/raid1/www/Hosts/bankrupt/CAR_Public/990330.MBX             C L A S S   A C T I O N   R E P O R T E R

             Tuesday, March 30, 1999, Vol. 1, No. 38


BALCOR COMPANY: Intends to Appeal to the Illinois Supreme Court
CHS ELECTRONICS: Barrack Rodos Files Complaint in Florida
CHS ELECTRONICS: Berman DeValerio Files Complaint in Florida
CHS ELECTRONICS: Wechsler Harwood Files Complaint in Florida
CHS ELECTRONICS: Wolf Popper Files Complaint in Florida

GENERAL AMERICAN: 20 More Train Accident Trials Start May 24th
HOECHST AG: United Wisconsin Joins Cardizem CD Litigation
LIVENT, INC.: Pomerantz Haudek Files Complaint in New York
MEDIAONE: Shareholder Sues in Delaware to Block Comcast Deal
ORBITAL SCIENCES: Wolf Haldenstein Files Complaint in Virginia

PARTY CITY: Wolf Haldenstein Files Complaint in New Jersey
PATHOGENESIS: Hagens Berman Files Complaint in Washington
QUAKER OATS: Round and Round the Shareholder Complaint Goes
RITE-AID: Kirby McInerney File Complaint in Pennsylvania
SAFESKIN CORP.: Wechsler Harwood Files Complaint in California

SIERRA HEALTH: Discloses Existence of Policyholder Complaints
SUN HEALTHCARE: Schoengold & Sporn Files Complaint in New Mexico
SUN HEALTHCARE: Analysts Don't Give a Hoot with Shareholder Suits


BALCOR COMPANY: Intends to Appeal to the Illinois Supreme Court
On June 14, 1996, a proposed class and derivative action
complaint, captioned Dee vs. Walton Street Capital Acquisition
II, LLC (Circuit Court of Cook County, Illinois, County
Department, Chancery Division, Case No. 96 CH 06283), was filed
naming Balcor Equity Pension Investors I, Balcor Equity Pension
Investors II, Balcor Pension Investors V, Balcor Pension
Investors III, Balcor Realty Investors Ltd. 82, Balcor Pension
Investors II, Balcor Equity Properties XVIII, Balcor Pension
Investors VII, Balcor Realty Investors 84, Balcor Realty
Investors 85 Series I, and other Partnerships sponsored by The
Balcor Company, as defendants.  Additional defendants were
Insignia Management Group and Walton Street Capital Acquisition
II, LLC and certain of their affiliates and principals.  

The complaint alleged, among other things, that the tender offers
for the purchase of limited partnership interests in the
Affiliated Partnerships made by a joint venture consisting of
affiliates of Insignia and Walton were coercive and unfair.  

On July 1, 1996, another proposed class action complaint was
filed in the Chancery Court, Anderson vs. Balcor Mortgage
Advisors (Case No. 96 CH 06884) (the "Anderson Case"). An amended
complaint consolidating the Dee and Anderson Cases was filed on
July 25, 1996.

The complaint seeks to assert class and derivative claims against
the Walton and Insignia Defendants and alleges that, in
connection with the tender offers, the Walton and Insignia
Defendants misused the Balcor Defendants' and Insignia's
fiduciary positions and knowledge in breach of the Walton and
Insignia Defendants' fiduciary duty and in violation of the
Illinois Securities and Consumer Fraud Acts. The plaintiffs
amended their complaint on October 8, 1996, adding additional
claims. The plaintiffs requested certification as a class and
derivative action, unspecified compensatory damages and
rescission of the tender offers.

Each of the defendants filed motions to dismiss the complaint for
failure to state a cause of action. On January 7, 1997, the
Chancery Court denied the plaintiffs' motion for leave to amend
the complaint and dismissed the matter for failure to state a
cause of action, with prejudice.

On February 3, 1997, the plaintiffs filed a Notice of Appeal of
the Chancery Court's order to the Appellate Court of Illinois.
Oral arguments before the Appellate Court were held on March 18,
1998. On November 12, 1998, the Appellate Court issued an opinion
affirming the Chancery Court's dismissal of the case. On December
3, 1998, the plaintiffs filed a notice of intent to appeal the
Appellate Court's ruling to the Illinois Supreme Court.

The Balcor Defendants intend to vigorously contest this action.
No class has been certified as of this date. The Defendants
believe they have meritorious defenses to contest the claims.

CHS ELECTRONICS: Barrack Rodos Files Complaint in Florida
Barrack, Rodos & Bacine commenced a class action suit in the
United States District Court for the Southern District of Florida
on behalf of all persons who purchased the common  stock of CHS
Electronics, Inc. (NYSE: HS) between June  19, 1998 and March 22,
1999, inclusive.

The complaint charges CHS and certain officers with violations of
Sections  10(b) and 20(a) of the Securities Exchange Act of 1934.  
The complaint alleges  that defendants issued a series of false
statements and failed to disclose  material facts throughout the
Class Period concerning, among others, the  Company's business,
operating results and its future prospects.  Because of the  
issuance of the false and misleading statements, the complaint
alleges that the  price of CHS common stock was artificially
inflated during the Class Period.

CHS ELECTRONICS: Berman DeValerio Files Complaint in Florida
CHS Electronics Corp. (NYSE: HS) was  charged with violating the
federal securities laws in a class action filed in  the United
States District Court for the Southern District of Florida, Miami  
Division on March 26, 1999.  The case was filed on behalf of all
persons and  entities who purchased the common stock of HS during
the period June 19, 1998  through and including March 19, 1999,
by Berman DeValerio & Pease LLP.

The action charges that HS and certain of its officers issued
materially false  and misleading financial statements during the
Class Period.  In particular, it  is charged that HS materially
overstated its 1998 second, third and fourth  quarter financial
results by overstating vendor rebates.  It is further charged  
that preliminary 1998 fourth quarter results were overstated by
50%.  On March  22, 1999 HS revealed that its 1998 financial
statements would have to be  restated.  Upon the revelation of
this news, HS's common stock plummeted 34% in  a single day.

CHS ELECTRONICS: Wechsler Harwood Files Complaint in Florida
Wechsler Harwood Halebian & Feffer LLP filed a class action
lawsuit  was filed on March 26, 1999 in the United States
District Court for the  Southern District of Florida, against CHS
Electronics, Inc. (NYSE:HS) and certain of its directors and
officers on behalf of all persons who purchased or otherwise
acquired shares of CHS common stock at  artificially inflated
prices between June 19, 1998 and March 22, 1999.  

The complaint alleges that defendants violated the federal
securities laws  (Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934) by  misrepresenting or failing to disclose
material information about CHS's financial condition. The
complaint alleges that defendants issued false and  misleading
press releases and financial statements for the last three
quarters  of fiscal 1998. In particular, the Complaint alleges
that, throughout the Class  Period, defendants failed to disclose
that they were overstating CHS's reported revenues and profits
by, among other things:

(a) overstating revenues and  earnings, and understating
     reserves, in connection with vendor rebates,  resulting in
     the Company's restatement of its 1998 results on March 22,

(b) misleadingly describing the amount of its vendor rebates;

(c) improperly keeping certain assets, such as its accounts
     receivable, off its balance sheet,

thus materially or recklessly overstating CHS's assets and  
earnings.  As a result of defendants' false and misleading
statements and  material omissions, the price of CHS's stock was
artificially inflated during  the Class Period, such that persons
who purchased or otherwise acquired common  stock during the
Class Period were damaged by overpaying for the stock.  

CHS ELECTRONICS: Wolf Popper Files Complaint in Florida
CHS Electronics Inc. (NYSE: HS) and two of  its senior officers
have been named in a securities fraud lawsuit filed on  March 26,
1999 in the U.S. District Court for the Southern District of
Florida.   The lawsuit was filed by Wolf Popper LLP on behalf of
all persons or entities who purchased CHS  Electronics Inc.
common stock during the period August 5, 1998 through March  21,
1999 inclusive.  

The lawsuit was precipitated by CHS' announcement on March 22,
1998, that it  would be restating its financial results for the
second, third and fourth  reported quarters for fiscal 1998.  
Following an analysis performed by its  independent auditors and
an investigation by outside legal counsel, CHS stated  that
vendor rebates for these three quarters for fiscal 1998 were
overstated  and that some of the overstated rebates were
supported with invalid documents. The lawsuit alleges that during
the Class Period, defendants knowingly or recklessly issued
materially false statements to the public in press releases  and
filings with the Securities and Exchange Commission, concerning
CHS' strong  growth and positive results reported for CHS'
second, third and fourth quarters  of fiscal 1998.  Indeed,
defendants knew or recklessly disregarded that CHS'  impressive
financial results were not due to growth in sales but to the  
defendants' improper recognition of vendor rebates.  As a result
of the  foregoing, the Company's assets, earnings and margins
were materially  overstated during the Class Period.

GENERAL AMERICAN: 20 More Train Accident Trials Start May 24th
General American Transportation Corporation and GATX Terminals
Corporation, each subsidiaries of GATX Corporation, are two of
nine defendants in the matter of In re New Orleans Train Car
Leakage Fire Litigation (No. 87-16374, Civil District Court for
the Parish of Orleans), a class action lawsuit arising out of a
September 1987 tank car fire in the City of New Orleans. The fire
was caused by a leak of butadiene from a railcar owned by GATC.
The fire resulted in no deaths or significant injuries, and only
minor property damage, but did result in the overnight evacuation
of a number of residents from the surrounding area. Immediately
after the fire a number of lawsuits (representing approximately
8,000 claims) were brought against a number of defendants,
including GATC and its wholly-owned subsidiary Terminals. The
suits were ultimately consolidated into a class action brought in
the Civil District Court in the Parish of Orleans (the "Trial

A trial of the claims of twenty of the plaintiffs resulted in a
jury verdict in September 1997 which awarded the twenty
plaintiffs approximately $1.9 million in compensatory
damages plus interest from the date of the accident. In addition,
the jury awarded punitive damages totaling $3.4 billion against
five of the nine defendants, including $190 million to Terminals.
On October 31, 1997, the Louisiana Supreme Court held that a
judgment incorporating the amount of punitive damages could not
be entered until all liability issues relating to all 8,000 class
members have been adjudicated.

On June 18, 1998, the Trial Court entered a judgment (a) finding
each of the defendants responsible for compensatory damages to
the members of the plaintiff class in the specified percentages
in the jury verdict, including twenty percent as to GATC and ten
percent to Terminals, but without specifying the quantum of
damages; and (b) finding five of the defendants, including
Terminals, liable for punitive damages in favor of the plaintiff
class. The Trial Court designated the judgment to be final and
appealable. On June 25, 1998, the defendants filed post judgment
motions seeking a new trial or alternatively seeking to overturn
the finding of punitive liability for lack of sufficient
evidence. The motions were taken under advisement.

The Trial Court has ordered the commencement of trials of the
claims of other members of the class. The trial to determine the
damages, if any, suffered by the second set of twenty claimants
is scheduled to commence on May 24, 1999. Two weeks after the
conclusion of this trial, a random selection of an additional
group of plaintiffs will be made in order that the trial of their
damage claims may commence thereafter.

On February 24, 1999, the Louisiana Supreme Court (1) denied the
writ seeking to delay any additional trials, (2) granted the writ
requiring entry of a judgment on the Phase I compensatory
damages, and (3) authorized the Trial Court to enter judgment
awarding a specific amount of punitive damages to the twenty
Phase I plaintiffs (without specifying the method of allocation
of such damages) in order that there could be immediate review of
the judgment. In view of the Supreme Court's ruling, the Trial
Court determined that it could not decide pending post-trial
motions and that such motions would not be addressed until
after entry of a new judgment. Pursuant to the Supreme Court's
ruling, on March 17, 1999 the Trial Court announced it would
enter judgments awarding punitive damages against each of the
five punitive defendants, including judgments in the amount of
$23,611 against Terminals in favor of each of the twenty
claimants whose cases were tried in September 1997.

GATC and Terminals believe that the compensatory damages awarded
to the first twenty plaintiffs are excessive, and intend to
pursue post-judgment review of the awards, and if necessary,
vigorous appeals of any final judgment. Terminals also believes
that the punitive liability judgment is unsupported by law and
the evidence and intends to pursue appeals of all aspects of the
punitive damages judgment if it survives post-judgment review.

Although approximately 8,000 claims have been made, GATC and
Terminals believe that the damages, if any, that are finally
awarded to the remaining plaintiffs will on average be
substantially less that the damages awarded to the twenty
plaintiffs whose claims have been tried.

HOECHST AG: United Wisconsin Joins Cardizem CD Litigation
The Milwaukee Sentinel & Journal reports that United Wisconsin
Services Inc. has sued a German pharmaceutical firm and a  
Florida drug manufacturer, claiming the companies conspired to
keep  a generic  heart drug from being sold in Wisconsin.  The
lawsuit is the latest in a series of actions filed around the
country by  a White Plains, N.Y., law firm against the companies.
The suit, filed in  Milwaukee County Circuit Court, is part of a
class-action  lawsuit brought  against Hoechst AG of Frankfurt,
Germany, and Fort  Lauderdale, Fla.-based  Andrz Pharmaceuticals
Inc.    The suit claims the companies violated antitrust and fair
trade laws  by  agreeing to keep an Andrz-manufactured generic
version of Cardizem CD,  a heart  medication, off the market. By
their action, Wisconsin Cardizem  CD users were  prevented from
buying the cheaper generic drug, the suit  alleges.

LIVENT: Pomerantz Haudek Files Complaint in New York
Pomerantz Haudek Block Grossman & Gross LLP  announced that it
has filed a Complaint seeking class action status in the  United
States District Court for the Southern District of New York on
behalf of  purchasers of 9-3/8% Senior Unsecured Notes Due 2004
of Livent, Inc., during the period from October 10, 1997 through
August 10, 1998.  Named as defendants are Garth Drabinsky, Myron
Gottlieb,  Gordon Eckstein, Robert Topol, Maria Messina, H.
Garfield Emerson, Martin  Goldfarb, A. Alfred Taubman, CIBC
Oppenheimer, and Deloitte & Touche Chartered  Accountants.

The Complaint charges that the defendants violated Sections 10(b)
and 20(a) of  the Exchange Act of 1934, and Sections 11, 12(2)
and 15 of the Securities Act  of 1933, by, inter alia, misleading
investors via the dissemination of  materially false and
misleading information to the investing public which  overstated
Livent's assets and earnings in the Company's financial
statements for fiscal years 1996 and 1997, as well as the first
quarter of 1998. Specifically, the Complaint alleges that during
the Class Period, defendants  misled Livent's financial condition
to the public by, among other things:

     (a)  executing sales agreements between Livent and third
          parties that contained side  agreements that required
          Livent to pay back amounts advanced by the other  
          parties to the agreements, resulting in the
          overstatement of revenue and the  understatement of the
          Company's liability;

     (b)  transferring costs associated  with particular
          theatrical shows to capitalized fixed asset accounts,
          resulting  in the understatement of expenses;

     (c)  transferring costs from a currently  running show to
          another show that had either not yet opened or that had
          a  longer amortization period, resulting in the
          understatement of expenses; and  

     (d)  removing from the Company's books and records expense
          and accounts payable  entries, resulting in the
          understatement of expenses and liabilities.

As a result of defendants' conduct, Livent reported inflated
revenues and  understated losses for fiscal year 1997 and the
first quarter of 1998.  For  fiscal year 1997, Livent reported a
pre-tax loss of $62.1 million when the  Company's true loss was
at least $83.6 million. Moreover, Livent overstated its  pre-
production costs and understated its production expenses,
resulting in the  overstatement of net income. For fiscal year
1997, Livent overstated its pre- production costs by
approximately $23.9 million. On August 10, 1998, Livent issued a
press release disclosing than an internal  investigation had
uncovered accounting irregularities that included improper  
revenue recognition and the failure to record or improper
deferral and  capitalization of expenses.  As a result, the
Company restated its financial  statements for the years 1995,
1996, and 1997, as well as the first quarter of  fiscal 1998.  
This restatement had a cumulative adverse effect on net income in  
excess of $98 million. Moreover, the Company suspended defendants
Drabinsky and  Gottlieb. Livent, a Canadian corporation that had
produced such shows as "Phantom of the  Opera," "Sunset
Boulevard," "Ragtime," and "Fosse" filed for bankruptcy in the  
United States on November 19, 1998.

MEDIAONE: Shareholder Sues in Delaware to Block Comcast Deal
MediaOne is being sued by a shareholder who says the company's
pending $60 billion stock-and-debt acquisition by Comcast Corp.
will undervalue his stock.  In the lawsuit, filed in Delaware
Chancery Court, MediaOne shareholder Paul Kelly is arguing that
the  deal is unfair because the company hasn't conducted an
auction to obtain the  best price.  "The price (for shareholders)
does not reflect an adequate premium  (and) will only serve to
inhibit the maximization of shareholder value," Kelly  charges.
He's asking a judge to grant class-action status on behalf of all  
shareholders, stop the transaction and award damages.  
Philadelphia-based Comcast has offered 1.1 shares of its special
class stock for each MediaOne  share. A MediaOne spokesman said
his company thinks the lawsuit has no merit. (Bloomberg & The
Denver Post)

Cablefax Daily observes that MediaOne's shrewd HR dept
negotiators did a nice job to ensure that the company's  
employees don't run for the doors before the merger with Comcast
closes.  Severed employees from the Comcast-MediaOne deal will
receive  at least 9 months of severance no matter how long
they've been with the  company, MediaOne confirmed.  Meanwhile,
Jones Intercable associates who  will be let go when the Comcast
deal closes next month will get a minimum of 3  months severance,
more based on seniority with the company, several sources  said.  
Makes sense since MediaOne is largely made up of employees who
haven't  been with the company long, while Jones touts a healthy
group who have served  the "Poet of Technology" for more than a

ORBITAL SCIENCES: Wolf Haldenstein Files Complaint in Virginia
Wolf Haldenstein Adler Freeman & Herz LLP  announced that it
filed a class action lawsuit in the United States District Court
for the Eastern District of Virginia on behalf of investors who
bought  Orbital Sciences Corp. (NYSE: ORB) stock between  April
21, 1998 and February 16, 1999.  

The Complaint alleges that, during the Class Period, Orbital and
certain  officers and directors of that Company violated the
securities laws and  regulations of the United States.  The
Complaint alleges that defendants issued  a series of materially
false and misleading financial statements and failed to  reveal
that the Company was employing fraudulent accounting methods
which  artificially inflated Orbital's earnings.  On February 16,
1999, the Company  announced that due to the improper accounting
treatment of certain items, the  Company would materially restate
earnings for the first three quarters of 1998. The Complaint also
alleges that defendants took advantage of their inside  
information regarding the artificial inflation of the Company's
stock price to  sell huge amounts of their own personal holdings
for proceeds of over $3  million.

PARTY CITY: Wolf Haldenstein Files Complaint in New Jersey
Wolf Haldenstein Adler Freeman & Herz LLP announced that it filed
a class action lawsuit in the United States District  Court for
the District of New Jersey on behalf of investors who bought
Party  City Corporation (Nasdaq: PCTY) stock between  February
26, 1998 and March 18, 1999.

The lawsuit charges Party City and certain officers of the
Company with  violations of the securities laws and regulations
of the United States. The  Complaint alleges that during the
Class Period defendants issued false  statements and failed to
disclose material facts concerning the Company's  financial
condition and the failure of the Company's internal audit systems
to  keep pace with the Company's rapid expansion program, causing
the Company's  stock price to be artificially inflated.  The
Complaint further alleges that  the individual defendants took
advantage of the artificial inflation of the  Company's stock
price to sell over 206,000 of their own shares for proceeds of  
over $4,700,000.

PATHOGENESIS: Hagens Berman Files Complaint in Washington
Hagens, Berman & Mitchell, P.S., filed a class action suit in the
United States District Court for the Western District of
Washington on behalf of all purchasers of the common stock of
Pathogenesis Corporation (Nasdaq: PGNS) during the  period from
January 25, 1999 through March 22, 1999.  

The complaint charges PGNS and certain of its officers and
directors with  violations of the federal securities laws.  
Specifically, plaintiff has brought  claims for violations of
sections 10(b) and 20 of the Securities Exchange Act  of 1934.
The complaint alleges that PGNS and certain of its officers and
directors  participated in a fraudulent scheme to misrepresent
the Company's sales of its  primary product, the antibiotic
Tobramycin ("TOBI").  Plaintiff alleges that  defendants failed
to disclose that PGNS' increased sales of TOBI in the fourth  
quarter of 1998 primarily resulted from wholesalers' overstock
purchases made  to avoid PGNS' imminent increase in TOBI's price,
rather than the increasing  market acceptance of or growth in the
patient base for the drug.  The complaint  also alleges that
defendants failed to disclose their knowledge that sales of  the
drug in the first quarter would be depressed as a result of its
fourth  quarter 1998 sales program.  These misrepresentations are
alleged to have  caused PGNS shares to trade at artificially
inflated prices during the Class  Period.

QUAKER OATS: Round and Round the Shareholder Complaint Goes
On November 10, 1994, two purported class actions were commenced
in the United States District Court for the District of New
Jersey on behalf of all purchasers of the common stock of The
Quaker Oats Company during the period between September 1, 1994
and November 2, 1994 (the "Weiner Action").  On January 20, 1995,
plaintiffs filed an amended consolidated class action complaint,
and on May 2, 1995, plaintiffs filed a second  amended
consolidated class action complaint.  As amended, the  Weiner
Action purports to be brought on behalf of all purchasers of the
Company's common stock during the period between August 4, 1994
and November 1, 1994.  

Named  as  defendants  are  the Company and William D. Smithburg.   
Plaintiffs allege,  among other things, that defendants violated
Sections 10(b) and  20(a) of  the  Securities  Exchange  Act of
1934 in  connection  with  the  Company's disclosure concerning
its earnings growth goals and indebtedness guideline.  Damages  
in  an unspecified amount are sought.  

On May 23, 1996,  the  District Court  dismissed this action. On
November 6, 1997, the United States  Court  of Appeals  for  the  
Third  Circuit issued a decision in which  it  affirmed  the
District  Court's dismissal of plaintiffs' claims relating to
Quaker's earnings growth goals, and reversed the District Court's
dismissal of plaintiffs' claims relating to Quaker's indebtedness
guideline.  The Court of Appeals remanded the action  to  the  
District  Court  for further proceedings  in  connection  with
plaintiffs' claims concerning Quaker's indebtedness guideline.  
On May 1, 1998, the  case  was transferred to the United States
District Court for the Northern District of Illinois, where it is
now pending.

The Company continues to assert that it has strong defenses to
the action described above.

RITE-AID: Kirby McInerney File Complaint in Pennsylvania
Kirby McInerney & Squire, LLP, on March 16, 1999, filed a class
action lawsuit was filed in the United States District Court for
the Middle District of Pennsylvania against Rite Aid Corp.  
(NYSE:RAD) and certain officers and/or directors of the company.  
The lawsuit was filed on behalf of all purchasers of Rite Aid
Corp. securities  between December 14, 1998, and March 11, 1999,

The Complaint asserts that defendants violated sections 10(a) and
20(a) of the Securities Exchange Act of 1934, as well as SEC rule
10b-5, by reason of material misrepresentations or omissions
during the Class Period that had the  effect of artificially
inflating the Company's stock price.  

SAFESKIN CORP.: Wechsler Harwood Files Complaint in California
Wechsler Harwood Halebian & Feffer LLP commenced a class action
lawsuit was filed on March 26, 1999, in the United States
District Court for the Southern of California on  behalf of all
persons who purchased Safeskin Corporation call options and/or
sold SFSK put options (American Options Exchange:FQK) from
February 19, 1998 through March 11, 1999, inclusive.   

The complaint charges SFSK and certain of its officers with
violations of the  federal Securities laws which inflated the
market price of SFSK stock. The  complaint alleges that during
the Class Period, defendants issued a series of  false and
misleading statements that overstated SFSK's income, gross
margins  and future prospects. Defendants further represented
that the Company's growth  was due to SFSK's increased production
after having solved its manufacturing  problems and that this
increased production was needed to meet increasing  customer
demands. In fact, SFSK was selling its customers more products
than  they needed or wanted by offering extended and favorable
payment terms, actions  which defendants repeatedly publicly
denied. As a result of such conduct,  defendants knew that they
could not continue to report record earnings and  income in
future quarters. On March 11, 1999, after the market closed,  
defendants announced that revenues for its first quarter ending
March 31, 1999  were expected to be $28 million below what
defendants led the market to believe  they were expecting, and
that the Company was reducing its sales and earnings expectations
in light of higher than estimated distributor inventory levels.  
Moreover, the Company announced that its sales for the year would
be lower by $25 million.  

SIERRA HEALTH: Discloses Existence of Policyholder Complaints
Sierra Health Services, Inc., discloses to its lenders on
Schedule 6.05 attached to a Credit Agreement dated as of October
30, 1998, among Sierra Health Services, Inc., as Borrower, Bank
of America National Trust and Savings Association, as
Administrative Agent and Issuing Bank, First Union National Bank,
as Syndication Agent, the existence of two pending class action
suits to which it is a party:

     (A) Harbor House Cafe, Inc. and other similarly situated v.
California Indemnity Insurance Company and Does 1-20  (No.
787823-5, Superior Court of the State of California for the
County of Alameda), a Class action alleging non-disclosure of
inability to pay policyholder dividends to certain policyholders;

     (B) Harbor House Cafe, Inc. and other similarly situated v.
California Indemnity Insurance Company and Does 1-100  (No.
7879920-9, Superior Court of the State of California for the
County of Alameda), one of approximately 35 class actions
against various insurers and the California state insurance fund
seeking damages growing out of administration by the defendants
of experience readjustments.

SUN HEALTHCARE: Schoengold & Sporn Files Complaint in New Mexico
A class action lawsuit has been commenced  in the United States
District Court for District of New Mexico on behalf of all  
persons who purchased the common stock of Sun Healthcare Group,
Inc. (NYSE: SHG) between June 2, 1998 and February 1, 1999,
inclusive, by Schoengold & Sporn.

The complaint alleges that during the Class Period, Sun
Healthcare and certain  of its officers and directors issued
false and misleading statements concerning  the Company's
finances and how various changes to the medicare reimbursement  
system was effecting those finances.

SUN HEALTHCARE: Analysts Don't Give a Hoot with Shareholder Suits
>From the March 26, 1999, edition of the Albuquerque Journal:

          Sun Healthcare Woes Hidden, Investors Say    

     Stockholders of Albuquerque-based Sun Healthcare Group have
filed a class- action lawsuit alleging the nursing home giant
knew it was headed for financial  trouble months before it warned

     In early February, Sun announced that the company expected
to report a  significant loss for the fourth quarter of 1998 and
that revenue was expected  to drop by $200 million in 1999.    
The company blamed Medicare's new "Prospective Payment System,"
which took  effect Jan. 1 and bases payments on the number of
Medicare patients a company  cares for. Under the old formula,
Medicare payments were based on the company's  actual costs,
regardless of the number of patients.    

     According to the lawsuit, filed Wednesday in U.S. District
Court, Sun  officials knew as early as June what the effect of
the payment changes would be  on the company.    

     "In stark contrast to the negative internal analyses,
defendants publicly  proclaimed that Sun was 'well-prepared,'"
the lawsuit says.    

     Sun officials said Thursday that investors had plenty of
warning and that  recent losses -- Sun stock has been trading at
less than $1, down from almost  $20 a year ago -- were

     "It should not come as a surprise to anyone that PPS is
having an impact on  this industry," Sun spokeswoman Phyllis
Goodman said. "We did alert the market long ago that PPS may have
a negative impact on our company."    

     But Sun officials said in February that even they were
surprised by the  severity of the impact of the Prospective
Payment System.    

     The suit includes statements from Securities and Exchange
Commission  filings, Sun news releases and news accounts saying
the company was prepared  not only to weather the changes but to
profit from them.    

     Among them was a published quote in October by chairman and
CEO Andrew  Turner who said, "Every time we have one of these
waves of change, there are  many more opportunities to acquire

     The lawsuit also says Sun officials "took advantage of Sun's
artificially  inflated stock price by negotiating and
consummating several critical  acquisitions utilizing Sun's
common stock as currency." The suit mentions the  purchases in
1998 of Retirement Care Associates and Contour Medical Inc.    
Sun was "motivated to conceal the expected impact that the
Medicare  Prospective Payment System would have on the company
until after the RCA and  Contour acquisitions were completed,"
the lawsuit says.    

     The suit names the company, Turner, president and chief
operating officer  Mark Wimer and chief financial officer Robert

     "The individual defendants knew or recklessly disregarded
that the adverse  facts specified herein were being concealed
from the public," the suit says. It  claims Sun officials
violated their duty, under Securities and Exchange  Commission
rules, to disclose any information that would be material to  

     Analyst Rob Mains, who follows Sun for Advest in New York,
called the  lawsuit ridiculous.    

     "In the vast majority of class-action lawsuits, it means
that a company's  stock has gone down, and a lawyer sees an
opportunity to extort from the  company on a one-third
contingency basis," he said.    

     Mains said Sun officials had no way to predict how damaging
the new payment  system would be.    

     "The publicly traded nursing home stocks have all been
devastated," he said.  "It's been a nuclear winter for investors,
and the reason is that nobody  accurately gauged how bad it was
going to be.  With Sun, there's a sort of  desperation, because
there's a possibility they'll end up in bankruptcy court  and the
shareholders won't get anything."    

     Because of the company's financial troubles, Sun is
attempting to  renegotiate its loan terms with several banks.    
Murray Innes, an analyst for Credit Lyonnais Securities in New
York, agreed  it was highly unlikely that Sun officials could
have predicted the stock's  decline.    

     "You would need something approaching a grand conspiracy
among all long-term  care companies for all of them to know about
this and no one to say anything,"  he said.    

     Mains said it was unlikely the lawsuit would have much
effect on Sun's stock  price.    

     "I don't think I've ever seen a stock react significantly to
a class-action  suit," he said.    Sun closed at 7/8 on Thursday,
up 1/16 from Wednesday.    

     The suit names two plaintiffs, Robert Rosenberg and E.T.
Reely, and says  they both suffered "substantial financial
damages."    The suit does not specify the amount of damages they
are seeking, but  attorney Neil Rothstein of Scott & Scott in San
Diego said the total figure  could be "in the millions of
dollars."    "Under the circumstances, we may hear from hundreds
of people," he said.    Along with Scott & Scott, the lawsuit
lists four other law firms, including  Youngdahl & Sadin of
Albuquerque. Joseph Arshawsky, the Youngdahl & Sadin  lawyer who
signed the complaint, was not available for comment Thursday.    
Attorney Rothstein said there's plenty of precedent for
shareholders to sue  a company and win.    

     But analyst Mains said that in Sun's case, the shareholder
who suffered most  was Turner, the company's CEO. According to
Goodman, Turner owns about 11  percent of Sun's shares.    

     "Andy Turner's been buying, for crying out loud," Mains
said. "It's not like  he's getting out ahead of everybody else."


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Class Action Reporter is a daily newsletter, co-published by
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