The two allege that as teenagers in the 1970s, they were abused by two priests of the Bridgewater diocese, The Hartford Courant reported Friday.
In a copy of the 2004 settlement document obtained by the newspaper, the diocese approved the payment to settle "disputed claims" to avoid "the inconvenience, expense and uncertainty of litigation."
One of the priests, Monsignor Frank Wissel, called the allegations "completely" false and said he was unaware the diocese had made any settlement, the Courant said.
An attorney for the victims said they were shocked to learn both priests were still active in the church. Church officials had told them the priests would be removed, they said.
"My clients are deeply concerned that both of these men are still in positions where they could possibly hurt other kids," attorney Jeffrey Anderson said.