The archdiocese of Miami established a health and welfare plan to provide medical coverage for its employees. The archdiocese purchased a stop loss insurance policy from Lloyd’s of London (Lloyd’s), which provided insurance against losses that exceeded the basic coverage of the plan. The archdiocese employed Coopers & Lybrand (Coopers), a national firm of CPAs, to audit the health plan every year for 12 years.
The audit program required Coopers to obtain a copy of the current stop loss policy and record any changes. After two years, Coopers neither obtained a copy of the policy nor verified the existence of the Lloyd’s insurance. Nevertheless, Coopers repeatedly represented to the trustees of the archdiocese that the Lloyd’s insurance policy was in effect, but in fact it had been canceled. During this period of time, Dennis McGee, an employee of the archdiocese, had embezzled funds that were to be used to pay premiums on the Lloyd’s policy. The archdiocese sued Coopers for accounting malpractice and sought to recover the funds stolen by McGee. Did Coopers act ethically in this case? Is Coopers liable? Coopers & Lybrand v. Trustees of the Archdiocese of Miami, 536 So. 2d 278, 1988 Fla. App. Lexis 5348 (Court of Appeal of Florida)