EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered as of this 8th day of
January,  1999 ("Effective Date"), by and between Mid Atlantic Medical Services,
Inc., a Delaware  corporation  with its  principal  executive  offices at 4 Taft
Court, Rockville, Maryland 20850 ("Company"), and Robert E. Foss ("Executive");

         WHEREAS,  the  Company  wishes to  assure  itself  of the  services  of
Executive for the period provided in this Agreement, and Executive is willing to
serve in the employ of the Company on a full-time basis for said period;

         WHEREAS,  the  Company  and  Executive  desire to set forth the amounts
payable and  benefits to be provided by the Company to Executive in the event of
a termination of Executive's employment with the Company under the circumstances
set forth herein;

          NOW,  THEREFORE,  in  consideration  of the  mutual  covenants  herein
contained, the parties hereto hereby agree as follows:

          1. Employment. The Company agrees to continue Executive in its employ,
     and Executive agrees to remain in the full time employ of the Company,  for
     the  period  stated  in  Section  3 hereof  and upon the  other  terms  and
     conditions herein provided.

          2. Position and Responsibilities.  The Company employs Executive,  and
     Executive  agrees  to serve,  as Senior  Executive  Vice  President  of the
     Company  on the  conditions  hereinafter  set  forth.  Executive  agrees to
     perform such  services  consistent  with his position as shall from time to
     time be assigned  to him by the  Company's  Chief  Executive  Officer,  the
     Company's Board of Directors ("Board"),  or another executive designated by
     the Board.  Such duties may  include the  appointment  of  Executive  as an
     officer and/or director of any present or future subsidiary or affiliate of
     the  Company  without any  additional  remuneration  under this  Agreement.
     Executive  shall devote all of his business  time,  attention,  skill,  and
     efforts to the faithful performance of the duties hereunder.

          3. Term.  The period of  Executive's  employment  under this Agreement
     with the Company (i) shall  commence as of the Effective Date and remain in
     effect for three (3) years  after the date of the  approval by the Board of
     Directors  of a  permanent  Chairman  of the  Board and a  permanent  Chief
     Executive Officer and President,  whichever date is later.  Notwithstanding
     the above, in no event will this Agreement  continue beyond January 1, 2003
     unless the term is extended by consent of the parties.

          4.  Compensation  and  Reimbursement  of  Expenses.  For all  services
     rendered  by  Executive  in  any  capacity  during  employment  under  this
     Agreement  (including,  without  limitation,   services  as  an  executive,
     officer,  or director of the Company, or any subsidiary or affiliate of the
     Company,  or as a member of any  committee of the Board of Directors of the
     Company or any  subsidiary or affiliate of the Company),  the Company shall
     pay Executive as compensation  (A) an annual salary ("Base Salary") and (B)
     such bonus for such  period,  if any, as may be awarded to  Executive  from
     time to time  pursuant  to any Bonus Plan  adopted by the  Company  for its
     senior  management  or  otherwise  awarded  by the Board or by a  committee
     designated by the Board.  Base Salary for the first year of this  Agreement
     shall be not less than the rate at which  Executive is  compensated  on the
     Effective Date which is $400,000. Thereafter, Base Salary shall be adjusted
     annually. For 2000 and each year thereafter, the Executive Base Salary will
     increase or decrease by an amount equal to 50% of the percentage  change in
     the Company's  consolidated  net income as  determined by the Company,  and
     audited by the Company's  independent  certified public  accountant but any
     annual  increase may not be greater than 20 percent and any annual decrease
     may not be greater than 10 percent.  This increase or decrease  would first
     apply to the year 2000 and would take effect  retroactively to January 1 of
     the then current year.  Items of a non-recurring  nature may be excluded in
     the calculations as mutually agreed to by the Company and the Executive. By
     action of the Board on February 25, 1999, the Company will grant  Executive
     75,000  shares of MAMSI stock  options as of that date.  Such  options will
     vest on the  date of the  February  2000  Board  meeting  on the  following
     prorata basis over a period to be determined by the percentage  increase of
     1999  earnings  per share over 1998  earnings per share as adjusted for one
     time items and as  determined  by the Board at its February 2000 meeting at
     which 1999 audited earnings are announced:

                     1999 EPS     % Increase   Vesting    Dates of Vesting 
                   up to          0-16%    5 years     1/5 in  2/2000;  1/5 in 
                   $0.51                               2/2001;  1/5 in 2/2002;
                                                       1/5 in 2/2003; 
                                                       1/5 in 2/2004
                   $0.54           23%     4 years     1/4 in 2/2000;  1/4 in 
                                                       2001; 1/4 in 2/2002; 
                                                       1/4 in 2/2003 
                   $0.57           30%     3 years     1/3 in  2/2000;  1/3 in 
                                                       2/2001; 1/3 in 2002
                   $0.60           36%     2 years     1/2 in 2/2000; 1/2 in 
                                                       2/2001

                   0.63            43%     1 year      All in 2/2000
                   or more
              For the purposes of the above  calculation,  the 1998 earnings per
share is  established  at $.44 per  share.  The  Company  shall  also  reimburse
Executive,  in  accordance  with such  policies and  procedures as the Board may
establish  from time to time,  for all  reasonable  travel  and  other  expenses
incurred  by  Executive  in  the  performance  of  his  obligations  under  this
Agreement.  Executive shall also be entitled to participate in any benefit plans
established  by the Company for which  Company  executives  are or shall  become
eligible.

          5.  Termination  of  Employment.  Executive's  employment  under  this
     Agreement may be terminated by the Company or Executive as follows:

               (a)  Disability.  (i) If  Executive  fails to perform  his duties
          under  this  Agreement  on  account  of  Disability  (as   hereinafter
          defined),  the Company may give notice to Executive to terminate  this
          Agreement on a date not less than thirty (30) days thereafter ("Notice
          Period")  and, if Executive  has not resumed full  performance  of his
          duties  under  this  Agreement   within  such  Notice   Period,   then
          Executive's employment under this Agreement will terminate on the date
          provided in the notice ("Disability Termination Date").

                  (ii)  During  any  period of  Disability,  the  Company  shall
         maintain and pay for health and other insurance  benefits for Executive
         at least equal to those he had at the commencement of such Disability.

                  (iii) As used in this Agreement,  the term "Disability"  shall
         mean the  inability  of  Executive  to perform  his  duties  under this
         Agreement  by reason of his medical  disability,  as  determined  by an
         independent  physician  selected  with the  approval  of the  Board and
         Executive. 

               (b) Death. If Executive dies while employed under this Agreement,
          his  employment  under this Agreement will terminate as of the date of
          his death ("Date of Death"). Within thirty (30) days after the Date of
          Death,  the  Company  shall pay to  Executive's  legal  representative
          Executive's Base Salary as then in effect that has accrued to the last
          day of the month in which the Date of Death  occurs.  If the Executive
          dies while  receiving  payments  pursuant to Section 5(c) below,  said
          payment shall  continue for the period  remaining and shall be paid to
          the estate of the Executive.

               (c) Certain  Other Events of  Termination.  In the event that (i)
          the Company  terminates  Executive's  employment for any reason (other
          than because of death,  Disability,  or "just  cause" (as  hereinafter
          defined),  (ii) Executive  terminates his employment  with the Company
          because  of the  Company's  material  breach of this  Agreement  (iii)
          Executive  terminates  his  employment  with the  Company  because the
          Company requires Executive to be based anywhere other than Executive's
          current location or within  seventy-five  (75) miles round trip of the
          Company's  principal  executive offices (except for required travel on
          the Company's  business),  or (iv) Executive terminates his employment
          with the Company  because of a substantial  reassignment of duties and
          responsibilities  unrelated  to a change in control as defined  below,
          then the Company shall pay Executive an amount equal to 12 months Base
          Salary,  as adjusted  pursuant  to Section 4, paid in equal  bi-weekly
          payments  over  a  period  of one  year  commencing  on the  Executive
          Termination Date and in accordance with the regular payroll  practices
          of the  Company.  The Company  shall also pay  Executive  any pro-rata
          bonus  that the  Executive  would  have been  entitled  to had he been
          employed  until the end of the year.  Such bonus  payment  shall occur
          when bonuses are normally paid by the Company. In addition,  all stock
          options which  Executive has been granted shall  immediately  vest and
          become  exercisable  under the terms of the  applicable  plan. For the
          purposes  of the time  period  available  for  exercising  such  stock
          options,  Executive  shall be  considered  an  employee of the Company
          unless  terminated  pursuant to  subsection  (e) below.  Payment  made
          pursuant to this paragraph  shall be the exclusive  remedy provided to
          Executive and Executive  shall not be entitled to any other  severance
          benefit that the Company may provide or adopt  unless  approved by the
          Board of Directors of the Company.

                  (d)  Retirement.  Executive shall be entitled to terminate his
         employment  with the Company on, or at any date after,  a date on which
         he is at least  sixty-five  (65) years old. Any date on which Executive
         elects to retire  shall be referred to as the  "Retirement  Termination
         Date." The Company  shall pay to  Executive  his Base Salary as then in
         effect  that has  accrued  to the last  day of the  month in which  the
         Retirement Termination Date occurs.

               (e)  Termination  by the Company for Just Cause. 

                    (i) The Company may  terminate  Executive's  employment  for
               "just  cause" at any time by giving  written  notice  thereof  to
               Executive.  (Except as provided below, the date of such notice is
               the "Just Cause  Termination  Date" unless otherwise  provided in
               the  notice).  Within  thirty  (30)  days  after  the Just  Cause
               Termination  Date,  the Company  shall pay to Executive  his Base
               Salary  as then in  effect  that has  accrued  to the Just  Cause
               Termination  Date. For the purposes of this  subparagraph,  "just
               cause" shall mean  termination  because of  Executive's  personal
               dishonesty,   willful  misconduct,   breach  of  fiduciary  duty,
               intentional  failure to perform stated duties,  willful violation
               of any law, rule or regulation (other than traffic  violations or
               similar  offenses),  or material  breach of any provision of this
               Agreement.  Unless otherwise  determined by the Board,  Executive
               shall have no right to  receive  compensation  or other  benefits
               under this Agreement after a termination for just cause.

                    (ii)  Notwithstanding the foregoing,  Executive shall not be
               deemed to have been  terminated  for just cause  pursuant to this
               Section 6(e) unless and until he shall have  received a copy of a
               resolution duly adopted by the affirmative  vote of a majority of
               the Board, at a meeting held for that purpose,  declaring that in
               the good faith opinion of the Board one or more of the conditions
               set forth in clause (i) of this  Section  6(e) has  occurred  and
               specifying the particulars thereof.

          f.  Termination by Executive  Without  Cause.  Executive may terminate
     this Agreement without cause upon the provision of two weeks' prior written
     notice to the Company. Upon such a termination, the following payments will
     be made by the Company to the Executive:

                    1.  If  Executive  elects  such a  termination  between  the
               Effective  Date of this  Agreement  and the first date of work of
               either the permanent  Chairman of the Board,  the permanent Chief
               Executive or the permanent President, the Executive would receive
               no benefits under this Agreement.

                    2. If the  Executive  elects  such a  termination  after the
               first date of work of either the  permanent  Chairman,  permanent
               Chief Executive Officer or the permanent President, the Executive
               would  receive  the same  payment as a  termination  pursuant  to
               Section 5(c) above.

     6. Change in Control.  Notwithstanding any other provision to the contrary,
the  following  provisions  will  govern in the event of a change in  control as
defined herein.

          a. A change in  control  shall be deemed to have  occurred  if, at any
     time, (I)  substantially all the assets of the Company shall have been sold
     or  transferred by sale,  merger or otherwise,  or if any "person" (as such
     term is used in Sections  13(d) or 14(d) of the Exchange Act) is or becomes
     the beneficial owner, directly or indirectly,  of securities of the Company
     representing 50% or more of the combined voting power of the  then-existing
     outstanding securities of the Company; and (ii) the Executive is reassigned
     without his concurrence to another  position in the Company within 6 months
     of such sale,  merger or other event.  No change in control shall be deemed
     to  have  occurred  if the  reassignment  is on a  temporary  basis  and is
     attributable  to the  Executive's  illness  or other  physical,  mental  or
     emotional disability or incapacity.

          b. In the event of a change in control  as  defined  in  Section  6(a)
     above,  Executive  shall be entitled  to a lump sum payment  which shall be
     equal to two times the  Executive's  base  salary  and two times the amount
     equal to the  maximum  bonus the  Executive  could  have  earned  under the
     applicable  bonus plan for the year in which such change in control  occurs
     in lieu of  payment  under the bonus  plan.  Upon  payment  of the lump sum
     provided under this  subsection,  the  obligations of the Company to employ
     Executive  under this Agreement  shall cease.  However,  if the event which
     triggers the  application of this  provision  occurs in calendar year 2002,
     the Executive shall receive  compensation  under Section 5(c) above as full
     compensation.

          c. In the event of a change in control as defined in subsection  6(a),
     all stock options to which  Executive  has been granted  shall  immediately
     vest and become  exercisable.  Such  acceleration  of the  vesting of stock
     options  shall be in addition to, and shall have no affect on, any payments
     accrued pursuant to subsection 6(b).

          d.  The  value  of all  payments,  benefits  and  other  consideration
     received pursuant to subsections 6(b) and 6(c) and contingent upon a change
     in  control,  and any  additional  payments  in the nature of  compensation
     described by Section  280G(b)(2) of the Internal  Revenue  Code,  shall not
     exceed  an  amount  which  is  equal to three  times  the  average  taxable
     compensation from the Company for the "base period" as that term is defined
     in Section  280G(d)(2) of the Internal  Revenue Code.  The parties agree to
     review the impact of the  termination of the Agreement  pursuant to Section
     6, and to negotiate  modifications,  if mutually acceptable,  in situations
     where the results to the Executive and to the Company are not compatible.

      7. Confidential  Information.  Executive shall fully comply with and abide
by the provisions of the Company's  Employee Manual and other announced policies
in  effect  from  time to  time,  including  those  provisions  relating  to the
protection of the Company's confidential information.  The Company and Executive
agree  that the  foregoing  provision  shall  survive  the  termination  of this
Agreement for any reason whatsoever.

      8.  Indemnification.  Employee shall be entitled to indemnification to the
full extent allowed by the Company's Certificate of Incorporation and Bylaws for
third  party  claims and to advances  for  expenses in  defending  against  such
claims.

      9. General Provisions.

         (a) Entire Agreement.  This Agreement contains the entire understanding
between the parties hereto and supersedes any prior employment agreement between
the Company and Executive.

         (b) No Duty to  Mitigate.  Executive  shall not be required to mitigate
the amount of any  payment  provided  for in this  Agreement  by  seeking  other
employment or otherwise, nor shall any amounts received from other employment or
otherwise  by  Executive  offset in any manner the  obligations  of the  Company
hereunder.
         (c)  Nonassignability.  Neither this  Agreement nor any right,  remedy,
obligation or liability  arising  hereunder or by reason hereof is assignable by
Executive,  his beneficiaries,  or legal  representatives  without the Company's
prior written  consent;  provided,  however,  that nothing in this Section 11(d)
shall  preclude (i) Executive  from  designating  a  beneficiary  to receive any
benefit payable hereunder upon his death, or (ii) the executors, administrators,
or other legal  representatives  of Executive or his estate from  assigning  any
rights hereunder to the person or persons entitled thereto.

         (d) Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been duly  given if  delivered  personally  or sent by  certified  mail,  return
receipt requested, first-class postage prepaid, to the parties to this Agreement
at the following addresses:

                  (i)      if to the Company at:
                           Mid Atlantic Medical Service, Inc.
                           4 Taft Court
                           Rockville, MD 20850
                           and
                  (ii) if to Executive at the address set forth on the signature
page. or to such other address as either party to this Agreement shall have last
designated  by notice to the other party.  All such  notices and  communications
shall be deemed to have been  received  on the earlier of the date of receipt or
the third business day after the date of mailing thereof.

         (e) Binding Effect;  Benefits. This Agreement shall be binding upon and
inure to the  benefit of the  parties  to this  Agreement  and their  respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended or shall be construed to give any person,  other than the parties to
this Agreement or their respective successors or permitted assigns, any legal or
equitable  right,  remedy,  or claim under or in respect of any agreement or any
provision contained herein.


         (f) Waiver.  No provision  of this  Agreement  may be amended,  waived,
discharged,  or  terminated  except by an  instrument in writing and executed by
each party.  Any waiver of enforcement of any provision of this Agreement  shall
not  operate or be  construed  as a  continuing  waiver or a waiver of any other
provisions unless expressly stated in such instrument.

         (g) Amendment. This Agreement may be terminated,  amended, modified, or
supplemented only by a written instrument executed by Executive and the Company.

         (h) Governing Law. This Agreement shall be governed by and construed in
accordance  with the law of the State of  Delaware,  regardless  of the law that
might be applied under principles of conflict of laws.

         (i) Severability.  If, for any reason,  any provision of this Agreement
is held invalid,  such  invalidity  shall not affect any other provision of this
Agreement not held so invalid,  and each such other provision shall, to the full
extent  consistent with law, continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect  the rest of such  provision  not held so  invalid,  and the rest of such
provision,  together with all other  provisions of this Agreement,  shall to the
full extent consistent with law continue in full force and effect.

         IN WITNESS  WHEREOF,  the  Company  has  caused  this  Agreement  to be
executed  and its seal to be affixed  hereunto by its  officers  thereunto  duly
authorized,  and  Executive has signed this  Agreement,  all as of the Effective
Date.
ATTEST:                                     MID ATLANTIC MEDICAL SERVICES, INC.
                                             By:/s/Thomas P. Barbera
(Corporate Seal)                             Name:Thomas P. Barbera
                                             Title:President and CEO
WITNESS                                      EXECUTIVE:


/s/Mark D. Groban                                  /s/ Robert E. Foss
                                          Address: 4 Taft Ct.
                                                   Rockville, MD 20850