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                                                                    EXHIBIT 99.1

                             TROVER SOLUTIONS, 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. Trover Solutions, Inc. (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 the Company. 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, the Company 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.

     The Company 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.  During May 2001, Congress proposed legislation
known as the Auto Choice Reform Act of 2001 (the "Proposed Act"). Similar bills
were introduced but not enacted in each of the two previous Congresses. Under
the Proposed Act, in those states not opting out of its provisions, individual
drivers would be able to choose to be covered by an auto insurance system in
which healthcare insurers, with some exceptions, may be unable to recover 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 asserted 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 not introduced in Congress again in the future, 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.  The Company's activities
involve the receipt and use of confidential health information from or on behalf
of its clients. On December 28, 2000, the Secretary (the "Secretary") of Health
and Human Services ("HHS") promulgated the Standards for Privacy of Individually
Identifiable Health Information. 45 C.F.R. Parts 160 and 164 (as modified, the
"Privacy Rule"). The Secretary modified certain provisions of the Privacy Rule
in August 2002. The Privacy Rule, which deals with the use and disclosure of
health information, implements certain requirements of the Administrative
Simplification subtitle of the Health Insurance Portability and Accountability
Act of 1996 ("HIPAA"). The Privacy Rule became effective on April 14, 2001.
Health plans, health care clearinghouses, and certain health care providers
covered by the Privacy Rule ("Covered Entities") generally have to comply by
April 14, 2003. The Privacy Rule prescribes the manner in which Covered Entities
are permitted or required to use and disclose individually identifiable health
information subject to the Privacy Rule's requirements, known as "protected
health information". The Privacy Rule also requires Covered Entities to
implement certain "administrative" requirements, such as establishing relevant
policies and procedures, designating a privacy official responsible for the
development and implementation of the policies and procedures, and training
affected members of the workforce regarding the policies and procedures. The
Privacy Rule establishes a complex regulatory framework on a variety of
subjects, including, but not limited to, (a) disclosures and uses of protected
health information that require patient consent or authorization, (b)
individuals' rights to access, amendment, and accounting regarding their
protected health information, and (c) individuals' rights to receive notice of
Covered Entities' practices with respect to protected health information.

     The Privacy Rule affects other entities, that are not necessarily Covered
Entities under the Privacy Rule, who perform certain functions or activities on
behalf of Covered Entities. Entities performing certain functions or activities
on behalf of a Covered Entity are treated as "business associates" of a Covered
Entity under the Privacy Rule. The Company's activities will make it a business
associate of customers that are Covered Entities, such as health plans. The
Privacy Rule requires the Covered Entity and its business associates to enter
into contracts that meet certain requirements. Therefore, although a business
associate to a Covered Entity is not directly subject to the Privacy Rule, it
will be subject to certain similar requirements imposed through its business
associate contracts. Significantly, however, the Privacy Rule does not require
business associate contracts to obligate business associates to implement
certain organizational requirements the Privacy Rule imposes upon Covered
Entities, such as appointing a privacy officer or establishing and distributing
a notice of privacy practices. The business associate provisions of the Privacy
Rule do require a Covered Entity that becomes aware of a pattern of activity or
practice of a business associate that constitutes a
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material violation of the business associate's obligations under the contract to
take reasonable steps to end the violation and, if such steps are not
successful, terminate the contract with the business associate, if feasible.

     In August 2000, HHS issued pursuant to HIPAA, a final rule establishing
transaction standards and code sets for the electronic transmission of health
information. 45 C.F.R. Part 162 (the "Transactions Standard"). The Transactions
Standard adopts uniform standards that must be used if one health care provider
or health plan conducts certain electronic transactions with another health care
provider or health plan. Moreover, the Transactions Standard establishes certain
code sets to be used in connection with the standard transactions. Although the
Transactions Standard had a compliance deadline of October 16, 2002, the
Secretary granted a one-year extension upon submission of a plan to come into
compliance.

     In addition to the Privacy Rule and the Transactions Standard, in February
2003 HHS published, pursuant to HIPAA, a final rule governing the security of
health information maintained or transmitted electronically by health plans and
certain clearinghouses and providers (the "Security Standards). The Security
Standards impose extensive additional administrative, physical, technological,
and organizational requirements on Covered Entities and their business
associates. As noted above, certain of the Company's activities make it a
business associate of the Company's clients; therefore the Company will have
some contractual obligations related to the Security Standards. The Security
Standards have a compliance date of April 21, 2005.

     HIPAA, the Privacy Rule, the Transactions Standard and the Security
Standard (collectively, the "Rules") could impair the Company's subrogation
recovery practices by creating administrative burdens (for example, by requiring
business associates of Covered Entities to amend health information in certain
circumstances or to restrict subsequent uses of protected health information) or
liability risks that lead health plans to voluntarily restrict their subrogation
recovery practices. 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. However, the Company believes that it will be able to
comply fully with the Rules on a timely basis and without material adverse
effect.

     In addition to the federal protection of health information, state laws
governing privacy of medical or insurance records and related matters may
significantly affect the Company's business. Most states have enacted health
care information confidentiality laws that limit the disclosure of confidential
medical information. The Rules do not preempt state laws regarding health
information privacy that are more restrictive than the Rules. The costs and
efforts associated with compliance with the various state laws could increase in
the future if states begin to enact additional and more comprehensive privacy
legislation and may have a material adverse effect on the Company.

 Other Federal and State Laws

     Changes in a variety of laws could also affect the Company's business. One
such area is insurance law, which comprises a complex network of state and
federal laws, such as the Employee Retirement Income Security Act of 1974
(ERISA), the regulations and orders promulgated under those laws, and the
pertinent case law created by state and federal courts. Similarly, federal or
state laws that would bar or impair healthcare subrogation or 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 healthcare subrogation
and reimbursement may be limited in some cases by three principles of general
application. The first of these is the "made whole
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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. The second is
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 the Company on
behalf of the healthcare payor out of that damage award. Finally, federal courts
have in some venues begun to apply a doctrine under ERISA that prevents health
plans (and their recovery agents) from bringing healthcare reimbursement actions
in federal court.

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 year ended December 31, 2002, clients terminated healthcare recovery
services covering 8.5 million lives; certain of these same clients, however,
kept in place or bought from the Company other healthcare recovery services with
respect to 2.2 million lives. During the three-year period ended December 31,
2002, clients terminated healthcare recovery services covering 16.9 million
lives; these same clients, however, kept in place or bought from the Company
other healthcare recovery services covering 2.6 million lives. Terminations
occurred due to, among other things, consolidations of healthcare payors,
bankruptcy, the selection of another vendor, or because the process was taken
in-house. 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.

     During 2002, UHG management informed the Company of its intention to
terminate subrogation services with respect to all but 1.8 million lives of the
9.7 million lives then subject to the Company's services under a contract with
UHG. UHG's termination of these services resulted from its decision to bring
subrogation recovery services back inside UHG, where they will be performed by
its Ingenix strategic business unit. The Company expects to continue recovering
on the backlog as to which UHG terminated the Company's services, a process that
the Company expects will be completed in 5 to 6 years. The Company's contract
with UHG expired in accordance with its terms on February 1, 2003 except with
respect to 1.8 million lives as to which the Company continues to provide
healthcare subrogation recovery services. UHG is the Company's largest source of
revenue, accounting for 28% of its total revenue in 2002.

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.
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     The Company expends substantial time, effort and funds to install lives and
generate active files. As a result, the Company 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.

LITIGATION

     The Company is engaged in the business of identifying and recovering
subrogation and related claims of its clients, many of which arise in the
context of personal injury lawsuits. As such, the Company operates in a
litigation-intensive environment. Consequently, since its founding in 1988 the
Company has been involved with many litigation matters related to its
subrogation business, sometimes as a defendant and sometimes through its
defendant client. Plaintiffs' attorneys attempting to defeat the clients'
subrogation liens often threaten litigation against the Company and its clients
as a negotiating tactic. Most of the lawsuits that have been filed against the
Company or its clients concern the entitlement to recover a specific, individual
subrogation claim or the amount of the subrogation claim. Typically, these
actions do not ask for punitive damages, are not pled as class actions, and do
not have wide implications with respect to the Company's ongoing business
practices.

     To date, however, the Company has encountered eight noteworthy instances in
addition to the pending lawsuits described under "-- Current Litigation", in
which lawsuits were filed against it or its clients that sought punitive
damages, were pled as class actions, or otherwise made claims or requested
relief that could have materially affected the Company's business practices. The
risk profile for this sort of business practices litigation includes not only
the usual considerations of the potential amount, effect, and likelihood of
loss, but also specifically the potential for punitive damages and class
certification, the possible effects of an adverse verdict on the Company's
business practices, and the likelihood of specific plaintiffs' attorneys
bringing similar actions in other jurisdictions.

     Each of these cases has been completely resolved, by decision of a court or
settlement by the parties, but prior to resolution the Company did not regard
all of these cases as being material in and of themselves. In management's
opinion, these eight cases share a common profile with each other and with the
lawsuits described below under the caption "-- Current Litigation".

     Five of the eight lawsuits named the Company as a defendant and were pled
as class actions. Two of these five cases, one in federal court and the other in
state court, alleged that the Company violated state and federal laws on fair
debt collection practices. In the state court action, the court granted the
Company's motion for summary judgment on all claims in the complaint, which the
court of appeals affirmed. In the federal court action, the Company settled the
matter, prior to the court's ruling on the Company's motion for summary
judgment, for a nominal amount.

     Three of those five lawsuits naming the Company as a defendant were filed
in federal court and charged the Company with a variety of violations of laws
and sought punitive damages. The complaints alleged, among other things, that
the Company committed negligence, fraud and breach of its duties under ERISA by
attempting to recover and actually recovering, by subrogation, the reasonable
value of medical benefits which were provided by the Company's clients under
capitation or discounted-fee-for-service arrangements. One of these lawsuits was
dismissed in a ruling on the merits. Another was settled, after the court denied
class certification, for a nominal amount paid by the Company's client, a
co-defendant in the case. The third case,
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DeGarmo et al. v. Healthcare Recoveries, Inc., was concluded in mid-July 2001
for a settlement payment of $3 million and nonmonetary terms that management
regards as immaterial to the Company's ongoing business.

     Three of the eight lawsuits did not name the Company as a defendant. These
three lawsuits did, however, involve the Company's clients and implicate
important Company business practices. The complaints in these cases alleged,
among other things, violation of state law with respect to the payment of
plaintiffs' attorneys' fees and unfair trade practices, violation of the federal
Health Maintenance Organization Act of 1973, misrepresentation of the rightful
amounts of subrogation claims, and impermissible enforcement of recovery rights.
Two of these cases resulted in judgments in favor of the Company's clients after
litigation of the merits before trial and appellate courts. The other case was
settled for an immaterial amount.

     Management believes that the lawsuits described above will not, as a
general matter, have precedential value for either the cases described below
under the caption "-- Current Litigation" or for any future litigation matters
(all these cases being referred to as the "Pending and Potential Cases").
Indeed, the courts hearing the Pending and Potential Cases may not even become
aware of the outcomes in the eight lawsuits described above. Management expects
that each of the Pending and Potential Cases will be decided on its own merits
under the relevant state and federal laws, which will vary from case to case and
jurisdiction to jurisdiction. The descriptions of the outcomes in the eight
cases dealing with business practices are included here in order to describe the
contexts for this kind of litigation and the Company's relative successes in
handling past business practices litigation, but are not necessarily predictive
of the outcomes of any of the Pending and Potential Cases.

     Moreover, there can be no assurance that the Company will not be subject to
further class action litigation similar to that described below under the
caption "-- Current Litigation", that existing and/or future class action
litigation against the Company and its clients will not consume significant
management time and/or attention or that the cost of defending and resolving
such litigation will not be material.

CURRENT LITIGATION

  Conte v. Healthcare Recoveries

     Conte v. Healthcare Recoveries, Inc., was settled for a nominal amount in
late 2002 after the court denied class certification and dismissed all but one
of the plaintiff's claims. A summary procedural history of the case is described
below.

     In October 1999, a First Amended Class Action Complaint ("Amended
Complaint") was filed against the Company 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 complaint, Conte v. Healthcare Recoveries, Inc., No.
99-10062, the plaintiffs asserted that the Company's subrogation recovery
efforts on behalf of its clients violated a number of state and federal laws,
including the Fair Debt Collection Practices Act and the Florida Consumer
Collection Practices Act. The Amended Complaint also sought a declaratory
judgment that the Company, as the subrogation agent for various healthcare
payors, was not entitled to assert and recover upon subrogation or reimbursement
liens it asserted on settlements obtained from third party tortfeasors when the
settlement was 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. The plaintiffs purported 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 the Company's alleged assertion
and/or recovery of unlawful subrogation/reimbursement rights of its clients.
Each count of the Amended Complaint sought compensatory and/or statutory damages
as well as exemplary and punitive damages. The plaintiffs also sought injunctive
relief, prejudgment interest, costs and attorneys' fees.

     In November 1999, the Company filed a motion to dismiss the Amended
Complaint. In June 2001, the court issued a decision dismissing plaintiffs'
common law claims for fraud and unjust enrichment as well as plaintiffs' claims
under the federal Fair Debt Collection Practices Act and the Florida Consumer
Collection Practices Act. The court did not, however, dismiss the remaining
count of the Amended Complaint
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("Count I"), which seeks a declaratory judgment and damages under ERISA based on
the Company's alleged violation of the "make whole" rule. The Company then filed
an answer with respect to Count I of the Amended Complaint.

     The plaintiffs' motion to certify a nationwide class, which the Company
opposed, was submitted to the court in September 2000. On June 5, 2002, the
court entered an order denying the plaintiffs' motion for class certification
and the plaintiffs did not appeal that order.

     In October 2002, the Company and the two named plaintiffs reached an
agreement in principle to settle all claims in the lawsuit under terms that
would not require any payment by the Company and would not impact the Company's
operations in any respect. The parties subsequently entered into a formal
written settlement embodying the agreement in principle, pursuant to which the
named plaintiffs released all claims against the Company. On February 6, 2003,
the Court entered an order dismissing the action with prejudice.

  Cajas et al. v. Prudential Health Care Plan and Healthcare Recoveries

     On October 28, 1999, a class action plaintiff's Original Petition
("Petition") was filed against the Company and one of the Company's clients 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 the Company'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 the Company, as the subrogation agent for
Prudential, made fraudulent misrepresentations in the course of unlawfully
pursuing subrogation and reimbursement claims that the 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 Company was served
with the Petition in November 1999, and has answered, denying all allegations.
The court has not yet addressed the question of whether to certify the putative
class. After the defendants filed a motion for summary judgment in January 2002,
the plaintiff moved the court to delay consideration of the motion until the
plaintiff could complete additional discovery. The plaintiff's motion to delay
consideration was granted. On October 25, 2002, the plaintiff filed an amended
petition naming one additional plaintiff as a purported class representative.
The amended petition does not add any new claims. The defendants filed a motion
for summary judgment on January 24, 2003 and the plaintiffs filed a cross motion
for summary judgment. On February 25, 2003, a state court judge denied the
defendants' motion for summary judgment that the defendants were entitled to
enforce the terms of Prudential's policies. The same judge granted the
plaintiffs' motion for summary judgment to the extent that Prudential could not
recover more than its costs.

  Franks et al. v. Prudential Health Care Plan and Healthcare Recoveries

     Franks et al. v. Prudential Health Care Plan and Healthcare Recoveries,
Inc., was settled for a nominal amount in February 2003. A summary procedural
history of the case is described below.

     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 the
Company and one of the Company's clients 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 the Company'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 the Company, as the subrogation agent for Prudential, made fraudulent
misrepresentations in the course of unlawfully pursuing
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subrogation and reimbursement claims that the 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
alleged that the Company 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. The plaintiffs, on behalf of the purported class, demanded
compensatory damages, punitive damages, and treble damages under RICO, costs and
reasonable attorneys' fees. In January 2000, the defendants filed a motion to
dismiss the Complaint.

     In response to the defendants' motion, in February 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. In March 2001, the
Company filed an answer to the Complaint denying all of the plaintiff's
allegations. Also in March 2001, the plaintiff filed a motion to alter or amend
the court's ruling on the motion to dismiss. On July 15, 2002, the court denied
the plaintiff's motion to alter or amend the court's ruling on the motion to
dismiss. On February 18, 2003, the defendants served an offer of judgment in the
amount of $21,000 pursuant to Rule 68 of the Federal Rules of Civil Procedure.
That offer was accepted by the plaintiff Timothy Franks in February 2003 and in
March 2003 the court approved dismissal of the case with prejudice.

  Martin et al. v. Companion Health Care and Healthcare Recoveries

     In December 1999, a purported class action complaint ("Complaint") was
filed against the Company and one of the Company's clients in the Court of
Common Pleas of Richland County, South Carolina, Estalita Martin et al. vs.
Companion Health Care Corp., and Healthcare Recoveries, Inc. In January 2000,
the defendant Companion Healthcare Corp. ("CHC") filed an Answer and
Counterclaim and the plaintiff Martin filed a First Amended Complaint ("Amended
Complaint"). The Amended Complaint asserts that the Company'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 the Company, as the subrogation agent for CHC, made
fraudulent misrepresentations in the course of unlawfully pursuing subrogation
and reimbursement claims that the 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 the Company 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. The plaintiffs, on behalf of the
purported class, demand compensatory damages, punitive damages, and treble
damages, disgorgement of unjust profits, costs, prejudgment interest and
attorneys' fees. The Company was served with the original Complaint in late
December 1999 and answered denying all allegations. The Company filed a motion
to dismiss in August 2000 and in June 2001 the court granted the Company's
motion to dismiss. The plaintiffs filed a notice of appeal in July 2001. All
parties have filed briefs, but the appellate court has not yet ruled on the
plaintiffs' appeal of the dismissal, nor has oral argument been scheduled.

  Hamilton v. Healthcare Recoveries

     On March 12, 2001, a Complaint ("Complaint") was filed against the Company
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. 01-650, the plaintiff asserts that the
Company's
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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 the Company 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 the Company unlawfully pursued subrogation and reimbursement claims that
the plaintiff asserts are unenforceable because the clauses in the Company'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 the Company attempting to enforce any clauses that allegedly
were rendered null and void by Louisiana law. The 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. In July 2001, the court granted a motion for summary judgment
filed by the Company as concerned the plaintiff's Fair Debt Collection Practices
Act ("FDCPA") claim, dismissing those claims with prejudice. The court denied
the Company's motion for summary judgment, without prejudice to the right of the
Company to reassert its motion, with respect to the plaintiff's state law
claims. The court ordered that the parties submit memoranda addressing whether
the court still had subject matter jurisdiction, given dismissal of the federal
claim. In August 2001, the court ruled that it lacked subject matter
jurisdiction, thus dismissing the remaining claims, without prejudice. The
plaintiff filed an appeal to the United States Fifth Circuit Court of Appeals.
On November 1, 2002, the Court of Appeals rendered its opinion reversing the
dismissal of the FDCPA claims. The court also affirmed the trial court's
determination that diversity jurisdiction did not exist in the case. The court
remanded the case to the federal district court for further proceedings. The
time in which the Company may seek further appeal has not expired, and the
Company is now reviewing the opinion. The Company disputes the plaintiff's
allegations regarding the applicability of the FDCPA and intends to vigorously
defend its position in this case.

     In addition to filing the appeal in federal court, the Hamilton plaintiff
in October 2001 filed a new complaint in the Civil District Court for the Parish
of Orleans, Louisiana, in a putative class action styled Hamilton v. Healthcare
Recoveries, Inc., 2001-15989. This state court action asserts claims
substantially similar to those in the federal court action. In November 2001,
the Company filed preliminary exceptions to this new complaint.

  Rogalla v. Christie Clinic, PersonalCare Health Management and HealthCare
  Recoveries

     On December 14, 2001, Valerie Rogalla, the plaintiff in a putative class
action against a health care provider, amended her complaint to add Healthcare
Recoveries, Inc. as a defendant in Valerie Rogalla v. Christie Clinic, P.C.,
PersonalCare Health Management, Inc. and Healthcare Recoveries, Inc., No.
01-L-203, Circuit Court of the Sixth Judicial Circuit, Champaign County,
Illinois. In her complaint, the plaintiff makes allegations on behalf of herself
and all others similarly situated. The complaint asserts that the Company, as
subrogation agent for PersonalCare Health Management, made fraudulent
misrepresentations in the course of unlawfully pursuing subrogation and
reimbursement claims. The complaint seeks recovery from the Company for
compensatory damages, punitive damages and costs. The Company disputes the
plaintiff's allegations and intends to vigorously defend its position in this
case. Each defendant filed a motion to dismiss the action. On October 2, 2002,
the Court granted each of the defendants' motions and dismissed the plaintiff's
action entirely. On October 22, 2002, the plaintiff filed her notice of appeal.
A hearing has not yet been scheduled on the plaintiff's appeal.

  Chan v. Trover Solutions

     On November 19, 2002, a Complaint ("Complaint") was filed against the
company in the Superior Court of the State of California for the County of Los
Angeles in a putative class action brought by Roger Chan. In that action, Roger
Chan v. Healthcare Recoveries, Inc. and Trover Solutions, Inc. and Does 1
through 100, inclusive, No. CV 03-0465 FMC, the plaintiff asserts that the
Company's subrogation recovery efforts violate California unfair trade practices
statute by pursuing recovery from ERISA members' personal
<PAGE>

injury recoveries when case law allegedly held that ERISA plans could not
enforce their recovery rights. The Company timely removed the action to federal
court and filed a motion to dismiss. The plaintiff filed a motion to remand the
case back to the state court. On March 3, 2003 the Court entered an order
denying the plaintiff's motion to remand and denying the defendant's motion to
dismiss. The Company disputes the plaintiff's allegations and intends to
vigorously defend its position in this case.

  Bruun et al. v. Prudential Health Care Plan, Prudential Insurance Company of
  America, Aetna, Inc. and Trover Solutions

     On October 30, 2002, the Cajas and Franks plaintiff's counsel filed a class
action lawsuit in the United States District Court for the District of New
Jersey on behalf of two Texas residents against the Company, one of the
Company's clients, Prudential Insurance Company, a subsidiary of the client,
PruCare HMO, and a company who had acquired the business of the client company,
Aetna. The complaint was served on the Company on February 27, 2003.

     In the complaint, plaintiffs Kimberly Bruun and Ashley Emanis, on behalf of
themselves and similarly situated persons, asserted claims on behalf of a
nationwide class of persons who were members of PruCare HMO health plans
governed by ERISA from whom the Company, under its contract with the client,
recovered reimbursement. The complaint alleged that reimbursement recoveries
made by PruCare HMO and the Company violate the terms of the standard PruCare
HMO plan documents, and that reimbursement recoveries violate the Conformity
with Law provision in the standard plan documents because subrogation and
reimbursement are prohibited under the federal HMO Act. The complaint further
alleged that the defendants' subrogation and reimbursement recoveries resulted
in a double recovery to PruCare HMO because PruCare HMO did not account for
subrogation and reimbursement recoveries as offsets to expenses when setting
premium rates. The complaint further alleged that the defendants improperly
recovered in subrogation or reimbursement for services provided by capitated
providers, or that in the alternative, the defendants improperly recovered more
for capitated services than was paid for the services, or alternatively, that
the defendants improperly collected amounts that exceeded the reasonable cash
value of capitated services. The plaintiffs allege that PruCare HMO, Prudential,
Aetna and the Company are fiduciaries and that they each have breached their
fiduciary duty to plaintiffs. Alternatively, the plaintiffs allege that if
Aetna, Prudential and the Company are not fiduciaries, that they knowingly
participated in PruCare HMO's breach of fiduciary duty.

     The plaintiffs, on behalf of the class, demand enforcement of the plan
documents under certain sections of ERISA. The plaintiffs also demand
restitution and disgorgement of sums recovered by defendants and the
establishment of a constructive trust. The plaintiffs also demand an accounting
of PruCare HMO's and Aetna's rate documents, the subrogation and reimbursement
claims for capitated services, and/or the actual costs paid by PruCare HMO and
Aetna for the capitated services.

     The Company has retained counsel and will vigorously defend itself against
these allegations.

  Godair V. American Home Assurance Company, Trover Solutions, and HMO Partners

     On March 14, 2003, Lawrence Godair, the plaintiff in a putative class
action against a motor vehicle insurer, amended his complaint to add the
Company, and a client of the company, HMO Partners, as defendants in Lawrence
Godair v. American Home Assurance Company, Trover Solutions, Inc. and HMO
Partners, Inc., No. 4:02 CV 00407 SMR, United States District Court for the
Eastern District of Arkansas, Western Division. In the amended complaint (the
"Amended Complaint"), the plaintiff makes allegations on behalf of himself and a
purported class of others similarly situated. The complaint asserts that the
Company, as subrogation agent for HMO Partners, unlawfully demanded payment of a
subrogation claim against proceeds of a medical payments insurance policy issued
to the plaintiff by American Home. The Amended Complaint also alleges that the
Company was unjustly enriched because the plaintiff was not fully compensated
("made whole") for his injuries in violation of the Arkansas no-fault motor
vehicle insurance statute and because the payment constituted a double recovery
to the Company and to HMO Partners, in violation of the Arkansas Health
Maintenance Organizations Act. The Amended Complaint further alleges that in
recovering the subrogation claim the Company acted negligently, that it
interfered with the plaintiff's
<PAGE>

contractual relationship with the motor vehicle insurer and that the Company may
be directly or vicariously liable for the acts of other defendants. The Amended
Complaint demands relief on behalf of a purported class of persons who purchased
medical payments coverage as required by the Arkansas no-fault motor vehicle
insurance statute and who were entitled to but did not receive benefits under
such policies due to the payment of those benefits to third parties, including
the Company and HMO Partners. The Amended Complaint demands compensatory and
punitive damages, 12% statutory penalties, costs, expenses, interest and
attorney's fees.

     The Company was served with the Amended Complaint on March 18, 2003 and has
not yet filed a response. The Company intends to retain counsel and to
vigorously defend itself against these allegations.

     The Cajas, Martin or Bruun 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 Cajas, Martin, Hamilton, Rogalla, Chan and Bruun 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
the Company's ability to assert subrogation or reimbursement claims on behalf of
its clients in the future. Based on the current disposition of these lawsuits,
the Company regards such an adverse outcome to be a remote possibility.

     In terms of the Company's business practices and the allegations underlying
the Cajas, Martin and Bruun cases, at the end of 1993 the Company had ceased the
practice of recovering the "reasonable value" of medical treatment provided by
medical providers under DFS arrangements with the Company's clients. From that
date, the Company's policy has been not to recover the "reasonable value" of
medical treatment in DFS arrangements. However, the Company 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.

     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 or that the cost of defending and resolving such litigation will not
be material.

COMPETITION

     Healthcare Recovery Services.  The Company competes primarily with the
internal recovery departments of potential customers and other outsource
healthcare recovery service vendors. To the Company's knowledge, there are four
smaller, but significant, independent providers of healthcare subrogation
recovery services in addition to the Company. There are three different vendors
that provide competitive overpayment recovery outsourcing services, as well as
three national companies that provide competing provider bill auditing services.

     Property and Casualty Recovery Services.  The Company has assessed the
competitive environment for P&C subrogation outsourcing and believes that the
competition is fragmented and characterized by claims
<PAGE>

adjusting companies that operate on a local or regional basis and by law firms
that specialize in a low volume of legally complex subrogation claims. The
Company has identified four competitors that attempt to serve a national market.
Three of these competitors are owned and controlled by P&C insurers, and the
Company believes that this fact may deter potential buyers of these competitors'
services if those potential buyers also compete against the competitors' parent
organizations.

     With respect to both its healthcare recovery services and its P&C recovery
services, the Company believes that there are barriers to entry 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.

     Software.  The Company is not aware of any competition in subrogation
software in an ASP model for the healthcare payor industry, and it has
identified only one large competitor in the P&C insurance industry. This
competitor is partially owned and controlled by a major P&C insurer, and the
Company believes that this relationship will reduce the ability of the
competitor to sell its services to other P&C insurers.

     With respect to its software segment, the Company believes that there are
barriers to entry in its market, including process expertise. 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 software.

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 an employment
agreement with Patrick B. McGinnis, Chairman and Chief Executive and has
severance agreements with certain of its other executive officers.

     The Company employs, and facilitates the development of, skilled
knowledge-workers. The Company maintains an extensive, in-house training
program, which it believes is attractive to employees and essential in
developing the necessary industry-specific skills. All of the Company's recovery
and management employees participate in one of four incentive compensation
plans, depending upon the responsibilities of each employee. Trover Solutions,
Inc. employed 666 persons as of December 31, 2002.

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.
<PAGE>

     Migration to New System.  The Company completed 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 markets them under the trade name ("Troveris"). The Company began
migrating its internal healthcare subrogation operations, currently run on the
SubroSystem, to Troveris software applications in the fourth quarter of 2001 and
currently expects to complete the transition during the third quarter of 2003.
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 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, patents, 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 patents
applied for or to be applied for by the Company will be granted by the United
States Patent and Trademark Office or enforced by the courts, 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
<PAGE>

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.

ABILITY TO MANAGE CHANGE

     The Company has experienced significant changes in its business and
business environment. The Company has added new products by acquisition and
internal development. The Company also has added multiple clients to its
installed base, lost multiple clients because of terminations and acquisitions,
and experienced changes in the continuity of many client relationships because
of client personnel turnover. The Company likewise has experienced alterations
in the composition of its Healthcare Recovery Services segment's backlog of
potentially recoverable claims, which is the primary source of the Company's
revenues. The value of healthcare subrogation files from terminated clients has
substantially increased, constituting at December 31, 2001 approximately 9% of
Healthcare Recovery Services backlog and 15% of healthcare subrogation backlog
(a subset of the Healthcare Recovery Services backlog), and at December 31, 2002
approximately 24% of the Healthcare Recovery Services backlog and approximately
40% of the healthcare subrogation backlog. Additionally, the value of provider
bill audit files has substantially increased, constituting at December 31, 2001
approximately 35% of the Healthcare Recovery Services backlog and at December
31, 2002 approximately 41% of the Healthcare Recovery Services backlog.

     The Company has responded to its changing environment, in part, by
replacing or re-aligning management, systems development and support, marketing,
sales and customer services personnel. There can be no assurance that the
Company will successfully meet the challenges of these changes in its business
or its business environment; and if the Company's management is unable to
address these matters 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, the Company is in the process of extending 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. The Company 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;
<PAGE>

     - 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 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
<PAGE>

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.

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, 2001.