect a release of any right or claim by the Executive in connection with his
rights as a stockholder of the Company.

                         (b) As a material inducement to enter into this
Agreement, the Company, likewise hereby knowingly and voluntarily, fully and
finally releases, acquits, and forever discharges as of the Effective Date, the
Executive and his agents, employees, successors, heirs, beneficiaries or assigns
(the "Executive Released Parties") from any and all claims, charges, complaints,
liens, demands, causes of action, obligations, damages and liabilities, known or
unknown, suspected or unsuspected, that it had, has, or may claim to have
against the Executive Released Parties arising out of or relating in any way to
the Executive's relationship with the Company as an employee, officer, director
or representative, whether or not previously asserted before any state or
federal court or before any state, federal or regulatory agency or governmental
entity. Notwithstanding the generality of the foregoing, nothing contained
herein shall release the Executive from any claim relating to the breach by the
Executive of any confidentiality agreements with the Company or any of its
affiliates or the obligations set forth herein, or set forth in the Surviving
Provisions.

                         (c) Each of the Company and the Executive acknowledges
that such party has been advised by legal counsel regarding, is familiar with
and expressly waives all rights afforded by Section 1542 of the Civil Code of
the State of California ("Section 1542"), or any statute of similar effect in
any other jurisdiction in which any action might be brought, with respect to the
claims described in paragraphs (a) and (b) of this Section 4. Section 1542
states as follows:


                                       5
<PAGE>   6
         A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
         KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
         RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
         SETTLEMENT WITH THE DEBTOR.

Thus, notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release, each of the Company and the Executive
understands and agrees that this Agreement is intended to include all claims, if
any, described in paragraphs (a) (in the case of the Executive) and (b) (in the
case of the Company) above, which either party may have and which neither party
now knows or suspects to exist in such party's favor against the Company
Released Parties (in the case of the Executive) or the Executive Released
Parties (in the case of the Company) and that this Agreement extinguishes those
claims.

                  6.  Right to Revoke.

                  The Executive acknowledges that the Company has advised him to
consult with an attorney of his choosing prior to signing this Agreement and
that he has been given the opportunity, if he so desired, to consider the
provisions of this Agreement for at least twenty-one (21) days. The Executive
further acknowledges that he has been advised by the Company that he has the
right to revoke this Agreement for a period of seven (7) days after the
execution of this Agreement and that this Agreement shall not become effective
or enforceable until such seven (7) day revocation period has expired. The
Executive acknowledges and agrees that, if he wishes to revoke this Agreement,
he must do so in writing, signed by the Executive and received by the Company at
its headquarters no later than 5:00 p.m. Pacific Standard Time on the seventh
(7th) day after the Effective Date. The Executive acknowledges and agrees that,
in the event that he revokes this Agreement, he shall have no right to receive
any payment hereunder. The Executive understands and agrees that the Company is
under no obligation to offer such payment and that he is under no obligation to
consent to the release set forth in Section 5 of this Agreement. The Executive
represents that he has read this Agreement and understands its terms and that he
enters into this Agreement freely, voluntarily, and without coercion.




                                       6
<PAGE>   7
                  7.  Nondisparagement and Litigation Support.

                  (a) Neither the Company on the one hand, nor the Executive on
the other hand, will make any derogatory or negative statements about the other
party that may adversely affect the current or potential business relationships
of the other. The Company agrees that the Executive will have the right to
reasonably approve the content of any press release containing specific
reference to the Executive.

                  (b) The Executive agrees to make himself and his records
available to the Company for consultation, testimony and related matters in
connection with any claim, action, proceeding or investigation instituted by or
against the Company before any court or governmental authority, in any manner
as may be reasonably requested by the Company.

                  8. Internet Product Negotiation. The Company and the Executive
shall negotiate in good faith a license to the Executive or a company or other
entity controlled by the Executive of the Company's internet browser product for
use by the Executive or such entity in certain businesses that do not compete
with the Company.

                  9.  Successor; Binding Agreement.

                  (a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and each entity
that, directly or indirectly, becomes a parent corporation of the Company, by
agreement in form and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets and each
entity that, directly or indirectly, becomes a parent corporation of the
Company.

                  (b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable



                                       7
<PAGE>   8
or benefits would still be provided to him and/or his family hereunder if he had
continued to live, all such amounts and benefits, unless otherwise provided
herein, shall be paid or provided in accordance with the terms of this Agreement
to the Executive's devisees, legatees, or other designees or, if there be no
such designee, to the Executive's estate.

                  10.  Notice.

                  For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certificated or registered mail, return
receipt requested, postage prepaid, addressed as follows:

                  If to the Executive:

                  Dr. Seth Flam
                  P.O. Box 675271
                  Rancho Santa Fe, CA  92067

                  If to the Company:

                  FPA Medical Management, Inc.
                  3636 Nobel Drive
                  San Diego, CA  92122

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

                  11.  Withholding.

                  All amounts payable hereunder shall be subject to such
withholding taxes as may be required by law.

                  12.  Modification of Agreement; Governing Law.

                                       8
<PAGE>   9
                  No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Executive and such officer of the Company as may be
specifically designated by the board of directors of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California without regard to its conflicts of law principles.

                  13.  Validity.

                  The validity or enforceability of any provision or provisions
of this Agreement shall not be affected by the invalidity or unenforceability of
any other provision of this Agreement, and such valid and enforceable provisions
shall remain in full force and effect.

                  14.  Counterparts.

                  This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.

                  15.  Entire Agreement.

                  This Agreement, including all schedules and exhibits, together
with the Employment Agreement as amended hereby upon its execution and delivery,
set forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party hereto
which are related to the subject matter of the Employment Agreement or the
termination thereof.


                                       9
<PAGE>   10
                  IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the date and year first written above.

                                            FPA MEDICAL MANAGEMENT, INC.


                                            By: /s/ STEPHEN DRESNICK
                                               -----------------------------
                                            Name: Stephen Dresnick
                                            Title: President and Chief
                                                   Executive Officer


                                             /s/ SETH FLAM
                                            --------------------------------
                                            SETH FLAM


                                       10