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                                                                    EXHIBIT 99.1

                          HEALTHCARE RECOVERIES, INC.

                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
                        SAFE HARBOR COMPLIANCE STATEMENT
                         FOR FORWARD-LOOKING STATEMENTS

     In passing the Private Securities Litigation Reform Act of 1995 ("the
Reform Act"), 15 U.S.C.A. Section 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. Healthcare Recoveries, Inc. ("HCRI" or the
"Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe harbor
provisions.

     "Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties, which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of HCRI. The Company
undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, HCRI undertakes no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over
time.

     HCRI provides the following risk factor disclosure in connection with its
continuing effort to qualify its written and oral forward-looking statements for
the safe harbor protection of the Reform Act and any other similar safe harbor
provisions. Important factors currently known to management that could cause
actual results to differ materially from those in forward-looking statements
include the following:

REGULATORY AND POLITICAL RISKS

     General.  From time to time, legislation is introduced in Congress and in
various state legislatures which would materially affect the Company's business.
The most significant legislation, laws and regulations may, for clarity, be
grouped into three categories: (i) legislation that would substantially limit
the ability of healthcare insurers to recover from third-parties
accident-related medical benefits incurred by injured insureds ("Health
Insurance Primacy Laws"); (ii) legislation that would substantially limit the
Company's ability to receive and utilize individual claim information from
healthcare insurers ("Confidentiality Laws"); and (iii) other federal and state
laws. The following identifies specific risks in these three categories:

  Health Insurance Primacy Laws

     Auto Choice Reform Act.  In each of the last three sessions of Congress,
legislation known as the Auto Choice Reform Act (the "Proposed Act") was
introduced, but not enacted. Under this Proposed Act, in those states not opting
out of its provisions, individual drivers may choose to be covered by an auto
insurance system in which healthcare insurers, with some exceptions, could be
made primarily responsible for healthcare costs incurred by those injured in
automobile accidents. Consequently, even if the insured's injuries were caused
by the negligence of another driver, the healthcare insurer might have no rights
of recovery against the negligent party or that party's liability insurer.
Revenue generated from recoveries against automobile liability insurers
represented approximately 68% of the Company's revenues. Should this or similar
legislation be enacted, it could have a material adverse effect on the Company's
business, results of operations and financial condition.

     Proponents of the Proposed Act assert that (i) the costs of operating a
motor vehicle are excessive due to legal and administrative costs associated
with the processing of claims under the fault-based liability system; and (ii)
the costly fault-based liability insurance system often fails to provide
compensation commensurate
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with loss and takes too long to pay benefits. Even if the Proposed Act is
ultimately abandoned, these policy reasons may result in future legislation
designed to significantly alter the fault-based liability system used in most
states, eliminate recovery rights of healthcare insurers and materially
adversely affect the Company's business.

     Certain No Fault Insurance Systems.  Certain states have adopted versions
of automobile "no fault" insurance systems in which the injured party's health
insurance carrier or provider is primarily responsible for healthcare related
expenses (and not the responsible party and his or her insurer or the injured
insured's automobile liability insurer). In 1996, California voters rejected a
no-fault automobile insurance measure, Proposition 200, which would have
required drivers with bodily injuries to be compensated by their healthcare
insurers. Although Proposition 200 was rejected by the voters, there can be no
assurance that similar measures will not again be presented in a ballot
initiative or as legislation in California or elsewhere in the future. Growth in
the number of states adopting similar systems could significantly reduce the
amounts otherwise recoverable by the Company in connection with automobile
injuries in such states.

  Confidentiality Laws

     Confidentiality Provisions of the Health Insurance Portability and
Accountability Act of 1996 and Related Regulations.  On November 3, 1999 the
Department of Health and Human Services (the "Secretary") issued a Notice of
Proposed Rulemaking (64 Fed. Reg. 59918 (1999) and 65 Fed. Reg. 427 (2000))
(collectively, the "Proposed Rule") setting standards to protect the privacy of
individually identifiable health information that is transmitted electronically
to health care providers, health plans and similar health care entities. The
requirements of the Proposed Rule also extend to the "business partners" (as
defined in the rule) of the covered entities. The covered entities are required
to enter into agreements with their business partners extending the provisions
of the Proposed Rule to those business partners. The covered entities are
responsible for enforcing those contractual provisions. The Secretary is
expected to issue a final rule by an undetermined date in 2000, after receiving
public comment on the Proposed Rule. The Secretary's actions are mandated by
Section 264 of the Health Insurance Portability and Accountability Act of 1996
("HIPAA") because Congress did not pass legislation protecting medical privacy
by the August 1999 deadline set by HIPAA.

     The Proposed Rule establishes a complex regulatory framework on a variety
of subjects, including (a) disclosures and uses of health information that
require patient consent (b) individuals' rights to access and amend their health
information and (c) administrative, technical and physical safeguards required
of entities that use protected health information. The Proposed Rule generally
prohibits any disclosure of protected health information except as authorized
either by the Proposed Rule or by the patient under standards set by the
Proposed Rule. Disclosures for subrogation are expressly authorized by the
Proposed Rule.

     The Secretary has received a large volume of public comment that may prompt
material changes in the final rule. Even if the provisions directly addressing
subrogation are unchanged, the final rule could impair subrogation recovery
practices by creating administrative burdens (for example, individual's right to
amend health information or to restrict subsequent uses) or liability risks that
lead health plans to voluntarily restrict their subrogation recovery practices.
In addition, the Proposed Rule does not prevent states from imposing more strict
privacy standards that could have similar impacts on subrogation.

     The provisions of the final rule or of future federal legislation and
regulations could impair or prevent the acquisition and use by the Company of
claims and insurance information necessary to process recovery claims on behalf
of its clients. Congress is likely to consider legislation this year that may
expand or contract the scope of the Proposed Rule. In addition, state laws
governing privacy of medical or insurance records and related matters may
significantly affect the Company's business.

  Other Federal and State Laws

     Changes in the regulation of insurance and debt collection could also
affect the Company's business. Similarly, changes in law that would bar
healthcare subrogation or impair an injured party's ability to collect insured
damages (that is, an injured person would be prevented from recovering from the
wrongdoer damages for accident-related medical benefits covered by health
insurance) could similarly adversely affect the Company's business. Existing
debt collection laws also may be amended or interpreted in a manner that could
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adversely affect the Company's business. Additionally, although the Company does
not believe that it engages in the unauthorized practice of law, changes in the
law or a judicial or administrative decision defining some of the Company's
activities as the practice of law, could have a material adverse effect on the
Company's business.

  Certain Legal Doctrines

     With respect to recoverable claims, the rights of subrogation and
reimbursement may be limited in some cases by (i) the "made whole doctrine."
This doctrine subordinates the healthcare provider's ability to recover to that
of the injured party when the settlement damage award received by the injured
party is inadequate to cover the injured party's damages: And (ii) the "common
fund doctrine," which permits plaintiff's attorneys to deduct their fees for the
claim based on the entire amount covered by a damage award and may, in some
cases, proportionally diminish the amount recoverable by HCRI on behalf of the
healthcare payor out of that damage award.

DEPENDENCE ON LARGE CLIENTS

     The Company's clients include national and regional healthcare payors,
large third-party administrators or self-insured corporations. The loss of one
or more of the Company's clients could have a material adverse effect on the
Company's business, results of operations, financial condition and stock price.
During the last three years, HCRI has lost sixteen clients representing
approximately 5.8 million lives. Terminations occurred due to, among other
things, consolidations, the selection of another vendor, or because the process
was taken in-house. The Company has re-sold services to three of the companies
previously lost, representing approximately 1.7 million lives previously lost.
The Company's revenues are earned under written contracts with its clients that
provide for contingency fees from recoveries under a variety of pricing
strategies. These contracts are generally terminable on 60 to 180 days' notice
by either party. However, the Company's contracts generally provide that in the
event of termination, the Company is entitled to complete the recovery process
on the backlog for that client. See "Marketing, Sales and Client Services" and
"Client Base" sections.

LENGTHY REVENUE CYCLE AND FLUCTUATION IN OPERATING RESULTS

     The Company's operating results may fluctuate from time to time as a result
of a number of factors. These factors include but are not limited to:

     - the addition of new clients;

     - the cancellation of client contracts;

     - the postponement of client decisions to enter into contracts;

     - delays in transmission of clients' claims data;

     - changes in prices offered to new clients;

     - timing of acquisitions; and

     - introduction of new services or introduction of new technologies to the
       Company's business processes.

     HCRI expends substantial time, effort and funds to install lives and
generate active files. As a result, HCRI incurs expenses related to its revenue
before revenue is received which can result in fluctuations in operating
results.

     In particular, during a fiscal quarter it is difficult to forecast when and
how many clients claims data will be received. The Company's clients
continuously update and modify their claims and medical encounter processing
systems often causing delays in or errors to the transmission of claims data.
The Company's expense levels are based in part on expectations of future receipt
of claims data and the Company has been significantly increasing and intends to
continue to increase operating expenditures and working capital balances as it
expands its operations. Specifically, material increases in new clients and
lives installed, and consequently client claims data received, will cause the
Company to increase its operating capacity before it expects to earn revenues
from such new clients. If operating results in any particular quarter do not
meet the expectations of securities analysts it is likely to cause volatility in
the price of the Company's Common Stock.
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LITIGATION

     On March 15, 1994, a class action complaint ("Complaint") was filed against
HCRI in the United States District Court for the Northern District of West
Virginia, Michael L. DeGarmo, et al. v. Healthcare Recoveries, Inc. The
plaintiffs assert that HCRI's subrogation recovery efforts on behalf of its
clients violate a number of state and federal laws, including the Fair Debt
Collection Practices Act and the Racketeering Influenced and Corrupt
Organizations Act ("RICO"). The Complaint also seeks a declaratory judgment that
HCRI as the subrogation agent for various healthcare payors be limited, in
recovering from persons who caused accidents or from the healthcare payors'
injured insureds, to the actual costs of the medical treatment provided to such
injured insureds by such healthcare payors, healthcare policies or agreements,
which generally allow recovery by the healthcare payors of the "reasonable
value" of such treatments. The Complaint alleges that HCRI made fraudulent
representations to recover sums in excess of those actually expended by the
applicable healthcare payor to pay for medical treatment. On March 30, 1999, the
Court entered an order certifying a class of all members of one HCRI client
health plan located in Wheeling, West Virginia (The Health Plan of the Upper
Ohio Valley) who have been subject to subrogation and/or reimbursement
collection practices by HCRI. Plaintiffs, on behalf of the class as certified,
demand compensatory damages, punitive damages, and treble damages under RICO,
costs and reasonable attorneys' fees.

     On October 1, 1999, a First Amended Class Action Complaint ("Amended
Complaint") was filed against HCRI in the United States District Court for the
Southern District of Florida, in a putative class action brought by William
Conte and Aaron Gideon, individually and on behalf of all others similarly
situated. In that action, Conte v. Healthcare Recoveries, Inc., No. 99-10062,
plaintiffs assert that HCRI's subrogation recovery efforts on behalf of its
clients violate a number of state and federal laws, including the Fair Debt
Collection Practices Act and the Florida Consumer Collection Practices Act. The
Complaint also seeks a declaratory judgment that HCRI, as the subrogation agent
for various healthcare payors, is not entitled to assert and recover upon
subrogation or reimbursement liens it asserts on settlements obtained from third
party tortfeasors when the settlement is in an amount less than the amount
required to fully compensate ("or make whole") the injured party for all
elements of damage caused by the tortfeasor. Plaintiffs purport to represent a
class consisting of all participants or beneficiaries of ERISA plans nationwide
whose net recovery of damages through judgments, settlements or otherwise
against liable third parties has been reduced or potentially reduced by HCRI's
alleged assertion and/or recovery of unlawful subrogation/reimbursement rights
of its clients. Plaintiffs also seek compensatory and statutory damages,
exemplary and punitive damages, injunctive relief, prejudgment interest, costs
and attorneys' fees.

     The original complaint in the Conte matter, filed in June 1999, asserted
similar claims on behalf of a putative class of participants or beneficiaries of
one client's health plans located in Florida, Alabama, and Georgia. In response
to HCRI's motion to dismiss that complaint, the Plaintiffs filed the Amended
Complaint on behalf of a putative national class. On November 5, 1999, HCRI
filed a motion to dismiss the Amended Complaint. That motion, now fully briefed,
remains pending. The court has not yet addressed the question whether to certify
the putative class; plaintiffs are required to file a motion by March 1, 2000,
seeking certification. HCRI intends to oppose the motion.

     On October 20, 1999, a class action complaint ("Baker Complaint") was filed
against HCRI and one HCRI client in the Circuit Court of Jefferson County
Alabama, Darrell DeWayne Baker v. Healthcare Recoveries, Inc., United Healthcare
of Alabama, Fictitious Party Defendants A, B, C et al. On December 6, 1999 the
Defendants removed the lawsuit to the United States District Court for the
Northern District of Alabama, Southern Division. On January 3, 2000 a First
Amended Complaint was filed, retaining all counts from the original complaint
and seeking an additional declaratory judgment that the health plan and HCRI
have a right to recover through subrogation only the actual benefits paid to
medical providers on behalf of the class. The Baker Complaint, as amended,
asserts claims on behalf of two putative subclasses, both consisting of members
nationwide of the client health plan, who either: (1) allegedly paid inflated
subrogation claims due to alleged failure by the health plan or by HCRI, to
disclose discounts in the health plan's payments to medical providers; or (2)
allegedly were denied coverage of certain claims by the health plan. The
plaintiffs assert claims against HCRI under a variety of theories including
unjust enrichment, breach of contract, breach of fiduciary duty and violations
of RICO. Plaintiffs demand, on behalf of the putative classes, compensatory
damages, punitive damages, treble damages under RICO, and reasonable attorneys'
fees.
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     On January 27, 2000, the defendants filed a motion to dismiss the Amended
Complaint, which remains pending. The court has not yet addressed the question
whether to certify the putative class.

     On October 28, 1999, a class action Plaintiff's Original Petition
("Petition") was filed against HCRI and one HCRI client in the District Court
for the 150th Judicial District, Bexar County, Texas, Joseph R. Cajas, on behalf
of himself and all others similarly situated v. Prudential Health Care Plan,
Inc. and Healthcare Recoveries, Inc. The plaintiff asserts that HCRI's
subrogation recovery efforts on behalf of its client Prudential Health Care
Plan, Inc. ("Prudential") violated a number of common law duties, as well as the
Texas Insurance Code and the Texas Business and Commerce Code. The Petition
alleges that HCRI as the subrogation agent for Prudential, made fraudulent
misrepresentations in the course of unlawfully pursuing subrogation and
reimbursement claims that plaintiffs assert are unenforceable because (1)
prepaid medical service plans may not exercise rights of subrogation and
reimbursement; (2) the subrogation and reimbursement claims asserted by the
Company are not supported by contract documents that provide enforceable
recovery rights and/or do not adequately describe the recovery rights; and (3)
the sums recovered pursuant to such claims unlawfully exceed the amount
Prudential paid for medical goods and services. HCRI was served with the
Petition in early November and has answered, denying all allegations. The court
has not yet addressed the question whether to certify the putative class.

     In late 1999, the Cajas plaintiff's counsel filed two lawsuits in Texas and
South Carolina that raise issues similar to those in the Cajas lawsuit. On
December 7, 1999, a class action complaint ("Complaint") was filed against HCRI
and one HCRI client in the United States District Court for the Western District
of Texas, San Antonio Division, Timothy Patrick Franks, on behalf of himself and
similarly situated persons v. Prudential Health Care Plan, Inc. and Healthcare
Recoveries, Inc. The plaintiff asserts claims on behalf of members of ERISA
governed health plans. The Complaint alleges that HCRI's subrogation recovery
efforts on behalf of its client Prudential Health Care Plan, Inc. ("Prudential")
violated a number of common law duties, as well as the terms of certain ERISA
plan documents, the RICO, the federal Fair Debt Collection Practices Act, the
Texas Insurance Code and the Texas Business and Commerce Code. The Complaint
alleges that HCRI, as the subrogation agent for Prudential, made fraudulent
misrepresentations in the course of unlawfully pursuing subrogation and
reimbursement claims that plaintiffs assert are unenforceable because (1)
prepaid medical service plans may not exercise rights of subrogation and
reimbursement; (2) the subrogation and reimbursement claims asserted by the
Company are not supported by contract documents that provide enforceable
recovery rights and/or do not adequately describe the recovery rights; and (3)
the sums recovered pursuant to such claims unlawfully exceed the amount
Prudential paid for medical goods and services. The Complaint further alleges
that HCRI unlawfully pursued subrogation and reimbursement claims by (1) failing
to pay pro rata attorney's fees to attorneys who represented class members with
respect to tort claims underlying the subrogation and reimbursement claims; and
(2) recovering subrogation and reimbursement claims from class members who have
not been fully compensated for their injuries. Plaintiffs, on behalf of the
class, demand compensatory damages, punitive damages, and treble damages under
RICO, costs and reasonable attorneys' fees. On January 18, 2000, the defendants
filed a motion to dismiss the Complaint, which remains pending. The court has
not yet addressed the question whether to certify the putative class.

     On December 22, 1999, a class action Complaint was filed against HCRI and
one HCRI client in the Court of Common Pleas of Richland County, South Carolina,
Estalita Martin et al. vs. Companion Health Care Corp., and Healthcare
Recoveries, Inc. On January 21, 2000 defendant Companion Healthcare Corp.
("CHC") filed an Answer and Counterclaim and plaintiff Martin filed a First
Amended Complaint ("Amended Complaint"). The Amended Complaint asserts that
HCRI's subrogation recovery efforts on behalf of its client. CHC violated a
number of common law duties, as well as the South Carolina Unfair Trade
Practices Act. The Amended Complaint alleges that HCRI as the subrogation agent
for CHC, made fraudulent misrepresentations in the course of unlawfully pursuing
subrogation and reimbursement claims that plaintiffs assert are unenforceable
because (1) prepaid medical service plans may not exercise rights of subrogation
and reimbursement; (2) the subrogation and reimbursement claims asserted by the
Company are not supported by contract documents that provide enforceable
recovery rights and/or do not adequately describe the recovery rights; and (3)
the sums recovered pursuant to such claims unlawfully exceed the amount CHC was
entitled to collect for such medical goods and services. The Complaint further
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alleges that HCRI and CHC unlawfully pursued subrogation and reimbursement
claims by (1) failing to pay pro rata costs and attorney's fees to attorneys who
represented class members with respect to tort claims underlying the subrogation
and reimbursement claims; and (2) failing to include in subrogation and
reimbursement claims all applicable discounts that CHC received for such medical
goods and services. Plaintiffs, on behalf of the class, demand compensatory
damages, punitive damages, and treble damages, disgorgement of unjust profits,
costs, and prejudgment interest and attorneys' fees. HCRI was served with the
original Complaint in late December and is preparing a formal response. The
court has not yet addressed the question of whether to certify the putative
class.

     The DeGarmo, Cajas, Franks, Baker and Martin lawsuits, or any one of them,
if successful, could prevent the Company from recovering the "reasonable value"
of medical treatment under discounted fee for service ("DFS"), capitation and
other payment arrangements. The DeGarmo, Conte, Cajas, Franks, Baker and Martin
lawsuits, or any one or more of them, if successful, could require the Company
to refund, on behalf of its clients, recoveries in a material number of cases.
In addition, an adverse outcome in any of the above referenced lawsuits could
impair materially HCRI's ability to assert subrogation or reimbursement claims
on behalf of its clients in the future.

     In terms of the Company's business practices and the allegations underlying
the DeGarmo, Cajas, Franks, Baker and Martin cases, at the end of 1993 HCRI had
ceased the practice of recovering the "reasonable value" of medical treatment
provided by medical providers in circumstances where HCRI has entered into a DFS
arrangement with its clients. From that date, the Company's policy has been not
to recover the "reasonable value" of medical treatment in DFS arrangements.
However, HCRI historically and currently recovers the "reasonable value" of
medical treatment provided under capitation arrangements and other payment
arrangements with medical providers on behalf of those clients that compensate
medical providers under these payment mechanisms, to the extent that these
benefits are related to treatment of the injuries as to which clients have
recovery rights. The Company believes that its clients' contracts, including the
contracts that provide for recovery under DFS, capitation and other payment
arrangements are enforceable under the laws potentially applicable in these
cases. As a result, and taking into account the underlying facts in each of
these cases, the Company believes it has meritorious grounds to defend these
lawsuits, it intends to defend the cases vigorously, and believes that the
defense and ultimate resolution of the lawsuits should not have a material
adverse effect upon the business, results of operations or financial condition
of the Company. Nevertheless, if any of these lawsuits or another lawsuit
seeking relief under similar theories were to be successful, it is likely that
such resolution would have a material adverse effect on the Company's business,
results of operations and financial condition.

     Recently, management of the Company has observed that, in parallel with
widely-reported legislative concerns with the healthcare payment system, there
also has occurred an increase in litigation, actual and threatened, directed at
healthcare payors and related parties. In addition, certain attorneys who have
gained prominence in representing plaintiffs in recent actions against tobacco
companies have publicly stated their intentions to institute class action
lawsuits against healthcare payors, particularly those in the so-called "managed
care industry" and related parties including, specifically, the Company. As a
result of the foregoing, there can be no assurance that the Company will not be
subject to further class action litigation, that existing and/or future class
action litigation against the Company and its clients will not consume
significant management time and or attention and that the cost of defending and
resolving such litigation will not be material.

COMPETITION

     HCRI competes primarily with the internal recovery departments of potential
customers and other subrogation recovery service vendors. To the Company's
knowledge, there are two smaller, but significant, independent providers of
subrogation recovery services in addition to HCRI. Both independent competitors
preceded HCRI's entry into the recovery industry, and no major competitors have
entered the market since that time. HCRI believes that it has competitive
advantages in the bulk of its market, including process expertise, capital
requirements necessitated by the unusually long revenue cycle in the recovery
industry, assembling and training a qualified and productive employee base
possessing appropriate industry expertise, and an information processing system
designed to aid investigators and recovery personnel engaged in the recovery
process. However, there are participants in the healthcare insurance and
transaction processing
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industries that possess sufficient capital, and managerial and technical
expertise to develop competitive services.

DEPENDENCE ON KEY PERSONNEL

     The Company's success depends to a significant degree upon the continued
contributions of members of the Company's senior management and other key sales,
marketing, computer systems and operations personnel, and the loss of any such
persons could have a materially adverse effect on the business of the Company.
The Company's success also depends upon its ability to attract and retain highly
qualified and skilled managerial, sales, marketing and computer software
development and operations personnel, the competition for whom is intense. There
can be no assurance that the Company will be successful in hiring or retaining
the requisite personnel, which could have a material adverse effect on the
Company's business, results of operations and financial condition. The Company
does not maintain insurance on key personnel. The Company has employment
agreements with Patrick B. McGinnis, Chairman and Chief Executive Officer,
Robert Jefferson, Sr. Vice President Business Development and Tim J. Cahill, Sr.
Vice President Sales & Marketing, and Kevin O'Donnell, Corporate Executive Vice
President -- SAI Sales Division. The Company has Change of Control and Severance
Agreements with Debra M. Murphy, Executive Vice President -- Subrogation
Operations, Douglas R. Sharps, Corporate Executive Vice President -- Finance and
Administration Chief Financial Officer and Secretary, Robert G. Bader, Executive
Vice President Overpayments Operations, and Mark J. Bates, Sr. Vice President
Systems.

     HCRI employs, and facilitates the development of, skilled
knowledge-workers. HCRI maintains an extensive, in-house training program, which
it believes is attractive to employees and essential in developing the necessary
industry-specific skills. All HCRI employees participate in one of four
incentive compensation plans, depending upon the responsibilities of each
employee. The Company believes the tight labor market could have an impact on
future hiring. HCRI employed approximately 741 persons as of December 31, 1999.

UPGRADE OF INFORMATION MANAGEMENT SYSTEM AND LOSS OF PROPRIETARY TECHNOLOGY

     System Upgrade.  Although the SubroSystem, a key component of HCRI's
recovery process, historically served the Company's operational and management
information needs, HCRI developed a plan (the "System Upgrade") under which it
would, over a 24-month to 36-month period, migrate the SubroSystem to a modern
network operating system and database architecture. The System Upgrade includes
a detailed process for the comprehensive testing of all key elements prior to
implementation of each step of the upgrade.

     At the end of January 1998, HCRI successfully migrated the SubroSystem to a
Windows NT environment, the first step of the System Upgrade. In the course of
migration, the Company encountered technical difficulties generally of the type
and number management believes are common with conversions of similar size and
scope. Following migration, HCRI has continued to maintain an inventory of
platform components for redundancy, to store on-line data on redundant devices,
and, on a daily basis, to copy all on-line storage systems to magnetic tapes,
which are then removed to a security vault off-site. HCRI's systems department
handles development and maintenance of the SubroSystem.

     Work was completed in late 1998 on the second step of the SubroSystem
Upgrade for the creation of a logical data model to support subrogation and
other processes. This work resulted in the initial implementation of a
relational database to support data warehousing. The last step of the System
Upgrade, the migration of data and process to the data warehouse to support
client reporting and ad hoc analysis, was completed in 1999. In total the
Company spent approximately $4 million on this project.

     Dependence on Proprietary Software Applications.  The Company's success
depends, in part, upon its proprietary technology, specifically the integrated
software programs comprising the SubroSystem. Although, federal copyright law
protects certain elements of the SubroSystem, such protection neither confers a
monopoly on the use of subrogation recovery software systems nor prevents
competitors from developing similar systems. The SubroSystem, like all other
software programs, may be subject to a variety of replication techniques (for
example, reverse engineering, logic tracing, disassembly and decompilation) that
would produce a functionally similar software system not covered by the
Company's registered copyright. Therefore, there can be no assurance that the
Company's registered copyright on the SubroSystem will preclude or deter
<PAGE>   8

circumvention by current or future competitors, with the effect that the Company
might lose any advantage conferred by the SubroSystem.

CONSOLIDATION AMONG HEALTHCARE PAYORS: PRESSURE ON MARGINS

     Consolidation among healthcare payors could increase their bargaining
strength as the number of lives insured or otherwise covered by such healthcare
payors grows. This consolidation may place downward pressure on the Company's
historic margins and may create additional competition from such healthcare
payors in the form of better-equipped in-house recovery departments.
Additionally, existing clients have been and may in the future be lost through
acquisition by non-client healthcare payors.

LIMITATION ON DIVIDENDS

     From August 28, 1995, the date Medaphis Corporation ("Medaphis") acquired
HCRI, until May 1997 when Medaphis sold HCRI in an initial public offering (the
"Offering"), the Company paid dividends to Medaphis totaling $13.6 million.
Following the Offering, however, the Company has retained earnings to finance
the growth and development of its business and does not anticipate paying cash
dividends on its Common Stock in the foreseeable future. The Company's credit
facility limits its ability to pay dividends on its Common Stock.

YEAR 2000 ISSUES

     The Company previously recognized the material nature of the business
issues surrounding the computer processing of dates into and beyond the Year
2000 and took corrective action. The Company's efforts included replacing and
testing three basic aspects of its business operations: internal information
technology ("IT") systems, including the internally-written systems that support
subrogation and bill audit recovery; internal non-IT systems, including office
equipment; and material third-party relationships. Management believes the
Company has completed all of the activities within its control to ensure that
the Company's systems are Year 2000 compliant and the Company has experienced no
interruptions to normal operations due to the start of the Year 2000.

     The Company spent approximately $216,000 during 1999 related to Year 2000
readiness, which was higher than the expected total expenditure of $175,000
previously disclosed due to the additional costs of contract labor for continued
retesting. The Company funded these costs through funds generated from
operations and such costs were generally not incremental to existing IT budgets;
internal resources were re-deployed and timetables for implementation of
replacement systems were accelerated. The Company does not currently expect to
apply any further funds to address Year 2000 issues.

     To date, the Company has not experienced any material disruptions of its
internal computer systems or software applications, or with the computer systems
or software applications of its third party vendors, suppliers or service
providers. The Company will continue to monitor these third parties to determine
the impact, if any, on the business of the Company and the actions the Company
must take, if any, in the event of non-compliance by any of these third parties.
Based upon the Company's assessment of compliance by third parties, there
appears to be no material business risk posed by any such noncompliance.
Moreover, the Company generally believes that the vendors that supply products
to the Company for resale are responsible for the products' Year 2000
functionality.

     Although the Company's Year 2000 rollover did not present any material
business interruptions, there are some remaining Year 2000-related risks,
including risks due to the fact that Year 2000 is a leap year. These risks
include potential product supply issues and other non-operational issues.
Management believes that appropriate action has been taken to address these
remaining Year 2000 issues and contingency plans are in place to minimize the
financial impact to the Company. Management, however, cannot be certain that
Year 2000 issues will not have a material adverse impact on the Company, since
the evaluation process is not yet complete and it is early in the Year 2000.
<PAGE>   9

ABILITY TO MANAGE GROWTH

     The Company has experienced significant growth in its product offerings,
revenues and the number of its employees. This growth has resulted in an
increase in responsibilities placed upon the Company's management and has placed
added pressures on the Company's operating systems. The Company is expanding its
management, systems development and support, marketing, sales and customer
services, which may place a strain on the Company's operations. Furthermore, the
initial expenses associated with the addition of new clients may be incurred
before the Company recognizes any revenues from such new clients. There can be
no assurance that the Company will successfully manage its expanding operations
or implement its growth strategy; and if the Company's management is unable to
manage growth effectively, the Company's business, operating results and
financial condition could be adversely affected.

ABILITY TO EXECUTE GROWTH STRATEGY

     In addition to growing its existing claims recovery business and other
medical cost containment services, HCRI intends to extend its systems-driven,
process-oriented approach, through acquisitions and internal developments, to
outsourcing opportunities in other service industries. HCRI believes that future
development opportunities are likely to be characterized by:

     - outsourcing services that produce predictable and recurring revenue
       streams;

     - competitive advantages from processes, automation and the provision of
       knowledge-rich services;

     - development-stage niche markets;

     - value-based pricing; and

     - a focus on (non-exclusive) healthcare information services.

     There can be no assurance that the Company will be successful in the
internal development or acquisition of new lines of business or that it will be
able to successfully integrate or manage new lines of business which it may
develop or acquire, and if the Company's management is unable either to execute
this growth strategy or to manage the resulting growth, the Company's business,
operating results and financial condition could be adversely affected.

CERTAIN ANTI-TAKEOVER PROVISIONS

     Certain provisions of the Amended and Restated Certificate of Incorporation
and Bylaws of the Company may be deemed to have the effect of making difficult
an acquisition of control of the Company in a transaction not approved by the
Company's Board of Directors. These provisions include the ability of the
Company's board of directors to issue shares of preferred stock in one or more
series without further authorization of the Company's stockholders. Accordingly,
the Company's Board of Directors is empowered, without stockholder approval, to
issue preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of Common Stock. In the event of such issuance, the preferred stock
could also be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company.
Although the Company has no current intention to issue any shares of its
preferred stock, there can be no assurance that the Company will not do so in
the future. These provisions may also have the effect of discouraging a
third-party from making a tender offer or otherwise attempting to obtain control
of the Company even though such a transaction might be economically beneficial
to the Company and its stockholders. Furthermore, the Company is subject to the
anti-takeover provisions of Section 203 of the Delaware General Corporation Law
which prohibits the Company from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the time of the
transaction in which the person first becomes an "interested stockholder,"
unless the business combination is approved in a prescribed manner. The
application of Section 203 could have the effect of delaying or preventing a
change of control of the Company. Certain other provisions of the Company's
Amended and Restated Certificate of Incorporation and Bylaws may have the effect
of delaying or preventing
<PAGE>   10

changes of control or management of the Company, which could adversely affect
the market price of the Common Stock. Among these are provisions:

     - requiring a classified board of directors;

     - limiting the person able to, and the procedures for, calling a special
       meeting of the stockholders; and

     - requiring certain supermajority stockholder votes to amend certain of the
       foregoing provisions.

     On February 12, 1999, the Board of Directors adopted a Stockholder Rights
Plan and declared a dividend of one preferred stock purchase right (a "Right")
for each outstanding share of Common Stock of the Company. The dividend was
payable to stockholders of record on March 1, 1999. The Rights, which will
initially trade with the common stock, separate and become exercisable only upon
the earlier to occur of (i) 10 days after the date (the "Stock Acquisition
Date") of a public announcement that a person or group of affiliated persons has
acquired 20% or more of the common stock (such person or group being hereinafter
referred to as an "Acquiring Person") or (ii) 10 days (or such later date as the
Board of Directors shall determine) after the commencement of, or announcement
of an intention to make, a tender offer or exchange offer that could result in
such person or group owning 20% or more of the common stock (the earlier of such
dates being called the "Distribution Date"). When exercisable, each Right
initially entitles the registered holder to purchase from the Company one
one-hundredth of a share of a newly created class of preferred stock of the
Company at a purchase price of $65 (the "Purchase Price"). The Rights are
redeemable for $0.001 per Right at the option of the Board of Directors. The
Rights expire on March 1, 2009.

     If any person becomes an Acquiring Person, each holder of a Right will
thereafter have the right (the "Flip-In Right") to receive, in lieu of shares of
preferred stock and upon payment of the Purchase Price, shares of Common Stock
having a value equal to two times the Purchase Price of the Right. Also, if at
any time on or after the Stock Acquisition Date, (i) the Company is acquired in
a transaction in which the holders of all the outstanding shares of Common Stock
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Company's assets, cash flow or earning power is sold or transferred other than
in the ordinary course of business, then each holder of a Right shall thereafter
have the right (the "Flip-Over Right") to receive, in lieu of shares of
preferred stock and upon exercise and payment of the Purchase Price, common
shares of the acquiring company having a value equal to two times the Purchase
Price. If a transaction would otherwise result in a holder having a Flip-In as
well as a Flip-Over Right, then only the Flip-Over Right will be exercisable. If
a transaction results in a holder having a Flip-Over Right subsequent to a
transaction resulting in the holder having a Flip-In Right, a holder will have a
Flip-Over Right only to the extent such holder's Flip-In Rights have not been
exercised.

PROFESSIONAL LIABILITY AND INDEMNITY OBLIGATIONS TO CLIENTS

     From time to time, the Company may be subject to claims from its clients
that it failed to provide services in accordance with its contract or that its
recovery activities have harmed the client. The Company has agreed to indemnify
and hold certain of its clients harmless from negligent acts or omissions of the
Company in the performance of recovery services. Although the Company maintains,
and intends to continue maintaining, insurance covering these types of risks,
there can be no assurance that such insurance will be an adequate amount or will
be available at reasonable costs in the future.

STOCK PRICE VOLATILITY

     The Company believes that a variety of factors could cause the price of the
Common Stock to fluctuate, perhaps substantially, including:

     - announcements of developments related to the Company's business;

     - changes in financial estimates by securities analysts; and

     - developments in the Company's relationships with its customers,
       distributors and suppliers.
<PAGE>   11

     In addition, in recent years the stock prices of companies have experienced
extreme price fluctuations, which have often been unrelated to the operating
performance of such companies. Similar fluctuations may adversely affect the
market price of the Common Stock in the future.

     During 1999, the market for the Company's Common Stock experienced material
price and volume fluctuations. An investment in the Company's Common Stock is
not suitable for any investor who is unwilling to assume the risk associated
with any such price and volume fluctuations.

     This Safe Harbor Statement supersedes the Safe Harbor Statements filed as
Exhibit 99.1 to the Company's Annual Report on Form 10-K, for the year ended
December 31, 1998.