SENIOR EXECUTIVE EMPLOYMENT AGREEMENT

Exhibit 99.1

SENIOR EXECUTIVE EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of December 2, 2005 (the “Effective Date”), by and between PACIFICARE HEALTH SYSTEMS, INC., a Delaware corporation (the “Company”), with its principal place of business located at 5995 Plaza Drive, Cypress, California 90630, and Sharon D. Garrett (“Executive”).

RECITALS

WHEREAS , the Company desires to employ Executive in the capacity of Executive Vice President, Enterprise Services.

WHEREAS , the Company and Executive are entering into this Agreement to establish the terms and conditions of the employment relationship.

NOW, THEREFORE , in consideration of the following covenants, conditions and promises contained herein, and other good and valuable consideration, the Company and Executive hereby agree as follows:

1.1 Executive’s General Duties . The Company will employ Executive and Executive will serve the Company in the capacity of Executive Vice President, Enterprise Services, having such usual and customary duties and authority as an officer of similar capacity in a corporation of comparable size, holdings, and business as that of the Company.

Executive shall do and perform all services, acts, or things necessary or advisable to manage and conduct the business of the Company and shall preside over such other areas of corporate activity as specified from time to time by the Board of Directors or Chief Executive Officer of the Company. During the term of this Agreement, Executive shall perform such additional or different duties, and accept the election or appointment to such other offices or positions as are mutually agreed upon by Executive and the Company.

1.2 Devotion of Executive . During the term of this Agreement, Executive shall devote her entire productive time, ability, and attention to the business of the Company. Executive shall use Executive’s best efforts, skills, and abilities to promote the general welfare and interests of the Company and to preserve, maintain, and foster the Company’s business and business relationships with all persons and entities associated therewith, including, without limitation, employer groups, medical service providers, stockholders, affiliates, officers, employees, and banks and other financial institutions. The Company shall give Executive a reasonable opportunity to perform Executive’s duties and shall neither expect Executive to devote more time, nor assign more duties or functions to Executive, than are customary and reasonable for a person in Executive’s position.

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2.1 Term . The initial term of Executive’s employment under this Agreement shall be 24 months, commencing on the Effective Date. The Company may extend the term of this Agreement for a successive term of 12 months or more by giving Executive written notice at least 45 days prior to the expiration of the term. Notwithstanding the foregoing, if a Change-of-Control occurs, as defined in Section 5.1(c) of this Agreement, then the term of the Agreement shall end 24 months from the effective date of the Change-of-Control. Except as provided by Section 2.2(f), if the Company offers Executive a new employment agreement at the end of the term of this Agreement, but Executive does not accept the new employment agreement, then Executive’s continued employment with the Company will be without the benefit of a written employment agreement, in which case Executive’s entitlement to severance benefits on termination shall be governed by then-existing Company policies and practices. In the event that at the end of the term of this Agreement, the Company neither extends the term of the Agreement nor offers Executive a new employment agreement, then the Company shall have been deemed to have given 45 days written notice pursuant to Section 2.2(d) of this Agreement and Executive’s employment with the Company shall terminate pursuant to Section 2.2(d) of this Agreement.

2.2 Termination . This Agreement, and Executive’s employment with the Company, shall be terminated upon the occurrence of any one of the following events:

a. The death of the Executive.

b. Executive becomes incapacitated or disabled, which incapacity or disability prevents Executive from fully performing her duties to the Company for a period in excess of 90 days and, after such 90-day period, the Company and a physician, duly licensed and qualified in the specialty of Executive’s incapacity, decide in their reasonable judgments, that such incapacity will be of such continued duration as to prevent Executive from resuming the rendition of services to the Company for at least an additional six-month period. For purposes of this Agreement, Executive shall be deemed permanently disabled, and this Agreement terminated upon the date Executive receives written notice from the Company that such determination has been made.

c. Executive habitually neglects her duties to the Company or engages in gross misconduct during the term of this Agreement. For the purposes of this Agreement, “gross misconduct” shall mean Executive’s misappropriation of funds; fraud; insider trading; unauthorized possession of corporate property; the sale, distribution, possession or use of a controlled substance; conviction of any criminal offense (whether or not such criminal offense is committed in connection with Executive’s duties hereunder or in the course of her employment with the Company); or Executive’s action, or failure to commit an act, involving the Company which amounts to willful misconduct, wanton misconduct or gross negligence and which is materially and demonstrably harmful to the Company. In such

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event, Executive’s termination shall be effective immediately upon receipt of written notice from the Company.

d. Either party hereto may terminate this Agreement, with or without cause, upon 45 days prior written notice to the other party. Except for the circumstances described in Subsections (a), (b), (c), (e) and (f) of this Section 2.2, Executive’s termination shall be effective 45 days after receipt of such written notice.

e. Upon the expiration of the term of this Agreement, the Company neither extends the Agreement pursuant to Section 2.1 nor offers Executive a new employment agreement.

f. Executive voluntarily terminates her employment, upon written notice to the Company, to be effective at the end of the term of this Agreement, after the Company offers Executive a new employment agreement that establishes duties materially inconsistent with those described in Section 1.1, reduces Executive’s salary by more than 10 percent below the salary in effect at the end of the term of this Agreement or does not contain severance provisions comparable to those in this Agreement.

3.1 Base Salary . As long as Executive satisfactorily performs all of the obligations under this Agreement, the Company shall pay Executive an annual base salary during the term of this Agreement, payable in equal installments on the Company’s regular payroll dates. As of this date, Executive’s annual base salary has been set at $460,000. On an annual basis, the Company shall review Executive’s salary, but shall be under no obligation to increase Executive’s salary. Executive authorizes the Company to take such deductions and withholdings from her base salary and other compensation, including any bonus, as are required by law, directed by Executive, or as reasonably directed by the Company for its employees, which deductions shall include, without limitation, withholding for federal and state income taxes and social security.

3.2 Benefits . Executive shall be eligible to fully participate in all of the employee benefit plans and programs available to other high-level executives of the Company, including, without limitation, health, dental, and life insurance coverage for Executive and Executive’s dependents, pension and profit sharing programs (including the Company’s Supplemental Executive Retirement Plan), paid time off benefits, the Amended and Restated PacifiCare Health Systems, Inc. Savings and Profit-Sharing Plan, and the trust agreement implemented pursuant thereto, adopted as of July 1999, the Company’s Statutory Restoration Plan and the Company’s Deferred Compensation Plan. The Company shall have the right to change, amend, modify, or terminate any existing benefit plan or program, or to change any insurance company or modify any insurance policy adopted incident to such existing benefit plan and program.

3.3 Automobile Allowance . Executive shall be eligible to participate in the Company’s automobile allowance program, if any, at a rate consistent with that provided to other high-level

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executives of the Company. The Company shall furnish Executive with a cellular telephone. Executive shall provide and maintain automobile insurance for Executive’s car including collision, comprehensive liability, personal and property damage, and uninsured and underinsured motorist coverage in amounts customarily obtained to cover such contingencies in the State of California. Executive shall provide proof of such coverage to the Company upon the Company’s request.

3.4 Reimbursement of Expenses . The Company shall pay for or reimburse Executive for all reasonable travel, entertainment, and other business expenses incurred or paid for by Executive in connection with the performance of her services under this Agreement. The Company shall not be obligated to make any such reimbursement unless Executive presents corresponding expense statements or vouchers and such other supporting information as the Company may from time to time reasonably request. The Company reserves the right to place subsequent limitations or restrictions on business expenses to be incurred or reimbursed.

3.5 Annual Incentive Plan . Executive shall be eligible to participate in either the Company’s 1996 Management Incentive Compensation Plan or 2003 Management Incentive Compensation Plan, as applicable, or any replacement plan, and as such plans may be further amended, modified, or terminated, from time to time (the “MICP”), in accordance with the terms and conditions set forth herein and therein.

3.6 Equity-Based Plans . Executive shall be eligible to participate in the applicable equity-based compensation plans for officers and key employees of PacifiCare Health Systems, Inc., as may be amended modified or replaced, from time to time, in accordance with the terms and conditions set forth herein and therein including eligibility for both stock options and restricted share awards.

3.7 Insurance . During the term of this Agreement, the Company shall insure Executive under its general liability insurance for all conduct committed in good faith while acting in the capacity of Executive Vice President, Enterprise Services or in any other capacity to which Executive may be appointed or elected.

4.1 Death . In the event that this Agreement is terminated by reason of Executive’s death, Executive’s estate or legal representative shall be entitled to receive the following:

a. Payment of benefits under the life insurance policy purchased by the Company on Executive’s behalf, if any;

b. Payments of benefits under the MICP set forth in Section 3.5 in accordance with the terms of the MICP plan document;

c. Executive’s legal representative shall be permitted to exercise any vested and unexercised options granted under the 1996 Stock Option Plan for Officers and Key

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Employees, the 2000 Employee Plan, the 2005 Equity Incentive Plan and any other stock option plans of the Company (collectively, the “Stock Option Plans”) in accordance with their terms for a period of one year following Executive’s death.

4.2 Disability . In the event that Executive is terminated because of incapacity or disability, the Company shall provide Executive with the following:

a. Payment of benefits under the disability insurance policy maintained by the Company on Executive’s behalf, if any;

b. Payment of benefits under the MICP set forth in Section 3.5 in accordance with the terms of the MICP plan document;

c. The right to exercise any vested and unexercised options under the Stock Option Plans in accordance with the terms stated therein;

d. Payment of the automobile allowance as provided under Section 3.3 for a period of 18 months following the effective date of such termination.

4.3 Neglect, Misconduct or Voluntary Termination . In the event this Agreement is terminated because of Executive’s habitual neglect or gross misconduct pursuant to Section 2.2(c) or because of Executive’s voluntary termination (except for resignation pursuant to Section 2.2(f)), the Company shall be relieved from any and all further or future obligations to compensate Executive; provided, however, that Executive shall be able to exercise any vested and unexercised awards under the Stock Option Plans in accordance with the terms set forth therein.

4.4 Discharge by the Company Pursuant to Section 2.2(d) or 2.2(e) . In the event that the Company terminates Executive pursuant to Section 2.2(d) or 2.2(e) under circumstances other than a Change-of-Control (as defined herein) and for any reason other than Executive’s incapacity or disability or neglect/misconduct as described in Sections 2.2(b) and 2.2(c), respectively, then Executive shall be entitled to the following compensation:

a. An amount equal to 2 times Executive’s then current annual salary under Section 3.1;

b. An amount equal to 2 times the average of the last two MICP bonuses paid to Executive. If Executive has been employed by the Company for more than one, but less than two years, then the MICP bonus severance payment shall equal 2 times the average of the MICP bonus paid to Executive for the prior year and the target for Executive for the current year. If Executive has been employed by the Company for less than one year, Executive will not receive any bonus severance payment. For purposes of this Section 4.4(b), the word “paid” shall include $0.00 for any year in which Executive was eligible for, but was not paid, an MICP bonus;

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c. The right to exercise any vested and unexercised options granted under the Stock Option Plans at a time when Executive was at the salary grade level of X15 or higher, or held the title of Senior Vice President or higher, in accordance with their terms within one year of the effective date of such termination;

d. Continuation of Executive’s and her dependents’ medical, dental and vision benefits for a period of 24 months following the effective date of such termination;

e. An amount equal to 24 months of Executive’s automobile allowance;

f. The Company shall provide to Executive outplacement services to assist Executive in securing a position comparable to the one from which Executive was terminated. The Company shall be obligated to provide those outplacement services which are customarily provided by companies of similar size and holdings as those of the Company to executives with comparable responsibility and longevity as Executive and for reasonable cost as approved by the Company. The Company’s provision of such outplacement services shall not limit, restrict, or reduce, in any manner, any and all other compensation to which Executive is entitled hereunder;

g. Executive shall receive, or have paid, the amounts of severance compensation provided in clauses (a), (b) and (e) above in equal installments over a period of 24 months. Payments will be made either in biweekly installments on the Company’s regular paydays or as currently being paid to Executive;

h. Notwithstanding the foregoing, in the event Executive engages in employment, whether as an employee, consultant or contractor with a competitor of the Company during the 24 month period in which Executive’s salary continues pursuant to this Section 4.4, the severance compensation available to Executive under this Section 4.4 shall be reduced by the amount of any and all gross earnings Executive earns while engaged in employment with any such competitor or competitors. For the purposes of this Section 4.4 , a “competitor of the Company” means any company offering managed care and other health insurance products, including specialty managed care products and services, including without limitation, managed care organizations, health maintenance organizations, competitive medical plans, preferred provider organizations, provider sponsored organizations (“PSO”), health insurance companies, pharmacy benefit management companies, behavioral health companies, and dental and vision benefit plans. Executive agrees to provide immediate notice to the Company upon receipt of any gross earnings received by Executive from a competitor of the Company. Quarterly, Executive shall provide the Company a certificate certifying as to her employment status and if employed, the name and business of her current employer;

i. If Executive is rehired by the Company, payments of severance compensation provid