Michael Saboe, a hard-charging 38-year-old engineer and computer company executive, was working round-the-clock in August when a cold he had been nursing for days landed him in the hospital.

"I thought I had pneumonia because I was so exhausted and short of breath," Saboe said.

His trouble, however, was soon diagnosed as viral myocarditis, an inflammation that attacks the heart and the heart muscle. Last month, his doctors told him he needed a heart transplant. This month, a letter from his doctor told him something else: His health insurance won't pay for it.

Saboe has filed suit in U.S. District Court against George Washington University Health Plan Inc., the health maintenance organization he joined in 1981. He said he can't afford the estimated $200,000 cost of a transplant, including preliminary and postoperative care, but that without a new heart he said he will likely die in 12 to 24 months.

Saboe's medical and legal battles have raised complex, highly emotional issues. An attorney for the health maintenance organization said the group has not taken a final stand on Saboe's coverage. Even if the insurance dispute is resolved, officials said, a further controversy has arisen over where the surgery would be performed.

Health plan officials want the operation to take place at George Washington University Medical Center, which has performed only one heart transplant operation -- on a patient who died, according to a spokeswoman for an area heart transplant consortium that includes GW. Saboe wants the operation performed at a hospital with a more extensive track record.

Until recently, Saboe said, he had counted on the surgery to save his life. He had been assured by GW doctors that his insurance plan would cover the operation no matter where it was performed, he said.

But on Jan. 5, one of his doctors, using GWU Health Plan stationery, wrote him that the plan "does not cover the costs of the cardiac transplantation." Although the letter did not indicate why the operation was not covered, Saboe said his doctors directed him to a clause in his health policy that denies coverage for "experimental surgery."

Kenneth Bass, an attorney for the health plan, said Saboe's suit came as a surprise. Health plan officials, he said, do not regard the doctor's letter as a final denial, because Saboe has yet to appeal the decision.

"The health plan makes the coverage decision, not the physician," Bass said. "It would be a mistake to take the position that cardiac transplants are not covered. He hasn't been denied coverage yet, nor am I in a position to say that he will be denied coverage."

Saboe's attorney, William Schaffer, said that Bass' statement appeared to represent a "new position" by plan officials. Saboe "assumed the letter from his doctor meant what it said," according to Schaffer. "And he didn't have the luxury of time, up to 100 days, set forth in the appeal procedure."

Since the lawsuit was filed, Schaffer said, he has received indications that the transplant will be covered -- but only if Saboe has it performed at GW.

Said Schaffer: "I don't think it's consistent with the responsibilties of an HMO or of any medical provider to take an initial position that we don't {cover} these operations, but if we're going to be forced to pay for it anyway, we might as well cut our losses and try to get it done at our facility where we can get some experience."

Bass objected to any suggestion that Saboe might be used as a "guinea pig." GW has been licensed to perform heart transplants, he said, adding that HMO patients normally are supposed to use the HMO care network if they want their HMO insurance to pay for medical treatment.

"No one is requiring Mr. Saboe to go to George Washington," said Bass. "But if {a heart transplant} is a covered service, and you have a George Washington University physician and a George Washington University facility, that's where you go unless you get a waiver."

George Washington is part of a six-hospital consortium that was granted a certificate of need a year ago to perform heart transplants. Since January 1987, the consortium -- whose other participants are Fairfax Hospital, Washington Hospital Center, Georgetown University Hospital, Howard University Hospital and Children's Hospital -- has performed transplants on 30 patients, two of whom died, including the patient at GW, according to a spokeswoman.

In the past, insurance coverage for heart transplants hinged on whether the operation was "experimental surgery" or an accepted "treatment of choice" among the medical and health insurance professions, according to an insurance industry spokeswoman. But, the spokeswoman said, the procedure no longer is considered experimental by commercial group health insurance companies and is increasingly being included in their policies.

About 80 U.S. hospitals now perform the operations, which were introduced in this country in 1968. Doctors say that new immunosuppressive drugs, which reduce the body's inclination to reject foreign tissues, have dramatically improved the survival rate for transplant patients.

According to Saboe's lawsuit, 1,368 heart transplants were performed in 1986, with a survival rate of 80 percent.

Last year, the federal Health Care Financing Administration extended Medicare coverage to heart transplants on suitable candidates in approved facilities.

Group Health Association of America, the trade association for health maintenance organizations, said a recent survey of 203 plans showed that about half provided coverage for heart transplants, but only under very specific circumstances. Officials at these plans say they weigh such factors as age, overall health and whether a patient faces imminent death without the operation.

Saboe, who lives in Alexandria with his wife, Terry, and two daughters, 5 and 2, said that until the insurance issue is cleared up he can't be put on a transplant waiting list at any facility. One preliminary medical workup at a Virginia hopsital was canceled for lack of insurance, he said, but he added that he is scheduled for a workup this week at the University of Utah.

"From here on out it's a pretty iffy situation," said Saboe, who hasn't worked in six months. He recently made out his will. "It's a choice of living two years max and declining all the way or getting an operation that would be a whole new ball game and let me go out and lead a regular life."