FPA MEDICAL MANAGEMENT INC, 8-K, 1998-06-03

FPA MEDICAL MANAGEMENT INC
8-K, 1998-06-03
SPECIALTY OUTPATIENT FACILITIES, NEC

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------

FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 18, 1998

FPA Medical Management, Inc.
(Exact name of Registrant as Specified in Charter)

<TABLE>
<S> <C> <C>
Delaware 0-24276 33-0604264
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
</TABLE>

3636 Nobel Drive, Suite 200
San Diego, California 92122
(Address of Principal Executive Offices)

(619) 453-1000
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

<PAGE> 2

Item 5. Other Events.

FPA Medical Management, Inc. ("FPA" or the "Company") has received notice
of, or has been served with, several federal and state court purported class
action lawsuits, some of which are described below.

In Steven Friedland, Trustee, on Behalf of Himself and All Others Similarly
Situated vs. FPA Medical Management, Inc., et al, Number 98CV 930 JM, filed in
the United States District Court, Southern District of California, on May 18,
1998, the plaintiff, a current or former stockholder of the Company, seeks to
bring this lawsuit on behalf of all persons who purchased common stock of the
Company between March 6, 1998 and May 14, 1998 (the "Friedland Class Period").
In this lawsuit, the plaintiff alleges violations of federal securities laws. In
this connection, the plaintiff alleges that during the Friedland Class Period,
the defendants (which include the Company and certain of its current and former
officers and directors) provided false and misleading information, by issuing
materially false financial statements and a series of materially false and
misleading statements about FPA's operations and financial condition; that these
materially false and misleading public statements artificially inflated the
market price of FPA's stock during the Friedland Class Period; and that certain
of the defendants and other FPA officers, prior to the disclosure of materially
false and misleading statements, sold shares of FPA common stock at artificially
inflated prices for a profit. The plaintiff seeks money damages for all losses
and injuries suffered by the plaintiff and the class as a result of the acts
described in the complaint. A copy of the complaint instituting this lawsuit is
included as Exhibit 99.1 to this Current Report on Form 8-K.

In Michael Giglio and Roger Rubinger, on Behalf of Themselves and All
Others Similarly Situated vs. FPA Medical Management, Inc., et al, Number 98CV
931 S, filed in the United States District Court, Southern District of
California, on May 18, 1998, the plaintiffs, current or former stockholders of
the Company, seek to bring this lawsuit on behalf of all persons who purchased
common stock of the Company between February 27, 1997 and May 14, 1998 (the
"Giglio Class Period"). In this lawsuit, the plaintiffs allege violations of
federal securities laws. In this connection, the plaintiffs allege that during
the Giglio Class Period, the defendants (which include the Company and certain
of its current and former officers and directors) issued a series of false and
misleading statements as part of a scheme to artificially inflate the market
price of FPA's common stock and to defraud purchasers of that stock during the
Giglio Class Period. The plaintiffs seek compensatory damages, fees and expenses
and extraordinary, equitable and/or injunctive relief. A copy of the complaint
instituting this lawsuit is included as Exhibit 99.2 to this Current Report on
Form 8-K.

In Harold M. Sucher, Individually, and On Behalf of a Class of Persons
Similarly Situated vs. FPA Medical Management, Inc., et al, Number 98 CV 932 JM,
filed in the United States District Court, Southern District of California, on
May 18, 1998, the plaintiff, a current or former stockholder of the Company,
seeks to bring this lawsuit on behalf of all persons who purchased common stock
of the Company between February 27, 1997 and May 15, 1998 (the "Sucher Class
Period"). In this lawsuit, the plaintiff alleges violations of federal
securities laws. In this connection, the plaintiff alleges that during the
Sucher Class Period, the defendants (which include the Company and certain of
its current and former officers and directors) misrepresented the truth about
FPA, its finances, revenues, gross margins and future business prospects; in
particular, defendants misrepresented the Company's financial results and
operations for each of the quarters of fiscal 1997, as well as the Company's
prospects for the first fiscal

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quarter of 1998 and as a result of these material misrepresentations, the
Company's securities traded at inflated prices on the NASDAQ National Market
System; and while in possession of material adverse non-public information about
the Company's business and financial condition, certain of the defendants sold
shares of the Company's common stock at a profit. The plaintiff seeks
compensatory damages, fees and expenses and such other relief as the court deems
just and proper. A copy of the complaint instituting this lawsuit is included as
Exhibit 99.3 to this Current Report on Form 8-K.

In Rick Penick and Coralette Penick, Albert D. Barnabei and Nancy M.
Barnabei, and Frederick M. Garson On Behalf of Themselves and All Others
Similarly Situated vs. FPA Medical Management, Inc., et al, Number 98 CV 928 S,
filed in the United States District Court, Southern District of California on
May 18, 1998, the plaintiffs, current or former stockholders of the Company,
seek to bring this lawsuit on behalf of all persons who purchased common stock
of the Company between February 27, 1997 and May 14, 1998 (the "Penick Class
Period"). In this lawsuit, the plaintiffs allege violations of federal
securities laws. In this connection, the plaintiffs allege that during the
Penick Class Period, the defendants (which include the Company and certain of
its current and former officers and directors and Foundation Health Corporation,
an alleged controlling person of the Company during the Penick Clsss Period)
knowingly or recklessly misrepresented the operating performance of FPA; in so
doing, defendants materially misled the public by issuing false financial
statements that were prepared in violation of generally accepted accounting
principles; defendants' fraudulent scheme and deceptive course of business
artificially inflated and maintained the trading price of FPA common stock
during the Penick Class Period and thereby injured the plaintiffs and other
purchasers of FPA stock. The plaintiffs seek compensatory damages, fees and
expenses, extraordinary, equitable and/or injunctive relief and such other
relief as the court deems just and proper. A copy of the complaint instituting
this lawsuit is included as Exhibit 99.4 to this Current Report on Form 8-K.

In Natale Longordo, On Behalf of Herself and All Others Similarly Situated
vs. FPA Medical Management, Inc., et al, Number 98CV 939 K, filed in the United
States District Court, Southern District of California, on May 19, 1998, the
plaintiff, a current or former stockholder of the Company, seeks to bring this
lawsuit on behalf of all persons who purchased common stock of the Company
between February 27, 1997 and May 14, 1998 (the "Longordo Class Period"). In
this lawsuit, the plaintiff alleges violations of federal securities laws. In
this connection, the plaintiff alleges that during the Longordo Class Period,
defendants (which include the Company and certain of its current and former
officers and directors) issued a series of false and misleading statements as
part of a scheme to artificially inflate the market price of FPA's common stock
and to defraud purchasers of that stock during the Longordo Class Period. The
plaintiff seeks compensatory damages, fees and expenses, extraordinary,
equitable and/or injunctive relief and such other relief as the court deems just
and proper. A copy of the complaint instituting this lawsuit is included as
Exhibit 99.5 to this Current Report on Form 8-K.

In Murray Lebowitz, On Behalf of Himself and All Others Similarly Situated
vs. FPA Medical Management, Inc. et al, Number 98 CV 949 TEG, filed in the
United States District Court, Southern District of California, on May 20, 1998,
the plaintiff, a current or former

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stockholder of the Company, seeks to bring this lawsuit on behalf of all
persons who purchased common stock of the Company between February 27, 1997 and
May 14, 1998 (the "Lebowitz Class Period"). In this lawsuit, the plaintiff
alleges violations of federal securities laws. In this connection, the plaintiff
alleges that during the Lebowitz Class Period, defendants (which include the
Company and certain of its current and former officers and directors) issued a
series of false and misleading statements as part of a scheme to artificially
inflate the market price of FPA's common stock and to defraud purchasers of that
stock during the Lebowitz Class Period. The plaintiff seeks compensatory
damages, fees and expenses, extraordinary, equitable and/or injunctive relief
and such other relief as the court deems just and proper. A copy of the
complaint instituting this lawsuit is included as Exhibit 99.6 to this Current
Report on Form 8-K.

In Dan J. Craddock, On Behalf of Himself and All Others Similarly Situated
vs. FPA Medical Management, Inc., et al, Number 721102, filed in the Superior
Court of the State of California, County of San Diego on June 1, 1998, the
plaintiff, a current or former stockholder of the Company, seeks to bring this
lawsuit on behalf of all persons who purchased common stock of the Company
between February 27, 1997 and May 15, 1998 (the "Craddock Class Period"). In
this lawsuit, the plaintiff alleges violations of state securities laws by the
defendants (which include the Company and certain of its current and former
officers and directors). In this connection, the plaintiff alleges that during
the Craddock Class Period, a series of false and misleading statements were
made by defendants issued as part of a scheme to artificially inflate the
market price of FPA securities during the Craddock Class Period. The plaintiff
seeks compensatory damages, fees and expenses and extraordinary, equitable
and/or injunctive relief.

All of the foregoing complaints have been recently filed and most of them
have been served on the Company. The Company is reviewing and evaluating the
complaints and is currently unable to assess the merits of any of the claims
contained in the complaints, the outcome of any of the lawsuits resulting from
the filing of the complaints or the length of time it will take to resolve them.

The Company does not intend to file further Current Reports on Form 8-K
describing additional lawsuits, if any, purporting class action status, in
either federal or state court, which are based on allegations substantially
similar to those contained in the lawsuits described herein.

Item 7. Financial Statements and Exhibits

99.1 Steven Friedland, Trustee, on Behalf of Himself and All Others
Similarly Situated vs. FPA Medical Management, Inc., et al,
Number 98CV 930 M, filed in the United States District Court,
Southern District of California, on May 18, 1998

99.2 Michael Giglio and Roger Rubinger, on Behalf of Themselves and
All Others Similarly Situated vs. FPA Medical Management, Inc.,
et al, Number 98CV 931 S, filed in the United States District
Court, Southern District of California, on May 18, 1998

99.3 Harold M. Sucher, Individually, and On Behalf of a Class of
Persons Similarly Situated vs. FPA Medical Management, Inc., et
al, Number 98 CV 932 JM, filed in the United States District
Court, Southern District of California, on May 18, 1998

99.4 Rick Penick and Coralette Penick, Albert D. Barnabei and Nancy M.
Barnabei, and Frederick M. Garson On Behalf of Themselves and All
Others Similarly Situated vs. FPA Medical

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<PAGE> 5

Management, Inc., et al, Number 98 CV 928 S, filed in the
United States District Court, Southern District of California,
on May 18, 1998

99.5 Natale Longordo, On Behalf of Herself and All Others Similarly
Situated vs. FPA Medical Management, Inc., et al, Number 98CV 939
K, filed in the United States District Court, Southern District
of California, on May 19, 1998

99.6 Murray Lebowitz, On Behalf of Himself and All Others Similarly
Situated vs. FPA Medical Management, Inc., et al, Number 98 CV
949 TEG, filed in the United States District Court, Southern
District of California, on May 20, 1998

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 by the
undersigned, thereunto duly authorized.

FPA MEDICAL MANAGEMENT, INC.

/s/ JAMES A. LEBOVITZ
-------------------------------------
By: James A. Lebovitz
----------------------------------
Its: Executive Vice President
---------------------------------

Dated: June 3, 1998
---------------

INDEX TO EXHIBITS

99.1 Steven Friedland, Trustee, on Behalf of Himself and All Others
Similarly Situated vs. FPA Medical Management, Inc., et al,
Number 98CV 930 JM, filed in the United States District Court,
Southern District of California, on May 18, 1998

5
<PAGE> 6

99.4 Rick Penick and Coralette Penick, Albert D. Barnabei and Nancy
M. Barnabei, and Frederick M. Garson On Behalf of Themselves and
All Others Similarly Situated vs. FPA Medical Management, Inc.,
et al, Number 98 CV 928 S, filed in the United States District
Court, Southern District of California on May 18, 1998

<PAGE> 1
EXHIBIT 99.1

MILBERG WEISS BERSHAD FILED
HYNES & LERACH LLP 98 MAY 18 PM 2:47
WILLIAM S. LERACH (68581) CLERK, U.S. DISTRICT COURT
DARREN J. ROBBINS (168593) SOUTHERN DISTRICT OF CALIFORNIA
600 West Broadway, Suite 1800
San Diego, CA 92101 BY: [SIG] DEPUTY
Telephone: 619/231-1058

SAVETT FRUTKIN PODELL &
RYAN, P.C.
STUART H. SAVETT
ROBERT P. FRUTKIN
BARBARA A. PODELL
325 Chestnut Street, Suite 700
Philadelphia, PA 19106
Telephone: 215/923-5400

JAROSLAWICZ & JAROS
DAVID JAROSLAWICZ BEATIE AND OSBORN
150 William Street EDWARD KORSINSKY
19th Floor 599 Lexington Avenue
New York, NY 10038 New York, NY 10022
Telephone: 212/227-2780 Telephone: 212/888-9000

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

STEVEN FRIEDLAND, TRUSTEE, On ) No. '98 CV U930JM (AJB)
Behalf of Himself and All Others )
Similarly Situated, ) CLASS ACTION
)
Plaintiff, ) COMPLAINT FOR VIOLATION OF
) THE SECURITIES EXCHANGE ACT
vs. ) OF 1934
)
FPA MEDICAL MANAGEMENT INC., )
STEPHEN DRESNICK, SOL LIZERBRAM, )
SETH FLAM and STEVEN M. LASH, )
) Plaintiff Demands A
Defendants. ) Trial By Jury
- -------------------------------- ----------------------------

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NATURE OF THE ACTION

1. This is a class action on behalf of all persons who purchased or
otherwise acquired the common stock of FPA Medical ("FPA" or the "Company")
between March 6, 1998 and May 14, 1998, inclusive (the "Class Period"). FPA,
whose stock is traded on the NASDAQ National Market System, holds itself out to
be the third largest publicly held national physician practice management
company ("PPM") which acquires, organizes, and manages primary care physician
practice networks and provides contract management services to hospital based
emergency departments. During the Class Period, defendants provided false and
misleading information, by issuing materially false financial statements and a
series of materially false and misleading statements about FPA's operations and
financial condition. These materially false and misleading public statements
artificially inflated the market price of FPA's stock during the Class Period.
The defendants and other FPA officers, prior to the disclosure of the
materially false and misleading statements, sold off more than 220,000 of their
shares at artificially inflated prices for gross proceeds in excess of $5.5
million.

JURISDICTION AND VENUE

2. Jurisdiction exists pursuant to Section 27 of the Securities Exchange
Act of 1934 ("Exchange Act"), 15 U.S.C. Section 78aa, and U.S.C. Section 1331.
The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange
Act, 15 U.S.C. Sections 78j(B) and 78t(a), and Rule 10b-5.

3. Venue is proper in this District pursuant to Section 27 of the
Exchange Act and 28 U.S.C. Section 1391(b). Many of the acts giving rise to the
violations complained of occurred in this District.

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4. In connection with the wrongs complained of, defendants used the
instrumentalities of interstate commerce including the U.S. mails and the
facilities of the national securities markets.

PARTIES

5. Plaintiff Steven Friedland, Trustee, purchased 400 shares of FPA
stock on March 27, 1998 at $16-3/16 per share and 300 shares on April 24, 1998
at $13-1/2 per share and suffered damages thereby.

6. FPA is a national physician practice management company which
acquires, organizes and manages primary care physician practice networks and
provides contract management services to hospital-based emergency departments.
The Company provides primary and specialty care services to capitated managed
care enrollees and fee-for-service patients. FPA's common stock is traded in an
efficient market on the NASDAQ National Market system.

7. Defendant Stephen J. Dresnick ("Dresnick") is, and has been since
March 26, 1998, President, Chief Executive Officer and a Director of FPA. Prior
thereto, Dresnick was Vice Chairman of FPA. Dresnick signed FPA's SEC Form 10-K
("Form 10-K") for the fiscal year ended December 31, 1997 ("fiscal 1997") on
March 30, 1998. In 1997, Dresnick's total cash compensation from the Company
was $1,812,500, including a performance-based bonus of $1,487,500. According to
the Company's 1997 Proxy, performance-based bonuses are based upon, among other
things, "internal earnings and market share targets."

8. Defendant Sol Lizerbaum ("Lizerbaum") is and was during the relevant
period, the Chairman of the Board of Directors of FPA and signed the Form 10-K
on March 30, 1998.

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9. Defendant Seth Flam, founder of FPA, was President and Chief
Executive Officer of FPA until his resignation on March 26, 1998. In 1997, Flam
received cash compensation of $1,112,500 from the Company, including a
performance-based bonus of $655,522.

10. Defendant Steven Lash was Executive Vice President and Chief
Financial Officer of FPA until his resignation on March 26, 1998.

ROLE OF INDIVIDUAL DEFENDANTS

11. The Individual Defendants, because of their positions of control and
authority, were able to and did control the contents of FPA's SEC filings and
press releases issued during the Class Period. Because of their Board
membership and/or executive and managerial positions with FPA, the Individual
Defendants had access to the adverse non-public information about the Company
by reason of their attendance at management and/or Board of Directors meetings
and committees thereof and other information provided to them in connection
therewith. As a result, the Individual Defendants were responsible for the
accuracy of the public reports and releases detailed herein as "group
published" information, and are therefore responsible and liable for the
representations contained therein under Section 20(a) of the Exchange Act.

12. The Individual Defendants either knew or recklessly disregarded the
fact that the misleading statements and omissions described herein would
adversely affect the integrity of the market for FPA common stock and would
artificially inflate or maintain the price of FPA common stock. Each of the
defendants, by acting as herein described, did so knowingly or in such a
reckless manner as

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to constitute a fraud and deceit upon plaintiff and the other members of the
Class whom plaintiff seeks to represent.

CLASS ACTION ALLEGATIONS

13. Plaintiff brings this action as a class action, pursuant to Fed. R.
Civ. P. 23(a) and (b)(3), on behalf of a class consisting of all persons who
purchased or otherwise acquired FPA common stock between March 6, 1998 and
May 14, 1998, inclusive, and who were damaged thereby (the "Class"). Excluded
from the Class are defendants, the officers and directors of FPA, members of
the immediate families of such officers and directors and subsidiaries and
affiliates of defendants and their officers and directors.

14. During the Class Period, there were over 46 million shares of FPA
common stock actively traded on the NASDAQ, an open and efficient market,
during the Class Period. Because persons who purchased FPA shares during the
Class Period number at least in the thousands and are believed to be located
throughout the country, joinder of all such class members is impracticable.

15. There are questions of law and fact common to all class members which
predominate over any questions affecting only individual class members,
including:

(a) Whether the federal securities laws were violated by defendants'
acts as alleged herein;

(b) Whether documents, releases and/or statements disseminated to
the investing public and FPA shareholders during the Class Period omitted
and/or misrepresented material facts about the business and financial condition
of the Company;

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<PAGE> 6
(c) Whether defendants made materially misleading statements during
the Class Period about the business and financial condition of the Company;

(d) Whether the defendants acted knowingly and/or recklessly in
making materially false statements and omitting material facts about the
business and financial condition of the Company;

(e) Whether the market price of the Company's common stock was
artificially inflated during the Class Period due to the non-disclosures and/or
material misrepresentations complained of herein; and

(f) Whether the members of the Class have suffered damages and, if
so, what is the proper measure of damages.

16. Plaintiff's claims are typical of all class members' claims.
Plaintiff has selected counsel experienced in class and securities litigation
and will fairly and adequately protect the interests of the Class. Plaintiff
has no interests antagonistic to those of the Class.

17. A class action is superior to other available methods for the fair
and efficient adjudication of this controversy. Since the damages suffered by
individual class members may be relatively small, the expense and burden of
individual litigation make it virtually impossible for members of the Class
individually to seek redress for the wrongful conduct alleged.

18. Plaintiff knows of no difficulty which will be encountered in the
management of this litigation which would preclude its maintenance as a class
action.

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<PAGE> 7
SUBSTANTIVE ALLEGATIONS

19. On March 6, 1998, defendants announced FPA's financial results for
the fourth quarter of fiscal 1997 and for fiscal 1997. FPA reported record
revenues for both periods. For the fourth quarter, defendants reported that
FPA's revenues increased 49.4% to $323 million and that net income, including
charges, rose to $7.2 million from a $9.4 million loss for the fourth quarter a
year ago. On a per share basis, FPA reported net income of $0.17 per share. For
fiscal 1997, the revenue increase was even more dramatic, rising 71.9% to $1.2
billion. Before non-recurring charges, FPA reported net income of $25.9 million
for fiscal 1997.

20. At the time of the earnings release, defendants made very positive
comments about the strength of FPA's operations, revenues and profits.
Commenting on the results, defendant Flam stated "FPA experienced significant
profitable growth as our operations expanded to 28 states, our primary care
physician network increased to more than 7,600 and our managed care membership
topped 1 million. We are proud of our ability to successfully integrate seven
acquisitions and begin reducing their medical loss ratios and improving their
financial performance while our existing operations also continued to improve
and expand." Lizerbaum stated, "Our ability to obtain several national payor
relationships in 1997 provided the foundation for FPA's continued positive
same-store growth and accelerated our entry into new markets. In the fourth
quarter of 1997, FPA began servicing Aetna U.S. Healthcare members in New
Jersey and in the first quarter of 1998 began servicing their members in New
York. In addition, we expanded our relationship with Foundation Health Systems
early in 1998 as we

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<PAGE> 8
began servicing their members in the Northeast." Defendant Lash stated, "FPA's
positive year end 1997 and fourth quarter financial results were due to our
ability to successfully implement our medical management technologies and
leverage our acquired service center operations. This has resulted in a
decrease in our general and administrative expenses when reported as a
percentage of revenue and a reduction in overall medical loss ratio."

21. Despite the record results, FPA's stock price fell, primarily because
FPA did not issue a balance sheet or pro forma quarterly comparisons.

22. On March 26 and 27, 1998 FPA announced a shake-up of senior
management. Defendant Dresnick was named President and CEO, effective
immediately, and FPA announced the immediate departure of defendant Flam and
Lash was announced. Defendant Lash, who continues to oversee FPA's mergers and
acquisitions activity, which fueled its phenomenal growth in 1997 and 1998,
stated that "we remain encouraged by the first quarter's performance."

23. On April 1, 1998 FPA filed its Form 10-K for fiscal 1997 with the
SEC. The Form 10-K contained the financial results for fiscal 1997 and included
FPA's balance sheet which listed its account receivables at $212 million and
recorded goodwill and intangibles at $464 million.

24. FPA continued on its "growth-by-acquisition" track, begin prior to
the Class Period announcing on April 8, 1998 that it would assume operation of
23 Humana, Inc. health centers in four markets serving 90,000 Humana
health-plan members and 135 staff physicians. Effective January 1, 1998, FPA
issued 1,402,123 shares valued at $18.9 million in its acquisition of Avanti
Health Systems of Texas,

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<PAGE> 9
Inc. and 299,165 shares valued at $4.0 million in the acquisition of Physicians
Quality Care, Ltd. Effective February 17, 1998, FPA issued 142,288 shares
valued at $2.8 million in its acquisition of Emergency Treatment Associates,
Inc.

25. Although defendants portrayed FPA's historical operations, earnings
and profits in glowing terms and presented FPA as poised to continue building
on this successful historical track record, the individual defendants had sold
significant amounts of their FPA stock before the March drop in FPA's share
price and before disclosure of the materially adverse information, as set forth
below in paragraphs 26 and 28. In addition, other FPA senior officers - Ellis -
Hassman and - Lebovitz sold a total of 83,000 shares in the same time frame.

UNDISCLOSED ADVERSE INFORMATION

26. Prior to and during the Class Period, the defendants concealed
material facts about FPA's financial condition, revenues and profits, which
operated to artificially inflate or maintain the market price of FPA common
stock during the Class Period. The releases, SEC filings and statements
particularized herein were materially false and misleading and misrepresented
and/or failed to disclose the material facts that defendants had artificially
inflated the reported revenues, earnings and net worth of FPA for fiscal 1997
and the fourth quarter of fiscal 1997 by making the following material
misrepresentations and/or omissions:

(a) FPA's shared risk and other receivables reported as current assets on
its balance sheet were overstated by approximately $40 million; and

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<PAGE> 10
(b) FPA's good will, reported as an asset on its balance sheet, was
overstated by approximately $125 million.

In addition, while defendants were telling securities analysts at
meetings throughout the first quarter of fiscal 1988 that FPA would be
profitable in that quarter, defendants knew that FPA would record a substantial
loss in excess of $9 million.

SCIENTER ALLEGATIONS

27. At all relevant times, defendants had actual knowledge that the
statements complained of herein were materially false and misleading as set
forth herein and intended to deceive plaintiff and the other members of the
Class. In the alternative, the defendants acted in reckless disregard for the
truth in that they failed or refused to ascertain and disclose such facts as
would have revealed the materially false and misleading nature of the statements
complained of herein although such facts were readily available to defendants.
Defendants' misrepresentations and omissions were committed intentionally or
with reckless disregard for the truth. In addition, defendants knew or
recklessly disregarded that material facts were being misrepresented or omitted
as alleged herein.

28. Information showing that the defendants acted knowingly or with
reckless disregard for the truth is peculiarly within defendants' knowledge and
control. However, the following facts, among other things, indicate a strong
inference that defendants acted with scienter:

(a) Since virtually all of FPA's current and future revenue growth
was attributable to acquisitions and FPA's business strategy was to expand its
operations through acquisitions in new

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<PAGE> 11
and existing markets, using only FPA stock as the acquisition consideration,
defendants had a very strong incentive to inflate the price of FPA common stock
in order to make acquisitions at a lower cost. Defendants knew that FPA's
ability to continue to grow through acquisitions would be negatively affected
by the disclosure of the truth.

(b) While the price of FPA common stock was being artificially
inflated by the defendants' false and misleading statements, FPA insiders
disposed of a significant amount of FPA common stock as follows:

FPA MEDICAL MANAGEMENT, INC.
----------------------------

Name Date Shares Sold Price ($) Total ($)
- ---- -------- ----------- --------- ---------
<S> <C> <C> <C> <C>

a) Flam 12/5/97 850 23.44 19,924.00
12/4/97 1,000 24.00 24,000.00
12/4/97 12,000 23.81 285,720.00
12/4/97 2,000 23.88 47,760.00
12/4/97 5,000 23.81 119,050.00
11/24/97 2,500 27.75 69,375.00
11/24/97 2,500 27.75 69,375.00
11/24/97 2,500 27.75 69,375.00
11/21/97 1,500 27.50 41,250.00
11/20/97 16,650 27.25 453,712.50
11/19/97 2,500 27.63 69,075.00
11/19/97 2,500 27.50 68,750.00
11/19/97 2,500 27.63 69,075.00
3/17/97 14,400 19.44 279,936.00
3/14/97 12,300 20.72 254,856.00
3/13/97 4,100 22.34 91,594.00
3/12/97 6,200 22.13 137,206.00
</TABLE>

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<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C>
3/11/97 2,000 22.88 45,760.00
- --------------------------------------------------------------------------------
TOTALS 93,000 2,215,793.50
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Name Date Shares Sold Price ($) Total ($)
- --------------------------------------------------------------------------------
d) Lizerbaum 12/4/97 1,000 24.25 24,250.00
12/4/97 750 23.88 17,910.00
12/4/97 7,500 24.13 180,975.00
12/4/97 1,150 24.00 36,000.00
12/1/97 1,000 26.44 26,440.00
11/24/97 5,000 27.75 138,750.00
11/24/97 2,500 27.75 69,375.00
11/21/97 1,500 27.50 41,250.00
</TABLE>
<PAGE> 13
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
11/20/97 16,650 27.25 453,712.50
- --------------------------------------------------------------------------------
11/19/97 2,500 27.63 69,075.00
- --------------------------------------------------------------------------------
11/19/97 2,500 27.50 68,750.00
- --------------------------------------------------------------------------------
11/19/97 2,500 27.63 69,075.00
- --------------------------------------------------------------------------------
TOTALS 44,900 1,195,562.50
- --------------------------------------------------------------------------------
</TABLE>

NO SAFE HARBOR

29. The statutory safe harbor provided for forward looking statements
under certain circumstances does not apply to any of the allegedly false
statements pleaded in this complaint. The statements alleged to be false and
misleading herein all relate to then-existing facts and conditions.

RELIANCE ALLEGATIONS
FRAUD-ON-THE-MARKET DOCTRINE

30. Plaintiff will rely, in part, upon the presumption of reliance
established by the fraud-on-the-market doctrine in that, among other things:

(a) FPA common stock met the requirements for listing, and was
listed, on the NASDAQ, a highly efficient market;

(b) as a regulated issuer, the Company filed periodic public reports
with the SEC;

(d) FPA was followed by securities analysts employed by several
major brokerage firms who wrote reports which were distributed to the sales
force and certain customers of such firms and which were available to various
automated data retrieval services;

- 12 -
<PAGE> 14
(e) the misrepresentations and omissions alleged herein were
material and would tend to induce a reasonable investor to misjudge the value
of FPA common stock; and

(f) plaintiff and the members of the Class purchased their common
stock during the Class Period without knowledge of the omitted or
misrepresented facts.

31. Based upon the foregoing, plaintiff and the other members of the
Class are entitled to a presumption of reliance upon the integrity of the
market for the purpose of class certification as well as for ultimate proof of
their claims on the merits. Plaintiff will also rely, in part, upon the
presumption of reliance established by material omissions and upon the actual
reliance of the class members.

FIRST CLAIM FOR RELIEF FOR
VIOLATION OF SECTION 10(b) OF THE
EXCHANGE ACT AND SEC RULE 10b-5

32. Plaintiff repeats and realleges each and every allegation contained
in the paragraphs above of the Complaint as if fully set forth herein.

33. During the Class Period, the defendants engaged in a course of
conduct, described above, pursuant to which they knowingly or recklessly
engaged in acts, transactions, practices, and a course of business which
operated as a fraud upon plaintiff and the other members of the Class; made
various untrue statements of material facts and omitted to state material facts
necessary to make statements made, in light of the circumstances under which
they were made, not misleading to plaintiff and the other Class members; and
employed manipulative and deceptive devices and contrivances in connection with
the purchase of FPA common stock.

- 13 -
<PAGE> 15
34. The purpose and effect of the defendants' plan, scheme, conspiracy
and course of conduct was to artificially inflate the price of FPA common stock
and artificially to maintain the market price of the stock.

35. The Individual Defendants, through their positions as officers and/or
directors, had actual knowledge of the material omissions and/or the falsity of
the statements set forth above, and intended to deceive plaintiff and the other
members of the Class or, in the alternative, acted with reckless disregard for
the truth when they failed or refused to ascertain and disclose in the
aforementioned documents the true facts to plaintiff and the other members of
the Class.

36. As a result of the foregoing, the market price of FPA stock was
artificially inflated during the Class Period. In ignorance of the materially
false and misleading nature of the misrepresentations described above and the
deceptive and manipulative devices and contrivances employed by the defendants,
plaintiff and the other members of the Class relied, to their detriment, on the
integrity of the market price of the stock in purchasing FPA stock. Had
plaintiff and the other members of the Class known of the material adverse
information not disclosed by the defendants, they would not have purchased FPA
stock at the artificially inflated prices that they did.

37. Plaintiff and the other members of the Class have suffered
substantial damages as a result of the wrongs alleged herein.

38. By reason of the foregoing, defendants have violated Section 10(b) of
the Exchange Act and Rule 10b-5 promulgated

- 14 -
<PAGE> 16
thereunder, in that they: (a) employed devices, schemes and artifices to
defraud; (b) made untrue statements of material fact or omitted to state
material facts necessary to make the statements made not misleading; and (c)
engaged in acts, practices and a course of business which operated as a fraud
or deceit upon plaintiff and the other members of the Class in connection with
their purchases of FPA stock during the Class Period.

SECOND CLAIM FOR RELIEF FOR VIOLATION
OF SECTION 20(a) OF THE EXCHANGE ACT

39. Plaintiff repeats and realleges each and every allegation set forth
in the paragraphs above, as if set forth fully herein.

40. The Individual Defendants were, at the time of the wrongs alleged
herein, controlling persons of FPA within the meaning of Section 20(a) of the
Exchange Act. The Individual Defendants had the power and influence and
exercised the same to cause FPA to engage in the illegal conduct and practices
complained of herein by causing the Company to disseminate to the public, or
through analysts, the materially false and misleading information referred to
above.

41. The Individual Defendants' positions made them privy to, and provided
them with, actual knowledge of the material facts or, in the alternative, the
Individual Defendants, recklessly disregarded such facts, which were concealed
from plaintiff and the Class during the Class Period.

42. By reason of the conduct alleged in the First Claim for Relief, the
Individual Defendants are liable for the aforesaid wrongful conduct and liable
to the plaintiff and the other members of the Class for the substantial damages
which they suffered in

- 15 -
<PAGE> 17
connection with their purchases of FPA common stock during the Class Period.

PRAYER FOR RELIEF

WHEREFORE, plaintiff on his own behalf, and on behalf of the other members
of the Class, prays for judgment as follows:

1. Declaring this action to be a proper class action, certifying the
plaintiff as Class representative and his counsel as Class Counsel;

2. Declaring and determining that the defendants violated the federal
securities laws by reason of their conduct as alleged herein;

3. Awarding money damages against the defendants, jointly and severally,
in favor of the plaintiff and the other members of the Class for all losses and
injuries suffered as a result of the acts and transactions complained of
herein, together with prejudgment interest on all of the aforesaid damages
which the Court shall award from the date of said wrongs to the date of
judgment herein at a rate the Court shall fix;

4. Awarding plaintiff his costs and expenses incurred in this action,
including reasonable attorneys', accountants' and experts' fees; and

5. Awarding such other relief as may be just and proper.

- 16 -
<PAGE> 18
JURY DEMAND

Plaintiff hereby demands a trial by jury.

DATED: May 18, 1998

MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
DARREN J. ROBBINS

/s/ William S. Lerach
----------------------------
WILLIAM S. LERACH

600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

SAVETT FRUTKIN PODELL &
RYAN, P.C.
STUART H. SAVETT
ROBERT P. FRUTKIN
BARBARA A. PODELL
325 Chestnut Street, Suite 700
Philadelphia, PA 19106
Telephone: 215/923-5400

JAROSLAWICZ & JAROS
DAVID JAROSLAWICZ
150 William Street
19th Floor
New York, NY 10038
Telephone: 212/227-2780

BEATIE AND OSBORN
EDWARD KORSINSKY
599 Lexington Avenue
New York, NY 10022
Telephone: 212/888-9000

Attorneys for Plaintiff

-17-
<PAGE> 19
FPA MEDICAL MANAGEMENT, INC.
CERTIFICATION OF STEVEN FRIEDLAND,
TRUSTEE OF JAMES FRIEDLAND TRUST
PURSUANT TO FEDERAL SECURITIES LAW

Steven Friedland, Trustee, declares, as to the claims asserted under the
federal securities laws, that

1. I am the plaintiff in this action.

2. I have reviewed the complaint and authorized its filing.

3. I did not purchase the common stock of FPA Medical Management, Inc.
at the direction of counsel, or in order to participate in this private action.

4. I am willing to serve as representative party on behalf of the class,
including providing testimony at deposition and trial, if necessary.

5. I purchased shares of the common stock of FPA Medical Management,
Inc. as follows:

400 shares on March 27, 1998 at $16 3/16 per share;
300 shares on April 24, 1998 at $13 1/2 per share;
500 shares on May 15, 1998 at $7 7/3 per share;

I sold 10 options for November 21, 1998, callable at $10.

6. During the three year period preceding the date of this
Certification, I have served as Trustee of the James M. Friedland Trust, as
representative party on behalf of the class in Molten Metal Technology, Inc.,
97-10345 (PBS).

7. I will not accept any payment for serving as representative party on
behalf of the Class beyond my pro rate share of any possible recovery, except
such reasonable costs and expenses (including lost wages) directly relating to
my representation of the Class.

- 18 -
<PAGE> 20
I declare under penalty of perjury that the foregoing is true and correct.
Executed this day of May, 1998.

/s/ STEVEN FRIEDLAND
---------------------------------------
Steven Friedland
Trustee of James Friedland Trust

- 19 -
<PAGE> 21

CIVIL COVER SHEET

JS 44
(Rev. 07/89)

The JS-44 civil cover sheet and the information contained herein neither
replace nor supplement the filing and service of pleadings or other papers as
required by law, except at provided by local rules of court. This form, approved
by the Judicial Conference of the United States in September 1974, is required
for the use of the Clerk of Court for the purpose of initiating the civil docket
sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)

I. (a) PLAINTIFFS

STEVEN FRIEDLAND, TRUSTEE, On Behalf of Himself and All Others Similarly
Situated

(b) COUNTY OF RESIDENCE OF FIRST LISTED PLAINTIFF New York
(EXCEPT IN U.S. PLAINTIFF CASES) --------

- --------------------------------------------------------------------------------
(c) ATTORNEYS (FIRM NAME, ADDRESS,AND TELEPHONE NUMBER)

William S. Lerach, Esq.

MILBERG WEISS BERSHAD HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
619/231-1058

- --------------------------------------------------------------------------------

DEFENDANTS

FPA MEDICAL MANAGEMENT, INC., STEPHEN J. DRESNICK, SOL LIZERBRAM, SETH FLAM and
STEVEN M. LASH

COUNTY OF RESIDENCE OF FIRST LISTED DEFENDANT
----------------------------------
(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND
INVOLVED

- --------------------------------------------------------------------------------

ATTORNEYS (IF KNOWN)

- --------------------------------------------------------------------------------

II. BASIS OF JURISDICTION (PLACE AN x IN ONE BOX ONLY)

[ ] 1. U.S. Government [X] 3. Federal Question
Plaintiff (U.S. Government Not a Party)

[ ] 2. U.S. Government [ ] 4. Diversity
Defendant (Indicate Citizenship of
Parties in Item III)

- --------------------------------------------------------------------------------

III. CITIZENSHIP OF PRINCIPAL PARTIES (PLACE AN x IN ONE BOX FOR
(For Diversity Cases Only) PLAINTIFF AND ONE BOX FOR DEFENDANT)

PTF DEF PTF DEF

Citizen of This State [ ] 1 [ ] 1 Incorporated or Principal [ ] 4 [ ] 4
Place of Business in
This State

Citizen of Another [ ] 2 [ ] 2 Incorporated and [ ] 5 [ ] 5
State Principal Place of
Business in Another
State

Citizen or Subject of [ ] 3 [ ] 3 Foreign Nation [ ] 6 [ ] 6
a Foreign Country

- --------------------------------------------------------------------------------

IV. CAUSE OF ACTION

(CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND
WRITE A BRIEF STATEMENT OF CAUSE. DO NOT CITE
JURISDICTIONAL STATUTES UNLESS DIVERSITY.)

COMPLAINT FOR VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934;
15 U.S.C. SECTIONS 78j(b) and 78t(a)

- --------------------------------------------------------------------------------

V. NATURE OF SUIT (PLACE AN x IN ONE BOX ONLY)

- --------------------------------------------------------------------------------
CONTRACT TORTS
- --------------------------------------------------------------------------------

[ ] 110 Insurance PERSONAL INJURY PERSONAL INJURY
[ ] 120 Marine [ ] 310 Airplane [ ] 362 Personal Injury--
[ ] 130 Miller Act [ ] 315 Airplane Product Med Malpractice
[ ] 140 Negotiable Liability [ ] 365 Personal Injury--
Instrument [ ] 320 Assault, Libel & Product Liability
[ ] 150 Recovery of Slander [ ] 368 Asbestos Personal
Overpayment & [ ] 330 Federal Employers' Injury Product
Enforcement of Liability Liability
Judgment [ ] 340 Marine
[ ] 151 Medicare Act [ ] 345 Marine Product PERSONAL PROPERTY
[ ] 152 Recovery of Liability [ ] 370 Other Fraud
Defaulted Student [ ] 350 Motor Vehicle [ ] 371 Truth in Lending
Loans (Excl. [ ] 355 Motor Vehicle [ ] 380 Other Personal
Veterans) Product Liability Property Damage
[ ] 153 Recovery of [ ] 360 Other Personal [ ] 385 Property Damage
Overpayment of Injury Product Liability
Veteran's Benefits
[ ] 160 Stockholders'
Suits
[ ] 190 Other Contract
[ ] 195 Contract Product
Liability

- --------------------------------------------------------------------------------
REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS
- --------------------------------------------------------------------------------

[ ] 210 Land Condemnation [ ] 441 Voting [ ] 510 Motion to Vacate
[ ] 220 Foreclosure [ ] 442 Employment Sentence
[ ] 230 Rent Lease & [ ] 443 Housing/ Habeas Corpus:
Ejectment Accommodations [ ] 530 General
[ ] 240 Torts to Land [ ] 444 Welfare [ ] 535 Death Penalty
[ ] 245 Tort Product [ ] 440 Other Civil [ ] 540 Mandamus & Other
Liability Rights [ ] 550 Other
[ ] 290 All Other Real
Property

- --------------------------------------------------------------------------------
FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES
- --------------------------------------------------------------------------------
[ ] 610 Agriculture [ ] 422 Appeal [ ] 400 State
[ ] 620 Other Food & Drug 29 USC 158 Reapportionment
[ ] 625 Drug Related [ ] 423 Withdrawal [ ] 410 Antitrust
Seizure of 29 USC 157 [ ] 430 Banks and Banking
Property -------------------------- [ ] 450 Commerce/ICC
21 USC 851 PROPERTY RIGHTS Rates/etc.
[ ] 630 Liquor Laws -------------------------- [ ] 460 Deportation
[ ] 640 R.R & Truck [ ] 820 Copyrights [ ] 470 Racketeer
[ ] 650 Airline Regs [ ] 830 Patent Influenced and
[ ] 660 Occupational [ ] 840 Trademark Corrupt
Safety/Health -------------------------- Organizations
[ ] 690 Other SOCIAL SECURITY [ ] 810 Selective Service
- ------------------------- -------------------------- [X] 850 Securities/
LABOR [ ] 861 HIA (1395A) Commodities/
- ------------------------- [ ] 862 Black Lung (923) Exchange
[ ] 710 Fair Labor [ ] 863 DIWC/DIWW (405(g)) [ ] 875 Customer
Standards Act [ ] 864 SSID Title XVI Challenge
[ ] 720 Labor/Mgmt. [ ] 865 RSI (405(g)) 12 USC 3410
Relations [ ] 891 Agricultural Acts
[ ] 730 Labor/Mgmt. -------------------------- [ ] 892 Economic
Reporting & FEDERAL TAX SUITS Stabilization
Disclosure Act -------------------------- Act
[ ] 740 Railway Labor [ ] 870 Taxes (U.S. [ ] 893 Environmental
Act Plaintiff or Matters
[ ] 790 Other Labor Defendant) [ ] 894 Energy Allocation
Litigation [ ] 871 IRS--Third Party Act
[ ] 791 Empl. Ret. Inc. 26 USC 7609 [ ] 895 Freedom of
Security Act Information Act
[ ] 900 Appeal of Fee
Determination
Under Equal
Access to Justice
[ ] 950 Constitutionality
of State Statutes
[ ] 890 Other Statutory
Actions

- --------------------------------------------------------------------------------

VI. ORIGIN (PLACE AN x IN ONE BOX ONLY)

Transferred Appeal to
from District
[X] 1 Original [ ] 2 Removed [ ] 3 Remanded [ ] 4 Reinstated [ ] 5 another [ ] 6 Multidistrict [ ] 7 Judge
Proceeding from State from or Reopened district Litigation from
Court Appellate (specify) Magistrate
Court Judgment

</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
VII. REQUESTED IN CHECK IF THIS IS A CLASS ACTION DEMAND $ Check YES only if demanded in complaint:
COMPLAINT: [X] UNDER F.R.C.P. 23 JURY DEMAND: [X] YES [ ] NO
</TABLE>
- --------------------------------------------------------------------------------
VIII. RELATED CASE(S) (See instructions):
IF ANY

JUDGE DOCKET NUMBER
------------ ----------

- --------------------------------------------------------------------------------
DATE SIGNATURE OF ATTORNEY OF RECORD

MAY 18, 1998 /s/ WILLIAM S. LERACH
- --------------------------------------------------------------------------------

UNITED STATES DISTRICT COURT

<PAGE> 1
EXHIBIT 99.2

MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
ALAN SCHULMAN (128661)
DARREN J. ROBBINS (168593)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

BARRACK, RODOS & BACINE
STEPHEN R. BASSER (121590)
BLAIR A. NICHOLAS (178428)
MATTHEW P. MONTGOMERY (180196)
600 West Broadway, Suite 1700
San Diego, CA 92101
Telephone: 619/230-0800

REINHARDT & ANDERSON
RANDALL H. STEINMEYER
E-1000 First National
Bank Building
332 Minnesota Street
St. Paul, MN 55101
Telephone: 612/227-9990

Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MICHAEL GIGLIO and ROGER RUBINGER, ) No. '98 CV U 931S (JFS)
On Behalf of Themselves and All )
Others Similarly Situated, ) CLASS ACTION
)
Plaintiffs, ) COMPLAINT FOR VIOLATIONS OF THE
) FEDERAL SECURITIES LAWS
)
vs. )
)
)
FPA MEDICAL MANAGEMENT, INC., SETH )
FLAM, SOL LIZERBRAM, STEVEN M. )
LASH, STEPHEN J. DRESNICK, HOWARD )
HASSMAN and JAMES A. LEBOVITZ, )
)
)
Defendants. ) Plaintiffs Demand A Trial
) By Jury

_____________________________________ _____________________________________
<PAGE> 2
INTRODUCTION

1. This is a securities class action on behalf of all those who
purchased or otherwise acquired the common stock of FPA Medical Management, Inc.
("FPA" or the "Company") between February 27, 1997 and May 14, 1998 (the
"Class Period"), seeking to pursue remedies under the Securities Exchange Act of
1934. This action alleges a series of false and misleading statements by
defendants issued as part of a scheme to artificially inflate the market price
of FPA's common stock and to defraud purchasers of that stock during the Class
Period.

2. FPA is a national physician practice management company which
acquires, organizes and manages primary care physician practice networks and
provides contract management services to hospital-based emergency departments.
FPA provides primary and specialty care services to prepaid managed care
enrollees and fee for service patients through a network of independent practice
association physicians and owned primary care physician groups. FPA manages all
covered primary and specialty medical care for each enrollee in exchange for
monthly capitation payments pursuant to payor contracts.

3. FPA's strategy is to increase enrollment by adding new payor
relationships and new providers to the existing FPA network and by expanding the
FPA network into new geographic areas where the penetration of managed
healthcare is growing. Prior to and during the Class Period FPA was engaged in
acquiring new companies or their assets and induced market confidence that it
was effectively merging with and integrating these new assets and

- 1 -
<PAGE> 3
companies, while achieving favorable merger synergies, prosperity, record
financial results and success.

4. During the Class Period and pursuant to defendants' scheme to
artificially inflate FPA's stock, defendants represented that FPA was continuing
to realize "strong revenue and earnings growth," with "successful integration of
new operations" that were "ahead of plan." Defendants claimed that FPA offered
"enhanced financial and management resources," that acquisitions were
"immediately positive to earnings through consolidation of corporate and
marketing operating expenses," that FPA was doing "an effective job of blocking
and tackling and producing quality and value," had the "ability to successfully
integrate seven acquisitions," was achieving "significant synergies," "record"
results and was performing "above expectations" as "integration plans provide
positive sequential results." Defendants stated that FPA's entry into national
contracts with "some of the largest and highest quality healthplans" in the
country enabled it to "increase revenues" and unabashedly declared "we remain
comfortable with analysts' earnings estimates for the fourth quarter of 1997 and
1998" adding "we expect to exceed analysts' high range revenue estimates for the
1997 fourth quarter."

5. But, in truth, FPA's business model was failing. By the
beginning of the Class Period and even more with each passing acquisition, FPA's
business and financial condition was spiralling towards disaster. FPA's economic
condition was being seriously and adversely impacted by a frenetic acquisition
pace that had greatly exceeded its critically important management information
system ("MIS") and medical claims tracking abilities required to control

- 2 -
<PAGE> 4

medical costs and by the assumption or absorption of too many unprofitable
contracts and payor relationships. FPA could not and was not controlling medical
costs and was failing to adequately reserve for incurred but not reported
("IBNR") medical costs. FPA was losing millions as operating expenses vastly
exceeded income. Defendants were able to camouflage FPA's increasing problems by
financial results that were false and misleading. But when it was no longer able
to conceal its problems after an FY97 year-end audit, FPA was forced to reveal
that its purportedly healthy business had collapsed -- acknowledging that it had
overvalued its acquisitions by an astounding $125 million, was running out of
money, and would exhaust its cash by June 30, 1998, as it spent $8 million more
than it was taking in, and revealing that it had lacked adequate controls and
infrastructure to manage its business. Reporting 1Q98 results that were far
below the quarterly earnings defendants' false and misleading statements had led
analysts to expect, the Company revealed that it would post about $200 million
in charges in 2Q98, including about $125 million in goodwill impairment and $40
million in write-down of shared risk and other receivables and that it had set
inadequate reserves which had the effect of inflating its financial results. In
sum, as one reporter commented, FPA had "crash landed."

6. As a result of these revelations, on May 15, 1998, FPA's stock
collapsed from $11.50 to just $6.00 and had an almost 50% one-day stock drop on
huge volume of over 18.6 million shares.

7. Thus, as a result of defendants' false financial reporting and
misrepresentations and concealment of serious problems in FPA's business during
the Class Period, FPA's common

- 3 -
<PAGE> 5
stock traded at artificially inflated levels as high as $39.875 per share. While
FPA stock was artificially inflated, the Company used it as currency to acquire
several companies in transactions totaling more than several hundred million
dollars. Top FPA executives named as defendants, taking advantage of their
knowledge of adverse, non-public information, sold off 415,040 shares of their
FPA stock for illegal insider trading proceeds of over $9.8 million.

8. The price action of FPA's common stock and the insider selling
engaged in by the defendant insiders during the Class Period is shown below.

FPA MEDICAL MANAGEMENT INC.

JANUARY 2, 1997 -- MAY 18, 1998

DAILY STOCK PRICES

[GRAPH]

- 4 -
<PAGE> 6

JURISDICTION AND VENUE

9. The claims asserted herein arise under Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. Sections
78j(b) and 78t(a), and Rule 10b-5, 17 C.F.R. Section 240.10b-5.

10. Jurisdiction is conferred by Section 27 of the Exchange Act, 15
U.S.C. Section 78aa, and 28 U.S.C. Section 1331.

11. Venue is proper in this District pursuant to Section 27 of the
Exchange Act, and 28 U.S.C. Section 1391(b). FPA is headquartered in this
District. The false and misleading statements were made or issued from this
District and most of the acts and transactions giving rise to the violations of
law complained of occurred in this District.

PARTIES

12. (a) Plaintiff Michael Giglio purchased 500 shares of FPA
common stock on October 15, 1997 at $35 per share, 500 shares on October 31,
1997 at $25 per share, 1,000 shares on March 9, 1998 at $18-1/2 per share and
1,000 shares on March 10, 1998 at $17 per share, and was damaged thereby.

(b) Plaintiff Roger Rubinger purchased 3,000 shares of FPA
common stock on December 4, 1997 at $17.875 per share, 2,000 shares on January
12, 1998 at $15.875 per share, and 2,000 shares on January 20, 1998 at $13.4375
per share, and was damaged thereby.

- 5 -
<PAGE> 7
prepaid managed care enrollees and fee-for-service patients through a network of
independent practice association physicians and owned primary care physician
groups. FPA manages all covered primary and specialty medical care for each
enrollee in exchange for monthly capitation payments pursuant to payor
contracts. During the Class Period, FPA stock traded in an efficient market on
the NASDAQ National Market System.

14. (a) Defendant Seth Flam ("Flam") is, and at all relevant
times was until his resignation in March 1998, FPA's President, Chief Executive
Officer and a director (Principal Executive Officer) . Because of defendant
Flam's positions with the Company, he knew the adverse non-public information
about its business, finances, products, markets and present and future business
prospects via access to internal corporate documents (including the Company's
operating plans, budgets and forecasts and reports of actual operations compared
thereto), conversations and connections with other corporate officers and
employees, attendance at management and Board of Directors' meetings and
committees thereof and via reports and other information provided to him in
connection therewith. During the Class Period, defendant Flam sold 93,000 shares
of FPA stock for proceeds of $2.2 million. He also received a $4.8 million
severance package when he resigned in March 1998.

- 6 -
<PAGE> 8
operating plans, budgets and forecasts and reports of actual operations compared
thereto), conversations and connections with other corporate officers and
employees, attendance at management and Board of Directors' meetings and
committees thereof and via reports and other information provided to him in
connection therewith. During the Class Period, defendant Lizerbram sold 87,900
shares of FPA stock for proceeds of $2.1 million.

(c) Defendant Steven M. Lash ("Lash") is, and at all
relevant time was, Executive Vice President, Chief Financial Officer and
Treasurer (Principal Financial Officer and Accounting Officer) of the Company.
Because of defendant Lash's positions with the Company, he knew the adverse
non-public information about its business, finances, products, markets and
present and future business prospects via access to internal corporate documents
(including the Company's operating plans, budgets and forecasts and reports of
actual operations compared thereto), conversations and connections with other
corporate officers and employees, attendance at management and Board of
Directors' meetings and committees thereof and via reports and other information
provided to him in connection therewith. During the Class Period, defendant Lash
sold 79,000 shares of FPA stock for proceeds of $1.8 million.

- 7 -
<PAGE> 9
access to internal corporate documents (including the Company's operating plans,
budgets and forecasts and reports of actual operations compared thereto),
conversations and connections with other corporate officers and employees,
attendance at management and Board of Directors' meetings and committees
thereof and via reports and other information provided to him in connection
therewith. During the Class Period, defendant Dresnick sold 36,140 shares of FPA
stock for proceeds of $859,140.

(e) Defendant Howard Hassman ("Hassman") is, and at all
relevant times was until his resignation on April 1, 1998, a director and
Executive Vice President of FPA. Because of defendant Hassman's positions with
the Company, he knew the adverse non-public information about its business,
finances, products, markets and present and future business prospects via access
to internal corporate documents (including the Company's operating plans,
budgets and forecasts and reports of actual operations compared thereto),
conversations and connections with other corporate officers and employees,
attendance at management and Board of Directors' meetings and committees thereof
and via reports and other information provided to him in connection therewith.
During the Class Period, defendant Hassman sold 98,000 shares of FPA stock for
proceeds of $2.3 million. He also received a $3.4 million severance package when
he resigned on April 1, 1998.

- 8 -
<PAGE> 10
and present and future business prospects via access to internal corporate
documents (including the Company's operating plans, budgets and forecasts and
reports of actual operations compared thereto), conversations and connections
with other corporate officers and employees, attendance at management and Board
of Directors' meetings and committees thereof and via reports and other
information provided to him in connection therewith. During the Class Period,
defendant Lebovitz sold 21,000 shares of FPA stock for proceeds of $469,771.

15. The defendants named in Paragraph 14(a)-(f) are referenced
herein as the "Individual Defendants."

16. By reason of their management positions, and membership on FPA's
Board of Directors, and their ability to make public statements in the name of
FPA, defendants Lizerbram, Flam, Lash and Dresnick were controlling persons and
had the power and influence to cause FPA to engage in the unlawful conduct
complained of herein.

MOTIVE, OPPORTUNITY AND KNOWLEDGE

17. Because of their Board membership and/or exclusive and
managerial positions with FPA, each of the Individual Defendants had access to
the adverse non-public information about the business, finances, products,
markets and present and future business prospects of FPA particularized herein
via access to internal corporate documents, conversations or connections with
corporate officers or employees, attendance at management and/or Board of
Directors' meetings and committees thereof and/or via reports and other
information provided to them in connection therewith.

- 9 -
<PAGE> 11
18. Defendants had a duty to promptly disseminate accurate and
truthful information with respect to FPA's operations and financial condition or
to cause and direct that such information be disseminated and to promptly
correct any previously disseminated information that was misleading to the
market. As a result of their failure to do so, the price of FPA common stock was
artificially inflated during the Class Period, damaging plaintiffs and the
Class.

19. The Individual Defendants, because of their positions with FPA,
controlled the contents of quarterly and annual reports, press releases and
presentations to securities analysts. Each Individual Defendant was provided
with copies of the reports and press releases alleged herein to be misleading
prior to or shortly after their issuance and had the ability and opportunity to
prevent their issuance or cause them to be corrected. Because of their positions
and access to material non-public information available to them but not the
public, each of these defendants knew that the adverse facts specified herein
had not been disclosed to and were being concealed from the public and that the
positive representations which were being made were then false and misleading.
As a result, each of the Individual Defendants is responsible for the accuracy
of FPA's corporate filings and the corporate releases detailed herein as
"group-published" information and is therefore responsible and liable for the
representations contained therein.

- 10 -
<PAGE> 12
of the defendants had motives to pursue a fraudulent scheme in furtherance of
their common goal, i.e. inflating the trading price of FPA stock by making false
and misleading statements and concealing material adverse information. The
fraudulent scheme and course of business, was designed to and did: (a) deceive
the investing public, including plaintiffs and other Class members; (b)
artificially inflate the price of FPA stock during the Class Period; (c) cause
plaintiffs and other members of the Class to purchase FPA stock at inflated
prices; (d) enable FPA to use artificially inflated stock as currency to acquire
other companies and create the false impression of successful expansion and
prosperity; (e) increase the value of options to purchase FPA stock owned by the
Individual Defendants, as well as their own FPA shareholdings; (f) conceal and
cover-up the Individual Defendants' mismanagement of FPA and failure to properly
implement a viable acquisition strategy while conferring exorbitant salaries,
and bonuses upon certain defendants that were grossly disproportionate to FPA's
true business condition; and (g) permit them to pocket, in the aggregate, over
$9.8 million in illegal insider-trading proceeds as part of the fraudulent
scheme and course of business they were pursuing and participating in, thus
personally profiting from their own deliberate and dishonest acts.

STATUTORY SAFE HARBOR

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<PAGE> 13
looking statements" when made, or it was not stated that actual results "could
differ materially from those projected," or the forward-looking statements
pleaded were not accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ materially from the
statements made therein. Defendants are liable for the allegedly forward-looking
statements pleaded in any event because, at the time each of those
forward-looking statements was made, the speaker knew the allegedly
forward-looking statement was false and was authorized and/or approved by an
executive officer of FPA who knew that those statements were false when made.

DEFENDANTS' AWARENESS OF THE UNDISCLOSED
ADVERSE CONDITIONS IMPACTING FPA'S BUSINESS

22. The defendants are top officers and directors of FPA and
controlled the Company's press releases, corporate reports, SEC filings or
communications with analysts, as well as the preparation of its financial
statements. A key management tool for the Company's top executives and
directors was its business plan, budget, forecast or projection, by which the
Company's top executives set performance goals for FPA and then closely
monitored the corporation's actual performance, i.e., results of operations
compared to the planned, budgeted or forecasted results on a constant basis.
These plans, forecasts and budgets were prepared on an annual basis and updated
during the year. All of the defendants were aware of FPA's internal plan,
forecast and budget and of the internal reports prepared and circulated, at
least monthly, comparing FPA's actual results to those previously planned,
budgeted or forecasted. FPA's top executives used its

- 12 -
<PAGE> 14
internal plan, budget and forecast as part of the basis for the statements they
made publicly about the Company's. performance during 1996, 1997 and 1998.

23. Throughout the Class Period, based on the frequently prepared
and negative internal reports comparing the Company's actual business
performance to plan, budget and forecast, the defendants knew or recklessly
disregarded that those public statements were false and misleading when made and
were inflating the market price of FPA stock.

DEFENDANTS' FALSE AND MISLEADING
STATEMENTS DURING THE CLASS PERIOD

24. Defendants issued numerous false and misleading statements
during the Class Period pursuant to their fraudulent scheme. On February 27,
1997, FPA announced "record" fourth quarter and FY96 year-end results, stating:

FPA Medical Management, Inc. today announced revenues and earnings for
the fourth quarter and year ended December 31, 1996.

Operating revenues for the fourth quarter ended December 31,
1996 increased 166% to $151.0 million compared to $56.8 million in the
same period last year, including the operations of Sterling Healthcare
Group, Inc., accounted for as a pooling of interests. Net income for the
fourth quarter was $4.2 million or $0.18 per share (excluding
non-recurring charges of $36.3 million related to transaction costs
associated with the acquisition of the Foundation Health affiliated
medical centers in Arizona and California, Sterling Healthcare Group,
and certain restructuring charges) compared to net income of $677,000 or
$0.04 per share for the same period last year. Including the charges,
the Company reported a net loss of $23.5 million or $1.01 per share.
Weighted average shares outstanding were 23,199,195 and $16,961,698 for
the fourth quarters of 1996 and 1995, respectively, with shares
outstanding including the effect of the Sterling pooling.

For the year ended December 31, 1996, operating revenue
increased 161% to $440.3 million compared to $168.4 million for the same
period last year. Excluding

- 13 -
<PAGE> 15
the non-recurring charges, net income for the year was $13.0 million or
$0.60 per share on weighted average shares outstanding of 21,702,786
compared to net income of $3.8 million or $0.28 per share on 13,693,193
weighted shares outstanding for the same period in the prior year.
Including non-recurring charges of $38.0 million, FPA reported a loss of
$15.7 million or $0.72 per share.

Commenting on the results, Dr. Seth Flam, President and Chief
Executive Officer stated, "1996 was a year of significant achievement
for FPA. During the year we successfully executed our growth strategy by
entering into new geographic regions. Through the merger with Sterling
Healthcare Group we now have operations in 25 states. We remain
optimistic about our long-term prospects and have built a solid
foundation for growth both internally and through strategic
acquisitions."

Dr. Sol Lizerbram, Chairman added, "In 1996 we successfully
attracted new payors into the FPA network and will continue to build
upon these relationships as we expand into new regions across the
country."

Steve Lash, Executive Vice President and Chief Financial Officer
stated, "We are pleased with the strong revenue and earnings growth
achieved during 1996. This growth continues to be driven by HMO
enrollment contributed from new primary care physicians in the FPA
network. At the end of 1996, the FPA network consisted of over 4,400
primary care physicians providing healthcare services to more than
623,000 HMO members."

25. On March 17, 1997, FPA and AHI Healthcare Systems, Inc.
announced completion of their merger via a press release stating:

Each share of AHI Healthcare System's common stock will be
exchanged for .391 shares of FPA Medical Management's common stock based
on FPA's average closing price of $22.99 during the measurement period.
Based on AHI's 14,551,541 shares outstanding, the aggregate
consideration was approximately 5,689,652 shares of FPA common stock or
approximately $117 million based on the $20.56 closing price of FPA's
common stock on the Nasdaq National Market on March 14, 1997.

Dr. Seth Flam, FPA's President and Chief Executive Officer,
stated, "This transaction with AHI advances FPA's position as the
largest primary care physician practice management company in the
country. We are proud to merge with a company that shares our commitment
to primary care and quality."

"The merger will immediately add more than 200,00 HMO enrollees
serviced through FPA physicians, expand

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<PAGE> 16
FPA's primary care operations into three new markets, and add nine
payors to the FPA network," commented Dr. Sol Lizerbram, Chairman of
FPA.

Steven M. Lash, FPA's Executive Vice President and Chief
Financial Officer commented, "We are pleased to complete our merger with
AHI Healthcare Systems. Based on the final terms of the agreement, the
transaction will provide immediate accretion to FPA shareholders and
will bring the Company's total 1996 annualized revenue to nearly $1
billion."

26. FPA's press release dated April 30, 1997 announcing the
Company's first quarter results stated:

FPA Medical Management . . . today announced revenues and earnings for
the first quarter ended March 31, 1997.

Operating revenues for the first quarter ended March 31, 1997
increased 114% to $223 million compared to $104 million in the same
period last year, including the operations of AHI Healthcare Systems,
Inc., recently merged into FPA, accounted for as a pooling of interests.
Net income for the first quarter was $6.4 million or $0.20 per share
(excluding a non-recurring charge of $37 million related to costs
associated with the acquisition of AHI Healthcare Systems, Inc.)
compared to net income of $1.4 million or $0.50 per share for the same
period last year. Weighted average shares outstanding were 32,288,183
and 25,814,913 for the first quarters of 1997 and 1996, respectively.

Commenting on the results, Steven M. Lash, Executive Vice
President and Chief Financial Officer stated, "We are pleased with our
financial performance in the first quarter. Strong HMO enrollment
continues to drive our growth. Alter the recent completed acquisition of
AHI, we now have over 7,200 primary care physicians providing quality
care to over 864,000 HMO members as compared to 1,800 primary care
physicians and 232,000 HMO members for the same quarter last year. In
addition, we continue to show margin improvements based on the further
integration of acquisitions as we continue to reduce medical and
administrative expenses. This operating leverage is reflected in the
reduction in our overall medical loss ratio of 71% for the first quarter
of 1997 compared to 72% for the same period last year"

Dr. Seth Flam, President and Chief Executive Officer, stated,
"We continue to realize strong revenue and earnings growth. During the
quarter, we showed same-store growth of 7% due to the successful
integration of new operations into the FPA network. Specially, the
integration and consolidation of the previously owned

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<PAGE> 17
Foundation Health Systems (NYSE:FHS) clinics is ahead of plan.

27. FPA's announced 1Q97 earnings had an immediate and positive
impact upon the market, increasing the share price of its common stock and
reversing its prior price weakness due to market factors. Needham &,Co. analyst
Bernard Lirola immediately upgraded FPA to a "strong buy" from "buy." Needham
was the financial advisor to FPA on its merger with AHI Healthcare Systems,
Inc., which closed on March 17, 1997.

28. On May 21, 1997, FPA announced that it signed an agreement with
PacifiCare Health Systems to enter into a ten-year capitated provider agreement
with PacifiCare and FHP Health Plans nationwide. The Company's May 21, 1997
press release stated, in pertinent part:

PacifiCare/FHP currently has approximately 4 million commercial
and Medicare members in 14 states, three in which FPA has existing
physician networks. FPA currently services 3% of PacifiCare/FHP members
in California, 6% in Arizona and 19% in Texas.

The new agreements are expected to permit growth in existing
service areas, and expansion into at least two new service areas by the
end of 1997. In addition, PacifiCare/FHP and FPA will work
collaboratively to reduce redundant costs, enhance member satisfaction
and expand quality improvement programs.

Dr. Seth Flam, President and Chief Executive Officer of FPA,
stated, "We are proud that the country's largest, health plans continue
to demonstrate their confidence in FPA. This strategic business
relationship with Pacificare will expedite FPA's expansion into new
geographic regions and allow for steady revenue growth as contracts are
converted to global capitation."

Dr. Sol Lizerbram, Chairman, stated, "The goal of servicing a
critical mass of HMO membership in new markets is simplified with
multiple national payor agreements. These agreements enable us to expand
into new markets utilizing our physician affiliation model"

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<PAGE> 18
29. Continuing to create the impression of health and prosperity, on
June 6, 1997, FPA entered into a definitive agreement to acquire HealthCap, Inc.
in a stock-for-stock merger, stating in pertinent part:

The merger of these two companies will expand FPA's services to
Nevada and Missouri and is expected to increase FPA's 1997 revenues on a
pro forma basis to more than $1 billion. The merger will be accounted
for as a pooling of interests and is expected to close at the end of
June 1997.

Dr. Seth Flam, President and Chief Executive Officer of FPA,
stated, "This transaction enhances our primary care operating model and
is responsive to the 'direct access' OB/GYN programs marketed by some of
our HMO payors."

Dr. Sol Lizerbram, Chairman of FPA, stated, "The expansion of
our network services will continue to further our goal of obtaining
global capitation arrangements and allows FPA to work with four new HMO
payors."

Robert McCray, President and Chief Executive Officer of
HealthCap, added, "This transaction will be very positive for
HealthCap's customers, whose greatest success can be achieved through
access to the enhanced financial and management resources that FPA can
provide. "

Steven M. Lash, Executive Vice President and Chief Financial
Officer, stated, "This transaction will be immediately positive to
earnings through consolidation of corporate and market operating
expenses."

The stock-for-stock merger was valued at almost $50 million based on a closing
price of $22.75 per share of FPA stock, with shareholders of HealthCap receiving
approximately 2.2 million FPA shares.

30. An article disseminated to the financial community in the June
16, 1997 edition of the San Diego Business Journal entitled "FPA Medical
continues its rapid expansion" accurately quoted defendant Lash who allayed any
concern that FPA was growing too fast for its own good. The article stated in
pertinent part:

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<PAGE> 19
"This merger takes us into two new markets that are highly
desirable, including St. Louis and Las Vegas, solidifies our leadership
position in San Diego, and marks our entry into OB/GYN business," said
Steven Lash, FPA's chief financial officer.

* * *

Lash said the merger will increase FPA's 1997 revenues to more
than $1 billion.

First-quarter revenue of more than $222 million earned the
company more than $6 million, or 20 cents per share. In 1996, FPA
increased operating revenue by 161 percent to $440 million.

The boost in revenues tracks FPA's rapid expansion. In December,
the company added 240,000 HMO members with its purchase of Foundation
Health Medical Group, Thomas Davis Medical Centers and Foundation Health
Medical Services.

In March, FPA completed a merger with AHI Healthcare Systems,
Inc. which added 2,200 physicians and 200,000 enrollees in California,
Arizona, Texas, Georgia, Louisiana and New York.

Lash is not concerned that the company is growing too fast for
its own good.

"This is a rapidly consolidating industry," he said "When we
make an acquisition and integrate it into our system, we're doing an
effective job of blocking and tackling, and producing quality and
value."

31. Shortly thereafter FPA announced another merger via a Company
press release dated July 2, 1997, stating in pertinent part:

FPA MEDICAL MANAGEMENT, INC. (NASDAQ:FPAM) AND HEALTH PARTNERS, INC.
today announced that they have entered into a definitive merger
agreement pursuant to which FPA Medical Management will acquire Health
Partners in a stock-for-stock merger. The closing of the merger is
expected to occur late in the third quarter of 1997 and is subject to
the receipt of certain regulatory approvals and satisfaction of certain
customary conditions.

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<PAGE> 20
platform for significant growth in New York, New Jersey and Texas.
Health Partners is the largest physician practice management
organization in New York with over 103,000 HMO members.

In addition, Oxford Health Plans, a shareholder of Health
Partners and its largest payor, has agreed to enter into a 10-year
strategic agreement with FPA under which FPA will provide physician
services to Oxford's members in existing markets and which provides a
framework for expansion to new markets. FPA and Oxford will also work
collaboratively on continuing to enhance member satisfaction and on
quality improvement initiatives.

* * *

The Health Partners transaction, which is expected to add
approximately $160 million to FPA's 1997 proforma revenue and is valued
at approximately $115 million, is subject to adjustment in the event
that FPA Medical Management's average stock price is less than $18.00 or
greater than $22.00. The merger will be accounted for as a pooling of
interests and is expected to close in the third quarter of 1997.

Dr. Sol Lizerbram, Chairman of FPA, stated, "This transaction
allows FPA to implement our previously announced strategy of servicing
HMO members in the greater New York metropolitan area. We will
incorporate FPA's national payor agreements into Health Partners'
network of physician providers, which is the largest network of any
physician practice management company in the New York region."

Dr. Seth Flam, President and Chief Executive Officer of FPA,
stated, "Significant synergies will be achieved, making this transaction
immediately accretive. Such synergies include the consolidation of
services with FPA's Philadelphia and San Antonio regional offices as
well as corporate services. I am also pleased to announce that Charles
Berg, Health Partners' current CEO, will play an important role at FPA
as President of our Eastern Region."

32. An article appearing in The Wall Street Journal on July 3, 1997
reported the investment community's enthusiastic reaction to defendants,
seemingly positive announcements, stating:

Underscoring the spread of managed health care into New York
City, FPA Medical Management Inc., a fast-growing manager of physician
groups, said it agreed to

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<PAGE> 21
purchase Health Partner's Inc. for $115 million in FPA stock.

"This is the platform we have been waiting for to enter the New
York metropolitan area," said Sol Lizerbram, chairman of FPA. The San
Diego company said it expects the transaction to add about $160 million
to its 1997 revenue, which analysts predicted before the announcement
would approach $1 billion this year. Since going public in 1994, FPA has
made an average of one acquisition per quarter, Dr. Lizerbram said.

Investors applauded the announcement, sending FPA shares up $2,
to $25.875, in Nasdaq Stock Market trading. Subject to various
conditions, FPA said it expects to issue between 5.2 million and 6.4
million new shares to complete the purchase, which is expected by the
end of September. FPA currently has about 31 million shares outstanding.

33. Defendants created additional investor confidence and enthusiasm
in their Company press release disseminated July 9, 1997 via the PR Newswire
which stated:

FPA Medical Management, Inc. announced today the signing of new seven
year agreements with Healthsource, Inc. (NYSE: HS) to service HMO
members in three additional states.

Dr. Seth Flam, President and Chief Executive Officer of FPA,
stated, "This agreement will expedite FPA's same store growth efforts in
our existing service areas and continue to increase revenues with the
additional of global capitation arrangements."

Dr. Sol Lizerbram, Chairman of FPA, stated, "FPA continues to
expand our payor relationships with regional and national HMOs such as
Healthsource. These relationships advance our mission of allowing
physicians to practice quality medicine in the managed care
environment."

34. Shortly thereafter, FPA announced "record revenues and earnings"
for the second quarter 1997 via a press release issued on July 30, 1997
which stated:

Operating revenues for the second quarter ended June 30, 1997
increased 92.3% to $244.5 million compared to

- 20 -
<PAGE> 22
$127.2 million in the same period last year, including the operations of
HealthCap, Inc., recently merged into FPA, accounted for as a pooling of
interests. Net income for the second quarter was $8.1 million or $0.24 per
share (excluding a non-recurring charge of $5.4 million related to costs
associated with the merger of HealthCap, Inc.) compared to a net loss of
$4.6 million or $0.16 per share for the same period last year. Weighted
average shares outstanding were 34,259,107 and 28, 317,866 for the second
quarters of 1997 and 1996, respectively.

For the six months ended June 30, 1997, operating revenue increased
100% to $475.6 million compared to $237.2 million in the same period last
year. Net income for the first six months of 1997 was $11.0 million or
$0.32 per share (excluding non-recurring charges associated with the
HealthCap, Inc. and AHI Healthcare Systems, Inc. mergers) compared to a net
loss of $3.6 million or $0.13 per share for the same period last year.
Weighted average shares outstanding were 34,510,257 and 27,660,452 for the
first six months periods of 1997 and 1996, respectively.

Commenting on the results, Steven M. Lash, Executive Vice President
and Chief Financial Officer stated, "Our record results for the second
quarter are due to better than expected performance in Texas and Florida,
the recently acquired care centers performing above proforma, and all other
markets performing as planned. In addition, FPA's G&A expenses continued to
decrease as a percentage of sales as we further integrate operations of our
previously acquired networks."

Dr. Seth Flam, President and Chief Executive Officer, stated: "FPA
continues to perform above expectations as our integration plans provide
positive sequential results. We believe this trend will continue and remain
optimistic for the balance of the year."

Dr. Sol Lizerbram, Chairman, added, "FPA has implemented our plan of
signing national payor agreements. In the last six months, FPA has signed
five national contracts with some of the largest and highest quality
healthplans in the country. These contracts represent over 9.6 million HMO
members in our current operating markets and 12.3 million HMO members
nationwide. We will begin penetrating this membership which will provide
FPA continued success in the future as these contracts enable us to expand
into new geographic markets, increase HMO membership and increase
revenues."

35. FPA's reported statements had their desired effect of increasing
investor confidence and inflating the share price of its

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<PAGE> 23
stock. The market reacted with great enthusiasm to FPA's reported
"record" revenues for 2Q97. As noted in an article appearing on July 31,
1997 in the San Diego Union-Tribune which stated in pertinent part:

FPA Medical Management Inc. yesterday demonstrated its ability
to cash in on a string of recent acquisitions by more than doubling
quarterly revenues and leaping from red ink into profitability.

The San Diego-based managed care company reported record net
income in the second quarter of $8.5 million, or 25 cents per share,
compared with a net loss in the similar period last year of $4.6
million, or 16 cents per share.

The results included a one-time gain of $6.2 million and a
one-time charge of $5.4 million, both related to acquisitions.

Revenues jumped to $245 million, also a record for the company,
up from $127 million in the same period last year. If FPA duplicates
that performance in coming quarters, it will join the ranks of companies
with $1 billion in annual sales.

* * *

The results announced yesterday appeared healthy "to investors,
who pushed FPA's share price up $1 to $27.375. About 1.6 million shares
changed hands, or more than twice the average daily volume in recent
months.

The quarterly results also exceeded the expectations of industry
analysts, and the company promised more of the same to come.

"We believe this trend will continue and remain optimistic for
the balance of the year," said Dr. Seth Flam, president and chief
executive officer.

36. On October 6, 1997, FPA announced in a press release
disseminated to the financial community its expansion into the Los
Angeles region and acquisition of Axminster Medical Group in a
stock-for-stock merger that closed September 30, 1997. As before, FPA
used its own artificially inflated common stock as currency to

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<PAGE> 24
feed its expansion addiction and further create the false and misleading
impression of health and prosperity.

37. Then on October 14, 1997, FPA announced via a press release that
it merged with Health Partners, Inc., stating:

FPA issued 5,227,273 shares of its common stock in exchange for
all the outstanding capital stock of Health Partners and for
cancellation of outstanding Health Partners stock options. Based on
FPA's closing price of $35.4375 on October 10, 1997, the aggregate
merger consideration value is approximately $185 million.

Steven M. Lash, FPA Executive Vice President and Chief Financial
Officer, commented, "We are pleased to finalize our merger with Health
Partners and believe the Health Partners network of quality physicians,
and our national payor agreements, creates a dynamic opportunity to
service HMO members in the New York metropolitan area. Based on the
final terms of the agreement, the transaction will provide immediate
accretion to FPA shareholders."

38. Defendants then followed another FPA acquisition with a press
release dated October 30, 1997 announcing "record earnings" for the third
quarter 1997 and another "new" national payor relationship, stating:

Operating revenue for the third quarter ended September 30, 1997
increased 45% to $240.6 million compared to $165.5 million in the same
period last year. Net income for the third quarter was $10.6 million or
$0.29 per share compared to a net loss of $5.4 million of $0.18 per
share for the same period last year. Weighted average shares outstanding
were 36,552,756 and 30,092,098 for the third quarters of 1997 and 1996,
respectively.

For the nine months ended September 30, 1997, operating revenue
increased 76% to $723.8 million compared to $410.5 million in the same
period last year. Net loss, including merger, restructuring and other
unusual charges, for the first nine months of 1997 was $2.8 million or
$0.08 per share compared to a net loss, including merger, restructuring
and other unusual charges, of $7.6 million or $0.26 per share for the
same period last year. Weighted average shares outstanding were
35,676,985 and 28,933,417 for the nine months ended September 30, 1997
and 1996, respectively.

* * *

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<PAGE> 25
Commenting on the results, Steven M. Lash, Executive Vice
President and Chief Financial Officer stated, "We are pleased to report
record earnings for the third quarter. FPA's overall medical loss ratio
in the third quarter of 1997 was 70.4%. This represents the fourth
sequential quarter of MLR improvement. In addition, our G&A expenses
continued to decrease as a percentage of revenues which can be
attributed to the continued consolidation of acquisitions, synergy
achievements and improvements in productivity."

Dr. Seth Flam, President and Chief Executive Officer, stated,
"Subsequent to the quarter end, we announced the completion of the
acquisition of Health Partners. This acquisition adds over 100,000 HMO
members to our national membership and will provide significant
opportunities to expand our payor relationships in the Northeast region.
Going forward, our business fundamentals remain strong, and we are
strategically positioned to continue our strong internal and external
growth through 1997 and beyond."

Dr. Sol Lizerbram, Chairman, added, "FPA continues to execute
its national payor agreements strategy. We are proud of the new
relationship we have established with NYLCare Health Plans which brings
us to a total of six national agreements. These new relationships enable
us to expand into new geographic markets, increase enrollment, and fuel
our same-store growth."

39. In an effort to reverse the downward pressure on the stock due
to investor concerns that revenues had slipped compared to 2Q97, FPA led the
market to believe that the revenue slippage was merely a result of its election
to walk away from three unprofitable contracts. FPA's explanation misled one
analyst, Gary Frazier at Bear Sterns, to comment that the quality of FPA's
earnings is "quite good," as quoted over the Dow Jones Newswire on October 30,
1997.

40. In an article appearing in the San Diego Union-Tribune on
November 1, 1997, FPA again dismissed slippage of $4.75 in its shares to close
at $24.125, a three-month low as of October 30, 1997, after reaching a
three-month high of $39.875 on October 6, 1997, stating that investors were
incorrectly interpreting

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<PAGE> 26
difficulties reported by HMOs. These statements by FPA buoyed its stock price
and helped to diminish the erosion in the price of its stock that otherwise
would have occurred absent those statements due to non-company specific market
factors.

41. On November 24, 1997, FPA announced via a company press release
that it had entered into a definitive agreement pursuant to which FPA would
acquire Avanti Health Systems of Texas, Inc. Commenting on the acquisition,
defendant Lash stated:

"We are pleased to add the University Medical Group to our existing
network of quality physicians in Texas. This transaction will serve as a
strong platform for continued growth in our Houston and Dallas markets.
We look forward to expanding the number of HMOs whose members University
Medical Group physicians can service, including our eight current HMO
payors in the region."

42. On December 9, 1997, FPA announced that it was acquiring
Meridian Medical Group. Then, in another effort to stem any decline in its
stock, defendants disseminated another Company press release to the investment
community on December 12, 1997 stating:

In response to unusual stock activity and several investor inquiries
regarding its relationship with Oxford Health Plans, Inc. FPA Medical
Management, Inc. (Nasdaq: FPAM) issued the following statement:

* * *

Oxford is current with respect to all of its prepayments to Health
Partners. The company also stated that Health Partners pays a
significant number of its own claims and had developed a customized
process with Oxford to regularly receive paid claims information from
Oxford or analysis and inclusion in Health Partners, financial
statements. This process has been in place and effectively used for the
past four years.

Dr. Seth Flam, President and Chief Executive Officer of FPA
Medical Management, Inc. stated, "We are current with respect to all
prepaid revenue associated with our Oxford enrollees, and we firmly
believe we have the systems in place to safeguard against exposure to
the issues Oxford has addressed in the market."

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<PAGE> 27
43. In a Company press release dated January 8, 1998 entitled "FPA
Medical Management, Inc. Comments on Operations and Fourth Quarter," designed to
increase investor confidence and buoy FPA's share price in the face of downward
market pressures in its industry sector, FPA stated:

FPA Medical Management, Inc. (Nasdaq:FPAM) today commented on the
strength of its California based business in response to investor
concerns following a recent announcement by another physician practice
management services provider, related to market and industry conditions.
FPA Medical Management stated that it has a strong 10-year history in
California and its current operations are performing as expected.

Steven M. Lash, Executive Vice President and Chief Financial
Officer of FPA Medical Management, Inc., stated, "We have properly
structured our California-based operations and continue to manage this
part of our network effectively."

FPA reiterated the following issues regarding its California operations:
FPA currently has no global capitation risk arrangements in California.
FPA has limited its Universal Open Access contract agreements to one
plan, and is successfully servicing approximately 18,000 lives, or less
than 6% of FPA's total California membership.
FPA maintains subcapitation agreements with specialists.
FPA operates Hospitalist programs in most California markets. All
California transactions, including the most recent, have been fu11y
integrated, with the last significant transaction completed 9 months
ago. Steven Lash also stated, "We remain comfortable with analysts'
earnings estimates for the fourth quarter of 1997 and 1998 as well as
same market growth assumptions. We expect to exceed analysts' high range
revenue estimates for the 1997 fourth quarter."

44. Shortly afterwards, in its press release disseminated to the
financial community on January 22, 1998 reporting further positive news, FPA
stated:

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<PAGE> 28
stock transaction. The transaction is expected to add approximately
120,000 HMO members which are under professional capitation arrangements
and will be added to FPA's existing California operations.

* * *

Steven M. Lash, Executive Vice President and Chief Financial
Officer of FPA, stated, "We are pleased to add Orange Coast and St.
Joseph to the FPA network. Their commitment to quality managed care and
strong positive financial performance will add to the strength and
growth of our California operations. Orange Coast is strategically
located in the Orange County, Southern California market, which has a
strong managed care presence, and due to its close proximity to our San
Diego operations, will allow for a seamless integration and synergies."

Charles T. Madden, Chief Executive Officer and President of
Orange Coast, stated, "We are delighted to partner with FPA to continue
building our strong physician networks. FPA offers significant
opportunities for future growth in the managed care industry such as
national payor contracting and management information systems."

The transaction is expected to increase FPA's California 1998
revenues by more than $60 million assuming a closing date of April 30,
1998, and will be immediately accretive to earnings.

45. Then, only weeks before the inevitable "crash" that FPA
insiders/defendants expected, the Company issued yet another glowing press
release reporting "Record 1997 Fourth Quarter and Year End Results" and earnings
of $.30 for the quarter. FPA's press release disseminated to the financial
community on March 6, 1998 stated, in pertinent part:

FPA's operating revenues for the fourth quarter ended December
31, 1997 increased 49.4% to $323.0 million compared to $216.2 million
for the same period last year. Net income for the fourth quarter was
$12.9 million or $0.30 per share (assuming a 38% tax rate and excluding
non-recurring charges of $17.0 million related to the acquisition of
Health Partners and certain restructuring charges) , compared to a net
loss of $9.4 million or $0.27 per share for the same period last year.
Including the charges, the Company reported net income of $7.2 million
(which includes a year-to-date tax benefit of $3.5

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<PAGE> 29
million) or $0.17 per share for the fourth quarter ended December 31,
1997. Weighted average shares outstanding were 43,594,548 and 35,542,571
for the fourth quarters of 1997 and 1996, respectively.

For the year ended December 31, 1997, operating revenue
increased 71.9% to $1.2 billion compared to $678.5 million fort he same
period last year. Excluding non-recurring charges related to transaction
costs associated with several acquisitions, net income for the year was
$25.9 million or $0.61 per share on weighted average shares outstanding
of 42,600,468 compared to a net loss of $26.1 million or $0.80 per share
on 32,639,412 weighted average shares outstanding for the same period in
the prior year. Including non-recurring charges of $55.0 million, FPA
reported a loss of $11.8 million or $0.29 per share for the year.

Commenting on the results, Dr. Seth Flam, President and Chief
Executive Officer, stated, "FPA experienced significant profitable
growth as our operations expanded to 28 states, our primary care
physician network increased to more than 7,600 and our managed care
membership topped 1 million. WE are proud of our ability to successfully
integrate seven acquisitions and begin reducing their medical loss
ratios and improving their financial performance while our existing
operations also continued to improve and expand."

Dr. Sol Lizerbram, Chairman, added, "Our ability to obtain
several national payor relationships in 1997 provided the foundation for
FPA's continued positive same-store growth and accelerated our entry
into new markets. In the fourth quarter of 1997, FPA began servicing
Aetna U.S. Healthcare members in New Jersey and in the first quarter of
1998 began servicing their members in New York. In addition, we expanded
our relationship with Foundation Health Systems early in 1998 as we
began servicing their members in the Northeast."

Steven Lash, Executive Vice President and Chief Financial
Officer, stated, "FPA's positive year end 1997 and fourth quarter
financial results were due to our ability to successfully implement our
medical management technologies and leverage our acquired service center
operations. This has resulted in a decrease in our general and
administrative expenses when reported as a percentage of revenue and a
reduction in overall medical loss ratio."

46. However, concern over a Salomon Smith Barney downgrade of the
Company, citing increasing debt and declining cash, caused a temporary panic in
investors which sent FPA stock plunging $5.69 to

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<PAGE> 30
close at $18.75 on March 6, 1998. Again, defendants responded with statements
designed to buoy market confidence and thereby stem any decline in FPA stock
that would have certainly occurred had the full truth about its dire economic
and business condition been revealed. In an interview reported in the San Diego
Union-Tribune on March 7, 1998, defendant Lash, FPA's Chief Financial Officer,
assured the market that Salomon's downgrade was based on "'incomplete
information'" and that Salomon's analyst had misunderstood information provided
by the Company in a conference call on March 6, 1998. Lash was further
accurately reported as claiming that FPA's shares may have also been pressured
by unfulfilled rumors on the Internet that the Company was about to be acquired
and that the fact that 7 million previously unregistered shares had become
available for trading on March 6, 1998, some of which were sold, may have put
additional pressure on FPA's share price. The San Diego Union-Tribune also
reported on March 7, 1998 that Wall Street analysts generally cheered the
Company's financial report of March 6, 1998 noting that Erik Wiberg, an analyst
with UBS Securities, said the Company's performance exceeded his expectations,
and that "'[t]hey look pretty good,'" while Margott Durow of Vector Securities
International characterized the 1997 results as strong.

47. On March 26, 1998, FPA issued a press release announcing that
defendant Dresnick was elected Chief Executive Officer by its Board of Directors
following the resignation of defendant Flam. Commenting on defendant Flam's
resignation and the business condition of FPA, the Company press release stated:

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<PAGE> 31
Dresnick's appointment followed the resignation of Dr. Seth
Flam, one of the founders of the Company, who is leaving to pursue other
business interests. "I am an entrepreneur at heart," said Dr. Flam.
"The Company has grown dramatically since its inception and has
established a leadership position among physician practice management
companies. I am confident that Steve Dresnick has the ability to manage
the Company into the future."

Dr. Dresnick stated, "I have a tremendous amount of respect for
Dr. Flam and what he has helped create. Having been acquisition driven
over the past few years, it is important that the Company adjust its
focus to place greater emphasis on infrastructure so that we will be
able to expand with a greater reliance on internal or same market
growth. Our first priority will be to assess all operating divisions and
their contribution to profit and cash flow and develop plans to achieve
improvements in these areas. Acquisitions will be viewed for their
strategic value and their return on capital. We will evaluate debt
financing opportunities in order to support such acquisitions."

The Company also announced that Douglas Kerner, who was recently
hired as Vice President-Treasurer, was named Acting chief Financial
Officer. Steven Lash, who has been Executive Vice President and Chief
Financial Officer since 1994, will remain as Executive Vice President.
. . . "With the growth that we have experienced this past year and the
complexity of our business, it has become difficult to provide
leadership and individual attention to both treasury and merger and
acquisition activity," said Steven Lash. "Doug was hired because of his
experience with cash management, capital related activities and investor
relations."

Steven Lash also stated, "Our business continues to track
according to expectations and we remain encouraged by the first
quarter's operating and financial performance."

Dr. Sol Lizerbram, who remains, as Chairman of the Board and
will continue to develop national payer relationships and affiliations
with hospital integrated delivery systems, stated "I am excited about
the prospects for the Company in the coming years. Steve Dresnick brings
extensive public company experience and management skills and I look
forward to his leadership."

48. An article appearing in The Wall Street Journal on March 27,
1998 accurately quoted defendant Flam as stating that he was leaving because
"'I'm an entrepreneur who has helped to grow a

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<PAGE> 32
great company . . . [and] it's time for me to do other things in my life.'" It
also reported Lash's public remarks that Flam was giving up the post because
"'[t]he job had become too much for one person.'" In that same article,
defendant Lash was further accurately reported as having commented that FPA
financial results continued to track expectations and that "we remain encouraged
by the first quarter's performance.

49. The positive optimistic statements made by defendants during the
Class Period were false and misleading when made. The true facts included the
following adverse conditions at FPA, which contradicted the Individual
Defendants' positive/optimistic public statements and which were known to each
of the Individual Defendants:

(a) FPA's financial results as reported were false, as its
earnings were artificially inflated as detailed in Paragraphs 54-66;

(b) FPA's results from operations were overstated due to the
recording of inadequate reserves and the failure to take required write-downs,
as is more fully alleged in Paragraphs 54-66;

(c) Because of the serious difficulties being encountered by
companies FPA was acquiring, their acquisition would not be accretive as
represented or claimed in FY97 or 1Q98 and, in certain instances, rather than
contributing to earnings growth, would decrease earnings;

(d) FPA did not have information systems or controls that
were adequate to keep pace with its acquisitions and, hence, the attempted
integration of new companies was a failure and a disaster from the outset,
especially with regard to the integration of computer systems integral to
tracking claims and controlling costs;

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<PAGE> 33
(e) As a result of gross deficiencies in its computer and
information systems and integration problems which were exacerbated by its
acquisitions pace, FPA did not effectively or honestly track medical claims and
costs;

(f) FPA, was hemorrhaging as a result of out of control
losses and expenses and was saddled with existing and newly acquired
unprofitable contracts and unprofitable pricing levels - a serious problem which
was worsened by FPA's inherent inability to control costs and its existing lack
of adequate systems in its operations necessary to get medical costs under
control;

(g) Contrary to defendants' representations, FPA's
integration of acquired businesses and their operations, including MIS, was
failing to achieve merger savings and synergies, negatively impacting FPA's
results of operations;

(h) FPA was failing to timely process claims and was
understating and under reporting medical costs;

(i) FPA was artificially increasing its membership lists by
obtaining unprofitable accounts;

(j) FPA was overstating its revenues by including
undisclosed bad debts without setting a proper reserve for those bad debts or
making adequate allowance for them;

(k) FPA had been skewing its financial results to make them
appear more favorable by setting inadequate reserves for IBNR medical claims;

(l) FPA was failing to take required restructuring charges,
especially with regard to its acquisition of St. Joseph's Medical Corp., thereby
causing its reported financial results to be false and misleading;

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<PAGE> 34
(m) Commercial pricing for FPA healthcare contracts was too
soft - and far softer than ever disclosed - with a resulting adverse impact on
FPA operations;

(n) Existing and newly acquired lines of business were
performing poorly and below plan; and

(o) As a result of the foregoing, defendants knew that FPA's
acquisition-dependent strategy and its business plan were not on track, that FPA
was spiraling towards imminent financial disaster and the collapse of its
business and that it would not meet analyst expectations for 1997 or 1998 once
its financial results were fairly, meaningfully, accurately and adequately
reported.

THE PREVIOUSLY UNDISCLOSED ADVERSE
EVENTS NEGATIVELY IMPACTING FPA'S BUSINESS
AND OPERATIONS ARE REVEALED TO A SHOCKED MARKET

50. Suddenly, FPA shocked the financial community to its roots when,
on May 15, 1998, it revealed serious problems in its business and operations to
such an extent that it raised serious questions about its ability to operate as
a going concern beyond the second quarter of 1998. On May 15, 1998, the Dow
Jones reported:

After several years of aggressive acquisition-fueled growth, FPA Medical
Management, Inc. crash landed Friday, reporting first quarter results
far below analyst expectations and disclosing that it is running short
of cash. The company's shares plummeted in heavy trading.

The struggling physician-practice management company also said
it would post about $200 million in charges in the second quarter, about
$125 million in goodwill impairment, $40 million in write-down of shared
risk and other receivables and $35 million for severance payments and
other items.

* * *

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<PAGE> 35
The San Diego based company said a year-end audit found it had
not set aside enough reserves for incurred but not reported, or IBNR,
medical claims. It said it had to increase its reserves by $15 million
in the first quarter. Market observers said the inadequate reserves in
the fourth quarter had the effect of inflating that period's operating
results.

. . . In a filing with the Securities and Exchange Commission
Friday, the company said it had $12.4 million in cash and marketable
securities at the end of March and that cash on hand and anticipated
cash flow from operations will only be enough to meet the company's
needs until the end of the second quarter, June 30.

* * *

FPA is facing numerous problems from businesses it acquired from
Foundation Health Systems, Inc., over the last few years. It is trying
to institute new contracts with doctors linked to a former foundation
health medical group in Sacramento. Also, doctors at Tucson-based
multispeciality group, Thomas-Davis Medical Centers, have joined the
Federation of Physicians and Dentists Union after complaining about
increasing workloads, slashed salaries and reduced patient services.

* * *

[T]he blinding speed at which the company expanded caused it to outrun
its information systems which were crucially important to cost-control
efforts, said Dane Rauscher Inc. analyst Kim Hollingsworth Taylor. . . .

The company now doesn't have enough money to make the necessary
improvements to its information systems, Taylor said. The company is
seeking to renegotiate some of its contracts with health-care payers
because its existing agreements don't pay enough for FPA to meet all of
its expenses, he said.

51. In a separate article reported over the Dow Jones News Service
on May 15, 1998, Bear Stearns analyst Gary Frazier was accurately quoted as
stating, "'It's quite obvious now why Flam left and why Lash moved to M&A. . . .
The numbers here are pretty much falling apart.'"

52. FPA reported a net loss of $9.1 million, or $.20 a basic share,
for the quarter ended March 31. That included a

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<PAGE> 36
restructuring charge of $7.6 million related to the acquisition of St. Joseph
Medical Corporation and a charge of $7.9 million related to executive severance.
Excluding those items, FPA reported first quarter earnings of $.01 per share,
compared with $0.06 per share a year ago and far below the $.31 mean estimate of
analysts surveyed by earnings tracker FirstCo. As a result of the May 15, 1998
announcement and revelations in FPA's 10-Q filing with the SEC, by the close of
trading, FPA shares were down $5.50 or 48% to close at $6 on NASDAQ volume of
18.6 million shares, far above the daily average of 1.8 million, registering the
complete surprise and shock of investors and that they had been grossly misled
by FPA's false and misleading statements and concealment of material
information.

53. The investment community in San Diego, FPA's headquarters, was
particularly shaken. The lead article appearing in the business section of the
San Diego Union-Tribune on May 16, 1998 focused on FPA and was entitled "Shares
of FPA Medical fall by Nearly 50%." Noting that the San Diego company "says that
it's running out of cash," Craig D. Rose, staff writer of the Union-Tribune
reported:

FPA Medical Management, Inc. whose former chief executive
declared the company the picture of health seven weeks ago, said
yesterday that it was running out of cash, losing money on certain
contracts and had overvalued its acquisitions by some $125 million.

* * *

The San Diego-based physician practice management company said
that it would respond to the problems by closing certain offices,
seeking to renegotiate or terminate its losing contracts, and taking a
one-time charge of up to $200 million during the second quarter.

* * *

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<PAGE> 37
Officials of the company noted that it will exhaust its cash by June
30 and that it needs to raise more money. FPA is spending $8 million more
each month than it is taking in.

* * *

Yesterday's announcement painted a distinctly different portrait of
the company than one provided when Dr. Seth Flam announced his resignation
as Chief Executive Officer on March 26.

"I feel very comfortable about the first quarter," Flam said at the time.
He added: "I'm leaving the company with it poised to be extremely
successful this year."

* * *

Fueled by a string of acquisitions, FPA leapfrogged from revenues of
just $50 million four years ago, when it first sold its shares to the
public, to current annual revenues in excess of $1 billion. But analysts
said yesterday that the growth had been inadequately managed.

"The acquisitions were made at such a frenetic pace and the company
did not have adequate controls and infrastructure to manage to operations,"
said Radininsky.

* * *

"There is a lack of operating controls and inadequate accounting,"
said Lirola.

FALSE FINANCIAL RESULTS

54. In order to inflate the price of FPA's stock and to misrepresent the
success of its business and its various mergers during the Class Period, the
Individual Defendants caused the Company to present false financial results
during the Class Period by, inter alia, failing to accurately report medical
claims incurred, losses on contracts, overstating the useful life of goodwill,
failing to accurately report the deterioration of goodwill, failing to set
adequate reserves or report IBNR and by making inadequate allowance for bad
debts.

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<PAGE> 38
55. These actions resulted in a material overstatement of the
Company's results during the Class Period in violation of Generally Accepted
Accounting Principles ("GAAP") and SEC rules.

56. GAAP are those principles recognized by the accounting
profession as the conventions, rules and procedures necessary to define accepted
accounting practice at a particular time. SEC Regulation S-X (17 C.F.R. Section
210-4-01(a)(1)) states that financial statements filed with the SEC which are
not prepared in compliance with GAAP are presumed to be misleading and
inaccurate, despite footnote or other disclosure. Regulation S-X requires that
interim financial statements must also comply with GAAP, with the exception that
interim financial statements need not include disclosure which would be
duplicative of disclosures accompanying annual financial statements. 17 C.F.R.
Section 210.10-01(a).

57. GAAP, as set forth in FASB Statement of Concepts ("Concepts")
No. 5, requires that costs incurred during a period which are related to
revenues reported in that period must be recognized as expenses in that same
period in order to match costs with revenues generated as result of those costs.

Further guidance for recognition of expenses and losses is intended to
recognize consumption (using up) of economic benefits or occurrence or
discovery of loss of future economic benefits during a period. Expenses
and losses are generally recognized when an entity's economic benefits
are used up in delivering or producing goods, rendering services, or
other activities that constitute its ongoing major or central
operations or when previously recognized assets are expected to provide
reduced or no further benefits.

Concepts No. 5, Paragraph 85. Specifically, GAAP, as set forth in the AICPA
Audit and Accounting Guide, Health Care Organizations, June 1, 1996 ("AAG-HCO"),
requires that providers of prepaid and managed

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<PAGE> 39
healthcare services report medical costs at the time services are rendered by
accruing such costs and making estimates of claims not yet received.

Accounting for Health Care Costs

13.02 Health care costs should be accrued as services are rendered,
including estimates of the costs of services rendered but not yet reported.
Furthermore, if a provider of prepaid health care services is obligated to
render services to specific members beyond the premium period due to
provisions in the contract or regulatory requirements, the costs of such
services to be incurred, net of any related anticipated revenues, also
should be accrued currently.

AAG-HCO Paragraph 13.02, in pertinent part. Additionally, GAAP provides that
anticipated losses should be recognized when it is probable that expected
future healthcare costs under existing contracts will exceed future revenue
from premiums on such contracts.

Accounting for Los Contracts

13.05 A prepaid health care provider enters into contracts to
provide member with specified health care services for specified periods in
return for fixed periodic premiums. The premium revenue is expected to
cover health care costs and other costs over the terms of the contracts.
Only in unusual circumstances would a provider be able to increase premiums
on contracts in force to cover expected losses....

13.06 FASB Statement No. 5, Accounting for Contingencies, states
that a loss should be accrued in financial statements when it is probable
that a loss has been incurred and the amount of the loss can be reasonably
estimated. Accordingly, losses should be recognized when it is probable
that expected future health care costs and maintenance costs under a group
of existing contracts will exceed anticipated future premiums and
stop-loss insurance recoveries on those contracts.

AAG-HCO, Paragraphs 13.05 and 13.06, in pertinent part.

58. GAAP, as set forth in Accounting Principles Board Opinion ("APB")
No. 17, requires that a company evaluate the recoverability of goodwill and
other intangible assets in each period for which a

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<PAGE> 40
balance sheet is presented and, when it is probable the value of goodwill is
impaired, record a charge against earnings to account for the impairment.

Subsequent review of amortization. A company should evaluate the periods
of amortization continually to determine whether later events and
circumstances warrant revised estimates of useful lives. If estimates
are changed, the unamortized cost should be allocated to the increased
or reduced number of remaining periods in the revised useful life but
not to exceed forty years after acquisition. Estimation of value and
future benefits of an intangible asset may indicate that the unamortized
cost should be reduced significantly by a deduction in determining net
income (APB Opinion No. 9, paragraph 21)

APB Opinion 17, Paragraph 31.

59. Additionally, the SEC and AICPA maintain that companies in the
healthcare industry should amortize goodwill over periods in the range of ten
not to exceed twenty years, and that the amortization of goodwill over 40 years
is assumed to be inappropriate.

Goodwill Amortization. In a speech made at the AICPA National
Conference on SEC Developments in January 1995, the SEC staff indicated
that there are a number of industry factors that make it difficult to
assert that an acquired business in the health care industry will
survive and provide a competitive advantage for periods as long as forty
years. These factors include the following:

- Significantly increased competition

- Industry consolidation

- Changing third-party reimbursement requirements

- Technological innovation

- An uncertain regulatory future

When these issues exist, the SEC staff believes that a useful
life of as few as ten years is often appropriate and will challenge a
useful life of more that twenty years. Auditors of health care entities
undergoing purchase acquisitions should be aware of the SEC staff's
concerns when reviewing amortization lives assigned to goodwill.

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<PAGE> 41
AICPA Audit Risk Alerts, Health Care Industry Developments 1995/96, Complement
to AICPA Auditand Accounting Guide Audits of Providers of Health Care Services,
at 12.

60. As a consequence of its numerous acquisitions prior to and
during the Class Period, FPA recorded goodwill for each of the acquisitions
respectively (the excess of the cost of the acquisition over the fair value of
the assets acquired less liabilities assumed). GAAP requires that goodwill
resulting from the acquisition of another company be amortized by charges
against income over the period estimated to be benefited. See APB No. 17.
Defendants knew that, in light of the significantly increased competition among
managed healthcare providers, anticipated future industry consolidation, and an
uncertain future among other factors, it was highly uncertain at best that the
acquisition of FHP would provide a competitive advantage for a period exceeding
ten years. See AICPA Audit Risk Alerts, Health Care Industry Developments --
1995/96, Complement to the AICPA Audit and Accounting Guide Audits of Providers
of Health Care Services. Accordingly, FPA should have amortized the acquired
goodwill over far fewer years than it did. Had FPA properly amortized the
goodwill associated with these acquisitions, it would have materially increased
amortization expense and decreased operating income reported in each of the
quarterly periods reported during the Class Period.

61. Further, in order to show positive earnings, defendants caused
FPA to provide medical cost accruals and reserves for IBNR that were wholly
inadequate to cover the actual level of

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<PAGE> 42
anticipated costs and claims that had been incurred, and as a consequence, FPA's
earnings were artificially inflated.

62. Defendants knew that accurately estimating the Company's IBNR
medical claims for its operations was absolutely essential to reporting accurate
financial results for FPA as a whole. FPA's management had responsibility to
establish a process for consistently and accurately making its estimates of
medical claims on a timely basis. That process should have included controls
necessary to accumulate relevant sufficient and reliable data on which to base
its estimates. See AICPA AU Section 342.05. However, FPA failed to implement
adequate processes to accumulate the reliable, relevant, and sufficient data
needed to make reasonable estimates and made IBNR estimates which were wholly
inadequate to reflect its medical claims experience within its operations or
those operations that it acquired.

63. Moreover, in addition to the improper accounting for medical
costs, FPA was improperly failing to estimate, record and process medical costs
and estimates and under-reserving for pharmacy, capitation and other medical
costs. FPA knew that it had serious problems in setting accurate medical cost
reserve levels and surely knew that the terms of its contracts with providers
would make it difficult to increase prices or adjust terms quickly enough to
avoid losses being incurred in unprofitable plans.

64. FPA reported net income and earnings for the Class Period
quarterly reporting periods and later included those results in reports on Form
10-Q filed with the SEC and created the impression in the financial community
that the results included therein contained all adjustments necessary to present
fairly FPA's results

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<PAGE> 43
of operations and financial position for the relevant quarterly periods. The
results FPA reported and its representations concerning those results were false
and misleading due to the accounting irregularities noted, the Company's failure
to set adequate reserves, the failure to properly report the valuation or useful
life of goodwill, and the failure to assess and report actual costs incurred.

65. Due to the accounting improprieties set forth above, the Company
presented its financial results and statements in a manner which violated GAAP
and SEC rules, including the following fundamental accounting principles:

(a) The principle that interim financial reporting should be
based upon the same accounting principles and practices used to prepare annual
financial statements (APB No. 28, Paragraph 10);

(b) The principle that financial reporting should provide
information that is useful to present and potential investors and creditors and
other users in making rational investment, credit and similar decisions was
violated (FASB Statement of Concepts No. 1, Paragraph 34);

(c) The principle that financial reporting should provide
information about the economic resources of an enterprise, the claims to those
resources, and effects of transactions, events and circumstances that change
resources and claims to those resources was violated (FASB Statement of Concepts
No. 1, Paragraph 40);

(d) The principle that financial reporting should provide
information about how management of an enterprise has discharged its stewardship
responsibility to owners (stockholders) for the use of enterprise resources
entrusted to it was violated.

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<PAGE> 44
To the extent that management offers securities of the enterprise to the public,
it voluntarily accepts wider responsibilities for accountability to prospective
investors and to the public in general (FASB Statement of Concepts No. 1,
Paragraph 50);

(e) The principle that financial reporting should provide
information about an enterprise's financial performance during a period was
violated. Investors and creditors often use information about the past to help
in assessing the prospects of an enterprise. Thus, although investment and
credit decisions reflect investors expectations about future enterprise
performance, those expectations are commonly based at least partly on
evaluations of past enterprise performance (FASB Statement of Concepts No. 1,
Paragraph 42)

(f) The principle that financial reporting should be
reliable in that it represents what it purports to represent was violated. That
information should be reliable as well as relevant is a notion that is central
to accounting (FASB Statement of Concepts No. 2, Paragraphs 58-59);

(g) The principle of completeness, which means that nothing
is left out of the information that may be necessary to insure that it validly
represents underlying events and conditions was violated (FASB Statement of
Concepts No. 2, Paragraph 79); and

(h) The principle that conservatism be used as a prudent
reaction to uncertainty to try to ensure that uncertainties and risks inherent
in business situations are adequately considered was violated. The best way to
avoid injury to investors is to try to ensure that what is reported represents
what it purports to represent (FASB Statement of Concepts No. 2, Paragraphs 95,
97).

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<PAGE> 45
66. Further, the undisclosed adverse information concealed by
defendants during the Class Period is the type of information which, because of
SEC regulations, regulations of the national stock exchanges and customary
business practice, is expected by investors and securities analysts to be
disclosed and is known by corporate officials and their legal and financial
advisors to be the type of information which is expected to be and must be
disclosed.

DEFENDANTS' INSIDER TRADING

67. While FPA officials were issuing favorable false statements
about FPA's business during the Class Period, including rendering financial
statements that were false and misleading, the Individual Defendants sold over
415,040 shares of the FPA stock they owned for proceeds of over $9.8 million to
profit from the artificial inflation in FPA's stock price their deliberate and
dishonest acts and fraudulent scheme had created. Notwithstanding their access
to confidential information as a result of their status as directors and/or
officers of the Company, the Individual Defendants sold the following amounts of
FPA's shares at artificially inflated prices throughout the Class Period while
in possession of material non-public information and without disclosing the
same:

<TABLE>
<CAPTION>
AGGREGATE
NAME SHARES PRICE PROCEEDS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
SOL LIZERBRAM 87,900 $19.44-27.75 $2,113,635
DR. SETH FLAM 93,000 $19.44-27.75 $2,215,794
STEVEN M. LASH 79,000 $19.44-27.50 $1,873,161
STEPHEN J. DRESNICK 36,140 $18.50-26.50 $ 859,140
HOWARD HASSMAN 98,000 $20.88-27.09 $2,343,870
JAMES A. LEBOVITZ 21,000 $19.44-26.00 $ 469,771
</TABLE>

- 44 -
<PAGE> 46
This insider selling was unusual in timing and amount.

COUNT I

For Violations Of Section 10(b) Of The
Exchange Act And Rule 10b-5 Promulgated
Thereunder Against All Defendants

68. Plaintiffs incorporate by reference Paragraphs 1-67.

69. During the Class Period, defendants engaged in a scheme and
course of business, pursuant to which they knowingly and/or recklessly engaged
in acts, transactions, practices and courses of business which operated as a
fraud upon plaintiffs and other members of the Class, and made various untrue
statements of material fact and omitted to state material facts necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading, to plaintiffs and other Class members as set
forth above. The purpose and effect of said scheme was to induce plaintiffs and
the members of the Class to purchase the Company's common stock during the Class
Period at artificially inflated prices.

70. By reason of the foregoing, the defendants knowingly or
recklessly violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated
thereunder in that they themselves or a person whom they controlled: (a)
employed devices, schemes and artifices to defraud; (b) made untrue statements
of material facts or omitted to state material facts necessary in order to make
the statements made, in light of the circumstances under which they were made,
not misleading or (c) engaged in acts, practices and a course of business that
operated as a fraud or deceit upon plaintiff s and other members of the Class in
connection with their purchases of the Company's common stock during the Class
Period.

- 45 -
<PAGE> 47
71. As a result of the foregoing, the market price of the Company's
common stock was artificially inflated during the Class Period. In ignorance of
the false and misleading nature of the representations described above,
plaintiffs and other members of the Class relied, to their damage, directly on
the misstatements or on the integrity of the market both as to price and as to
whether to purchase these securities. Plaintiffs and the other members of the
Class would not have purchased FPA stock at the market prices they paid, or at
all, if they had been aware that the market prices had been artificially and
falsely inflated by the defendants' false and misleading statements and
concealments. At the time of the purchase of FPA common stock by plaintiffs and
the other members of the Class, the fair market value of said common stock was
substantially less than the prices paid by plaintiffs. Plaintiffs and the other
members of the Class have suffered substantial damages as a result.

COUNT II

For Violations Of Section 20(a) Of The
Exchange Act Against Defendants Flam,
Lizerbram, Lash, Dresnick And FPA

72. Plaintiffs incorporate by reference Paragraphs 1-71.

73. Individual Defendants Flam, Lizerbram, Lash and Dresnick are
liable under Section 20(a) of the Exchange Act as control persons of FPA since,
by virtue of their executive and directorial positions, their knowledge of and
involvement in the Company's business, their stock ownership, and their power
and ability to make public statements on behalf of the Company to shareholders,
potential investors and the media, they had the power and ability to control

- 46 -
<PAGE> 48
the actions of the Company. FPA, in turn controlled each of the Individual
Defendants.

BASIS OF ALLEGATIONS

75. This Complaint is pleaded in accordance with the Federal Rules
of Civil Procedure, including Rule 11. Because the PSLRA, Section 21D(c) of the
Exchange Act (15 U.S.C. Section 78u-4(c)), requires complaints to be pleaded in
conformance with Federal Rule of Civil Procedure 11, plaintiffs have alleged the
foregoing based upon the investigation of their counsel, which included, a
review of FPA's SEC filings, securities analysts, reports and advisories about
the Company, press releases issued by the Company, media reports about the
Company and discussions with consultants pursuant to Rule 1l(b)(3).

CLASS ACTION ALLEGATIONS

76. Plaintiffs bring this action as a class action pursuant to Rule
23(a) and (b)(3) of the Federal Rules of Civil Procedure on behalf of a class
(the "Class") consisting of all persons who purchased or otherwise acquired the
common stock of FPA between February 27, 1997 and May 14, 1998, inclusive.
Excluded from the Class are the defendants herein, members of each Individual
Defendant's immediate family, any entity in which any defendant has a
controlling interest, and the legal affiliates, representatives, heirs,
controlling persons, successors, and predecessors in interest or assigns of any
such excluded party.

77. Because FPA has millions of shares of common stock outstanding,
and because the Company's common stock was actively traded, members of the Class
are so numerous that joinder of all members is impracticable. While the exact
number of Class members

- 47 -
<PAGE> 49
can only be determined by appropriate discovery, plaintiffs believe that Class
members number at least in the thousands and that they are geographically
dispersed. FPA has approximately 14.7 million shares of class A common stock and
27.1 million shares of class B common stock outstanding and actively traded over
the counter in an efficient market. Record owners and other members of the Class
may be identified from records maintained by FPA or its transfer agent and may
be notified of the pendency of this action by mail, using a form of notice
similar to that customarily used in securities class actions.

78. Plaintiffs' claims are typical of the claims of the members of
the Class, because plaintiffs and all of the Class members sustained damages
arising out of defendants' wrongful conduct complained of herein.

79. Plaintiffs will fairly and adequately protect the interests of
the Class members and have retained counsel who are experienced and competent in
class and securities litigation. Plaintiffs have no interests that are contrary
to or in conflict with the members of the Class plaintiffs seek to represent.

80. A class action is superior to all other available methods for
the fair and efficient adjudication of this controversy, since the joinder of
all members is impracticable. Furthermore, as damages suffered by individual
members of the class may be relatively small, the expense and burden of
individual litigation make it impossible for the members of the Class
individually to redress the wrongs done to them. There will be no difficulty in
the management of this action as a class action.

- 48 -
<PAGE> 50
81. Questions of law and fact common to the members of the Class
predominate over any questions that may affect only individual members, in that
defendants have acted on grounds generally applicable to the entire Class.
Among the questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by defendants'
acts as alleged herein;

(b) whether the Company's publicly disseminated releases and
statements during the Class Period omitted and/or misrepresented material facts
and whether defendants breached any duty to convey material facts or to correct
material facts previously disseminated;

(d) whether the defendants acted willfully, with knowledge or
recklessly, in omitting and/or misrepresenting material facts;

(e) whether the market prices of FPA common stock during the Class
Period were inflated artificially due to the material nondisclosures and/or
misrepresentations complained of herein; and

(f) whether the members of the Class have sustained damages and, if
so, what is the appropriate measure of damages.

PRAYER FOR RELIEF

WHEREFORE, plaintiffs pray for judgment as follows:

1. Declaring this action to be a proper class action on behalf of the
Class defined herein;

2. Awarding plaintiffs and the members of the Class compensatory damages;

- 49 -

<PAGE> 51
3. Awarding plaintiffs and the members of the Class prejudgment and
post-judgment interest, as well as reasonable attorneys' fees, expert witness
fees and other costs;

4. Awarding extraordinary, equitable and/or injunctive relief as
permitted by law, equity and the appropriate state law remedies; and

5. Awarding such other relief as this Court may deem just and proper.

JURY DEMAND

Plaintiffs demand a trial by jury.

DATED: May 18, 1998 MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN SCHULMAN
DARRIN J. ROBBINS

/s/ WILLIAMS S. LERACH
------------------------------
WILLIAM S. LERACH

600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

BARRACK, RODOS & BACINE
STEPHEN R. BASSER
BLAIR A. NICHOLAS
MATTHEW P. MONTGOMERY

/s/ STEPHEN R. BASSER
------------------------------
STEPHEN R. BASSER

600 West Broadway, Suite 1700
San Diego, CA 92101
Telephone: 619/230-0800

- 50 -

<PAGE> 52
REINHARDT & ANDERSON
RANDALL H. STEINMEYER
E-1000 First National
Bank Building
332 Minnesota Street
St. Paul, MN 55101
Telephone: 612/227-9990

Attorneys for Plaintiffs

-51-
<PAGE> 53
BARRACK, RODOS & BACINE
Attorneys-At-Law

SWORN CERTIFICATION

I, MICHAEL J. GIGLIO, hereby certify and swear as follows:

1. I have reviewed a complaint against FPA Medical Management, Inc.
alleging violations of the securities laws and authorize its filing;

2. I am willing to serve as a representative party on behalf of a class,
including providing testimony at deposition and trial, if necessary;

3. I have not within the 3 year period preceding the date hereof sought
to serve, or served, as a representative party on behalf of a class in an
action brought under the federal securities laws, unless noted hereafter: 3Com
Corporation; Silicon Graphics, Inc.; and Vivus, Inc.;

4. The following is a description of my transactions during the class
period specified in the complaint in the shares of FPA Medical Management, Inc.:

<TABLE>
<CAPTION>
(TRADE)
DATE NO. OF SHARES P = PURCHASE/S = SOLD PRICE/SHARE
<S> <C> <C> <C>
4/15/98 3000 S 13-3/8
3/10/98 1000 B 17%
3/9/98 1000 B 18-1/2
10/31/97 500 B 25
10/18/87 500 B 35
</TABLE>
<PAGE> 54
BARRACK, RODOS & BACINA
Attorneys-At-Law

5. I did not purchase shares of FPA Medical Management, Inc. at the
direction of my counsel or in order to participate in any private action under
the federal securities laws; and

6. I will not accept any payment for serving as a representative
party on behalf of a class beyond my pro rata share of any recovery, except as
ordered or approved by the Court.

I declare under penalty of perjury that the foregoing is true and
correct.

Dated: May 18th, 1998 /s/ MICHAEL J. GIGLIO
---------------------
Michael J. Giglio

2
<PAGE> 55
Reinhardt & Anderson
Attorneys at Law

SWORN CERTIFICATION

I, Roger Rubinger, hereby certify and swear as follows:

1. I have reviewed a complaint against FPA Medical, alleging violations
of the securities laws;

2. I am willing to serve as a representative party on behalf of a class,
including providing testimony at deposition and trial, if necessary;

4. The following is a description of my transactions during the class
period specified in the complaint in the shares of FPA Medical:

<TABLE>
<CAPTION>
TRADE DATE NO. OF SHARES PURCHASE OR SALE PRICE PER SHARE
- ---------- ------------- ---------------- ---------------
<S> <C> <C> <C>
12- 4-97 3,000 P 17.875
1-12-98 2,000 P 15.875
1-20-98 2,000 P 13.4375
4-23-98 7,000 S 13.1875
</TABLE>

5. I did not purchase shares of FPA Medical, at the direction of my
counsel or in order to participate in any private action under the federal
securities laws;
<PAGE> 56

[REINHARDT & ANDERSON LETTERHEAD]

6. I will not accept any payment for serving as a representative party
on behalf of a class beyond my pro rata share of any recovery, except as
ordered or approved by the Court.

I declare under penalty of perjury that the foregoing is true and correct.

Dated: 5-18, 1998. /s/ ROGER RUBINGER
----------------------------------------
Signature

2
<PAGE> 57

CIVIL COVER SHEET

JS 44
(Rev. 07/89)

I. (a) PLAINTIFFS

MICHAEL GIGLIO and ROGER RUBINGER, On Behalf of Themselves and All Others
Similarly Situated

(b) COUNTY OF RESIDENCE OF FIRST LISTED PLAINTIFF Pennsylvania
(EXCEPT IN U.S. PLAINTIFF CASES) ------------

- --------------------------------------------------------------------------------
(c) ATTORNEYS (FIRM NAME, ADDRESS,AND TELEPHONE NUMBER)

William S. Lerach, Esq.

MILBERG WEISS BERSHAD HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
619/231-1058

- --------------------------------------------------------------------------------

DEFENDANTS

FPA MEDICAL MANAGEMENT, INC., SETH FLAM, SOL LIZERBRAM, STEVEN M. LASH,
STEPHEN J. DRESNICK, HOWARD HASSMAN and JAMES A. LEBOVITZ

COUNTY OF RESIDENCE OF FIRST LISTED DEFENDANT
----------------------------------
(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND
INVOLVED

- --------------------------------------------------------------------------------

ATTORNEYS (IF KNOWN)

- --------------------------------------------------------------------------------

II. BASIS OF JURISDICTION (PLACE AN x IN ONE BOX ONLY)

[ ] 1. U.S. Government [X] 3. Federal Question
Plaintiff (U.S. Government Not a Party)

[ ] 2. U.S. Government [ ] 4. Diversity
Defendant (Indicate Citizenship of
Parties in Item III)

- --------------------------------------------------------------------------------

III. CITIZENSHIP OF PRINCIPAL PARTIES (PLACE AN x IN ONE BOX FOR
(For Diversity Cases Only) PLAINTIFF AND ONE BOX FOR DEFENDANT)

PTF DEF PTF DEF

Citizen of This State [ ] 1 [ ] 1 Incorporated or Principal [ ] 4 [ ] 4
Place of Business in
This State

Citizen of Another [ ] 2 [ ] 2 Incorporated and [ ] 5 [ ] 5
State Principal Place of
Business in Another
State

Citizen or Subject of [ ] 3 [ ] 3 Foreign Nation [ ] 6 [ ] 6
a Foreign Country

- --------------------------------------------------------------------------------

IV. CAUSE OF ACTION

(CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND
WRITE A BRIEF STATEMENT OF CAUSE. DO NOT CITE
JURISDICTIONAL STATUTES UNLESS DIVERSITY.)

COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
15 U.S.C. SECTIONS 78j(b) and 78t(a)

- --------------------------------------------------------------------------------

V. NATURE OF SUIT (PLACE AN x IN ONE BOX ONLY)

- --------------------------------------------------------------------------------
CONTRACT TORTS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

VI. ORIGIN (PLACE AN x IN ONE BOX ONLY)

JUDGE DOCKET NUMBER
------------ ----------

- --------------------------------------------------------------------------------
DATE SIGNATURE OF ATTORNEY OF RECORD

MAY 18, 1998 /s/ WILLIAM S. LERACH
- --------------------------------------------------------------------------------

UNITED STATES DISTRICT COURT

<PAGE> 1
EXHIBIT 99.3

ROBERT C. SCHUBERT S.B.N. 62684
JUDEN JUSTICE REED S.B.N. 153748 FILED
SCHUBERT & REED LLP 98 MAY 18 PM 4:23
Two Embarcadero Center, Suite 1050 CLERK, U.S. DISTRICT COURT
San Francisco, California 94111 SOUTHERN DISTRICT OF CALIFORNIA
Telephone: (415) 788-4220
BY: J. HASLAN DEPUTY
Attorneys for Plaintiff Harold M. Sucher,
Individually, and on Behalf of a Class
Of Persons Similarly Situated

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

HAROLD M. SUCHER, Individually, No. '98 OV 932JM (AJB)
and On Behalf of a Class of
Persons Similarly Situated, CLASS ACTION COMPLAINT FOR
VIOLATION OF FEDERAL SECURITIES
Plaintiff, LAWS

vs. JURY TRIAL DEMANDED

FPA MEDICAL MANAGEMENT INC., a
Delaware corporation; STEPHEN
DRESNICK; KEVIN ELLIS; SETH
FLAM; HOWARD HASSMAN; STEVEN
LASH; and SOL LIZERBRAM,

Defendants.

Plaintiff, individually and on behalf of all others similarly situated,
by his undersigned attorneys, alleges as follows:

NATURE OF ACTION

1. This action is brought by plaintiff, under the federal securities
laws, individually and on behalf of a class of purchasers of the common stock
of defendant FPA Medical Management Inc., a Delaware corporation ("FPA" or "the
Company"), during the period from February 27, 1997 through and including May
15, 1998,

Page 1
<PAGE> 2
inclusive (the "Class Period") to recover damages caused by defendants'
violations of the federal securities laws.

2. As hereinafter alleged, during the Class Period defendants
misrepresented the truth about FPA, its finances, revenues, gross margins and
future business prospects. In particular, defendants misrepresented the
Company's financial results and operations for each of the quarters of fiscal
1997, as well as the Company's prospects for the first fiscal quarter of 1998.
As a result of the material misrepresentations, the Company's securities
traded at inflated prices on the NASDAQ National Market System. While in
possession of material adverse non-public information about the Company's
business and financial condition, the named individual defendants sold in the
aggregate 429,040 shares of the Company's common stock, realizing proceeds of
$10,219,897.50.

JURISDICTION AND VENUE

3. The claims asserted herein arise under and pursuant to Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. Section
78j(b) and 78t(a) ("the Exchange Act") and Rule 10b-5, (17 C.F.R. Section
240.10b-5), promulgated thereunder by the Securities and Exchange Commission
("SEC").

4. Jurisdiction is proper in this court under Section 27 of the
Exchange Act, 15 U.S.C. Section 78aa and 28 U.S.C. Section 1331 (federal
question jurisdiction).

5. Venue is proper in this district pursuant to Section 27 of the
Exchange Act, 15 U.S.C. Section 78aa and 28 U.S.C. Section 1391(b) and (c).
Many of the acts and conduct complained of herein, including

Page 2

<PAGE> 3
the preparation, issuance and dissemination of materially false and misleading
information to the investing public occurred in the Southern District of
California. Furthermore, FPA maintained its principal place of business in this
district at all relevant times.

6. In connection with the acts, transactions, and conduct alleged
herein, defendants used the means and instrumentalities of interstate commerce,
including the United States mails, interstate telephonic communications and the
facilities of national securities exchanges and markets.

PARTIES

7. Plaintiff Harold M. Sucher purchased 1000 shares of FPA common
stock at $18.0625 on January 29, 1998, 400 shares of FPA common stock at
$22.9375 on February 23, 1998, and 600 shares of FPA common stock at $16.3125
on March 27, 1998 and has been damaged thereby.

8. FPA is a corporation organized under the laws of the state of
Delaware, with its principal place of business located in San Diego,
California. In its filings with the SEC and other public statements, FPA has
described itself as a "national physician practice management company which
acquires, organizes and manages primary care physician practice networks and
provides contract management services to hospital emergency departments."
According to the same sources, FPA also "provides primary and specialty care
services to prepaid managed care enrollees and fee-for-service patients through
a network of independent practice association physicians and owned primary care
physician groups."

Page 3

<PAGE> 4
9. Defendant Stephen Dresnick ("Dresnick") has been since March 25,
1998 the President and Chief Executive Officer of the Company following the
resignation of defendant Seth Flam from those positions. Dresnick is and was at
all relevant times a director of the Company and serves as the Vice Chairman of
the Company's Board of Directors. During the Class Period, Dresnick sold 36,140
shares of the Company's common stock while in possession of material adverse
non-public information about the Company's business and financial condition,
realizing proceeds of $859,140.00. In the Company's 1998 Annual Proxy
Statement, filed with the Securities and Exchange Commission ("SEC") on May 5,
1998 (the "1998 Proxy Statement"), it was reported that during the 1997 fiscal
year Dresnick received as compensation a base salary of $325,000, and incentive
compensation comprising a $1,487,500 cash bonus and options for the purchase of
75,000 shares of the Company's common stock. Amounts awarded as incentive
compensation by the Company are awarded based upon the performance of the
Company, according to the 1998 Proxy Statement, and the award of stock options,
in particular, is intended to provide an incentive to the Company's executive
officers to "build stockholder value." 1998 Proxy Statement, at 12-13.

10. Defendant Kevin Ellis ("Ellis") is and was at all relevant times
Chief Medical Officer and a Director of the Company. During the Class Period,
Ellis sold 43,000 shares of the Company's common stock while in possession of
material adverse non-public information about the Company's business and
financial condition, realizing proceeds of $978,495.00.

Page 4
<PAGE> 5
11. Defendant Seth Flam ("Flam") was, until his resignation March 25,
1998, Chief Executive Officer and President of the Company. Flam was a Director
of the Company during the Class Period, but apparently resigned as a Director as
the same time he resigned his other positions with the Company. During the Class
Period, Flam sold 93,000 shares of the Company's common stock while in
possession of material adverse non-public information about the Company's
business and financial condition, realizing proceeds of $2,215,793.00. In the
1998 Proxy Statement, it was reported that during the 1997 fiscal year Flam
received as compensation a base salary of $446,978, and incentive compensation
comprising a $665,522 cash bonus and options for the purchase of 200,350 shares
of the Company's common stock. Amounts awarded as incentive compensation by the
Company are awarded based upon the performance of the Company, according to the
1998 Proxy Statement, and the award of stock options, in particular, is intended
to provide an incentive to the Company's executive officers to "build
stockholder value". 1998 Proxy Statement, at 12-13.

12. Defendant Howard Hassman ("Hassman") was, at all relevant times,
Executive Vice President - Corporate Development and a Director of the Company.
Formerly, Hassman served as Chief Financial Officer of the Company. In the 1998
Proxy, it was reported that Hassman, whose term as Director would not otherwise
expire until the 1999 annual meeting, would resign as Director effective as of
the date of the 1998 Annual Meeting. During the Class Period, Hassman sold
98,000 shares of the Company's common stock while in possession of material
adverse non-public information about the Company's business and financial
condition,

Page 5
<PAGE> 6
realizing proceeds of $2,343,870.00. In the 1998 Proxy Statement, it was
reported that during the 1997 fiscal year Hassman received as compensation a
base salary of $271,417, and incentive compensation comprising a $403,584 cash
bonus and options for the purchase of 250 shares of the Company's common stock.
Amounts awarded as incentive compensation by the Company are awarded based upon
the performance of the Company, according to the 1998 Proxy Statement, and the
award of stock options, in particular, is intended to provide an incentive to
the Company's executive officers to "build stockholder value". 1998 Proxy
Statement, at 12-13.

13. Defendant Steven Lash ("Lash") was, until March, 1998, Executive Vice
President and Chief Financial Officer of the Company. He continues to serve as
Executive Vice President of the Company. During the Class Period, Lash sold
79,400 shares of the Company's common stock while in possession of material
adverse non-public information about the Company's business and financial
condition, realizing proceeds of $1,882,312.50. In the 1998 Proxy Statement, it
was reported that during the 1997 fiscal year Lash received as compensation a
base salary of $361,705, and incentive compensation comprising a $500,795 cash
bonus and options for the purchase of 100,000 shares of the Company's common
stock. Amounts awarded as incentive compensation by the Company are awarded
based upon the performance of the Company, according to the 1998 Proxy
Statement, and the award of stock options, in particular, is intended to provide
an incentive to the Company's executive officers to "build stockholder value".
1998 Proxy Statement, at 12-13.

Page 6
<PAGE> 7
14. Defendant Sol Lizerbram ("Lizerbram") was, at all relevant times,
Chairman of the Board of Directors of the Company. Formerly, Lizerbram served as
President of the Company. During the Class Period, Lizerbram sold 79,500 shares
of the Company's common stock while in possession of material adverse non-public
information about the Company's business and financial condition, realizing
proceeds of $1,940,286.50. In the 1998 Proxy Statement, it was reported that
during the 1997 fiscal year Lizerbram received as compensation a base salary of
$446,978, and incentive compensation comprising a $665,522 cash bonus and
options for the purchase of 200,250 shares of the Company's common stock.
Amounts awarded as incentive compensation by the Company are awarded based upon
the performance of the Company, according to the 1998 Proxy Statement, and the
award of stock options, in particular, is intended to provide an incentive to
the Company's executive officers to "build stockholder value". 1998 Proxy
Statement, at 12-13.

15. Dresnick, Ellis, Flam, Hassman, Lash and Lizerbram are sometimes
collectively referred to herein as the "Individual Defendants". In addition to
the compensation arrangements described above, the Individual Defendants, with
the exception of Ellis, each are party to compensation or other agreements with
the Company whereby, upon termination of their employments, or upon a change of
control of the Company, the Company is obligated to pay them severance and other
valuable consideration ranging in value between approximately $2 million and $4
million each.

16. By reason of their executive positions with FPA and/or their
membership on the Company's Board of Directors, the

Page 7
<PAGE> 8
Individual Defendants were "controlling persons" of the Company within the
meaning of Section 20(a) of the Exchange Act and had the power and influence,
and exercised the same, to cause FPA to engage in the illegal and wrongful
practices complained of herein.

17. As officers, directors and/or controlling persons of a company whose
securities are registered with the SEC and which is therefore subject to the
exacting disclosure requirements of the federal securities laws, the Individual
Defendants had a duty to: (a) promptly disseminate accurate and truthful
information concerning the Company's operations, business, products, markets,
management, earnings and present and future business prospects; (b) correct any
previously issued statements made by them that were materially false when made;
and (c) disclose any trends that were impacting the Company's present and future
operating results.

18. Each of the Individual Defendants participated in the drafting,
preparation and/or approval of the public representations complained of herein.
Because of their positions and access to material non-public information, each
of these defendants knew or recklessly disregarded that the adverse facts
specified herein had not been disclosed to and were being concealed from the
public, and that the positive representations that were being made were then
false and misleading.

19. As a result, each of the Individual Defendants is responsible for the
accuracy of the public reports and releases detailed herein and is therefore
responsible for the misrepresentations alleged herein.

Page 8
<PAGE> 9
CLASS ACTION ALLEGATIONS

20. Plaintiff brings this action as a class action pursuant to Rules
23(a) and 23(b)(3) of the Federal Rules of Civil Procedure. The Class is
defined as well as all persons or entities who purchased the common stock of FPA
during the period from February 27, 1997 through and including May 15, 1998,
inclusive (the "Class Period"). Excluded from the Class are the defendants
herein, members of FPA's Board of Directors and management, their immediate
families, and any subsidiary, affiliate or controlling or controlled person of
any such persons or entities.

21. The Class is so numerous that joinder of all members is
impracticable. As of March 21, 1997, 30,708,632 shares of the Company's common
stock were outstanding. By April 27, 1998, due to the Company's practice of
registering and issuing shares of its stock to pay for acquisitions made by the
Company, the number of outstanding shares of the Company's common stock had
risen dramatically, to 47,533,234, an increase of more than 54 percent in
eleven months. Throughout the Class Period, the Company's common shares were
actively traded on the NASDAQ National Market System. The Company has at least
hundreds of public shareholders, although the exact number and names of the
members of the Class is presently unknown to plaintiff and can only be
determined through appropriate discovery.

22. Plaintiff's claims are typical of the claims of the other members of
the Class. All members of the Class sustained damages arising out of
defendant's conduct in violation of federal law as complained of herein.

Page 9
<PAGE> 10
23. Plaintiff has retained counsel experienced in prosecuting securities
and other complex class action litigation.

SUBSTANTIVE ALLEGATIONS

24. On February 27, 1997, FPA announced its results for the fourth quarter
of 1996 and the year:

Operating revenues for the fourth quarter ended Dec. 31, 1996 increased
166% to $151.0 million compared to $56.8 million in the same period last
year, including the operations of Sterling Healthcare Group Inc., accounted
for as a pooling of interests. Net income for the fourth quarter was $4.2
million or 18 cents per share, (excluding non-recurring charges of $36.3
million related to transaction costs associated with the acquisition of the
Foundation Health affiliated medical centers in Arizona and California,
Sterling Healthcare Group, and certain restructuring charges) compared to
net income of $677,000 or 4 cents per share for the same period last year.
Including the charges, the company reported a net loss of $23.5 million or
$1.01 per share. Weighted average shares outstanding were 23,199,195 and
16,961,698 for the fourth quarters of 1996 and 1995, respectively, with
shares outstanding including the effect of the Sterling pooling.

For the year ended Dec. 31, 1996, operating revenue increased 161% to
$440.3 million compared to $168.4 million for the same period last year.
Excluding the non-recurring charges, net income for the year was $13.0
million or 60 cents per share on weighted average shares outstanding of
21,702,786 compared to net income of $3.8 million or 28 cents per share on
13,693,193 weighted shares outstanding for the same period in the prior
year. Including non-recurring charges of $38.0 million, FPA reported a loss
of $15.7 million or 72 cents per share.

25. Each of defendants Flam, Lizerbram and Lash included positive
statements in the February 27, 1997 press release:

Commenting on the results, Dr. Seth Flam, President and Chief Executive
Officer stated, "1996 was a year of

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significant achievement for FPA. During the year we successfully executed
our growth strategy by entering into new geographic regions. Through the
merger with Sterling Healthcare Group we now have operations in 25 states.
We remain optimistic about our long-term prospects and have built a solid
foundation for growth both internally and through strategic acquisitions."

Dr. Sol Lizerbram, Chairman added, "In 1996 we successfully attracted new
payors into the FPA network and will continue to build upon these
relationships as we expand into new regions across the country."

Steven Lash, Executive Vice President and Chief Financial Officer stated,
"We are pleased with the strong revenue and earnings growth achieved during
1996. This growth continues to be driven by HMO enrollment contributed from
new primary care physicians in the FPA network. At the end of 1996, the FPA
network consisted of over 4,400 primary care physicians providing
healthcare services to more than 623,000 HMO members."

26. On March 18, 1997, FPA announced the completion of its merger with
AHI Healthcare Systems, Inc. The announcement touted the merger in glowing
terms:

FPA MEDICAL MANAGEMENT, INC. (San Diego, CA) and AHI HEALTHCARE SYSTEMS,
INC. (Downey, CA) announced Monday the completion of their merger that will
significantly enhance FPA's primary care physician network.

The merger will add more than 200,000 HMO enrollees serviced through FPA's
affiliated physicians and expand FPA's primary care operations into three
new markets. Additionally, nine HMOs will fall into FPA's physician
network.

"This transaction with AHI advances FPA's position as the largest primary
care physician practice management company in the country," said Dr. Seth
Flam, FPA's president and chief executive officer. "We are proud to merge
with a company that shares our commitment to primary care and quality."

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<PAGE> 12
27. On March 31, 1997, FPA filed with the SEC its Annual Report on Form
10-K405, which reported the same 1996 fourth quarter and year results as the
Company's February 27, 1997 press release. The Form 10-K405 was executed by
defendants Flam, Lash, Lizerbram, Hassman and Ellis, among other. The results
reported to the SEC were accompanied by the following statement:

The following table presents financial information for the eight quarters
ended December 31, 1996. In the opinion of management, this information has
been prepared on the same basis as the audited consolidated financial
statements appearing elsewhere in this document and all necessary
adjustments, consisting only of normal recurring adjustments, have been
included in the amounts presented below to present fairly the quarterly
results when read in conjunction with the audited consolidated financial
statements of the Company and notes thereto.

28. On April 30, 1997, FPA announced that it had reached a global
capitation agreement with Physician Corporation of America:

FPA Medical Management, Inc. (Nasdaq: FPAM) announced today that it has
reached a global capitation agreement with Physician Corporation of America
(Nasdaq:PCAM) to service approximately 10,000 additional HMO members in
Florida. Effective May 1, 1997, this agreement will bring FPA's total
Florida enrollment to 120,024 as compared to 85,869 in June 1996.

In connection with the agreement, FPA will expand its physician network by
115 primary care physicians who provide services to PCA members in
Jacksonville, Orlando, Gainesville and Palm Beach areas.

29. Defendants Lizerbram and Flam touted the Physician Corporation of
America agreement in the press release:

Dr. Sol Lizerbram, Chairman of FPA Medical Management, Inc., stated, "We
are excited by the opportunity to expand our relationship with PCA. This
further demonstrates the confidence HMOs have in our quality programs and
systems."

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<PAGE> 13
Dr. Seth Flam, President and CEO, added, "This new agreement with PCA
will result in significant same store growth through our IPA affiliation growth
model, without the use of additional capital. This contract is expected to
result in an additional $10 million in annual revenue."

30. On the same day, April 30, 1997, FPA announced its first quarter
results for the 1997 fiscal year:

Fifth consecutive quarter of exceeding analysts' estimates

FPA Medical Management, Inc. (Nasdaq:FPAM) today announced revenues and
earnings for the first quarter ended March 31, 1997. Operating revenues for
the first quarter ended March 31, 1997 increased 114% to $223 million
compared to $104 million in the same period last year, including the
operations of AHI Healthcare Systems, Inc., recently merged into FPA,
accounted for as a pooling of interests. Net income for the first quarter
was $6.4 million or $0.20 per share (excluding a non-recurring charge of
$37 million related to costs associated with the acquisition of AHI
Healthcare Systems, Inc.) compared to net income of $1.4 million or $0.05
per share for the same period last year. Weighted average shares
outstanding were 32,288,183 and 25,814,913 for the first quarters of 1997
and 1996, respectively.

31. Defendants Lash, Lizerbram and Flam made positive representations in
the press release in connection with the results:

Commenting on the results, Steven M. Lash, Executive Vice President and
Chief Financial Officer stated, "We are pleased with our financial
performance in the first quarter. Strong HMO enrollment continues to drive
our growth. After the recent completed acquisition of AHI, we now have over
7,200 primary care physicians providing quality care to over 864,000 HMO
members as compared to 1,800 primary care physicians and 232,000 HMO
members for the same quarter last year. In addition, we continue to show
margin improvements based on the further integration of acquisitions as we
continue to reduce medical and

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administrative expenses. This operating leverage is reflected in the
reduction in our overall medical loss ratio of 71% for the first quarter
of 1997 compared to 72% for the same period last year."

Dr. Seth Flam, President and Chief Executive Officer, stated, "We continue
to realize strong revenue and earnings growth. During the quarter, we
showed same-store growth of 7% due to the successful integration of new
operations into the FPA network. Specifically, the integration and
consolidation of the previously owned Foundation Health Systems (NYSE:FHS)
clinics is ahead of plan."

Dr. Sol Lizerbram, Chairman, added, "FPA maintains strong relationships
with over 30 HMOs and continues to pursue new payor agreements. We are in
the process of expanding existing payor relationships into statewide
service contracts, and are exploring national payor agreements. Two new
global capitation agreements were signed this quarter with Humana
(NYSE:HUM) and Physician Corporation of America (Nasdaq:PCAM). These two
new contracts will add over 14,000 members in the state of Florida. In
addition, we believe Sterling's emergency room physician network will
enhance our ability to attract new payors and will enable us to penetrate
new markets."

32. On May 1, 1997, FPA announced that it had entered into a letter of
intent with Foundation Health Systems, Inc. ("FHS") to enter into long-term
global capitation provider agreements with FHS health plans nationwide,
predicting a closing in the fourth quarter of 1997:

FPA Medical Management, Inc. (NASDAQ:FPAM) announced yesterday that it has
signed a letter of intent with Foundation Health Systems, Inc. (NYSE:FHS) to
enter into long-term global capitation provider agreements with FHS health plans
nationwide. As part of this agreement, FHS health plans will accelerate the
execution of agreements with FPA to the fourth quarter of 1997. These global
capitation agreements were originally scheduled to be executed no later than the
fourth quarter of 1998.

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FHS health plans currently have approximately 3.1 million commercial,
Medicare and Medicaid HMO members in 15 states, seven of which FPA has
existing physician networks. FPA currently services approximately 340,000
FHS health plan members.

33. Defendants Flam and Lizerbram touted the intended agreements:

Dr. Seth Flam, President and Chief Executive Officer of FPA, stated,
"National contracts demonstrate the confidence that payors have in FPA's
ability to effectively manage their members while providing high quality
cost effective healthcare."

Dr. Sol Lizerbram, Chairman, stated, "Due to FPA's extensive provider
network, we are uniquely positioned to enter into national payor
agreements. This is a powerful tool to advance our same store growth in
existing markets while allowing us to enter into new markets with quality
HMOs. These national payor contracts will create strategic partnerships
resulting in long-term, predictable revenue for FPA."

34. On May 7, 1997, Credit Suisse First Boston initiated coverage of FPA
with a BUY rating.

35. On May 15, 1997, FPA filed with the SEC its Quarterly Report on Form
10-Q for the first fiscal quarter of 1997. The 10-Q, executed by defendants
Flam and Lash, reported the same results previously announced by the Company on
April 30, 1997 and contained the following statement:

In the opinion of management, this information has been prepared on the
same basis as the audited consolidated financial statements and all
necessary adjustments, consisting only of normal recurring adjustments
(unless otherwise noted), have been included in the amounts presented below
to present fairly the quarterly results when read in conjunction with the
audited consolidated financial statements of the Company and notes thereto.

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36. On May 21, 1997, FPA announced that it had signed an agreement with
PacifiCare Health Systems, Inc. to enter into ten-year capitated provider
agreements with PacifiCare and FHP health plans nationwide:

These agreements will enable PacifiCare/FHP and FPA to work together in
all mutual markets.

PacifiCare/FHP currently has approximately 4 million commercial and
Medicare members in 14 states, three in which FPA has existing physician
networks. FPA currently services 3% of PacifiCare/FHP members in
California, 6% in Arizona and 19% in Texas.

The new agreements are expected to permit growth in existing service
areas, and expansion into at least two new service areas by the end of
1997. In addition, PacifiCare/FHP and FPA will work collaboratively to
reduce redundant costs, enhance member satisfaction and expand quality
improvement programs.

37. Defendants Flam and Lizerbram touted the announced agreements:

Dr. Seth Flam, President and Chief Executive Officer of FPA, stated, "We
are proud that the country's largest health plans continue to demonstrate
their confidence in FPA. This strategic business relationship with
PacifiCare will expedite FPA's expansion into new geographic regions and
allow for steady revenue growth as contracts are converted to global
capitation."

Dr. Sol Lizerbram, Chairman, stated, "The goal of servicing a
critical mass of HMO membership in new markets is simplified with multiple
national payor agreements. These agreements enable us to expand into new
markets utilizing our physician affiliation medal."

38. On June 6, 1997, FPA announced a definitive agreement to acquire
HealthCap Inc.:

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<PAGE> 17
FPA MEDICAL MANAGEMENT, INC. (Nasdaq: FPAM) AND HEALTHCAP, INC. announced
that they have entered into a definitive agreement pursuant to which FPA
Medical Management will acquire HealthCap in a stock-for-stock merger.

Founded in 1992, HealthCap, a San Diego based company, provides services
to more than 297,000 capitated OB/GYN enrollees and 50,000 professional
capitated enrollees in five states. As of April 30, 1997, HealthCap
provided services through a network of approximately 1,540 primary care
physicians and 570 OB/GYN physicians.

The merger of these two companies will expand FPA's services to Nevada and
Missouri and is expected to increase FPA's 1997 revenues on a pro forma
basis to more than $1 billion. The merger will be accounted for as a
pooling of interests and is expected to close at the end of June 1997.

39. Defendants Flam and Lizerbram touted the HealthCap acquisition:

Dr. Seth Flam, President and Chief Executive Officer of FPA, stated, "This
transaction enhances our primary care operating model and is responsive to
the direct access' OB/GYN programs marketed by some of our HMO payors."

Dr. Sol Lizerbram, Chairman of FPA, stated, "The expansion of our
network services will continue to further our goal of obtaining global
capitation arrangements and allows FPA to work with four new HMO payors."

40. In connection with the HealthCap acquisition, defendant Lash predicted
"This transaction will be immediately positive to earnings through
consolidation of corporate and market operating expenses."

41. On June 20, 1997, following FPA's execution of a $225 million
revolving credit facility and $50 million term loan,

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Standard & Poor's ("S&P) rated the credit facility a B+ and assessed
FPA's outlook to be "stable".

42. On July 2, 1997, FPA announced an agreement to merge with Health
Partners, Inc.:

FPA Medical Management, Inc. (Nasdaq: FPAM) and Health Partners, Inc.
today announced that they have entered into a definitive merger agreement
pursuant to which FPA Medical Management will acquire Health Partners in
a stock-for-stock merger. The closing of the merger is expected to occur
late in the third quarter of 1997 and is subject to the receipt of
certain regulatory approvals and satisfaction of certain customary
conditions.

Health Partners currently has [sic] FPA's primary care delivery model to
Ohio, Kentucky, Washington DC and Virginia and serve as a platform for
significant growth in New York, New Jersey and Texas. Health Partners is
the largest physician practice management organization in New York with
over 103,000 HMO members.

In addition, Oxford Health Plans, a shareholder of Health Partners and
its largest payor, has agreed to enter into a 10-year strategic agreement
with FPA under which FPA will provide physician services to Oxford's
members in existing markets and which provides a framework for expansion
to new markets. FPA and Oxford will also work collaboratively on
continuing to enhance member satisfaction and have agreed to enter into a
Memorandum of Understanding with FPA calling for mutual cooperation in
Wellpoint's markets, focusing initially on California, Arizona and
Nevada.

The Health Partners transaction, which is expected to add approximately
$160 million to FPA's 1997 proforma revenue and is valued at
approximately $115 million, is subject to adjustment in the event that
FPA Medical Management's average stock price is less than $18.00 or
greater than $22.00. The merger will be accounted for as pooling of
interests and is expected to close in the third quarter of 1997.

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43. Defendants Lizerbram and Flam touted the benefits of the Health
Partners merger:

Dr. Sol Lizerbram, Chairman of FPA stated, "This transaction allows FPA to
implement our previously announced strategy of servicing HMO members in the
greater New York metropolitan area. We will incorporate FPA's national
payor agreements into Health Partners' network of physician providers,
which is the largest network of any physician practice management company
in the New York region."

Dr. Seth Flam, President and Chief Executive Officer of FPA stated,
"Significant synergies will be achieved, making this transaction
immediately accretive. Such synergies include the consolidation of services
with FPA's Philadelphia and San Antonio regional offices as well as
corporate services. I am also pleased to announce that Charles Berg, Health
Partners' current CEO, will play an important role at FPA as President of
our Eastern Region."

44. On July 9, 1997, FPA announced that it had signed new seven-year
agreements with Healthsource, Inc.:

FPA Medical Management, Inc. (Nasdaq: FPAM) announced today the signing of
new seven year agreements with Healthsource, Inc. (NYSE: HS) to service HMO
members in three additional states.

The agreements, expected to begin September 1, 1997, will allow FPA to
service members in the states of South Carolina, New Jersey and Texas.
Healthsource currently has over 188,000 HMO members in these states.

The agreements, will provide for global capitation in the states of South
Carolina and New Jersey and professional capitation in Texas. All
agreements are subject to receiving appropriate regulatory approvals.

45. Defendants Flam and Lizerbram touted the alleged benefits of
Healthsource contracts:

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Dr. Seth Flam, President and Chief Executive Officer of FPA, stated, "This
agreement will expedite FPA's same store growth efforts in our existing
service areas and continue to increase revenues with the addition of
global capitation arrangements."

Dr. Sol Lizerbram, Chairman of FPA, stated, "FPA continues to expand our
payor relationships with regional and national HMOs such as Healthsource.
These relationships advance our mission of allowing physicians to practice
quality medicine in the managed care environment."

46. On July 30, 1997, FPA announced record revenues and earnings for the
second fiscal quarter of 1997:

FPA Medical Management, Inc. (Nasdaq: FPAM) today announced record revenues
and earnings for the second quarter ended June 30, 1997.

Operating revenues for the second quarter ended June 30, 1997 increased
92.3% to $244.5 million compared to $127.2 million in the same period last
year, including the operations of HealthCap, Inc., recently merged into
FPA, accounted for as a pooling of interests. Net income for the second
quarter was $8.1 million or $0.24 per share (excluding a non-recurring
charge of $5.4 million related to costs associated with the merger of
HealthCap, Inc.) compared to net loss of $4.6 million or $0.16 per share
for the same period last year. Weighted average shares outstanding were
34,259,107 and 28,317,866 for the second quarters of 1997 and 1996,
respectively.

For the six months ended June 30, 1997, operating revenue increased 100% to
$475.6 million compared to $237.2 million in the same period last year. Net
income for the first six months of 1997 was $11.0 million or $0.32 per
share (excluding non-recurring charges associated with the HealthCap, Inc.
and AHI Healthcare Systems, Inc. mergers) compared to a net loss of $3.6
million or $0.13 per share for the same period last year. Weighted average
shares outstanding were 34,510,257 and 27,660,452 for the first six months
periods of 1997 and 1996, respectively.

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47. Defendants Lash, Flam and Lizerbram commented on the results in the
press release:

Commenting on the results, Steven M. Lash, Executive Vice President and
Chief Financial Officer stated, "Our record results for the second quarter
are due to better than expected performance in Texas and Florida, the
recently acquired care centers performing above pro-forma, and all other
markets performing as planned. In addition, FPA's G&A expenses continued to
decrease as a percentage of sales as we further integrate operations of our
previously acquired networks."

Dr. Seth Flam, President and Chief Executive Officer, stated, "FPA
continues to perform above expectations as our integration plans provide
positive sequential results. We believe this trend will continue and remain
optimistic for the balance of the year."

48. On August 1, 1997, S&P upgraded its assessment of the FPA's outlook to
"positive" from "stable", basing the upgrade on:

The recently announced agreement to merge with Health Partners Inc. -- and
the mergers and acquisitions of HealthCap Inc., AHI Healthcare Systems
Inc., Foundation Health's Physician Groups, and Healthcare Centers and
Sterling Healthcare Group over the last year -- have greatly increased the
number of physicians under management, broadened the company's business
profile, and improved its geographic diversity. Furthermore, the company
has signed five national contracts with large health plans, providing
access to more than 12 million HMO members nationwide.

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49. On August 5, 1997, FPA announced agreements with Prudential
HealthCare and Carolina Health Care Group:

FPA Medical Management, Inc. (Nasdaq: FPAM) announced today that it has
agreed to enter into agreements with Prudential HealthCare and the Carolina
Health Care Group (CHCG), one of the largest providers in Prudential
HealthCare - Charlotte's network. Under the proposed terms of the
agreements, FPA will acquire and provide administrative services to CHCG
and enter into a ten-year, non-exclusive, global capitation provider
agreement with Prudential HealthCare North Carolina.

CHCG is comprised of 15 physicians in four clinic locations in Charlotte,
North Carolina, where it services approximately 26,500 Prudential HMO
members as well as approximately 7,000 POS and Medicaid members.

50. Defendant Lash touted the benefits of the arrangement:

Steven Lash, Executive Vice President and Chief Financial Officer of FPA
Medical Management, Inc. stated, "This transaction will have a significant
impact on our North Carolina market as our HMO membership in that region
will almost double. The agreement with Prudential is non-exclusive which
will be positive for CHCG as it allows FPA to begin initiating growth for
that medical group as we begin contracting with additional HMO payors,
including our national payor agreements."

5.1 On August 14, 1997, the Company filed with the SEC its Quarterly
Report on Form 10-Q for the second fiscal quarter of 1997. The 10-Q, signed by
defendants Flam and Lash, reported the same results previously announced by the
Company on July 30, 1997 and contained the following statement:

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when read in conjunction with the audited consolidated financial statements
of the Company and notes thereto.

52. On September 29, 1997, FPA announced that it had signed a management
service agreement with NYLCare Health Plans of New Jersey, Inc.:

FPA MEDICAL MANAGEMENT, INC. (Nasdaq: FPAM), announced today the signing of
a management service agreement with NYLCare Health Plans of New Jersey,
Inc. (NYLCare Atlantic). NYLCare currently services approximately 55,000
HMO enrollees in the state of New Jersey where FPA manages independent
practice associations (IPAs) consisting of approximately 900 primary care
physicians. The agreement, expected to begin in December, will allow FPA's
affiliated physicians to provide care to NYLCare enrollees in Southern New
Jersey. The agreement with NYLCare covers both inpatient and outpatient
services.

53. Defendant Lizerbram touted the alleged benefits of the contract:

Dr. Sol Lizerbram, Chairman of FPA Medical Management, Inc. stated, "Adding
a new HMO payor in the New Jersey region continues to strengthen our same
store growth for our East Coast operations. We look forward to expanding
our relationship with NYLCare to service both the southern and northern
regions of New Jersey."

54. On October 6, 1997, FPA announced that it had acquired Axminster
Medical Group in a stock-for-stock merger on September 30, 1997:

Axminster Medical Group, FPA's first owned medical group in the Los Angeles
area, presently employs 21 primary care physicians in 5 healthcare centers
located in the cities of Hawthorne, Inglewood, and Los Angeles. Axminster
currently provides services to more than 17,000 HMO enrollees.

55. Defendant Hassman touted the alleged benefits of the combination:

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Dr. Howard Hassman, Executive Vice President of Corporate Development of
FPA, stated, "We are excited to expand FPA's Los Angeles operations by
adding this quality medical group. This transaction is our first
significant expansion in the Los Angeles area since our iniiees."

56. On October 14, 1997, FPA announced the completion of its merger with
Health Partners, Inc.:

FPA Medical Management, Inc. (Nasdaq: FPAM) announced today that its merger
with Health Partners, Inc. was completed on Monday, October 13, 1997.

FPA issued 5,227,273 shares of its common stock in exchange for all the
outstanding capital stock of Health Partners and for cancellation of
outstanding Health Partners stock options. Based on FPA's closing price of
$35.4375 on October 10, 1997, the aggregate merger consideration value is
approximately $185 million.

57. Defendant Lash touted the alleged benefits of the merger:

Steven M. Lash, FPA's Executive Vice President and Chief Financial Officer,
commented, "We are pleased to finalize our merger with Health Partners and
believe the Health Partners network of quality physicians, and our national
payor agreements, creates a dynamic opportunity to service HMO members in
the New York metropolitan area. Based on the final terms of the agreement,
the transaction will provide immediate accretion to FPA shareholders."

58. On October 30, 1997, FPA announced record earnings for the third
fiscal quarter of 1997:

FPA Medical Management, Inc. (Nasdaq: FPAM) today announced record earnings
for the third quarter ended September 30, 1997.

Operating revenue for the third quarter ended September 30, 1997 increased
45% to $240.6 million compared to $165.5 million in the same period last
year. Net income for the third quarter was $10.6 million or $0.29 per
share compared to a net loss of $5.4 million or $0.18 per
<PAGE> 25
share for the same period last year. Weighted average shares outstanding
were 36,552,756 and 30,092,098 for the third quarters of 1997 and 1996,
respectively.

For the nine months ended September 30, 1997, operating revenue increased
76% to $723.8 million compared to $410.5 million in the same period last
year. Net loss, including merger, restructuring and other unusual charges,
for the first nine months of 1997 was $2.8 million or $0.08 million per
share compared to a net loss, including merger, restructuring and other
unusual charges, of $7.6 million or $0.26 per share for the same period
last year. Weighted average shares outstanding were 35,676,985 and
28,933,417 for the nine months ended September 30, 1997 and 1996,
respectively.

FPA also announced the signing of a letter of intent for a national payor
relationship with NYLCare Health Plans, Inc. NYLCare, the managed care
subsidiary of New York Life, provides healthcare coverage to more than 1.3
million HMO members in 10 states.

59. Defendants Lash, Flam and Lizerbram commented on the results in the
press release:

Commenting on the results, Steven M. Lash, Executive Vice President and
Chief Financial Officer stated, "We are pleased to report record earnings
for the third quarter. FPA's overall medical loss ratio in the third
quarter of 1997 was 70.4%. This represents the fourth sequential quarter of
MLR improvement. In addition, our G&A expenses continued to decrease as a
percentage of revenues which can be attributed to the continued
consolidation of acquisitions, synergy achievements and improvements in
productivity."

Dr. Seth Flam, President and Chief Executive Officer, stated, "Subsequent
to the quarter end, we announced the completion of the acquisition of
Health Partners. This acquisition adds over 100,000 HMO members to our
national membership and will provide significant opportunities to expand
out payor relationships in the Northeast region. Going forward, our
business fundamentals remain strong, and we are strategically positioned to
continue our

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strong internal and external growth through 1997 and beyond."

Dr. Sol Lizerbram, Chairman, added, "FPA continues to execute its national
payor agreements strategy. We are proud of the new relationship we have
established with NYLCare Health Plans which brings us to a total of six
national agreements. These new relationships enable us to expand into new
geographic markets, increase enrollment, and fuel our same-store growth."

60. On November 14, 1997, FPA filed with the SEC its Quarterly Report on
Form 10-Q for the third fiscal quarter of 1997. The 10-Q, executed by
defendants Flam and Lash, reported the results previously announced by the
Company on October 30, 1997, and contained the following statement:

61. On November 24, 1997, FPA announced its acquisition of Avanti Health
Systems of Texas, Inc.:

FPA Medical Management, Inc. (Nasdaq: FPAM) announced today that it has
entered into a definitive agreement pursuant to which FPA Medical
Management will acquire Avanti Health Systems of Texas, Inc.

Avanti manages University Medical Group ("UMG"), a premier medical group in
Texas that currently provides services to more than 50,000 NYLCare Health
Plans HMO members in Houston and Dallas. UMG is one of the largest primary
care medical groups in Houston and Dallas, comprising a network of more
than 60 primary care physicians located in 20 healthcare centers. Following
this transaction, FPA's Texas operations will provide

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services to more than 165,00 HMO members. In connection with this
acquisition, FPA and NYLCare Health Plans, Inc. expect to enter into a
national provider agreement that would permit FPA and its affiliates to
receive global capitation for NYLCare members.

62. Defendant Lash touted the alleged benefits of the acquisition:

Steven M. Lash, Executive Vice President and Chief Financial Officer of
FPA, stated, "We are pleased to add the University Medical Group to our
existing network of quality physicians in Texas. This transaction will
serve as a strong platform for continued growth in our Houston and Dallas
markets. We look forward to expanding the number of HMOs whose members
University Medical Group physicians can service, including our eight
current HMO payors in the region."

63. On December 8, 1997, FPA announced that it had executed letters of
intent to enter into agreements with Prudential Health Care Plan of Georgia,
Inc. and Meridian Medical Group:

FPA Medical Management, Inc. (Nasdaq: FPAM) announced today that it has
agreed to enter into agreements with Prudential Health Care Plan of
Georgia, Inc. and the Meridian Medical Group. Under the proposed terms of
the agreements, FPA will acquire and provide administrative services to
Meridian Medical Group and enter into a ten-year, non-exclusive, global
capitation provider agreement with Prudential Health Care Plan of Georgia.

Meridian Medical Group, one of the oldest and largest primary care groups
in Atlanta, is comprised of 67 physicians in nine locations in Atlanta,
Georgia, where it services approximately 70,000 Prudential HMO members. FPA
currently contracts with approximately 10,000 members in Georgia through a
network of approximately 55 primary care physicians.

64. Defendant Lash touted the arrangements:

Steven Lash, Executive Vice President and Chief Financial Officer of FPA
Medical Management, Inc. stated, "We look

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forward to adding the Meridian Medical Group to our Georgia operations
which will bring our HMO membership in that region to approximately 80,000.
Meridian Medical Group will benefit significantly from the long-term
relationship FPA has entered into with Prudential HealthCare, as well as
FPA's ability to accelerate growth for that medical group through
additional HMO payors.

65. On December 10, 1997, FPA issued a statement of additional
reassurance to its investors following inquiries expressing concerns about the
possible impact on FPA of troubles which had become public at Oxford Health
Plans, Inc.:

FPA acquired Health Partners, a leading northeast physician practice
management company, in October 1997. The company stated that out of 1.2
million FPA covered lives in its networks, approximately 95,000 commercial,
Medicare and Medicaid Oxford enrollees are served on global capitation or a
shared risk basis through Health Partners. Health Partners manages medical
groups and physician networks in Brooklyn and Manhattan, two of the highest
Medicare reimbursement counties in the New York region.

FPA reiterated that Oxford is current with respect to all of its
prepayments to Health Partners. The company also stated that Health
Partners pays a significant number of its own claims and has developed a
customized process with Oxford to regularly receive paid claims information
from Oxford for analysis and inclusion in Health Partners' financial
statements. This process has been in place and effectively used for the
past four years.

66. Defendant Flam personally reassured FPA investors in this statement:

Dr. Seth Flam, President and Chief Executive Officer of FPA Medical
Management, Inc. stated, "We are current with

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<PAGE> 29
respect to all prepaid revenue associated with our Oxford enrollees, and we
firmly believe we have the systems in place to safeguard against exposure
to the issues Oxford has addressed in the market."

67. On January 8, 1998, FPA again gave its investors warm assurances,
following alarming developments in the healthcare sector:

FPA Medical Management, Inc. (Nasdaq: FPAM) today commented on the strength
of its California-based business in response to investor concerns following
a recent announcement by another physician practice management services
provider, related to market and industry conditions. FPA Medical Management
stated that it has a strong 10-year history in California and its current
operations are performing as expected.

* * *

FPA reiterated the following issues regarding its California operations:

-- FPA currently has no global capitation risk arrangements in California.

-- FPA has limited its Universal Open Access contract arrangements to one
plan, and is successfully servicing approximately 18,000 lives, or less
than 6% of FPA's total California membership.

-- FPA maintains subcapitation arrangements with specialists.

-- FPA operates Hospitalist programs in most California markets.

-- All California transactions, including the most recent, have been fully
integrated, with the last significant transaction completed 9 months ago.

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<PAGE> 30
68. Defendant Lash personally reassured investors in this announcement:

Steven M. Lash, Executive Vice President and Chief Financial Officer of FPA
Medical Management, Inc., stated, "We have properly structured our
California-based operations and continue to manage this part of our network
effectively."

Steven Lash also stated, "We remain comfortable with analysts' earnings
estimates for the fourth quarter of 1997 and 1998 as well as same market
growth assumptions. We expect to exceed analysts' high range revenue
estimates for the 1997 fourth quarter."

69. On January 22, 1998, FPA announced that it had entered into a
definitive merger agreement to acquire Orange Coast Managed Care Services, Inc.
and St. Joseph Medical Corporation:

FPA Medical Management, Inc. (Nasdaq: FPAM) announced today that it has
entered into a definitive merger agreement to acquire Orange Coast Managed
Care Services, Inc. and St. Joseph Medical Corporation in a stock-for-stock
transaction. The transaction is expected to add approximately 120,000 HMO
members which are under professional capitation arrangements and will be
added to FPA's existing California operations.

Orange Coast Managed Care Services, Inc. manages St. Joseph Medical
Corporation which is comprised of the St. Joseph IPA with approximately 200
primary care and 370 specialty care physicians, and the St. Joseph Medical
Group with 50 employed primary care physicians practicing in nine
locations.

70. Defendant Lash touted the alleged benefits of the combination:

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<PAGE> 31
of our California operations. Orange Coast is strategically located in the
Orange County, Southern California market, which has a strong managed care
presence, and due to its close proximity to our San Diego operations, will
allow for a seamless integration and synergies."

71. On March 6, 1998, FPA announced record results for the fourth fiscal
quarter of 1997 and for the year:

FPA Medical Management, Inc. (Nasdaq: FPAM) today reported financial
results for the fourth quarter and year ended December 31, 1997).

FPA's operating revenues for the fourth quarter ended December 31, 1997
increased 49.4% to $323.0 million compared to $216.2 million for the same
period last year. Net income for the fourth quarter was $12.9 million or
$0.30 per share (assuming a 38% tax rate and excluding non-recurring
charges of $17.0 million related to the acquisition of Health Partners and
certain restructuring charges), compared to a net loss of $9.4 million or
$0.27 per share for the same period last year. Including the charges, the
Company reported net income of $7.2 million (which includes a year-to-date
tax benefit of $3.5 million) or $0.17 per share for the fourth quarter
ended December 31, 1997. Weighted average shares outstanding were
43,594,548 and 35,542,571 for the fourth quarters of 1997 and 1996,
respectively.

For the year ended December 31, 1997, operating revenue increased 71.9% to
$1.2 billion compared to $678.5 million for the same period last year.
Excluding non-recurring charges related to transaction costs associated
with several acquisitions, net income for the year was $25.9 million or
$0.61 per share on weighted average shares outstanding of 42,600,468
compared to a net loss of $26.1 million or $0.80 per share on 32,639,412
weighted average shares outstanding for the same period in the prior year.
Including non-recurring charges of $55.0 million, FPA reported a loss of
$11.8 million or $0.29 per share for the year.

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<PAGE> 32
72. Defendants Flam, Lizerbram and Lash commented on the results in the
press release:

Commenting on the results, Dr. Seth Flam, President and Chief Executive
Officer, stated, "FPA experienced significant profitable growth as our
operations expanded to 28 states, our primary care physician network
increased to more than 7,600 and our managed care membership topped 1
million. We are proud of our ability to successfully integrate seven
acquisitions and begin reducing their medical loss ratios and improving
their financial performance while our existing operations also continued to
improve and expand."

Dr. Sol Lizerbram, Chairman, added, "Our ability to obtain several national
payor relationships in 1997 provided the foundation for FPA's continued
positive same-store growth and accelerated our entry into new markets. In
the fourth quarter of 1997, FPA began servicing Aetna U.S. Healthcare
members in New Jersey and in the first quarter of 1998 began servicing
their members in New York.

In addition, we expanded our relationship with Foundation Health Systems
early in 1998 as we began servicing their members in the Northeast."

Steven Lash, Executive Vice President and Chief Financial Officer, stated,
"FPA's positive year end 1997 and fourth quarter financial results were due
to our ability to successfully implement our medical management
technologies and leverage our acquired service center operations. This has
resulted in a decrease in our general and administrative expenses when
reported as a percentage of revenue and a reduction in overall medical loss
ratio."

73. On March 26, 1998, FPA announced a major management shakeup without
giving the slightest acknowledgement that it was in trouble, couching the
entire announcement in glowing praise for all concerned, and containing
admonitions by Flam, Dresnick, Lash and

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Lizerbram that business was performing according to previous optimistic
announcements:

The Board of Directors of FPA Medical Management Inc. (Nasdaq: FPAM)
elected Stephen J. Dresnick as President and Chief Executive Officer
effective immediately. Dr. Dresnick served as Vice Chairman since October
1996 when the publicly traded company (Sterling Healthcare Group, Inc.) he
founded merged with FPA.

Dresnick's appointment followed the resignation of Dr. Seth Flam, one of
the founders of the Company, who is leaving to pursue other business
interests. "I am an entrepreneur at heart," said Dr. Flam. "The Company has
grown dramatically since its inception and has established a leadership
position among physician practice management companies. I am confident that
Steve Dresnick has the ability to manage the Company into the future."

Dr. Dresnick stated, "I have a tremendous amount of respect for Dr. Flam
and what he has helped create. Having been acquisition driven over the past
few years, it is important that the Company adjust its focus to place
greater emphasis on infrastructure so that we will be able to expand with a
greater reliance on internal or same market growth. Our first priority will
be to assess all operating divisions and their contribution to profit and
cash flow and develop plans to achieve improvements in these areas.
Acquisitions will be viewed for their strategic value and their return on
capital. We will evaluate debt financing opportunities in order to support
such acquisitions."

The Company also announced that Douglas Kerner, who was recently hired as
Vice President-Treasurer, was named Acting Chief Financial Officer. Steven
Lash, who has been Executive Vice President and Chief Financial Officer
since 1994, will remain as Executive Vice President. Prior to joining FPA;
Mr. Kerner served as Vice President and Treasurer of Total Petroleum (North
America) Ltd., a publicly traded company which had annual revenues in
excess of $2.5 billion. "With the growth that we have experienced this past
year and the complexity of our business, it has become difficult to provide
leadership

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and individual attention to both treasury and merger and acquisition
activity," said Steven Lash. "Doug was hired because of his experience with
cash management, capital related activities and investor relations."

Steven Lash also stated, "Our business continues to track according to
expectations and we remain encouraged by the first quarter's operating and
financial performance."

Dr. Sol Lizerbram, who remains as Chairman of the Board and will continue
to develop national payer relationships and affiliations with hospital
integrated delivery systems, stated, "I am excited about the prospects for
the Company in the coming years. Steve Dresnick brings extensive public
company experience and management skills and I look forward to his
leadership."

The Company also announced that Dr. Herbert Wertheim, the former Vice
Chairman of the Board of Sterling Healthcare Group, Inc. and a member of
FPA's Board since 1996, was elected as Vice Chairman of the Board. Dr.
Wertheim brings numerous years of public company experience and more than
30 years of computer and healthcare systems knowledge to the Company.

74. On March 31, 1998, the Company filed with the SEC its Annual Report on
Form 10-K405 for the fiscal year ended December 31, 1997. The Form 10-K405
reported the 1997 fourth quarter and year results previously announced by the
Company on March 6, 1998. The 10-K405, executed by defendants Dresnick,
Lizerbram, Ellis and Hassman, among others, contained the statement:

In the opinion of management, this information has been prepared on the
same basis as the audited consolidated financial statements appearing
elsewhere in this report and all necessary adjustments, consisting only of
normal recurring adjustments, have been included in the amounts presented
below to present fairly the quarterly results when read in conjunction with
the audited consolidated financial statements of the Company and notes
thereto.

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<PAGE> 35
75. On April 8, 1998, FPA announced that it had agreed to assume
operations of 23 Humana Inc. health centers:

FPA MEDICAL MANAGEMENT, INC. (Nasdaq: FPAM) announced today that it has
reached an agreement with Humana Inc. in which FPA will assume operations
of 23 Humana health centers in four markets and will provide healthcare
services to Humana members under a 10-year provider agreement.

Under the proposed agreement FPA would significantly expand its southeast
operations as it begins operating Humana's health centers in Tampa, Orlando
and South Florida, on a non-exclusive basis, which will allow the centers
to begin servicing additional HMO members. FPA will also assume the
operations of Humana's health centers in Kansas City, which will be managed
out of FPA's Texas operations center. The health centers in Florida and
Texas consist of 135 physicians providing services to approximately 90,000
Humana members.

* * *

Under this proposed agreement, FPA will not assume claims expense for
services prior to the effective date, and will require minimal capital as
only the fixed assets (equipment) of the healthcare centers will be
purchased. FPA expects this agreement, which is expected to be effective on
or before June 30, 1998, to add approximately $100 million in revenue for
1998.

76. Defendant Dresnick touted the alleged benefits of the agreement:

"We are pleased that Humana has the confidence in our abilities to provide
ongoing quality care to their patients," stated Stephen J. Dresnick, M.D.,
President and Chief Executive Officer of FPA. "The integration of these
centers into our existing delivery system, combined with our significant
presence in Florida, will allow Humana members enhanced access to FPA's
physician network."

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<PAGE> 36
77. On April 13, 1998, S&P downgraded its assessment of FPA's outlook to
"stable" from positive, stating:

The outlook revision reflects the diminished likelihood that the company
will be upgraded in the next several years due to the company posting
weaker operating results and higher debt levels than Standard & Poor's
previously expected.

78. On May 14, 1998, Riley Capital Research suggested in a "booster-shot"
press release touting the charms of Advanced Health Corporation, a competitor
of FPA, that FPA, together with certain other competitors of Advanced, suffered
operational problems which Riley believed could be attributed to deficient
business models.

THE REVELATIONS OF MAY 15, 1998

79. On May 15, 1998, without the slightest concrete warning, FPA stunned
the market with the release of its results for the first fiscal quarter of 1998
and a concurrent announcement of massive write downs and charges to come in the
second fiscal quarter of 1998:

May 15, 1998--FPA Medical Management, Inc. (Nasdaq:FPAM) today reported
financial results for the three months ended March 31, 1998.

FPA's operating revenue for the first quarter ended March 31, 1998
increased 33.0% to $392.2 million compared to $294.9 million for the same
period last year. Earnings before interest, taxes, depreciation,
amortization and one-time charges (EBITDA) increased 1.5% to $15.9 million
as compared to $15.7 million for the same period last year. EBITDA
decreased 53.9% from $34.5 million reported for the fourth quarter of 1997.
The fourth quarter 1997 EBITDA included approximately $15 million related
to the recognition of excess reserves for incurred but not reported medical
claims (IBNR) based upon the Company's year end audit.

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<PAGE> 37
Net income for the first quarter was $449,000 or $0.01 per share (assuming
a 38% tax rate and excluding non-recurring charges of $7.6 million related
to the acquisition of St. Joseph Medical Corporation and $7.9 million
related to executive severance), compared to a net income of $2.6 million
or $0.06 per share for the same period last year (excluding one-time merger
and restructuring charges of $36.8 million). Including the charges of
$15.5 million, the Company reported a net loss of $9.1 million or $0.20
per share for the three months ended March 31, 1998 compared to a net loss
of $24.5 million or $0.60 per share for the same period in 1997.

First quarter earnings were negatively impacted by a 45.5% increase in
interest expense to $6.4 million from $4.4 million in 1997 due to
increased borrowings under the Company's credit facility. Depreciation and
amortization also increased 22.0% to $8.7 million from $7.1 million in
1997. The combined effect of increased interest, depreciation and
amortization expenses resulted in a decrease in pre-tax income of $3.6
million or $0.08 per share (after tax) as compared to 1997. In addition,
earnings per share were negatively impacted by a 10% increase in basic
shares outstanding. Both 1998 and 1997 financial results have been
restated to reflect pooling of interests transactions.

"While I am disappointed in the first quarter results, I am encouraged by
the strength in most of our operations," stated Stephen J. Dresnick, MD,
FACEP, who was elected President and Chief Executive Officer of FPA on
March 25, 1998. The Company stated that management was completing the
assessment of all regional operations and their respective contribution to
operational results. As a result of this assessment, the Company also
stated that in the second quarter of 1998 it anticipates recording a
pre-tax charge for one-time non-recurring charges of up to approximately
$200 million, which are expected to consist of the following items:
approximately $125 million representing goodwill impairment; an
approximately $40 million write-down of shared risk and other receivables;
and approximately $35 million for additional severance payments,
anticipated office consolidation and other miscellaneous charges. Based
upon the Company's current assessment, management anticipates no
additional restructuring charges in 1998.

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<PAGE> 38
The Company's Sacramento and Arizona (Thomas Davis Medical Centers)
regional operations incurred a pre-tax loss of approximately $5.0 million
that negatively impacted first quarter results. The Company is
aggressively working towards solutions in these markets and is committed
to either achieving profitability or existing those markets.

Douglas Kerner, Acting Chief Financial Officer, added, "We have launched a
major internal improvement program throughout the entire Company to
improve profitability and cash flow. Steps taken to date include a freeze
on hiring and capital spending, a workforce reduction and establishing
more effective procedures to control overhead expenses. We estimate these
steps, when fully implemented by the fourth quarter, should reduce general
and administrative expenses by approximately $25 million on an annualized
basis." The Company also reported that it is in the process of closing its
Long Beach, California facility, consolidating its credentialing
department to Miami, Florida and aggressively pursuing other office
consolidations and closures. In addition, the Company reported that the
anticipated write-down of goodwill is expected to result in reduced
amortization charges of approximately $5 million on an annualized basis.

Dr. Dresnick stated, "We continue to develop plans to achieve operational
improvements, including an aggressive claims audit and recovery process
where claims are paid on behalf of FPA by third parties. I believe that
these overhead reductions coupled with our increased focus on medical cost
management initiatives should result in substantially improved financial
results in the second half of 1998."

80. The foregoing statements of the Company and the Individual Defendants
appearing in the section of this Complaint entitled "Substantive
Allegations" were false and misleading when they were made because
defendants knew, or recklessly disregarded, that:

(a) FPA was embarked on a program of uncontrolled expansion;

Page 38
<PAGE> 39
(b) FPA lacked internal controls and information systems adequate to form
an accurate picture of the true financial condition of the Company,
particularly with respect to shared risk and other receivables;

(c) at the time of the acquisitions described above, as FPA was engaged in
making the acquisitions, (i) each such acquired company had different
accounting and information systems for accounting for receivables, (ii)
although these acquisitions would have an immediately accretive effect on the
Company's earnings, that the company lacked sufficient infrastructure and
accounting systems to digest these acquisitions (iii) that, inevitably, there
would be a raft of purportedly one-time charges related to the consolidation of
these acquisitions, and (iv) that such charges would be material.

PLAINTIFF AND THE MEMBERS OF THE CLASS
--------------------------------------
RELIED ON THE INTEGRITY OF THE MARKET
-------------------------------------

81. Plaintiff and the members of the Class relied upon the integrity of
the market for FPA common stock, in that the market price for the stock was the
product of the dissemination of truthful and accurate financial information on
the Company.

82. Plaintiff and the Class are entitled to the presumption of reliance
established by the fraud-on-the-market doctrine. That doctrine is applicable in
this action because, among other things:

(a) FPA met the requirements for listing, and was listed, on the NASDAQ
National Market System, a highly efficient public market;

Page 39
<PAGE> 40
(b) As a regulated issuer, the Company filed periodic public reports with
the SEC before and during the Class Period;

(c) The Company was actively followed by institutional investors and
personnel from a number of major brokerage firms who possessed significant
expertise in valuing securities and who disseminated publicly disclosed
information concerning the Company to other participants in the market;

(d) Among other material information, the market price of FPA securities
reflected the representations made by defendants in their SEC filings and other
public statements;

(e) Plaintiff and the other members of the Class purchased FPA securities
in reliance upon the integrity of the market and the market price for those
securities; and

(f) Plaintiff and the other members of the Class purchased FPA securities
without knowledge of the omitted and misrepresented facts alleged herein.

83. By reason of the foregoing, plaintiff and the other members of the
Class are entitled to a presumption of reliance for the purpose of class
certification as well as for ultimate proof of their claims on their merits.

DEFENDANTS' MISREPRESENTATIONS AND OMISSIONS CAUSED DAMAGE TO
PLAINTIFF AND THE MEMBERS OF THE CLASS

84. The material misrepresentations and omissions alleged herein directly
and proximately caused the damages sustained by plaintiff and other members of
the Class. During the Class Period FPA common stock traded as high as $38-1/8
per share. As a result

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<PAGE> 41
of the revelations alleged herein, the value of these shares has dropped
precipitously.

36. As described herein; during the Class Period, defendants made or caused to
be made a series of false statements concerning the Company's business
operations and prospects and failed to disclose material information concerning
the same. These material misstatements and omissions had the cause and effect of
creating an unrealistically positive assessment of FPA, its business and its
prospects in the market, thus causing the Company's securities to be overvalued
and artificially inflated at all relevant times.

85. Defendants' false portrayal of FPA, its business operations and
prospects during the Class Period resulted in plaintiff and other members of
the Class purchasing the Company's securities at market prices significantly in
excess of the actual value of those securities. Plaintiff and other members of
the Class would not have purchased the Company's securities at the market
prices which prevailed during the Class Period had they been aware of the true
facts concerning the Company's business operations and prospects.

DEFENDANTS' MISREPRESENTATIONS AND OMISSIONS
WERE MADE WITH SCIENTER

86. Defendants have now admitted facts that demonstrate that their
representations during the Class Period were contradicted by facts they either
knew or, at a bare minimum, recklessly failed to know. Each of the facts that
defendants now concede either was or should have been known to them before
they issued the false and misleading press releases and quarterly SEC filings
alleged above.

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<PAGE> 42
87. Specifically, each of the defendants either knew or recklessly
disregarded that:

(a) FPA was embarked on a program of uncontrolled expansion;

(b) FPA lacked internal controls and information systems adequate to form
an accurate picture of the true financial condition of the Company,
particularly with respect to shared risk and other receivables;

(c) at the time of the acquisitions described above, as FPA was engaged
in making the acquisitions, (i) each such acquired company had different
accounting and information systems for accounting for receivables, (ii)
although these acquisitions would have an immediate accretive effect on the
Company's earnings, that the company lacked sufficient infrastructure and
accounting systems to digest these acquisitions (iii) that, inevitably, there
would be a raft of purportedly one-time charges related to the consolidation of
these acquisitions, and (iv) that such charges would be material; which
knowledge or reckless disregard rendered the Company's public statements and
financial statements during the Class Period materially false.

88. Defendants acted with scienter in that they knew or recklessly
disregarded that the public documents and statements they issued in the name of
the Company were materially false and misleading; knew or recklessly
disregarded that such statements or documents would be issued or disseminated
to the investing public; and knowingly or recklessly participated or acquiesced
in the issuance or dissemination of such statements or documents.

Page 42

<PAGE> 43
89. Defendants had both opportunity and motive to commit the fraud
alleged herein. During the Class Period, they controlled the Company's
financial disclosures and public statements. Their compensation, particularly
their entitlement to bonuses and stock options, was substantially dependent on
equaling or exceeding internal budgets and projections of revenues and profits,
which could not be achieved if GAAP was followed. Defendants were also
motivated to conceal their previous wrongdoing, so as to protect their
executive positions and lucrative compensation. In addition, the Individual
Defendants each sold FPA common stock at substantially inflated prices during
the Class Period, as detailed below.

DEFENDANTS' INSIDER SELLING

90. During the Class Period, defendants each occupied positions with FPA
that made them privy to confidential, proprietary information concerning the
Company's business, products, markets, financial conditions, and future
business prospects. Notwithstanding their duty to refrain from trading FPA's
stock under these circumstances, or to disclose the insider information prior
to trading, certain of these defendants sold, for proceeds in excess of $10
million, prior to disclosure of the material adverse facts described above,
shares of FPA common stock at prices that had been artificially inflated by
defendants' materially false and misleading representations as set forth in the
attached Exhibit A -- Insider Trading Chart.

Page 43
<PAGE> 44
COUNT 1
-------

AGAINST ALL DEFENDANTS FOR VIOLATION OF SECTION 10(B) OF THE
------------------------------------------------------------
EXCHANGE ACTS AND RULE 10B-5 PROMULGATED THEREUNDER
----------------------------------------------------

91. Plaintiff incorporates by reference the allegations contained in each
of the preceding paragraphs as though set forth fully herein.

92. By engaging in the conduct alleged herein, by the making of false and
misleading statements, and by omitting to disclose the material facts
identified above, defendants employed devices and artifices, and engaged in a
scheme and course of business which was intended to and did act to induce
plaintiff and the members of the Class to purchase FPA securities at
artificially inflated prices during the Class Period.

93. During the Class Period defendants, singularly and in concert,
directly and indirectly, engaged and participated in a course of business
constituting a plan, scheme, and unlawful course of conduct, pursuant to which
they knowingly or recklessly engaged in acts, transactions, and courses of
business which operated as a fraud and deceit upon plaintiff and the other
members of the Class. Defendants knowingly, or in reckless disregard for the
truth, made the materially false and misleading statements, and failed to
disclose the material facts necessary to make the statements made not
misleading.

94. As a result of the affirmative misrepresentations and failure to
disclose material facts set forth herein, the market price of FPA securities
was artificially inflated during the Class Period. Plaintiff and the other
members of the Class relied, to

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<PAGE> 45
their detriment, on the integrity of the market price in purchasing FPA
securities. Had plaintiff and the other members of the Class known the truth,
they would not have purchased such securities or would not have purchased them
at the inflated prices that were paid.

95. In addition, defendants failed to correct or supplement earlier
reports and statements when they knew, or recklessly disregarded, were
materially false and misleading and as to which there was a likelihood that
market participants purchasing the Company's securities could reasonably be
expected to be rely, either directly or indirectly.

96. Upon the revelations of May 15, 1998, the market price of FPA's
common stock declined substantially, as a result of disclosure of the
materially adverse facts alleged in this Complaint. Plaintiff and other members
of the Class have suffered substantial damages as a result of the wrongs
complained of herein.

97. By reason of the foregoing, defendants violated Section 10(b) of the
Exchange Act and Rule 10b-5 promulgated thereunder in that they: (a) employed
devices, schemes, and artifices to defraud; (b) made untrue statements of
material facts or omitted to state material facts necessary in order to make
the statements made, in the light of the circumstances under which they were
made, not misleading; or (c) engaged in acts, practices, and a course of
business which operated as a fraud and deceit upon plaintiff and the other
members of the Class in connection with their purchases of FPA securities
during the Class Period.

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<PAGE> 46
COUNT II
--------

Against the Individual Defendants for Violation of Section 20(a)
of the Exchange Act

98. Plaintiff incorporates by reference the allegations contained in each
of the preceding paragraphs as though set forth fully herein.

99. The Individual Defendants, by virtue of their positions, stock
ownership, and/or specific acts described above, had the power to control and
influence, which they exercised, to cause FPA to engage in the illegal conduct
complained of herein. As a result, at the time of the wrongs alleged herein,
they were controlling persons within the meaning of Section 20(a) of the
Exchange Act.

100. The Individual Defendants, as the senior executive officers of FPA,
were responsible for the issuance and contents of the Company's public
statements to investors.

101. As a direct and proximate result of defendants' wrongful conduct,
plaintiffs and the Class have been damaged in connection with their purchases
of FPA securities during the Class Period.

PRAYER FOR RELIEF
-----------------

WHEREFORE, plaintiff, on behalf of himself and the Class, prays for judgment as
follows:

A. Declaring this action to be a proper class action and certifying
plaintiff as class representative under Rule 23 of the Federal Rules of Civil
Procedure;

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<PAGE> 47
B. Awarding compensatory damages in favor of plaintiff and other members
of the Class against all defendants, jointly and severally, for the damages
sustained as a result of the wrongdoing of defendants, together with interest
thereon;

C. Awarding plaintiff the fees and expenses incurred in this action,
including reasonable allowance of fees for plaintiff's attorneys and experts;
and

D. Granting such other and further relief as the Court may deem just and
proper.

JURY DEMAND

Plaintiff demands a trial by jury.

Dated: May 18, 1998 SCHUBERT & REED LLP

By: /s/ JUDEN JUSTICE REED
-------------------------------
Juden Justice Reed

Attorneys for Plaintiff Harold
M. Sucher, Individually, and on
Behalf of a Class
Of Persons Similarly Situated

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<PAGE> 48
Exhibit A FPA Medical Insider Trading Chart

<TABLE>
<CAPTION>
NO. OF
SHARES
NAME DATE SOLD PRICE PROCEEDS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dresnick, Stephen 11/26/97 1,000 $25.63 $25,630.00
11/26/97 4,000 $25.50 $102,000.00
11/25/97 10,000 $25.13 $251,300.00
11/27/97 11,140 $26.50 $295,210.00
5/21/97 10,000 $18.50 $185,000.00
- --------------------------------------------------------------------------------
Dresnick Total 36,140 $859,140.00

- --------------------------------------------------------------------------------
Ellis, Kevin 12/8/97 3,000 $24.50 $73,500.00
11/18/97 2,500 $27.00 $67,500.00
11/17/97 5,000 $26.50 $132,500.00
11/14/97 5,000 $25.50 $127,500.00
11/13/97 2,500 $24.50 $61,250.00
3/17/97 9,300 $19.44 $180,792.00
3/14/97 9,400 $20.72 $194,768.00
3/13/97 2,100 $22.34 $46,914.00
3/12/97 3,100 $22.13 $68,603.00
3/11/97 1,100 $22.88 $25,168.00
- --------------------------------------------------------------------------------
Ellis Total 43,000 $978,495.00

- --------------------------------------------------------------------------------
Flam, Seth 12/5/97 850 $23.44 $19,924.00
12/4/97 1,000 $24.00 $24,000.00
12/4/97 12,000 $23.81 $285,720.00
12/4/97 2,000 $23.88 $47,760.00
12/4/97 5,000 $23.81 $119,050.00
11/24/97 2,500 $27.75 $69,375.00
11/24/97 2,500 $27.75 $69,375.00
11/24/97 2,500 $27.75 $69,375.00
11/21/97 1,500 $27.50 $41,250.00
11/20/97 16,650 $27.25 $453,712.50
11/19/97 2,500 $27.63 $69,075.00
11/19/97 2,500 $27.50 $68,750.00
11/19/97 2,500 $27.63 $69,075.00
3/17/97 14,400 $19.44 $279,936.00
3/14/97 12,300 $20.72 $254,856.00
3/13/97 4,100 $22.34 $91,594.00
3/12/97 6,200 $22.13 $137,206.00
3/11/97 2,000 $22.88 $45,760.00
- --------------------------------------------------------------------------------
Flam total 93,000 $2,215,793.50

- --------------------------------------------------------------------------------
Hassman, Howard 11/18/97 11,500 $27.09 $311,535.00
11/18/97 2,500 $27.01 $67,525.00
11/17/97 10,000 $25.39 $253,800.00
11/17/97 10,000 $26.38 $253,800.00
11/14/97 10,000 $25.56 $255,600.00
11/7/97 5,000 $23.55 $117,750.00
11/6/97 5,000 $24.50 $122,500.00
</TABLE>

Page 1 of 2
<PAGE> 49
Exhibit A FPA Medical Insider Trading Chart

<TABLE>
<S> <C> <C> <C> <C>
11/4/97 5,000 $24.38 $121,900.00
3/14/97 2,500 $21.00 $52,500.00
3/14/97 27,500 $20.88 $574,200.00
3/14/97 7,000 $21.00 $147,000.00
3/11/97 2,000 $22.88 $45,760.00
- --------------------------------------------------------------------------------
Hassman Total 98,000 $2,343,870.00

- --------------------------------------------------------------------------------
Lash, Steven 12/5/97 4,850 $23.44 $113,084.00
12/4/97 1,000 $24.00 $24,000.00
12/4/97 17,000 $23.81 $404,770.00
12/4/97 2,000 $23.88 $47,760.00
11/20/97 16,650 $27.25 $453,712.50
11/19/97 2,500 $27.63 $69,075.00
11/19/97 5,000 $27.50 $137,500.00
3/17/97 11,100 $19.44 $215,784.00
3/14/97 9,400 $20.72 $194,768.00
3/13/97 3,200 $22.34 $71,488.00
3/12/97 4,700 $22.13 $104,011.00
3/11/97 2,000 $22.88 $45,760.00
- --------------------------------------------------------------------------------
Lash Total 79,400 $1,882,312.50

- --------------------------------------------------------------------------------
Lizerbram, Sol 12/4/97 750 $23.88 $17,910.00
12/4/97 1,000 $24.25 $24,250.00
12/4/97 7,500 $24.13 $180,975.00
12/4/97 1,500 $24.00 $36,000.00
12/1/97 4,000 $25.38 $105,520.00
12/1/97 1,000 $26.44 $26,440.00
11/24/97 5,000 $27.75 $138,750.00
11/24/97 2,500 $27.75 $69,375.00
11/21/97 1,500 $27.50 $41,250.00
11/20/97 16,650 $27.25 $453,712.50
11/19/97 2,500 $27.63 $69,075.00
11/19/97 2,500 $27.50 $68,750.00
11/19/97 2,500 $27.63 $69,075.00
3/17/97 12,600 $19.44 $244,944.00
3/14/97 2,500 $21.00 $52,500.00
3/13/97 4,100 $22.34 $91,594.00
3/13/97 3,200 $21.00 $67,200.00
3/12/97 6,200 $22.13 $137,206.00
3/11/97 2,000 $22.88 $45,760.00
- --------------------------------------------------------------------------------
Lizerbram Total 79,500 $1,940,286.50

- --------------------------------------------------------------------------------
Grand Total 429,040 $10,219,897.50
</TABLE>
Page 2 of 2
<PAGE> 50
CERTIFICATION OF NAMED PLAINTIFF

PURSUANT TO FEDERAL SECURITIES LAWS

Harris Sucher, ("Plaintiff"), declares, as to his claims asserted under
the federal securities laws against FPA Medical Management, Inc., that:

1. Plaintiff has renewed the complaint and authorized its filing.

2. Plaintiff did not purchase the security that is not subject to this
action at the direction of Plaintiff's counsel or in order to participate in
this private action.

3. Plaintiff is willing to serve as a representative on behalf of the
Class, including providing testimony at deposition and trial, if necessary.

4. Plaintiff's transactions in the security that is the subject of this
action during the Class Period is as follows:

Security Transaction Date Price
- -------- ----------- ---- -----
<S> <C> <C> <C>
FPAM Bought 1/29/1998 $??????
FPAM Bought 1/23/1996 $??????
FPAM Bought 1/27/1999 $??????
</TABLE>

5. Plaintiff has sought to serve as class representative in the cases in
the last three (3) years: Coram Healthcare Securities Litigation, United States
District Court for the District of Colorado, Master File No. 91-K-20??, and
Employee Solutions

<PAGE> 51
Securities Litigation, United States District Court for the District of
Arizona, No. CIV-553PHXEHC.

6. Plaintiff will not accept any payment for serving as representative on
behalf of the class beyond Plaintiff's pro rata share of any recovery, except
such reasonable costs and expenses (including lost wages) directly relating to
the representative of the Class as ordered or approved by the Court.

I declare under penalty of perjury that the foregoing is true and
correct. Executed this 18th day of May, 1998, in Phoenix, Arizona.

/s/ HAROLD SUCHER
---------------------------------
Harold Sucher

<PAGE> 52

FILED
98 MAY 18 PM 4:25
CLERK, U.S. DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

BY: [SIG] DEPUTY

CIVIL COVER SHEET

JS 44 - NO. CALIF.
(Rev. 4/97)

I. (a) PLAINTIFFS

HAROLD SUCHER, individually and on behalf of a class of persons similarly
situated, PLAINTIFF

(b) COUNTY OF RESIDENCE OF FIRST LISTED PLAINTIFF
(EXCEPT IN U.S. PLAINTIFF CASES) --------

- --------------------------------------------------------------------------------
(c) ATTORNEYS (FIRM NAME, ADDRESS,AND TELEPHONE NUMBER)

ROBERT C. SCHUBERT 62684 (415) 788-4220
JUDEN JUSTICE REED 153748
SCHUBERT & REED LLP
Two Embarcadero Center, Suite 1050
San Francisco, CA 94111

- --------------------------------------------------------------------------------

DEFENDANTS

FPA MEDICAL MANAGEMENT, INC., a Delaware Corporation; STEPHEN DRESNICK; KEVIN
ELLIS; SETH FLAM; HOWARD HASSMAN; STEPHEN LASH; SOL LIZERBRAM

COUNTY OF RESIDENCE OF FIRST LISTED DEFENDANT San Diego
----------------------------------
(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND
INVOLVED

- --------------------------------------------------------------------------------

ATTORNEYS (IF KNOWN)

- --------------------------------------------------------------------------------

II. BASIS OF JURISDICTION (PLACE AN x IN ONE BOX ONLY)

[ ] 1. U.S. Government [X] 3. Federal Question
Plaintiff (U.S. Government Not a Party)

[ ] 2. U.S. Government [ ] 4. Diversity
Defendant (Indicate Citizenship of
Parties in Item III)

- --------------------------------------------------------------------------------

III. CITIZENSHIP OF PRINCIPAL PARTIES (PLACE AN x IN ONE BOX FOR
(For Diversity Cases Only) PLAINTIFF AND ONE BOX FOR DEFENDANT)

PTF DEF PTF DEF

Citizen of This State [ ] 1 [ ] 1 Incorporated or Principal [ ] 4 [ ] 4
Place of Business in
This State

Citizen of Another [ ] 2 [ ] 2 Incorporated and [ ] 5 [ ] 5
State Principal Place of
Business in Another
State

Citizen or Subject of [ ] 3 [ ] 3 Foreign Nation [ ] 6 [ ] 6
a Foreign Country

- --------------------------------------------------------------------------------

IV. ORIGIN (PLACE AN x IN ONE BOX ONLY)

</TABLE>
- --------------------------------------------------------------------------------

V. NATURE OF SUIT (PLACE AN x IN ONE BOX ONLY)

- --------------------------------------------------------------------------------
CONTRACT TORTS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
VI. CAUSE OF ACTION

(CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND
WRITE A BRIEF STATEMENT OF CAUSE. DO NOT CITE
JURISDICTIONAL STATUTES UNLESS DIVERSITY.)

SECURITIES FRAUD; 15 U.S.C. Section 78j(b)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
VII. REQUESTED IN CHECK IF THIS IS A CLASS ACTION DEMAND $ Check YES only if demanded in complaint:
COMPLAINT: [X] UNDER F.R.C.P. 23 JURY DEMAND: [X] YES [ ] NO
</TABLE>
- --------------------------------------------------------------------------------
VIII. RELATED CASE(S) PLEASE REFER TO CIVIL L.R. 3-12 CONCERNING REQUIREMENT
IF ANY TO FILE "NOTICE OF RELATED CASE."
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
IX. DIVISIONAL ASSIGNMENT (CIVIL L.R. 3-2)
(PLACE AN "X" IN ONE BOX ONLY) [ ] SAN FRANCISCO/OAKLAND [ ] SAN JOSE
</TABLE>
- --------------------------------------------------------------------------------
DATE SIGNATURE OF ATTORNEY OF RECORD

MAY 18, 1998 [SIG]
- --------------------------------------------------------------------------------

UNITED STATES DISTRICT COURT

<PAGE> 1
EXHIBIT 99.4

MILBERG WEISS BERSHAD FILED
HYNES & LERACH LLP
WILLIAM S. LERACH (68581) 98 MAY 18PM 1:24
DARREN J. ROBBINS (168593) CLERK, U.S. DISTRICT COURT
600 West Broadway, Suite 1800 SOUTHERN DISTRICT OF CALIFORNIA
San Diego, CA 92101
Telephone: 619/231-1058 BY: J. HASLER DEPUTY

THE OLSEN LAW FIRM
KURT OLSEN
2300 N. Street, NW
Suite 600
Washington, DC 20037
Telephone: 202/663-9337

BERGER & MONTAGUE, P.C. HOFFMAN & EDELSON
TODD S. COLLINS MARC EDELSON
1622 Locust Street 45 W. Court Street
Philadelphia, PA 19103 Doylestown, PA 18901
Telephone: 215/875-3000 Telephone: 215/230-8043

Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RICK PENICK and CORALETTE PENICK, ) No. '98 CV 928S (LAB)
ALBERT D. BARNABEI and NANCY M. )
BARNABEI, and FREDERICK M. GARSON, ) CLASS ACTION
On Behalf of Themselves and All ) CLASS ACTION COMPLAINT FOR
Others Similarly Situated, ) VIOLATIONS OF FEDERAL
) SECURITIES LAW
Plaintiffs, )
)
vs. )
)
)
FPA MEDICAL MANAGEMENT, INC., SOL )
LIZERBRAM, STEPHEN J. DRESNICK, )
SETH FLAM, STEVEN M. LASH and )
FOUNDATION HEALTH CORPORATION, )
)
Defendants. ) Plaintiffs Demand A
) Trial By Jury
___________________________________ )___________________________________

<PAGE> 2

NATURE OF THE ACTION

1. This is a securities class action on behalf of all persons who
purchased the common stock of FPA Medical Management, Inc. ("FPA" or the
"Company") between February 27, 1997 and May 14, 1998, inclusive (the "Class
Period"), seeking to pursue remedies under the Securities Exchange Act of 1934
(the "Exchange Act"). As hereinafter alleged, during the Class Period, FPA,
four executive officers, directors and/or controlling persons of FPA and
Foundation Health Corporation (a controlling person of FPA during the Class
Period) knowingly or recklessly misrepresented the operating performance of FPA.
In so doing, defendants materially misled the public by issuing false financial
statements that were prepared in violation of generally accepted accounting
principles ("GAAP"), Defendants' fraudulent scheme and deceptive course of
business artificially inflated and maintained the trading price of FPA common
stock during the Class Period and thereby injured plaintiffs and other
purchasers of FPA stock.

2. During the Class Period, defendants vastly overstated FPA's
revenues, earnings and assets in public reports. Defendants did so by a variety
of methods. First, defendants successfully deceived the investing public with
respect to FPA's medical cost trend by, among other things, understating FPA's
reserves for incurred but not reported claims ("INBR"). This led to a huge
increase in medical services expenses in the first quarter of 1998, at the end
of the Class Period, when defendants could no longer hide the truth.

3. Second, defendants materially inflated reported income for the
fourth quarter of 1996 and all four quarters of 1997 by

- 1 -

<PAGE> 3

misrepresenting the purchase price of a group of medical practices that
defendant Foundation Health Corporation ("Foundation") sold to FPA in December
1996. In violation of GAAP, defendants caused FPA to record as revenue $55
million that Foundation paid with respect to certain obligations that FPA took
on in connection with the acquisition of the medical practices. In fact, these
obligations were part and parcel of the acquisition agreement, and the sums paid
to FPA should not have been recorded as revenue but instead as an offset against
or reduction to the consideration FPA paid for the acquisition of the medical
practices. The effect was to inflate by material amounts FPA's reported revenue
and income during the fourth quarter of 1996 and each quarter of 1997.

4. Third, defendants recognized revenue that never should have been
recorded by inflating reported receivables. Defendants thus artificially
inflated assets as well as revenues, since, once recorded, these receivables
immediately should have been written off in accordance with GAAP. (Eventually,
at the close of the Class Period, defendants belatedly took a write-off of
approximately $40 million with respect to shared risk and other receivables.)

5. On May 15, 1998, FPA finally began to reveal the truth. In an
announcement that shocked the market, FPA revealed that net income for the first
quarter of 1998 declined materially and, in addition, that it would be necessary
for the Company to take a $200 million charge in the second quarter. In
reaction, the market price of FPA common stock plunged on May 15, 1998, closing
at $6 per share, down $5.50.

- 2 -
<PAGE> 4

6. Analysts, who routinely visited and conversed with FPA management,
immediately downgraded their recommendations of FPA. The analysts who downgraded
FPA stock on May 15, 1998 included Russ of Lehman Brothers and Harris and
Ripperger of Salomon Smith Barney. Harris and Ripperger specifically noted that
the May 15, 1998 report, showing among other things a huge increase in medical
claims payable, revealed that the Company "has been systematically overstating
revenues and earnings in prior periods." (Emphasis added.)

JURISDICTION AND VENUE

7. This Court has jurisdiction over the subject matter of this action
pursuant to 28 U.S.C. Sections 1331 and 1337, and Section 27 of the Exchange Act
(15 U.S.C. Section 78aa).

8. This action arises under Sections 10(b) and 20(a) of the Exchange Act
and Rule 10b-5 promulgated thereunder (17 C.F.R. Section 240.10b-5).

9. Venue is proper in this District pursuant to Section 27 of the
Exchange Act and 28 U.S.C. Section 1391(b). FPA has its headquarters in San
Diego, and many of the acts charged herein occurred in substantial part in this
District.

10. In connection with the acts alleged in this complaint, the
defendants, directly or indirectly, used the means and instrumentalities of
interstate commerce, including, but not limited to, the mails, interstate
telephone communications, and the facilities of the national securities markets.

PARTIES

11. (a) Plaintiffs Rick and Coralette Penick purchased 500 shares of
FPA common stock on April 3, 1998 at $16-1/4 per share

- 3 -
<PAGE> 5

and 1,000 shares on April 16, 1998 at $13-3/4 per share, and were damaged
thereby.

(b) Plaintiffs Albert D. and Nancy M. Barnabei purchased 500
shares of FPA common stock on October 31, 1997 at $23-1/4 per share and were
damaged thereby.

(c) Plaintiff Frederick M. Garson purchased 800 shares of FPA
common stock on February 27, 1998 at $24.56 per share and was damaged thereby.

12. Defendant FPA is a corporation organized and existing under the laws
of the State of Delaware. The Company's principal executive offices are located
at 3636 Nobel Drive, Suite 200, San Diego, California. FPA is a national
physician practice management company. In the business of acquiring, organizing
and managing primary care physician practice networks, the Company provides
contract management services to hospital emergency rooms and primary and
specialty care services to capitated managed care enrollees and fee-for-service
patients. At all times relevant to this action, the common stock of FPA was
actively traded on the NASDAQ National Market System, a national securities
market, under the ticker symbol "FPAM" and was registered pursuant to Section 12
of the Exchange Act (15 U.S.C. Section 78e). The market for FPA common stock was
therefore open, well-developed and efficient at all relevant times. FPA files
annual, quarterly and other reports with the Securities and Exchange Commission
(the "SEC") in accordance with the Exchange Act.

13. (a) Defendant Sol Lizerbram has been Chairman of the Board of
Directors of FPA since 1986, and he was President from 1986 to 1996. Lizerbram
has received substantial compensation from

- 4 -

<PAGE> 6

the Company. Lizerbram's compensation included $446,978 in salary and a bonus of
$665,522 in 1997 and salary of $237,646 and a bonus of $1,133,123 in 1996, in
addition to large amounts of stock options and/or stock grants. During the
Class Period, while possessing the material, undisclosed information described
in this Complaint, Lizerbram sold at least 74,200 shares of the Company's common
stock in the open market at inflated prices, receiving insider trading proceeds
in excess of $1,800,000.

(b) Defendant Stephen J. Dresnick has been President and Chief
Executive Office of the Company since March 1998, and he was Vice Chairman of
the Board from 1996 until March 1998. Dresnick, has received substantial
compensation from FPA, including salary of $325,000 and a bonus of $1,487,500 in
1997, and salary of $325,000 and a bonus of $1,819,180 in 1996, in addition to
large amounts of stock options and/or stock grants. During the Class Period,
while possessing the material, undisclosed information described in this
Complaint, Dresnick sold at least 36,140 shares of the Company's common stock in
the open market at inflated prices, receiving insider trading proceeds in excess
of $800,000.

(c) Defendant Seth Flam was President, Chief Executive Officer and
a director throughout the Class Period until March 25, 1998, when he resigned
from all of these positions and became a consultant to the Company pursuant to a
lucrative consulting agreement. Flam has received substantial compensation from
the Company, including salary of $446,978 and a bonus of $655,522 in 1997, and
salary of $237,646 and a bonus of $1,133,123 in 1996, in addition to large
amounts of stock options and/or stock grants. During the Class Period, while
possessing the material, undisclosed

- 5 -

<PAGE> 7

information described in this Complaint, Flam sold at least 93,000 shares of the
Company's common stock in the open market at inflated prices, receiving insider
trading proceeds in excess of $2,000,000.

(d) Defendant Steven M. Lash was the Company's Executive Vice
President and Chief Financial Officer from 1994 until March 1998, at which time
he relinquished the position of Chief Financial Officer. Lash has received
substantial compensation from the Company, including salary of $361,705 and a
bonus of $500,795 in 1997, and salary of $215,417 and a bonus of $1,084,584 in
1996, in addition to substantial amounts of stock options and/or stock grants.
During the Class Period, while possessing the material, undisclosed information
described in this Complaint, Lash sold at least 79,100 shares of the Company's
common stock in the open market at inflated prices, receiving proceeds in excess
of $1,600,000.

(e) The defendants named in Section 13(a)-(d) are referred to herein
as the "Individual Defendants."

14. Defendant Health Foundation Corporation, a controlling person of the
Company from the beginning of the Class Period as a result of its ownership of a
controlling block of the Company's stock, acquired approximately $75 million
worth of the Company's stock, along with cash and notes, in connection with
Foundation's 1996 sale to FPA of physician practice management operations and
affiliated medical groups in California and Arizona. During the Class Period,
while possessing the material, undisclosed information described in this
Complaint, Foundation sold at least 3 million shares of the Company's common
stock at inflated prices, receiving proceeds of approximately $55,300,000.

- 6 -
<PAGE> 8

15. It is appropriate to treat the Individual Defendants and
Foundation as a group for pleading purposes and to presume that the false and
misleading information conveyed in the Company's financial statements, public
filings, press releases and other publications as alleged herein are the
collective actions of the narrowly defined group of defendants identified above.
Each of the above officers and directors of FPA and Foundation, by virtue of his
or its high-level positions and influence with the Company, directly
participated in the management of the Company at the highest levels, and were
privy to confidential proprietary information concerning the Company and its
operations, finances, financial condition, performance and results as alleged
herein. Said defendants were involved in drafting, producing, reviewing and/or
disseminating the false and misleading statements alleged herein, were aware
that false and misleading statements were being issued regarding the Company,
and approved or ratified these statements, in violation of the federal
securities laws.

16. As officers, directors and/or controlling persons of a
publicly-held company whose common stock was, and is, registered with the SEC
pursuant to the Exchange Act, traded on NASDAQ's National Market System, and
governed by the provisions of the federal securities laws, the Individual
Defendants and Foundation each had a duty to disseminate promptly accurate and
truthful information with respect to the Company's financial condition,
performance, results, operations, business, products, markets, management,
earnings, and business prospects, and to correct any previously issued
statements that had become materially misleading or untrue, so that the market
price of the Company's publicly-

- 7 -

<PAGE> 9

traded securities would be based upon truthful and accurate information. The
Individual Defendants' and Foundation's misrepresentations during the Class
Period violated these specific requirements and obligations.

17. The Individual Defendants and Foundation participated in the
drafting, preparation, and/or approval of the various financial statements,
public and shareholder and investor reports, and other communications complained
of herein and/or were aware of or recklessly disregarded the misstatements
contained therein and omissions therefrom. Each of the Individual Defendants and
Foundation had access to the adverse non-public information about FPA's
financial condition and performance as particularized herein and knew that these
adverse facts rendered the positive representations made by and about FPA and
the business and the financial statements issued by the Company materially false
and misleading.

18. The Individual Defendants and Foundation, because of their
positions of control and authority, were able to and did control the contents of
the various quarterly and annual financial reports, press releases and other
public statements pertaining to the Company. Each Individual Defendant and
Foundation were provided with copies of the financial statements and documents
alleged herein to be false and misleading prior to or shortly after their
issuance and had the ability and opportunity to prevent their issuance or to
cause them to be corrected. Accordingly, each of the Individual Defendants and
Foundation are responsible for the accuracy of the financial statements and
public reports and

- 8 -

<PAGE> 10

releases detailed herein and are therefore primarily liable for the
representations contained therein.

19. Each of the defendants is liable as a participant in a fraudulent
scheme and course of business that operated as a fraud and deceit on purchasers
of FPA stock, by disseminating materially false and misleading statements and/or
concealing material, adverse facts. The scheme: (i) deceived the investing
public regarding FPA's business, financial condition and performance, and the
intrinsic value of FPA shares; and (ii) caused plaintiffs and other members of
the Class to purchase FPA stock at artificially inflated prices.

PLAINTIFFS' CLASS ACTION ALLEGATIONS

20. Plaintiffs bring this action as a class action pursuant to Federal
Rule of Civil Procedure 23(a) and (b)(3) on behalf of a Class consisting of
all persons who purchased or otherwise acquired shares of FPA common stock from
February 27, 1997 through May 14, 1998, inclusive (the "Class Period"), and who
were damaged thereby. Excluded from the Class are defendants, members of the
immediate family of each of the Individual Defendants, any subsidiary or
affiliate of FPA, Foundation and the directors, officers and employees thereof,
any entity in which any excluded person has a controlling interest, and the
legal representatives, heirs, successors and assigns of any excluded person.

21. The members of the Class are so numerous that joinder of all
members is impracticable. While the exact number of Class members is unknown to
plaintiffs at this time and can only be ascertained through appropriate
discovery, plaintiffs believe that there are thousands of members of the Class
located throughout the

- 9 -

<PAGE> 11

United States. As of April 27, 1998, there were 47,533,234 shares of FPA common
stock outstanding. Throughout the Class Period, FPA common stock was actively
traded on the National Market System. Record owners and other members of the
Class may be identified from records maintained by FPA and/or its transfer agent
and may be notified of the pendency of this action by mail, using a form of
notice similar to that customarily used in securities class actions.

22. Plaintiffs' claims are typical of the claims of the other members
of the Class, as all members of the Class were similarly affected by defendants'
wrongful conduct in violation of federal law that is complained of herein.

23. Plaintiffs will fairly and adequately protect the interests of the
members of the Class and have retained counsel competent and experienced in
class and securities litigation.

24. Common questions of law and fact exist as to all members of the
Class and predominate over any questions solely affecting individual members of
the Class. Among the questions of law and fact common to the Class are:

(a) Whether the federal securities laws were violated by
defendants' acts and omissions as alleged herein;

(b) Whether defendants participated in and pursued the common
course of conduct complained of herein;

(c) Whether documents, press releases, public filings, and other
statements disseminated to the investing public and the Company's shareholders
during the Class Period misrepresented material facts about the business,
financial condition and performance of FPA;

- 10 -

<PAGE> 12

(d) Whether documents issued by defendants to the investing public
during the Class Period misrepresented material facts about the business,
financial condition and performance of FPA;

(e) Whether the market prices of FPA's common stock during the
Class Period were artificially inflated due to the material misrepresentations
complained of herein; and

(f) To what extent the members of the class have sustained damages
and the proper measure of damages.

25. A class action is superior to all other available methods for the
fair and efficient adjudication of this controversy, since joinder of all
members is impracticable. Furthermore, as the damages suffered by individual
Class members may be relatively small, the expense and burden of individual
litigation make it impossible for members of the Class individually to redress
the wrongs done to them. There will be no difficulty in the management of this
suit as a class action.

SUBSTANTIVE ALLEGATIONS

Applicability Of Presumption Of Reliance:
Fraud-On-The-Market Doctrine

26. At all relevant times, the market for FPA common stock was an
efficient market for the following reasons, among others:

(a) FPA common stock met the requirements for active trading on
NASDAQ's National Market System, a highly efficient and automated market;

(b) As a regulated issuer, FPA filed periodic public reports with
the SEC; and

- 11 -

<PAGE> 13

(c) FPA was followed by 10 or more securities analysts employed by
major brokerage firms who wrote reports that were distributed to the sales force
and certain customers of their respective brokerage firms. Each of these
reports was publicly available and entered the public marketplace.

27. As a result, the market for FPA securities promptly digested
current information with respect to FPA from all publicly available sources and
reflected such information in FPA's stock price. Under these circumstances, all
purchasers of FPA shares during the Class Period suffered similar injury through
their purchase of shares at artificially inflated prices, and a presumption of
reliance applies.

THE NATURE OF DEFENDANTS' FRAUD

28. During the Class Period, defendants announced results for the
fourth quarter of 1996 and each of 1997's quarters. With respect to each of
these five quarters, and with regard to 1996 and 1997 as a whole, defendants
materially inflated and misrepresented the Company's revenues, income and
assets.

29. Each of the following press releases and public reports, issued by
all defendants as a group, was materially false and misleading, because each
materially overstated FPA's revenue, income and assets:

(a) FPA's report for the quarter and fiscal year ending December
31, 1996, contained in FPA's press release of February 27, 1997 and 1996 Form
10-K Report filed March 31, 1997. This report falsely stated, among other
things, that during the fourth quarter FPA had operating revenue of $151,000,000
and net income of $4,200,000 (excluding charges).

- 12 -

<PAGE> 14

(b) FPA's report for the first quarter, ending March 31, 1996,
contained in FPA's press release of April 30, 1997 and Form 10-Q Report filed
May 15, 1997. This report falsely stated, among other things, that during the
first quarter FPA had operating revenue of $223,000,000 and net income of
$6,400,000 (excluding charges).

(c) FPA's report for the second quarter, ending June 30, 1997,
contained in FPA's press release of July 30, 1997 and Form 10-Q Report filed
August 14, 1997. This report falsely stated, among other things, that during the
second quarter FPA had operating revenue of $244,500,000 and net income of
$8,100,000 (excluding charges).

(d) FPA's report for the third quarter, ending September 30, 1997,
contained in FPA's press release of October 30, 1997 and Form 10-Q Report filed
November 14, 1997. This report falsely stated, among other things, that during
the third quarter FPA had operating revenue of $240,600,000 and net income of
$10,600,000.

(e) FPA's report for the fourth quarter and fiscal year, ending
December 31, 1997, contained in FPA's press release of March 6, 1998 and Form
10-K Report filed March 31, 1998. This report falsely stated, among other
things, that during the fourth quarter FPA had operating revenue of $323,000,000
and net income of $12,900,000 (excluding charges).

30. Each of the foregoing reports on FPA's operating results was
materially false and misleading, and each vastly overstated the Company's actual
revenues, income and assets, for the reasons set forth below.

- 13 -

<PAGE> 15

Defendants Artificially Inflated Income By
Improperly Shorting The Claims Payable Reserve

31. During the Class Period Defendants also violated GAAP by
dramatically understating FPA's Medical Services Expenses and hence reserving
insufficiently for FPA's claims payable. The effect of this deception was to
materially overstate earnings in the fourth quarter of 1996, in each quarter in
fiscal year 1997, and in fiscal 1997 as a whole.

32. Specifically, "Medical Services Expenses" are the expenses
associated with providing services to FPA's covered enrollees on a per quarter
basis. The "Claims Payable Reserve" is the reserve that FPA was required to take
against future medical expenses it would have to pay out for treatment of its
covered enrollees. Part of Medical Services Expenses go to fund the Claims
Payable Reserve.

33. Industry practice uses a figure termed the "medical loss ratio" as
one method of gauging company performance. The Medical Loss Ratio is calculated
by dividing the "Medical Services Expenses" by the total "Operating Revenues."
The lower this figure, the more efficient a company is in containing costs.

34. Reserves against claims payable directly impact FPA earnings. The
greater the additions to the reserve, the lower a company's earnings will be for
a particular reporting period

35. Regulation S-X provides that financial statements filed with the
SEC that are not prepared in conformity with GAAP are presumed to be misleading,
despite footnote or other disclosure. 17 C.F.R. Section 210.4-01(a)(1). GAAP
provides that financial statements account for and disclose existing
uncertainties as to possible

- 14 -

<PAGE> 16

loss. Such loss contingencies should be recognized and reported as a charge to
income when: (a) information existing as of the date of the financial statements
indicates that it is probable (e.g., a likely chance) that an asset had been
impaired or a liability had been incurred; and (b) the amount of such loss can
be reasonably estimated. Financial Accounting Standards Board ("FASB") Statement
of Financial Accounting Standards ("SFAS") No. 5, paragraph 8.

36. In addition, disclosure of the nature of the loss contingency
accrual, and in some circumstances disclosure of the amount accrued, may be
necessary for the financial statements not to be misleading. SFAS No. 5,
paragraph 9. When condition "(a)" in the preceding paragraph has been met and,
with respect to condition "(b)", a range of contingent loss can be reasonably
estimated, but no single amount within the range is a better estimate than any
other amount, the minimum amount should be charged against income. FASB
Interpretation No. 14.

37. Notwithstanding these requirements, however, beginning in the
fourth quarter 1996 for the period ended December 31, 1996 and continuing
throughout the Class Period, defendants, without proper justification,
artificially lowered FPA's Medical Services Expenses, and therefore FPA's
Medical Loss Ratio, by underreserving for claims payable. Defendants thereby
materially inflated FPA's reported earnings throughout the Class Period.

38. Direct evidence of defendants' continuous deception during the
Class Period is found as late as April 8, 1998 -- just 36 days before FPA's
disastrous announcement of May 15, 1998 -- in an analyst report by Raymond James
and Associates. In that report, the analyst states that:

- 15 -

<PAGE> 17

Dr. Dresnick also indicated that the year-end Claims Payable and IBNR
(incurred, but not reported) levels were sufficient, as confirmed by
an intense audit from Deloitte and Touche. While reserves as a
percentage of Capitation revenues were reduced in the fourth quarter,
the absolute level at year-end appears adequate.

(Emphasis added.)

39. On May 15, 1998, defendants revealed the truth about their
deceptive understatement of reserves, and dramatically increased the claims
payable reserve to account for their past deceit. In fact, defendants were
forced to increase FPA's reserve from $159.987 million to $237.438 million -- an
increase of $77.451 million. This resulted in FPA's Medical Loss Ratio
increasing to 79.7%.

40. Analysts were thus forced to dramatically revise their earnings
models downward to reflect the true expense against earnings associated with a
proper and accurate claims payable reserve. As an analyst at Lehman Brothers
put it in a First Call Report issued on May 15, 1998, "Medical loss ratio
increased 850 bp (basis points] sequentially to 79.7%. While we were expecting
MLR to rise materially, the magnitude of this increase is alarming, and
management expects MLR to remain at this higher level."

41. Two analysts from Smith Barney stated in their First Call Report
dated May 15, 1998 that "Medical Claims Payable (IBNR) increased by $68.1
million in the quarter we are unsure as to how much of increase pertains to
1Q98 v. 96/97."

42. Merrill Lynch's analyst stated:

From an operating performance, the biggest change from historical
trend occurred in the company's Medical Services expenses, which
increased from just 72.2% of aggregate revenues last year to 79.7% in
the current quarter. Clearly, this was above our expectations, as well
as the Street. Moreover, the Company stated that

- 16 -

<PAGE> 18
this rate would likely be sustained going forward, with little hope of a
return to FPA's historical low 70% range.

43. As illustrated in the chart below, defendants' deceptive understatement
of FPA's Medical Loss Ratio materially inflated FPA's reported earnings each
quarter during the Class Period. This chart shows how, throughout the Class
Period, FPA should have materially increased Medical Services Expenses, and
thereby its Medical Loss Ratio, in order to reserve adequately for claims.

<TABLE>
<CAPTION>
3Q96 4Q96 1Q97 2Q97 3Q97 4Q97 1Q98
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating 89,680 151,048 222,840 244,557 240,622 432,492 392,234
Revenues
- ---------------------------------------------------------------------------------------------
Reported 67,618 103,911 158,105 174,725 169,484 327,447 312,632
Medical
Service
Expenses
- ---------------------------------------------------------------------------------------------
Reported 75.4% 68.7% 71.0% 71.4% 70.4% 75.7% 79.7%
Medical
Loss Ratio
- ---------------------------------------------------------------------------------------------
Reported 47,475 65,618 127,286 124,044 110,846 150,256 237,438
Claims
Payable
Reserve
- ---------------------------------------------------------------------------------------------
Reported (29,121) (27,037) 13,217 16,600 20,757 (14,731)
Pre-Tax
Income
- ---------------------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------------
True* N/A 117,062 172,701 189,531 186,482 335,181 N/A
Medical
Service
Expenses
- ---------------------------------------------------------------------------------------------
True N/A 78,769 141,882 138,851 127,844 157,990 N/A
Claims
Payable
Reserve
- ---------------------------------------------------------------------------------------------
Additional N/A 13,151 14,596 14,807 16,998 7,734 N/A
Medical
Service
Expenses
- ---------------------------------------------------------------------------------------------
True N/A (42,272) (41,633) (1,590) (398) 13,023 N/A
Pre-Tax
Income
- ---------------------------------------------------------------------------------------------
% Boost To N/A 68.9% 64.9% 931.3% 4270.8% 59.4% N/A
Pre-Tax
Income
- ---------------------------------------------------------------------------------------------
</TABLE>

* Calculated using 77.5%, the average of the MLR for 3Q96 and 1Q98, as a
baseline.

- 17 -

<PAGE> 19

Defendants Artificially Inflated Results
By Misrepresenting the Purchase from Foundation

44. Defendants materially misled the investing public with respect to
the price of the 1996 acquisition of physician practices from Foundation.
Defendants overstated the purchase price by approximately $55 million, and then
contrived to cause this $55 million to be paid by Foundation to FPA during the
last quarter of 1996 and the four quarters of 1997, materially inflating
reported revenues and assets.

45. Defendants announced FPA's purchase of physician practices from
Foundation on July 1, 1996. Defendants stated, falsely, that the purchase price
was $220 million and that, as part of the agreement, Foundation would make
periodic payments to FPA, referred to as Guaranteed Access Payments ("GAPs"),
allegedly to ensure that Foundation's patients would continue to receive
uninterrupted access to care from their providers.

46. In fact, the GAPs were a sham, intended solely to allow defendants
to mislead the public with respect to FPA's revenue and income during the Class
Period. In fact, the GAPs were a deduction from or offset against the purchase
price or, alternatively, periodic refunds from Foundation to FPA with respect to
FPA's overpayment to Foundation in the acquisition of the physician practices.

47. By this method, defendants inflated FPA's reported revenues and
income as illustrated by the following chart:

- 18 -

<PAGE> 20

ADJUSTMENTS TO REVENUE & PRETAX INCOME --
SUBTRACTION OF PAYMENTS FROM FOUNDATION

<TABLE>
<CAPTION>
Dec-96 Mar-97 Jun-97 Sep-97 Dec-97
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Reported Revenues 151,048 222,840 244,557 240,622 322,964
Adjustments to 10,000 9,500 11,833 11,833 11,833
------- ------- ------- ------- -------
Subtract GAP
Adjusted Revenues 141,048 213,340 232,724 228,789 311,131
------- ------- ------- ------- -------

Reported (29,121) (27,037) 13,217 16,600 20,757
Pre-Tax Income
Adjustments to 10,000 9,500 11,833 11,833 11,833
------- ------- ------- ------- -------
Subtract GAP
Adjusted Pre 8,924 4,767 1,384 (36,537) (39,121)
------- ------- ------- ------- -------
Tax Income
</TABLE>

Defendants Artificially Inflated Revenue
And Assets By Inflating Receivables

48. Throughout the Class Period, defendants recorded receivables that
were in excess of actual value. Accordingly, defendants inflated revenue and
earnings during the periods in which the receivables were recognized as revenue.
In addition, defendants overstated assets with respect to those same
receivables.

49. Defendants' fraud with respect to inflated receivables was
revealed only with the May 15, 1998 announcement. Included in the $200 million
second quarter charge was approximately $40 million with respect to shared risk
and other receivables.

50. Defendants thus inflated revenues, earnings and assets in
violation of GAAP throughout the Class Period.

DEFENDANTS' MISLEADING STATEMENTS

51. As stated, throughout the Class Period defendants materially
misled the investing public, thereby inflating the price of FPA stock, by
publicly issuing false and misleading statements, including false financial
statements, and omitting to disclose material facts necessary to make
defendants' statements, as set forth herein, not false and misleading. The
documents and

- 19 -

<PAGE> 21

statements referred to above, as well as others disseminated by defendants,
during the Class Period, were materially false and misleading.

52. As noted above, defendants resorted to deceptive practices to
artificially inflate the price of FPA's common stock during the Class Period. In
so doing, the defendants knew or recklessly disregarded the fact that FPA's
financial statements were materially inaccurate and misleading and failed to
comply with GAAP, including specifically SFAS No. 5 with respect to
underreserving of the claims reserve.

53. In addition to the violations of GAAP noted above, defendants
presented the Company's financial statements in a manner that violated the
following GAAP provisions, among others:

(a) The principle that financial reporting should provide
information that is useful to present and potential investors and creditors and
other users in making rational investment, credit and similar decisions
(Concepts Statement No. 1, paragraph 34);

(b) The principle of completeness, which means that nothing is
left out of the information that may be necessary to insure that it validly
represents underlying events and conditions (Concept Statement, No. 2,
paragraph 79);

(c) The principle that conservatism be used as a prudent reaction
to uncertainty to try to ensure that uncertainties and risks inherent in
business situations are adequately considered. The best way to avoid injury to
investors is to try to ensure that what is reported represents what it purports
to represent (Concepts Statement No. 2, paragraphs 95, 9) ; and

- 20 -

<PAGE> 22

(d) The principle that financial reporting should be reliable in
that it represents what it purports to represent. That information should be
reliable as well as relevant is a notion that is central to accounting (Concepts
Statement No. 2, paragraphs 58-59; and

54. At all relevant times, the material misrepresentations and
omissions particularized in this Complaint directly or proximately caused or
were a substantial contributing cause of the damages sustained by the plaintiffs
and other members of the Class. As described herein, during the Class Period,
defendants made or caused to be made a series of false and misleading statements
about FPA's business, financial results and performance. These material
misstatements and omissions had the cause and effect of creating in the market
an unrealistically positive assessment of FPA, and its business and financial
performance, thus causing the Company's securities to be overvalued and
artificially inflated at all relevant times. Defendants' false portrayal during
the Class Period of FPA, and its financial performance, resulted in
the plaintiffs and other members of the Class purchasing the Company's
securities at a disparity between their market price and their actual value,
thus causing the damages complained of herein, both to persons who bought and
held until the end of the Class Period as well as persons who bought and sold
within that time.

SCIENTER ALLEGATIONS

55. Defendants acted with scienter in that defendants knew or
recklessly disregarded that the public documents and statements, including the
financial statements, issued or disseminated in the name of the Company were
materially false and misleading. By virtue of their receipt of information
reflecting the truth

- 21 -

<PAGE> 23

regarding FPA, their control over FPA's materially misleading misstatements
herein alleged and/or their associations with the Company that made them privy
to confidential proprietary information concerning FPA, defendants participated
in the fraudulent scheme described herein. Defendants knew and/or recklessly
disregarded the falsity and misleading nature of the information that they,
caused to be disseminated to the investing public. This case does not involve
allegations of false forward-looking statements or projections but instead
involves materially false and misleading statements, including false financial
statements.

56. The Individual Defendants and Foundation engaged in such a scheme
to inflate the price of FPA securities in order, among other things: (i) to
carry out their scheme of selling tens of millions of dollars of FPA stock from
their own portfolios at grossly inflated prices; (ii) to protect and enhance
their executive positions and the substantial compensation and prestige they
obtained thereby; and (ii) to enhance the value of their substantial personal
holdings of FPA securities and options to acquire such securities.

FIRST CLAIM

Violations of Section 10(b) Of The Exchange Act
And Rule 10b-5 Promulgated Thereunder

57. Plaintiffs repeat and reallege the allegations set forth above as
though fully set forth herein. This claim is asserted against all defendants.

58. During the Class Period, defendants, and each of them, carried out
a plan, scheme and course of conduct which was intended

- 22 -

<PAGE> 24

to and, throughout the Class Period, did: (i) deceive the investing public,
including plaintiffs and other class members, as alleged herein; (ii)
artificially inflate and maintain the market price of FPA securities; and (iii)
cause the plaintiffs and other members of the class to purchase FPA securities
at artificially inflated prices. In furtherance of this unlawful scheme, plan
and course of conduct, defendants, and each of them, took the actions set forth
herein.

59. Defendants (a) employed devices, schemes, and artifices to
defraud; (b) made untrue statements of material fact and/or omitted to state
material facts necessary to make the statements not misleading; and (c) engaged
in acts, practices, and a course of business which operated as a fraud and
deceit upon the purchasers of the Company's stock in an effort to maintain
artificially high market prices for FPA's securities in violation of Section
10(b) of the Exchange Act and Rule 10b-5. All defendants are sued as primary
participants in the wrongful and illegal conduct charged herein. The Individual
Defendants also are sued as controlling persons of FPA, as alleged below.

60. In addition to the duties of full disclosure imposed on defendants
as a result of their making of affirmative statements and reports, or
participation in the making of affirmative statements and reports to the
investing public, the Individual Defendants had a duty to promptly disseminate
truthful information that would be material to investors in compliance with the
integrated disclosure provisions of the SEC as embodied in SEC Regulations S-X
(17 C.F.R. Section 210.01, et sec.) and S-K (17 C.F.R. Section 229.10, et seq.)
and other SEC regulations, including accurate and

- 23 -

<PAGE> 25

truthful information with respect to the Company's business, operations,
financial condition and performance so that the market price of the Company's
common stock would be based on truthful, complete and accurate information.

61. FPA, the Individual Defendants and Foundation, individually and in
concert, directly and indirectly, by the use of means or instrumentalities of
interstate commerce and/or of the mails, engaged and participated in a
continuous course of conduct to misrepresent and to conceal adverse material
information concerning the business, financial condition, performance, and
operations of FPA as specified herein. FPA, the Individual Defendants and
Foundation employed devices, schemes and artifices to defraud, while in
possession of material adverse non-public information, and engaged in acts,
practices, and a course of conduct as alleged herein in an effort to assure
investors of FPA's value and performance and continued substantial growth,
which included the making of, or the participation in the making of, untrue
statements of material facts and omitting to state material facts necessary in
order to make the statements made about FPA and its business, operations,
financial condition, performance, and results in the light of the circumstances
under which they were made, not misleading, as set forth more particularly
herein, and engaged in practice and a course of business which operated as a
fraud and deceit upon the purchasers of FPA securities during the Class Period.

62. The primary liability of the Individual Defendants and Foundation,
as well as their controlling person liability, arises from the following facts,
among others: (i) each of the Individual

- 24 -

<PAGE> 26

Defendants was a high-level executive and/or director at the Company during the
Class Period and was a member of the Company's management team; (ii) each of the
Individual Defendants, by virtue of his responsibilities and activities as
a senior executive officer and/or director of the Company, was privy to and
participated in the preparation of the Company's financial statements and
reporting of the Company's financial condition and performance; (iii) the
Individual Defendants and Foundation enjoyed significant personal contact and
familiarity with each other and were advised of and had access to all members of
the Company's management team, internal reports, and other data and information
about the Company's financial condition and performance at all relevant times;
and (iv) the Individual Defendants and Foundation were aware of the Company's
dissemination of information to the investing public that they knew or
recklessly disregarded was materially false and misleading. The manipulative
and deceptive transactions alleged herein were ones that the Individual
Defendants and Foundation caused or permitted and for which they were
responsible. The Individual Defendants and Foundation had clear knowledge as to
the suspicious nature and distorting effect or such transactions.

63. The defendants had actual knowledge of the misrepresentations and
omissions of material facts set forth herein, or acted with reckless disregard
for the truth in that they failed to ascertain and to disclose such facts, even
though such facts were available to them. Defendants' material
misrepresentations and/or omissions were done knowingly or recklessly and for
the purpose and effect of concealing FPA's true

- 25 -

<PAGE> 27

operating condition and performance from the investing public and supporting the
artificially inflated price of its stock. As demonstrated by defendants,
overstatements and misstatements of the Company's financial condition and
performance throughout the class Period, defendants, if they did not have actual
knowledge of the misrepresentations and omissions alleged, were reckless in
failing to obtain such knowledge by deliberately refraining from taking those
steps necessary to discover whether those statements were false or misleading
and departed markedly from their fiduciary and full disclosure obligations and
duties in connection therewith.

64. As a result of the dissemination of the materially false and
misleading information and failure to disclose material facts, as set forth
above, the market price of FPA common stock was artificially inflated during the
Class Period. In ignorance of the fact that the market price of FPA stock was
artificially inflated, and relying directly or indirectly on the false and
misleading statements made by defendants, or upon the integrity of the market in
which the securities trade, and the truth of any representations made to
appropriate agencies or to the investing public, at the times at which any
statements were made, and/or on the absence of material adverse information that
was known to or recklessly disregarded by defendants but not disclosed in public
statements by defendants during the Class Period, plaintiffs and other members
of the Class acquired FPA stock during the Class Period at artificially high
prices and were damaged thereby.

65. At the time of said misrepresentations and omissions, plaintiffs
and other members of the Class were ignorant of their falsity and believed them
to be true. Had plaintiffs and the other

- 26 -

<PAGE> 28
members of the Class and the marketplace known of the true financial condition
and performance of FPA, which were not disclosed by defendants, plaintiffs and
other members of the Class would not have purchased or otherwise acquired their
FPA shares during the Class Period, or, if they had acquired such securities
during the Class Period, they would not have done so at the artificially
inflated prices that they paid.

66. By virtue of the foregoing, defendants have violated Section 10(b)
of the Exchange Act, and Rule 10b-5 promulgated thereunder.

67. As a direct and proximate result of defendants' wrongful conduct,
plaintiffs and the other members of the Class suffered damages in connection
with their purchases of the Company's securities during the Class Period.

SECOND CLAIM

Violations Of Section 20(a) Of The Exchange Act
Against The Individual Defendants And Foundation

68. Plaintiffs repeat and reallege the allegations set forth above as
if fully set forth herein. This claim is asserted against the Individual
Defendants and Foundation.

69. The Individual Defendants and Foundation acted as controlling
persons of FPA within the meaning of Section 20(a) of the Exchange Act as
alleged herein. By virtue of their high-level positions, share ownership,
participation in and/or awareness of the Company's operations and/or intimate
knowledge of the Company's business, financial condition, and performance, the
Individual Defendants and Foundation had the power to influence and control and
did influence and control, directly or indirectly, the decision-making of the
Company, including the content and

- 27 -

<PAGE> 29

dissemination of the various statements that plaintiffs contend are false and
misleading. Each of the Individual Defendants and Foundation was provided with
or had unlimited access to copies of the Company's financial statements,
reports, press releases, public filings and other statements prior to and/or
shortly after those statements were issued and had the ability to prevent the
issuance of the statements or cause the statements to be corrected.

70. Each of the Individual Defendants and Foundation had direct
involvement in or access to the day-to-day operations of the Company and
therefore are presumed to have had and exercised the power to control or
influence the particular transactions giving rise to the securities violations
alleged herein.

71. Pursuant to Section 20(a) of the Exchange Act, by virtue of their
positions as controlling person, the Individual Defendants and Foundation are
liable jointly and severally with and to the same extent as the Company for the
Company's aforesaid violations of Section 10(b) of the Exchange Act and Rule
10b-5 promulgated thereunder. As a direct and proximate result of defendants'
wrongful conduct, plaintiffs and other members of the Class suffered damages in
connection with their purchases of the Company's securities during the Class
Period.

BASIS OF ALLEGATIONS

72. Plaintiffs make the allegations contained in this complaint upon
investigation of counsel. Plaintiffs' counsel's investigation included analyses
of publicly-available news articles (including reliable investigative reports),
public filings, releases, and other matters of public record, as well as
consultation with experts. Plaintiffs believe that further

- 28 -

<PAGE> 30

substantial evidentiary support for the allegations set forth below will be
developed after a reasonable opportunity for discovery.

PRAYER FOR RELIEF

WHEREFORE, plaintiffs pray for relief and judgment, as follows:

1.Determining that this action is a proper class action under Rule 23
of the Federal Rules of Civil Procedure, and certifying plaintiffs as class
representatives and their counsel as class counsel;

2. Awarding compensatory damages in favor of plaintiffs and the other
Class members against all defendants, jointly and severally, for all damages
sustained as a result of defendants' wrongdoing, in an amount to be proven at
trial, including interest thereon;

3. Awarding plaintiffs and the Class their reasonable costs and
expenses incurred in this action, including counsel fees and expert fees;

4. Awarding extraordinary, equitable and/or injunctive relief as
permitted by law, equity and federal statutory provisions sued hereunder and any
appropriate state law remedies; and

5. Such other and further relief as the Court may deem just and
proper.

- 29 -

<PAGE> 31

JURY DEMAND

Plaintiffs hereby demand a trial by jury.

DATED: May 18, 1998 MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
DARREN J. ROBBINS

/S/ WILLIAM S. LERACH
----------------------------------
WILLIAM S. LERACH

600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

THE OLSEN LAW FIRM
KURT OLSEN
2300 N. Street, NW
Suite 600
Washington, DC 20037
Telephone: 202/663-9337

BERGER & MONTAGUE, P.C.
TODD S. COLLINS
1622 Locust Street
Philadelphia, PA 19103
Telephone: 215/875-3000

HOFFMAN & EDELSON
MARC EDELSON
45 W. Court Street
Doylestown, PA 18901
Telephone: 215/230-8043

Attorneys for Plaintiffs

- 30 -

<PAGE> 32
CERTIFICATION OF NAMED PLAINTIFFS
PURSUANT TO FEDERAL SECURITIES LAWS
-----------------------------------

Rick and Coralette Penick, ("Plaintiffs") duly swear and say, as to the
claims asserted under the federal securities laws, that:

1. Plaintiffs have reviewed the complaint and authorized its filing.

2. Plaintiffs did not purchase the security that is the subject of this
action at the direction of plaintiffs' counsel or in order to participate in
this private action.

3. Plaintiffs are willing to serve as a representative party on behalf of
the class, including providing testimony at deposition and trial, if necessary.

4. Plaintiffs' transactions in the security that is the subject of this
action during the Class Period are as follows:

<TABLE>
<CAPTION>
SECURITY TRANSACTION DATE PRICE PER SHARE
- -------- ----------- ---- ---------------
<S> <C> <C> <C>
FPAM Purchased 500 4/3/98 $16 1/4
FPAM Purchased 1000 4/16/98 $13 3/4
</TABLE>

5. During the three years prior to the date of this Certificate,
Plaintiffs have sought to serve or served as a class representative in the
following actions filed under the federal securities laws: None.

6. Plaintiffs have not and will not accept any payment for serving as a
representative party on behalf of the class beyond the Plaintiffs' pro rata
share of any recovery, or as ordered or approved by the court, including any
award for reasonable costs and expenses (including lost wages) directly
relating to the representation of the class.

<PAGE> 33
I declare under penalty of perjury that the foregoing is true and correct.
Executed this day of May 16th, 1998, at 2:30 PM.

/s/ RICK PENICK
---------------------------
Rick Penick

/s/ CORALETTE PENICK
---------------------------
Coralette Penick

<PAGE> 34

CERTIFICATION OF NAMED PLAINTIFFS

PURSUANT TO FEDERAL SECURITIES LAWS

Albert Barnabei and Nancy Barnabei, ("Plaintiffs) duly swears and
says, as to the claims asserted under the federal securities laws, that:

1. Plaintiffs have reviewed the complaint and authorized its filing.

2. Plaintiffs did not purchase the security that is the subject of
this action at the direction of plaintiff's counsel or in order to participate
in this private action.

3. Plaintiffs are willing to serve as a representative party on behalf
of the class, including providing testimony at deposition and trial, if
necessary.

4. Plaintiff's transactions in the security that is the subject of
this action during the Class Period are as follows:

<TABLE>
<CAPTION>
SECURITY TRANSACTION DATE PRICE PER SHARE
-------- ----------- ---- ---------------
<S> <C> <C> <C>
FPAM Purchased 500 10/31/97 $23 1/4
</TABLE>

6. Plaintiffs have and will not accept any payment for serving as a
representative party on behalf of the class beyond the Plaintiff's pro rata
share of any recovery, or as ordered or approved by the court, including any
award for reasonable costs and expenses (including lost wages) directly
relating to the representation of the class.

<PAGE> 35

I declare under penalty of perjury that the foregoing is true and correct.
Executed this day of 18, 1998 at May

/s/ ALBERT D. BARNABEI
-----------------------------
Albert Barnabei

/s/ NANCY M. BARNABEI
-----------------------------
Nancy Barnabei

<PAGE> 36

CERTIFICATION OF NAMED PLAINTIFF
PURSUANT TO FEDERAL SECURITIES LAWS

FREDERICK M. GARSON ("Plaintiff") declares:

1. Plaintiff has reviewed the complaint and authorized its filing.

2. Plaintiff did not purchase the security that is the subject of this
action at the direction of plaintiff's counsel or in order to participate in
this private action or any other litigation under the federal securities laws.

3. Plaintiff is willing to serve as a representative party on behalf
of the class, including providing testimony at deposition and trial, if
necessary.

4. Plaintiff has made no transaction(s) during the Class Period in the
debt or equity securities that are the subject of this action except those set
forth below:

<TABLE>
<CAPTION>
Price
Security Transaction Date Per Share
- -------- ----------- ---- ---------
<S> <C> <C> <C>
Common Stock Purchased 800 shares 02/27/98 $24.56
</TABLE>

During the three years prior to the date of this Certificate,
Plaintiff has sought to serve or served as a representative party for a class in
the following actions filed under the federal securities laws:

6. The Plaintiff will not accept any payment for serving as a
representative party on behalf of the class beyond the Plaintiff's pro rata
share of any recovery, except such reasonable costs and expenses (including lost
wages) directly relating to the representation of the class as ordered or
approved by the court.

<PAGE> 37

I declare under penalty of perjury that the foregoing is true and
correct. Executed this 10th day of May, 1998.

/s/ FREDERICK M. GARSON
-----------------------------------
FREDERICK M. GARSON

<PAGE> 38

FILED
98 MAY 18 PM 1:23
CLERK, U.S. DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

BY: [SIG] DEPUTY

CIVIL COVER SHEET

JS 44
(Rev. 07/89)

I. (a) PLAINTIFFS

RICK PENICK and CORALETTE PENICK, ALBERT D. BARNABEI and NANCY M. BARNABEI, and
FREDERICK M. GARSON, On Behalf of Themselves and All Others Similarly Situated

(b) COUNTY OF RESIDENCE OF FIRST LISTED PLAINTIFF New York
(EXCEPT IN U.S. PLAINTIFF CASES) --------

- --------------------------------------------------------------------------------
(c) ATTORNEYS (FIRM NAME, ADDRESS,AND TELEPHONE NUMBER)

William S. Lerach, Esq.

MILBERG WEISS BERSHAD HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
619/231-1058

- --------------------------------------------------------------------------------

DEFENDANTS

FPA MEDICAL MANAGEMENT INC., SOL LIZERBRAM, STEPHEN J. DRESNICK, SETH FLAM,
STEVEN M. LASH and FOUNDATION HEALTH CORPORATION

COUNTY OF RESIDENCE OF FIRST LISTED DEFENDANT
----------------------------------
(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND
INVOLVED

- --------------------------------------------------------------------------------

ATTORNEYS (IF KNOWN)

- --------------------------------------------------------------------------------

II. BASIS OF JURISDICTION (PLACE AN x IN ONE BOX ONLY)

[ ] 1. U.S. Government [X] 3. Federal Question
Plaintiff (U.S. Government Not a Party)

[ ] 2. U.S. Government [ ] 4. Diversity
Defendant (Indicate Citizenship of
Parties in Item III)

- --------------------------------------------------------------------------------

III. CITIZENSHIP OF PRINCIPAL PARTIES (PLACE AN x IN ONE BOX FOR
(For Diversity Cases Only) PLAINTIFF AND ONE BOX FOR DEFENDANT)

PTF DEF PTF DEF

Citizen of This State [ ] 1 [ ] 1 Incorporated or Principal [ ] 4 [ ] 4
Place of Business in
This State

Citizen of Another [ ] 2 [ ] 2 Incorporated and [ ] 5 [ ] 5
State Principal Place of
Business in Another
State

Citizen or Subject of [ ] 3 [ ] 3 Foreign Nation [ ] 6 [ ] 6
a Foreign Country

- --------------------------------------------------------------------------------

IV. CAUSE OF ACTION

(CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND
WRITE A BRIEF STATEMENT OF CAUSE. DO NOT CITE
JURISDICTIONAL STATUTES UNLESS DIVERSITY.)

CLASS ACTION COMPLAINT FOR VIOLATIONS OF FEDERAL SECURITIES LAW
15 U.S.C. SECTIONS 78j(b) and 78t(a)

- --------------------------------------------------------------------------------

V. NATURE OF SUIT (PLACE AN x IN ONE BOX ONLY)

- --------------------------------------------------------------------------------
CONTRACT TORTS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

VI. ORIGIN (PLACE AN x IN ONE BOX ONLY)

</TABLE>
- -------------------------------------------------------------------------------
VIII. RELATED CASE(S) (See instructions):
IF ANY

JUDGE DOCKET NUMBER
------------ ----------

- --------------------------------------------------------------------------------
DATE SIGNATURE OF ATTORNEY OF RECORD

MAY 18, 1998 /s/ WILLIAM S. LERACH
- --------------------------------------------------------------------------------

UNITED STATES DISTRICT COURT

<PAGE> 1
EXHIBIT 99.5

MILBERG WEISS BERSHAD FILED
HYNES & LERACH LLP 98 MAY 19 PM 4:23 JM
WILLIAM S. LERACH (68581)
ALAN SCHULMAN (128661) CLERK. U.S. DISTRICT COURT
DARREN J. ROBBINS (168593) SOUTHERN DISTRICT OF CALIFORNIA
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058 BY: J. HASLER DEPUTY

WOLF POPPER LLP
MARIAN P. ROSNER
PAUL O. PARADIS
845 Third Avenue
New York, NY 10022
Telephone: 212/759-4600

Attorneys for Plaintiff

(Additional counsel appear on signature page.]

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

NATALE LONGORDO, On Behalf of ) No. '98 CV 939K (POR)
Herself and All Others similarly )
Situated, ) CLASS ACTION
)
)
Plaintiff, ) COMPLAINT FOR VIOLATIONS OF
) THE FEDERAL SECURITIES LAWS
)
vs. )
)
FPA MEDICAL MANAGEMENT, INC., SETH )
FLAM, SOL LIZERBRAM, STEVEN M. )
LASH, STEPHEN J. DRESNICK, HOWARD )
HASSMAN and JAMES A. LEBOVITZ, )
)
)
) Plaintiff Demands A Trial
Defendants. ) By Jury
_____________________________________ ) _____________________________________

<PAGE> 2

INTRODUCTION

1. This is a securities class action on behalf of all those who
purchased or otherwise acquired the common stock of FPA Medical Management, Inc.
("FPA" or the "Company") between February 27, 1997 and May 14, 1998 (the "Class
Period"), seeking to pursue remedies under the Securities Exchange Act of 1934.
This action alleges a series of false and misleading statements by defendants
issued as part of a scheme to artificially inflate the market price of FPA's
common stock and to defraud purchasers of that stock during the Class Period.

2. FPA is a national physician practice management company which
acquires, organizes and manages primary care physician practice networks and
provides contract management services to hospital-based emergency departments.
FPA provides primary and specialty care services to prepaid managed care
enrollees and fee-for-service patients through a network of independent practice
association physicians and owned primary care physician groups. FPA manages all
covered primary and specialty medical care for each enrollee in exchange for
monthly capitation payments pursuant to payor contracts.

- 1 -

<PAGE> 3
companies, while achieving favorable merger synergies, prosperity, record
financial results and success.

4. During the Class Period and pursuant to defendants' scheme to
artificially inflate FPA's stock, defendants represented that FPA was continuing
to realize "strong revenue and earnings growth," with "successful integration of
new operations" that were "ahead of plan." Defendants claimed that FPA offered
"enhanced financial and management resources," that acquisitions were
"immediately positive to earnings through consolidation of corporate and
marketing operating expenses", that FPA was doing "an effective job of blocking
and tackling and producing quality and value," had the "ability to successfully
integrate seven acquisitions," was achieving "significant synergies," "record"
results and was performing "above expectations" as "integration plans provide
positive sequential results." Defendants stated that FPA's entry into national
contracts with "some of the largest and highest quality healthplans" in the
country enabled it to "increase revenues" and unabashedly declared "we remain
comfortable with analysts' earnings estimates for the fourth quarter of 1997 and
1998" adding "we expect to exceed analysts' high range revenue estimates for the
1997 fourth quarter."

5. But, in truth, FPA's business model was failing. By the beginning
of the Class Period and even more with each passing acquisition, FPA's business
and financial condition was spiralling towards disaster. FPA's economic
condition was being seriously and adversely impacted by a frenetic acquisition
pace that had greatly exceeded its critically important management information
system ("MIS") and medical claims tracking abilities required to control

- 2 -
<PAGE> 4

medical costs and by the assumption or absorption of too many unprofitable
contracts and payor relationships. FPA could not and was not controlling medical
costs and was failing to adequately reserve for incurred but not reported
("IBNR") medical costs. FPA was losing millions as operating expenses vastly
exceeded income. Defendants were able to camouflage FPA's increasing problems by
financial results that were false and misleading. But when it was no longer
able to conceal its problems after an FY97 year-end audit, FPA was forced to
reveal that its purportedly healthy business had collapsed -- acknowledging that
it had overvalued its acquisitions by an astounding $125 million, was running
out of money and would exhaust its cash by June 30, 1998, as it spent $8 million
more than it was taking in, and revealing that it had lacked adequate controls
and infrastructure to manage its business. Reporting 1Q98 results that were far
below the quarterly earnings defendants' false and misleading statements had led
analysts to expect, the Company revealed that it would post about $200 million
in charges in 2Q98, including about $125 million in goodwill impairment and $40
million in write-down of shared risk and other receivables and that it had set
inadequate reserves which had the effect of inflating its financial results. In
sum, as one reporter commented, FPA had "crash landed."

6. As a result of these revelations, on May 15, 1998, FPA's stock
collapsed from $11.50 to just $6.00 and had an almost 50% one-day stock drop on
huge volume of over 18.6 million shares.

7. Thus, as a result of defendants' false financial reporting and
misrepresentations and concealment of serious problems in FPA's business during
the Class Period, FPA's common

- 3 -
<PAGE> 5

stock traded at artificially inflated levels as high as $39.875 per share.
While FPA stock was artificially inflated, the Company used it as currency to
acquire several companies in transactions totalling more than several hundred
million dollars. Top FPA executives named as defendants, taking advantage of
their knowledge of adverse, non-public information, sold off 415,040 shares of
their FPA stock for illegal insider trading proceeds of over $9.8 million.

8. The price action of FPA's common stock and the insider selling
engaged in by the defendant insiders during the Class Period is shown below.

FPA MEDICAL MANAGEMENT, INC.

JANUARY 2, 1997 - MAY 18, 1998

[DAILY STOCK PRICES GRAPH]

- 4 -

<PAGE> 6

JURISDICTION AND VENUE

9. The claims asserted herein arise under Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C.
Sections 78j(b) and 78t(a), and Rule 10b-5, 17 C.F.R. Section 240.10b-5.

10. Jurisdiction is conferred by Section 27 of the Exchange Act, 15
U.S.C. Section 78aa, and 28 U.S.C. Section 1331.

PARTIES

12. Plaintiff Natale Longordo purchased 2,000 shares of FPA common
stock on March 2, 1998 at $23-3/16 per share, 1,000 shares on March 3, 1998 at
$23-7/16 per share, 1,000 shares on March 3, 1998 at $22-5/8 per share and
2,000 shares on March 6, 1998 at $18-7/16 per share, and was damaged thereby.

13. Defendant FPA Medical Management, Inc. is headquartered at 2878
Camino del Rio South, San Diego, California. FPA is a national physician
practice management company which acquires, organizes and manages primary care
physician practice networks and provides contract management services to
hospital-based emergency departments. FPA provides primary and specialty care
services to prepaid managed care enrollees and fee-for-service patients through
a network of independent practice association physicians and owned primary care
physician groups. FPA manages all covered primary and specialty medical care for
each enrollee in exchange for monthly

- 5 -

<PAGE> 7

capitation payments pursuant to payor contracts. During the Class Period, FPA
stock traded in an efficient market on the NASDAQ National Market System.

14. (a) Defendant Seth Flam ("Flam") is, and at all relevant times
was until his resignation in March 1998, FPA's President, Chief Executive
Officer and a director (Principal Executive Officer). Because of defendant
Flam's positions with the Company, he knew the adverse non-public information
about its business, finances, products, markets and present and future business
prospects via access to internal corporate documents (including the Company's
operating plans, budgets and forecasts and reports of actual operations compared
thereto), conversations and connections with other corporate officers and
employees, attendance at management and Board of Directors' meetings and
committees thereof and via reports and other information provided to him in
connection therewith. During the Class Period, defendant Flam sold 93,000 shares
of FPA stock for proceeds of $2.2 million. He also received a $4.8 million
severance package when he resigned in March 1998.

(b) Defendant Sol Lizerbram ("Lizerbram") is, and at all relevant
times was, FPA's Chairman of the Board of Directors. Because of defendant
Lizerbram's position with the Company, he knew the adverse non-public
information about its business, finances, products, markets and present and
future business prospects via access to internal corporate documents (including
the Company's operating plans, budgets and forecasts and reports of actual
operations compared thereto) , conversations and connections with other
corporate officers and employees, attendance at management and Board of
Directors' meetings and committees thereof and via

- 6 -
<PAGE> 8

reports and other information provided to him in connection therewith. During
the Class Period, defendant Lizerbram sold 87,900 shares of FPA stock for
proceeds of $2.1 million.

(c) Defendant Steven M. Lash ("Lash") is, and at all relevant
time was, Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Accounting Officer) of the Company. Because of
defendant Lash's positions with the Company, he knew the adverse non-public
information about its business, finances, products, markets and present and
future business prospects via access to internal corporate documents (including
the Company's operating plans, budgets and forecasts and reports of actual
operations compared thereto), conversations and connections with other corporate
officers and employees, attendance at management and Board of Directors'
meetings and committees thereof and via reports and other information provided
to him in connection therewith. During the Class Period, defendant Lash sold
79,000 shares of FPA stock for proceeds of $1.8 million.

(d) Defendant Stephen J. Dresnick ("Dresnick") is, and at all
relevant times was, a director and Vice Chairman of the Board of Directors of
FPA. On March 26, 1998 he was appointed Chief Executive Officer of the Company,
replacing Flam. Because of defendant Dresnick's positions with the Company, he
knew the adverse non-public information about its business, finances, products,
markets and present and future business prospects via access to internal
corporate documents (including the Company's operating plans, budgets and
forecasts and reports of actual operations compared thereto) , conversations and
connections with other corporate officers and employees, attendance at
management

- 7 -

<PAGE> 9

and Board of Directors' meetings and committees thereof and via reports and
other information provided to him in connection therewith. During the Class
Period, defendant Dresnick sold 36,140 shares of FPA stock for proceeds of
$859,140.

(e) Defendant Howard Hassman ("Hassman") is, and at all relevant
times was until his resignation on April 1, 1998, a director and Executive Vice
President of FPA. Because of defendant Hassman's positions with the Company, he
knew the adverse non-public information about its business, finances, products,
markets and present and future business prospects via access to internal
corporate documents (including the Company's operating plans, budgets and
forecasts and reports of actual operations compared thereto), conversations and
connections with other corporate officers and employees, attendance at
management and Board of Directors' meetings and committees thereof and via
reports and other information provided to him in connection therewith. During
the Class Period, defendant Hassman sold 98,000 shares of FPA stock for proceeds
of $2.3 million. He also received a $3.4 million severance package when he
resigned on April 1, 1998.

(f) Defendant James A. Lebovitz ("Lebovitz") is, and at all
relevant times was, the Senior Vice President of FPA, General Counsel and
Secretary to the Company. Because of defendant Lebovitz's positions with the
Company, he knew the adverse non-public information about its business,
finances, products, markets and present and future business prospects via access
to internal corporate documents (including the Company's operating plans,
budgets and forecasts and reports of actual operations compared thereto),
conversations and connections with other corporate

- 8 -

<PAGE> 10

officers and employees, attendance at management and Board of Directors'
meetings and committees thereof and via reports and other information provided
to him in connection therewith. During the Class Period, defendant Lebovitz sold
21,000 shares of FPA stock for proceeds of $469,771.

15. The defendants named in paragraph 14 (a) - (f) are referenced
herein as the "Individual Defendants."

MOTIVE, OPPORTUNITY AND KNOWLEDGE

17. Because of their Board membership and/or executive and managerial
positions with FPA, each of the Individual Defendants had access to the adverse
non-public information about the business, finances, products, markets and
present and future business prospects of FPA particularized herein via access to
internal corporate documents, conversations or connections with corporate
officers or employees, attendance at management and/or Board of Directors'
meetings and committees thereof and/or via reports and other information
provided to them in connection therewith.

18. Defendants had a duty to promptly disseminate accurate and
truthful information with respect to FPA's operations and financial condition or
to cause and direct that such information be disseminated and to promptly
correct any previously disseminated

- 9 -

<PAGE> 11

information that was misleading to the market. As a result of their failure to
do so, the price of FPA common stock was artificially inflated during the Class
Period, damaging plaintiff and the Class.

20. Each of the defendants is liable as a primary violator in making
false and misleading statements, and for participating in a fraudulent scheme
and course of business that operated as a fraud or deceit on purchasers of FPA
stock during the Class Period. All of the defendants had motives to pursue a
fraudulent scheme in furtherance of their common goal, i.e. , inflating the
trading price of FPA stock by making false and misleading statements and
concealing material adverse information. The fraudulent scheme and

- 10 -

<PAGE> 12

course of business was designed to and did: (a) deceive the investing public,
including plaintiff and other Class members; (b) artificially inflate the price
of FPA stock during the Class Period; (c) cause plaintiff and other members of
the Class to purchase FPA stock at inflated prices; (d) enable FPA to use
artificially inflated stock as currency to acquire other companies and create
the false impression of successful expansion and prosperity; (e) increase the
value of options to purchase FPA stock owned by the Individual Defendants, as
well as their own FPA shareholdings; (f) conceal and cover-up the Individual
Defendants' mismanagement of FPA and failure to properly implement a viable
acquisition strategy while conferring exorbitant salaries and bonuses upon
certain defendants that were grossly disproportionate to FPA's true business
condition; and (g) permit them to pocket, in the aggregate, over $9.8 million in
illegal insider-trading proceeds as part of the fraudulent scheme and course of
business they were pursuing and participating in, thus personally profiting from
their own deliberate and dishonest acts.

STATUTORY SAFE HARBOR

21. The federal statutory safe harbor provided for forward-looking
statements under certain circumstances does not apply to any of the allegedly
false statements pleaded in this Complaint because even if any of the statements
pleaded herein were forward-looking statements they were not actually identified
as "forward-looking statements" when made, or it was not stated that actual
results "could differ materially from those projected," or the forward-looking
statements pleaded were not accompanied by meaningful cautionary statements
identifying important factors that

- 11 -
<PAGE> 13
could cause actual results to differ materially from the statements made
therein. Defendants are liable for the allegedly forward-looking statements
pleaded in any event because, at the time each of those forward-looking
statements was made, the speaker knew the allegedly forward-looking statement
was false and was authorized and/or approved by an executive officer of FPA who
knew that those statements were false when made.

DEFENDANTS' AWARENESS OF THE UNDISCLOSED
ADVERSE CONDITIONS IMPACTING FPA'S BUSINESS

22. The defendants are top officers and directors of FPA and controlled
the Company's press releases, corporate reports, SEC filings or communications
with analysts, as well as the preparation of its financial statements. A key
management tool for the Company's top executives and directors was its business
plan, budget, forecast or projection, by which the Company's top executives set
performance goals for FPA and then closely monitored the corporation's actual
performance, i.e., results of operations compared to the planned, budgeted or
forecasted results on a constant basis. These plans, forecasts and budgets were
prepared on an annual basis and updated during the year. All of the defendants
were aware of FPA's internal plan, forecast and budget and of the internal
reports prepared and circulated, at least monthly, comparing FPA's actual
results to those previously planned, budgeted or forecasted. FPA's top
executives used its internal plan, budget and forecast as part of the basis for
the statements they made publicly about the Company's performance during 1996,
1997 and 1998.

- 12 -
<PAGE> 14

23. Throughout the Class Period, based on the frequently prepared and
negative internal reports comparing the Company's actual business performance to
plan, budget and forecast, the defendants knew or recklessly disregarded that
those public statements were false and misleading when made and were inflating
the market price of FPA stock.

DEFENDANTS' FALSE AND MISLEADING
STATEMENTS DURING THE CLASS PERIOD

24. Defendants issued numerous false and misleading statements during
the Class Period pursuant to their fraudulent scheme. On February 27, 1997, FPA
announced "record" fourth quarter and FY96 year-end results, stating:

FPA Medical Management, Inc. today announced revenues and earnings for
the fourth quarter and year ended December 31, 1996.

Operating revenues for the fourth quarter ended December 31,
1996 increased 166% to $151.0 million compared to $56.8 million in the
same period last year, including the operations of Sterling Healthcare
Group, Inc., accounted for as a pooling of interests. Net income for the
fourth quarter was $4.2 million or $0.18 per share (excluding
non-recurring charges of $36.3 million related to transaction costs
associated with the acquisition of the Foundation Health affiliated
medical centers in Arizona and California, Sterling Healthcare Group,
and certain restructuring charges) compared to net income of $677,000 or
$0.04 per share for the same period last year. Including the charges,
the Company reported a net loss of $23.5 million or $1.01 per share.
Weighted average shares outstanding were 23,199,195 and 16,961,698 for
the fourth quarters of 1996 and 1995, respectively, with shares
outstanding including the effect of the Sterling pooling.

For the year ended December 31, 1996, operating revenue
increased 161% to $440.3 million compared to $168.4 million for the same
period last year. Excluding the non-recurring charges, net income for
the year was $13.0 million or $0.60 per share on weighted average shares
outstanding of 21,702,786 compared to net income of $3.8 million or
$0.28 per share on 13,693,193 weighted shares outstanding for the same
period in the prior year.

- 13 -
<PAGE> 15

Including non-recurring charges of $38. 0 million, FPA reported a loss
of $15.7 million or $0.72 per share.

Commenting on the results, Dr. Seth Flam, President and Chief
Executive Officer stated, "1996 was a year of significant achievement
for FPA. During the year we successfully executed our growth strategy
by entering into new geographic regions. Through the merger with
Sterling Healthcare Group we now have operations in 25 states. We remain
optimistic about our long-term prospects and have built a solid
foundation for growth both internally and through strategic
acquisitions."

25. On March 17, 1997, FPA and AHI Healthcare Systems, Inc. announced
completion of their merger via a press release stating:

"The merger will immediately add more than 200,000 HMO enrollees
serviced through FPA physicians, expand FPA's primary care operations
into three new markets, and add nine payors to the FPA network,"
commented Dr. Sol Lizerbram, Chairman of FPA.

- 14 -
<PAGE> 16

26. FPA's press release dated April 30, 1997 announcing the Company's
first quarter results stated:

FPA Medical Management... today announced revenues and earnings for the
first quarter ended March 31, 1997.

Commenting on the results, Steven M. Lash, Executive Vice
President and Chief Financial Officer stated, "We are pleased with our
financial performance in the first quarter. Strong HMO enrollment
continues to drive our growth. After the recent completed acquisition of
AHI, we now have over 7,200 primary care physicians providing quality
care to over 864,000 HMO members as compared to 1,800 primary care
physicians and 232,000 HMO members for the same quarter last year. In
addition, we continue to show margin improvements based on the further
integration of acquisitions as we continue to reduce medical and
administrative expenses. This operating leverage is reflected in the
reduction in our overall medical loss ratio of 71% for the first quarter
of 1997 compared to 72% for the same period last year."

- 15 -
<PAGE> 17

27. FPA's announced 1Q97 earnings had an immediate and positive impact
upon the market, increasing the share price of its common stock and reversing
its prior price weakness due to market factors. Needham & Co. analyst Bernard
Lirola immediately upgraded FPA to a "strong buy" from "buy." Needham was the
financial advisor to FPA on its merger with AHI Healthcare Systems, Inc., which
closed on March 17, 1997.

Dr. Seth Flam, President and Chief Executive Officer of FPA,
stated, "We are proud that the country's largest health plans continue
to demonstrate their confidence in FPA. This strategic business
relationship with Pacificare will expedite FPA's expansion into new
geographic regions and allow for steady revenue growth as contracts are
converted to global capitation."

29. Continuing to create the impression of health and prosperity, on
June 6, 1997, FPA entered into a definitive

- 16 -
<PAGE> 18

agreement to acquire HealthCap, Inc. in a stock-for-stock merger, stating in
pertinent part:

The stock-for-stock merger was valued at almost $50 million based on a closing
price of $22.75 per share of FPA stock, with shareholders of HealthCap receiving
approximately 2.2 million FPA shares.

30. An article disseminated to the financial community in the June 16,
1997 edition of the San Diego Business Journal entitled "FPA Medical continues
its rapid expansion" accurately quoted defendant Lash who allayed any concern
that FPA was growing too fast for its own good. The article stated in pertinent
part:

"This merger takes us into two new markets that are highly
desirable, including St. Louis and Las Vegas, solidifies our leadership
position in San Diego, and

- 17 -
<PAGE> 19
marks our entry into OB/GYN business," said Steven Lash, FPA's chief
financial officer.

* * *

Lash said the merger will increase FPA's 1997 revenues to more than $1
billion.

First-quarter revenue of more than $222 million earned the company
more than $6 million, or 20 cents per share. In 1996, FPA increased
operating revenue by 161 percent to $440 million.

The boost in revenues tracks FPA's rapid expansion. In December, the
company added 240,000 HMO members with its purchase of Foundation Health
Medical Group, Thomas Davis Medical Centers and Foundation Health Medical
Services.

In March, FPA completed a merger with AHI Healthcare Systems, Inc.
which added 2,200 physicians and 200,000 enrollees in California, Arizona,
Texas, Georgia, Louisiana and New York.

Lash is not concerned that the company is growing too fast for its own
good.

"This is a rapidly consolidating industry," he said. "When we make an
acquisition and integrate it into our system, we're doing an effective job
of blocking and tackling, and producing quality and value."

31. Shortly thereafter FPA announced another merger via a Company press
release dated July 2, 1997, stating in pertinent part:

FPA MEDICAL MANAGEMENT, INC. (NASDAQ:FPAM) AND HEALTH PARTNERS, INC. today
announced that they have entered into a definitive merger agreement
pursuant to which FPA Medical Management will acquire Health Partners in a
stock-for-stock merger. The closing of the merger is expected to occur late
in the third quarter of 1997 and is subject to the receipt of certain
regulatory approvals and satisfaction of certain customary conditions.

Health Partners currently has a network of 418 primary care physicians
which provides healthcare services to over 138,000 HMO enrollees. This
merger will expand FPA's primary care delivery model to Ohio, Kentucky,
Washington DC and Virginia and serve as a platform for significant growth
in New York, New Jersey and Texas. Health Partners is the largest physician

- 18 -
<PAGE> 20

practice management organization in New York with over 103,000 HMO
members.

In addition, Oxford Health Plans, a shareholders of Health
Partners and its largest payor, has agreed to enter into a 10-year
strategic agreement with FPA under which FPA will provide physician
services to Oxford's members in existing markets and which provides a
framework for expansion to new markets. FPA and Oxford will also work
collaboratively on continuing to enhance member satisfaction and on
quality improvement initiatives.

* * *

32. An article appearing in The Wall Street Journal on July 3, 1997
reported the investment community's enthusiastic reaction to defendants'
seemingly positive announcements, stating:

Underscoring the spread of managed health care into New York
City, FPA Medical Management Inc., a fast-growing manager of physician
groups, said it agreed to purchase Health Partners Inc. for $115 million
in FPA stock.

* * *

- 19 -
<PAGE> 21

33. Defendants created additional investor confidence and enthusiasm in
their Company press release disseminated July 9, 1997 via the PR Newswire which
stated:

FPA Medical Management, Inc. . . . announced today the signing of new
seven year agreements with Healthsource, Inc. (NYSE:HS) to service HMO
members in three additional states.

* * *

Dr. Seth Flam, President and Chief Executive Officer of FPA,
stated, "This agreement will expedite FPA's same store growth efforts
in our existing service areas and continue to increase revenues with the
additional of global capitation arrangements."

34. Shortly thereafter, FPA announced "record revenues and earnings" for
the second quarter 1997 via a press release issued on July 30, 1997 which
stated:

- 20 -
<PAGE> 22

share (excluding a non-recurring charge of $5.4 million related to costs
associated with the merger of HealthCap, Inc.) compared to a net loss of
$4.6 million or $0.16 per share for the same period last year. Weighted
average shares outstanding were 34,259,107 and 28,317,866 for the second
quarters of 1997 and 1996, respectively.

For the six months ended June 30, 1997, operating revenue
increased 100% to $475.6 million compared to $237.2 million in the same
period last year. Net income for the first six months of 1997 was $11.0
million or $0.32 per share (excluding non-recurring charges associated
with the HealthCap, Inc. and AHI Healthcare Systems, Inc. mergers)
compared to a net loss of $3.6 million or $0.13 per share for the same
period last year. Weighted average shares outstanding were 34,510,257
and 27,660,452 for the first six months periods of 1997 and 1996,
respectively.

Commenting on the results, Steven M. Lash, Executive Vice
President and Chief Financial Officer stated, "Our record results for
the second quarter are due to better than expected performance in Texas
and Florida, the recently acquired care centers performing above
pro-forma, and all other markets performing as planned. In addition,
FPA's G&A expenses continued to decrease as a percentage of sales as we
further integrate operations of our previously acquired networks."

Dr. Seth Flam, President and Chief Executive Officer, stated:
"FPA continues to perform above expectations as our integration plans
provide positive sequential results. We believe this trend will
continue and remain optimistic for the balance of the year."

Dr. Sol Lizerbram, Chairman, added, "FPA has implemented our
plan of signing national payor agreements. In the last six months, FPA
has signed five national contracts with some of the largest and highest
quality healthplans in the country. These contracts represent over 9.6
million HMO members in our current operating markets and 12.3 million
HMO members nationwide. We will begin penetrating this membership which
will provide FPA continued success in the future as these contracts
enable us to expand into new geographic markets, increase HMO membership
and increase revenues."

35. FPA'S reported statements had their desired effect of increasing
investor confidence and inflating the share price of its stock. The market
reacted with great enthusiasm to FPA's reported "record" revenues for 2Q97. As
noted in an article appearing on

- 21 -
<PAGE> 23

July 31, 1997 in the San Diego Union-Tribune which stated in pertinent part:

FPA Medical Management Inc. yesterday demonstrated its ability
to cash in on a string of recent acquisitions by more than doubling
quarterly revenues and leaping from red ink into profitability.

The results included a one-time gain of $6.2 million and a
one-time charge of $5.4 million, both related to acquisitions.

* * *

The results announced yesterday appeared healthy to investors,
who pushed FPA's share price up $1 to $27.375. About 1.6 million shares
changed hands, or more than twice the average daily volume in recent
months.

The quarterly results also exceeded the expectations of industry
analysts, and the company promised more of the same to come.

"We believe this trend will continue and remain optimistic for
the balance of the year," said Dr. Seth Flam, president and chief
executive officer.

36. On October 6, 1997, FPA announced in a press release disseminated to
the financial community its expansion into the Los Angeles region and
acquisition of Axminster Medical Group in a stock-for-stock merger that closed
September 30, 1997. As before, FPA used its own artificially inflated common
stock as currency to feed its expansion addiction and further create the false
and misleading impression of health and prosperity.

- 22 -
<PAGE> 24

37. Then on October 14, 1997, FPA announced via a press release that it
merged with Health Partners, Inc., stating:

Steven M. Lash, FPA Executive Vice President and Chief
Financial Officer, commented, "We are pleased to finalize our merger
with Health Partners and believe the Health Partners network of quality
physicians, and our national payor agreements, creates a dynamic
opportunity to service HMO members in the New York metropolitan area.
Based on the final terms of the agreement, the transaction will provide
immediate accretion to FPA shareholders."

For the nine months ended September 30, 1997, operating revenue
increased 76% to $723.8 million compared to $410.5 million in the same
period last year. Net loss, including merger, restructuring and other
unusual charges for the first nine months of 1997 was $2.8 million or
$0.08 per share compared to a net loss, including merger, restructuring
and other unusual charges, of $7.6 million or $0.26 per share for the
same period last year. Weighted average shares outstanding were
35,676,985 and 28,933,417 for the nine months ended September 30, 1997
and 1996, respectively.

* * *

Commenting on the results, Steven M. Lash, Executive Vice
President and Chief Financial Officer stated, "We are pleased to report
record earnings for the third

- 23 -
<PAGE> 25

quarter. FPA's overall medical loss ratio in the third quarter of 1997
was 70.4%. This represents the fourth sequential quarter of MLR
improvement. In addition, our G&A expenses continued to decrease as a
percentage of revenues which can be attributed to the continued
consolidation of acquisitions, synergy achievements and improvements in
productivity."

39. In an effort to reverse the downward pressure on the stock due to
investor concerns that revenues had slipped compared to 2Q97, FPA led the market
to believe that the revenue slippage was merely a result of its election to
walk away from three unprofitable contracts. FPA's explanation misled one
analyst, Gary Frazier at Bear Sterns, to comment that the quality of FPA's
earnings is "quite good," as quoted over the Dow Jones Newswire on October 30,
1997.

40. In an article appearing in the San Diego Union-Tribune on November
1, 1997, FPA again dismissed slippage of $4.75 in its shares to close at
$24.125, a three-month low as of October 30, 1997, after reaching a three-month
high of $39.875 on October 6, 1997, stating that investors were incorrectly
interpreting difficulties reported by HMOs. These statements by FPA buoyed its

- 24 -
<PAGE> 26

stock price and helped to diminish the erosion in the price of its stock that
otherwise would have occurred absent those statements due to non-company
specific market factors.

41. On November 24, 1997, FPA announced via a Company press release that
it had entered into a definitive agreement pursuant to which FPA would acquire
Avanti Health Systems of Texas, Inc. Commenting on the acquisition, defendant
Lash stated:

* * *

Oxford is current with respect to all of its prepayments to Health
Partners. The company also stated that Health Partners pays a
significant number of its own claims and had developed a customized
process with Oxford to regularly receive paid claims information from
Oxford for analysis and inclusion in Health Partners' financial
statements. This process has been in place and effectively used for the
past four years.

- 25 -
<PAGE> 27

43. In a Company press release dated January 8, 1998, entitled "FPA
Medical Management, Inc. Comments on Operations and Fourth Quarter," designed to
increase investor confidence and buoy FPA's share price in the face of downward
market pressures in its industry sector, FPA stated:

FPA Medical Management, Inc. (Nasdaq:FPAM) today commented on the
strength of its California-based business in response to investor
concerns following a recent announcement by another physician practice
management services provider, related to market and industry
conditions. FPA Medical Management stated that it has a strong 10-year
history in California and its current operations are performing as
expected.

FPA reiterated the following issues regarding its California operations:
FPA currently has no global capitation risk arrangements in California.

FPA has limited its Universal Open Access contract agreements to one
plan, and is successfully servicing approximately 18,000 lives, or less
than 6% of FPA's total California membership.

FPA maintains subcapitation agreements with specialists. FPA operates
Hospitalist programs in most California markets.

All California transactions, including the most recent, have been fully
integrated, with the last significant transaction completed 9 months
ago.

44. Shortly afterwards, in its press release disseminated to the
financial community on January 22, 1998 reporting further positive news, FPA
stated:

***

Steven M. Lash, Executive Vice President and Chief Financial
Officer of FPA, stated, "We are pleased to add Orange Coast and St.
Joseph to the FPA network. Their commitment to quality managed care and
strong positive financial performance will add to the strength and
growth of our California operations. Orange Coast is strategically
located in the Orange County, Southern California market which has a
strong managed care presence, and due to its close proximity to our San
Diego operations, will allow for a seamless integration and synergies."

The transaction is expected to increase FPA's California 1998
revenues by more than $60 million assuming a closing date of April 30,
1998, and will be immediately accretive to earnings.

- 27 -
<PAGE> 29

million) or $0.17 per share for the fourth quarter ended December 31,
1997. Weighted average shares outstanding were 43,594,548 and 35,542,571
for the fourth quarters of 1997 and 1996, respectively.

For the year ended December 31, 1997, operating revenue
increased 71.9% to $1.2 billion compared to $678.5 million for the same
period last year. Excluding non-recurring charges related to transaction
costs associated with several acquisitions, net income for the year was
$25.9 million or $0.61 per share on weighted average shares outstanding
of 42,600,468 compared to a net loss of $26.1 million or $0.80 per share
on 32,639,412 weighted average shares outstanding for the same period in
the prior year. Including non-recurring charges of $55.0 million, FPA
reported a loss of $11.8 million or $0.29 per share for the year.

Commenting on the results, Dr. Seth Flam, President and Chief
Executive Officer, stated, "FPA experienced significant profitable
growth as our operations expanded to 28 states, our primary care
physician network increased to more than 7,600 and our managed care
membership topped 1 million. We are proud of our ability to successfully
integrate seven acquisitions and begin reducing their medical loss
ratios and improving their financial performance while our existing
operations also continued to improve and expand."

46. However, concern over a Salomon Smith Barney downgrade of the
Company, citing increasing debt and declining cash, caused a temporary panic in
investors which sent FPA stock plunging $5.69 to

- 28 -
<PAGE> 30

close at $18.75 on March 6, 1998. Again, defendants responded with statements
designed to buoy market confidence and thereby stem any decline in FPA stock
that would have certainly occurred had the full truth about its dire economic
and business condition been revealed. In an interview reported in the San Diego
Union-Tribune on March 7, 1998, defendant Lash, FPA's Chief Financial Officer,
assured the market that Salomon's downgrade was based on 'incomplete
information' and that Salomon's analyst had misunderstood information provided
by the Company in a conference call on March 6, 1998. Lash was further
accurately reported as claiming that FPA's shares may have also been pressured
by unfulfilled rumors on the Internet that the Company was about to be acquired
and that the fact that 7 million previously unregistered shares had become
available for trading on March 6, 1998, some of which were sold, may have put
additional pressure on FPA's share price. The San Diego Union-Tribune also
reported on March 7, 1998 that Wall Street analysts generally cheered the
Company's financial report of March 6, 1998 noting that Erik Wiberg, an analyst
with UBS Securities, said the Company's performance exceeded his expectations
and that "'[t]hey look pretty good,'" while Margot Durow of Vector Securities
International characterized the 1997 results as strong.

- 29 -
<PAGE> 31

Dresnick's appointment followed the resignation of Dr. Seth
Flam, one of the founders of the Company, who is leaving to pursue other
business interests. "I am an entrepreneur at heart," said Dr. Flam. "The
Company has grown dramatically since its inception and has established a
leadership position among physician practice management companies. I am
confident that Steve Dresnick has the ability to manage the Company into
the future."

Dr. Dresnick stated, "I have a tremendous amount of respect for
Dr. Flam and what he has helped create. Having been acquisition driven
over the past few years, it is important that the Company adjust its
focus to place greater emphasis on infrastructure so that we will be
able to expand with a greater reliance on internal or same market
growth. Our first priority will be to assess all operating divisions
and their contribution to profit and cash flow and develop plans to
achieve improvements in these areas. Acquisitions will be viewed for
their strategic value and their return on capital. We will evaluate debt
financing opportunities in order to support such acquisitions."

The Company also announced that Douglas Kerner, who was recently
hired as Vice President-Treasurer, was named Acting chief Financial
Officer. Steven Lash, who has been Executive Vice President and Chief
Financial Officer since 1994, will remain as Executive Vice President.
... "With the growth that we have experienced this past year and the
complexity of our business, it has become difficult to provide
leadership and individual attention to both treasury and merger and
acquisition activity," said Steven Lash. "Doug was hired because of his
experience with cash management, capital related activities and investor
relations."

Steven Lash also stated, "Our business continues to track
according to expectations and we remain encouraged by the first
quarter's operating and financial performance."

Dr. Sol Lizerbram, who remains as Chairman of the Board and will
continue to develop national payer relationships and affiliations with
hospital integrated delivery systems, stated "I am excited about the
prospects for the Company in the coming years. Steve Dresnick brings
extensive public company experience and management skills and I look
forward to his leadership."

48. An article appearing in The Wall Street Journal on March 27, 1998
accurately quoted defendant Flam as stating that he was leaving because "'I'm an
entrepreneur who has helped to grow a

- 30 -
<PAGE> 32
great company... [and] it's time for me to do other things in my life.'" It also
reported Lash's public remarks that Flam was giving up the post because [t]he
job had become too much for one person.'" In that same article, defendant Lash
was further accurately reported as having commented that FPA financial results
continued to track expectations and that "we remain encouraged by the first
quarter's performance.

(a) FPA's financial results as reported were false, as its
earnings were artificially inflated as detailed in paragraphs 54-66;

(b) FPA's results from operations were overstated due to the
recording of inadequate reserves and the failure to take required write-downs,
as is more fully alleged in paragraphs 54-66;

(d) FPA did not have information systems or controls that were
adequate to keep pace with its acquisitions and, hence, the attempted
integration of new companies was a failure and a disaster from the outset,
especially with regard to the integration of computer systems integral to
tracking claims and controlling costs;

- 31 -
<PAGE> 33

(e) As a result of gross deficiencies in its computer and
information systems and integration problems which were exacerbated by its
acquisitions pace, FPA did not effectively or honestly track medical claims and
costs;

(f) FPA was hemorrhaging as a result of out of control losses and
expenses and was saddled with existing and newly acquired unprofitable contracts
and unprofitable pricing levels -- a serious problem which was worsened by FPA's
inherent inability to control costs and its existing lack of adequate systems in
its operations necessary to get medical costs under control;

(g) Contrary to defendants' representations, FPA's integration of
acquired businesses and their operations, including MIS, was -failing to achieve
merger savings and synergies, negatively impacting FPA's results of operations;

(h) FPA was failing to timely process claims and was understating
and under-reporting medical costs;

(i) FPA was artificially increasing its membership lists by
obtaining unprofitable accounts;

(j) FPA was overstating its revenues by including undisclosed bad
debts without setting a proper reserve for those bad debts or making adequate
allowance for them;

(k) FPA had been skewing its financial results to make them
appear more favorable by setting inadequate reserves for IBNR medical claims;

- 32 -
<PAGE> 34

(m) Commercial pricing for FPA healthcare contracts was too soft
and far softer than ever disclosed -- with a resulting adverse impact on FPA
operations;

(n) Existing and newly acquired lines of business were
performing poorly and below plan; and

(o) As a result of the foregoing, defendants knew that FPA's
acquisition-dependent strategy and its business plan were not on track, that FPA
was spiralling towards imminent financial disaster and the collapse of its
business and that it would not meet analyst expectations for 1997 or 1998 once
its financial results were fairly, meaningfully, accurately and adequately
reported.

THE PREVIOUSLY UNDISCLOSED ADVERSE
EVENTS NEGATIVELY IMPACTING FPA'S BUSINESS
AND OPERATIONS ARE REVEALED TO A SHOCKED MARKET

50. Suddenly, FPA shocked the financial community to its roots when, on
May 15, 1998, it revealed serious problems in its business and operations to
such an extent that it raised serious questions about its ability to operate as
a going concern beyond the second quarter of 1998. On May 15, 1998, the Dow
Jones reported:

* * *

- 33 -
<PAGE> 35

The San Diego based company said a year-end audit found it had
not set aside enough reserves for incurred but not reported, or IBNR,
medical claims. It said it had to increase its reserves by $15 million
in the first quarter. Market observers said the inadequate reserves in
the fourth quarter had the effect of inflating that period's operating
results.

...In a filing with the Securities and Exchange Commission
Friday, the company said it had $12.4 million in cash and marketable
securities at the end of March and that cash on hand and anticipated
cash flow from operations will only be enough to meet the company's
needs until the end of the second quarter, June 30.

* * *

51. In a separate article reported over the Dow Jones News Service on
May 15, 1998, Bear Stearns analyst Gary Frazier was accurately quoted as
stating, "'It's quite obvious now why Flam left and why Lash moved to M&A....The
numbers here are pretty much falling apart.'"

52. FPA reported a net loss of $9.1 million, or $.20 a basic share, for
the quarter ended March 31. That included a

- 34 -
<PAGE> 36

restructuring charge of $7.6 million related to the acquisition of St. Joseph
Medical Corporation and a charge of $7.9 million related to executive severance.
Excluding those items, FPA reported first quarter earnings of $.01 per share,
compared with $0.06 per share a year ago and far below the $.31 mean estimate of
analysts surveyed by earnings tracker FirstCo. As a result of the May 15, 1998
announcement and revelations in FPA's 10-Q filing with the SEC, by the close of
trading, FPA shares were down $5.50 or 48% to close at $6 on NASDAQ volume of
18.6 million shares, far above the daily average of 1.8 million, registering the
complete surprise and shock of investors and that they had been grossly misled
by FPA's false and misleading statements and concealment of material
information.

* * *

- 35 -
<PAGE> 37

Officials of the company noted that it will exhaust its cash by
June 30 and that it needs to raise more money. FPA is spending $8
million more each month than it is taking in.

* * *

Yesterday's announcement painted a distinctly different portrait
of the company than one provided when Dr. Seth Flam, announced his
resignation as Chief Executive Officer on March 26.

"I feel very comfortable about the first quarter," Flam said at the
time. He added: "I'm leaving the company with it poised to be extremely
successful this year."

* * *

Fueled by a string of acquisitions, FPA leapfrogged from
revenues of just $50 million four years ago, when it first sold its
shares to the public, to current annual revenues in excess of $1
billion. But analysts said yesterday that the growth had been
inadequately managed.

"The acquisitions were made at such a frenetic pace and the
company did not have adequate controls and infrastructure to manage to
operations," said Radininsky.

* * *

"There is a lack of operating controls and inadequate
accounting," said Lirola.

FALSE FINANCIAL RESULTS

- 36 -
<PAGE> 38

55. These actions resulted in a material overstatement of the Company's
results during the Class Period in violation of Generally Accepted Accounting
Principles ("GAAP") and SEC rules.

56. GAAP are those principles recognized by the accounting profession as
the conventions, rules and procedures necessary to define accepted accounting
practice at a particular time. SEC Regulation S-X (17 C.F.R. Section 210-4-01(a)
(1)) states that financial statements filed with the SEC which are not prepared
in compliance with GAAP are presumed to be misleading and inaccurate, despite
footnote or other disclosure. Regulation S-X requires that interim financial
statements must also comply with GAAP, with the exception that interim financial
statements need not include disclosure which would be duplicative of disclosures
accompanying annual financial statements. 17 C.F.R. Section 210.10-01(a).

57. GAAP, as set forth in FASB Statement of Concepts ("Concepts") No. 5,
requires that costs incurred during a period which are related to revenues
reported in that period must be recognized as expenses in that same period in
order to match costs with revenues generated as result of those costs.

Concepts No. 5, paragraph 85. Specifically, GAAP, as set forth in the AICPA
Audit and Accounting Guide, Health Care Organizations, June 1, 1996 ("AAG-HCO"),
requires that providers of prepaid and managed

- 37 -
<PAGE> 39

hea1thcare services report medical costs at the time services are rendered by
accruing such costs and making estimates of claims not yet received.

Accounting for Health Care Costs

13.02 Health care costs should be accrued as services are
rendered, including estimates of the costs of services rendered but not
yet reported. Furthermore, if a provider of prepaid health care services
is obligated to render services to specific members beyond the premium
period due to provisions in the contract or regulatory requirements, the
costs of such services to be incurred, net of any related anticipated
revenues, also should be accrued currently.

AAG-HCO paragraph 13.02, in pertinent part. Additionally, GAAP provides that
anticipated losses should be recognized when it is probable that expected future
healthcare costs under existing contracts will exceed future revenue from
premiums on such contracts.

Accounting for Loss Contracts

13.05 A prepaid health care provider enters into contracts to
provide members with specified health care services for specified
periods in return for fixed periodic premiums. The premium revenue is
expected to cover health care costs and other costs over the terms of
the contracts. Only in unusual circumstances would a provider be able to
increase premiums on contracts in force to cover expected losses. . . .

13.06 FASB Statement No. 5, Accounting for Contingencies, states
that a loss should be accrued in financial statements when it is
probable that a loss has been incurred and the amount of the loss can
be reasonably estimated. Accordingly, losses should be recognized when
it is probable that expected future health care costs and maintenance
costs under a group of existing contracts will exceed anticipated future
premiums and stop-loss insurance recoveries on those contracts.

AAG-HCO, paragraphs 13.05 and 13.06, in pertinent part.

58. GAAP, as set forth in Accounting Principles Board opinion ("APB")
No. 17, requires that a company evaluate the recoverability of goodwill and
other intangible assets in each period for which a

- 38 -
<PAGE> 40

balance sheet is presented and, when it is probable the value of goodwill is
impaired, record a charge against earnings to account for the impairment.

Subsequent review of amortization. A company should evaluate the
periods of amortization continually to determine whether later events
and circumstances warrant revised estimates of useful lives. If
estimates are changed, the unamortized cost should be allocated to the
increased or reduced number of remaining periods in the revised useful
life but not to exceed forty years after acquisition. Estimation of
value and future benefits of an intangible asset may indicate that the
unamortized cost should be reduced significantly by a deduction in
determining net income (APB Opinion No. 9, paragraph 21).

APB Opinion 17, paragraph 31.

- Significantly increased competition
- Industry consolidation
- Changing third-party reimbursement requirements
- Technological innovation
- An uncertain regulatory future

- 39 -
<PAGE> 41

AICPA Audit Risk Alerts, Health Care Industry Developments - 1995/96, Complement
to AICPA Audit and Accounting Guide Audits of Providers of Health Care Services,
at 12.

60. As a consequence of its numerous acquisitions prior to and during
the Class Period, FPA recorded goodwill for each of the acquisitions
respectively (the excess of the cost of the acquisition over the fair value of
the assets acquired less liabilities assumed). GAAP requires that goodwill
resulting from the acquisition of another company be amortized by charges
against income over the period estimated to be benefitted. See APB No. 17.
Defendants knew that, in light of the significantly increased competition among
managed healthcare providers, anticipated future industry consolidation, and an
uncertain future among other factors, it was highly uncertain at best that the
acquisition of FHP would provide a competitive advantage for a period exceeding
ten years. See AICPA Audit Risk Alerts, Health Care Industry Developments -
1995/96, Complement to the AICPA Audit and Accounting Guide Audits of Providers
of Health Care Services. Accordingly, FPA should have amortized the acquired
goodwill over far fewer years than it did. Had FPA properly amortized the
goodwill associated with these acquisitions, it would have materially increased
amortization expense and decreased operating income reported in each of the
quarterly periods reported during the Class Period.

61. Further, in order to show positive earnings, defendants caused FPA
to provide medical cost accruals and reserves for IBNR that were wholly
inadequate to cover the actual level of

- 40 -
<PAGE> 42

anticipated costs and claims that had been incurred, and as a consequence, FPA's
earnings were artificially inflated.

63. Moreover, in addition to the improper accounting for medical costs,
FPA was improperly failing to estimate, record and process medical costs and
estimates and under-reserving for pharmacy, capitation and other medical costs.
FPA knew that it had serious problems in setting accurate medical cost reserve
levels and surely knew that the terms of its contracts with providers would make
it difficult to increase prices or adjust terms quickly enough to avoid losses
being incurred in unprofitable plans.

64. FPA reported net income and earnings for the Class Period quarterly
reporting periods and later included those results in reports on Form 10-Q filed
with the SEC and created the impression in the financial community that the
results included therein contained all adjustments necessary to present fairly
FPA's results

- 41 -
<PAGE> 43

of operations and financial position for the relevant quarterly periods. The
results FPA reported and its representations concerning those results were false
and misleading due to the accounting irregularities noted, the Company's failure
to set adequate reserves, the failure to properly report the valuation or useful
life of goodwill, and the failure to assess and report actual costs incurred.

(a) The principle that interim financial reporting should be
based upon the same accounting principles and practices used to prepare annual
financial statements (APB No. 28, paragraph 10);

- 42 -
<PAGE> 44

To the extent that management offers securities of the enterprise to the public,
it voluntarily accepts wider responsibilities for accountability to prospective
investors and to the public in general (FASB Statement of Concepts No. 1,
paragraph 50);

(e) The principle that financial reporting should provide
information about an enterprise's financial performance during a period was
violated. Investors and creditors often use information about the past to help
in assessing the prospects of an enterprise. Thus, although investment and
credit decisions reflect investors' expectations about future enterprise
performance, those expectations are commonly based at least partly on
evaluations of past enterprise performance (FASB Statement of Concepts No. 1,
paragraph 42);

(f) The principle that financial reporting should be reliable in
that it represents what it purports to represent was violated. That information
should be reliable as well as relevant is a notion that is central to accounting
(FASB Statement of Concepts No. 2, paragraphs 58-59);

(g) The principle of completeness, which means that nothing is
left out of the information that may be necessary to insure that it validly
represents underlying events and conditions was violated (FASB Statement of
Concepts No. 2, paragraph 79); and

(h) The principle that conservatism be used as a prudent reaction
to uncertainty to try to ensure that uncertainties and risks inherent in
business situations are adequately considered was violated. The best way to
avoid injury to investors is to try to ensure that what is reported represents
what it purports to represent (FASB Statement of Concepts No. 2, paragraphs 95,
97).

- 43 -
<PAGE> 45

66. Further, the undisclosed adverse information concealed by defendants
during the Class Period is the type of information which, because of SEC
regulations, regulations of the national stock exchanges and customary business
practice, is expected by investors and securities analysts to be disclosed and
is known by corporate officials and their legal and financial advisors to be
the type of information which is expected to be and must be disclosed.

DEFENDANTS' INSIDER TRADING

67. While FPA officials were issuing favorable false statements about
FPA's business during the Class Period, including rendering financial statements
that were false and misleading, the Individual Defendants sold over 415,040
shares of the FPA stock they owned for proceeds of over $9.8 million to profit
from the artificial inflation in FPA's stock price their deliberate and
dishonest acts and fraudulent scheme had created. Notwithstanding their access
to confidential information as a result of their status as directors and/or
officers of the Company, the Individual Defendants sold the following amounts of
FPA's shares at artificially inflated prices throughout the Class Period while
in possession of material non-public information and without disclosing the
same:

<TABLE>
<CAPTION>
AGGREGATE
NAME SHARES PRICE PROCEEDS
- ---------------------- ------ ------------ -----------
<S> <C> <C> <C>
SOL LIZERBRAM 87,900 $19.44-27.75 $2,113,635
DR. SETH FLAM 93,000 $19.44-27.75 $2,215,794
STEVEN M. LASH 79,000 $19.44-27.50 $1,873,161
STEPHEN J. DRESNICK 36,140 $18.50-26.50 $ 859,140
HOWARD HASSMAN 98,000 $20.88-27.09 $2,343,870
JAMES A. LEBOVITZ 21,000 $19.44-26.00 $ 469,771
</TABLE>

- 44 -
<PAGE> 46

This insider selling was unusual in timing and amount.

COUNT I

For Violations Of Section 10 (b) Of The
Exchange Act And Rule 10b-5 Promulgated
Thereunder Against All Defendants

68. Plaintiff incorporates by reference paragraphs 1-67.

69. During the Class Period, defendants engaged in a scheme and course
of business, pursuant to which they knowingly and/or recklessly engaged in acts,
transactions, practices and courses of business which operated as a fraud upon
plaintiff and other members of the Class, and made various untrue statements of
material fact and omitted to state material facts necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading, to plaintiff and other Class members as set forth above. The purpose
and effect of said scheme was to induce plaintiff and the members of the Class
to purchase the Company's common stock during the Class Period at artificially
inflated prices.

70. By reason of the foregoing, the defendants knowingly or recklessly
violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder
in that they themselves or a person whom they controlled: (a) employed devices,
schemes and artifices to defraud; (b) made untrue statements of material facts
or omitted to state material facts necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading;
or (c) engaged in acts, practices and a course of business that operated as a
fraud or deceit upon plaintiff and other members of the Class in connection with
their purchases of the Company's common stock-during the Class Period.

- 45 -
<PAGE> 47

71. As a result of the foregoing, the market price of the Company's
common stock was artificially inflated during the Class Period. In ignorance of
the false and misleading nature of the representations described above,
plaintiff and other members of the Class relied, to their damage, directly on
the misstatements or on the integrity of the market both as to price and as to
whether to purchase these securities. Plaintiff and the other members of the
Class would not have purchased FPA stock at the market prices they paid, or at
all, if they had been aware that the market prices had been artificially and
falsely inflated by the defendants' false and misleading statements and
concealments. At the time of the purchase of FPA common stock by plaintiff and
the other members of the Class, the fair market value of said common stock was
substantially less than the prices paid by plaintiff. Plaintiff and the other
members of the Class have suffered substantial damages as a result.

COUNT II

For Violations Of Section 20(a) Of The
Exchange Act Against Defendants Flam,
Lizerbram, Lash, Dresnick And FPA

72. Plaintiff incorporates by reference paragraphs 1-71.

73. Individual Defendants Flam, Lizerbram, Lash and Dresnick are liable
under Section 20(a) of the Exchange Act as control persons of FPA since, by
virtue of their executive and directorial positions, their knowledge of and
involvement in the Company's business, their stock ownership, and their power
and ability to make public statements on behalf of the Company to shareholders,
potential investors and the media, they had the power and ability to control

- 46 -
<PAGE> 48

the actions of the Company. FPA, in turn, controlled each of the Individual
Defendants.

BASIS OF ALLEGATIONS

74. This Complaint is pleaded in accordance with the Federal Rules of
Civil Procedure, including Rule 11. Because the PSLRA, Section 21D(c) of the
Exchange Act (15 U.S.C. Section 78u-4(c)), requires complaints to be pleaded in
conformance with Federal Rule of Civil Procedure 11, plaintiff has alleged the
foregoing based upon the investigation of her counsel, which included a review
of FPA's SEC filings, securities analysts' reports and advisories about the
Company, press releases issued by the Company, media reports about the Company
and discussions with consultants pursuant to Rule 11(b)(3).

CLASS ACTION ALLEGATIONS

75. Plaintiff brings this action as a class action pursuant to Rule 23
(a) and (b) (3) of the Federal Rules of Civil Procedure on behalf of a class
(the "Class") consisting of all persons who purchased or otherwise acquired the
common stock of FPA between February 27, 1997 and May 14, 1998, inclusive.
Excluded from the Class are the defendants herein, members of each Individual
Defendant's immediate family, any entity in which any defendant has a
controlling interest, and the legal affiliates, representatives, heirs,
controlling persons, successors, and predecessors in interest or assigns of any
such excluded party.

76. Because FPA has millions of shares of common stock outstanding, and
because the Company's common stock was actively traded, members of the Class are
so numerous that joinder of all members is impracticable. While the exact number
of Class members

- 47 -
<PAGE> 49

can only be determined by appropriate discovery, plaintiff believes that Class
members number at least in the thousands and that they are geographically
dispersed. FPA has approximately 14.7 million shares of class A common stock and
27.1 million shares of class B common stock outstanding and actively traded over
the counter in an efficient market. Record owners and other members of the Class
may be identified from records maintained by FPA or its transfer agent and may
be notified of the pendency of this action by mail, using a form of notice
similar to that customarily used in securities class actions.

77. Plaintiff's claims are typical of the claims of the members of the
Class, because plaintiff and all of the Class members sustained damages arising
out of defendants' wrongful conduct complained of herein.

78. Plaintiff will fairly and adequately protect the interests of the
Class members and has retained counsel who are experienced and competent in
class and securities litigation. Plaintiff has no interests that are contrary to
or in conflict with the members of the Class plaintiff seeks to represent.

79. A class action is superior to all other available methods for the
fair and efficient adjudication of this controversy, since joinder of all
members is impracticable. Furthermore, as the damages suffered by individual
members of the Class may be relatively small, the expense and burden of
individual litigation make it impossible for the members of the Class
individually to redress the wrongs done to them. There will be no difficulty in
the management of this action as a class action.

- 48 -
<PAGE> 50

80. Questions of law and fact common to the members of the Class
predominate over any questions that may affect only individual members, in that
defendants have acted on grounds generally applicable to the entire Class. Among
the questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by
defendants' acts as alleged herein;

(d) whether the defendants acted willfully, with knowledge or
recklessly, in omitting and/or misrepresenting material facts;

(e) whether the market prices of FPA common stock during the
Class Period were inflated artificially due to the material nondisclosures
and/or misrepresentations complained of herein; and

(f) whether the members of the Class have sustained damages and,
if so, what is the appropriate measure of damages.

PRAYER FOR RELIEF

WHEREFORE, plaintiff prays for judgment as follows:

1. Declaring this action to be a proper class action on behalf of the
Class defined herein;

2. Awarding plaintiff and the members of the Class compensatory damages;

- 49 -
<PAGE> 51

3. Awarding plaintiff and the members of the Class pre-judgment and
post-judgment interest, as well as reasonable attorneys, fees, expert witness
fees and other costs;

4. Awarding extraordinary, equitable and/or injunctive relief as
permitted by law, equity and the appropriate state law remedies; and

5. Awarding such other relief as this court may deem just and proper.

JURY DEMAND

Plaintiff demands a trial by jury.

DATED: May 19, 1998
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN SCHULMAN
DARREN J. ROBBINS

/s/ WILLIAM S. LERACH
--------------------------
William S. Lerach

600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

WOLF POPPER LLP
MARIAN P. ROSNER
PAUL O. PARADIS
845 Third Avenue
New York, NY 10022
Telephone: 212/759-4600

KAPLAN, KILSHEIMER & FOX, LLP
ROBERT R. KAPLAN
CHRISTINE COMAS
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: 212/687-1980

- 50 -
<PAGE> 52

MILLER FAUCHER CAFFERTY
AND WEXLER LLP
MARVIN MILLER
30 North LaSalle Street
Suite 3200
Chicago, IL 60602
Telephone: 312/782-4880

LAW OFFICES OF JAMES V.
BASHIAN, P.C.
JAMES V. BASHIAN
500 Fifth Avenue
Suite 2700
New York, NY 10110
Telephone: 212/921-4110

BERMAN, DeVALERIO & PEASE
NORMAN BERMAN
One Liberty Square
Boston, MA 02109
Telephone: 617/542-8300

Attorneys for Plaintiff

- 51 -
<PAGE> 53

PLANTIFF CERTIFICATION

I, Natale Longordo, hereby state:

1. I have reviewed the complaint against FPA Medical Management Inc.
("FPA") and the individual defendants named in this action and have authorized
the filing of this complaint on my behalf.

2. I did not purchase any shares of FPA at the direction of counsel or
in order to participate in this private action.

3. I am willing to serve as a representative party on behalf of a class,
including providing testimony at deposition and trial, if necessary.

4. The following includes all of my transactions in FPA common stock
during the class period specified in the complaint:

<TABLE>
<CAPTION>
TRADE
TRANSACTION DATE SHARE PRICE QUANTITY
- ----------- ---- ----------- --------
(Purchase,
Sale; Stock,
Put, Call)
<S> <C> <C> <C>
Purchase 3.2.98 23 3/16 2000
Purchase 3.3.98 23 7/16 1000
Purchase 3.3.98 22 5/8 1000
Purchase 3.6.98 18 7/16 2000
Sale 5.15.98 6 5/16 6000
</TABLE>

<PAGE> 54

5. have not served as a representative party on behalf of a class in any
action brought under the federal securities laws during the last three years.

6. I will not accept any payment for serving as a representative party
on behalf of a class except to receive my pro rata share of any recovery, or as
ordered or approved by the court, including the award to a representative party
of reasonable costs and expenses including lost wages relating to the
representation of the class.

7. I support Wolf Popper LLP as lead counsel on behalf of the proposed
class.

I declare under penalty of perjury that the foregoing is true and correct.

Executed this 18th day of MAY, 1998 in
WHITE PLAINS, NEW YORK
- ------------ --------
(City) (State)

Natale Longordo

/s/ NATALE LONGORDO

<PAGE> 55

FILED
98 MAY 19 PM 4:23
CLERK, U.S. DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

BY: [SIG] DEPUTY

CIVIL COVER SHEET

JS 44
(Rev. 07/89)

I. (a) PLAINTIFFS

NATALE LONGORDO, On Behalf of Herself and All Others Similarly Situated

(b) COUNTY OF RESIDENCE OF FIRST LISTED PLAINTIFF New York
(EXCEPT IN U.S. PLAINTIFF CASES) --------

- --------------------------------------------------------------------------------
(c) ATTORNEYS (FIRM NAME, ADDRESS,AND TELEPHONE NUMBER)

William S. Lerach, Esq.

MILBERG WEISS BERSHAD HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
619/231-1058

- --------------------------------------------------------------------------------

DEFENDANTS

FPA MEDICAL MANAGEMENT, INC., SETH FLAM, SOL LIZERBRAM, STEVEN M. LASH,
STEPHEN J. DRESNICK, HOWARD HASSMAN and JAMES A. LEBOVITZ

COUNTY OF RESIDENCE OF FIRST LISTED DEFENDANT
----------------------------------
(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND
INVOLVED

- --------------------------------------------------------------------------------

ATTORNEYS (IF KNOWN)

- --------------------------------------------------------------------------------

II. BASIS OF JURISDICTION (PLACE AN x IN ONE BOX ONLY)

[ ] 1. U.S. Government [X] 3. Federal Question
Plaintiff (U.S. Government Not a Party)

[ ] 2. U.S. Government [ ] 4. Diversity
Defendant (Indicate Citizenship of
Parties in Item III)

- --------------------------------------------------------------------------------

III. CITIZENSHIP OF PRINCIPAL PARTIES (PLACE AN x IN ONE BOX FOR
(For Diversity Cases Only) PLAINTIFF AND ONE BOX FOR DEFENDANT)

PTF DEF PTF DEF

Citizen of This State [ ] 1 [ ] 1 Incorporated or Principal [ ] 4 [ ] 4
Place of Business in
This State

Citizen of Another [ ] 2 [ ] 2 Incorporated and [ ] 5 [ ] 5
State Principal Place of
Business in Another
State

Citizen or Subject of [ ] 3 [ ] 3 Foreign Nation [ ] 6 [ ] 6
a Foreign Country

- --------------------------------------------------------------------------------

IV. CAUSE OF ACTION

(CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND
WRITE A BRIEF STATEMENT OF CAUSE. DO NOT CITE
JURISDICTIONAL STATUTES UNLESS DIVERSITY.)

COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS;
15 U.S.C. SECTIONS 78j(b) and 78t(a)

- --------------------------------------------------------------------------------

V. NATURE OF SUIT (PLACE AN x IN ONE BOX ONLY)

- --------------------------------------------------------------------------------
CONTRACT TORTS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

VI. ORIGIN (PLACE AN x IN ONE BOX ONLY)

JUDGE DOCKET NUMBER
------------ ----------

- --------------------------------------------------------------------------------
DATE SIGNATURE OF ATTORNEY OF RECORD

MAY 19, 1998 /s/ WILLIAM S. LERACH
- --------------------------------------------------------------------------------

UNITED STATES DISTRICT COURT

<PAGE> 1
EXHIBIT 99.6

MILBERG WEISS BERSHAD FILED
HYNES & LERACH LLP 98 MAY 20 PM 2:18
WILLIAM S. LERACH (68581)
ALAN SCHULMAN (128661) CLERK, U.S. DISTRICT COURT
DARREN J. ROBBINS (168593) SOUTHERN DISTRICT OF CALIFORNIA
600 West Broadway, Suite 1800
San Diego, CA 92101 BY: /S/ J. HARLAN DEPUTY
Telephone: 619/231-1058

SAVETT FRUTKIN PODELL &
RYAN, P.C.
STUART H. SAVETT
ROBERT P. FRUTKIN
BARBARA A. PODELL
325 Chestnut Street, Suite 700
Philadelphia, PA 19106
Telephone: 215/923-5400

Attorneys for Plaintiff

[Additional counsel appear on signature page.]

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MURRAY LEBOWITZ, On Behalf of ) No. '98 CV 949 IEG (JFS)
Himself and All Others Similarly )
Situated, ) CLASS ACTION
)
Plaintiff, ) COMPLAINT FOR VIOLATIONS OF
) THE FEDERAL SECURITIES LAWS
vs. )
)
FPA MEDICAL MANAGEMENT, INC., SETH )
FLAM, SOL LIZERBRAM, STEVEN M. )
LASH, STEPHEN J. DRESNICK, HOWARD )
HASSMAN and JAMES A. LEBOVITZ, )
)
Defendants. ) Plaintiff Demands A Trial
) By Jury
- -------------------------------------------------------------------------------
<PAGE> 2
INTRODUCTION

1. This is a securities class action on behalf of all those who
purchased or otherwise acquired the common stock of FPA Medical Management, Inc.
("FPA" or the "Company") between February 27, 1997 and May 14, 1998 (the "Class
Period"), seeking to pursue remedies under the Securities Exchange Act of 1934.
This action alleges a series of false and misleading statements by defendants
issued as part of a scheme to artificially inflate the market price of FPA's
common stock and to defraud purchasers of that stock during the Class Period.

2. FPA is a national physician practice management company which
acquires, organizes and manages primary care physician practice networks and
provides contract management services to hospital-based emergency departments.
FPA provides primary and specialty care services to prepaid managed care
enrollees and fee-for-service patients through a network of independent practice
association physicians and owned primary care physician groups. FPA manages all
covered primary and specialty medical care for each enrollee in exchange for
monthly capitation payments pursuant to payor contracts.

- 1 -
<PAGE> 3

companies, while achieving favorable merger synergies, prosperity, record
financial results and success.

5. But, in truth, FPA's business model was failing. By the beginning of
the Class Period and even more with each passing acquisition, FPA's business and
financial condition was spiralling towards disaster. FPA's economic condition
was being seriously and adversely impacted by a frenetic acquisition pace that
had greatly exceeded its critically important management information system
("MIS") and medical claims tracking abilities required to control

- 2 -
<PAGE> 4

medical costs and by the assumption or absorption of too many unprofitable
contracts and payor relationships. FPA could not and was not controlling medical
costs and was failing to adequately reserve for incurred but not reported
("IBNR") medical costs. FPA was losing millions as operating expenses vastly
exceeded income. Defendants were able to camouflage FPA's increasing problems by
financial results that were false and misleading. But when it was no longer able
to conceal its problems after an FY97 year-end audit, FPA was forced to reveal
that its purportedly healthy business had collapsed -- acknowledging that it had
overvalued its acquisitions by an astounding $125 million, was running out of
money and would exhaust its cash by June 30, 1998, as it spent $8 million more
than it was taking in, and revealing that it had lacked adequate controls and
infrastructure to manage its business. Reporting 1Q98 results that were far
below the quarterly earnings defendants' false and misleading statements had led
analysts to expect, the Company revealed that it would post about $200 million
in charges in 2Q98, including about $125 million in goodwill impairment and $40
million in write-down of shared risk and other receivables and that it had set
inadequate reserves which had the effect of inflating its financial results. In
sum, as one reporter commented, FPA had "crash landed."

6. As a result of these revelations, on May 15, 1998, FPA's stock
collapsed from $11.50 to just $6.00 and had an almost 50% one-day stock drop on
huge volume of over 18.6 million shares.

7. Thus, as a result of defendants' false financial reporting and
misrepresentations and concealment of serious problems in FPA's business during
the Class Period, FPA's common

- 3 -
<PAGE> 5

stock traded at artificially inflated levels as high as $39.875 per share. While
FPA stock was artificially inflated, the Company used it as currency to acquire
several companies in transaction totaling more than several hundred million
dollars. Top FPA executives named as defendants, taking advantage of their
knowledge of adverse, non-public information, sold off 415,040 shares of their
FPA stock for illegal insider trading proceeds of over $9.8 million.

8. The price action of FPA's common stock and the insider selling
engaged in by the defendant insiders during the Class Period is shown below.

FPA MEDICAL MANAGEMENT INC.
JANUARY 2, 1997 - MAY 18, 1998
DAILY STOCK PRICES

[GRAPH]

- 4 -
<PAGE> 6

JURISDICTION AND VENUE

9. The claims asserted herein arise under Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. Sections 78j(b)
and 78t(a), and Rule 10b-5, 17 C.F.R. Section 240.10b-5.

10. Jurisdiction is conferred by Section 27 of the Exchange Act, 15
U.S.C. Section 78aa, and 28 U.S.C. Section 1331.

PARTIES

12. Plaintiff Murray Lebowitz purchased 100 shares of FPA common stock
on March 12, 1998 at $19 per share and 100 shares on May 4, 1998 at $11.25 per
share, and was damaged thereby.

- 5 -
<PAGE> 7

Period, FPA stock traded in an efficient market on the NASDAQ National Market
System.

14. (a) Defendant Seth Flam ("Flam") is, and at all relevant times was
until his resignation in March 1998, FPA's President, Chief Executive Officer
and a director (Principal Executive Officer). Because of defendant Flam's
positions with the Company, he knew the adverse non-public information about its
business, finances, products, markets and present and future business prospects
via access to internal corporate documents (including the Company's operating
plans, budgets and forecasts and reports of actual operations compared thereto),
conversations and connections with other corporate officers and employees,
attendance at management and Board of Directors' meetings and committees thereof
and via reports and other information provided to him in connection therewith.
During the Class Period, defendant Flam sold 93,000 shares of FPA stock for
proceeds of $2.2 million. He also received a $4.8 million severance package when
he resigned in March 1998.

(b) Defendant Sol Lizerbram ("Lizerbram") is, and at all relevant times
was, FPA's Chairman of the Board of Directors. Because of defendant Lizerbram's
position with the Company, he knew the adverse non-public information about its
business, finances, products, markets and present and future business prospects
via access to internal corporate documents (including the Company's operating
plans, budgets and forecasts and reports of actual operations compared thereto),
conversations and connections with other corporate officers and employees,
attendance at management and Board of Directors' meetings and committees thereof
and via reports and other information provided to him in connection

- 6 -
<PAGE> 8
therewith. During the Class Period, defendant Lizerbram sold 87,900 shares of
FPA stock for proceeds of $2.1 million.

(c) Defendant Steven M. Lash ("Lash") is, and at all relevant time was,
Executive Vice President, Chief Financial Officer and Treasurer (Principal
Financial Officer and Accounting Officer) of the Company. Because of defendant
Lash's positions with the Company, he knew the adverse non-public information
about its business, finances, products, markets and present and future business
prospects via access to internal corporate documents (including the Company's
operating plans, budgets and forecasts and reports of actual operations compared
thereto), conversations and connections with other corporate officers and
employees, attendance at management and Board of Directors' meetings and
committees thereof and via reports and other information provided to him in
connection therewith. During the Class Period, defendant Lash sold 79,000 shares
of FPA stock for proceeds of $1.8 million.

(d) Defendant Stephen J. Dresnick ("Dresnick") is, and at all relevant
times was, a director and Vice Chairman of the Board of Directors of FPA. On
March 26, 1998 he was appointed Chief Executive Officer of the Company,
replacing Flam. Because of defendant Dresnick's positions with the Company, he
knew the adverse non-public information about its business, finances, products,
markets and present and future business prospects via access to internal
corporate documents (including the Company's operating plans, budgets and
forecasts and reports of actual operations compared thereto), conversations and
connections with other corporate officers and employees, attendance at
management and Board of Directors' meetings and committees thereof and via

- 7 -
<PAGE> 9
reports and other information provided to him in connection therewith. During
the Class Period, defendant Dresnick sold 36,140 shares of FPA stock for
proceeds of $859,140.

(e) Defendant Howard Hassman ("Hassman") is, and at all relevant
times was until his resignation on April 1, 1998, a director and Executive Vice
President of FPA. Because of defendant Hassman's positions with the Company, he
knew the adverse non-public information about its business, finances, products,
markets and present and future business prospects via access to internal
corporate documents (including the Company's operating plans, budgets and
forecasts and reports of actual operations compared thereto), conversations and
connections with other corporate officers and employees, attendance at
management and Board of Directors' meetings and committees thereof and via
reports and other information provided to him in connection therewith. During
the Class Period, defendant Hassman sold 98,000 shares of FPA stock for proceeds
of $2.3 million. He also received a $3.4 million severance package when he
resigned on April 1, 1998.

(f) Defendant James A. Lebovitz ("Lebovitz") is, and at all relevant
times was, the Senior Vice President of FPA, General Counsel and Secretary to
the Company. Because of defendant Lebovitz's positions with the Company, he knew
the adverse nonpublic information about its business, finances, products,
markets and present and future business prospects via access to internal
corporate documents (including the company's operating plans, budgets and
forecasts and reports of actual operations compared thereto), conversations and
connections with other corporate officers and employees, attendance at
management and Board of

- 8 -
<PAGE> 10
Directors' meetings and committees thereof and via reports and other information
provided to him in connection therewith. During the Class Period, defendant
Lebovitz sold 21,000 shares of FPA stock for proceeds of $469,771.

15. The defendants named in Paragraph 14(a)-(f) are referenced herein as
the "Individual Defendants."

MOTIVE, OPPORTUNITY AND KNOWLEDGE

18. Defendants had a duty to promptly disseminate accurate and truthful
information with respect to FPA's operations and financial condition or to cause
and direct that such information be disseminated and to promptly correct any
previously disseminated information that was misleading to the market. As a
result of

- 9 -
<PAGE> 11
their failure to do so, the price of FPA common stock was artificially inflated
during the Class Period, damaging plaintiff and the Class.

20. Each of the defendants is liable as a primary violator in making
false and misleading statements, and for participating in a fraudulent scheme
and course of business that operated as a fraud or deceit on purchasers of FPA
stock during the Class Period. All of the defendants had motives to pursue a
fraudulent scheme in furtherance of their common goal, i.e., inflating the
trading price of FPA stock by making false and misleading statements and
concealing material adverse information. The fraudulent scheme and course of
business was designed to and did: (a) deceive the

- 10 -
<PAGE> 12
investing public, including plaintiff and other Class members; (b) artificially
inflate the price of FPA stock during the Class Period; (c) cause plaintiff and
other members of the Class to purchase FPA stock at inflated prices; (d) enable
FPA to use artificially inflated stock as currency to acquire other companies
and create the false impression of successful expansion and prosperity; (e)
increase the value of options to purchase FPA stock owned by the Individual
Defendants, as well as their own FPA shareholdings; (f) conceal and cover-up the
Individual Defendants' mismanagement of FPA and failure to properly implement a
viable acquisition strategy while conferring exorbitant salaries and bonuses
upon certain defendants that were grossly disproportionate to FPA's true
business condition; and (g) permit them to pocket, in the aggregate, over $9.8
million in illegal insider-trading proceeds as part of the fraudulent scheme and
course of business they were pursuing and participating in, thus personally
profiting from their own deliberate and dishonest acts.

STATUTORY SAFE HARBOR

- 11 -
<PAGE> 13
made therein. Defendants are liable for the allegedly forward-looking statements
pleaded in any event because, at the time each of those forward-looking
statements was made, the speaker knew the allegedly forward-looking statement
was false and was authorized and/or approved by an executive officer of FPA who
knew that those statements were false when made.

DEFENDANTS' AWARENESS OF THE UNDISCLOSED
ADVERSE CONDITIONS IMPACTING FPA'S BUSINESS

22. The defendants are top officers and directors of FPA and
controlled the Company's press releases, corporate reports, SEC filings or
communications with analysts, as well as the preparation of its financial
statements. A key management tool for the Company's top executives and directors
was its business plan, budget, forecast or projection, by which the Company's
top executives set performance goals for FPA and then closely monitored the
corporation's actual performance, i.e., results of operations compared to the
planned, budgeted or forecasted results on a constant basis. These plans,
forecasts and budgets were prepared on an annual basis and updated during the
year. All of the defendants were aware of FPA's internal plan, forecast and
budget and of the internal reports prepared and circulated, at least monthly,
comparing FPA's actual results to those previously planned, budgeted or
forecasted. FPA's top executives used its internal plan, budget and forecast as
part of the basis for the statements they made publicly about the Company's
performance during 1996, 1997 and 1998.

23. Throughout the Class Period, based on the frequently prepared and
negative internal reports comparing the Company's

- 12 -
<PAGE> 14
actual business performance to plan, budget and forecast, the defendants knew
or recklessly disregarded that those public statements were false and
misleading when made and were inflating the market price of FPA stock.

DEFENDANTS' FALSE AND MISLEADING
STATEMENTS DURING THE CLASS PERIOD

24. Defendants issued numerous false and misleading statements during
the Class Period pursuant to their fraudulent scheme. On February 27, 1997, FPA
announced "record" fourth quarter and FY96 year-end results, stating:

FPA Medical Management, Inc. today announced revenues and earnings for
the fourth quarter and year ended December 31, 1996.

Operating revenues for the fourth quarter ended December 31,
1996 increased 166% to $151.0 million compared to $56.8 million in the
same period last year, including the operations of Sterling Healthcare
Group, Inc., accounted for as a pooling of interests. Net income for the
fourth quarter was $4.2 million or $0.18 per share (excluding
non-recurring charges of $36.3 million related to transaction costs
associated with the acquisition of the Foundation Health affiliated
medical centers in Arizona and California, Sterling Healthcare Group,
and certain restructuring charges) compared to net income of $677,000 or
$0.04 per share for the same period last year. Including the charges,
the Company reported a net loss of $23.5 million or $1.01 per share.
Weighted average shares outstanding were 23,199,195 and $16,961,698
for the fourth quarters of 1996 and 1995, respectively, with shares
outstanding including the effect of the Sterling pooling.

Commenting on the results, Dr. Seth Flam, President and Chief
Executive officer stated, "1996 was a year of

- 13 -
<PAGE> 15
significant achievement for FPA. During the year we successfully
executed our growth strategy by entering into new geographic regions.
Through the merger with Sterling Healthcare Group we now have operations
in 25 states. We remain optimistic about our long-term prospects and
have built a solid foundation for growth both internally and through
strategic acquisitions."

25. On March 17, 1997, FPA and AHI Healthcare Systems, Inc. announced
completion of their merger via a press release stating:

- 14 -
<PAGE> 16
bring the Company's total 1996 annualized revenue to nearly $1 billion."

26. FPA's press release dated April 30, 1997 announcing the Company's
first quarter results stated:

FPA Medical Management . . . today announced revenues and earnings for
the first quarter ended March 31, 1997.

Commenting on the results, Steven M. Lash, Executive Vice
President and Chief Financial Officer stated, "We are pleased with our
financial performance in the first quarter. Strong HMO enrollment
continues to drive our growth. After the recent completed acquisition of
AHI, we now have over 7,200 primary care physicians providing quality
care to over 864,000 HMO members as compared to 1,800 primary care
physicians and 232,000 HMO members for the same quarter last year. In
addition, we continue to show margin improvements based on the further
integration of acquisitions as we continue to reduce medical and
administrative expenses. This operating leverage is reflected in the
reduction in our overall medical loss ratio of 71% for the first quarter
of 1997 compared to 72% for the same period last year."

27. FPA's announced 1Q97 earnings had an immediate and positive impact
upon the market, increasing the share price of its common stock and reversing
its prior price weakness due to market

- 15 -
<PAGE> 17
factors. Needham & Co. analyst Bernard Lirola immediately upgraded FPA to a
"strong buy" from "buy." Needham was the financial advisor to FPA on its merger
with AHI Healthcare Systems, Inc., which closed on March 17, 1997.

28. On May 21, 1997, FPA announced that it signed an agreement with
PacifiCare Health Systems to enter into a ten-year captivated provider agreement
with PacifiCare and FHA Health Plans nationwide. The Company's May 21, 1997
press release stated, in pertinent part:

Dr. Seth Flam, President and Chief Executive Officer of FPA,
stated, "We are proud that the country's largest health plans continue
to demonstrate their confidence in FPA. This strategic business
relationship with PacifiCare will expedite FPA's expansion into new
geographic regions and allow for steady revenue growth as contracts are
converted to global capitation."

29. Continuing to create the impression of health and prosperity, on
June 6, 1997, FPA entered into a definitive agreement to acquire HealthCap, Inc.
in a stock-for-stock merger, stating in pertinent part:

The merger of these two companies will expand FPA's services to
Nevada and Missouri and is expected to

- 16 -
<PAGE> 18
increase FPA's 1997 revenues on a pro forma basis to more than $1
billion. The merger will be accounted for as a pooling of interests and
is expected to close at the end of June 1997.

The stock-for-stock merger was valued at almost $50 million based on a closing
price of $22.75 per share of FPA stock, with shareholders of HealthCap receiving
approximately 2.2 million FPA shares.

30. An article disseminated to the financial community in the June 16,
1997 edition of the San Diego Business Journal entitled "FPA Medical continues
its rapid expansion" accurately quoted defendant Lash who allayed any concern
that FPA was growing too fast for its own good. The article stated in pertinent
part:

"This merger takes us into two new markets that are highly
desirable, including St. Louis and Las Vegas, solidifies our leadership
position in San Diego, and marks our entry into OB/GYN business," said
Steven Lash, FPA's chief financial officer.

* * *

- 17 -
<PAGE> 19
Lash said the merger will increase FPA's 1997 revenues to more
than $1 billion.

First-quarter revenue of more than $222 million earned the
company more than $6 million, or 20 cents per share. In 1996, FPA
increased operating revenue by 161 percent to $440 million.

In March, FPA completed a merger with AHI Healthcare Systems,
Inc. which added 2,200 physicians and 200,000 enrollees in California,
Arizona, Texas, Georgia, Louisiana and New York.

Lash is not concerned that the company is growing too fast for
its own good.

"This is a rapidly consolidating industry," he said. "When we
make an acquisition and integrate it into our system, we're doing an
effective job of blocking and tackling, and producing quality and
value."

31. Shortly thereafter FPA announced another merger via a Company
press release dated July 2, 1997, stating in pertinent part:

Health Partners currently has a network of 418 primary care
physicians which provides healthcare services to over 138,000 HMO
enrollees. This merger will expand FPA's primary care delivery model to
Ohio, Kentucky, Washington DC and Virginia and serve as a platform for
significant growth in New York, New Jersey and Texas. Health Partners is
the largest physician practice management organization in New York with
over 103,000 HMO members.

In addition, Oxford Health Plans, a shareholders of Health
Partners and its largest payor, has agreed to enter into a 10-year
strategic agreement with FPA under

- 18 -
<PAGE> 20
which FPA will provide physician services to Oxford's members in existing
markets and which provides a framework for expansion to new markets. FPA and
Oxford will also work collaboratively on continuing to enhance member
satisfaction and on quality improvement initiatives.

* * *

Dr. Sol Lizerbram, Chairman of FPA, stated, "This transaction
allows FPA to implement our previously announced strategy of servicing
HMO members in the greater New York metropolitan area. We will
incorporate FPA'S national payor agreements into Health Partners'
network of physician providers, which is the largest network of any
physician practice management company in the New York region."

32. An article appearing in The Wall Street Journal on July 3, 1997
reported the investment community's enthusiastic reaction to defendants'
seemingly positive announcements, stating:

- 19 -
<PAGE> 21
announcement would approach $1 billion this year. Since going public in
1994, FPA has made an average of one acquisition per quarter, Dr.
Lizerbram said.

33. Defendants created additional investor confidence and enthusiasm in
their Company press release disseminated July 9, 1997 via the PR Newswire which
stated:

FPA Medical Management, Inc. ... announced today the signing of new
seven year agreements with Healthsource, Inc. (NYSE: HS) to service HMO
members in three additional states.

* * *

34. Shortly thereafter, FPA announced "record revenues and earnings" for
the second quarter 1997 via a press release issued on July 30, 1997 which
stated:

Operating revenues for the second quarter ended June 30, 1997
increased 92.3% to $244.5 million compared to $127.2 million in the same
period last year, including the operations of HealthCap, Inc., recently
merged into FPA, accounted for as a pooling of interests. Net income for
the second quarter was $8.1 million or $0.24 per share (excluding a
non-recurring charge of $5.4 million related to costs associated with
the merger of HealthCap, Inc.) compared to a net loss of $4.6 million or
$0.16 per share for the same period last year. Weighted average

- 20 -
<PAGE> 22
shares outstanding were 34,259,107 and 28,317,866 for the second
quarters of 1997 and 1996, respectively.

For the six months ended June 30, 1997, operating revenue
increased 100% to $475.6 million compared to $237.2 million in the same
period last year. Net income for the first six months of 1997 was $11.0
million or $0.32 per share (excluding non-recurring charges associated
with the HealthCap, Inc. and AHI Healthcare Systems, Inc., mergers)
compared to a net loss of $3.6 million or $0.13 per share for the same
period last year. Weighted average shares outstanding were 34,510,257
and 27,660,452 for the first six months periods of 1997 and 1996,
respectively.

Commenting on the results, Steven M. Lash, Executive Vice
President and Chief Financial Officer stated, "Our record results for
the second quarter are due to better than expected performance in Texas
and Florida, the recently acquired care centers performing above
proforma, and all other markets performing as planned. In addition,
FPA's G&A expenses continued to decrease as a percentage of sales as we
further integrate operations of our previously acquired networks."

Dr. Seth Flam, President and Chief Executive Officer, stated:
"FPA continues to perform above expectations as our integration plans
provide positive sequential results. We believe this trend will
continue and remain optimistic for the balance of the year."

Dr. Sol Lizerbram, Chairman, added, "FPA has implemented our
plan of signing national payor agreements. In the last six months, FPA
has signed five national contracts with some of the largest and highest
quality healthplans in the country. These contracts represent over 9.6
million HMO members in our current operating markets and 12.3 million
HMO members nationwide. We will begin penetrating this membership which
will provide FPA continued success in the future as these contracts
enable us to expand into new geographic markets, increase HMO membership
and increase revenues."

- 21 -
<PAGE> 23
FPA Medical Management Inc. yesterday demonstrated its ability
to cash in on a string of recent acquisitions by more than doubling
quarterly revenues and leaping from red ink into profitability.

The results included a one-time gain of $6.2 million and a
one-time charge of $5.4 million, both related to acquisitions.

* * *

The quarterly results also exceeded the expectations, of
industry analysts, and the company promised more of the same to come.

"We believe this trend will continue and remain optimistic for
the balance of the year," said Dr. Seth Flam, president and chief
executive officer.

36. On October 6, 1997, FPA announced in a press release disseminated to
the financial community its expansion into the Los Angeles region and
acquisition of Axminster Medical Group in a stock-for-stock merger that closed
September 30, 1997. As before, FPA used its own artificially inflated common
stock as currency to feed its expansion addiction and further create the false
and misleading impression of health and prosperity.

37. Then on October 14, 1997, FPA announced via a press release that it
merged with Health Partners, Inc., stating:

- 22 -
<PAGE> 24
FPA issued 5,227,273 shares of its common stock in exchange for
all the outstanding capital stock of Health Partners and for
cancellation of outstanding Health Partners stock options. Based on
FPA's closing price of $35.4375 on October 10, 1997, the aggregate
merger consideration value is approximately $185 million.

Steven M. Lash, FPA' Executive Vice President and Chief
Financial Officer, commented "We are pleased to finalize our merger with
Health Partners and believe the Health Partners network of quality
physicians, and our national payor agreements, creates a dynamic
opportunity to service HMO members in the New York metropolitan area.
Based on the final terms of the agreement, the transaction will provide
immediate accretion to FPA shareholders."

* * *

Commenting on the results, Steven M. Lash, Executive Vice
President and Chief Financial Officer stated, "We are pleased to report
record earnings for the third quarter. FPA's overall medical loss ratio
in the third quarter of 1997 was 70.4%. This represents the fourth
sequential quarter of MLR improvement. In addition, our G&A expenses
continued to decrease as a percentage of

- 23 -

<PAGE> 25
revenues which can be attributed to the continued consolidation of
acquisitions, synergy achievements and improvements in productivity."

Dr. Sol Lizerbram, Chairman, added, "FPA continues to execute
its national payer agreements strategy. We are proud of the new
relationship we have established with NYLCare Health Plans which brings
us to a total of six national agreements. These new relationships enable
us to expand into new geographic markets, increase enrollment, and fuel
our same-store growth."

39. In an effort to reverse the downward pressure on the stock due to
investor concerns that revenues had slipped compared to 2Q97, FPA led the market
to believe that the revenue slippage was merely a result of its election to walk
away from three unprofitable contracts. FPA's explanation misled one analyst,
Gary Frazier at Bear Sterns, to comment that the quality of FPA's earnings is
"quite good," as quoted over the Dow Jones Newswire on October 30, 1997.

40. In an article appearing in the San Diego Union-Tribune on November
1, 1997, FPA again dismissed slippage of $4.75 in its shares to close at
$24.125, a three-month low as of October 30, 1997, after reaching a three-month
high of $39.875 on October 6, 1997, stating that investors were incorrectly
interpreting difficulties reported by HMOs. These statements by FPA buoyed its
stock price and helped to diminish the erosion in the price of its

- 24 -

<PAGE> 26
stock that otherwise would have occurred absent those statements due to
non-company specific market factors.

41. On November 24, 1997, FPA announced via a company press release that
it had entered into a definitive agreement pursuant to which FPA would acquire
Avanti Health Systems of Texas, Inc. Commenting on the acquisition, defendant
Lash stated:

42. On December 9, 1997, FPA announced that it was acquiring Meridian
Medical Group. Then, in another effort to stem any decline in its stock,
defendants disseminated another Company press release to the investment
community on December 12, 1997 stating:

* * *

Oxford is current with respect to all of its prepayments to Health
Partners. The company also stated that Health Partners pays a
significant number of its own claims and had developed a customized
process with Oxford to regularly receive paid claims information from
Oxford for analysis and inclusion in Health Partners' financial
statements. This process has been in place and effectively used for the
past four years.

Dr. Seth Flam, President and Chief Executive Officer of FPA
Medical Management, Inc. stated, "We are current with respect to all
prepaid revenue associated with our Oxford enrollees and we firmly
believe we have the systems in place to safeguard against exposure to
the issues Oxford has addressed in the market."

43. In a Company press release dated January 8, 1998, entitled "FPA
Medical Management, Inc. Comments on Operations and

- 25 -
<PAGE> 27
Fourth Quarter, "designed to increase investor confidence and buoy FPA's share
price in the face of downward market pressures in its industry sector, FPA
stated:

FPA Medical Management, Inc. (Nasdaq:FPAM) today commented on the
strength of its California-based business in response to investor
concerns following a recent announcement by another physician practice
management services provider, related to market and industry conditions.
FPA Medical Management stated that it has a strong 10-year history in
California and its current operations are performing as expected.

Steven M. Lash, Executive Vice President and Chief Financial
Officer of FPA Medical Management Inc., stated, "We have properly
structured our California-based operations and continue to manage this
part of our network effectively."

FPA maintains subcapitation agreements with specialists.

FPA operates Hospitalist programs in most California markets.

All California transactions, including the most recent, have been fully
integrated, with the last significant transaction completed 9 months
ago.

44. Shortly afterwards, in its press release disseminated to the
financial community on January 22, 1998 reporting further positive news, FPA
stated:

FPA MEDICAL MANAGEMENT, INC. (NASDAQ:FPAM) announced today that it has
entered into a definitive merger agreement to acquire Orange Coast
Managed Care Services, Inc. and St. Joseph Medical Corporation in a
stock-for stock transaction. The transaction is expected to add
approximately 120,000 HMO members which are under professional
capitation arrangements and will be added to FPA's existing California
operations.

- 26 -
<PAGE> 28

* * *

The transaction is expected to increase FPA's California 1998
revenues by more than $60 million assuming a closing date of April 30,
1998, and will be immediately accretive to earnings.

FPA's operating revenues for the fourth quarter ended December
31, 1997 increased 49.4% to $323.0 million compared to $216.2 million
for the same period last year. Net income for the fourth quarter was
$12.9 million or $0.30 per share (assuming a 38% tax rate and excluding
non-recurring charges of $17.0 million related to the acquisition of
Health Partners and certain restructuring charges), compared to a net
loss of $9.4 million or $0.27 per share for the same period last year.
Including the charges, the Company reported net income of $7.2 million
(which includes a year-to-date tax benefit of $3.5 million) or $0.17 per
share for the fourth quarter ended December 31, 1997. Weighted average
shares outstanding were 43,594,548 and 35,542,571 for the fourth
quarters of 1997 and 1996, respectively.

- 27 -
<PAGE> 29

Commenting on the results, Dr. Seth Flam, President and Chief
Executive Officer, stated, "FPA experienced significant profitable
growth as our operations expanded to 28 states, our primary care
physician network increased to more than 7,600 and our managed care
membership topped 1 million. We are proud of our ability to successfully
integrate seven acquisitions and begin reducing their medical loss
ratios and improving their financial performance while our existing
operations also continued to improve and expand."

46. However, concern over a Salomon Smith Barney downgrade of the
Company, citing increasing debt and declining cash, caused a temporary panic in
investors which sent FPA stock plunging $5.69 to close at $18.75 on March 6,
1998. Again, defendants responded with statements designed to buoy market
confidence and thereby stem any

- 28 -
<PAGE> 30
decline in FPA stock that would have certainly occurred had the full truth about
its dire economic and business condition been revealed. In an interview reported
in the San Diego Union-Tribune on March 7, 1998, defendant Lash, FPA's Chief
Financial Officer, assured the market that Salomon's downgrade was based on
"'incomplete information'" and that Salomon's analyst had misunderstood
information provided by the Company in a conference call on March 6, 1998. Lash
was further accurately reported as claiming that FPA's shares may have also been
pressured by unfulfilled rumors on the Internet that the Company was about to be
acquired and that the fact that 7 million previously unregistered shares had
become available for trading on March 6, 1998, some of which were sold, may have
put additional pressure on FPA's share price. The San Diego Union-Tribune also
reported on March 7, 1998 that Wall Street analysts generally cheered the
Company's financial report of March 6, 1998 noting that Erik Wiberg, an analyst
with UBS Securities, said the Company's performance exceeded his expectations
and that "'[t]hey look pretty good,"' while Margot Durow of Vector Securities
International characterized the 1997 results as strong.

Dresnick's appointment followed the resignation of Dr. Seth
Flam, one of the founders of the company, who is leaving to pursue other
business interests. "I am an entrepreneur at heart," said Dr. Flam.
"The Company has grown dramatically since its inception and has

- 29 -
<PAGE> 31
established a leadership position among physician practice management
companies. I am confident that Steve Dresnick has the ability to manage
the Company into the future."

The Company also announced that Douglas Kerner, who was recently
hired as Vice President-Treasurer, was named Acting Chief Financial
Officer. Steven Lash, who has been Executive Vice President and Chief
Financial Officer since 1994, will remain as Executive Vice President.
. . . "With the growth that we have experienced this past year and the
complexity of our business, it has become difficult to provide
leadership and individual attention to both treasury and merger and
acquisition activity," said Steven Lash. "Doug was hired because of
his experience with cash management, capital related activities and
investor relations."

Steven Lash also stated, "Our business continues to track
according to expectations and we remain encouraged by the first
quarter's operating and financial performance."

Dr. Sol Lizerbram, who remains as Chairman of the Board and will
continue to develop national payer relationships and affiliations with
hospital integrated delivery systems, stated "I am excited about the
prospects for the Company in the coming years. Steve Dresnick brings
extensive public company experience and management skills and I look
forward to his leadership."

48. An article appearing in The Wall Street Journal on March 27, 1998
accurately quoted defendant Flam as stating that he was leaving because "'I'm an
entrepreneur who has helped to grow a great company . . . [and] it's time for me
to do other things in my life.'" It also reported Lash's public remarks that
Flam was

- 30 -
<PAGE> 32

giving up the post because "'[t]he job had become too much for one person'". In
that same article, defendant Lash was further accurately reported as having
commented that FPA financial results continued to track expectations and that
"we remain encouraged by the first quarter's performance.

(a) FPA's financial results as reported were false, as its
earnings were artificially inflated as detailed in Paragraphs 54-66;

(b) FPA's results from operations were overstated due to the
recording of inadequate reserves and the failure to take required write-downs,
as is more fully alleged in Paragraphs 54-66;

(d) FPA did not have information systems or controls that were
adequate to keep pace with its acquisitions and, hence, the attempted
integration of new companies was a failure and a disaster from the outset,
especially with regard to the integration of computer systems, integral to
tracking claims and controlling costs;

- 31 -
<PAGE> 33

(g) Contrary to defendants' representations, FPA's integration of
acquired businesses and their operations, including MIS, was failing to achieve
merger savings and synergies, negatively impacting FPA's results of operations;

(h) FPA was failing to timely process claims and was
understating and under-reporting medical costs;

(i) FPA was artificially increasing its membership lists by
obtaining unprofitable accounts;

(j) FPA was overstating its revenues by including undisclosed bad
debts without setting a proper reserve for those bad debts or making adequate
allowance for them;

(k) FPA had been skewing its financial results to make them
appear more favorable by setting inadequate reserves for IBNR medical claims;

- 32 -
<PAGE> 34

(m) Commercial pricing for FPA healthcare contracts was too soft
- -- and far softer than ever disclosed -- with a resulting adverse impact on FPA
operations;

(n) Existing and newly acquired lines of business were performing
poorly and below plan; and

THE PREVIOUSLY UNDISCLOSED ADVERSE
EVENTS NEGATIVELY IMPACTING FPA'S BUSINESS AND OPERATIONS ARE
REVEALED TO A SHOCKED MARKET

50. Suddenly, FPA shocked the financial community to its roots when, on
May 15, 1998, it revealed serious problems in its business and operations to
such an extent that it raised serious questions about its ability to operate as
a going concern beyond the second quarter of 1998. On May 15, 1998, the Dow
Jones reported:

* * *

. . . In a filing with the Securities and Exchange Commission
Friday, the company said it had $12.4 million in cash and marketable
securities at the end of March and that cash on hand and anticipated
cash flow from operations will only be enough to meet the Company's
needs until the end of the second quarter, June 30.

* * *

51. In a separate article reported over the Dow Jones News Service on
May 15, 1998, Bear Stearns analyst Gary Frazier was accurately quoted as
stating, "'It's quite obvious now why Flam left and why Lash moved to M&A. . . .
The numbers here are pretty much falling apart.'"

52. FPA reported a net loss of $9.1 million, or $.20 a basic share, for
the quarter ended March 31. That included a

- 34 -
<PAGE> 36

* * *

- 35 -
<PAGE> 37
Officials of the company noted that it will exhaust its cash by
June 30 and that it needs to raise more money. FPA is spending $8
million more each month than it is taking in.

* * *

Yesterday's announcement painted a distinctly different portrait
of the company than one provided when Dr. Seth Flam announced his
resignation as Chief Executive Officer on March 26.

"I feel very comfortable about the first quarters," Flam said at the
time. He added: "I'm leaving the company with it poised to be extremely
successful this year."

* * *

Fueled by a string of acquisitions, FPA leapfrogged from
revenues of just $50 million four years ago, when it first sold its
shares to the public, to current annual revenues in excess of $1
billion. But analysts said yesterday that the growth had been
inadequately managed.

"The acquisitions were made at such a frenetic pace and the
company did not have adequate controls and infrastructure to manage to
operations," said Radininsky.

* * *

"There is a lack of operating controls and inadequate
accounting," said Lirola.

FALSE FINANCIAL RESULTS

- 36 -
<PAGE> 38
55. These actions resulted in a material overstatement of the
Company's results during the Class Period in violation of Generally
Accepted Accounting Principles ("GAAP") and SEC rules.

56. GAAP are those principles recognized by the accounting
profession as the conventions, rules and procedures necessary to define
accepted accounting practice at a particular time. SEC Regulation S-X
(17 C.F.R. Section 210-4-01(a)(1)) states that financial statements
filed with the SEC which are not prepared in compliance with GAAP are
presumed to be misleading and inaccurate, despite footnote or other
disclosure. Regulation S-X requires that interim financial statements
must also comply with GAAP, with the exception that interim financial
statements need not include disclosure which would be duplicative of
disclosures accompanying annual financial statements. 17 C.F.R.
Section 210.10-01(a).

57. GAAP, as set forth in FASB Statement of Concepts
("Concepts") No. 5, requires that costs incurred during a period which
are related to revenues reported in that period must be recognized as
expenses in that same period in order to match costs with revenues
generated as result of those costs.

Further guidance for recognition of expenses and losses is intended to
recognize consumption (using up) of economic benefits or occurrence or
discovery of loss of future economic benefits during a period. Expenses
and losses are generally recognized when an entity's economic benefits
are used up in delivering or producing goods, rendering services, or
other activities that constitute its ongoing major or central operations
or when previously recognized assets are expected to provide reduced or
no further benefits.

Concepts No. 5, Paragraph 85. Specifically, GAAP, as set forth in the
AICPA Audit and Accounting Guide, Health Care Organizations, June 1,
1996 ("AAG-HCO") requires that providers of prepaid and managed

- 37 -
<PAGE> 39
healthcare services report medical costs at the time services are rendered by
accruing such costs and making estimates of claims not yet received.

Accounting for Health Care Costs

13.02 Health care costs should be accrued as services are
rendered, including estimates of the costs of services rendered but not
yet reported. Furthermore, if a provider of prepaid health care services
is obligated to render services to specific members beyond the premium
period due to provisions in the contract or regulatory requirements, the
costs of such services to be incurred, net of any related anticipated
revenues, also should be accrued currently.

AAG-HCO Paragraph 13.02, in pertinent part. Additionally, GAAP provides that
anticipated losses should be recognized when it is probable that expected future
healthcare costs under existing contracts will exceed future revenue from
premiums on such contracts.

Accounting for Loss Contracts

13.06 FASB Statement No. 5, Accounting for Contingencies, states
that a loss should be accrued in financial statements when it is
probable that a loss has been incurred and the amount of the loss can be
reasonably estimated. Accordingly, losses should be recognized when it
is probable that expected future health care costs and maintenance costs
under a group of existing contracts will exceed anticipated future
premiums and stop-loss insurance recoveries on those contracts.

AAG-HCO, Paragraphs 13.05 and 13.06, in pertinent part.

58. GAAP, as set forth in Accounting Principles Board Opinion ("APB")
No. 17, requires that a company evaluate the recoverability of goodwill and
other intangible assets in each period for which a

- 38 -
<PAGE> 40
balance sheet is presented and, when it is probable the value of goodwill is
impaired, record a charge against earnings to account for the impairment.

APB Opinion 17, Paragraph 31.

- Significantly increased competition
- Industry consolidation
- Changing third-party reimbursement requirements
- Technological innovation
- An uncertain regulatory future

- 39 -
<PAGE> 41
AICPA Audit Risk Alerts, Health Care Industry Developments - 1195/96,
Complement to AICPA Audit and Accounting Guide Audits of Health Care
Services, at 12.

60. As a consequence of its numerous acquisitions prior to and during the
Class Period, FPA recorded goodwill for each of the acquisitions respectively
(the excess of the cost of the acquisition over the fair value of the assets
acquired less liabilities assumed). GAAP requires that goodwill resulting from
the acquisition of another company be amortized by charges against income over
the period estimated to be benefitted. See APB No. 17. Defendants knew that,
in light of the significantly increased competition among managed healthcare
providers, anticipated future industry consolidation, and an uncertain future
among other factors, it was highly uncertain at best that the acquisition of
FHP would provide a competitive advantage for a period exceeding ten years. See
AICPA Audit Risk Alerts, Health Care Industry Developments - 1995/96,
Complement to the AICPA Audit and Accounting Guide Audits of Providers of
Health Care Services. Accordingly, FPA should have amortized the acquired
goodwill over far fewer years that it did. Had FPA properly amortized the
goodwill associated with these acquisitions, it would have materially increased
amortization expense and decreased operating income reported in each of the
quarterly periods reported during the Class Period.

61. Further, in order to show positive earnings, defendants caused FPA to
provide medical cost accruals and reserves for IBNR that were wholly
inadequate to cover the actual level of

- 40 -
<PAGE> 42

anticipated costs and claims that had been incurred, and as a consequence, FPA's
earnings were artificially inflated.

63. Moreover, in addition to the improper accounting for medical costs,
FPA was improperly failing to estimate, record and process medical costs and
estimates and under-reserving for pharmacy, capitation and other medical costs.
FPA knew that it had serious problems in setting accurate medical cost reserve
levels and surely knew that the terms of its contracts with providers would make
it difficult to increase prices or adjust terms quickly enough to avoid losses
being incurred in unprofitable plans.

64. FPA reported net income and earnings for the Class Period quarterly
reporting periods and later included those results in reports on Form 10-Q filed
with the SEC and created the impression in the financial community that the
results included therein contained all adjustments necessary to present fairly
FPA's results

(a) The principle that interim financial reporting should be
based upon the same accounting principles and practices used to prepare annual
financial statements (APB No. 28, Paragraph 10);

(e) The principle that financial reporting should provide information
about an enterprise's financial performance during a period was violated.
Investors and creditors often use information about the past to help in
assessing the prospects of an enterprise. Thus, although investment and credit
decisions reflect investors' expectations about future enterprise performance,
those expectations are commonly based at least partly on evaluations of past
enterprise performance (FASB Statement of Concepts No. 1, Paragraph 42);

(f) The principle that financial reporting should be reliable in that
it represents what it purports to represent was violated. That information
should be reliable as well as relevant is a notion that is central to accounting
(FASB Statement of Concepts No. 2, Paragraphs 58-59);

(g) The principle of completeness, which means that nothing is left
out of the information that may be necessary to insure that it validly
represents underlying events and conditions was violated (FASB Statement of
Concepts No. 2, Paragraph 79); and

(h) The principle that conservatism be used as a prudent reaction to
uncertainty to try to ensure that uncertainties and risks inherent in business
situations are adequately considered was violated. The best way to avoid injury
to investors is to try to ensure that what is reported represents what it
purports to represent (FASB Statement of Concepts No. 2, Paragraphs 95-97).

- 43 -

<PAGE> 45
66. Further, the undisclosed adverse information concealed by defendants
during the Class Period is the type of information which, because of SEC
regulations, regulations of the national stock exchanges and customary business
practice, is expected by investors and securities analysts to be disclosed and
is known by corporate officials and their legal and financial advisors to be the
type of information which is expected to be and must be disclosed.

DEFENDANTS' INSIDER TRADING

67. While FPA officials were issuing favorable false statements about
FPA's business during the Class Period, including rendering financial statements
that were false and misleading, the Individual Defendants sold over 415,040
shares of the FPA stock they owned for proceeds of over $9.8 million to profit
from the artificial inflation in FPA's stock price their deliberate and
dishonest acts and fraudulent scheme had created. Notwithstanding their access
to confidential information as a result of their status as directors and/or
officers of the Company, the Individual Defendants sold the following amounts of
FPA's shares at artificially inflated prices throughout the Class Period while
in possession of material non-public information and without disclosing the
same:

<TABLE>
<CAPTION>
AGGREGATE
NAME SHARES PRICE PROCEEDS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
SOL LIZERBRAM 87,900 $19.44-27.75 $2,113,635

DR. SETH FLAM 93,000 $19.44-27.75 $2,215,794

STEVEN M. LASH 79,000 $19.44-27.50 $1,873,161

STEPHEN J. DRESNICK 36,140 $18.50-26.50 $ 859,140

HOWARD HASSMAN 98,000 $20.88-27.09 $2,343,870

JAMES A. LEBOVITZ 21,000 \ $19.44-26.00 $ 469,771
</TABLE>

- 44 -
<PAGE> 46
This insider selling was unusual in timing and amount

COUNT I

For Violations Of Section 10(b) Of The
Exchange Act And Rule 10b-5 Promulgated
Thereunder Against All Defendants

68. Plaintiff incorporates by reference Paragraphs 1-67.

69. During the Class Period, defendants engaged in a scheme and course
of business, pursuant to which they knowingly and/or recklessly engaged in acts,
transactions, practices and courses of business which operated as a fraud upon
plaintiff and other members of the Class, and made various untrue statements of
material fact and omitted to state material facts necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading, to plaintiff and other Class members as set forth above. The
purpose and effect of said scheme was to induce plaintiff and the members of the
Class to purchase the Company's common stock during the Class Period at
artificially inflated prices.

70. By reason of the foregoing, the defendants knowingly or recklessly
violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder
in that they themselves or a person whom they controlled: (a) employed devices,
schemes and artifices to defraud; (b) made untrue statements of material facts
or omitted to state material facts necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading;
or (c) engaged in acts, practices and a course of business that operated as a
fraud or deceit upon plaintiff and other members of the Class in connection with
their purchases of the Company's common stock during the Class Period.

- 45 -
<PAGE> 47

COUNT II

For Violations Of Section 20(a) Of The
Exchange Act Against Defendants Flam,
Lizerbram, Lash, Dresnick And FPA

72. Plaintiff incorporates by reference Paragraphs 1-71.

73. Individual Defendants Flam, Lizerbram, Lash and Dresnick are liable
under Section 20(a) of the Exchange Act as control persons of FPA since, by
virtue of their executive and directorial positions, their knowledge of and
involvement in the Company's business, their stock ownership, and their power
and ability to make public statements on behalf of the Company to shareholders,
potential investors and the media, they had the power and ability to control

- 46 -
<PAGE> 48
the actions of the Company. FPA, in turn, controlled each of the Individual
Defendants.

BASIS OF ALLEGATIONS

74. This Complaint is pleaded in accordance with the Federal Rules of
Civil Procedure, including Rule 11. Because the PSLRA, Section 521D(c) of the
Exchange Act (15 U.S.C. Section 78u-4(c)), requires complaints to be pleaded in
conformance with Federal Rule of Civil Procedure 11, plaintiff has alleged the
foregoing based upon the investigation of his counsel, which included a review
of FPA's SEC filings, securities analysts' reports and advisories about the
Company, press releases issued by the Company, media reports about the Company
and discussions with consultants pursuant to Rule 11(b)(3).

CLASS ACTION ALLEGATIONS

- 47 -
<PAGE> 49
can only be determined by appropriate discovery, plaintiff believes that Class
members number at least in the thousands and that they are geographically
dispersed. FPA has approximately 14.7 million shares of class A common stock and
27.1 million shares of class B common stock outstanding and actively traded over
the counter in an efficient market. Record owners and other members of the Class
may be identified from records maintained by FPA or its transfer agent and may
be notified of the pendency of this action by mail, using a form of notice
similar to that customarily used in securities class actions.

77. Plaintiff's claims are typical of the claims of the members of
the Class, because plaintiff and all of the Class members sustained damages
arising out of defendants' wrongful conduct complained of herein.

78. Plaintiff will fairly and adequately protect the interests of
the Class members and has retained counsel who are experienced and competent in
class and securities litigation. Plaintiff has no interests that are contrary to
or in conflict with the members of the Class plaintiff seeks to represent.

- 48 -
<PAGE> 50
80. Questions of law and fact common to the members of the Class
predominate over any questions that may affect only individual members, in that
defendants have acted on grounds generally applicable to the entire Class. Among
the questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by
defendants' acts as alleged herein;

(d) whether the defendants acted willfully, with knowledge or
recklessly, in omitting and/or misrepresenting material facts;

(e) whether the market prices of FPA common stock during the
Class Period were inflated artificially due to the material nondisclosures
and/or misrepresentations complained of herein; and

(f) whether the members of the Class have sustained damages and,
if so, what is the appropriate measure of damages.

PRAYER FOR RELIEF

WHEREFORE, plaintiff prays for judgment as follows:

1. Declaring this action to be a proper class action on behalf of the
Class defined herein;

2. Awarding plaintiff and the members of the Class compensatory damages;

- 49 -
<PAGE> 51
3. Award plaintiff and the members of the Class pre-judgment and
post-judgment interest, as well as reasonable attorneys' fees, expert witness
fees and other costs;

4. Award extraordinary, equitable and/or injunctive relief as permitted
by law, equity and the appropriate state law remedies; and

5. Award such other relief as this Court may deem just and proper.

JURY DEMAND

Plaintiff demands a trial by jury.

DATED: May 20, 1998

MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN SCHULMAN
DARREN J. ROBBINS

/s/ WILLIAM S. LERACH
-------------------------------
WILLIAM S. LERACH

600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

SAVETT FRUTKIN PODELL &
RYAN, P.C.
STUART H. SAVETT
ROBERT P. FRUTKIN
BARBARA A. PODELL
325 Chestnut Street, Suite 700
Philadelphia, PA 19106
Telephone: 215/923-5400

JAROSLAWICZ & JAROS
DAVID JAROSLAWICZ
150 William Street
19th Floor
New York, NY 10038
Telephone: 212/227-2780

-50-
<PAGE> 52
BEATIE AND OSBORN
EDUARD KORSINSKY
599 Lexington Avenue
New York, NY 10022
Telephone: 212/888-9000

LEVIN, FISHBEIN, SEDRAN &
BERMAN
ARNOLD LEVIN
510 Walnut Street, Suite 500
Philadelphia, PA 19106
Telephone: 215/592-1500

Attorneys for Plaintiff

-51-
<PAGE> 53
CERTIFICATION FOR CLASS ACTION COMPLAINT
FOR VIOLATION OF THE FEDERAL SECURITIES LAWS

Murray Lebowitz hereby certifies as follows:

1. I am the plaintiff in the within complaint.

2. I have reviewed the Complaint prepared by counsel in the
above-captioned case and have authorized its filing.

3. I did not purchase the security that is the subject of the
Complaint at the direction of plaintiffs' counsel or in order to participate in
any private action arising under Title I of the Securities Exchange Act of 1934.

4. I am willing to serve as a representative on behalf of the class,
including providing testimony at depositions and trial, if necessary.

5. During the proposed Class Period specified in the Complaint I have
engaged in the following transactions in the common stock of FPA Medical
Management, Inc.:

Transaction Date No. Shares Price

Purchase 3/12/98 100 $19.00

Purchase 5/04/98 100 $11.25

6. During the three year period preceding the date on which this
certification was signed, I have not sought to serve nor have served as a
representative party on behalf of a class in any actions under Title I of the
Securities Exchange Act of 1934.

7. I agree not to accept any payment for serving as a representative
party on behalf of the class, beyond plaintiff's pro rata share of any
recovery, except as ordered or approved by the Court.
<PAGE> 54
8. I make this certification without waiver of any applicable
privileges and without waiver of any right to challenge the necessity for, or
the constitutionality of, this certification, or to object to the filing of
this certification on any ground whatsoever.

9. The matters stated in this certification are true to the best of my
current knowledge, information and belief.

CERTIFIED, UNDER THE PENALTIES OF PERJURY, at Hartsdale, New York, this
19th day of May, 1998.

/s/ MURRAY LEBOWITZ
--------------------------
Murray Lebowitz

2
<PAGE> 55

FILED
98 MAY 20 PM 2:17
CLERK, U.S. DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

BY: [SIG] DEPUTY

CIVIL COVER SHEET

JS 44
(Rev. 07/89)

I. (a) PLAINTIFFS

MURRAY LEBOWITZ, On Behalf of Himself and All Others Similarly Situated

(b) COUNTY OF RESIDENCE OF FIRST LISTED PLAINTIFF New York
(EXCEPT IN U.S. PLAINTIFF CASES) --------

- --------------------------------------------------------------------------------
(c) ATTORNEYS (FIRM NAME, ADDRESS,AND TELEPHONE NUMBER)

William S. Lerach, Esq.

MILBERG WEISS BERSHAD HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
619/231-1058

- --------------------------------------------------------------------------------

DEFENDANTS

FPA MEDICAL MANAGEMENT, INC., SETH FLAM, SOL LIZERBRAM, STEVEN M. LASH,
STEPHEN J. DRESNICK, HOWARD HASSMAN and JAMES A. LEBOVITZ

COUNTY OF RESIDENCE OF FIRST LISTED DEFENDANT
----------------------------------
(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND
INVOLVED

- --------------------------------------------------------------------------------

ATTORNEYS (IF KNOWN)

- --------------------------------------------------------------------------------

II. BASIS OF JURISDICTION (PLACE AN x IN ONE BOX ONLY)

[ ] 1. U.S. Government [X] 3. Federal Question
Plaintiff (U.S. Government Not a Party)

[ ] 2. U.S. Government [ ] 4. Diversity
Defendant (Indicate Citizenship of
Parties in Item III)

- --------------------------------------------------------------------------------

III. CITIZENSHIP OF PRINCIPAL PARTIES (PLACE AN x IN ONE BOX FOR
(For Diversity Cases Only) PLAINTIFF AND ONE BOX FOR DEFENDANT)

PTF DEF PTF DEF

Citizen of This State [ ] 1 [ ] 1 Incorporated or Principal [ ] 4 [ ] 4
Place of Business in
This State

Citizen of Another [ ] 2 [ ] 2 Incorporated and [ ] 5 [ ] 5
State Principal Place of
Business in Another
State

Citizen or Subject of [ ] 3 [ ] 3 Foreign Nation [ ] 6 [ ] 6
a Foreign Country

- --------------------------------------------------------------------------------

IV. CAUSE OF ACTION

(CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND
WRITE A BRIEF STATEMENT OF CAUSE. DO NOT CITE
JURISDICTIONAL STATUTES UNLESS DIVERSITY.)

COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS;
15 U.S.C. SECTIONS 78j(b) and 78t(a)

- --------------------------------------------------------------------------------

V. NATURE OF SUIT (PLACE AN x IN ONE BOX ONLY)

- --------------------------------------------------------------------------------
CONTRACT TORTS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

VI. ORIGIN (PLACE AN x IN ONE BOX ONLY)

JUDGE Schwartz DOCKET NUMBER 98cv928-S(LAB)

- --------------------------------------------------------------------------------
DATE SIGNATURE OF ATTORNEY OF RECORD

MAY 20, 1998 /s/ WILLIAM S. LERACH
- --------------------------------------------------------------------------------

UNITED STATES DISTRICT COURT