Mail Stop 6010
Via Facsimile and U.S. Mail
September 7, 2005
Ms. Mary Jane Johnson
President and Chief Executive Officer
Comprehensive Care Corporation
204 South Hoover Blvd., Suite 200
Tampa, Florida 33609
Re: Comprehensive Care Corporation
Form 10-K for Fiscal Year Ended May 31, 2005
File No. 1-9927
Dear Ms. Johnson:
We have limited our review of your filing to those issues
addressed in our comments. In our comments, we ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Managements Discussion and Analysis
Critical Accounting Estimates, page 14
1. Disclosure providing investors with a fuller understanding of
the
uncertainties in applying critical accounting policies and
explaining
the likelihood that materially different amounts would be reported
under different conditions or using different assumptions is
consistent with the objective of Management`s Discussion and
Analysis. This disclosure should include quantification of the
related variability in operating results that you expect to be
reasonably likely to occur. We were unable to find this disclosure
in
your filing. Please provide us in disclosure-type format
information
about the uncertainties in applying your critical accounting
policies, the historical accuracy of these critical accounting
estimates, a quantification of their sensitivity to changes in key
assumptions and the expected likelihood of material changes in the
future.
2. Your disclosure regarding accrued claims payable does not
adequately explain how you compute this estimate, particularly the
impact of changes in judgments and uncertainties on operating
results. We note that the impact of changes in the ratio of
healthcare operating expenses to operating revenue appeared to be
significant. Accordingly, please provide us the following
information
for each line of business in disclosure-type format.
* Amount of accrued claim liability for reported claims, claims
that
have been incurred but not reported and claim adjustment expenses
for
each balance sheet date presented.
* Description of the nature of your liability for incurred but not
reported claims. It is unclear whether this estimate relates only
to
services provided by healthcare providers as of the balance sheet
date but not reported to you or all services to be provided in
connection with an insured event. We note that you describe
accrued
claims payable on page 27 as representing the "ultimate net
amounts
for all behavioral healthcare services."
* Range of accrued claim estimates as determined by your
actuaries.
Discuss the key assumptions used to arrive at management`s best
estimate of accrued claims payable within that range and what
specific factors led management to believe this amount rather than
any other amount within the range represented the best estimate of
incurred losses.
* Changes in the methods or key assumptions made to estimate the
accrued claims liability for each period presented.
* Roll forward of the accrued claim liability for each period
presented using the format described in SOP 94-5. For changes in
estimate related to insured events of prior years, describe in
reasonable specificity the new events that occurred or additional
information acquired since the prior reporting date that led to
the
change in estimate.
* Description of the expected effects on future operations and
financial condition of known trends in healthcare expenses (e.g.
utilization).
Consolidated Financial Statements
Consolidated Statements of Operations, page 22
3. We note that at May 31, 2005 fully integrated capitated lives
and
combined MSO and ASO lives totaled 679,000 and 245,000,
respectively.
Because of the potential variability on a company`s earnings
arising
from capitated arrangements, we believe that separate line item
presentation is appropriate for revenue and cost of revenue
related
to capitated and non-capitated arrangements. At a minimum, the
amount
of capitated revenue earned should be disclosed in the notes to
your
financial statements and MD&A should separately disclose and
discuss
the amount of revenue and cost of revenue for capitated and non-
capitated arrangements Please provide us this information in
disclosure-type format.
Note 2. Summary of Significant Accounting Policies
Healthcare Expense Recognition, page 25
4. We note your statement that you recognize healthcare services
when
you are "obligated" to provide such services. It is unclear as to
what this obligation refers to. Please provide us a complete
description of this obligation and the primary sources of
information
that you utilize to determine the timing and amount of this
expense
recognition.
Note 3. Liquidity, page 30
5. We note that of $776,000 in private placement proceeds
raised in March 2005, you allocated $234,000 to warrants. We were
unable to locate disclosure relating to these warrants elsewhere
in
your filing. Please describe the terms of these warrants and the
basis for their valuation in disclosure-type format.
* * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Your letter
should
key your responses to our comments. Detailed letters greatly
facilitate our review. Please file your letter on EDGAR under the
form type label CORRESP.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in your letter, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Frank Wyman, Staff Accountant, at 202-551-
3660
or Kevin Woody, Accounting Branch Chief, at 202-551-3629, if you
have
questions regarding the comments. In this regard, do not hesitate
to
contact me, at (202) 551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief Accountant
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Ms. Mary Jane Johnson
Comprehensive Care Corporation
September 7, 2005
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