<p align= justify >As summarized by the Company’s FORM 10-Q for the quarterly period ended March 31, 2008, [several] identical purported stockholder class action complaints were subsequently filed in the Florida District Court. One of the three plaintiffs voluntarily dismissed its complaint without prejudice and the two other plaintiffs consolidated their complaints with the Cole Action. In addition, three other purported stockholders who did not file complaints filed motions to be appointed as the lead plaintiff; however, one of the plaintiffs subsequently withdrew its motion. The Florida District Court has not yet determined which plaintiff or other person will be designated as lead plaintiff pursuant to the Private Securities Litigation Reform Act of 1995.</p> <p align= justify > </p>
<p align= justify >The Complaint alleges that defendants violated the federal securities laws, by issuing a series of material misrepresentations during the Class Period thereby artificially inflating the price of Health Management securities. The Complaint alleges, among other things, that defendants engaged in a scheme to manipulate Health Management’s policies in order to create the impression that the Company had its “bad debt expenses” under control in order to borrow additional money, and to get the Board to approve of their recapitalization plan. On January 17, 2007, Health Management announced a major recapitalization which was completed in March 2007 and which required the company to borrow $3.25 billion of new debt to refinance existing debt and pay shareholders a special one-time cash dividend of $10.00. The Individual Defendants benefited substantially from this one time dividend, given that they were major shareholders and each defendant received large sums of money.</p>