Michael Saboe of Alexandria, who took his health insurance company to court seeking coverage for a heart transplant operation, has withdrawn his suit and now expects to obtain the operation at a Veterans Administration hospital in Utah.

The procedure will be paid for because he is a veteran, according to his attorney, who said there is no longer any reason to fight with Saboe's health insurer about its health coverage obligations.

In a "stipulation of dismissal" in the case, both Saboe and his health insurer have agreed that a heart transplant is a covered service under his contract. But the insurer, according to court documents, is not required to pay for a heart transplant operation performed outside its service area.

Saboe filed suit in U.S. District Court last month against George Washington University Health Plan Inc., the health maintenance organization he joined in 1981, after officials there initially balked at paying for the operation.

In withdrawing his suit, Saboe said in a statement that he was "pleased that the Health Plan had recognized its coverage obligations for a transplant performed in the Washington area." But he said he had decided to have the operation performed at the Utah Health Transplant Program, with which the VA hospital is affiliated, because it has an "excellent program," a relatively short waiting list and an advanced drug treatment program to fight organ rejection.

Saboe's attorney said his client did not learn he could get the operation at the VA hospital in Utah, with VA insurance coverage, until about a week ago. He checked into the University of Utah about two weeks ago for a medical workup and had hoped to have his transplant there if his HMO plan would cover it.

The 38-year-old engineer and computer company executive has viral myocarditis, an inflammation that attacks the heart and the heart muscle, and has been told he likely would die in one to two years without a heart transplant.

His dispute with his insurer centered on whether a heart transplant would be covered by his health plan and, if covered, where such an operation would be performed.

Saboe's doctor wrote him Jan. 5 that the plan "does not cover the costs of the cardiac transplantation." The letter did not give any reason for the denial, but Saboe said his doctor directed him to a clause in his policy that denies coverage for "experimental surgery."

After the suit was filed, an attorney for the health plan said the doctor's letter was not a final denial since Saboe had not appealed the decision. The attorney indicated that the operation would be paid for by the plan if it was performed at George Washington University Medical Center.

The center is part of a consortium of six area hospitals that has performed heart transplants on 30 patients in the last year. However, GW itself has performed only one heart transplantation, according to a consortium spokeswoman, and the patient later died.

Saboe, a husband and the father of two, said he wanted his operation done at a hospital with a more extensive track record. His health plan said HMO patients normally are supposed to use the HMO care network if they want their HMO insurance to pay for medical treatment.

Heart transplants cost an estimated $200,000, including preliminary and postoperative care.