The following table summarizes all business combinations and membership purchases for the three years ended December 31, 2001 (in thousands):

	Effective Date	Market	Purchase Price
Business Combinations
Carelink Health Plans (“Carelink”)	October 1, 1999	West Virginia	$ 8,400
PrimeONE, Inc. (“PrimeONE”)	February 1, 2000	West Virginia	$ 4,332
Maxicare Louisiana, Inc. (“Maxicare”)	August 1, 2000	Louisiana	$ 3,541
WellPath Community Health Plans (“WellPath”)	October 2, 2000	North Carolina	$ 21,244
Blue Ridge Health Alliance, Inc. (“Blue Ridge”)	September 1, 2001	Virginia	$ 14,850

Membership Purchases
Kaiser Foundation Health Plan of North Carolina (“Kaiser – NC”)	November 1, 1999	North Carolina	$ 2,100
Prudential Health Care Plan, Inc. (“Prudential”) ⁽¹⁾	February 1, 2000	St. Louis	$ 956
Health Partners of the Midwest (“Health Partners”)	January 1, 2001	St. Louis	$ 4,864
Kaiser Foundation Health Plan of Kansas City, Inc. (“Kaiser – KC”)	April 2, 2001	Kansas City	See Note (2)

(1) The Prudential acquisition included Medicaid membership only.
(2) The final Kaiser – KC purchase price will be determined following a one year transition period.

In the fourth quarter of 1999, we notified the Indiana Department of Insurance of our intention to close our subsidiary, Coventry Health Care of Indiana, Inc. The Indiana health plan did not operate profitably or demonstrate good prospects for future growth. Although closing the health plan did not have a substantial effect on consolidated earnings, it did allow us to focus resources and management attention on our other markets. Our transition plan gave employers and members ample time to obtain health care coverage through one of the many other companies operating in Indiana. Effective December 23, 2001, our license to operate the Indiana health plan had been withdrawn from the state. As a result of the cost associated with exiting the Indiana market, we recorded a reserve of $2.0 million in the fourth quarter of 1999. We have expended substantially all of the reserve as of December 31, 2001.

In the normal course of business, we have been named as a defendant in various legal actions such as actions seeking payments for claims denied by us, medical malpractice actions, and other various claims seeking monetary damages. The claims are in various stages of proceedings and some may ultimately be brought to trial. Incidents occurring through December 31, 2001 may result in the assertion of additional claims. With respect to medical malpractice, we carry professional malpractice and general liability insurance for each of our operations on a claims-made basis with varying deductibles for which we maintain reserves. In the opinion of management, the outcome of these actions should not have a material adverse effect on our financial position or results of operations.

On April 16, 2001, we were served with an Amended Complaint filed in the United States District Court for the Southern District of Florida, Miami Division, MDL No. 1334, styled In Re: Humana, Inc., Managed Care Litigation, Charles B. Shane, M.D., et al. vs. Humana, Inc., et al. This matter is a purported class action lawsuit filed by a group of health care providers against our Company and 11 other defendants in the managed care field. The lawsuit alleges multiple violations of RICO, violations of the “prompt pay” statutes in certain states and breaches of contract for failure to pay claims. The lawsuit seeks declaratory, injunctive, compensatory and equitable relief as well as restitution, costs, fees and interest payments. Although we cannot predict the outcome, we believe this suit is without merit and intend to defend our position vigorously.

We may be the target of other similar lawsuits involving RICO and the ERISA, generally claiming that managed care companies overcharge consumers and misrepresent that they deliver quality health care. Although we may be the target of other similar lawsuits, we believe there is no valid basis for such lawsuits.

Our industry is heavily regulated and the laws and rules governing the industry and interpretations of those laws and rules are subject to frequent change. Existing or future laws could have a significant effect on our operations.