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Biotech / Medical : FPA Medical Management - FPAMQ -- Ignore unavailable to you. Want to Upgrade?

To: Kurthend who wrote (843)	7/5/1998 2:03:00 PM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 1110

Kurt, The success in the lawsuits is inversely corollated to FPAM's success in righting itself and moving forward. If FPAM straightens out its house and the stock price rises, then by definition their exposure in the litigation drops, since if the persons who were "damaged" held onto their stock, then their total loss would be less. Also the court would tend to look less favorably upon plaintiffs who filed a lawsuit just because their stock dropped in price. If Dr. Dresnick perceives the litigation to be a serious threat to FPAM's survival, then I'd recommend that he consider this a factor for placing the Company into a Chapter 11 proceeding while he carefully reorganizes and restuctures the Company. Unless the attorneys can prove fraud (which is very difficult), the stockholders who are suing would only have an unsecured claim to damages- the bottom of the totem pole in priorities for remuneration in a reorganization proceeding.... That would reduce the plaintiffs attorneys leverage in the disputes... The other great thing about a Chapter 11 Proceeding is that FPAM as the debtor-in-possession has the unilateral option under Federal Bankruptcy Law to affirm or reject each and every one of its current contracts with its customers. In fact this IMO is actually what you are seeing here in the Pacificare case. Pacificare was afraid that FPAM would file a Chapter 11 Proceeding, keep the good contracts with Pacificare, and say "adios" and unilaterally terminate all of Pacificare's losers. Pacificare in striking first, might just be trying to put itself in a better business position just in case FPAM uses Chapter 11 as its vehicle for reorganizing for the future...IMO so far Dr. Dresnick looks like he is playing his cards carefully and well here, in this critical phase of restoring FPAM to health and wealth... Sincerely, Doug F.