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                                                                   EXHIBIT 10(1)

                              EMPLOYMENT AGREEMENT

         This Agreement, effective as of October 16, 1998 (the "Effective
Date"), is made by and between Robert J. Sheehy ("Executive") and United
HealthCare Services, Inc. ("United HealthCare") for the purpose of setting forth
the terms and conditions of Executive's employment by United HealthCare, or an
affiliate or subsidiary of United HealthCare, and to protect United HealthCare's
knowledge, expertise, customer relationships and the confidential information
United HealthCare has developed about its customers, products, operations and
services. Unless the context otherwise requires, when used in this Agreement
"United HealthCare" includes any entity affiliated with United HealthCare.

         WHEREAS, as additional consideration for entering into this Agreement
Executive shall receive, upon execution of this Agreement, a nonqualified stock
option to purchase 60,000 shares of United HealthCare Corporation ("UHC") common
stock with a grant date the same as the Effective Date pursuant to the terms of
the UHC Amended and Restated 1991 Stock and Incentive Plan.

         WHEREAS, Executive and United HealthCare desire to enter into this
Agreement, which shall supersede any and all other prior employment-related
agreements between Executive and United HealthCare.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:

1. EMPLOYMENT AND DUTIES; TERMINATION OF PRIOR AGREEMENTS.

         A. EMPLOYMENT. United HealthCare hereby employs Executive, either
         directly or through an affiliate or subsidiary of United HealthCare,
         and Executive hereby accepts such employment on the terms and
         conditions set forth in this Agreement. Except as specifically
         superseded by this Agreement, Executive's employment hereunder shall be
         subject to all of United HealthCare's policies and procedures in regard
         to its employees. Executive's employment hereunder shall begin on the
         Effective Date and shall continue until terminated as set forth in
         Section 3 hereof.

         B. DUTIES. Executive shall initially hold the executive level position
         of COO, Health Plans and perform the duties associated therewith.
         Executive shall perform such other executive level responsibilities as
         are reasonably assigned Executive from time to time. Executive agrees
         to devote substantially all of Executive's business time and energy to
         the performance of Executive's duties in a diligent and proper manner.

         C. TERMINATION OF PRIOR AGREEMENTS. As of the Effective Date all other
         prior employment related agreements between Executive and United
         HealthCare will terminate in their entirety and no longer be of any
         force or effect.

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 2. COMPENSATION.

         A. BASE SALARY. Executive shall initially be paid a base annual salary
         in the amount of $350,000, payable bi-weekly, less all applicable
         withholdings and deductions (the "Initial Base Salary"). Executive
         shall receive a periodic performance review and consideration for an
         increase in the Initial Base Salary.

         B. BONUS AND STOCK PLANS. Executive shall be eligible to participate in
         the incentive compensation plans and the stock option and grant plans
         maintained by United HealthCare or an affiliate or subsidiary of United
         HealthCare, in the sole discretion of United HealthCare and in
         accordance with the terms and conditions of those plans and applicable
         laws and regulations.

         C. EMPLOYEE BENEFITS. Executive shall be eligible to participate in the
         employee benefit plans maintained by either United HealthCare or an
         affiliate or subsidiary of United HealthCare, including without
         limitation, any life, health, dental, short-term and long-term
         disability insurance coverages and any retirement plans, in the sole
         discretion of United HealthCare and in accordance with the terms and
         conditions of those plans and applicable laws and regulations.

         D. VACATION; ILLNESS. Executive shall be eligible for paid vacation and
         sick leave each year in accordance with the then-current policies of
         either United HealthCare or an affiliate or subsidiary of United
         HealthCare, in the sole discretion of United HealthCare and in
         accordance with the terms and conditions of those plans and applicable
         laws and regulations.

3. TERM AND TERMINATION.

         A. TERM. The term of this Agreement shall begin on the Effective Date
         and shall continue until terminated as set forth in Section 3B.

         B. TERMINATION OF AGREEMENT.

                  1. BY MUTUAL AGREEMENT. This Agreement and Executive's
                  employment hereunder may be terminated at any time by the
                  mutual written agreement of the parties.

                  2. BY UNITED HEALTHCARE. United HealthCare may terminate this
                  Agreement and Executive's employment hereunder on 30 days'
                  written notice.

                  3. BY EXECUTIVE. Executive may terminate this Agreement and
                  Executive's employment hereunder on 30 days' written notice.

                  4. DEATH, DISABILITY, ETC. This Agreement and Executive's
                  employment by United HealthCare shall terminate immediately
                  upon Executive's death. This Agreement and Executive's
                  employment hereunder shall automatically terminate in the
                  event of a permanent and total disability which renders
                  Executive incapable of


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                  performing Executive's duties, with or without reasonable
                  accommodation. United HealthCare has the sole discretion to
                  determine whether Executive is permanently or totally disabled
                  with the meaning of this Section 3B4, and the effective date
                  on which Executive was rendered so disabled.

         C. EMPLOYEE BENEFITS. On the effective date of the termination of this
         Agreement and Executive's employment by United HealthCare, Executive
         shall cease to be eligible for all employee benefit plans maintained by
         United HealthCare, except as required by federal or state continuation
         of coverage laws ("COBRA Benefits"). If Executive elects COBRA
         Benefits, Executive shall pay the entire cost of such benefits either
         through after-tax payroll deductions from the cash component of any
         severance compensation Executive receives or directly if Executive does
         not receive such severance compensation or if such severance
         compensation ceases.

         D. SEVERANCE EVENTS AND BENEFITS. If a Severance Event, as hereinafter
         defined, occurs, Executive shall receive the severance benefits set
         forth in this Section 3D for a period of 12 months from the effective
         date of the applicable Severance Event (the "Severance Period"). For
         purposes of this Agreement a Severance Event shall occur if and when:

         (i)      United HealthCare (a) terminates this Agreement and
                  Executive's employment without Cause, as hereinafter defined,
                  or (b) terminates this Agreement without terminating
                  Executive's employment and Executive elects to treat such
                  termination of this Agreement as a Change in Employment, as
                  hereinafter defined (collectively a "Termination without
                  Cause"), or

         (ii)     Within two years following a Change in Control, as hereinafter
                  defined, either (a) United HealthCare terminates this
                  Agreement and Executive's employment without Cause, or (b) a
                  Change in Employment occurs and Executive elects to treat such
                  Change in Employment as a termination of Executive's
                  employment (collectively a "Termination following a Change in
                  Control").

         1. SEVERANCE COMPENSATION. Executive shall receive the following
         severance compensation (the "Severance Compensation"):

                  a) TERMINATION WITHOUT CAUSE. Subject to Section 3D(1)(b)
                  below, upon a Termination without Cause Executive shall
                  receive biweekly payments equal to 1/26 of two times the sum
                  of (1) Executive's annualized base salary as of the date of
                  the Severance Event, less all applicable withholdings or
                  deductions required by law and Executive's COBRA Benefit
                  payments, if any, plus (2) one-half of the total of any bonus
                  or incentive compensation paid or payable to Executive for the
                  two most recent calendar years (excluding any special or
                  one-time bonus or incentive compensation payments), or if
                  Executive has been eligible for such bonus or incentive
                  compensation payments for less than two such periods, the last
                  such payment paid or payable to Executive (excluding any
                  special or one-time bonus or incentive compensation payments).


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                  b) TERMINATION FOLLOWING A CHANGE IN CONTROL. Upon a
                  Termination following a Change in Control, Executive shall
                  receive biweekly payments equal to 1/26 of three times the sum
                  of (1) Executive's highest annualized base salary during the 2
                  year period immediately preceding the Severance Event, less
                  all applicable withholdings or deductions required by law and
                  Executive's COBRA Benefit payments, if any, plus (2) the
                  greater of (i) all bonuses that would be payable to Executive
                  under any incentive compensation plans in which Executive then
                  participates at Executive's then-current target level, or (ii)
                  one-half of the total of any bonus or incentive compensation
                  paid or payable to Executive for the two most recent calendar
                  years (excluding any special or one-time bonus or incentive
                  compensation payments), or if Executive has been eligible for
                  such bonus or incentive compensation payments for less than
                  two such periods, the last such payment paid or payable to
                  Executive (excluding any special or one-time bonus or
                  incentive compensation payments).

         2. CASH PAYMENT. Executive shall receive a one-time cash payment within
         a reasonable time following commencement of the Severance Period in an
         amount equal to the portion of the premiums that United HealthCare, or
         its affiliate or subsidiary, as applicable, subsidizes for
         employee-only health, dental and group term life benefit coverages (the
         "Cash Payment"). The Cash Payment shall cover the Severance Period and
         shall be determined as of the effective date of the applicable
         Severance Event.

         3. JOB SEARCH FEES. For a period not to exceed the Severance Period,
         United HealthCare shall pay to an outplacement firm selected by United
         HealthCare an amount deemed reasonable by United HealthCare for
         outplacement and job search services for Executive.

         4. EXCISE TAX PAYMENT. If any portion of the Severance Compensation
         payable upon a Termination following a Change in Control constitutes an
         Excess Parachute Payment, as hereinafter defined, such that an Excise
         Tax, as hereinafter defined, is due, Executive shall receive a one-time
         cash payment in an amount sufficient to cover (a) the full cost of the
         Excise Tax plus (b) Executive's federal, state and city income,
         employment and Excise Tax on this one-time cash payment and on all such
         iterative payments so that Executive is made entirely whole for the
         impact of the Excise Tax (collectively the "Gross-Up Payment"). United
         HealthCare shall calculate these amounts on a timely and accurate
         basis, and for this purpose Executive shall be deemed to be in the
         highest marginal rate of federal, state and city taxes. The Gross-Up
         Payment shall be made within 30 days following the effective date of
         Executive's employment termination. For purposes of this Agreement the
         term "Excess Parachute Payment" shall have the meaning set forth in
         Section 28OG of the Internal Revenue Code of 1986, as amended (the
         "Code"). For purposes of this Agreement the term "Excise Tax" shall
         mean the tax imposed on an Excess Parachute Payment pursuant to
         Sections 28OG and 4999 of the Code.


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This Section 3D shall be the sole liability of United HealthCare to Executive
upon the termination of this Agreement and Executive's employment hereunder, and
shall replace and be in lieu of any payments or benefits which otherwise might
be owed Executive under any other severance plan or program maintained by United
HealthCare. Such compensation and benefits shall be conditioned on receipt by
United HealthCare of a separation agreement and a release of claims by Executive
on terms and conditions acceptable to United HealthCare in its sole discretion.

         E. DEFINITIONS AND PROCEDURES.

                  1. CAUSE. For purposes of this Agreement "Cause" shall mean
                  (a) the refusal of Executive to follow the reasonable
                  direction of the Board of Directors of United HealthCare or
                  Executive's supervisor or to perform any duties reasonably
                  required on material matters by United HealthCare, (b)
                  material violations of United HealthCare's Code of Conduct or
                  (c) the commission of any criminal act or act of fraud or
                  dishonesty by Executive in connection with Executive's
                  employment by United HealthCare. Prior to the termination of
                  Executive's employment under subsection (a) of this definition
                  of Cause, United HealthCare shall provide Executive with a 30
                  day notice specifying the basis for Cause. If the Cause
                  described in the notice is cured to United HealthCare's
                  reasonable satisfaction prior to the end of the 30 day notice
                  period, Executive's employment hereunder shall not be
                  terminated on that basis.

                  2. CHANGE IN CONTROL. For purposes of this Agreement "Change
                  in Control" shall mean (a) the acquisition by any person,
                  entity or "group," within the meaning of Section 13(d)(3) or
                  14(d)(2) of the Securities Exchange Act of 1934 (the 'Exchange
                  Act"), other than United HealthCare or any employee benefit
                  plan of United HealthCare, of beneficial ownership (as defined
                  in the Exchange Act) of 20% or more of the common stock of UHC
                  or the combined voting power of UHC's then-outstanding voting
                  securities in a transaction or series of transactions not
                  approved in advanced by a vote of at least three-quarters of
                  the directors of UHC; (b) a change in 50% or more of the
                  directors of UHC in any 12 month period; (c) the approval by
                  the shareholders of UHC of a reorganization, merger,
                  consolidation, liquidation or dissolution of UHC or of the
                  sale (in one transaction or a series of related transactions)
                  of all or substantially all of the assets of UHC other than a
                  reorganization, merger, consolidation, liquidation,
                  dissolution or sale approved in advance by a vote of at least
                  three-quarters of the directors; (d) the first purchase under
                  any tender offer or exchange offer (other than an offer by
                  UHC) pursuant to which shares of UHC common stock are
                  purchased; or (e) at least a majority of the directors of UHC
                  determine in their sole discretion that there has been a
                  change of control of UHC.

                  3. CHANGE IN EMPLOYMENT. For purposes of this Agreement a
                  "Change in Employment" shall be deemed to have occurred (a) if
                  (i) Executive's duties are materially and adversely changed
                  without Executive's prior consent, (ii) Executive's salary or
                  benefits are reduced other than as a general reduction of
                  salaries and


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                  benefits by United HealthCare, (iii) without terminating
                  Executive's employment United HealthCare terminates this
                  Agreement, or (iv) the geographic location for the performance
                  of Executive's duties hereunder is moved more than 50 miles
                  from the geographic location at the Effective Date without
                  Executive's prior consent, and (b) if in each case under
                  subsections (a) (i), (ii), (iii) and (iv), in the period
                  beginning 90 days before the time the Change in Employment
                  occurs, Cause does not exist or if Cause does exist United
                  HealthCare has not given Executive written notice that Cause
                  exists. Notwithstanding the foregoing, an isolated,
                  insubstantial or inadvertent action by United HealthCare,
                  which is remedied by United HealthCare within 30 days after
                  receipt of notice thereof by Executive, shall not constitute a
                  Change in Employment. Executive may elect to treat a Change in
                  Employment as a termination of this Agreement and Executive's
                  employment hereunder. To do so Executive shall send written
                  notice of such election to United HealthCare within 90 days
                  after the date Executive receives notice from United
                  HealthCare or otherwise is definitively informed of the events
                  constituting the Change in Employment. No Change in Employment
                  shall be deemed to have occurred if Executive fails to send
                  the notice of election within the 90 day period. Executive's
                  failure to treat a particular Change in Employment as a
                  termination of employment shall not preclude Executive from
                  treating a subsequent Change in Employment as a termination of
                  employment. The effective date of a Change in Employment
                  termination shall be the date 30 days after United HealthCare
                  receives the written notice of election.

4. PROPERTY RIGHTS, CONFIDENTIALITY. NON-DISPARAGEMENT, NON-SOLICIT AND
NON-COMPETE PROVISIONS.

         A. UNITED HEALTHCARE'S PROPERTY.

                  1. ASSIGNMENT OF PROPERTY RIGHTS. Executive shall promptly
                  disclose to United HealthCare in writing all inventions,
                  discoveries and works of authorship, whether or not patentable
                  or copyrightable, which are conceived, made, discovered,
                  written or created by Executive alone or jointly with another
                  person, group or entity, whether during the normal hours of
                  employment at United HealthCare or on Executive's own time,
                  during the term of this Agreement. Executive assigns, all
                  rights to all such inventions and works of authorship to
                  United HealthCare. Executive shall give United HealthCare any
                  assistance it reasonably requires in order for United
                  HealthCare to perfect, protect, and use its rights to
                  inventions and works of authorship.

                  This provision shall not apply to an invention for which no
                  equipment, supplies, facility or trade secret information of
                  United HealthCare was used and which was developed entirely on
                  the Executive's own time and which (1) does not relate to the
                  business of United HealthCare or to United HealthCare's
                  anticipated research or development, or (2) does not result
                  from any work performed by the Executive for United
                  HealthCare.


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                  2. NO REMOVAL OF PROPERTY. Executive shall not remove any
                  records, documents, or any other tangible items (excluding
                  Executive's personal property) from the premises of United
                  HealthCare in either original or duplicate form, except as is
                  needed in the ordinary course of conducting business for
                  United HealthCare.

                  3. RETURN OF PROPERTY. Executive shall immediately deliver to
                  United HealthCare, upon termination of employment with United
                  HealthCare, or at any other time upon United HealthCare's
                  request, any property, records, documents, and other tangible
                  items (excluding Executive's personal property) in Executive's
                  possession or control, including data incorporated in word
                  processing, computer and other data storage media, and all
                  copies of such records, documents and information, including
                  all Confidential Information, as defined below.

         B. CONFIDENTIAL INFORMATION. During the course of employment Executive
         will develop, become aware of and accumulate expertise, knowledge and
         information regarding United HealthCare's organization, strategies,
         business and operations and United HealthCare's past, current or
         potential customers and suppliers. United HealthCare considers such
         expertise, knowledge and information to be valuable, confidential and
         proprietary and it shall be considered Confidential Information for
         purposes of this Agreement. During this Agreement and at all times
         thereafter Executive shall not use such Confidential Information or
         disclose it to other persons or entities except as is necessary for the
         performance of Executive's duties for United HealthCare or as has been
         expressly permitted in writing by United HealthCare. This Section 4B
         shall survive the termination of this Agreement.

         C. NON-DISPARAGEMENT. Executive agrees that he will not criticize, make
         any negative comments or otherwise disparage or put in disrepute United
         HealthCare, or those associated with United HealthCare, in any way,
         whether orally, in writing or otherwise, directly or by implication in
         communication with any person, including but not limited to customers
         or agents of United HealthCare. This Section 4C shall survive the
         termination of this Agreement.

         D. NON-SOLICITATION. During (i) the term of this Agreement, (ii) the
         Severance Period or any period in which Executive receives severance
         compensation pursuant to United HealthCare' election under Section 4E,
         as applicable (iii) any period following the termination or expiration
         of this Agreement during which Executive remains employed by United
         HealthCare and (iv) for a period of one year after the last day of the
         latest of any period described in (i), (ii) or (iii), Executive shall
         not (y) directly or indirectly attempt to hire away any then-current
         employee of United HealthCare or a subsidiary of United HealthCare or
         to persuade any such employee to leave employment with United
         HealthCare, or (z) directly or indirectly solicit, divert, or take
         away, or attempt to solicit, divert, or take away, the business of any
         person, partnership, company or corporation with whom United HealthCare
         (including any subsidiary or affiliated company in which United
         HealthCare has a more than 20% equity interest) has established or is
         actively seeking to establish a business or customer relationship. This
         Section 4D shall survive the termination of this Agreement.


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         E. NON-COMPETITION. During (i) the term of this Agreement, (ii) the
         Severance Period or any period in which Executive receives severance
         compensation pursuant to United HealthCare' election under this Section
         4E, as applicable, and (iii) any period following the termination or
         expiration of this Agreement during which Executive remains employed by
         United HealthCare, Executive shall not, without United HealthCare's
         prior written consent, engage or participate, either individually or as
         an employee, consultant or principal, partner, agent, trustee, officer
         or director of a corporation, partnership or other business entity, in
         any business in which United HealthCare (including any subsidiary or
         affiliated company in which United HealthCare has more than a 20%
         equity interest) is engaged. If Executive terminates this Agreement,
         and as of such termination or within 90 days of such termination
         Executive also terminates Executive's employment by United HealthCare,
         United HealthCare may elect to have the provisions of this Section 4E
         be in effect for up to 24 months following the effective date of
         Executive's employment termination if, during the period up to 24
         months specified by United HealthCare, United HealthCare pays Executive
         severance compensation equal to biweekly payments of 1/26 of the
         Severance Compensation and the Cash Payment. United HealthCare must
         send written notice of such election within 10 days after it receives
         written notice of Executive's termination of employment. This Section
         4E shall survive the termination of this Agreement.

5. MISCELLANEOUS.

         A. ASSIGNMENT. This Agreement shall be binding upon and shall inure to
         the benefit of the parties and their successors and assigns, but may
         not be assigned by either party without the prior written consent of
         the other party, except that United HealthCare in its sole discretion
         may assign this Agreement to an entity controlled by United HealthCare
         at the time of the assignment. If United HealthCare subsequently loses
         or gives up control of the entity to which this Agreement is assigned,
         such entity shall become United HealthCare for all purposes under this
         Agreement, beginning on the date on which United HealthCare loses or
         gives up control of the entity. Any successor to United HealthCare
         shall be deemed to be United HealthCare for all purposes of this
         Agreement.

         B. NOTICES. All notices under this Agreement shall be in writing and
         shall be deemed to have been duly given if delivered by hand or mailed
         by registered or certified mail, return receipt requested, postage
         prepaid, to the party to receive the same at the address set forth
         below or at such other address as may have been furnished by proper
         notice.

United HealthCare:             300 Opus Center
                               9900 Bren Road East
                              Minnetonka, MN 55343
                              Attn: General Counsel
   Executive:


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         C. ENTIRE AGREEMENT. This Agreement contains the entire understanding
         of the parties with respect to its subject matter and may be amended or
         modified only by a subsequent written amendment executed by the
         parties. This Agreement replaces and supersedes any and all prior
         employment or employment related agreements and understandings,
         including any letters or memos which may have been construed as
         agreements, between the Executive and United HealthCare.

         D. CHOICE OF LAW. This Agreement shall be construed and interpreted
         under the applicable laws and decisions of the State of Minnesota.

         E. WAIVERS. No failure on the part of either party to exercise, and no
         delay in exercising, any right or remedy under this Agreement shall
         operate as a waiver; nor shall any single or partial exercise of any
         right or remedy preclude any other or further exercise of any right or
         remedy.

         F. ADEQUACY OF CONSIDERATION. Executive acknowledges and agrees that
         Executive has received adequate consideration from United HealthCare to
         enter into this Agreement.

         G. DISPUTE RESOLUTION AND REMEDIES. Any dispute arising between the
         parties relating to this Agreement or to Executive's employment by
         United HealthCare shall be resolved by binding arbitration pursuant to
         United HealthCare' Employment Arbitration Policy. The arbitrators shall
         not ignore or vary the terms of this Agreement and shall be bound by
         and apply controlling law. The parties acknowledge that Executive's
         failure to comply with the Confidential Information, Non-Solicitation
         and Non-Competition provisions of this Agreement will cause immediate
         and irreparable injury to United HealthCare and that therefore the
         arbitrators, or a court of competent jurisdiction if an arbitration
         panel cannot be immediately convened, will be empowered to provide
         injunctive relief, including temporary or preliminary relief, to
         restrain any such failure to comply.

         H. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer or be
         deemed or construed to confer any rights or benefits upon any person
         other than the parties.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY
THE PARTIES.

IN WITNESS WHEREOF, this Agreement has been signed by the parties hereto as of
the Effective Date set forth above.

United HealthCare Services, Inc.             Executive

By /s/ Robert J. Backes                      /s/ Robert J. Sheehy
   ---------------------------------         ------------------------------

Its  Senior Vice President
     Human Resources
   ---------------------------------

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