Dear Provider:

I am pleased to provide you with a check representing your Estimated Third Interim Distribution payment from ______________________________.

This payment is being made pursuant to a law signed last year to provide a source of funds to pay providers for monies owed to them by HIP and/or APPP, the HMOís that became insolvent in 1998.

This interim distribution represents only a portion of what you may be owed. This payment is an "interim distribution" meaning it is being paid now as an advance payment against any future payment that may be owed to you upon the final adjudication of your claim. Our review of your Proof of Claim ("POC") is still on-going. Because of this, there are certain conditions about this interim distribution that you need to know. The most important is that if we overpay you, you must agree to repay what you are not owed. When you cash the enclosed check, you are bound to all the conditions in the Refunding Agreement explained to you below. Please read the materials in this package carefully, including the Refunding Agreement.

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

    1. Your Estimated Third Interim Distribution Check with the particulars of your Estimated Third Interim Distribution payment;
    2. Questions and Answers; and
    3. 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:

    1. The establishment of the New Jersey Insolvent Health Maintenance Organization Assistance Fund (the "Fund") with up to $100 million to pay certain identified provider claims (Class 3 Priority Claims under the New Jersey Life and Health Insurers Rehabilitation and Liquidation Act, the "LHIRLA");
    2. 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 or APPP;
    3. The law provides for interim payments to providers;
    4. 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
    5. 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 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 or APPP. The Refunding Agreement was designed to comply with the Act and not eliminate any rights that you would otherwise have under the LHIRLA. Your deposit, cashing or other endorsement of your Estimated Third Interim Distribution check constitutes your acceptance of all the terms and conditions contained in the Refunding Agreement.

The enclosed Questions and Answers document is designed to answer anticipated questions you may have regarding this Estimated Third Interim Distribution. We hope that you find the Questions and Answers both informative and helpful. Also, the Questions and Answers and further details about the interim distribution can be found on the Departmentís website at


We thank you for your cooperation.


Deputy Liquidator