''This has been a tragic time for our church," Bishop William Franklin said. ''It is my prayer that true healing may now begin in the Diocese of Davenport."

The settlement, reached after weeks of negotiations, will be covered by insurance and diocesan funds, Franklin said.

Before the settlement, the diocese had warned that it might file for bankruptcy, a step taken by dioceses in Tucson and Portland, Ore.

Franklin said it is unclear how the settlement would affect the diocese and the services it provides to its 102,000 parishioners.

Earlier this month, he announced layoffs and early resignations to trim diocese staff from 44 employees to 18.

He also mentioned selling church property, including a retirement home for priests.

''All I can say right now is we're looking at these possibilities," Franklin said. ''I hope this, for the moment, puts bankruptcy aside."

Franklin declined to reveal the payment received by the diocese's insurer. In a court hearing this month, diocese attorneys calculated church assets at $10 million.

Franklin said he expects the diocese to be hit with more claims of abuse, which would make its financial situation uncertain.

He said the diocese agreed to provide stronger protections for children, including better monitoring of priests.

He noted that most of the claims date back to the 1950s and 1960s.

''Prior bishops are no longer living to explain their decisions," he said. ''All I know for certain is that, in fact, we failed to protect children from harm. I am profoundly sorry and I express deep apology to the victims from the entire Catholic community."

Craig Levien, the attorney representing most of the victims, said the settlement will help heal the mental and emotional wounds caused by the priests' behavior.

''These victims have suffered drug, alcohol, marital, mental, and sexual problems," Levien said. ''For years, these victims have waited for vindication, validation, support, and closure."

The 37 claims target the past behavior of as many as 11 priests, three of whom were individually named in the lawsuits.

The settlement was reached just days before the first of the cases was set for trial.

Levien said the settlement eliminates the diocese as a defendant in all the lawsuits, but that the claims remain against the priests accused of abusing the victims.