Dear Provider:

I am pleased to provide you with a check representing your Fourth Interim Distribution payment from ___________________________________________. This payment is being made pursuant to the “Act”, described below, that provides a source of funds to pay providers monies owed to them by HIP Health Plans of New Jersey in Liquidation (“HIP”) and/or American Preferred Provider Plan (“APPP”), the Health Maintenance Organizations (HMO's) that became insolvent in 1998. With this Fourth Interim Distribution, together with the three prior Interim Distributions, ________________ has now paid 75 percent of your allowed claim.

Remember, this payment is an “interim distribution” meaning it is being paid now as an advance payment against any future payment that is owed to you. Since this payment is not a final distribution, there are certain conditions about this interim distribution that you need to know. Specifically, when you cash the enclosed check, you are bound to all the conditions of the Refunding Agreement summarized below. Please read the documents in this package carefully, including the Refunding Agreement .

Enclosed with this explanatory letter, please find the following documents regarding the Fourth Interim Distribution:

•  Your Fourth Interim Distribution check with the particulars of your Fourth Interim Distribution payment;

•  The Refunding Agreement

The New Jersey Insolvent Health Maintenance Organization Assistance Fund Act of 2000 (the “Act”) became effective on April 6, 2000 . This Act, among other things, provides for the following:

•  The establishment of the New Jersey Insolvent Health Maintenance Organization Assistance Fund (the “Fund”) to pay certain identified provider claims (Class 3 Priority Claims under the New Jersey Life and Health Insurers Rehabilitation and Liquidation Act, the “LHIRLA”);

•  Providers shall forgive one-third of their adjudicated and allowable Class 3 Priority claim in exchange for payment from the Fund rather than wait until the closure of HIP and/or APPP;

•  The law provides for interim payments to providers;

•  Providers shall agree to return that portion of any interim or partial payment (including the entire amount of any such payment or payments) to them from the Fund in the event that it was subsequently discovered that such payment was made in error; and

•  Providers shall agree to assign their rights (subrogate) to the New Jersey Insolvent Health Maintenance Organization Assistance Association (the “Association”) for any monies paid to them from the Fund. This means you are being paid first and the Association stands in your shoes to receive this amount from the estates of HIP and/or APPP, assuming there are monies remaining in these estates when they close.

As required by the Act, the enclosed Refunding Agreement provides for your agreement to return any or all of any distribution made to you from the Fund in the event that you were paid in error, and your assignment of rights to the Association for any monies paid to you from the Fund. The Refunding Agreement is for your records. You do NOT have to sign and return it to the Deputy Liquidators of HIP and/or APPP. Your deposit, cashing or other endorsement of your Fourth Interim Distribution check constitutes your acceptance of all the terms and conditions contained in the Refunding Agreement. The Refunding Agreement was designed to comply with the Act and not eliminate any rights that you would otherwise have under the LHIRLA.

We hope that you find this explanatory letter both informative and helpful. Further details about the interim distribution can be found on the Department's website at: .

We thank you for your cooperation.



Deputy Liquidator