Sierra Abandons Deal With Physician Corp.

The $509 million merger is off between Sierra Health Services Inc. and Physician Corp. of America.

Workers compensation losses and regulatory objections combined Tuesday to kill the merger intended to form the nation’s eighth-largest publicly held managed care company.

Las Vegas-based Sierra ended a month of speculation that the deal was dead by citing Physician Corp.’s $250 million in workers comp losses.

Physician Corp.’s main business is running a 1 million member health maintenance organization, and it also administers workers comp coverage for about 70,000 employers.

The losses disclosed by the Miami-based company Feb. 26 came largely from four self-insured funds bought by Physician Corp. in 1995 and now considered insolvent by state insurance regulators.