Three fired executives of 301-bed Cape Coral (Fla.) Hospital have been accused by the hospital in court documents of embezzling $761,000 from the not-for-profit hospital from 1989 to 1992.
But an attorney for two of the executives described the money as loans and bonuses.
Meanwhile, a federal grand jury last week in Fort Myers, Fla., indicted former hospital board member Robert Kay and his wife, Jacqueline, for insurance and mail fraud. The indictment charges that the Kays received free medical care from Cape Coral and then billed their insurance company.
According to allegations filed by the hospital last week in federal district court in Fort Myers, the three fired executives allegedly wrote checks to themselves from a special payroll account, said hospital attorney Chris Rolle of the Orlando office of the Foley and Lardner law firm.
The account was separate from general payroll to keep secret from employees the salaries of the top three executives, a practice that is common in large corporations, Mr. Rolle said.
"The money was over and above their salaries," Mr. Rolle said.
The three executives are J. Michael Ward, former president and chief executive officer; Jay Murphy, former chief financial officer; and Daniel Edgar, former chief operating officer.
Mr. Ward, who had worked at the hospital for 17 years, earned $180,000 a year; Mr. Edgar, with 16 years tenure, made $165,000; and Mr. Murphy, who had been with Cape Coral for 13 years, earned $153,000.
Allan Woodruff, a Cape Coral attorney who represents Messrs. Ward and Edgar, said Mr. Ward had the authority to grant bonuses and suggested some of the money could have been loans.
"The hospital is fabricating this to avoid paying their salaries by charging that felonies have been committed," Mr. Woodruff said. "The board members are a bunch of bozos who have ignored the hospital for 15 years."
In the first nine months of fiscal 1994 ended June 30, Cape Coral lost $10.4 million, compared with total profits of $2.6 million for the same period in 1993. Net patient revenues totaled $60.2 million, compared with $62.9 million in 1993.
To help stem the losses, Cape Coral announced layoffs of 200 employees (June 27, p. 16).
After the executives were fired in June, they filed separate suits against Cape Coral to recover $4.3 million in severance pay and other compensation.
In response, Cape Coral charged that the three executives conspired to conceal lucrative employment contracts that included salaries, benefits and severance pay and spent excessive amounts on their expense accounts (June 20, p. 3).
Federal and state investigative agencies, including the Internal Revenue Service, the U.S. attorney's office and the state Insurance Department, also are investigating the hospital's allegations.
Cape Coral also is involved in an antitrust lawsuit filed by the Federal Trade Commission to block its proposed merger with Lee Memorial Hospital in Fort Myers. A hearing is set for Aug. 31 in Jacksonville.