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                                                                    Exhibit 20.2

                    SETTLEMENT AGREEMENT AND MUTUAL RELEASE


This Settlement Agreement and Mutual Release is entered into this 24th day of
November, 1997, by and between STEVEN N. BRODY and STEVEN N. BRODY ASSOCIATES
("Brody Associates")

                              A

                                        N

                                                  D

NORTHSTAR HEALTH SERVICES, INC. ("Northstar"), THOMAS W. ZAUCHA and ALICE L.
ZAUCHA (the "Zauchas") and the ZAUCHA FAMILY LIMITED PARTNERSHIP (the
"Partnership"):

     WHEREAS, Northstar, a Delaware corporation, is a regional provider of
physical, occupational and speech therapy;

     WHEREAS, Steven N. Brody and/or Brody Associates served as consultant
and/or director of Northstar from January 1, 1996 to May 9, 1997;

     WHEREAS, Thomas W. Zaucha is the Chairman, President, CEO and a
shareholder of Northstar;

     WHEREAS, Alice L. Zaucha is a shareholder of Northstar;

     WHEREAS, Steven N. Brody purchased 50,000 shares of Northstar common stock
from the Zauchas by agreement dated February, 1996, as follows: (i) 25,000
shares for aggregate cash payment of $148,250.00, or $5.93 per share; and (ii)
25,000 shares pursuant to delivery by Steven N. Brody to the Zauchas of a
promissory note in the principal amount of $100,000.00;

     WHEREAS, the Zauchas were the holders of the Northstar shares transferred
from Thomas W. and Alice L. Zaucha to Steven N. Brody;

     WHEREAS, Steven N. Brody and Brody Associates have asserted certain claims
against Northstar and Thomas W. Zaucha;

     WHEREAS, Northstar, the Zauchas and the Partnership have asserted certain
claims against Steven N. Brody and Brody Associates;

     WHEREAS, Steven N. Brody, Brody Associates, Northstar, the Zauchas and the
Partnership now wish to resolve any disputes which may exist between them.

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     NOW, THEREFORE, for and in consideration of the mutual promises and
covenants set forth below, and intending to be legally bound, Steven N. Brody,
Brody Associates, Northstar, the Zauchas and the Partnership hereby agree as
follows:

     1. The foregoing recitals are incorporated herein by reference.

     2. Steven N. Brody and Brody Associates, on behalf of themselves and their
agents, attorneys, heirs, executors, administrators, officers, directors,
employees, parents, subsidiaries, affiliates, successors and assigns, do hereby
release, remise, acquit, satisfy and forever discharge the Zauchas, Northstar
and the Partnership and his, hers and their agents, attorneys, heirs,
executors, administrators, officers, directors, employees, parents,
subsidiaries, affiliates, successors and assigns, from any and all actions,
causes of action, suits, debts, accounts, liability, damages, attorney's fees,
claims, counterclaims, accounts, covenants, controversies, agreements,
promises, judgments and demands whatsoever, whether arising in contract or in
tort, arising from all claims, liquidated or unliquidated, contingent or fixed,
determined or undetermined, known or unknown, foreseen or unforeseen, at law
or in equity which Steven N. Brody or Brody Associates or any of their
successors or assigns, or any one or more of them, has had, now has or may have
against the Zauchas, Northstar and the Partnership for, upon or by reason of
any matter, cause or thing whatsoever arising from the parties' relationship
and the termination thereof, including without limitation the claims related to
the service of Steven N. Brody and/or Brody Associates as consultant and/or
director of Northstar.

     3. The Zauchas, Northstar and the Partnership, on behalf of themselves,
and their agents, attorneys, heirs, executors, administrators, officers,
directors, employees, parents, subsidiaries, affiliates, successors and
assigns, do hereby release, remise, acquit, satisfy and forever discharge
Steven N. Brody and Brody Associates and their agents, attorneys, heirs,
executors, administrators, officers, directors, employees, parents,
subsidiaries, affiliates, successors and assigns from any and all actions,
causes of action, suits, debts, accounts, liability, damages, attorney's fees,
claims, counterclaims, accounts, covenants, controversies, agreements,
promises, judgments and demands whatsoever, whether arising in contract or in
tort, arising from all claims, liquidated or unliquidated, contingent or fixed,
determined or undetermined, known or unknown, foreseen or unforeseen, at law or
in equity which the Zauchas, Northstar or the Partnership, or any of their
successors or assigns, or any one or more of them, have had, now have or may
have against Steven N. Brody and Brody Associates for, upon or by reason of any
matter, cause or thing whatsoever arising from the parties' relationship and
the termination thereof.

     4. Northstar agrees:

        (a) to pay to Steven N. Brody $26,190.00 as follows:

            (i)  $10,000.00 upon the execution of this Agreement;

            (ii) $6,190.00 on or before January 1, 1998;


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          (iii) $5,000.00 on or before February 1, 1998; and

          (iv)  $5,000.00 on or before March 1, 1998;

     (b)  to issue to Steven N. Brody within thirty (30) days of the date of
          this Agreement options to purchase 40,000 shares of common stock of
          Northstar at a price of $1.25 per share, said options to vest
          immediately upon issuance and to be exercised within thirty (30)
          months of the date of their issuance, pursuant to the terms of the
          Non-Qualified Stock Option Agreement for Steven N. Brody attached to
          this Agreement as Exhibit A;

     (c)  to take all steps reasonably necessary to facilitate the transfer of
          the shares held by Steven N. Brody including removing any restrictions
          which exist on the transfer of the Northstar common stock (other than
          the stock to be transferred pursuant to Paragraph 5 below) currently
          owned by Steven N. Brody and providing such legal opinions as are
          required by the transfer agent to permit the transfer of the shares by
          Steven N. Brody;

     (d)  to indemnify Steven N. Brody and Brody Associates against all losses,
          damages, costs and expenses which Steven N. Brody and/or Brody
          Associates may suffer through or arising from any and all claims,
          demands or suits allegedly based upon any statement, action or failure
          to act of Steven N. Brody, Brody Associates, or any other individual
          or entity relating to the service of Steven N. Brody and/or Brody
          Associates as consultant and/or director or officer of Northstar.

     5. Steven N. Brody shall transfer to the Zauchas, jointly, 25,000 shares of
Northstar common stock.

     6. The Zauchas shall forgive and/or mark as satisfied the $100,000.00
promissory note delivered to them by Steven N. Brody in February 1996 pursuant
to the purchase of 25,000 shares of Northstar common stock.

     7. Thomas W. Zaucha personally guarantees the timely payment from
Northstar to Steven N. Brody of the amounts described in Paragraphs
4(a)(ii)-(iv) of this Agreement, and agrees to pay such amounts to Steven N.
Brody if Northstar fails to make any payment in the amount or by the date set
forth in those paragraphs.

     8. The transfer of shares from Steven N. Brody to the Zauchas pursuant to
Paragraph 5 above shall not preclude Steven N. Brody from filing a claim in the
action styled as Butler, et al. v. Northstar Health Services, Inc., et al., and
docketed in the United States District Court for the Western District of
Pennsylvania at civil action number 96-701, with respect to those shares or from
receiving the proceeds of the settlement of the action attributable to those
shares.

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     9. This Agreement does not constitute an admission of fault or liability
by Steven N. Brody and Brody Associates or the Zauchas, Northstar and the
Partnership.

     10. This Agreement shall be governed by and construed in accordance with
Pennsylvania law.

     11. The parties agree that the terms and conditions of this Agreement
constitute the full and complete understandings, agreements, promises of the
parties and that there are no oral or written understandings, agreements,
promises or inducements made or offered other than those set forth herein. This
Agreement can only be modified by a subsequent writing signed by both parties.

     12. In the event of a breach of this Agreement, the prevailing party shall
be entitled to payment of its reasonable attorney's fees and costs.

     13. This Agreement may be executed in counterparts, each of which shall be
deemed an original, and such original counterparts shall together constitute
but one and the same agreement.

     WITNESS the due execution hereof on the date above written:


WITNESS:


/s/ PAUL H. TITUS                       /s/ STEVEN N. BRODY
-----------------------                 --------------------------
Paul H. Titus                           Steven N. Brody


WITNESS:


/s/ PAUL H. TITUS                       /s/ STEVEN N. BRODY
-----------------------                 --------------------------
Paul H. Titus                           Steven N. Brody on behalf of
                                        Steven N. Brody Associates


ATTEST:                                 NORTHSTAR HEALTH SERVICES, INC.


/s/ MICHAEL S. DILANEY                  BY: /s/ THOMAS W. ZAUCHA
-----------------------                     ----------------------
Michael S. Dilaney                             Thomas W. Zaucha
                                        TITLE: Chairman, President & CEO


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WITNESS:


/s/ MICHAEL S. DILANEY                  /s/ THOMAS W. ZAUCHA
---------------------------             --------------------------
Michael S. Dilaney                      Thomas W. Zaucha



WITNESS:


/s/ MICHAEL S. DILANEY                  /s/ ALICE L. ZAUCHA
---------------------------             --------------------------
Michael S. Dilaney                      Alice L. Zaucha



WITNESS:                                ZAUCHA FAMILY LIMITED
                                        PARTNERSHIP


/s/ MICHAEL S. DILANEY                  BY: /s/ THOMAS W. ZAUCHA
---------------------------             --------------------------
Michael S. Dilaney                             Thomas W. Zaucha
                                        TITLE: General Partner



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