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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 and certain legal doctrine. The following identifies specific risks in
these three categories:

  Health Insurance Primacy Laws

     Auto Choice Reform Act.  In both of the last two Congresses, legislation
known as the Auto Choice Reform Act (the "Proposed Act") was introduced, but not
enacted. Under the Proposed Act, in those states not opting out of its
provisions, individual drivers would have been able to 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
historically represented approximately 64% of the Company's revenues. Should
similar legislation be enacted, it could have a material adverse effect on the
Company's business, results of operations and financial condition.
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     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 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 December 28, 2000, the
Secretary of Health and Human Services (the "Secretary") published the Standards
for Privacy of Individually Identifiable Health Information (65 Fed. Reg. 82462
(2000)) (the "Rules"). The Rules implement the privacy requirements of the
Administrative Simplification subtitle of the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA"). The Rules are scheduled to become
effective on April 14, 2001, after which affected entities will have at least 24
months to comply. The Rules set standards to protect the privacy of individually
identifiable health information that is transmitted to and from health care
providers, health plans and similar health care entities. The requirements of
the Rules will also extend to the "business associates" (as defined in the
Rules) of the covered entities. The covered entities are required to enter into
agreements with their business associates extending many provisions of the Rules
to those business associates. The covered entities are responsible for enforcing
those contractual provisions.

     The Rules establish 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 to amend their health
information, and (c) administrative, technical and physical safeguards required
of entities that use, maintain, or transmit protected health information. The
Rules generally prohibit disclosure or use of protected health information
except pursuant to certain authorizations or consents (as defined in the Rules)
by the patient. The Rules allow a health plan (as defined in the Rules) to
condition enrollment in the health plan on the person enrolling providing their
consent to certain health plan operations, including, inter alia, activities
related to "payment" (as defined in the Rules). The Rules define "payment" to
include "subrogation of health benefit claims." (65 Fed. Reg. 82805 (2000)).

     On February 26, 2001, the Secretary announced that a new period for public
comment on the Rules would extend through March 30, 2001, and suggested that
additional changes in the Rules may be forthcoming. Even if the Rules remain
unchanged, they could impair subrogation recovery practices by creating
administrative burdens (for example, individuals' rights 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 Rules do not prevent states from imposing more strict privacy standards that
could have similar impacts on subrogation.

     The provisions of the Rules 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. In addition, state laws governing privacy of medical or
insurance records and related matters may significantly affect the Company's
business.

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  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
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,"
which 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 and 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 twenty clients representing
approximately 7.6 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
generally provide for contingency fees from recoveries under a variety of
pricing regimes. These contracts are generally terminable on 60 to 180 days'
notice by either party, although in a few cases the contracts extend over a
period of years. The Company's contracts generally provide that in the event of
termination, the Company is entitled to complete the recovery process on the
existing backlog or to receive a cash payment, designed to approximate the gross
margin that would otherwise have been earned from the recovery on the backlog of
the terminating client. See Part I. Item 1. "Business -- 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 loss of business by a client or the acquisition of a client by a
       non-client;
     - the postponement of client decisions to enter into contracts;
     - delays in transmission of clients' claims data;
     - changes in prices offered to new or renewing clients;
     - timing of client 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.
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     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.

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 alleges that HCRI engaged in
fraudulent or negligent practices on behalf of its clients by attempting to
recover, via subrogation, amounts in excess of the actual amounts paid for those
services and that HCRI pursued subrogation recoveries from individuals whose
health insurance plans did not specifically provide for subrogation. HCRI has
responded to these allegations by maintaining that the subrogation rights of its
clients provide for recovery of medical treatment at the "prevailing rates" or
"reasonable value" of those services and that instances in which recoveries were
made or sought against individuals without specific plan language occurred due
to either mistaken referrals from clients or reliance on equitable or common law
subrogation rights. 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 February 5, 2001, the Company announced that the parties to the DeGarmo
lawsuit had agreed in principal to settle for $3 million and certain
non-monetary terms primarily affecting subrogation recovery activities of one
HCRI client in West Virginia. The agreement in principal is subject to
negotiation and finalization of definitive settlement documentation, a fairness
hearing and court approval, which the Company believes will take place in
mid-May 2001. The Company will fund the settlement with cash flow from
operations and/or borrowings under its existing credit facility. The Company
believes that the settlement agreement will not have an adverse effect on its
subrogation recovery activities. The Company's primary reason for settling the
DeGarmo litigation is its unusual facts, which are, to the Company's best
knowledge, peculiar to this case. The Company does not believe that this
proposed settlement will have an effect on its defense of any other lawsuits or
on its current level of determination to defend vigorously those lawsuits.

     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

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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. In May, 2000, plaintiffs moved to certify the putative class
and HCRI thereafter filed opposition papers. That motion has now also been fully
briefed and remains pending.

     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.

     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
of 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 1999, and has answered, denying all allegations. The
court has not yet addressed the question of 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 Complaint asserted claims on behalf of members of ERISA
governed health plans and alleged that HCRI's subrogation recovery efforts on
behalf of its client Prudential violated a number of common law duties, as well
as the terms of certain ERISA plan documents, RICO, the federal Fair Debt
Collection Practices Act, the Texas Insurance Code and the Texas Business and
Commerce Code. The Complaint alleged 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

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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
alleged that HCRI unlawfully pursued subrogation and reimbursement claims by (1)
failing to pay pro rata attorney's fees to attorneys who represented purported
class members with respect to tort claims underlying the subrogation and
reimbursement claims; and (2) recovering subrogation and reimbursement claims
from purported class members who have not been fully compensated for their
injuries. Plaintiffs, on behalf of the purported class, demanded 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.

     In response to the defendants' motion, on February 28, 2001, the court
rendered its opinion and entered an order dismissing all of the plaintiff's
claims with the exception of the plaintiff's claim for attorney fees, which
remains pending before the court for disposition. On March 14, 2001, HCRI filed
an answer to the Complaint denying all of the plaintiff's allegations. Also on
March 14, 2001, the plaintiff filed a motion to alter or amend the court's
ruling on the motion to dismiss. The court has not yet addressed that motion,
nor has the court addressed the issue of class certification.

     On December 22, 1999, a class action complaint ("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
Amended Complaint further 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 purported 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 purported 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 1999 and has answered denying all allegations. HCRI filed a motion
to dismiss on August 31, 2000. HCRI filed a Memorandum in Support of that Motion
to Dismiss on December 22, 2000. The Court held a hearing on that motion on
December 29, 2000. The Court has not yet ruled on the motion. The court has not
yet addressed the question of whether to certify the putative class.

     The 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 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 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 under DFS arrangements with HCRI's clients. From that date,
the Company's policy has been not to recover the "reasonable value" of medical
treatment in DFS
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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 it 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 one or more other
lawsuits 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.

     On March 12, 2001, a Complaint ("Complaint") was filed against HCRI in the
United States District Court for the Eastern District of Louisiana, in a
putative class action brought by Kyle M. Hamilton. In that action, Hamilton v.
Healthcare Recoveries, Inc., No. 01-0650, plaintiff asserts that HCRI's
subrogation recovery efforts on behalf of its clients violate certain Louisiana
state laws, the federal Fair Debt Collection Practices Act and the Louisiana
Unfair Trade Practices Act. The Complaint alleges that HCRI intentionally and
negligently interfered with the plaintiff's and the putative class members'
rights to settle certain personal injury claims. The Complaint further alleges
that HCRI unlawfully pursued subrogation and reimbursement claims that plaintiff
asserts are unenforceable because the clauses in HCRI's clients' coverage
documents that create such recovery rights are rendered null and void by
Louisiana statutes that generally prohibit coordination of benefits with
individually underwritten insurance coverages. Plaintiff purports to represent a
class consisting of all persons covered under group health policies that were
issued or delivered in the State of Louisiana and who received any communication
from HCRI attempting to enforce any clauses that allegedly were rendered null
and void by Louisiana law. Plaintiff seeks on behalf of the purported class
compensatory and statutory damages, interest, costs, attorneys' fees and such
additional damages and relief as may be allowed by any applicable law. HCRI was
served with the Complaint in mid-March and is preparing a formal response.

     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, including
class actions brought by nationally prominent attorneys, directed at healthcare
payors and related parties. 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 outsource recovery service vendors. To the Company's knowledge,
there are two smaller, but significant, independent providers of subrogation
recovery services in addition to HCRI. There are two different vendors that
provide competitive overpayment recovery outsourcing services, as well as three
national companies that provide competing provider bill auditing services.
Finally, the Company has identified only one competitor that attempts to serve a
national market with respect to property and casualty insurance subrogation
outsourcing and who sells subrogation software to property and casualty
insurers. 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 examiners engaged in the recovery process. However, there are participants
in the healthcare, insurance, transaction processing and software development
industries that possess sufficient capital, and managerial and technical
expertise, to develop competitive services.

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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 and
Kevin O'Donnell, Executive Vice President Corporate; and President, SAI Sales
Division. The Company has Severance Agreements with Debra M. Murphy, Executive
Vice President -- Subrogation Operations, Douglas R. Sharps, 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 recovery and management 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 677 persons as of December
31, 2000.

PROPRIETARY TECHNOLOGY

     Dependence on Proprietary Software Applications.  The Company's success
depends, in part, upon its proprietary technology, specifically the integrated
software programs (the "SubroSystem") that supports its subrogation operations.
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 circumvention by current or future
competitors, with the effect that the Company might lose any advantage conferred
by the SubroSystem.

     Migration to New System.  The Company expects to complete development of a
web-enabled subrogation software application for health insurance in the second
quarter of 2001 and an application for P&C insurance during the third quarter of
2001, and market them under the trade name ("Troveris"). The Company anticipates
that it will begin migrating its subrogation operations, currently run on the
SubroSystem, to Troveris software applications in the fourth quarter of 2001 and
complete the transition in the second quarter of 2002. At that time the Company
expects to abandon the SubroSystem. There can be no assurance that the Company
will successfully complete development of Troveris software applications or
implement a migration of its subrogation operations to Troveris software
applications. If the Company's management is unable to manage this development
and migration effectively, the Company's business, results of operations and
financial condition could be adversely affected. In addition, if the Company is
not successful in developing, marketing or migrating Troveris software
applications, any reduction in technology expenses anticipated by the Company
would not be realized.

     New Product Development.  The Company's future performance will depend in
part upon the Company's ability to develop and successfully introduce new
products and to create and implement enhancements to its existing suite of
products, including those software applications sold by or through Troveris. The
Company has devoted increasingly more resources to product and system
development and enhancements and believes that significant continuing
development and enhancement efforts will be necessary to adapt to

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changing marketplace requirements, to sustain its operations, and to integrate
the products and technologies of acquired businesses. There can be no assurance
that the Company will successfully or in a timely manner develop, acquire,
integrate, introduce, and market new product enhancements or products. There can
be no assurance that such product enhancements or new products developed by the
Company will meet the requirements or achieve or sustain the market acceptance
of payors or others in target markets, and any failure to do so could have a
material adverse affect on the Company's business, results of operations and
financial condition.

     Limited Proprietary Rights; Risk of Infringement.  The Company's success is
dependent to a significant extent on its ability to maintain the proprietary and
confidential aspects of its data processing and computer software technology.
The Company relies on a combination of trade secrets, copyright and trademark
laws, nondisclosure and other contractual provisions to protect its proprietary
rights. There can be no assurance that the measures taken by the Company to
protect its intellectual property will be adequate or that the Company's current
competitors or others will not independently develop products and services that
are substantially equivalent or superior to those of the Company.

     Substantial litigation regarding intellectual property rights exists in the
software industry, and the Company expects that software products may be
increasingly subject to third-party infringement claims as the number of
competitors in the Company's industry segment grows and the functionality of
products overlaps. Although the Company does not believe, based on its current
analysis, that its products infringe upon the proprietary rights of third
parties, there can be no assurance that third parties will not assert
infringement claims against the Company in the future or that a license or
similar agreement will be available on reasonable terms in the event of an
unfavorable ruling on any such claim. In addition, any claim may require the
Company to incur substantial litigation expenses or subject the Company to
significant liabilities and could have a material adverse effect on the
Company's business, results of operations and financial condition. There can be
no assurance that the Company will be successful in its defense of any such
claims.

     Risk of Product Defects; Failure to Meet Performance Criteria.  Software
products, such as those to be offered by the Company, at times contain errors or
failures, especially when initially introduced or when new versions are released
or processes implemented. Although the Company conducts extensive testing,
software errors are sometimes discovered in certain enhancements and products
and services after their introduction. There can be no assurance that, despite
testing by the Company and by current and potential customers, errors or
performance failures will not occur in software products and services under
development or in other enhancements or products after commencement of
availability or implementations. Such errors or performance failures could
result in the loss of revenue and customers, delay in market acceptance,
diversion of development resources, damage to the Company's reputation or
increased service and warranty costs, any of which could have a material adverse
effect upon the Company's business, results of operations and financial
condition.

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

     Since the initial public offering of the Company's Common Stock in May 1997
(the "Offering"), 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. Any future determination to pay
cash dividends will be at the discretion of the Board and will be dependent upon
the Company's financial condition, results of operations, credit agreements,
capital requirements and such other factors as the Board deems relevant.

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ABILITY TO MANAGE GROWTH

     Since the Offering, 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 cost
management services, HCRI intends to extend its systems-driven, process-oriented
approach, through acquisitions and internal development, to outsourcing
opportunities in other service industries, including the property and casualty
insurance industry. HCRI believes that future development opportunities are
likely to be characterized by:

     - outsourcing services that produce predictable and recurring revenue
       streams;
     - the sale of unbundled components of the Company's traditional subrogation
       outsourcing services;
     - competitive advantages from effective process management, proprietary
       systems and the provision of knowledge-rich services;
     - the development of niche markets;
     - value-based pricing; and
     - a non-exclusive focus on healthcare information services.

     There can be no assurance that the Company will be successful in the
internal development or acquisition of additional claims recovery service or new
lines of business or that it will be able to successfully integrate or manage
additional claims recovery services or 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,
results of operations and financial condition could be adversely affected.
Furthermore, there can be no assurance that the Company will be successful in
attaining adequate funding to complete such developments or acquisitions. In
addition, there can be no assurance that the Company's entrance into the
property and casualty market will be successful, that the Company will be able
to leverage its healthcare subrogation expertise and resources to provide
services to this market effectively or that it will be able to achieve
profitability in this market. If the Company is unable to successfully penetrate
the property and casualty market, leverage its existing expertise in healthcare
or achieve anticipated revenue and gross margin targets, the Company's business,
results of operations 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

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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 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 persons 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 in an adequate amount or
will be available at reasonable costs in the future.

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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.

     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.

     Over the past three years, 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 fiscal year
ended December 31, 1999.

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