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Superior Surgical may settle dispute

Superior Surgical Mfg. Co. Inc., a Seminole-based maker of uniforms and hospital gowns, said Tuesday it is reserving $2.25-million to settle a dispute with a federal agency.

The dispute, which the company disclosed last year, involves sales to the unidentified agency from 1983 to 1992.

"The previously reported dispute . . . has continued," said Gerald M. Benstock, chief executive officer and chairman, in a statement. "The government has yet to make any claim in connection with the dispute."

According to a previous company statement, Superior Surgical has been accused of not complying with an agreement with the agency. A former vice president in charge of governmental bids and quotes, whom the company has not identified, was accused of providing false information to the agency.

The questionable sales to the agency involved less than 3 percent of the company's aggregate gross sales for that year, or about $31.9-million, according to the previous statement.

The $2.25-million settlement offer amounts to about 7 percent of those sales.

Notice of the proposed settlement was disclosed in the company's announcement of its annual earnings and revenues on Tuesday.

Superior Surgical earned $7.7-million on annual sales of $130.1-million in fiscal 1993. The earnings followed a record 1992, with earnings of $9.9-million on sales of nearly $128.7-million.

The company employs 410 people in the Tampa Bay area, according to the Tampa Bay Business Journal.

The company's stock, like other health care stocks, "took a beating" over the prospect of health reform and lost 21 percent of its value during 1993, according to John P. Miller, research analyst at Ariel Capital Management Inc.

Ariel, based in Chicago, is Superior Surgical's largest investor, with 17 percent of its outstanding shares. Like other investors, Ariel has been kept in the dark about the dispute, Miller said.

"I think they (Superior Surgical) had an outstanding year, all things being considered equal," Miller said. "We're such a large investor and I continue to question management on the issue. But they can't comment on that" without disclosing the same details to every other stockholder.

Despite knowing few details, Miller compared the dispute to Baxter International Inc.'s recent entanglement with the U.S. Department of Veterans Affairs.

Baxter, a Deerfield, Ill., medical supplier, was suspended from seeking new VA contracts in August. The VA contended that Baxter and its units were responsible for unauthorized sales to the VA of products not on a specially approved list and for misleading VA representatives.

The company admitted no wrongdoing, but in December agreed to pay the VA $2.8-million over three years. The VA then lifted the suspension.

Superior Surgical officials have refused to comment on which federal agency is involved in their dispute.

When questioned about Superior Surgical on Tuesday, VA spokeswoman Linda Salvey said the agency "is currently doing business with Superior Surgical on an open-market basis," as opposed to a contract basis. She then referred questions to Assistant U.S. Attorney James Hilbert in Tampa.

Hilbert did not return phone calls. Cory Findley, a spokeswoman for the U.S. Attorney's Office, said, "It is our policy not to confirm or deny the existence of an investigation."

Superior Surgical said in its statement that it is not admitting wrongdoing by offering the settlement.

Management "continues to believe that the company has complied with the terms and conditions of its obligations with the government," it said. "The company arrived at this settlement offer after management's assessment of the potential expenses, inconvenience and disruption of certain employees' duties."

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