Affirmation to Support Motion for Leave to Appeal

    SUPREME COURT OF THE STATE OF NEW YORK 
APPELLATE DIVISION: SECOND DEPARTMENT 

  

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS 

- QUEENS COALITION, an unincorporated AFFIRMATION IN 

association, by its member WILLIAM MALLOY, SUPPORT OF MOTION 
CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS FOR LEAVE TO 
- CONEY ISLAND HOSPITAL COALITION, an APPEAL 

unincorporated association, by its member PHILIP 

R.METLING, ANNE YELLIN, and MARILYN 

MOSSOP, Appellate Division 

Case No. 97-01339 

Plaintiffs-Respondents, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, NEW YORK CITY 

HEALTH AND HOSPITALS CORPORATION, and 

NEW YORK CITY ECONOMIC DEVELOPMENT 

CORPORATION, 

Defendants-Appellants. 

  

ELIZABETH DVORKIN, an attorney admitted to practice law before the Courts 

of this State, affirms under penalty of law: 

1. I am an attorney in the office of PAUL A. CROTTY, Corporation Counsel 

of the City of New York, attorney for defendants in this matter. I submit this affirmation in 

support of defendants’ motion for leave to appeal to the Court of Appeals from the order of this 

Court, dated September 8, 1997 and never served with notice of entry. This Court modified an 

order and judgment of the Supreme Court, Queens County (Posner, J.), entered on February 5, 

1997, and as modified, affirmed so much of the order as declared that the New York City 

 



  

Health and Hospitals Corporation ("HHC") lacks the statutory authority to enter into a 99 year 

sublease of Coney Island Hospital to a private hospital company. A copy of this Court’s order 

and opinion is annexed to this affirmation as Exhibit A. A copy of the lower Court’s judgment 

and opinion is annexed to this affirmation as Exhibit B. 

2. This appeal concerns whether HHC has the statutory authority to adapt to 

changes in the field of health care delivery as it strives to make health care services available 

for all New Yorkers. The Court of Appeals is the appropriate body to decide whether the HHC 

Act requires that HHC be forever barred from making certain charges in the configuration of 

health care services, even if those changes would be the best way for HHC to carry out its 

mission. 

3. In this case, HHC entered into a sublease of Coney Island Hospital to PHS- 

NY, a private hospital company HHC determined that the sublease was the best way to advance 

its purposes because the sublease will keep the hospital as a community based, acute care 

inpatient hospital with a broad range of services, improve the hospital’s physical plant 

immediately with a substantial capital outlay, give HHC funds to free HHC borrowing capacity 

for other HHC projects and guarantees a level of charity care at Coney Island Hospital greater 

than what HHC provides today. 

4. In entering into the sublease, HHC relied on that portion of its governing 

statute that gives it the authority to "sublease . . . a health facility . . . for its corporate 

purposes." Unconsolidated Laws ("U.L.") § 7385[6]. HHC also relied on its understanding of 

its statutory purpose: to arrange for health care for all New Yorkers, without being encumbered 

by anachronistic bureaucratic requirements for the delivery of health care services. 

 



5. This Court interpreted the statutory language authorizing subleasing as not 

permitting HHC "to turn over the operation of an entire hospital to a private entity by means 

of a 99-year sublease...." Slip Op. p. 4 (emphasis in original). This Court relied primarily on 

its understanding of the purpose of the HHC Act, which it held "was to establish one entity 

accountable to the public to operate the municipal hospitals for the benefit of the public." Id. 

This Court determined that the sublease of Coney Island Hospital would be inconsistent with this 

statutory purpose. 

6. In its opinion this Court stated that HHC "may be correct that the sublease of 

CIH is the only viable means of ensuring that quality medical services are provided to the 

community in the future and that necessary capital improvements are made to the hospital," Slip 

Op. p. 5. If HHC is correct, as this Court was willing to posit, then this case presents an 

extremely important issue of health care for the people of this State: Does the HHC Act 

preclude HHC from taking the steps necessary to ensure the future availability of quality medical 

services for the poor and uninsured? 

7. If the HHC Act freezes in place the health care delivery mechanism created 

in the 1960’s, then the Act may make it unreasonably difficult for HHC to effect its mission in 

the modern health care era. Because the field of health care delivery has changed radically since 

the time the HHC Act was enacted, HHC has to adapt to current conditions in order to continue 

to ensure the availability of health services for the poor and uninsured. HHC subleased Coney 

Island Hospital because it determined that the private hospital company operating in compliance 

with the sublease would do a better job of keeping the hospital available for poor people in need 

of medical care than HHC was likely to do. Under the sublease, the Coney Island Hospital  



  

save the Coney Island Hospital sublease. Yet if HHC is correct and the sublease is the best way 

to ensure the continuing availability of health services for the poor and uninsured in the Coney 

Island area, HHC and the people of New York City will suffer the loss of an outstanding 

arrangement because of the delay. 

8. This case is also appropriate for Court of Appeals review because it presents 

an important question of legislative interpretation. In the past, the Court of Appeals has adhered 

  to a plain meaning interpretation of legislation. See, e.g., Lad v. Grayly, 83 N.Y.2d 537, 545- 

46 (1994). In its opinion, this Court rejected the plain meaning of the HHC Act in order to 

interpret the statute in light of its purpose as this Court perceived it. The Court of Appeals, as 

the highest court of this state, is the appropriate body to determine whether a plain language 

interpretation of the HHC Act is appropriate, and, if it is not, whether the legislative purpose 

was to allow HHC to adapt to changes in the field of health care delivery rather than freezing 

one administrative structure in place in perpetuity. 

9. This case was decided together with Campaign to Save Our Public Hospitals- 
  

Queens Coalition v. Giuliani. A copy of this Court’s order and opinion in the Campaign appeal 
  

is annexed as Exhibit C. The City Council, plaintiffs n the case at bar, took the lead role in 

litigating the two cases. Yet only the Campaign case is final and therefore amenable to a motion 

for leave to appeal in the Court of Appeals. Accordingly, only this Court can decide whether 

the Council plaintiffs will have the opportunity to address these issues in the Court of Appeals. 

Given their importance to the people of New York City and New York State, it is respectfully 

requested that this Court grant the motion for leave to appeal to the Court of Appeals in this case 

on a certified question. 

 



  

WHEREFORE, it is respectfully requested that this Court certify to the Court 

of Appeals the question: Was the order of this Court, dated September 8, 1997, properly made? 

Dated: New York, New York 

October 8, 1997 edn 

  

__ELZABETH DVORKIN 

 



  Exhibit A  



  

N CORNELIUS J. O'BRIEN J.P. 
A 
© 

| 
V 

  

AD2d 
  

  

«3. COURT OF THE STATE OF NEW YORK 

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT 

8799Z 
S/hu 

Argued - June 9, 1997 

THOMAS R. SULLIVAN 
GLORIA GOLDSTEIN 
DANIEL F. LUCIANO, JJ. 

  

97-01339 

Campaign To Save Our Public Hospitals - DECISION & ORDER 
Queens Coalition, etc., et al., 
respondents, v Rudolph W. Giuliani, 
etc., et al., appellants. 

  

Paul A. Crotty, Corporation Counsel, New York, N.Y. (Jeffrey D. 
Friedlander, David Kamovsky, Daniel Turbow, and Elizabeth Dvorkin of 
counsel), for appellants. 

NAACP Legal Defense & Educational Fund, Inc., New York, N.Y. (Elaine 
R. Jones, Norman J. Chachkin, and Rachel D. Godsil of counsel); Kenneth 
Kimerling, New York, N.Y.; Barbara Olshanksy, New York, N.Y.; and 
Evette Soto-Maldonado, New York, N.Y. for respondents (one brief filed). 

New York Lawyers for the Public Interest, Inc., New York, N.Y. (Cary 
Lacheen, Lourdes I. Reyes, and Edward Copeland of counsel), for 
Commission on the Public’s Health System, amicus curiae. 

In an action for a judgment declaring, inter alia, that the New York City 
Health and Hospitals Corporation is not authorized to sublease Coney Island Hospital to a 
private entity, the defendants appeal from an order and judgment (one paper) of the Supreme 
Court, Queens County (Posner, J.), dated January 31, 1997, which denied their motion for 
summary judgment and granted the plaintiffs’ cross motion for summary judgment and declared 
(1) that the proposed sublease of Coney Island Hospital constitutes an ultra vires act on the part 
of the New York City Health and Hospitals Corporation, (2) that any sublease of a facility of 
the New York City Health and Hospitals Corporation requires the approval of both the Mayor 
of the City of New York and the City Council, and (3) that the subleasing of a facility of the 
New York City Health and Hospitals Corporation requires the application of the Uniform Land 
Use Review Procedures (see, New York City Charter § 197-c). 

September 3, 1997 Page 1. 
CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - QUEENS COALITION v GIULIANI



   ORDERED that the order and judgment is modified, on the law, by deleting the provisions thereof which declared (1) that any sublease of a facility of the New York City Health and Hospitals Corporation requires the approval of the Mayor and the City Council of the City of New York and (2) that any sublease of a facility of the New York City Health and Hospitals Corporation is subject to the Uniform Land Use Review Procedures, and substituting therefore a provision dismissing the plaintiffs’ first and second causes of actions; as so modified, the order and judgment is affirmed, without costs or disbursements (see, Council of the City of New York v Giuliani, AD2d [decided herewith]). 

O'BRIEN, J.P., SULLIVAN, GOLDSTEIN and LUCIANO, JJ., concur. 

ENTER: 

Martin H. Brownstein 
Clerk 

September 8, 1997 
Page 2. CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - QUEENS COALITION v GIULIANI 

 



  Exhibit B  



616 

  

rl 

MEMORANDUM 

SUPREME COURT, QUEENS COUNTY 
IA PART 5 

THE COUNCIL OF THE CITY OF NEW YORK, 22 BY: POSNER. . J. PETER 'F. VALLONE, SPEAKER OF THE A 
COUNCIL, and ENOCH H: WILLIAMS, CHAIR Action No. 1 OF THE COUNCIL HEALTH COMMITTEE, : 

; 
INDEX NO.: 004897/55 

Plaintiffs, 
: 

DATED: January 13, 1997 - against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 
CITY OF NEW YORK, NEW YORK CITY HEALTH 
AND HOSPITALS CORPORATION, and NEW YORK 
CITY ECONOMIC DEVELOPMENT CORPORATION, 

Defendants. 

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS ~ INDEX NO. : 10763/96 QUEENS COALITION, an unincorporated 
association, by its member WILLIAM pa Action No. 2 MALLOY, CAMPAIGN TO SAVE OUR PUBLIC 
HOSPITALS - CONEY ISLAND HOSPITAL 
COALITION, an unincorporated associ- 
ation, by its member PHILIP R. METLING, 
ANNE YELLIN, and MARILYN MOSSOP, 

Plaintiffs 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 
CITY OF NEW YORK, NEW YORK CITY HEALTH 
AND HOSPITALS CORPORATION, and NEW YORK 
CITY ECONOMIC DEVELOPMENT CORPORATION, 

Defendants. 

Defendants, Mayor Rudolph Giuliani {“CGiuliani”), the New 

 



  

  

617 

York City Health and Hospitals Corporation (“HCC”) and the New York 

City Economic Development Corporation (“NYCED”) have moved ‘for 

summary judgment. Plaintiffs in Action No. 1, The Council of the 

City ‘of New York (“Council”) and its principal leaders, and 

plaintiffs in Action No. 2, The Campaign to Save Our Public 

Hospitals, (“Campaign”) have cross-moved for summary judgment. 

Both Action No. 1 and Action No. 2 were combined for joint trial, 

without consolidation. (See Order of. thig court dated 

September 18, 1996.) The parties all agree that there are no 

issues of fact and that the legal issues are ripe for adjudicstion; 

though, initially, defendants had raised the issue of "ripeness" in 

their answer. 

The conflict between the Mayor of the City of New York 

and the Council of the City of New York is founded upon the age-old 

controversy between the executive and legislative branches of 

government. Fortunately, unlike the resolution adopted by the 

protagonists (Cassius and Brutus) in Shakespeare's "Julius Caesar", 

the authors of our State and Federal constitutions have wisely 

established the third branch of government as arbiter of disputes 

between the two. 

FEE ISSUES 

plaintiffs in both actions originally etitioned the 

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court for a . declaratory judgment interpreting Section 7385 (6) of 

McKinney's Unconsolidated Laws of 1969. This section of the Health 

and Roupitals Corporation Act (“HHC Act”) subjected the HHC’s power 

to sell or lease its health facilities to the approval of the Rczard 

of Estimate. When the Board of Estimate was abolished by the rew 

City Charteriof 198%, no specific language was included to indicate 

which person or entity inherited this partic 2
 

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exercised by the Board of Estimate. Furthermore, the New York 

State Legislature has failed to exercise its power to amend the 

statute substituting a specific officer or body to succeed the 

Board. {See A.88%6 ‘and BA.11048 of 1998.) Defendant Giuliani 

claims that the new Charter intended that he alone should exercise 

that power. Plaintiffs contend that the new Charter gives the 

power to the Council acting in conjunction with the Mayor. 

A second issue has arisen since November 8, 1856 when the 

Board of Directors of defendant HHC voted to empower the HHC's 

president to execute a lease with a for-profit corporation. Said 

lease in effect turns over the operation of Coney Island Hospital 

in toto to the lessee for eight (8) generations (198 yesars). As a 

result of this action, plaintiffs amended their complaints to 

include a new cause of action against HHC alleging it exceeded its 

statutory powers. 

 



  

619 

THE BACKGROUND 
  

Defendant Giuliani took office as chief executive of the 

City of New York in 1994. When he realized that he had inherited 

a budget with fiscal problems (stretching back to the 70's), he 

sought numerous ways to bring the City's expenses in balance with 

its revenue. One of his proposals was for the privatization of the 

City's public hospitals’ - ‘a continuous drain: on the City's 

resources. It is his belief that a private for-profit corporation 

can more efficiently run the City's hospitals. Whether the 

plaintiffs agree or disagree with this philosophy is not the issue. 

Nor is the debate over that philosophy one in which the court has 

any right or power to immerse itself. To explore properly the 

issues involved herein, it is necessary to step back and consider 

the history of the HHC Act, 

HISTORY 

Tha New York 8tate Constitution, Article Xvii, § 3 

states: 

"The protection and promotion oi the 

health of the inhabitants of the state 

are ‘matters of public concern. and 

provision ‘therefor shall be made by the 

state and by such of its subdivisions and 

in such manner, and by such means as the 

legislature shall from time to time 

- determine." 

4 

 



  

620 

Prior +o 1970, in compliance with this constitutional 

requirement, the City of New York constructed, maintained and 

operated hospital facilities providing care to residents of the 

City, including those persons who could not otherwise gfford 

hospital services. In 1969, the New York State Legislature enacted 

the Health and Hospital Corporation Act ("HHC Act"), creating the 

HHC and authorizing the City to transfer the municipal hospitals to 

HHC for the purpose of continuing to fulfill the constitutional 

mandates (1, 196%, ch 101s, McKinney's Uncons Laws of NY §§ 7381 et 

seq, the HHC Act). 

HHC's mission is to ensure the provision of "high 

quality, dignified and comprehensive" care to the ill and infirm of 

the City, and particularly those persons who can least afford such 

services (gee, McKinney's Uncons Laws of NY 5 7382). HHC was 

established at the behest of the City in part to permit independent 

financing of municipal hospital construction and improvements and 

to facilitate professional management of the hospital system. 

HHC's creation was Intended Lo overcome the "myriad of complex and 

often deleterious constraints" which inhibited the provision of 

care by the City in its own operation of the municipal health 

system (McKinney's Uncons Laws of NY § 7382). To effect that goal, 

5 

 



  

  

the Legislature gave HHC a number of powers designed to provide the 

"legal, financial and managerial" flexibility necessary to: carry 

out its purpose (McKinney's Uncons Laws of NY §§ 7382, 7385). It 

was authorized "[tlo make and execute contracts and leases and all 

other agreements or instruments necessary or convenient for the 

exercise of ‘its powers and the fulfillment Of its corporate 

purposes" (McKinney's Uncons Laws of NY § 738515} ). In ‘addition, 

HHC was granted the power "[t]lo provide health and medical services 

for the public directly or by agreement or lease with any person, 

firm or private or public corporation or association through and in 

the health facilities of the corporation ***." (McKinney's Uncons 

Laws § 7385(8]). 

Nevertheless, some of the powers conferred on HHC were 

constrained, and in some instances, subject to direct oversight and 

continuing control by the City.! Among these powers was the power 

  

See, (e.g... McKinney's Uncons Laws of NY § 73856(1) (a); HHC 

submits its program budget to the City in time for inclusion in the 

Mayor's executive budget and culminates in the City budget which 

the City Council has the sole authority to adopt; 

§ 7286{(2)(b); the City has the right to acquire any health 

facility held by EHC; 

§ 7386(7); HHC must exercise its powers in accordance with 

policies and plans determined by the City; 

§ 7390(5)-(8); HHC employee grievances are governed by NYC 

Administrative Code; 

§ 7385(19); HHC may use City agents, employees and facilities 

6 

 



  

622 

relevant to the issues herein: 

K
C
 "To . dispose of by sale, lease o 

dof sublease, real *** property including but 
not limited to a health facility, or any 
interest therein for ‘its corporate 
purposes, provided, however, that n 
health facility or other real propert 
acquired or constructed by th 
corporation shall be sold, leased or 
otherwise transferred by the corporation 
without public hearing by the corporat 
after twenty days notice and without the 
consent of the board of estimate of the 
City.” 

(McKinney's Uncons Laws § 7385[6]). 
(Emphasis added). 

  

  

On July 1, 1970, in accordance with the HHC Act and with 

the approval and authorization of the Board of Estimate, the City, 

by Mayor Lindsay, and HHC entered into an agreement under which HHC 

agreed to assume responsibility for maintaining and operating the 

City's public hospitals. Eleven hospitals, included under that 

agreement, have continued in operation since 1970. 

in 1934, the City, through the Mayor's office, began 

exploring the possibility of transferring the operation of three of 

those hospitals, Coney Island Hospital (“CIH”), Elmhurst Hospital 

Center and Queens Hospital Center (“the Queens Health Network”) to 

private entities. J.P. Morgan Securities, Inc., was retained by 

  

subject to collective bargaining agreements and the Mayor's 
consent. 

 



ie Be iii ahaa ¢ Loo Dt hea chibi TT RA Sra A Le Rr 1} 
  

  

  

623 

defendant EDC as financial advisor to prepare offering memoranda 

for proposals to privatize the operations of the three hospitals 

and to sublease their facilities. 

In spring of this year, HHC began receiving proposals, 

and on June 26, 1996, Peter J. Powers, First Deputy Mayor of the 

City, Dr. Luis R. Marcos, as President OF HEC, and Steven Volla, as 

Chairman of PHS New York Inc. ("PHS-NY") and of Primary Health 

Systemg, Inc. ("Primary") executed a letter of intent calling for 

negotiations to achieve a long-term sublease of property, plant and 

equipment of CIH to PHS-NY, and a contract for PHES-NY to Operate 

CIH as a community based, acute care in-patient hospital during the 

term of the sublease. On October 8, 1996, HHC and the New York 

City Department of Health held a public hearing on the proposed 

sublease of CIH. On November 8, 1996, the HHC Board of Directors 

authorized and approved the sublease of CIH to PHS-NY for an 

initial term of 99 years (and renewable by PHS-NY for an additional 

99 year term). The sublease is rather unusual in that it recites 

those service obligations being imposed upon PHS-NY, including that 

PHS-NY take over HEC's operation of the hospital services and 

provide access to health care to indigent persons, in addition to 

the more typical tenant obligations. 

Both plaintiffs claim that (1) any sale, transfer, leave 

8 

  

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a
l
   
 



  

[J 24 ‘» 

or sublease of any HHC facilities to private lessees requires the 

-~ 
the Council pursuant to Unconsolidated Laws § 73851(6) ; approval of 

(2) any such disposition requires the application of and compliance 

(*"ULURP") procsss of 

  

| 

with the Uniform Land Use Review Procedure 

sections 197-c and 157-4 of the New York City Charter. The 

Coslirion plaintiffs also originally claimed that defendants 

violated section 17-b of the Charter by failing to submit their 

plans for privatizing the hospitals to the New York City Planning 

Commission and affected community boards and borough presidents. 

41,.:1996, all parties stipulzted, on the 

i and 2 

add December 

to permit plaintiffs in Actions No, 

On 

record in open court, 

to amend their respective complaints to add a cause of action 

against HHC asking the court to void HHC's action on November 8, 

  
1996 as an ultra vires act. 

Defendants served a second amended answer to each second 

and asserting allegations denying various 

failure to state a cause of 

complaint 

of 

amended 

and 7385 (8) 

affirmative defenses based upon the 

and sections 7385(6) action and lack of ripeness, 

based upon affirmative 

irmative 1 

the Unconsolidated Laws. 

outset, the At the 

failure to state a cause of action are stricken 

S 

defense based upon the failure to state a cause of action cannot be 

 



  

  

625 

interposed in an answer, but must be raised by a motion to dismiss 

  
pursuant to CPLR 3211 (a) (7) (see, Propoco. Inc. v Birnbaum, i157 an24 

774,175). 

puis 
ine (D

 0 0) a 0) CY
 ffirmative defense based upon lack of ripen [) 

also be stricken. At the time of the commencement of the action, 

the HHC Board of Directors had not yet. considered the proposed 

sublease of CIH, and an argument could have been made that the 

suits were premature. Nevertheless, at this juncture, where the 

HHC board has acted to approve the sublease, the issues raised by 

the Council and Campaign plaintiffs are ripe for adjudication.   

This issue will be dealt with after consideration of the issue of 

the devolvement of the powers of the Board of Estimate (HHC Act 

7385]6]). 

THE BOARD OF ESTIMATE ISSUE 
  

The HHC Act expressly provides that the HHC may "dispose 

of by sale, lease or sublease, real or personal property, including 

but not limited to a health facility, or any interest therein for 

its corporate purposes" (emphasis supplied) (McKinney's Uncons Laws 
  

§ 7385[6]). Such provision goes on to condition the exercise of 
  

that power upon the consent of the Board of Estimate of the City 
  

10 

 



  

$ 626 » 

(emphasis added) .2 

At the time of the Passage of the HHC Act, the Board of 

Estimate consisted of eight elected members; the Mayor, the City 

Comptroller, the President of the City Council and the five Borough 

Hh Presidents. Each of the citywide officers had two votes and each 

the borough presidents had one vote. This voting distribution 

O 1
 

of the Board of Estimate members was declared viol IY i 
3 

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rr
 

5 MD
 

constitutional requirement of one Person, one vote (see, Morris v 
  

Board of Esrimate, 553 F Supp 1462 [E.D.N.Y. 1984], affd 831i F224 
  

384, affd 489 US s88 [1982]. 

  

As a consequence of such ruling, and the United States 

District Court order that a Plan be developed by the City to cure 

the constitutional deficiency (see, Morris v Board of Fatiwmate. 647   

F Supp 1463), the New York City Charter Revision Commission was 

formed, with one of its objectives for Charter revision being to 

build greater participation in policy debates and decisions (see, 

Final Report of the New York City Charter Revision Commission - 

  

2 

The authority of the Board to approve or consent to terms of leases of sales transactions was also recognized by the State 
Legislature in other States laws, e.g., Urban Development 
Corporation Act § 3(4), codified at Uncons Laws § 6253 (1); Not- 
for-Profit Corporation Law 8 1411; Racing, Pari-Mutuel Wagering & Breeding Law §8§ 607(1), (3). 

11 

= 

 



  

627 

January 1989-November 1989 p LY Following the enactment on 

November 7, 1989 at the general election of sweeping Charter 

amendments proposed by the Commission, the Board of Estimate was 

abolished and its power distributed elsewhere. 

Notwithstanding the abolition of the Board of Estimate, 

the books" (McKinney's Uncons Laws § 7385[b]) and the Legislature 

ah not taken the opportunity to amend it. However, the failure of 

the Legislature to amend the section does not mandate a Conelision 

that ‘it prefers. a statutory construction severing the consent 

portion as obsolete. In fact, the contrary 4s true, The 

: Legislature, by not having acted £0 eliminate the "board of 

estimate" language, can be said to have opted to allow the consent 

power to devolve upon the body, agency or officer designated in the 

revised Charter to succeed to the powers of the Board of Estimate. 

The Charter itself contemplates this result. 

Section 1152(e), adopted by the voters in 13982, as part 

of the Charter revisions, in relevant part, provides: 

"the powers and responsibilities of the 

board of estimate, set forth in any 

state Or local law, that are not 

otherwise devolved by the terms of such 

law, upon another body agency or officer 

12 

 



    

% 628 a» 

shall devolve upon the bodv., agencv or 

Officer of rhe citv charged wich 

comparable and related vowers and 

respongibiliries under this charter, 
consistent with the purposes and intent 
Of this charter... .¥ 

(Emphasis supplied.) 

  

  

  

  

By applying such "savings" provision to the HEC Act, the 

original intent of the Legislature (to allow a check on EHC's power 

to lease or transfer a health facility or real property) may be 

accomplished (see, McKinnev's Statutes §§ 391-392, § 357; see glso, 
  

  

Matter of New York Pub. Interest Research Group Vv Dinkins, 83 NY2d4 
  

377, 386; Matter of Natural Resources Council v New York Citv Depot. 
  

of Sanitation, 83:NY2d 215, 222, Ball v Srate of New Vorlk, 41 Nv2d 
  

  

617, 622)... Moreover, none of the parties involved herein claim 

that no consent by a city agency, body or officer is required. 

This court concludes that section 7385(6) must be construed to 

continue to require consent; the question to be resolved is which 

body, agency or officer, or combination thereof, has succeeded to 

the Board of Estimate in this regard. 

The Council plaintiffs urge that the consent power 

granted the Board of Estimate in § 7385(6) has devolved upon both 

the Council and the Mayor. They point to the fact that the powers 

to consider land use effects and business terms have been split 
- 

under the Charter revisions between the Council, under section 197- 

33 

fad ER FH A er 28 

 



  
  

629 

  

c of the Charter (“ULURP”), and the Mayor, under § 38¢(a) of the 

Charter, respectively (see, Tribeca Community Assn. Inc. v New York 
  

  

  

State Urban Dev. Corp., Supreme Court, Queens County, Index No. 

20385/%2, gffd 200 AD2E 536, appeal dismissed 83 NY24 905, lv to 

appeal denied 84 NY2d 805). They also contend that rnieicher the HHC   

Act nor the Charter restricts the Council to ULURP considerations 

only. 

Defendants argue that because at the time of the HHC 

Act's enactment, the Board of Estimate had the right to consider 

cr
 business terms under the then Charter § 384 (a) and ULURP did no 

yet exist, the Legislature intended that the Board of Estimate be 

relegated to consideration of the business terms only of any sale 

or lease of property held by HHC. According to defendants, such 

consideration of business terms has been assigned to the Mayor 

exclusively pursuant to § 384 of the Charter, and the Council has 

no role in the consent power of § 7385(6). 

The HHC Act, however, did not provide guidelines or 

limits on the type of issues the Board of Estimate could take into 

consideration when exercising the consent power. By its silence, 

the Act granted the Board of Estimate full authority to contemplate 

at least those issues usually associated with property disposition, 

including business terms and land use effects. 

14 

 



  

* 630 a 

Defendants further argue that the Council has no land use 

review role under the consent power of § 7385(6) because ULURP, * as 

the mechanism for the Council's exercise of land use review is 

inapplicable to HHC. According to defendants, the HHC Act 

supersedes any Charter provision regulating its power to subleases 

[O
N 

w
 

1
 

0
 

  

citing Wavbro v New York Citv Board of Estimate, 67 NY2 

Waybro, however, is distinguishable from this case, 

because unlike the statute at issue therein (the Urban Development 

Corporation Act [L. 1968, ch 174, as amended], McKinney's Uncons 

Law § 6251), nothing in the HHC Act indicates HHC has the authority 

Lo override requirements of the local charter in relation to 

disposition of health facilities or property (see, Wavbro v New 
  

York City Board of Fstimate, supra at 355; gee 8180, Connor vy   
  

Cuomo, 161 Misc 2d 889, 896). The HHC Act, by requiring consent 

of the Board of Estimate under § 7385(6) for dispositions of 

Property, expresses, if anything, the contrary intent. Similarly, 

if this court was to adopt defendants reasoning, then it would 

have to hold that the HHC Act supersedes even § 384 (a), the Charter 

provision granting the Mayor the power to review business terms of 

dispositions of City property. To the extent the parties agree on 

anything, they agree that this section gives the Mayor the power 

to review business terms of dispositions of City property, 

5 

 



  

631 

including the HHC sublease. 

Section 384 (a) of the Charter provides: 

"No real property of the city may be 

sold, leased, exchanged or otherwise 

disposed of except with the approval of 

the mayor and as mav be provided bv lzw 

unless such power is expressly vested by 

  

  

  

law in another aagcencv." 
  

The sec CT
 

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however, includes the conjunctive "and," followed by as may be 

provided by law unless such power is expressly vested by law in 

another agency." The phrase "as may be provided by law" can be 

read without strain or force to include ULURP wherein the power 

to review sales, leases and other dispositions of real property 

of the City is bestowed upon the Council (see, New York City 

Charter 88 197-c, 187-4). 

ULURP was enacted in 1975, "in response to.a perceived 

need for informed local community involvement in land use planning, 

for adequate technical and professional review of land use 

decisions: and for final decision making by  e ‘politically 

accountable body, the City's Board of Estimate." (2 Morris, New 

York Practice Guide, Real Estate § 20.04, p 20-47.) In its final 

report, the Charter Revision Commission indicated that prior to the 

1989 revision of the Charter, the Board of Estimate had "final 

16 

 



  

® 633 » 

authority over land use decisions ***" and the Council "had no role 

in the land use review process" (Final Report of the New York City 

Charter Revision Commission - January 1989 -November 1282, Pp 7 and 

12 respectively). It noted that "(tlhe basic change made by the 

1989 charter amendments was to substitute the Council for the Board 

as the final decision maker in land use,” and that "because racizi 

and language minority groups will enjoy greater representation on 

the Council than they have had on the Board, they will be able to 

exert more influence if there is conflict with the mayor on a land 

use matter" (The Final Report, pp 20-21). 

ULURP, as revised, in pertinent part, provides: 

"$ 197-c. Uniform land use review 
procedure. ‘a. Except as otherwise 
provided in this charter, applications 
by any person or agency for changes, 
approvals, contracts, consents, permits 
or authorization thereof, respecting the 
use, development or improvement of real 
Property subject to city regulation 
shall be reviewed pursuant to a uniform 
review procedure in the following 
Categories *** (10) Sale, leage (other 
than. the lease of office space), 
exchange, or other disposition of the 
real property of the city." (Emphasis 
supplied) . 

  

HHC has been held not to be an "agency" of the City (see, 

Bremnan. wv City of New York, 859. Wy2d 79%, 7%2). 2nd the term   

"person" is not specifically defined in § 197-c, or in the New York 

17 

 



  

  

633 

City Administrative Code concerning land use topics. Nevertheless, 

  

§ 197-c of the Charter should be liberally construed (see, Maudlin 

v New York Citv Transit Auth. 64 AD24 1148, 177), and thus, HHC 
  

as a public benefit corporation, may be considered z "person" for 

the purposes of ULURP (see, General Construction Law §§ 37, 65). 

As for the meaning of “disposition,” the term is not 

defined by statute, charter or code provision. This court must 

interpret the word. The word has been defined as "the act of 

disposing, transferring to the care or possession of another. The 

parting with, or alienation of, or giving up property." {Black's 

Law Dictionary 471 [6th ed. 1990]). By applying this definition, 

the court finds the sublease of CIH constitutes a "disposition" 

under ULURP because it is a transfer of a real property interest, 

as well as service duties from HHC to PHS-NY. 

Defendants further argue that even assuming ULURP evinces 

the partial devolvement of the consent power under § 7385(6) to the 

Council, it cannot actually apply to the CIH sublease because ULURP 

violates §.104(5) of the Municipal Home Rule Law. Section 10(5) 

states: 

"xxx ga local government shall not have 

the power to adopt local laws which 

impair the powers of any other public 

corporation.” 

18 

mt dh 

 



  

% 634 A 

The Court of Appeals has interpreted § 10(5) to provide that 

public benefit corporations are exempt only from regulations which 

would interfere with their Purpose (see, Levy v Citv Comm. on   
  

Human Rights, 85 NY2d 740). Again, it is the HHC Act itself which 

  

  

grants a check on HHC's authority to dispose of real Property, 

&lbeit via the Board of Estimate, now a nonexistent body. "As 

explained above, the consent power of the Board of Estimate under 

section 7385 (6) has devolved to both the Council and the Mayor. 

Hence, ULURP must be viewed as not impairing the exercise of HHC's 

power to dispose of property by sublease. 

Defendants alternatively contend ULURP is inapplicable 

because the sublease of CIH is not the subject of any disposition 

by the City, but instead; 35 disposition by HHC. They argue that 

under traditional notions of property law, a lessee is free to 

exercise possession and control over the property as against ‘the 

world, including the landlord. According to defendants, HHC is 

legally allowed to sublease, and to require it to undergo ULURP 

review would render its leasehold less significant. Charter § 

197-c, however, is not restricted to dispositions by ‘the City, but 

instead, is applicable to any dispositions of the real property 

of the City. 

THE ULTRA VIRES ISSUE 
  

is 

 



* J 
635 

  

The primary issue presented is whether the subleasing 

of CIH. =2long with ths wholesale turnover of HEC's service 

obligations, constitutes an ultra yires act in violation of the 
  

As Mayor Lindsay pledged to the State Legislature, in 

his letter to Governor Nelson A. Rockefeller, 

n{iin .egrsblighing =z public benefit 

corporation, the Citv is not getting out 

of the hospital business. Rather it is 

establishing a mechanism to aid it in 

better managing that business for the 

benefit not only of the public served by 

the hospitals but the entire City health 

service system. The municipal and 

health care svstem will continue to be 

the City's responsibility. governed by 

  

  

  

  

  

  

  

  

policies, determined by the City 

Council. the Board of Estimate, the 

Mavor, and the Health Services 

Administration on behalf of and in 

consultation with the citizens of New 

York City.” 

{LLetter of Mayor John 'V, Lindsay, 

Governor's Bill Jacket, L. 1988, 

ch. 1016.) 

The Legislature, by enacting the HHC Act chose to rely upon such 

pledges and created HHC, a Stile benefit corporation, to carry 

out the City's constitutional responsibilities. 

HHC, by contracting with PHS-NY by means of a 99 year 

sublease, to have PHS-NY take over the operation of CIH, is 

.shirking its own statutorily imposed responsibility, without the 

290 

  

 



  

* ¢ 
Legislature's approval. Although the HHC Act concededly allows 

for provision of health and medical services "by agreement or 

lease with any person firm or Private or public corporation or 

association, through and in the health facilities of [HHC fu
 3 ,
 

cr
 

Oo 

make rules and regulations governing admissions and health ang 

medical services" (McKinney's Uncons Laws § 73881({81), ‘such 

allowance may not be construed to permit the incongruous result 

its responsibilities to a Hh
 that HHC hin delegate or shift all o 

non-public entity as ‘a means of "furthering its corporate 

purposes." (McKinney's Uncons Law § 7385(8]). Moreover, that 

reading would frustrate the purposes and obligations of the HHC 

to the people of the City (see, Matter of New York Public Interest   

Regearch Group, 83 Ny24 377, [City officials cannot frustrate a   

legislative purposes by eviscerating an agency or group created by 

statute for a public purpose]; Matter of Gallagher v Regan, 42   

NY2d 230, 234 ["(a) legislative act of equal dignity and import™ 

is required to modify a statute, and "nothing less than another 

Statute will ‘suffice®}). 

This situation is inherently different from one in which 

a particular hospital property is no longer needed, usable or 

  

affordable, requiring its closure by HHC (ses, Matter of 

Creenpoint Renaissance Enterprise Corp. Vv Citv of New York, 1137   

21 

 



  

  
  

637 

  

AD2d 597; Jackson v New York Citv Health & Hosp. Corp., 419 F Supp 

  

809; see 3lgs, Brvan.v Koch 827 F224 612, affg 292 TF Supp 213), 

Or even one in which a specific portion or service of a health 

facility is leased, subcontracted or merged by HHC with a view to 

saving costs or improving delivery of care. For in each of those 

eins of control and decision-making, HN instances, HHC maintains the 

he administration and day-to-day rr
 and does not leave both 

  

operation entirely to someone else. 

Put another way, HHC cannot put itself out of business 

in relation to. CIR by subleasing &ll of its assets and 

transferring all of its duties, without the consent of the 

Legislature, any more than a private corporation, by its Board of 

Directors, could divest itself of its assets and property without 

permission of its shareholders (see, Business Corporation Law § 

S909[a); Dukes v Davis Aircraft Prods. Co.,v13% 2D2d 720, 721).   

The evidence presented on these motions makes it clear 

that defendants seek to privatize all the HHC hospitals. It is 

also obvious that the "turning over" of CIH to a non-public 

corporation, is the first step towards defendants’ ultimate goal 

of disengaging the City from the municipal hospital system and 

placing municipal hospital services in the hands of an outsider 

22 

 



  

® 638 ¢ 

or the private sector.? At the least, defendants seek to 

"downsize" HHC and minimize its role (and therefore the Qity's 

role), for an examination of the sublease terms reveals such 

limited retained control by HHC z3 to raise the question of 

whether HHC's continued existence could be justified if such 

subleasing is repeated in connection with the other HAC hospitals. 

For example, the sublease provides an arbitration process in the 

event PES-NY wishes to discontinue 2a core service, by which an 

arbitration award can become binding on HHC. The Legislature 

cannot possibly have intended or expected that by granting HHC the 

right to enter into agreements or leases, HHC would be put into 

a position where HHC's Board of Directors essentially stripped the 

  

3 

"Mayor Rudolph Giuliani recently announced plans to sell 
Coney Island Hospital and two other Queens hospitals into private 
hands. Giuliani said he was worried about rising health-care 
costs and deficits at city-owned hospitals, and wants to get the 
city out of hospital business." 
(Newsday, March 5, 1995, emphasis supplied). 

  

  

  

As the Mayor told the press: 

"Twenty years from now the mayor of New York City will not 
be standing here with New York City owning 11 acute-care 
hospitals. That will not be the case. It is going to happen, 
it's going to change. That change is either going to be forced 
on us or we're going to guide it.” 

(National Public Radio, Interview with Mayor Giuliani, Morning 
Edition, September 5, 1995.) 

23 

= 
- 

 



  

% . 
639 

corporation of its control over the carrying out of its duties. 

The history of the creation of HHC is instructive. HHC 

was borne out of the City's need to salvage a hospital System that 

was floundering. Tf HHC likewise is confronted with a system 

nearly drowning in red ink, defendants’ response cannot be simply 

to jump ship. They must go back to the Legislature, and seek an 

ee a 

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amendment or repeal oj 

managing the crisis. 

By finding that HHC has committed an ultra vires act in   

entering into a sublease to privatize CIH, this court is not 

attempting to second guess HHC or the other defendants or to 

substitute its own beliefs for that of the HHC Board of Directors. 

Instead, it is holding that EHC must give meaning to the intent 

Of the People as expressed through the State egislature's 

enactment of the HHC Act. 

Accordingly, the summary judgment motions by defendants 

In Action Nos. 1 and 2 are denied. The cross motions for summary 

end by the }=
4 

judgment by the Council plaintiffs in Action No. 

Campaign plaintiffs in Action No. 2 are granted to the extent of 

Geclaring that the subleasing of HHC facilitites reculres the 

application of ULURP and the approval of the Council, znd further 

24 

 



. a * 

  

declaring that the sublease of CIH to PHS-NY constitutes an Bltra 

vires act and violates the HHC Act. 

Settle orders. 

  

25 

 



  

J 

At.an IAS Motion Part 5, of the Supreme 

Court of the State of New York, heid in and 

for the County of Queens, at the Courthouse 

located at 88-11 Sutphin Boulevard, Jamaica, 

New York, on the 57 | day of January, 1997. 

PRESENT. 

HON. HERBERT A. POSNER, 
  

  

JUSTICE. 

CL RN SAD TM 
ce ge RRR © AL ti dh iT 

X 

CAMPAIGN TO SAVE OUR PUBLIC 

HOSPITALS - QUEENS COALITION, an ORDER AND 

unincorporated association, by its member JUDGMENT 

WILLIAM MALLOY, CAMPAIGN TO SAVE 

OUR PUBLIC HOSPITALS - CONEY ISLAND Index No. 10763/96 

HOSPITAL COALITION, an unincorporated 

association by its member PHILIP R. METLING, 

ANNE YELLIN, and MARILYN MOSSOP, 

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF 

THE CITY OF NEW YORK, NEW YORK CITY 

HEALTH AND HOSPITALS CORPORATION, 

and NEW YORK CITY ECONOMIC 

DEVELOPMENT CORPORATION, 

Defendants. 

Plaintiffs Campaign to Save Our Public Hospitals - Queens Coalition, an 

unincorporated association, by its member William Malloy, Campaign to Save Our Public 

Hospitals - Coney Island Hospital Coalition, an unincorporated association by its member Philip 

R. Metling, Anne Yellin, and Marilyn Mossop, having commenced this action seeking 2 

declaration that (i) defendants violated New York City Chartec § 197-b by failing to submit their 

 



J 

plans for privatization of Coney Island Hospital, Queens Hospital Center and Elmhurst Hospital 

Center (the "Subject Hospitals") and requests for proposals to the New York City Planning 

Commission and the affected community boards and borough presiden:s; (ii) defendants are 

required to submit their contracts for lease of the Subject Hospitals for review and approval 

under the Uniform Land Use Review Procedures ("ULURP") set forh in New York City 

Charter § 197-c; and (iii) defendants’ proposed sublease of Coney Island Hospital to a 

corporation violates the New York City Health and Hospitals Corporation Act (Laws of 1969, 

ch. 1016, Unconsolidated Laws §§ 7381 et seq.), and defendants Rudolph W. Giuliani, the 

Mayor of the City of New York, the New York City Health and Hospitals Corporation, and the 

New York City Economic Development Corporation, having moved to consolidate this action 

with an action entitled The Council of the City of New York, et al. v. Rudolph W. Giuliani, The 
  

Mavor of the Citv of New York, et al., Index No. 004897-96 (Sup. Ct. Queens Co.) (the 
  

"Council Action"), and for summary judgment in both actions, and plaintifis having cross-moved 

for summary judgment, and the motions having duly come on 10 be heard, 

v Vv 

NOW, upon the reading and filing of the defendants’ Notice of Motion to 

v 

Consolidate and for Summary Judgment dati on 12, 1996, the pe aint ffs’ Notice of Cross- 

 § 
Motion for Summary Sudornn dete August 25, 1996, the Atti of Luis Niceoh, M.D. 

/ 7 
aed, 11, 1996, and the exhibits thereto, submitted in support of czfendants’ motion to 

v’ Wg “ v 

consolidate and for summary epi the Affirmation of Daniel Turbow dated Pe 12, 

: 0 v Chen ov 7 

1996 and the exhibits thereto, the Supplemental Affirmation of Daniel Turbow dated November 

Vv and +e xh, } 4; There, v v i) r ; vv 

19, 1996 andthe exhibils thazetd, and the Supplemental Reply Affirmz:ion of Daniel Turbow 
  
  
  

oY v , Se re 
dated November 29, 1996, all submitted in support of defendants’ motion for summary judgment 

LD.  



  

¢ | 

  

and in opposition to Piz cross-motion for summary judgment, 

  

  

  

if o- 4 j “on 3 44 { ’ f- 
Rofept [ar AH Aad ober >, 1776 PRY. +H exh: be Fherede JLNNLE a, Shak: ich dated 

x art—Carvar gota) seemban 20 10Q€ and thao eh 1h to tharats fe WE inoled: on A Stipulation dated 

Decent ber i7, 194 ¢ , am ctdiry He Arsuer, N Netric e1 Hotes 4 od Nadie cf Cre CS Metin 
Breeember171006entendins the Annes Neties ot Moten—and-Drotiee-of-CressMetion, and 

: aa ae FIRE » ; 7, ; 
the Affidavit of David R. Jones ested August 22, 1996 and the exhibits thereto, the Affirmation 

of Rachel D. Godsil dated August 23, 1996 and the’ exhibits thereto, the Supplemental 

. . wv 

Affirmation of Rachel D. Godsil dated November 19, 1996 and the exhibits thereto, the Affidavit 
— 

& bf Oud [0 v ae 2 A x, ; Vv’ 

of Judith B. Wessler, M.P.H., dsted November 27, 1996 and the exhibits thereto, the Reply 

vv . v Y . r . 
Affirmation of Rachel D. Godsil dated November 30, 1996 and the exhibits thereto, all submitted 

in support of plaintiffs’ cross-motion for summary judgment and in opposition to defendants’ 

motion for summary judgment, and plaintiffs having appeared by the Puerto Rican Legal Defense 

& Education Fund, Inc. (Kenneth Kimerling, of counsel), the NAACP Legal Defense & 

Educational Fund, Inc. (Marianne Engelman Lado and Rachel D. Godsil, of counsel) and the 

Center for Constitutional Rights (Barbara Olshansky, of counsel), and defendants having 

appeared by Paul A. Crotty, Corporation Counsel of the City of New York (Daniel Turbow and 

v b Robert Carver, of counsel), and upon the Order dated Sept somber 18, 1996, granting defendants 

motion to consolidate to the extent that the Council Action was combined with the instant action 

effuiclne del Aust, anil 
for the purpose of a joint trial, without consolidation, and upon the Decision of the Court dafed 

Vv 

January 13, 1997, it is 

ORDERED and ADJUDGED that defendants’ motion for summary judgment is 

denied, and it is further 

ORDERED, ADJUDGED and DECLARED that plaintiffs’ cross-motion for 

summary judgment is granted to the extent of declaring that (i) pursuant to the Health and 

Hospitals Corporation Act, U.L. § 7385(6), the subleasing of HHC facilities requires the 

v3. 

 



¢ a 
10 

  

  

  ~~ ——— ——.. 

approval of the Mayor and the City Council; (ii) the subleasing of HHC facilities requires the 

application of ULURP; and (iii) the proposed sublease of Coney Island Hospital to PHS New 

York, Inc., constitutes an ultra vires act and violates the Health and Hospitals Corporation Act, 

and it is further 

ORDERED that the County Clerk is directed to enter this order and judgment . 

without costs. 

ENTER: 

  

    

  

   



  

Case No. 97-01339 
  

SUPREME COURT OF THE STATE OF NEW YORK 

APPELLATE DIVISION : SECOND DEPARTMENT 
  
  

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - 
QUEENS COALITION, an unincorporated association, by 

its member WILLIAM MALLOY, CAMPAIGN TO SAVE 
OUR PUBLIC HOSPITALS - CONEY ISLAND HOSPITAL 
COALITION, an unincorporated association, by its member 

PHILIP R. METLING, ANNE YELLIN, and MARILYN 
MOSSOP, 

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE CITY 

OF NEW YORK, NEW YORK CITY HEALTH AND 

HOSPITALS CORPORATION, and NEW YORK CITY 

ECONOMIC DEVELOPMENT CORPORATION , 

Defendants. 
  

  

NOTICE OF MOTION FOR 

LEAVE TO APPEAL 

  
  

PAUL A. CROTTY 

Corporation Counsel of the City of New York 
Attorney for Defendants-Appellants 
100 Church Street 
New York, N.Y. 10007 

Of Counsel: Elizabeth Dvorkin 
Tel: (212) 788-0412 
NYCLIS No. 
  
  

Due and timely service is hereby admitted. 

New York, NY. i iii divi wns ai ats 199.