Nearly 1,500 employees of Cape Coral (Fla.) Hospital will split a $9.1 million settlement of claims that former executives of the hospital underfunded the employees' retirement plans.
The settlement, approved by U.S. District Court Judge John Steele in Fort Myers, Fla., excludes three former Cape Coral executives who were convicted of embezzling more than $2 million from the hospital and using some of that money to buy cocaine. The hospital fired all three in 1994.
The hospital, which was acquired in 1996 by Fort Myers-based Lee Memorial Health System, will pay $6.5 million of the settlement. Its insurer, a local affiliate of the National Life Insurance Co. of Vermont, will cover the remainder.
J. Michael Ward, former president and chief executive officer of Cape Coral; Daniel Edgar, former chief operating officer; and Jay Murphy, former chief financial officer, will not collect anything from the settlement. Ward and Edgar are serving seven-year prison terms for embezzlement and money laundering, among other charges. In 1995, Murphy pleaded guilty to stealing more than $290,000 from Cape Coral and was sentenced to 18 months in prison. He testified against Ward and Edgar, who were sentenced last year.
The three executives operated Cape Coral's employee pension program illegally and funded it with insufficient money to cover all eligible employees, said Darryl Richards, a lawyer with the Tampa, Fla., law firm Johnson, Blakely, Pope, Bokor, Ruppel & Burns, which represented the 1,450 employees.
As Cape Coral executives, Ward, Edgar and Murphy were able to protect themselves from the underfunded retirement plan, and "it was not appropriate that they participate in this settlement," Richards said. No trial was ever held on the matter as the parties worked to reach a settlement, Richards said.
After their dismissal, Ward and Edgar filed separate suits against Cape Coral to recover $4.3 million in severance pay and other compensation. Those suits were dismissed in 1996.