Document:

Exhibit 10.10

                              MDNY Healthcare, Inc.

                           IPA Participation Agreement

                                    AGREEMENT

      This  Agreement (the  "Agreement")  is dated as of the 26th day of January
1998, by and between MDNY  Healthcare,  Inc.  ("MDNY"),  a business  corporation
established  in  accordance  with  the  laws of New  York  and  Island  Practice
Association  I.P.A.,  Inc.  ("IPA"),  a  business  corporation   established  in
accordance with the laws of New York.

                              W I T N E S S E T H:

      WHEREAS,   MDNY  is  licensed  and  certified  as  a  health   maintenance
organization  ("HMO") in  accordance  with the  provisions  of Article 44 of the
Public Health Law; and

      WHEREAS,  IPA is an  Independent  Practice  Association,  which  has  been
established  to arrange for the  delivery  or  provision  of health  services by
individuals licensed to practice medicine and other health professions,  and, as
appropriate,  ancillary  medical services and equipment,  pursuant to a contract
between it and an HMO that would make the services of such health care providers
available to the HMO and its Members; and

      WHEREAS,  IPA operates in Nassau,  Queens and Suffolk  Counties  ("Service
Area"); and

      WHEREAS,  IPA wishes to contract with MDNY by making its provider  network
available  to Members in MDNY and wishes to provide  other  related  services to
MDNY that will assist MDNY in the operation of the HMO;

      NOW,  THEREFORE,  in  consideration  of mutual  agreements,  undertakings,
representations  and warranties  hereinafter set forth, the parties hereby agree
as follows:

      1. Definitions:

            1.1.  Covered  Services shall mean those health care services that a
Member is entitled to receive and are authorized for payment  pursuant to MDNY's
health benefit plan as defined by the applicable  Subscriber Contract.  Services
rendered by a professional  shall be defined as Covered  Professional  Services.
Services  rendered in a hospital or other health care facility  shall be defined
as Covered Hospital Services.

            1.2.  Emergency  Services  shall  mean  those  healthcare   services
required  to be  provided  to  Members  as a result of a medical  or  behavioral
condition,  the onset of which is sudden,  that manifests  itself by symptoms of
sufficient severity, including severe pain, that a prudent layperson, possessing
an average knowledge of

<PAGE>

medicine and health,  could reasonably  expect the absence of immediate  medical
attention to result in:

                  (a)   placing  the  health of the person  afflicted  with such
                        condition  in  serious  jeopardy,  or in the  case  of a
                        behavioral condition,  placing the health of such person
                        or others in serious jeopardy;

                  (b)   serious impairment to such person's bodily functions;

                  (c)   serious  dysfunction of any bodily organ or part of such
                        person; or

                  (d)   serious disfigurement of such person.

            1.3. IPA Members  shall mean those MDNY Members who either select or
are randomly assigned by virtue of their resident zip code to a specific IPA.

            1.4.  Members  shall  mean  those  subscribers,  or  their  eligible
dependents,  who are entitled to receive certain health care services,  pursuant
to MDNY's health benefit plan, as defined by the applicable Subscriber Contract.

            1.5.  Participating  Provider  shall mean a health care provider who
has entered into a  Participating  Provider  Agreement  with an  MDNY-affiliated
practice association to render Covered Services to Members.

            1.6. Participating Facilities shall mean licensed general acute care
or specialty  facilities or other health care  facilities  that have  contracted
with MDNY to render Covered Services to Members.

            1.7.  Subscriber  Contract shall mean the contract  between a Member
and MDNY.

      2. Responsibilities of MDNY:

            2.1.  Licensure and Status:  MDNY shall maintain its licensed status
as an HMO and shall  undertake  all steps  necessary  to maintain its license in
accordance  with the  provisions  of Article 44 of the Public  Health  Law,  the
Insurance Law and other  applicable  federal and State statutes and  regulations
promulgated thereunder.

            2.2. Subscriber Contracts:  MDNY shall enter into, maintain or amend
Subscriber  Contracts  that govern the provision of health care services by MDNY
to Members. The terms of these Subscriber Contracts, which have been provided to
IPA, are, to the extent  relevant  hereto,  made a part hereof.  MDNY represents
that it shall take all steps to satisfy the terms of these Subscriber  Contracts
and that IPA shall be informed of any amendments thereto.

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            2.3. Ultimate Responsibility: Notwithstanding any other provision in
this contract to the contrary,  MDNY shall be responsible  for ensuring that any
service  provided by IPA pursuant to this  contract  complies with all pertinent
provisions of federal,  State and local  statutes,  rules and  regulations.  IPA
acknowledges and agrees that MDNY is required to establish, operate and maintain
a  health  service  delivery  system,   quality   assurance   system,   provider
credentialing  system,  member  grievance  system and other systems  meeting the
standards of the New York State  Department of Health  ("DOH"),  and is directly
accountable to DOH for  compliance  with DOH standards for the provision of high
quality,  cost  effective  care to Members.  Notwithstanding  any  delegation of
certain functions by MDNY to IPA under this Agreement, MDNY nevertheless retains
ultimate  responsibility for the provision of these services and nothing in this
Agreement shall be construed to limit MDNY's authority or responsibility to meet
applicable  quality  standards or to take prompt  corrective action to address a
quality  of care  problem,  resolve  a  Member  grievance  or to  comply  with a
regulatory requirement. MDNY shall be responsible for its agreement with IPA and
for the agreement between IPA and physicians and other health care providers and
suppliers and for the care provided through such arrangements to the same extent
as it is  responsible  for  arrangements  with all other  types of  health  care
providers,  including,  but not  limited to,  responsibility  for all aspects of
medical delivery, including quality assurance, credentialing of providers in the
IPA network, and utilization management.

            2.4. Delegation Subject to Performance  Monitoring:  IPA agrees that
any delegation of authority or  responsibility  for provider  credentialing  and
relations,  utilization  review  and/or other  administrative  functions by MDNY
shall be subject to performance  monitoring and  independent  validation by MDNY
and  DOH,  as well as any  independent  quality  review/assessment  organization
(e.g.,  NCQA)  approved  by MDNY and/or DOH to  undertake  such  monitoring  and
assessment.

            2.5. Financial Terms:  Payments by MDNY to IPA for services rendered
in accordance  with this Agreement  shall be made in accordance with Exhibits A,
B,  C and D,  attached  hereto  and  incorporated  herein,  and  any  subsequent
agreements between MDNY and IPA that may be entered into by both parties.

            2.6.  Administrative  Services:  MDNY shall  provide  administrative
services  to IPA  necessary  for IPA to  discharge  its  obligations,  which may
include the following:

                  (a) providing a provider  manual  specifying  the policies and
procedures  established by MDNY that are applicable to Participating  Providers,
as the same may be  amended  from time to time,  including  but not  limited  to
grievance  procedures,  claims  administration,  appeal procedures,  utilization
management,   quality   assessment   and   improvement,   risk   management  and
credentialing policies.

                  (b) filing  reports,  seeking  approvals  and  complying  with
applicable laws and regulations of state,  federal and other regulatory agencies
having  jurisdiction  over MDNY in  connection  with  matters  addressed by this
Agreement.

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<PAGE>

                  (c)   performing,   directly  or  indirectly,   all  necessary
administrative,  accounting,  enrollment  and other  functions  appropriate  for
marketing and administration of MDNY's programs.

                  (d)  collecting,   directly  or  indirectly,   Member  premium
payments  and other  items of income to which  MDNY is  entitled  to under or in
connection with its programs,  except for coinsurance,  copayments and permitted
deductibles that Participating Providers are required to collect.

                  (e)  performing,  directly or indirectly,  utilization  review
activities.

                  (f) establishing and administering Member grievance and appeal
procedures in accordance with applicable law.

                  (g) performing primary source  verification of all health care
providers who apply to become Participating Providers.

                  2.6.1 In the event that administrative  services necessary for
IPA to discharge  its  obligations  are delegated by IPA to an entity other than
MDNY, which delegation must be approved by HMO, the delegation of administrative
services  shall be governed by an agreement  similar in form and content to that
of the Administrative Services Agreement attached hereto as Exhibit G.

      3. Responsibilities of IPA:

            3.1.   Financial   Responsibility:   IPA  shall   assume   financial
responsibility  for services provided pursuant to this Agreement to IPA Members,
in accordance with the provisions of a Participating  Provider Agreement entered
into  between  Participating  Providers  and IPA and approved by MDNY, a copy of
which  has  been  provided  to  MDNY.  In  accordance  with  applicable  law and
regulation,  Members  shall not be liable  for the costs in excess of the amount
specified in the applicable Subscriber Contract of any Covered Services that are
included in such Subscriber  Contract.  The Subscriber  Contracts have also been
provided  to IPA.  IPA agrees  that in no event,  including  but not  limited to
nonpayment or insolvency by MDNY, or breach of this  Agreement,  shall IPA bill,
charge, collect a deposit from, seek compensation, remuneration or reimbursement
from,  or have any recourse  against a Member or other person  (other than MDNY)
acting on his/her/their behalf, for services arranged for by IPA.

            3.2.  Provider-Related  Responsibilities:  IPA shall be  responsible
for:

                  (a)  developing a  comprehensive  provider  network of primary
care and specialist  physicians to provide medical and surgical services that is
geographically   and  specialty  balanced  and  meets  the  access  and  service
requirements of MDNY. IPA shall  undertake all appropriate  steps to recruit the
providers  necessary  to meet  such  requirements.  IPA  shall  provide,  at the
earliest possible time, notice to MDNY

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of any  significant  changes in the capacity of IPA to arrange for the provision
of Covered  Services to Members as contemplated  by this  Agreement.  MDNY shall
determine whether Members' access to IPA Participating Providers is unacceptable
based upon factors,  which may include but are not limited to industry  accepted
geographic  access  standards,  employer  requests  and  access to  competitors'
networks.  In the  event  that  MDNY  determines  that  Members'  access  to IPA
Participating  Providers  is  unacceptable,  MDNY  may  request  that  IPA  take
corrective  action  acceptable  to MDNY within ninety (90) days. If IPA fails to
take such  corrective  action  within  such  ninety  (90) day  period,  MDNY may
terminate this Agreement as provided in Section (8).

                  (b)  implementing  the   credentialing   and   recredentialing
policies of MDNY with respect to IPA Participating  Providers except for primary
source  verification  which will be performed  by MDNY or a mutually  acceptable
assigned third party which is in compliance  with NCQA  requirements  and MDNY's
policies and  standards.  IPA shall have written  policies  and  procedures  for
credentialing and recredentialing  health care providers who apply to become IPA
Participating  Providers.  These credentialing and recredentialing  policies and
procedures  ("Policies")  must  comply with the  current  nationally  recognized
review  organization and MDNY standards,  as promulgated or revised from time to
time, and shall include, at a minimum, the following:

                  (i) Scope of  Credentialing.  IPA's  policies must address the
                  credentialing of all staff, network, and contracted group/solo
                  practices  utilized for the  provision of Covered  Services to
                  Members. IPA must credential all personnel functioning as case
                  managers  and assure that all  utilization  review  agents are
                  registered in accordance with applicable law and regulation.

                  (ii)  Credentialing  Criteria.   IPA's  written  credentialing
                  policies must:

                        a. Include  minimum  criteria for  credentialing  health
                        care providers, as well as the circumstances under which
                        exceptions, if any, may be made;

                        b.  Designate the person(s)  responsible  for conducting
                        credentialing  activities  and for  seeking  approval of
                        clinical personnel;

                        c.  Establish  a  Credentialing  or  Quality  Assessment
                        Committee responsible for credentialing decisions;

                        d.    Define   time    frames   and    procedures    for
                        recredentialing,  which  must  occur at least  every two
                        years; and

                        e. Require the review of the  credentialing  policies by
                        the IPA's governing body at predetermined intervals.

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                  (iii) Scope of Recredentialing. IPA must have written policies
                  regarding   the  scope  and   frequency   of   recredentialing
                  activities.   These  policies  must  define  time  frames  and
                  procedures for  recredentialing.  IPA's credential files must,
                  at  a  minimum,   document   current   licensing,   DBA,   and
                  certifications.  In addition, a confidential  information form
                  must  be  completed  by  Participating  Providers  at  time of
                  recredentialing  and  maintained  in IPA's file.  Any positive
                  response  to a  malpractice  suit  inquiry or loss of hospital
                  privileges, or any other disciplinary action noted in National
                  Practitioners  Data Bank or  Federation of State Medical Board
                  responses must be reviewed by MDNY's Medical Director.

                  (c) establishing directly, or through the authority granted to
IPA's medical  management  committee,  policies and procedures to ensure:  (1) a
uniform standard of care is delivered  throughout the IPA; (2) quality standards
established by MDNY are met and maintained by IPA Participating  Providers;  and
(3) the financial viability and solvency of IPA.

                  (d) ensuring  that all IPA  Participating  Providers  agree to
adhere to the medical management  directives  established by IPA, as approved by
MDNY, and the quality improvement ("QI") directives established by MDNY.

                  (e) accurately  documenting  the QI directives  established by
MDNY utilizing standards accepted by a recognized national review  organization,
which may be amended upon prior written notice to IPA.

                  (f)  developing  and  implementing   policies  and  procedures
associated with a comprehensive  compensation program, that includes, but is not
limited to, such elements as a fee schedule program, a risk sharing program that
includes adequate provisions for reserves, and an incentive program, in order to
fairly and appropriately  compensate IPA  Participating  Providers for rendering
services to subscribers while  maintaining the financial  viability and solvency
of IPA and  adequately  providing  funds that may be used to cover any  deficits
associated with the risk sharing program.

                  (g) ensuring that IPA Participating  Providers agree to comply
with all of the applicable requirements and conditions for providing services to
Medicare beneficiaries, pursuant to a contract between the Health Care Financing
Administration  and MDNY. Such requirements  shall include,  but are not limited
to, those related to advance directives,  medical record retention and access to
medical,  financial and administrative  records by governmental  authorities for
inspection and review purposes.

                  (h)  ensuring   that  all   contracts   between  IPA  and  IPA
Participating  Providers conform to requirements  established by DOH,  including
compliance with Chapter 705 of the Laws of 1996.

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                  (i) ensuring  that IPA  Participating  Providers  cooperate in
MDNY's marketing programs.

            3.3. Reports: IPA will supply MDNY with all claims,  utilization and
other  information  available  to it that may be  necessary in order for MDNY to
submit required reports to State and other regulatory  entities,  or that may be
reasonably necessary to assist MDNY in the conduct and operation of the HMO.

            3.4. Participation in IPA's Quality Assurance/Utilization  Meetings:
IPA shall  allow one or more  members of MDNY's  Utilization  Review and Quality
Assurance  Medical  Staff to  participate  in  IPA's  Quality  Assurance  and/or
Utilization  meetings relating to Members.  In addition,  IPA shall provide MDNY
with copies of the minutes of such meetings  relating to Members within ten (10)
business days of receipt of a written request from MDNY for such minutes.

            3.5.  Complaints:  IPA  and IPA  Participating  Providers  agree  to
cooperate with MDNY and provide MDNY with the  information  necessary to resolve
Member grievances with respect to Covered Services and other issues and abide by
decisions  of MDNY  Grievance  Committee.  IPA and IPA  Participating  Providers
agrees to cooperate  and  participate  with MDNY in any internal peer review and
external  audit system and grievance  procedures as may be  established by MDNY.
IPA and IPA Participating  Providers shall comply with and be bound by all final
determinations rendered by the peer review process of grievance mechanism.

            3.6. Referrals:  Except in the event of a medical Emergency, IPA and
Participating Providers shall not refer any Members to any specialist other than
another IPA Participating  Provider without specific prior approval from MDNY or
Member's  primary care  physician,  in accordance  with the Member's  Subscriber
Contract.  All charges  resulting  from such  referral  without  specific  prior
approval  from MDNY or Member's  primary care  physician  shall be the financial
responsibility of the IPA.

            3.7.  Accessibility  and  Continuity  of Care:  IPA agrees  that the
Covered Services it has arranged to provide shall be available and accessible to
Members  24 hours  per day,  seven  days  per  week in a  manner  which  assures
continuity of care.

            3.8.  Other  Program  Participation:  Covered  Services  under  this
Agreement  shall  be  made  available  to  Members  of  any  health  maintenance
organization  plan  offered by MDNY.  MDNY has or intends to seek a contract  to
serve  Medicare  and  Medicaid   beneficiaries.   Such  beneficiaries  shall  be
considered as Members. IPA and IPA Participating Providers shall be bound by all
the rules and  regulations of the Medicare and Medicaid  programs.  MDNY, on its
own,  or  together  with  IPA,  reserves  the  right  to  introduce  new  health
maintenance  organization  plans to its  membership  during  the  course of this
Agreement,  provided however,  that IPA may reject participation in any new plan
upon a showing of financial  cause or health  services  related reasons for such
rejection. IPA shall use its best efforts to cause each of its IPA Participating
Providers to  participate  in the provider  network  sponsored by MDNY Preferred
Network, Inc., a preferred provider organization.

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      4. IPA Participating Provider Information:

      IPA shall provide to MDNY a complete list of IPA Participating  Providers,
including  names,  office  addresses,  office  hours,  telephone  and  facsimile
numbers,  and, area of practice or  specialty.  IPA shall notify MDNY in writing
within ten (10) business days of its receipt of written  notice of any change in
this  information.  IPA shall  provide  to MDNY at least  sixty  (60) days prior
notice (or, if IPA does not receive at least sixty (60) days  notice,  then such
notice as IPA actually receives) of the termination of IPA's relationship with a
IPA  Participating   Provider.  IPA  shall  obtain  a  completed   credentialing
application  to become a  Participating  Provider  from  each IPA  Participating
Provider who is subject to MDNY's credentialing  standards,  which shall conform
to the credentialing  standards of a nationally  recognized review organization.
IPA shall obtain all  necessary  releases  from IPA  Participating  Providers to
permit  IPA to  release  said  credentialing  files to MDNY,  and MDNY  shall be
entitled to presume that such releases have, been obtained.

      5. Compensation:

            5.1.  General:  In  accordance  with  Exhibit A, which is subject to
change only upon mutual agreement of the parties, unless such change is required
by law or regulatory  authority,  MDNY shall compensate IPA for the provision of
Covered   Services.   IPA   Participating   Providers   and  other  health  care
professionals  shall be  compensated  by IPA for rendering  Covered  Services in
accordance with policies and procedures of IPA approved by MDNY,  which approval
shall not unreasonably be withheld.  IPA  Participating  Providers shall collect
and retain any copayments  from Members  according to the applicable  Subscriber
Contract.

                  5.1.1 Upon  notice to IPA,  MDNY may  revise the  compensation
specified in Exhibit A of this Agreement to accurately reflect  compensation for
the year 1998. MDNY warrants that such 1998 compensation shall not be materially
different  from  the  compensation   specified  in  Exhibit  A,  and  shall  not
financially disadvantage IPA.

            5.2. Professional Services:

                  5.2.1. Compensation for Covered Professional Services rendered
to IPA Members shall be based on a percentage of premium as set forth in Exhibit
A.  Compensation  shall  be made by the  twentieth  (20th)  of  each  month  for
commercial  claims and the tenth (10th) of each month for  government  sponsored
claims, and shall be computed on the basis of the most current group information
available. In the event an IPA Member is not eligible to receive services during
the entire month, the compensation  for that  Member-month  shall be prorated to
the number of days the IPA Member will be eligible. A summary report identifying
the IPA  Members  by type of plan and  coverage  will be  provided  on a monthly
basis.  Compensation shall be subject to adjustments by MDNY,  retroactive up to
ninety  (90)  days,  either  upward  or  downward,  consistent  with  change  in
membership, change in plan design, or change in premium.

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                  5.2.2. All claims for Covered  Professional  Services rendered
to IPA Members  shall be paid as  described in Exhibit D. All Claims for Covered
Professional Services that together with all other Covered Services in excess of
stop-loss provisions as set forth in Exhibit E, attached hereto and incorporated
herein, shall not be charged to IPA.

                  5.2.3.  Referrals  to  specialists  who are not  Participating
Providers  must,  where  required  by the  applicable  Subscriber  Contract,  be
approved in advance by IPA and shall be paid by IPA. In  accordance  with MDNY's
obligation  to ensure  appropriate  delivery of services to Members,  MDNY shall
review all such  referrals and reject any referral it  determines  does not meet
the particular health care needs of the Member. If that referral  specialist has
an agreement with MDNY and not IPA, the specialist will be paid according to the
agreement  with MDNY. If that referral  specialist has no agreement with MDNY or
IPA,  IPA shall  have the  opportunity  to  negotiate  payment  rates  with such
referral  specialist  and payment  will be made as agreed  upon by the  referral
specialist and IPA. In the event that IPA and referral  specialist  cannot agree
upon payment terms,  payment will be made according to the terms of the Member's
Subscriber Contract or as agreed upon between MDNY and the referral  specialist.
Such amount shall be charged to IPA.

                  5.2.4. IPA Participating  Providers shall be paid according to
a fee  schedule  established  by IPA and  approved by MDNY.  In the absence of a
withhold,  IPA must  establish a  contingency  or reserve fund approved by MDNY,
which approval shall not unreasonably be withheld.

                  5.2.5.  Any surplus of IPA shall be retained by IPA. IPA shall
establish  policies  and  procedures  for  distribution  of such  surplus.  Such
policies and procedures  shall be reviewed by MDNY, and shall not be implemented
in the event they are  determined  to be in  violation  of  applicable  laws and
regulations.  Any deficit of IPA shall be the  responsibility  of IPA. IPA shall
establish  policies and procedures,  approved by MDNY, to ensure that sufficient
funds will be available to cover current or projected deficits of IPA.

            5.3. Shared Risk Fund:

                  5.3.1. MDNY shall establish and administer,  with the approval
of IPA,  one (1) Shared  Risk Fund as a budget  for  Covered  Hospital  Services
rendered to IPA Members, pursuant to Exhibit D. Distributions to the Shared Risk
Fund by MDNY shall be based on a percentage of premium,  as set forth in Exhibit
A. Such distributions shall be subject to adjustments,  retroactive up to ninety
(90) days,  either  upward or downward,  consistent  with change in  membership,
change in plan design, or change in premium.

                  5.3.2.  Claims for Covered Hospital  Services  rendered to IPA
Members,  as  described  in Exhibit D, shall be charged to the Shared Risk Fund,
when the Covered  Hospital  Services are provided within or are referred outside
of MDNY's  service  area or  Participating  Facilities.  All Claims for  Covered
Hospital Services in

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excess of stop-loss provisions as set forth in Exhibit E shall not be charged to
the Shared Risk Fund.

                  5.3.3. At a time agreed to by IPA and MDNY,  which shall be no
less than one  quarter  (1/4) of one (1) year and no greater  than one (1) year,
MDNY shall calculate the difference  between the amounts  credited to the Shared
Risk Fund for that period of time and the actual charges made to the Shared Risk
Fund.  In making this  calculation,  actual  charges  shall  include an adequate
reserve,  as approved by MDNY, for unpaid and incurred but not reported  claims.
Accruals  to these  reserves  will be reviewed  monthly by MDNY and  adjusted to
reflect  claims  history.  In the event the  charges  exceed the  amounts in the
Shared Risk Fund, IPA and MDNY shall be responsible for such deficit, if any, as
set forth in Exhibit A. In the event the  amounts in the Shared Risk Fund exceed
the charges, IPA and MDNY shall receive  distributions,  if any, as set forth in
Exhibit A. The first  distribution of the surplus shall be made at a time agreed
to by IPA and MDNY,  which  shall be no less than one  quarter  (1/4) of one (1)
year and no greater than one (1) year,  following the end of the first  calendar
year of this Agreement.

            5.4.  Carve-Out  Fund:  MDNY shall  establish and administer one (1)
Carve-Out  Fund  that  relates  to those  services  that  MDNY and IPA  agree to
separate from the services  covered by IPA.  Distributions to such Fund shall be
calculated  based on a set amount for each IPA Member per month as determined by
MDNY as set  forth  in  Exhibit  B.  Such  distributions  shall  be  subject  to
adjustments  by MDNY,  retroactive  up to ninety  (90)  days,  either  upward or
downward, consistent with change in membership, change in plan design, or change
in premium.

            5.5.  Specialty  Networks  Fund:  For  MDCIassic  and  MDClassic  65
Members,  MDNY shall  establish and administer  one (1) Specialty  Networks Fund
that relates to those  services  that MDNY and IPA agree to separate  from those
services  covered  by IPA.  Distributions  to such Fund  shall be based on a set
amount  for each IPA  Member  per  month as  determined  by MDNY as set forth in
Exhibit  C.  Such  distributions  shall  be  subject  to  adjustments  by  MDNY,
retroactive up to ninety (90) days,  either upward or downward,  consistent with
change in membership, change in plan design, or change in premium.

      6. Insurance and Indemnification:

            6.1. IPA  Insurance:  IPA shall maintain  policies of  comprehensive
general liability,  including  professional liability and other insurance of the
types and in amounts  customarily carried by independent  practice  associations
with respect to their  operations,  including  stop-loss and  reinsurance as set
forth in Exhibit E. Such policies shall provide for thirty (30) day cancellation
notification  to MDNY and shall be  effective on or before the  Effective  Date.
Such policies  shall include  coverage for claims which are incurred  during the
term of this Agreement but which arise after termination of this Agreement.  IPA
shall,  upon  request,  provide  MDNY with  certificates  with  respect  to said
policies and any  renewals or  replacements  thereof and shall  arrange with its
insurance  carrier(s) to notify MDNY in the event of any change in the status of
such coverage.

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            6.2. MDNY Insurance:  MDNY shall maintain  policies of comprehensive
general liability,  including professional liability, in amounts satisfactory to
IPA and other insurance of the types customarily  carried by HMOs, such as MDNY,
with respect to their  operations.  Such policies  shall provide for thirty (30)
day  cancellation  notification  to IPA and shall be  effective on or before the
Effective  Date.  Such  policies  shall  include  coverage  for claims which are
incurred during the term of this Agreement but which arise after  termination of
this Agreement.  MDNY shall,  upon request,  provide IPA with  certificates with
respect to said  policies  and any  renewals or  replacements  thereof and shall
arrange with its  insurance  carrier(s) to notify IPA in the event of any change
in the status of such coverage.

            6.3. IPA Participating  Provider  Insurance:  IPA shall require that
each  IPA  Participating   Provider  shall  maintain  policies  of  professional
liability  insurance in the amounts of $1,000,000  per occurrence and $3,000,000
in the aggregate,  as well as extended insurance coverage through a hospital, if
available.  Such policies shall provide for thirty (30) day cancellation  notice
to IPA.  Such  policies  shall  include  coverage  for claims which are incurred
during the term of the agreement between the IPA and IPA Participating  Provider
but which arise after termination of such agreement. IPA Participating Provider,
upon request of IPA, provide IPA with certificates with respect to said policies
and any renewals or  replacements  thereof and shall  arrange with its insurance
carrier(s)  to  notify  IPA in the  event of any  change  in the  status of such
coverage.

            6.4. Indemnification:

                  6.4.1.  IPA shall  indemnify  and hold  harmless  MDNY and its
directors,  officers  and agents of, from and against any and all loss,  damage,
expense or other  liability  arising out of the  performance  by IPA of services
under this  Agreement,  excepting  only  liability  attributable  to the willful
misconduct  or the  willful,  wanton or  reckless  failure by MDNY,  its agents,
servants,  employees or independent contractors engaged by MDNY (but not by IPA)
to perform their respective  obligations  under this Agreement or the negligence
of MDNY or the  negligence of MDNYs agents,  servants,  employees or independent
contractors  engaged by MDNY (but not by IPA).  This indemnity  agreement  shall
include indemnity against all costs, expenses and liabilities incurred in and in
connection with any such claim or liability, and proceeding brought thereon, and
the reasonable cost of the defense thereof.

                  6.4.2.  MDNY shall  indemnify  and hold  harmless  IPA and its
directors,  officers  and  agents  from and  against  any and all loss,  damage,
expense or other  liability  arising out of the  performance by MDNY of services
under this  Agreement,  excepting  only  liability  attributable  to the willful
misconduct  or the  willful,  wanton or  reckless  failure by IPA,  its  agents,
servants,  employees or independent contractors engaged by IPA (but not by MDNY)
to perform their respective  obligations  under this Agreement or the negligence
of IPA or the  negligence of IPA's agents,  servants,  employees or  independent
contractors  engaged by IPA (but not by MDNY).  This indemnity  agreement  shall
include indemnity against all costs, expenses and liabilities incurred in and in

                                       11
<PAGE>

connection with any such claim or liability, and proceeding brought thereon, and
the reasonable cost of the defense thereof.

                  6.4.3.  In no event shall either party  hereunder be liable to
the other for punitive damages on account of the default under this Agreement or
otherwise.  Each party shall indemnify the other against any liability resulting
from performance of duties hereunder.

      7. Term of Agreement:

      This  Agreement  shall be effective  for an initial term of ten (10) years
from the date of its original execution ("Effective Date"), except for the terms
of Exhibit  sections of this document.  Renewal  subject to MDNY Bylaws and MDNY
Board of Directors approval and shall be automatically  renewable thereafter for
additional  one (1) year terms unless the  Agreement is terminated in accordance
with the provisions of section 8, section 11 or section 15.1 of this Agreement.

      8. Termination of Agreement:

            8.1. IPA or MDNY shall have the right to terminate this Agreement by
written  notice  thereof to the other if the other  party  shall be in  material
default  hereunder or shall have  breached its material  obligations  under this
Agreement  and shall have failed to cure same within a period of sixty (60) days
following  the giving of written  notice by the other  party of such  default or
breach by the non-faulting  party.  Such notice of termination shall take effect
upon no less than one hundred eighty (180) days  following  receipt of notice of
breach or default if such breach or default was not  substantially  cured within
the sixty  (60) day cure  period  to the  reasonable  satisfaction  of the party
giving such notice.  If substantial cure cannot  reasonably be completed in such
sixty (60) day period,  and if good faith reasonable efforts to effect cure have
been commenced and are being  diligently  pursued by die defaulting  party,  the
other  party may,  at its sole  discretion,  extend the time period in which the
breach must be cured.  The  Commissioner  of the  Department  of Health shall be
notified of any intention to terminate this Agreement. Any dispute as to whether
either party was in default in accordance  with this Agreement shall be resolved
in accordance with the provisions of section 16.6 of this Agreement.

            8.2. In the event this Agreement  terminates as a result of a breach
or default by the IPA of any provision in this Agreement,  the contracts between
the IPA and IPA Participating Providers shall automatically be assigned to MDNY.
This provision shall survive the termination of this Agreement

      9. Records/Confidentiality:

      To the extent any medical records  relating to any Member for whom IPA has
arranged  for the  provision  of health  services are  maintained  by IPA,  such
records shall be maintained in such form and contain such  information as may be
required  by MDNY and  State and  federal  regulatory  bodies  now and as may be
amended  in the  future,  and  such  records  shall  be  retained  for a  period
consistent with any record retention

                                       12
<PAGE>

requirements  of federal or State law, rule or regulation,  but in no event less
than six (6) years (including six (6) years from the date a minor Member reaches
the age of majority).

      MDNY shall be entitled, in accordance with applicable law and regulations,
to access the financial  records of IPA  pertaining to this  Agreement,  and IPA
shall  account  to MDNY  in  detail  for all  funds  received  pursuant  to this
Agreement.  Subject to the foregoing, all records, whether business,  medical or
otherwise,  relating to the operation of MDNY's programs or its beneficiaries or
providers,  including  but not  limited  to all  books  of  account,  enrollment
records, general administrative records and patient records,  provider files and
related  materials  shall be and  remain  the sole  property  of IPA,  provided,
however,  that MDNY, State and federal regulatory  entities shall have access to
such  information,  upon their  request,  as may be required in accordance  with
applicable law and regulations.

      10. Representations and Warranties:

            10.1.  MDNY hereby  represents,  warrants  and  covenants  to IPA as
follows:

                  (a)  MDNY  is a duly  organized,  validly  existing  New  York
business  corporation in good standing,  with full corporate power and authority
to execute and deliver this Agreement and to perform the obligations  undertaken
herein.  All  corporate  action  required to be taken by MDNY to  authorize  its
execution, delivery and performance of this Agreement has been duly and properly
taken.  MDNY is licensed as a health  maintenance  organization  pursuant to the
provisions  of Article 44 of the Public Health Law and will maintain its license
in good standing.

                  (b) This  Agreement is duly executed and delivered by MDNY and
is the valid and legally binding obligation of MDNY,  enforceable  against it in
accordance with its terms.

                  (c) Each of the representations,  warranties and covenants set
forth in this section shall survive the execution, expiration and termination of
this Agreement.

            10.2.  IPA hereby  represents,  warrants  and  covenants  to MDNY as
follows:

                  (a) IPA is a duly organized,  validly existing New York entity
in good standing, with full corporate power and authority to execute and deliver
this Agreement and to perform the obligations  undertaken  herein. All corporate
action  required to be taken by IPA to  authorize  its  execution,  delivery and
performance has been duly and properly taken.

                  (b) IPA is a duly organized  independent practice association,
established  in  accordance  with  the  provisions  of New  York  State  law and
regulation,  which  contracts with  physicians and other providers of medical or
medically related services in order that it may contract with MDNY.

                                       13
<PAGE>

                  (c) Each of the representations,  warranties and covenants set
forth in this section shall survive the execution, expiration and termination of
this Agreement.

      11. Bankruptcy:

      MDNY may terminate  this Agreement upon the bankruptcy of IPA, and IPA may
terminate  this  Agreement upon the bankruptcy of MDNY. As used in this section,
"bankruptcy"  shall mean the filing of a petition  commencing  a voluntary  case
under  the  Bankruptcy  Code;  a general  assignment  by it for the  benefit  of
creditors;  its  insolvency;  its inability to pay its debts as they become due;
the filing by it of any petition or answer in any proceeding  seeking for itself
or consenting to, or acquiescing in, any insolvency, receivership,  composition,
readjustment,  liquidation,  dissolution  or similar relief under any present or
future statute or regulation, or the filing by it of an answer or other pleading
admitting  or  failing  to deny or  contest,  the  material  allegations  of the
petition filed against it in any such proceedings; its seeking or consenting to,
or acquiescing in the appointment of, any trustee, receiver or liquidator of it,
or any  material  part of its  property;  or the  commencement  against it of an
involuntary   case  under  the  Bankruptcy  Code,  or  a  proceeding  under  any
receivership,  composition, readjustment,  liquidation, insolvency, dissolution,
or like law or  statute,  or  seeking or  resulting  in the  appointment  of any
trustee,  receiver or  liquidator  of it or any material  part of its  property,
which case or proceeding or appointment is not dismissed or vacated within sixty
(60) days.  Termination under this section shall be effective upon the giving of
notice thereof.

      12. Confidentiality:

      During the term of this  Agreement and  thereafter  without  limitation of
time,  neither party shall knowingly  divulge,  furnish or make available to any
third person,  company,  corporation  or other  organization,  without the other
party's prior written consent, any confidential or proprietary information of or
concerning the other party,  including without limitation,  confidential methods
of operation and organization,  confidential lists of providers or beneficiaries
or any other such  confidential  or proprietary  information or data, or use any
such information otherwise than under this Agreement.

      13. Notices:

      All notices  required or given  under this  Agreement,  except for notices
given pursuant to Section 8 of this Agreement shall be in writing,  addressed as
set forth below (or to such other  address as any party may so designate by like
notice  from  time  to  time)  and  shall  be  mailed  by  first-class  mail  or
transmitted,  against confirmed receipt, by facsimile. Notices given pursuant to
Section  8 of this  Agreement  shall  be in  writing  and  shall  be  mailed  by
first-class,  registered or certified mail,  return receipt  requested,  postage
pre-paid,  or  transmitted,  against  confirmed  receipt,  by  facsimile,  or by
overnight  earner or hand.  Receipt of notice shall be presumed on the third day
after mailing,  if the notice is mailed as herein provided,  or upon receipt, if
notice is seat via facsimile, overnight carrier or hand-delivery.

                                       14
<PAGE>

      If notice is to MDNY, it shall be sent to:

      MDNY Healthcare, Inc.
      One Huntington Quadrangle Suite 4C0I
      Melville, New York 11747
      Fax: (516) 454-1914
      Attention: Chief Executive Officer

      If notice is sent to IPA, it shall be sent to:

      ______________________________________
      ______________________________________
      ______________________________________
      Fax: _________________________________
      Attention: President

      14. Affirmative Action Plan:

      MDNY is an Equal  Opportunity  Employer  which  maintains  an  Affirmative
Action  Program The parties  agree that they will  comply with  Executive  Order
11246,  the  Vietnam  Era  Veterans  Readjustment  Act of 1974,  the  Drug  Free
Workplace Act of 1988, and the  Vocational  Rehabilitation  Act in  transactions
relating to any government contract.

      15. Non-Competition/Exclusivity:

            15.1.  Except when required by law or regulation  relating to health
maintenance organizations (including single purpose HMOs), if during the term of
this  Agreement  IPA or any  affiliate,  subsidiary,  or its parent  directly or
indirectly  begins  to  operate  or files  for a  license  to  operate  a health
maintenance   organization  or  Provider  Sponsored   Organization  or  Provider
Sponsored  Network  in  MDNY's  service  areas,  MDNY  shall  have the  right to
terminate this Agreement upon one hundred eighty (180) days written notice.  IPA
shall notify MDNY in writing no less than one hundred eighty (180) days prior to
any such occurrence.

            15.2. The  exclusivity  of this  Agreement  shall be governed by the
terms of Exhibit F, attached hereto and incorporated herein.

            15.3.  During the term of this  Agreement,  IPA is  prohibited  from
soliciting  any Member for the purpose of  marketing  other  health  maintenance
organization  plans to Member,  with the exception of patients that have a prior
relationship with a Participating Provider.

      16. Miscellaneous:

            16.1.  This  Agreement  cannot  be  changed,  modified,  amended  or
suspended except by written agreement  executed by all parties affected thereby.
This  provision  shall not apply to  modifications  made in Exhibit A.  Material
amendments to

                                       15
<PAGE>

this Agreement  require prior  approval by New York  Department of Health thirty
(30) days in advance of their anticipated execution.

            16.2.  The waiver by either  party of a breach or  violation  of any
provision of this Agreement  shall not operate as or be construed to be a waiver
of any subsequent breach or violation hereof.

            16.3. This Agreement shall be governed in all respects by applicable
New York State and federal laws. The invalidity or unenforceability of any terms
or conditions  hereof shall in no way affect the validity or  enforceability  of
any other term or provision. This contract is subject to State Approval.

            16.4.  Because of the special nature of IPA's and IPA  Participating
Providers'  services,  IPA and IPA  Participating  Providers  may not assign any
rights (except to an accounting or billing agent) or delegate any duties of this
Agreement   without  the  expressed  written  consent  of  MDNY.  Any  purported
assignment or delegation  in  derogation of this  prohibition  shall be null and
void.  MDNY may, for business  purposes,  assign its rights and/or  delegate its
obligations to a successor in interest.  The New York State Department of Health
must be notified of any assignment of this Agreement.

            16.5. None of the provisions of this Agreement is intended to create
nor shall be deemed or construed to create any relationship  between the parties
hereto  other  than that of  independent  entities  contracting  with each other
hereunder  solely for the purpose of effecting the provisions of this Agreement.
Neither of the parties hereto, nor any of their respective  employees,  shall be
construed to be the agent, employer or representative of the other.

            16.6.  IPA and MDNY agree that  either of them may submit to binding
arbitration  in a  jurisdiction  of the  State of New York  agreed  upon by both
parties,  under  such rules as may be agreed to by the  parties  or, if no other
rules  are  established,  under  the  rules  of  the  National  Health  Lawyers'
Association,  any dispute regarding the terms of this Agreement. The controversy
would be submitted on an expedited  basis to one  arbitrator  selected  from the
panels of arbitrators of the National Health Lawyers' Association.  IPA and MDNY
agree to allocate the costs of such  arbitration in accordance with the decision
of the arbitrator as to such allocation,  if any, and in the absence of any such
decision,  to share such costs equally.  Each party shall bear its own costs for
preparing for and appearing at any such arbitration.  MDNY and IPA further agree
to faithfully  abide by and perform any award rendered by the arbitrator and the
judgment of any court having  jurisdiction  may be entered  upon the award.  The
parties  hereto agree that the party  submitting a  controversy  to  arbitration
shall  notify  the  Commissioner  of the  Department  of  Health  of all  issues
submitted to arbitration and shall provide the  Commissioner  with all decisions
of such arbitration. The parties further acknowledge that the Commissioner shall
not be bound by the decisions of any arbitrations.

            16.7.  Neither  party shall be liable for any failure,  inability or
delay to perform hereunder,  if such failure,  inability or delay is due to war,
strike, fire,

                                       16
<PAGE>

explosion, sabotage, accident, casualty or any other cause beyond the reasonable
control of the parties so failing, providing due diligence is used by that party
in curing such cause and in resuming performance.

            16.8. This Agreement may be executed  simultaneously  in two or more
counterparts,  each of which will be deemed the original  Agreement,  but all of
which together will constitute one and the same instrument.

            16.9.  This  Agreement,   including   exhibits,   attached   hereto,
constitutes the entire agreement and understanding,  written and oral, among the
parties with respect to the subject  matter  hereof and  supersedes  any and all
prior negotiations,  understandings,  arrangements of any nature, and agreements
existing  between the parties  relating to the subject matter of this Agreement,
including the agreement  entered into between MDLI  Healthcare,  Inc. and Island
Practice Association I.P.A., Inc.

            16.10.  This Agreement  shall inure to the benefit of and be binding
upon the parties and their respective successors and permitted assigns.

            16.11.  In the event a party's  approval  is required in any term or
provision of this  Agreement,  such party's  approval shall not  unreasonably be
withheld.

            16.12.  This  Agreement  shall be subject to the approval of the New
York State Department of Health.

                                       17
<PAGE>

      IN WITNESS WHEREOF,  the parties have caused this Agreement to be executed
as of the day and year first written above.

                                       MDNY HEALTHCARE, INC.

                                       /s/ Richard A. Radoccia
                                       -----------------------------------------
                                       Richard A. Radoccia
                                       Chief Executive Officer

                                       IPA Name: /s/ ___________________________
                                                     1/26/98

                                       Officer's Signature: ____________________

                                                Print Name: ____________________
                                                                 President

                                     18

<PAGE>

                           IPA PARTICIPATION AGREEMENT
                                    EXHIBIT A

                            FUND AND RISK ALLOCATION

<TABLE>
<CAPTION>
==============================================================================================================
Fund Allocation*         MDDirect       MDValue         MDSelect     MDClassic       MDSelect65    MDClassic65
--------------------------------------------------------------------------------------------------------------
<S>                       <C>            <C>             <C>           <C>             <C>            <C>
Shared Risk               30.0%          30.0%           30.0%         30.0%           54.0%          54.0%
--------------------------------------------------------------------------------------------------------------
IPA                       49.0%          47.0%           44.0%         40.5%           26.5%          19.0%
--------------------------------------------------------------------------------------------------------------
Carve-Out(1)               2.5%           4.5%            7.5%          4.5%            3.0%           3.5%
--------------------------------------------------------------------------------------------------------------
Specialty Network(2)        --             --              --           6.5%             --            7.0%
--------------------------------------------------------------------------------------------------------------
Total Allocation          81.5%          81.5%           81.5%         81.5%           83.5%          83.5%
==============================================================================================================
</TABLE>

      (1)   Amounts are  reflective  of  community  HMO rates;  actual  premiums
            received  depend  on  benefit  design,  riders,  age/sex  and  other
            underwriting factors.

      (2)   As a % of Premium. Above Numbers are rounded to nearest 1/2 percent.

<TABLE>
<CAPTION>
==============================================================================================================
Risk Allocation        MDDirect        MDValue        MDSelect       MDClassic     MDSelect65      MDClassic65
--------------------------------------------------------------------------------------------------------------
<S>                     <C>             <C>            <C>             <C>           <C>              <C>
Shared Risk             75.00%          75.00%         75.00%          63.00%        75.00%           57.00%
--------------------------------------------------------------------------------------------------------------
IPA                       100%            100%           100%            100%          100%             100%
==============================================================================================================
</TABLE>

<TABLE>
<CAPTION>
==============================================================================================================
Risk Allocation        MDDirect        MDValue        MDSelect       MDClassic     MDSelect65      MDClassic65
--------------------------------------------------------------------------------------------------------------
<S>                     <C>             <C>            <C>                <C>          <C>               <C>
Shared Risk                                                               12%                            18%
--------------------------------------------------------------------------------------------------------------
IPA                                                                      100%                           100%
==============================================================================================================
</TABLE>

                                       19
<PAGE>

                           IPA PARTICIPATION AGREEMENT
                                    EXHIBIT B

                          ALLOCATION TO CARVE-OUT FUND

      Except for such IPA Members whose coverage has been specifically  modified
to exclude or to enhance such coverage,  MDNY shall allocate, in accordance with
the provisions defined in Section 4 of this Agreement, an amount as set forth in
the table below to the Carve-Out Fund to pay for those Covered Services rendered
to IPA Members but not  provided by IPA.  Such  allocations  shall be subject to
retroactive  adjustments  by MDNY,  either upward or downward,  consistent  with
change in membership, change in plan design, or change in premium.

<TABLE>
<CAPTION>
==============================================================================================================
Carve-Outs (pmpm)        MDDirect       MDValue       MDSelect       MDClassic     MDSelect65      MDClassic65
--------------------------------------------------------------------------------------------------------------
<S>                     <C>           <C>                <C>            <C>           <C>              <C>
Behavioral Health           $4.00         $3.00          $4.00          $4.00         $5.00            $5.00
--------------------------------------------------------------------------------------------------------------
Chiropractic            No Benefit         $.75          $1.70          $1.70         $2.75            $2.75
--------------------------------------------------------------------------------------------------------------
Dental                  No Benefit        $1.25          $2.00          $2.00         $3.80            $3.80
--------------------------------------------------------------------------------------------------------------
Vision                  No Benefit    No Benefit         $2.25          $2.25         $3.75            $3.75
==============================================================================================================
</TABLE>

                                       20
<PAGE>

                           IPA PARTICIPATION AGREEMENT
                                    EXHIBIT C

                      ALLOCATION TO SPECIALTY NETWORKS FUND

      Except for such IPA Members whose coverage has been specifically  modified
to exclude or to enhance such coverage,  MDNY shall allocate, in accordance with
the provisions defined in Section 4 of this Agreement, an amount as set forth in
the table below to the Specialty Networks Fund to pay for those Covered Services
rendered to IPA  Members but not  provided  by IPA.  Such  allocations  shall be
subject  to  retroactive   adjustments  by  MDNY,  either  upward  or  downward,
consistent  with  change  in  membership,  change in plan  design,  or change in
premium. See Exhibit C-l for specific CPT codes by Specialty.

================================================================================
Specialty Network               Commercial MDClassic       Medicare MDClassico65
--------------------------------------------------------------------------------
Cardiology                                $1.75                    $14.75
--------------------------------------------------------------------------------
Ophthalmology                             $1.25                    $11.75
--------------------------------------------------------------------------------
Orthopedics                               $3.00                     $9.25
--------------------------------------------------------------------------------
Gastroenterology                          $1.00                     $4.18
--------------------------------------------------------------------------------
Podiatry                                  TBD                       TBD
================================================================================

                                       21
<PAGE>

                           IPA PARTICIPATION AGREEMENT
                                   EXHIBIT C-1

CRT Codes by Specialty:

Gastroenterology

43200-43272         Endoscopy
43450-43496         Manipulation
43750-43761         Introduction

44360-44394         Endoscopy, Small Bowel and Stomal
45300-45385         Proctosigmoidoscopy, Sigmoidoscopy, Colonoscopy
46030-46615         Anus-Excision, Introduction & Endoscopy
91000-91299         Gastroenterology Services
99201-99499         Evaluation and Management

Ophthalmology

15820-15823         Blepharoplasty
21280-21282         Canfhoplexy
65091-68899         Eye and Ocular Adnexa
92002-92499         Ophthalmology Services
99201-99499         Evaluation and Management

Orthopedic Surgery

20000-27899         Musculoskeletal System - Non foot and Toes
29000-29909         Casts and Strapping:
61105-61253         Twist Drill, Burr Hole(s), or Trephine
61680-64907         Surgery for Aneurysm, Arteriovenous Malformation or Vascular
                    Disease etc.
99201-99499         Evaluation and Management

Cardiology

33200-33261         Pacemaker or Defibrillator
35450-35476         Transluminal Angioplasty - Open and Percutaneous
92950-93799         Cardiovascular Services
99201-99499         Evaluation and Management

                                       22
<PAGE>

                           IPA PARTICIPATION AGREEMENT
                                    EXHIBIT D

                        DISTRIBUTION OF COVERED SERVICES

    SERVICE                                                     RESPONSIBILITY
    -------                                                     --------------

A.  HOSPITAL SERVICES (INPATIENT)

      1.     Inpatient Hospital Care                            Shared Risk Fund

      2.     Hospital Services at any Hospital whether          Shared Risk Fund
             by Emergency Admission or Pre-authorization
             (excluding Physician Component)

      3.     Inpatient Diagnostic and Therapeutic               Shared Risk Fund
             Services including but not limited to:

         a.  Inpatient Neurology Services

             Inpatient services excluding  Professional         Shared Risk Fund
             Component (e.g., EEG, NCS, EMC, etc.)

         b.  Inpatient Cardiology Services

             Inpatient services excluding Professional          Shared Risk Fund
             Component (e.g.,Treadmills, Holter Monitor,
             EKG, etc.)

         c.  Inpatient Pulmonary Services, Inpatient            Shared Risk Fund
             Services including Professional Component
             for interpretation (e.g., PFTOs, ABGOs, etc.)

         d.  Inpatient Radiation Therapy Technical              Shared Risk Fund
             Component

         e.  Cardiopulmonary Perfusionist                       Shared Risk Fund

         f.  Inpatient Psychiatric Services including           Shared Risk Fund
             testing, ECT Therapy.

         g.  Inpatient Nephrology Services including            Shared Risk Fund
             Acute and Chronic Dialysis.

         h.  Inpatient Blood Banking Services including         Shared Risk Fund
             Blood Bank and Autologous Blood.

         i.  Inpatient Hospital Surgical Services               Shared Risk Fund
             including Implanted Prosthesis.

         j.  Inpatient Hospital Surgical Services               Shared Risk Fund
             including Implanted Prosthesis.

         k.  Pre-Admit Lab, X-ray, EKG and other                Shared Risk Fund
             pre-admission diagnostic services performed
             at the hospital or hospital-contracted
             facilities. (Technical component only.)

                                       23
<PAGE>

    SERVICE                                                     RESPONSIBILITY
    -------                                                     --------------

         l.  Inpatient Lab including clinical and anatomic      Shared Risk Fund
             pathology. (Technical component only.)

         m.  Inpatient radiology, diagnostic and                Shared Risk Fund
             therapeutic and imaging services. (Technical
             component only)

         n.  Inpatient Diagnostic and Therapeutic Services      Shared Risk Fund
             including but not limited to all of the
             above at any Hospital whether by Emergency
             Admission or Pre-authorization.

B.  HOSPITAL-BASED PHYSICIAN SERVICES

      1.     Anesthesiologist                                   IPA Fund

         a.  General Anaesthesiologv Service

             Inpatient                                          IPA Fund
             Outpatient                                         IPA Fund

         b.  Pain Management Service by Anesthesiologist

      2.     Radiologist, Therapeutic and diagnostic services   IPA Fund

             Inpatient                                          IPA Fund
             Outpatient                                         IPA Fund

      3.     Pathologist

         a.  Inpatient Anatomical and clinical Pathology        Shared Risk Fund

         b.  Outpatient Anatomical Pathology including
             Pap Smear reading IPA Fund and specimens from
             outpatient surgery.

C. HOSPITAL SERVICES (OUTPATIENT)

      1.     Emergency Room including all services and          Shared Risk Fund
             supplies, including covered care at any
             hospital facility.

      2.     Non-referred Emergency Care.                       Shared Risk Fund

      3.     Lab, X-ray, EKG and other services within the      Shared Risk Fund
             Emergency Department.

      4.     The Professional component of all other            IPA  Fund
             services such as fluorescein angiogram; YAG,
             ARGON, Krypton lasers; endothelial cell
             counts, etc.

      5.     Outpatient procedures including outpatient         Shared Risk Fund
             surgery and all services, supplies and
             covered prostheses, equipment and materials
             (technical component only).

      6.     Outpatient X-ray and diagnostic imaging            IPA Fund
             including noninvasive and invasive radiology,
             but not limited to IVP,

                                       24
<PAGE>

    SERVICE                                                     RESPONSIBILITY
    -------                                                     --------------

             CAT Scan, Nuclear Med., Ultrasound/Transrectal
             Ultrasound, Mammography, Thallium  Treadmills,
             Magnetic Resonance  Imaging, Nephrostomy,
             Stent Placements, Needle Aspirations,
             Annriocentesis, etc. Excluding routine chest
             and skeletal (Technical component only).

      7.     Outpatient Radiation Therapy Services              IPA Fund
             (Technical Component only).

      8.     Outpatient Rehabilitation Services including       IPA Fund
             but not limited to OT, PT, ST.

      9.     Outpatient Services for Therapeutic Abortion,      IPA Fund
             Tubal Ligations.

     10.     Facility Component for Dialysis                    Shared Risk Fund

     11.     Emergency Medical Transportation and               Shared Risk Fund
             Transportation of Members from one
             institution to another.

D.  OTHER PROFESSIONAL SERVICES

      1.     Home Health Agency care as defined by MDNY         Shared Risk Fund
             but not less than required by Medicare
             (including medical supplies.)

      2.     Durable Medical Equipment and prosfhetics as       IPA Fund
             defined by MDNY, but not less than that
             required by Medicare. Includes orthotics,
             ostomy supplies.

      3.     Infusion Therapy (administration in the home       Shared Risk Fund
             including but not limited to IV antibiotics,
             IV hydration, TPN, pain management, enteral
             nutrition. Includes delivery of drug(s),
             administration supplies and appropriate
             training.)

      4.     Social Services and Discharge Planning for         Shared Risk Fund
             Inpatients.

      5.

         a.  Inpatient Rehabilitation Services including        Shared Risk Fund
             but not limited to OT, PT, ST excluding the
             professional component.

         b.  Outpatient Rehabilitation Services.                IPA Fund

      6.     Inpatient and Outpatient substance abuse and       Carve-Out Fund
             alcohol detoxification and rehabilitation
             services as indicated in Member's Evidence
             of Coverage (Technical Component only).

E.  SKILLED NURSING FACILITY CARE

             Inpatient skilled nursing care excluding           Shared Risk Fund
             custodial care.

                                       25
<PAGE>

    SERVICE                                                     RESPONSIBILITY
    -------                                                     --------------

F.  HEALTH CARE PROFESSIONAL SERVICES

      1.     Physician Hospital, Consult. Office and            IPA Fund
             Follow-up Visits in any facility, Physician
             office, consults, and follow up visits in any
             hospital or any facility including but not
             limited to immunizations, other injectables,
             chemotherapy drugs administered as part of
             an office visit or in the home to non
             house-bound patients. Medical supplies
             including but not limited to elastic
             bandages, dressing materials and catheters.

      2.     Routine chest & skeletal and plain abdominal       IPA Fund
             films, includes Radiologist backup reading.

      3.     Professional Surgical Fees.                        IPA Fund

      4.     Referred Emergency Room Physician Fees except      IPA Fund
             where covered under global ER fee.

      5.     Physician Fees for Urgent Care covered             IPA Fund
             services.

      6.     Fees for office based diagnostic and               IPA Fund
             therapeutic procedures,

      7.     Physician care at any Hospital by emergency        IPA Fund
             admission or pie-authorization.

      8.     Audiologic Evaluations.                            IPA Fund

      9.     Outpatient counseling by LCSW, MSW,                Carve-Out Fund
             Psychologist, Psychiatrist or other mental
             health professional.

     10.     Outpatient Neurology - Diagnostic and              IPA Fund
             Therapeutic Services including EMG, NCS
             and EEG.

     11.     Nephrology Professional Component for acute        IPA Fund
             and chronic dialysis.

     12.     Outpatient Pulmonary Diagnostic and                IPA Fund
             Therapeutic Services including ABGOs and PFTOs.

     13.     Radiation Oncologist and Therapist,                IPA Fund
             Professional Component.

     14.     Outpatient Cardiology Diagnostic and               IPA Fund
             Therapeutic Procedures and Services (e.g,
             treadmills, EKG, ECHOS, Dopplers, Non-Invasive
             vascular studies, Holter Monitor, etc.)

     15.     Outpatient Lab including but not limited to        IPA Fund
             clinical pathology, anatomy pathology and
             dermatologic pathology,

     16.     Outpatient diagnostic and therapeutic services     IPA Fund
             performed on patients in custodial facilities.

     17.     Medically necessary optometry, post cataract       IPA Fund
             refractions and eyeglasses.

                                       26
<PAGE>

    SERVICE                                                     RESPONSIBILITY
    -------                                                     --------------

     18.     Authorized referrals to non participating          IPA Fund
             physicians including but not limited to all
             services listed under Section F herein.

     19.     Routine Podiatry as defined in the Member's        Carve-Out Fund
             Subscriber Agreement.

    PHARMACY SERVICES

      1.     Outpatient Prescription Drugs limited to the       IPA Fund
             MDNY Formulary or approved exceptions.

      2.     Outpatient injectable Prescription Drugs.          IPA Fund

H.  OTHER SERVICES

      1.     Routine Optometry Refractions.                     Carve-Out fund

      2.     Routine Chiropractic as defined in the             Carve-Out Fund
             Member's Subscriber Agreement.

   *     Some of these  covered  services  will be excluded from the IPA fund
         for MDClassic(TM) and  MDClassic65(TM)  members.  These services are
         the responsibility of the Specialty Networks.

                                       27
<PAGE>

                           DPA PARTICIPATION AGREEMENT
                                    EXHIBIT F

                              EXCLUSIVITY AGREEMENT

This  Agreement is not  intended to be  exclusive  and either party may contract
with any other person or entity for purposes  similar to those described in this
Agreement,  provided,  however,  MDNY  may  contract  with  one  or  more  other
medical-surgical   independent  practice   associations  or   physician-hospital
organizations  ("PHO") which operate in the Service Area only upon the following
conditions:

      1.    With regard to medical-surgical independent practice associations or
            PHOs which operate in the Service Area,  other than those affiliated
            with  Catholic  Healthcare  Network of Long Island  ("CHNLI"),  MDNY
            shall: a) demonstrate a deficiency in its service  delivery  network
            such  that it is unable  to  satisfy  its  statutory  obligation  to
            maintain a network of health  care  providers  adequate  to meet the
            comprehensive  needs of its  Members  and to provide an  appropriate
            choice of providers sufficient to provide the services covered under
            its Subscribers' Contracts;  and b) provide no less than ninety (90)
            days' notice to IPA of MDNY's intention to contract with one or more
            such other  medical-surgical  independent  practice  associations or
            PHOs prior to MDNY  entering  into a contract  with one or more such
            independent practice associations or PHOs.

      2.    With regard to any medical-surgical independent practice association
            or PHO which  operates in the Service  Area and is  affiliated  with
            CHNU,  MDNY may enter  into one or more  contracts  with one or more
            such other  medical-surgical  independent  practice  associations or
            PHOs for a period of one (I) year from the date of this Agreement.

      3.    The above  conditions  are not  applicable  to any contract MDNY has
            entered   into   with  a   medical-surgical   independent   practice
            association or PHO prior to the date of this Agreement.

                                       28
<PAGE>

                           IPA PARTICIPATION AGREEMENT
                                    EXHIBIT G

               [Attach form of Administrative Services Agreement]

                                       29Exhibit 10.11

                                    Preferred
                                      Life
                          Insurance Company of New York
                        152 West 57th Street, 18th Floor
                            New York, New York 10019

                              REINSURANCE AGREEMENT

                                     between

                  PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
                               New York, New York

                  (hereinafter referred to as "Preferred Life")

                                       and

                              MDNY HEALTHCARE, INC.

                               Melville, New York

                       (hereinafter referred to as "Plan")

                             January 1, 1999 RENEWAL

                       REINSURANCE POLICY NUMBER 17055-036

                                                    Tax I.D. #__________________

<PAGE>

                                TABLE OF CONTENTS

TITLE                                                         ARTICLE

Reinsurance Coverage

Definitions                                                      I

Schedule of Reinsurance                                         II

Premium  Payment                                               III

Notice of Claims and Reimbursement                              IV

Reports, Records and Audits                                      V

Arbitration                                                     VI

Insolvency/Cessation of Operations                             VII

Limitations of Reinsurance Coverage                           VIII

Effective Date, Duration and Termination                        IX

General Provisions                                               X

Document Execution

Endorsements:

Continuation of Benefits                                         1

Out of Area Conversion Provision                                 2

<PAGE>

                              Reinsurance Coverage

It is hereby agreed that in consideration of the promises, terms, and conditions
contained in this Reinsurance Agreement,  Plan shall cede to, and Preferred Life
shall  reinsure,   the  portion  specified  herein  of  the  Membership  Service
Agreements issued by the Plan.

                                   Article I

                                   Definitions

A.    "Acute Care Services" shall mean those services which are necessary to the
      care and treatment of an unstable medical condition caused by the onset of
      an illness or injury which places the patient's  health in severe jeopardy
      and requires immediate medical attention.

            Acute Care  Services  do not include  health care or other  services
            which are for  custodial  care or  services  which  assist in or are
            intended to improve the usual activities of daily living.

B.    "Approved Fixed  Procedural Fee Hospital" shall mean a hospital with fixed
      per diems or fixed ease rates  which have been  reviewed  and  approved by
      Allianz Life prior to any service  being  rendered.  This does not include
      any discounted fee-for-service arrangements, nor does it include per diems
      or  case  rates  which  revert  to  a  discount  off  actual  charges  for
      fee-for-service once an outlier or stop-loss threshold has been reached.

C.    "Contract  Year" shall mean the twelve (12) month  period  which begins on
      the Effective Date of this  Reinsurance  Agreement,  or any anniversary of
      the Effective Date.

D.    "Deductible"  shall mean the  deductible  amount  shown in the Schedule of
      Reinsurance. The Deductible will be applied to any Loss as follows:

      1.    If the Loss  consists  of  Eligible  Hospital  Services  or Eligible
            Medical   Services   incurred   during  a  period   of   continuous,
            uninterrupted  confinement at one or more  facilities,  charges from
            each facility  will be applied to the  Deductible in an amount equal
            to the  proportion  of that  facility's  Services to total  Eligible
            Hospital Services or Eligible Medical Services.

E.    "Eligible  Hospital  Services"  shall mean those Acute Care  Services  for
      Members who require Acute Care while  registered  bed patients,  which are
      generally and customarily provided by the Plan's  participating  hospitals
      or other specialized  institutions within the Service Area of the Plan and
      which are prescribed, directed, or authorized by or on behalf of the Plan.
      Eligible Hospital Services shall mean the lesser of:

      1.    The amount of the Plan's fee schedule; or

      2.    The amount of the Reasonable and Customary charges;

but in any event,  Eligible  Hospital Services shall be limited to an average of
$2,000 per day of each period of continuous hospital confinement. Operating room
charges are Eligible Hospital Services, but are excluded from the calculation of
the average daily limit.  Eligible Hospital Services shall also include Referral
Services and outpatient facility charges.

<PAGE>

F.    "Eligible Medical Services" shall mean those services  performed by health
      care professional and paramedical  personnel including medical,  surgical,
      diagnostic,  therapeutic,  and preventive services which are generally and
      customarily  performed,  prescribed,  or  directed  by or on behalf of the
      Plan. Eligible Medical Services shall mean the lesser of:

      1.    The amount of the Plan's fee schedule; or

      2.    The amount of the Reasonable and Customary charges;

      Eligible Medical Services shall also include Referral Services

G.    "Loss" shall mean only such  eligible  amounts as are incurred  during the
      Contract Year, or under the previous year's "carry forward"  provision for
      treatment  and  services  rendered  to a  Member  while  this  Reinsurance
      Agreement  is in effect and  provided  such  treatment  and  services  are
      covered by the  Membership  Service  Agreement.  The word "Loss" shall not
      include:

      1.    Compensation  paid to salaried  officers or employees of the Plan or
            any other overhead expenses;

      2.    Any amount paid by the Plan for  punitive or exemplary  damages,  or
            compensatory  damages  awarded  to  any  Member  arising  out of the
            conduct of the Plan in the  investigation,  trial,  or settlement of
            any claims or failure to pay or delay in payment of  benefits  under
            its Membership Service Agreement; or

      3.    Any Statutory penalty imposed upon the Plan on account of any unfair
            trade practice or any unfair claims practice.

H.    "Member" shall mean any person or family  dependent  enrolled and eligible
      to receive services under a Membership Service Agreement.

I.    "Membership Service Agreements" shall mean those contractual agreements to
      provide services to Members of the Plan which are approved by the State of
      New York and are for those Members for who Plan has requested  reinsurance
      coverage from Preferred Life.  Under those Membership  Service  Agreements
      only the following  products  serviced by the Plan will be reinsured under
      this Agreement:

            1.    Commercial HMO                  2. Medicare

            Applicable  Membership  Service  Agreements shall be incorporated by
            reference.

J.    "Prior   Approved   Transplant   Reimbursement   Schedule"  shall  mean  a
      reimbursement  schedule  for  a  specific  transplant  procedure  that  is
      approved, in writing, by Preferred Life prior to the transplant admission.
      Instructions  for obtaining  prior  approval are available  from Preferred
      Life upon request.

K.    Reasonable  and  Customary"  shall  mean  the  cost of  services  that are
      generally  incurred  for cases of  comparable  nature and  severity in the
      geographical area involved.

L.    "Referral  Services"  shall mean those Acute Care  Services  provided to a
      Member  by a  non-participating  hospital  which,  due to the  specialized
      nature of the  service or  facility  required,

                                       2
<PAGE>

cannot be  provided by the Plan's  participating  hospitals.  Referral  Services
shall be considered  Eligible  Hospital Services or Eligible Medical Services if
such services are specifically  authorized by the Plan.  Referral Services shall
mean the lesser of:

      1.    The amount of the negotiated charges; or

      2.    The amount of the Reasonable and Customary charges;

but in any event  Referral  Services,  to the extent they are Eligible  Hospital
Services,  shall be limited  to an  average of $2,000 per day of each  period of
continuous  hospital  confinement.  Operating room charges are excluded from the
calculation of the average daily limit.

M.    "Service  Area"  shall mean the  service  area  defined in the  Membership
      Service Agreements.

                                       3
<PAGE>

                                   Article II

                             Schedule of Reinsurance

A.    The Effective Date for this Reinsurance Agreement shall be January 1,1999.

B.    The monthly premium for the Reinsurance  Coverage  defined in paragraph C.
      below shall be $1.51 per Commercial Member and $4.33 per Medicare Member.

C.    The Reinsurance  Coverage to be provided under this Reinsurance  Agreement
      shall be defined as follows:

      1.    For  Eligible  Hospital  Services,  the  Deductible  amount for such
            Reinsurance  Coverage  shall be $100,000 of the Loss for each Member
            for  each  Contract  Year.  For  Eligible  Medical   Services,   the
            Deductible amount for such Reinsurance  Coverage shall be $20,000 of
            the Loss for each Member for each Contract Year. Once the Deductible
            has been satisfied, Preferred Life shall indemnify the Plan for:

            a.    The  excess  Loss  for  Eligible  Hospital  Services  in  that
                  Contract  Year for any  Member who is under one year of age at
                  the start of the Contract Year shall be reimbursed as follows:

                  1)    90%  if  services  are  performed  in a  "per  diem"  or
                        approved fixed procedural fee hospital.

                  2)    85% if services are performed on an outpatient basis.

                  3)    70% if services are performed in any other hospital.

            b.    The  excess  Loss  for  Eligible  Hospital  Services  in  that
                  Contract Year for any Member who is one year of age or over at
                  the start of the Contract Year shall be reimbursed as follows:

                  1)    90%  if  services  are  performed  in a  "per  diem"  or
                        approved fixed procedural fee hospital.

                  2)    80% if services are performed on an outpatient basis.

                  3)    80% if services are performed in any other hospital.

            c.    The  excess  Loss  for  Eligible  Hospital  Services  in  that
                  Contract  Year for  expenses  related to organ and bone marrow
                  transplant therapy shall be reimbursed as follows:

                  1)    90% if services  are  performed  in a LifeTrac  facility
                        with a Prior Approved Transplant  Reimbursement Schedule
                        for that confinement.

                  2)    80% if services are performed in a hospital with a Prior
                        Approved  Transplant  Reimbursement  Schedule  for  that
                        confinement.

                  3)    50% if services are performed in any other hospital.

                                       4
<PAGE>

                  4)    50% for organ and bone marrow Retransplantation Services
                        performed in any  hospital.  Retransplantation  Services
                        shall  mean  retransplantation  of the  same  organ/bone
                        tissue type performed within one year of the date of the
                        initial transplant procedure.

                  The acquisition  cost of the "live" organ is not included as a
                  benefit in this Reinsurance Agreement for any organ transplant
                  procedure.

            d.    90% of the excess Loss for Eligible  Medical  Services in that
                  Contract Year paid by the Plan to a provider.

            e.    In the event an excess  Loss could be  indemnified  under more
                  than one of the above  subsections,  the subsection  providing
                  the least indemnity shall apply.

            f.    Except  for  the  hospitals  listed  in  Exhibit  I,  expenses
                  incurred at hospitals having "per diem"  arrangements with the
                  Plan  shall  be  reimbursed  on the  basis  of the  contracted
                  hospital's  actual  charges to the  Member or Plan,  but in an
                  amount  which does not exceed  the "per  diem"  rate.  For the
                  hospitals  listed in  Exhibit  I,  eligible  charges  shall be
                  limited  to the  amounts  stated,  including  any  outlier  or
                  stoploss provisions, if specifically listed.

                  Hospitals  with outlier or stoploss  provisions  in which "per
                  diem"  revert to a  discount  off  actual  charges  or fee-for
                  services  charges shall not be considered "per diem" hospitals
                  once the outlier or stoploss threshold is reached.

            h.    Notwithstanding the above, the maximum  reinsurance  indemnity
                  payable under this Reinsurance Agreement for Eligible Hospital
                  Services and Eligible  Medical  Services for each Member shall
                  be $2,000,000.

D.    Loss  incurred  by the Plan  during  the last  thirty-one  (31)  days of a
      Contract Year for which no benefits  were payable  under this  Reinsurance
      Agreement  because  such  Loss  was  applied  to the  Deductible  for that
      Contract Year shall be applied  toward the  Deductible  for the succeeding
      Contract Year.  Benefits for carry-forward  Losses shall be subject to the
      maximums established in Article I, Sections E and L.

E.    The preceding  Schedule of  Reinsurance  is subject to the  Limitations as
      defined in Article VIII.

                                       5
<PAGE>

                                  Article III

                                 Premium Payment

A.    The  amount  of  premiums  to be paid by the  Plan to  Preferred  Life for
      Reinsurance  Coverage  under this  Reinsurance  Agreement  is set forth in
      Article II herein.

B.    Premiums  shall be  payable  monthly  and shall be based on the  number of
      Members  enrolled and eligible to receive Eligible  Hospital  Services and
      Eligible Medical Services during the month.

C.    Premiums shall be due on the first day of the month for which  Reinsurance
      Coverage is provided  and are payable to  Preferred  Life at its office in
      New York, New York.

D.    A grace  period not to exceed  one month  shall be granted to the Plan for
      the payment of every premium due.

E.    If any premium is not paid before the expiration of the grace period, this
      Reinsurance  Agreement shall automatically  terminate as of the expiration
      of the period for which premium has been paid.

F.    The premium  payment by the Plan to Preferred Life shall be accompanied by
      a statement  signed by an authorized  Plan official in which the number of
      enrolled and eligible Members for that month is given.

G.    Preferred  Life shall  have the right to change the  premium at the end of
      the first  Contract  Year of this  Reinsurance  Agreement  and at any time
      thereafter,  provided this  Reinsurance  Agreement has not had the premium
      changed within the preceding  twelve (12) months and further provided that
      at least  thirty-one  (31) days written notice has been given by Preferred
      Life to the Plan. The Plan must give Preferred Life  thirty-one  (31) days
      advance  written  notice of any change in  coverage.  Upon  notice of such
      change of coverage,  Preferred Life may elect to exclude the  modification
      of  coverage  from  Reinsurance  Coverage  or  charge  additional  premium
      therefore.  Preferred  Life  shall not be liable for any  modification  of
      coverage  of the  Reinsured  Policy  in the event  that the Plan  fails to
      properly  notify  Preferred Life. Any change in premium that is solely the
      result of a change in coverage shall not be considered a change in premium
      requiring  the twelve (12) month period of time before  another  change in
      premium can be made.

                                       6
<PAGE>

                                   Article IV

                       Notice of Claims and Reimbursement

A.    The Plan shall give  Preferred  Life timely written notice of any claim or
      potential  claim.  The Plan shall use its best  efforts to give  Preferred
      Life notice of claim or potential  claim within  thirty-one (31) days from
      the date on which the claim or potential claim is incurred.

B.    Preferred  Life shall  furnish the Plan with a supply of claim forms to be
      used in filing a claim.

C.    The Plan shall file  completed  proof of Loss by sending to Preferred Life
      the  information  requested  on the claim  form,  along with copies of the
      various bills and itemized expenses involved.

D.    In accordance with the terms and conditions of this Reinsurance Agreement,
      Preferred  Life shall make payment to the Plan within  thirty (30) days of
      Preferred Life's receipt of complete  written proof of such Loss,  subject
      to E. below.

E.    Preferred  Life shall not be liable  with  regard to any Loss for which it
      has not received  written  notice  within the twelve (12) months after the
      end of the Contract  Year in which the Loss was  incurred.,  except in the
      case of insolvency, as defined in Article VII.

                                       7
<PAGE>

                                   Article V

                           Reports, Records and Audits

A.    The Plan shall submit a monthly report to Preferred Life listing the names
      and amounts for those Members who have received Eligible Hospital Services
      and  Eligible  Medical  Services  during the  Contract  Year which  exceed
      seventy-five  (75)  percent of the per Member  Deductible  as set forth in
      Article II.

B.    The Plan shall report to Preferred  Life any changes of a material  nature
      in its  Membership  Service  Agreements.  Such  report  shall  be  sent to
      Preferred Life at least  thirty-one (31) days before the Effective Date of
      the change so that Preferred Life may evaluate the need for any changes in
      this Reinsurance Agreement.

C.    The Plan shall report to Preferred Life any  investigation  or request for
      information of a material nature by a State Insurance Department regarding
      the  conduct of the Plan.  Such  report must be provided in writing by the
      Plan to Preferred Life within  thirty-one (31) days following the date the
      Plan receives  notice,  written or  otherwise,  of such  investigation  or
      request from the State Insurance Department.

D.    The Plan shall keep a record of the monthly  enrollment of Members covered
      by its Membership  Service  Agreements and the Eligible  Hospital Services
      and Eligible Medical Services  received by each Member while covered under
      this Reinsurance Agreement. Such record shall be kept during the time this
      Reinsurance Agreement is in effect and for a one (1) year period after its
      termination date.

E.    The Plan's books and  records,  to the extent  permitted by law,  shall be
      made  available to  Preferred  Life for  inspection  and audit at any time
      during normal business hours during the time this Reinsurance Agreement is
      in effect and for a one (1) year period after its termination date.

F.    All information  disclosed to Preferred Life by the Plan or to the Plan by
      Preferred Life, either in the course of conducting  negotiations or as the
      result of  complying  with the terms and  conditions  of this  Reinsurance
      Agreement,   shall  be  considered  to  be  privileged  and   confidential
      information by both the Plan and Preferred Life.

G.    The  submission  of  this  Reinsurance  Agreement  to  any  Department  of
      Insurance  or any  State or  Federal  agency  shall  not be  considered  a
      violation of F above.

                                       8
<PAGE>

                                   Article VI

                                   Arbitration

A.    In the event of any dispute or difference  of opinion  arising out of this
      Agreement  which  cannot be amicably  resolved  by the Plan and  Preferred
      Life, the Plan and Preferred Life agree that such dispute or difference of
      opinion shall be submitted to and settled by arbitration.

B.    Except as otherwise provided herein, the arbitration shall be conducted in
      accordance  with  the  Commercial   Arbitration   Rules  of  the  American
      Arbitration  Association  (the "AAA" and the "AAA's Rules") which shall be
      in effect on the date of delivery of demand for arbitration.  In the event
      that the AAA's Rules  conflict with any  provisions of this Article,  this
      Article shall govern.

C.    The party that determines that a dispute should be resolved by arbitration
      (the "Initiating Party") shall give written notice to the other party (the
      "Responding  Party") of its  desire to compel  arbitration,  which  notice
      shall  contain a statement  setting  forth the nature of the dispute,  the
      amount involved, if any, and the remedy sought.

D.    The  arbitration  tribunal shall consist of three  arbitrators who must be
      disinterested  parties,  unaffiliated with the Plan or Preferred Life. The
      Plan shall appoint one  arbitrator,  and Preferred  Life shall appoint one
      arbitrator.  The third  arbitrator  shall be appointed by the previous two
      (2) arbitrators.  If the two previous  arbitrators cannot agree on a third
      arbitrator, then the third arbitrator shall be appointed by AAA.

E.    If either party refuses or neglects to appoint an arbitrator  within sixty
      (60) days after receipt of written notice from the other party  requesting
      it to do so, the requesting  party shall instruct AAA to appoint a neutral
      second  arbitrator.  The two  appointed  arbitrators  can then appoint the
      third.

F.    For the  purposes of  arbitration,  this  Reinsurance  Agreement  shall be
      considered an honorable  engagement  rather than a mere legal  obligation,
      and the arbitrators  are not bound by judicial  formalities or strict rule
      of law in interpreting this Reinsurance Agreement.

G.    The decision of a majority of the  arbitrators  shall be final and binding
      on both the Plan and Preferred Life.

H.    The expense of arbitration shall be divided between the Plan and Preferred
      Life based on a decision made by the arbitrators.

I.    Any such  arbitration  shall  take  place in New York,  unless  some other
      location is mutually agreed upon.

J.    The laws of New York  shall  govern the  arbitration  process in the event
      they conflict with A through I above.

                                       9
<PAGE>

                                  Article VII

                       Insolvency/Cessation of Operations

A.    In the event that Preferred Life should become insolvent, this Reinsurance
      Agreement shall  automatically  terminate on the date of Preferred  Life's
      insolvency.

B.    In the  event  that the Plan  shall  become  insolvent,  this  Reinsurance
      Agreement  shall  automatically  terminate  on  the  date  of  the  Plan's
      insolvency.  All Reinsurance  shall be payable directly to the liquidator,
      receiver,  or statutory  successor of the Plan,  without diminution due to
      the insolvency of the Plan.

C.    For purposes of this  Reinsurance  Agreement,  "insolvent" or "insolvency"
      shall mean that both of the following conditions occur:

      1.    A final  determination is made by a court of competent  jurisdiction
            that the Plan or Preferred Life is insolvent; and

      2.    All operations of the Plan or Preferred Life cease.

            The date of  insolvency  shall be  determined  as the date which the
            court  declares the Plan or Preferred  Life insolvent or the date on
            which the Plan or Preferred  Life has ceased  operations,  whichever
            date is later in time.

            Operations of the Plan will not be considered  ceased so long as the
            Plan is in control of a Receiver (which, as used herein,  includes a
            court or state appointed  supervisor,  receiver,  or  rehabilitator)
            until  the date the  Receiver  stops  paying  for  future  services,
            publicly  declares  its  intention  to not make  payment  for future
            services,  and orders Plan providers to stop  rendering  services on
            behalf of the Plan other than those  services for the remaining term
            for which providers have previously been paid.

D.    In the event the Plan should cease  operations  and become  insolvent,  as
      defined  above,  during  the  term of this  Reinsurance  Agreement,  it is
      further agreed the following would apply:

      1.    The liquidator,  receiver,  or statutory successor of the Plan shall
            give written  notice to Preferred  Life of the pendency of any claim
            affecting this Reinsurance  Agreement within a reasonable time after
            such a claim is filed. During the pendency of such claim,  Preferred
            Life may  investigate at its own expense such claim and interpose in
            the proceeding  where such claim is to be adjudicated,  any defenses
            which  it may  deem  available  to the  Plan  or to its  liquidator,
            receiver, or statutory successor; and

      2.    The expense  thus  incurred by Preferred  Life shall be  chargeable,
            subject to court  approval,  against the Plan or its  successors  as
            part of the expense of liquidation to the extent of a  proportionate
            share of the benefit which may accrue to the Plan solely as a result
            of the defense undertaken by Preferred Life.

E.    Notice of the Plan's or  Preferred  Life's date of  insolvency  or date of
      cessation of operations  shall be  communicated  to the other party at the
      earliest possible point in time.

                                       10
<PAGE>

                                  Article VIII

                       Limitations of Reinsurance Coverage

A.    Preferred Life's  reimbursement of claims to the Plan shall not exceed, in
      any event, the limits of coverage stated in Article II.

B.    The Plan is solely  responsible for providing all services to its Members,
      for  compensation of all liability to its Members,  and for payment of all
      expenses to its Members.

C.    Preferred Life shall have no  responsibility  or obligation to provide any
      services or payment to any Member of the Plan, directly or indirectly.

D.    To the extent the Plan  receives or will receive any payment or receives a
      reduction  in its  liability  by  reason  of a  Coordination  of  Benefits
      provision in the Plan's  Membership  Service  Agreement or by any right of
      subrogation.  Preferred  Life shall only  indemnify the Plan in respect of
      any excess  beyond the amount of COB or  subrogation  amounts  received or
      applied currently or in the future as reductions in its liability.

E.    Preferred  Life shall not  reimburse  the Plan for  amounts  incurred  for
      skilled nursing or rehabilitative services (including,  but not limited to
      treatments   for  motor   function  or  mobility,   physical   therapy  or
      psychotherapies),  unless such services are provided  concurrent  with and
      incidental to Acute Care Services.

F.    Preferred  Life  shall not be liable to the Plan,  and the Plan shall hold
      harmless and indemnify Preferred Life, for any of the following:

      1.    Professional  liability  or  liability  for  any  act  or  omission,
            tortious or otherwise,  in connection with any services  rendered to
            any person or group of persons by the Plan or any group,  entity, or
            person employed by or affiliated in any manner with the Plan;

      2.    Liability assumed by the Plan in excess of Plan's Membership Service
            Agreements as identified in Article I of this Reinsurance Agreement,
            including  liability under any contract other than Plan's Membership
            Service Agreements;

      3.    Expenses  or losses for which the Plan has  released  any persons or
            entity from its legal liability;

      4.    Liabilities which are non-pecuniary in nature (not having a monetary
            value);

      5.    Liabilities,   expenses,   or  losses   which  are  based  upon  any
            noncompliance or violation of any Federal or State statute, rule, or
            regulation by the Plan;

      6.    Additional  expenses or losses  resulting  from those services which
            are  billed in excess of the  usual and  customary  charges  for the
            locality where same were administered;

      7.    Any expenses to the extent the Plan  receives a reduction in charges
            because  of a  Coordination  of  Benefits  provision  in the  Plan's
            Membership Service Agreements or any right of subrogation;

                                       11
<PAGE>

      8.    Any liability due to war or act of war;

      9.    Any liability for replacement of equipment,  furniture,  or supplies
            which  are  not  Eligible  Hospital  Services  or  Eligible  Medical
            Services.

      10.   Any  liability  for any  property  damage  expenses  resulting  from
            negligence by any party which causes a failure of any equipment used
            in the treatment of a Member.

                                       12
<PAGE>

                                   Article IX

                    Effective Date, Duration and Termination

A.    This Reinsurance Agreement shall become effective on the date set forth in
      Article II.

B.    This  Reinsurance  Agreement  shall  continue in effect from the Effective
      Date until it is terminated.

C.    This Reinsurance  Agreement shall automatically  terminate for non-payment
      of premium by the Plan as set forth in Article III.

D.    This Reinsurance  Agreement shall  automatically  terminate on the date of
      Preferred  Life's  insolvency or cessation of operations or on the date of
      the Plan's insolvency or cessation of operations.

E.    This Reinsurance  Agreement can be terminated in accordance with paragraph
      A. of Article X.

F.    Termination of this  Reinsurance  Agreement shall not terminate the rights
      or  liabilities  of either the Plan or Preferred  Life arising  during any
      period when this Reinsurance Agreement was in force, provided that nothing
      herein  shall be  construed  to  extend  Preferred  Life's  liability  for
      reimbursements  under this Reinsurance  Agreement for any Loss paid by the
      Plan  which  was  incurred  on or after  the date of  termination  of this
      Reinsurance Agreement.

G.    The Plan and  Preferred  Life shall each have the right to terminate  this
      Reinsurance Agreement by giving the other party, and the State of New York
      Health and  Insurance  Departments,  written  notice of such  intention to
      terminate at least  thirty-one  (31) days prior to the end of any Contract
      Year.

                                       13
<PAGE>

                                   Article X

                               General Provisions

A.    It is  understood  and agreed  that if at any time while this  Reinsurance
      Agreement is in effect the Plan should:

      1.    Acquire   the  assets  and   liabilities   of  any  other   company,
            corporation, or foundation; or

      2.    Be  acquired,  come  under  control  of or be merged  with any other
            company, corporation, or foundation;

            Preferred  Life shall,  at its  option,  have the right to charge an
            additional  premium  to the  Plan,  or  terminate  this  Reinsurance
            Agreement by giving written notice by certified mail which shall set
            forth the date and time of such  termination,  but not  sooner  than
            thirty-one (31) days after the date of receipt of such notice.

B.    The Plan shall give Preferred Life written notice in the event that any of
      A. above should occur as soon as Plan is aware that such event will occur.

C.    This Reinsurance Agreement may be altered or amended at any time by mutual
      consent of the Plan and Preferred  Life either by written  Amendment or by
      correspondence signed by officers of the Plan and Preferred Life. Any such
      Amendments or correspondence  shall be binding upon the Plan and Preferred
      Life and  deemed to be an  integral  part of this  Reinsurance  Agreement.
      Amendments  are  subject to  approval  by the State of New York Health and
      Insurance Departments prior to effectuation.

D.    This  Reinsurance  Agreement  shall not be assignable  without the express
      written consent of the other party.

E.    Nothing  in this  Reinsurance  Agreement  shall  create any right or legal
      contractual  relationship  between  Preferred  Life and any Member under a
      Membership  Service Agreement  identified in Article I of this Reinsurance
      Agreement.

F.    The Plan is  solely  responsible  for all  services  to  Members,  for all
      liabilities  to  Members,  and  for  payment  of all  claims  of  Members.
      Preferred Life shall not have any  responsibility or obligation to provide
      any  service  or  payment  to any  Member,  directly  or  indirectly.  The
      Reinsurance Coverage provided herein is payable solely to the Plan.

G.    If any payment is made by Preferred Life under this Reinsurance Agreement,
      Preferred  Life shall be  subrogated  to all the Plan's  rights to recover
      such  payment  against any Member,  person or  organization,  and the Plan
      shall  execute and deliver  instruments  and do whatever is  necessary  to
      preserve and secure such rights.  Any  recovery  made by the Plan,  net of
      attorney's  fees charged to the Plan,  shall be paid to Preferred  Life to
      the extent of payment made under this Reinsurance Agreement.

H.    This Reinsurance Agreement, including Endorsements and attached papers, if
      any,  constitutes the entire  contract of  reinsurance.  No change in this
      Reinsurance  Agreement  shall  be valid  until  approved  by an  executive
      officer of Preferred  Life and unless such approval be

                                       14
<PAGE>

      endorsed hereon or attached hereto.  No agent has authority to change this
      Reinsurance Agreement or to waive any of its provisions.

I.    Plan agrees to give  Preferred  Life written notice of any change in Chief
      Operating  Management,  any fundamental  change in the Management  Service
      Contract,  or any change in majority  ownership of the Plan, and Preferred
      Life shall reserve the right within  thirty-one (31) days.  Preferred Life
      shall  reserve the right  within  thirty-one  (31) days of receipt of such
      written notice to terminate this Reinsurance Agreement.

As of  January  1,  1999,  all  the  promises,  terms  and  conditions  of  this
Reinsurance  Agreement will  supersede  those of  Reinsurance  Agreement  Policy
Number 17055-036, dated January 1, 1998, and Reinsurance Coverage will be deemed
continuous.

IN  WITNESS  WHEREOF,  the Plan and  Preferred  Life have,  by their  respective
officers,  executed  and  delivered  this  Reinsurance  Agreement  in  duplicate
effective from the date set out in Article II hereof.

                                    MDNY HEALTHCARE, INC.

Dated:      4/8/99                  By:     /s/
      -------------------              ----------------------------------------

Attest:                             Title:   Chief Financial Officer
       ------------------                 -------------------------------------

                  PREFERRED LIFE INSURANCE COMPANY OF NEW YORK

Dated:                              By:
      -------------------              ----------------------------------------

Attest:                             Title:
      -------------------              ----------------------------------------

                                       15
<PAGE>

                                ENDORSEMENT NO. 1

Endorsement of Policy No. 17055-036 ("Reinsurance  Agreement") between Preferred
Life Insurance  Company of New York  ("Preferred  Life") MDNY  Healthcare,  Inc.
("Plan") to provide  limited  coverage for certain Members of the Plan when they
can no longer  receive  benefits  because of insolvency  and  liquidation of the
Plan.

Definitions

1.    Receiver means any court or state appointed  supervisor or receiver of the
      Plan.
2.    Provider means a hospital, doctor or other health care provider.
3.    Insolvency  means  the  conditions  of  Article  VII  of  the  Reinsurance
      Agreement have been met, including that Plan operations have ceased.
4.    Plan Benefits means the contractual obligations of the Plan to its Members
      to insure costs for health services.
5.    Acute Care  Services  and Acute  Care are as  defined  in the  Reinsurance
      Agreement.
6.    Members means those Members with Membership Service  Agreements,  as those
      terms are defined in the Reinsurance Agreement,  for which, as of the date
      of insolvency,  1) reinsurance is applicable;  2) reinsurance  premium has
      been paid; and 3) premium has been paid to the plan.

Limitations

1.    There is no liability of Preferred Life under this  Endorsement  until and
      unless  all  conditions  of  Insolvency  in  Article  VII have  been  met,
      including the condition that Plan operations cease.

2.    This  Endorsement  provides  no benefits  for  creditors,  owners,  or the
      Receiver  of the Plan,  although  payment of Plan  Benefits  may be to the
      Receiver for transfer to the appropriate Provider payees.

3.    This Endorsement provides no benefits for services which are the legal, or
      direct or indirect contractual,  obligation of a Provider. As one example,
      this Endorsement provides no benefits for a service if the Provider or any
      entity  contracted  with a Provider (1) has been paid to provide  services
      for the  period in which the  service is  provided,  or (2) has a legal or
      contractual obligation to provide such service, whether or not payment has
      or will be received by the Provider.

4.    This  Endorsement  provides no benefits for services which are included in
      coverage provided by a state guaranty fund.

5.    This Endorsement provides no benefit for services to Plan insureds who are
      not Members as defined above.

6.    Liability of Preferred Life under the  Continuation of Benefits  Provision
      is limited to $5 million  dollars in the  aggregate  for  Commercial  HMO,
      Medicare and Point-of-Service combined.

Continuation of Benefits Provision

Upon the date the Plan is Insolvent, Preferred Life will provide the benefits in
A through D below, subject to the Limitations.

<PAGE>

A.    Preferred Life will continue Plan Benefits for Members who are confined in
      an Acute Care hospital on the date of  Insolvency,  beginning on such date
      and  continuing to the earlier of 365 days or until their  discharge,  and
      subject to the Limitations.

B.    Preferred Life will continue Plan Benefits for Members who are confined on
      the date of Insolvency in skilled nursing or rehabilitation facilities, if
      care in such  facilities  is rendered  concurrent  with and  incidental to
      Acute Care  Services.  Plan  Benefits for such  services will begin on the
      date of Insolvency  and continue until the earlier of 120 days or the date
      of discharge, and subject to the Limitations.

C.    Preferred Life will continue Plan Benefits for Members (other than Members
      subject to A or B above) from the date of Insolvency  through the contract
      period after Insolvency, but for not more than 60 days, and subject to the
      Limitations.

D.    For any Members who are Title XVIII Medicare enrollees.  A, B, and C above
      will  apply,  subject to the  further  limit that Plan  Benefits  will not
      extend  beyond the date such Member is  entitled  to coverage  under other
      Title XVIII provisions or any other federal program.

Conversion Coverage

Preferred Life will issue conversion coverage to Members, other than Members who
are Medicaid or Title XVIII  Medicare  enrollees,  who apply to Allianz Life for
conversion  coverage within 31 days of Insolvency.  The conversion coverage will
be that which is  customarily  issued to by  Preferred  Life at the then current
rates and of the type available for conversion.

Except as stated herein,  all terms and conditions of the Reinsurance  Agreement
remain unchanged.

The Effective Date of this Endorsement is January 1,1999.

                                            MDNY HEALTHCARE, INC.

Dated:    4/8/99                    By:     /s/
      -------------------              ----------------------------------------

                                    Title:  Chief Financial Officer
                                          -------------------------------------

                  PREFERRED LIFE INSURANCE COMPANY OF NEW YORK

Dated:                              By:
      -------------------              ----------------------------------------

                                    Title:
                                          -------------------------------------

                                       2
<PAGE>

                                ENDORSEMENT NO.2

Endorsement  between  Preferred Life Insurance  Company of New York (hereinafter
referred to as "Preferred Life") and MDNY Healthcare, Inc. (hereinafter referred
to as "Plan") Policy No. 17055-036.

The  following  provision  is hereby  made a part of the  Reinsurance  Agreement
between Preferred Life and Plan.

                        Out of Area Conversion Provision

      In the event that a Plan Member  moves  outside  the  Service  Area of the
      Plan, such Member, without evidence of insurability,  shall have the right
      of  conversion  for a period  of  thirty-one  (31)  days.  The  Conversion
      Coverage will be that which is customarily issued by Preferred Life at the
      then current rates and of the type available for conversion.

      Except as herein  stated,  all terms  and  conditions  of the  Reinsurance
      Agreement remain unchanged.

The Effective Date of this Endorsement is January 1, 1999.

                                    MDNY HEALTHCARE, INC.

Dated:                              By:
      -------------------              ----------------------------------------

                                    Title:
                                          -------------------------------------

                  PREFERRED LIFE INSURANCE COMPANY OF NEW YORK

Dated:                              By:
      -------------------              ----------------------------------------

                                    Title:
                                          -------------------------------------

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