<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>green8kex991080204.txt
<DESCRIPTION>PRESS RELEASE DATED AUGUST 2, 2004.
<TEXT>

Exhibit 99.1


                         GREENBRIAR CORPORATION SETTLES
                      INTERNAL REVENUE SERVICE EXAMINATION


FOR IMMEDIATE RELEASE
                                                         Contact: Gene Bertcher
                                                         Oscar Smith
                                                         Phone:   (972) 407-8400

Dallas,  Texas,  (Business  Wire) August 2,  2004...announced  today that it has
entered  into an  agreement  with the  Internal  Revenue  Service (the "IRS") to
resolve an examination arising out of the issuance,  defeasance, and remarketing
of certain tax-exempt bonds.

         As  previously  announced,  the IRS indicated  that it was  considering
assessing a penalty  against  the Company  under  section  6700 of the  Internal
Revenue Code because of the Company's participation in these transactions.

         In participating in the transactions,  which occurred  approximately 12
years ago, the Company relied on advice rendered by the investment  banking firm
of J.C.  Bradford  & Co.,  which is now an  affiliate  of UBS  PaineWebber,  and
certain  nationally-recognized  law  firms.  The  individual  who  directed  the
Company's  participation  in the  transactions  no  longer  is  employed  by the
Company.

         Pursuant to the agreement, the Company remitted $216,000 to the IRS. As
specified in the  agreement,  the Company  agreed to treat the  remittance  as a
penalty pursuant to section 6700. However,  the Company expressly denied that it
engaged in any  conduct  that  would be  subject  to penalty  under the tax law.
Consequently,  it entered into the agreement  solely for the purpose of avoiding
the expense and burden of further proceedings.

         Pursuant to a 2002 agreement  between the IRS and UBS PaineWebber,  the
IRS agreed not to dispute or otherwise  challenge the  tax-exempt  status of the
bonds.

         The bonds in question were:

         -        the  Development  Authority of Colquitt  County  Revenue Bonds
(Southern Care Corporation Facility) Series 1991A and C;

         -        the  Development  Authority of Richmond  County  Revenue Bonds
(Southern Care Corporation Facility) Series 1991A and C;


         -        the Savannah  Economic  Development  Authority  Revenue  Bonds
(Southern Care Corporation Facility) Series 1991A and C; and


         -        the Washington  Wilkes Payroll  Development  Authority Revenue
Bonds (Southern Care Corporation Facility) Series 1991A and C (collectively, the
"Bonds").

                                      # # #




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