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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 13, 1999
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
(Exact Name of Registrant as Specified in Charter)
Pennsylvania 23-2795795
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
Commission File No.: 0-28390
651 East Park Drive, Harrisburg, PA 17111
(Address of Principal Executive Offices)
(717) 561-7890
(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events.
As discussed in Item 2. "Management's Discussion and Analysis or Plan
of Operation," in the Company's Form 10-QSB for the fiscal quarter ended June
30, 1999, incorporated herein by reference, during the second quarter of 1999
Physicians Care PPO, Inc., the Company's preferred provider organization, which
is its sole revenue generating subsidiary (the "PPO"), incurred significantly
larger underwriting losses than anticipated. These losses continued in the third
quarter of 1999. As a result of these losses, the PPO's external cash
requirements have continued to materially exceed its internally generated cash
by an amount in excess of its ability to borrow or to access the capital
markets. The Company has been unable to enter into any definitive arrangements
to provide it with the additional capital it needs to fund its internal cash
requirements. Consequently, the PPO's net worth has declined below that required
by Pennsylvania managed care laws.
On October 13, 1999, the Company met with the Pennsylvania Department
of Insurance (the "Department") so that satisfactory arrangements can be made to
achieve a timely and orderly cessation of the PPO's business, including the
placing of subscribers with other insurance providers. Although the Department
has the authority to seek a rehabilator to manage the PPO's day-to-day
operations, it has advised the Company that it can continue to remain in control
until October 25, 1999 in order to wind up the PPO's affairs and also to seek
additional sources of funding. After that date, the Department will assess the
PPO's financial condition, and, at that time, the Department would seek an order
from the Commonwealth Court of Pennsylvania appointing a rehabilator and/or
liquidator for the PPO. As a result, proceedings could last for many months and
there are many uncertainties as to how provisions of law would be applied.
Rights and remedies of stockholders and creditors could be altered, limited or
denied.
The Company is attempting to obtain additional capital from the
Pennsylvania Medical Society; however, no assurance can be given that the
Company will ultimately obtain this financing by the October 25, 1999 deadline
set by the Department, or, if obtained, the form of the financing, its terms and
whether the amount would be sufficient to meet the Company's and/or the PPO's
internal cash requirements.
In the event that the PPO is liquidated, there is a substantial
likelihood that the Company would seek protection from its creditors under the
bankruptcy laws.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf be the
undersigned hereunto duly authorized.
Pennsylvania Physician Healthcare Plan, Inc.
(Registrant)
Date: October 15, 1999 By: /s/ Richard A. Felice
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Richard A. Felice, President
and Chief Executive Officer
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