Affirmation Supporting Cross-Motion Opposing Appellants' Request for Leave and Seeking to Appeal Dismissal of Respondents' Causes of Action

    SUPREME COURT OF THE STATE OF NEW YORK 
APPELLATE DIVISION: SECOND DEPARTMENT 
C—O Se xX 

AFFIRMATION IN SUPPORT 

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - OF CROSS-MOTION 

QUEENS COALITION, an unincorporated OPPOSING APPELLANTS’ 

association, its member WILLIAM MALLOY, REQUEST FOR LEAVE 
CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - TO APPEAL AND 

CONEY ISLAND HOSPITAL COALITION, an IN THE ALTERNATIVE 

unincorporated association, by its SEEKING LEAVE TO 
member PHILIP R. METLING, ANNE YELLIN, APPEAL THE DISMISSAL 

and MARILYN MOSSOP, OF RESPONDENTS’ FIRST 

AND SECOND CAUSES 

Plaintiffs-Respondents, OF ACTION 

Appellate Division 
- against - Case No. 97-01339 

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. 

BARBARA J. OLSHANSKY, an attorney duly admitted to practice 

law before the courts of this State, affirms under penalty of 

law: 

1. I am an attorney with the Center for Constitutional 

Rights, counsel for plaintiffs-respondents in the above-captioned 

matter. I submit this affirmation to the Court in opposition to 

defendants’ motion for leave to appeal to the Court of Appeals 

from the opinion and order of this Court, dated September 8, 

1997. In that opinion, this Court affirmed the order and 

judgment of the Supreme Court, Queens County (Posner, J.) entered 

on February 5, 1997 which declared that the proposed sublease of 

Coney Island Hospital to a private entity constitutes an ultra 

vires act by the New York City Health and Hospitals Corporation 

("HHC"). The Court also modified the order of the lower court 

 



  

% 

by: (i) deleting those provisions of the order and judgment 

which declared that the sublease of any facility of HHC requires 

the approval of both the Mayor and the City Council, and that 

such a sublease is subject to the requirements delineated in the 

Uniform Land Use Review Procedures, and (ii) substituting a 

provision dismissing plaintiffs’ first and second causes of 

action of the Amended Complaint which had raised these claims. A 

copy of this Court’s order and opinion is annexed to this 

affirmation as Exhibit A. A copy of the Supreme Court’s judgment 

and order is annexed hereto as Exhibit B. 

24 The New York State Constitution requires New York State 

("State") and New York City ("City") to ensure that dignified and 

comprehensive health care is available to all New York residents 

regardless of their ability to pay for such care. See New York 

State Constitution Article XVII. Pursuant to this mandate, the 

New York State Legislature created HHC to operate the public 

hospital system in the City. See The New York Health and 

Hospitals Corporation Act, §§ 7381 et seq. ("HHC Act"). Since 

that time, HHC’s public hospital system has provided care for 

hundreds of thousands of poor and uninsured New Yorkers, and has 

played a disproportionately large role in caring for those who 

suffer from special access problems due to conditions such as 

HIV/AIDS, tuberculosis, and psychiatric problems. Unlike private 

hospitals, by law, public hospitals cannot turn away patients 

because of their inability to pay. 

3. Under Mayor Giuliani’s plan for the privatization of 

 



  

the public hospital system, HHC would no longer be the primary 

mechanism by which the City provides health care services to its 

residents; instead, private companies would operate and manage 

the municipal hospitals for their own benefit or that of their 

shareholders. Coney Island Hospital in Brooklyn was chosen as 

one of the first public hospitals to be privatized. 

4. As the Supreme Court held, and this Court properly 

affirmed, the HHC system is a state-created institution and, as 

such, cannot be privatized absent an amendment to the HHC Act. 

HHC was created in response to the fiscal and operational crisis 

facing New York City’s municipal hospitals in the late 1960s, and 

was designed to be "an agent of the City." May 8, 1969 Letter of 

Mayor John V. Lindsay to Governor Nelson Rockefeller, Governor’s 

Bill Jacket 1969, Chapter 1016 at 12 ("Lindsay Letter"). The 

State Legislature established HHC as the mechanism by which the 

State and the City would fulfill their constitutional obligation 

to provide dignified and comprehensive health care to all New 

York residents. ee McKinney’s Unconsolidated Laws of New York, 

8 7382. 

5. As this Court aptly noted in its opinion, the 

Legislature’s intent in creating HHC could not have been more 

clearly articulated; in enacting the HHC Act it "declared that 

the provision of health care and the operation of the City’s 

health facilities were of ‘vital and paramount concern.’" See 

Exhibit B, Opinion at 3 (citations omitted). The Legislature 

created a public benefit corporation to address the City’s 

 



  

inadequate health care system and to provide "needed health and 

medical services and health facilities" to the residents of the 

City and particularly "to those who can least afford such 

services." See McKinney’s Unconsolidated Laws of New York, § 

7382. 

6 Furthermore, the plain language of the HHC Act, see 

McKinney’s Unconsolidated Laws of New York, § 7387[1], confirms 

that "[t]lhe Legislature clearly contemplated that the municipal 

hospitals would remain a governmental responsibility and would be 

operated by HHC as long as HHC remained in existence." Exhibit 

B, Opinion at 4. Thus, there can be no doubt that defendants’ 

proposed construction, which would permit HHC to divest itself of 

its statutory responsibility, contravenes the HHC Act’s purpose 

and intent "to establish one entity accountable to the public to 

operate the municipal hospitals for the benefit of the public." 

Id. 

7. As this Court also appropriately emphasized, the 

Legislature plainly intended for the City to remain responsible 

for the maintenance of its health care system. Exhibit B, 

Opinion at 5, citing Lindsay Letter. The creation of a public 

benefit corporation was the means by which this system would be 

efficiently managed to ensure the provision of dignified health 

care services to those in need of such services. 

8. Contrary to defendants’ contention, this case does not 

present a novel issue necessary for resolution by the Court of 

Appeals. The law is clear that only the State Legislature has 

 



  

the authority to modify or dissolve a public benefit corporation. 

See City of Rye v. Metropolitan Transportation Authority, 24 
  

  

N.Y.24 627, 634, 301 N.¥.S5.2d 569, 573 (1969): Town of Hoosick v, 

Eastern Rensselear County Solid Waste Management Authority, 182 
  

A.D.2d 37, 592 N.Y.S.2d 472 (3d Dep’t 1992); New York 

Constitution, Article X, § 5. For this reason, plaintiffs 

respectfully submit that leave to appeal to the Court of Appeals 

is not appropriate. 

9. In the alternative, plaintiffs respectfully request 

that if defendants’ motion for leave to appeal is granted by this 

Court, that plaintiffs’ cross-motion for leave to appeal the 

dismissal of the first and second causes of action be granted to 

preserve those claims. These claims address other issues of law 

governing the appropriate procedure to be followed in the event 

that the Court of Appeals overturns the decisions below. 

WHEREFORE, it is respectfully requested that this Court deny 

defendants’ motion for leave to appeal the opinion and order of 

this Court dated September 8, 1997, and in the alternative, grant 

plaintiffs’ request for leave to appeal the dismissal of the 

first two causes of action. 

Dated: New York, New York 

October 14, 1997 

itd. 2] Olbnco bt) 
  

Barbara J? Olshansky’ 
Center for Constitutional Rights 
666 Broadway, 7th Floor 
New York, New York 10012 

Tel. (212) 614-6439 

 



  Exhibit A  



   cep-1@-1997 10:43 ES NEW YORK CITY LAW DEPT qe = @458  P.@2/@9 

SUPREME COURT OF THE STATE OF NEW YORK 

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT 

    

  

8797Z 
S/hu 

AD2d Argued - June 9, 1997 

CORNELIUS J. O'BRIEN J.P. 
THOMAS R. SULLIVAN 
GLORIA GOLDSTEIN 
DANIEL F. LUCIANO, JJ. 

97-01337 

Council of The City of New York, etc., OPINION & ORDER 
et al., respondents, v Rudolph W. Giuliani, 
etc., et al., defendants-appellants. 

  

< 

APPEAL by the defendants, in an action, infer alia, to enjoin the New 

York City Health and Hospitals Corporation from subleasing Coney Island Hospital to a private 

entity, from an order and judgment (one paper) of the Supreme Court (Herbert A. Posner, J.), 

dated January 31, 1997, and entered in Queens County, which denied their motion for 

summary judgment and granted the plaintiffs’ cross motion for summary judgment to the extent 

of declaring (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). 

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

Tenzer Greenblatt LLP, New York, N.Y. (Edward L. Sadowsky, Ira A. 
Finkelstein, and Gail R. Zweig of counsel), and Richard M. Weinberg, New 
York, N.Y., for respondents (one brief filed). 

September 8, 1997 Page 1. 
COUNCIL OF CITY OF NEW YORK v GIULIANI 

 



   SEP-16-1997 18:43 % NEW YORK CITY LAW DEPT 212 458 P.B37@S 

PER CURIAM. On November 8, 1996, the Board of 

Directors of the New York City Health and Hospitals Corporation (hereinafter HHC) approved 

a sublease of Coney Island Hospital (heréinafter CIH) to a for-profit entity, Primary Health 

Systems New York, Inc. (hereinafter PHS-NY), for an initial period of 99 years with an option 
to renew for an additional 99 years. CIH serves a population of about 750,000 in South 
Brooklyn. Pursuant to the terms of the sublease, PHS-NY agreed to operate CIH as a 
community based, acute care inpatient hospital and to provide substantially the same medical 

services currently provided by HHC. The sublease further provided that the City and HHC 

would enter into a separate agreement with PHS-NY in which they would agree not to compete 
with PHS-NY by operating a hospital within the "catchment area" of CIH. 

The sublease was part of a plan announced in 1994 by New York City Mayor, 
Rudolph W. Giuliani, to privatize the hospitals operated by HHC. Through the City’s 
Economic Development Corporation, offering memoranda were issued in 1995 for three 

targeted HHC hospitals (CIH, Queens Hospital Center, and Elmhurst Hospital Center in 

Queens) which proposed a transfer of the facilities and their services to private entities through 

long-term subleases. In an effort to obtain broader public review of the privatization plan, the 

City Council commenced this declaratory judgment action in March 1996 against, inter alia, 
the Mayor and HHC. The City Council alleged, inter alia, that the privatization of the 

target hospitals by means of subleases with private institutions required City Council approval 
and was subject to the Uniform Land Use Review Procedure (hereinafter ULURP) (see, NY 

City Charter § 197-c. A second declaratory judgment action, which raised essentially the same 
issues, was commenced in May 1996 by two unincorporated associations whose members live 
and work in the communities served by CIH and the targeted hospitals in Queens (see, 

Campaign to Save Qur Public Hospitals-Queens Coalition v Giuliani, AD2d 

  

[decided herewith]). The parties cross-moved for summary judgment, and the Supreme Court, 

Queens County, directed that the actions be jointly tried. 

While the parties’ motions and cross motions for summary judgment were 
pending, the HHC Board of Directors approved the CIH sublease. The plaintiffs in both 
actions amended their complaints to allege that the sublease of CIH constituted an ultra vires 
act, and the motion papers were amended to address this issue. The Supreme Court granted 
summary judgment to the plaintiffs herein to the extent of declaring that the subleasing of HHC 
facilities was subject to ULURP, that such subleasing required the approval of the Mayor and 

September 8, 1997 Page 2. 
COUNCIL OF CITY OF NEW YORK v GIULIANI 

 



   

  

he. 

the City Council, and that HHC did not have statutory authority to sublease CIH. We agree 

with the Supreme Court that the CIH sublease, which transfers responsiblity for the operation 

of the hospital and the provision of medical services, is not authorized by HHC's governing 

statute. 

HHC was established as a public benefit corporation by the State Legislature 

in 1969 (see, McKinney's Uncons Laws of NY § 7381 er seq. [New York City Health and 

Hospitals Corporation Act] [hereinafter NYCHHCA); IL 1969, ch 1016). Resolution of the 

issue of whether HHC has the authority to privatize its hospital facilities begins with the 

language of the enabling statute (see, Giuliani v Hevesi, NY2d Mar. 20, 
1997)). In interpreting the statute, "the spirit and purpose of the act and the objects to be 

  

accomplished must be considered. The legislative intent is the great and controlling 

principle” (Ferres v City of New Rochelle, 68 NY2d 446, 451, quoring People v Ryan, 274 

NY 149, 152). 

The Legislature's intent in creating HHC can readily be discerned from the 

statute’s lengthy "Declaration of policy and statement of purposes" (see, McKinney’s Uncons 

Laws of NY § 7382). The Legislature declared that the provision of health care and the 

operation of the City's health facilities were of "vital and paramount concern” (McKinney's 

Uncons Laws of NY § 7382). Upon finding that the City's health facilities were inadequate 

and that the administrative system then in place obstructed and impaired the "efficient operation 

of health and medical resources”, the Legislature concluded that a system was required which 

would permit flexibility in the provision of health care, "particularly to those who can least 

afford such services" (McKinney's Uncons Laws of NY § 7382). The Legislature stated: 

"It 1s found, declared and determined that in order to 
accomplish the purposes herein recited, to provide the 
needed health and medical services and health facilities, a 
public benefit corporation * * * should be created to provide 
such health and medical services and health facilities and to 
otherwise carry out such purposes; * * * and that the 
exercise by such corporation of the functions, powers and 
duties as hereinafter provided constitutes the performance of 
an essential public and governmental function" (McKinney's 
Uncons Laws of NY § 7382). 

The statute required HHC and the City to enter into an agreement by July 1, 
1970, "whereby the corporation shall operate the hospitals then being operated by the city 
for the treatment of acute and chronic diseases” McKinney's Uncons Laws of NY § 7386[1])[a) 

September 8, 1997 Page 3. 
COUNCIL OF CITY OF NEW YORK v GIULIANI 

  

SEP-10-1997 10:44 ea NEW YORK CITY LAW DEPT 21 fs 8458 P.B4,8S



SEP-10-1997 10:44 & NEW YORK CITY LAW DEPT 21 4f)e 2458  P.@S/83 

[emphasis added]). CIH was among the hospitals that the City leased to HHC for an annual 

rent of $1.00 “for its corporate purposes, for so long as it (HHC) shall be in existence" 

(McKinney's Uncons Laws of NY § 7387[1]). The Legislature clearly contemplated that the 

municipal hospitals would remain a governmental responsibility and would be operated by 

HHC as long as HHC remained in existence. ” 

The defendants contend, however, that HHC’s corporate purpose of providing 
quality medical care to the CIH community can best be accomplished through the sublease with 

PHS-NY and that the statute explicitly authorizes HHC to sublease a hospital to a private 

entity. The defendants rely upon that portion of the staute which gives HHC the power: 

"To * * * 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; 
provided, however, that no health facility or other real 
property acquired or constructed by the corporation shall be 
sold, leased or otherwise transferred by the corporation 
without public hearing by the corporation after twenty days 
public notice and without the consent of the board of 
estimate of the city" (McKinney’s Uncons Laws of NY § 
7385[6]). 

We disagree with the defendants’ contention that this provision, which permits 

HHC to dispose of a health facility, also authorizes it to "sublease" its responsibility to provide 

medical services. The words of a statute should not be read in isolation to reach a construction 

which 1s contrary to the overall statutory purpose and scheme. Rather, a statute should be 
construed as a whole and all parts read together to determine the legislative intent (see, Marrer 

of Long v Adirondack Park Agency, 76 NY2d 416, 420; McKinney's Cons Laws of NY, Book 

1, Statutes § 97). The purpose and intent of the NYCHHCA was to establish one entity 
accountable to the public to operate the municipal hospitals for the benefit of the public. A 
construction of section 7385(6) of the NYCHHCA which would permit the defendants to tum 

over the operarion of an entire hospital to a private entity by means of a 99-year sublease 
would be inconsistent with that intent and purpose. 

The defendants’ reliance on NYCHHCA section 7385(8) is also misplaced. 

That section states that HHC has the power: 

"To 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 and to make rules and 
regulations governing admissions and health and medical 
services" (McKinney’s Uncons Laws of NY § 7385[8]). 

September 8, 1997 Page 4. 
COUNCIL OF CITY OF NEW YORK v GIULIANI 

 



    
SEP-10-1997 18:45 NEW YORK CITY LAW DEPT 214s B458 P.B6/8S 

While EHC has the authority to contract with private entities to provide medical services, such 

authority is limited by the phrase "through and in the health facilities of the corporation.” 

NYCHXCA section 7385(8) does not authorize HHC to transfer its statutory obligation to 

operate a City hospital to a private entity. 

Although the issue of HHC’s authority to sublease CIH can be resolved on the 

basis of the statutory language alone, the legislative history is instructive. A report by the New 

York State Department of Health in May 1969, following investigatory hearings on the City’s 

hospital system, recommended creation of a public benefit corporation as a means of operating 

the municipal hospital system with more administrative autonomy while retaining accountability 

to municipal officials (Report of Hearing Officer, NY Dept. of Health, May 15, 1969, Bill 

Jacket, L 1969, ch 1016). Former Governor Nelson Rockefeller, in his memorandum 

approving the legislation, stated that the HHC was established to "operate and maintain” the 

City's municipal hospitals and that the provision of adequate health facilities "is a major 

responsibility of government” (Governor's Mem. approving L 1969, ch 1016, 1969 

McKinney's Sess. Laws of NY, at 2569). 

There is no indication that the Legislature intended that HHC, upon being 

given the authority to operate City hospitals, could then transfer such authority to a private 

entity. In a letter to Governor Rockefeller, former New York City Mayor John Lindsay, who 

proposed the HHC legislation, stated that, by establishing a public benefit corporation, the City 

was "not getting out of the hospital business”. The public benefit corporation was viewed as a 

means of better managing the City's entire health system, and the Mayor stated that the "health 

care system will continue to be the City’s responsibility" (Letter dated May &, 1969, Bill 

Jacket, L 1969, ch 1016). 

Based on the statutory language, together with the legislative history, we 

conclude that HHC exceeded its statutory authority when it agreed to sublease CIH to 

PHS-NY. The defendants 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. It is not the function of this Court to 

consider the merits of privatization of HHC-operated hospitals. The defendants’ remedy is to 

apply to the Legislature to amend the statute to confer such authority upon HHC, as only the 

Legislature has the authority to create, modify, or dissolve a public benefit corporation (see, 

City of Rye v Metropolitan Transp. Auth., 24 NY2d 627, 634; Town of Hoosick v Eastern 

Rensselaer Counry Solid Waste Mgt. Auth., 182 AD2d 37; NY Const, art X, § 5). 

September 8, 1997 Page 5. 
: COUNCIL OF CITY OF NEW YORK v GIULIANI 

 



   ® 10-1997 10:45 » NEW YORK CITY LAW DEPT 215g) @45@ P.@7/089 

In view of the Supreme Court’s determination that the sublease of CIY 

constitutes an ultra vires act to the extent the sublease absolves the HHC from any 

responsibility for the day-to-day administration or operation of CIH, it should have dismissed 
the demands for declaratory relief on the remaining issues raised by the parties with respect to 
whether the provisions of ULURP apply to the sublease and whether City Council approval of 
the sublease 1s required (see, New York Public Interest Research Group v Carey, 42 NY2d 

527, 529-530; Carlisle v Spatola, 232 AD2d 444). 

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

ORDERED that the order and judgment is modified, on the law, by deleting 
the provisions thereof which declare (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 
therefor a provision dismissing the causes of action which sought those declarations; as so 
modified the order and judgment is affirmed, without costs or disbursements, and the matter is 
remitted to the Supreme Court, Queens County, for a determination of those branches of the 
plaintiffs’ motion which were for summary judgment as to demands D and E of the second 
amended complaint. 

ENTER: 

Martin H. Brownstein 
Clerk 

September 8, 1997 Page 6. 
COUNCIL OF CITY OF NEW YORK v GIULIANI 

 



   
SEP-10-1997 18:45 NEW YORK CITY LAW DEPT 212) g4s@  P.08/89 

SUPREME COURT OF THE STATE OF NEW YORK 

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT 

    

  

87992 
S/hu 

AD2d Argued - June 9, 1997 

CORNELIUS J. O'BRIEN J.P. 
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 8, 1997 Page 1. 
CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - QUEENS COALITION v GIULIANI 

 



   

  

br ATL 18:46 é NEW YORK CITY LAW DEPT 212 458 P.09/63 

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. 

Martin H. Brownstein 
Clerk 

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

 



SUPREME COURT OF THE STATE OF NEW YORK 

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT 

  

  

  

  

8799Z 
S/hu 

AD2d Argued - June 9, 1997 

CORNELIUS J. O'BRIEN J.P. 
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 §, 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 

THE COUNCIL, OF THE CITY OF NTU YORK, BY: POSNER, J 
PETER F. VALLONE, SPEAKER OF THT 
COUNCIL, and ENOCH KE WILLIAMS, CHAIR Action Xo, 
OF TEE COUNCIL, HEALTH COMMITTEE, 

RUDOLPH W. GIULIANI, THE 
CITY OF NEW- YORY, "NEW YORK CJ 
END HOSPITALS CORPORATIO 
CITY ECONOMIC DEVELOPMENT COX 

AMPRAIGN TO SAVE OUR PUBLIC HOSPITALS -: INDEX NO.: 10763/96 
TION, an unincorporated 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 
F NEW YORK, NEW YORK CITY HEALTH 
SPITALS CORPORATION, and NEW YORK 
CONOMIC DEVELOPMENT CORPORATION, 

Defendants, Mayor Rudolph Giuliani (“Giulizni”), the New 

 



  
  

  

      
t PPR ETI PCI WVt J Tio INET SS 8g aP dove PL J ak Po) . : \ i 

617 

vork City Health and Eospitals Corporation (“HCC”) and tne N 

“NYCED") 

Action No. 

without consolidation. 

controversy between the executive and -legislai 

government. Fortunately, resolution adopted by the 

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

the authors of our State and Federal constitutions wisely 

egtablished the third branch of government as arbiter of disputes 

ISSUES 
  

ctions originally petitioned th  



618 

court for a. declaratory judgment interpreting Section 

inney's Unconsolidated Laws of 1965S. 

and Hospitals Corporation Act (“HHC subjected 

the 

Furthermore, 

Board 

president to execute 73 for-profit corporation. Said 

lease in effect turns over the operation of Cone 

in toto to the lesses  



  

619 

THE BACKGROUND 
  

Defendant Giuliani tool office as chief exscutive of the 

City of New Yorkiin 198<.  Vhen he realized that he had inherited 

budget with fiscal problems {stretching back to the 70's), hs 

1)
 

1 ~~ «9 - on ® * ~~ RE by = ” a i No — a . b) 

sought numerous ways to bring the City's expeness an palance with 
> 

its revenue One of his proposals was IOr the privatization of the 

5 continuous drain ci the City's 

0)
 

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

can: more efficiently rum the City's hospitals, Wnether the 

plaintiffs agree Or disagrees wlth this philosophy is nd the issue 

EISTORY 

New York State Constitution, Article XVII, £3 

+]
 

i 
i 

(MD
 

states: 

"The protection and promotion of "ths 

health of the inhabitants of the state 

are matters of public concern and 

provision ‘therefor shell 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 Tims 

. determine." 

4 

 



  

620 

Prior to 1370, in compliance with this constitutional 

requirement, the City of New York constructed, maintained and 

operated hospital facilities providing care to residants of ths 

City, including those persons who could not otherwise afford 

hospital services In 1969, the New York State Legislature enacted 

the Hezlith and Hospitzl Corporation Act (YEHC Act!) creating the 

HHC for thes purpose of continuing to fulfill the cons-itutionzl 

> 
mandates (L. 1962, ch 101s, McKinney's Uncons Laws of 

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

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

the City, and particularly those persons who can least z7ford such 

services (gee, McKinney's Uncons Laws of NY § 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 hospitzl system. 

HHC's creation was intendasd to overcome the "myriad of complex and 

Often deleterious. constraints" which inhibited the provision of 

care ‘by. the City in. its own operation of the wmunicipsl 

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

5 

 



    

  

“ 

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

njegal, financial and managerial" flexibility necessary to carry 

Se h NL SR RIN ge a 

out its purpose (McKinney's Uncons Laws OI Ny £5 7382, 7385) ic 

was zuthorized "[t]o make and exacute contracts anc jezses and 21% 

other agreements or instruments necessary Or converient for ithe 

exercises of its powers znd the fulfillment Of its corporate 

purposes" (McKinney's Uncons Laws OI NY § 73£515)) in addition, 

HUC was granted the power "([t]o provide health and nellical services 

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

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

continuing control by the City.* Among these powers wzs the power 

  

=
 

  

See, e.9., McKinney's Uncons Laws ©O 

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

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

the City Council has the sole authority 

§ «73861{2){b); the City has the ri Ey
 

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

policies and plan determined by the City; S 

§ 7350(5)-(8); HHC employee grievances are ccverned by NYC 

Administrative Code 7 

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

6 

 



  

622 

relevant to the issues herein: 

#70. dispose of by sale, lease or 
r= "sublease, real #*** property including but 

not limited to z= health facility, or any 
interest  <theysin for: its’ corporzts 

  

purposes, providsd, howsver, that no 
health facility or other real propercy 
acquired or constructed by Tns 
corporation shall bs sold, leased or 
otherwise transferred by the corporation 
without public hearing by the corporation 
after twenty days notice and withour the 

consent of the board of estimete of rhe 
  

City. ™ 

(McKinney's Uncons Laws § 7385([6]). 

(Emphasis addsd). 

On July 31,1970, in gccordance with the HHL Act and with 

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

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 1294, the City, through the Mavor's office, began 

exploring the possibility of transferring the operatiox of three of 

those hospitals, Coney Island Hospital {(“CIH")}, Elmhurst Hospital 

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

  

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

subject to collective bargaining agreements and thes Mayor's 

consent. 

 



    

eh Ci a ail iis lls an SA pd oi Ea dak ad SE SA eR i 
  

  

623 

defendant EDC as financial advisor to prepare oO 

for proposals to privatize ths operations of the three hospitals 

2nd to sublease their facilities. 

Chairman of PHS New York Inc. ("PHS-NY*) and of :trimary Heslth 

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

authorized and approved the sublease of CIH to PES-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 thar it recites i 

the more typical tenant obligations. 
; 

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

 



  

or sublease of any HEC facilities to private lessees rzquires the ’ 

- 

approval of the Council pursuant to Unconsolidated Laws § 7385(6); 

sh 1 - ~ GL T—~a “en ~ ~~ BITTY D h! py oe = with the Uniform Land Uss Review Procedure (FULURP"} process of 

- Cc 3 IE oth BRE od 3 T ~ ” Sony An uk a am sections "1€7-c and 1€7-d Of the New Yorx City Cnarcer Tne 

  

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amended complaint denying various allegations and asserting 

+ 
i affirmative defenses based upon the failure to state a cause oO 

action and lack of ripeness, and sections 7385(6) and 7385(8) of 

Bt the woutset, the affirmative defenses passed upon 

~ - —~ = - ~~ - an De =F 4 ma 3 o 

£zilure tO siete 2a CzusSe OI action gre sSiYXicCKenh,. An.affirmative 

defense based upon the failure to state a cause ofigction cannot be 

S 

 



  

    

625 

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

  

" - i. : Yori pn wn ™ } = - ~ -— ~ = - —- . 

iso be stricxren tthe rime of the commencement cl Lne acrlion, 

sublesge. of CIH,: and an srgument could have been rade thal the 

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

  

  

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

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

  

  

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

g£ 7385{6)).. Such provision goes on to condition ihe exercigs of 

that power upon the consent of the Board of 
  

10 

 



  

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S
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(emphasis adde 

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

eight elected members; the Mz 

Presidents Each of the citywids officers had two vo-as and each 

of the borough presidents had ons vote. This voting distribution 

of .the Board of Estimate members was '‘daclared violative of ths 

  

Board of Estimate, 52 F SUpp "1462" (BD.N.Y. 1984), affd 831 Fad   

  

As a conseaguence of such ruling, and the United Srates 

District Court order that a plan be developed by ths City to cure 

  

the constitutional deficiency (see, Morris v Board of Estimate, 647 

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

tormed, with one of its objectives for Charter revis ion being to 

build greater participation in policy debates and decisions (see, 
  

Final Report of the New York City Charter Revision Commission - he 

  

2 

The authority of the Board to approve or consent to terms of 
lenses 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 § £253 (1); Not- 
for-Profit Corporation Lew § 1411; Racing, Pari-Mutusl Wagering & 
Breeding Law §§ 607(1), (3) 

 



  

January 1989-November 1989 Dp 4). Following the enactment on 
- 

November 7, 1989 at the general election of swsesping Charter 

transfer of a health facility or real property Db; ==C remains "on 

the books" (McXinnzy's Uncons Laws § 7385 {b}) and the Legislature 

has no: taken the opportunity to amend it. However, the failure of 

that it prefers: za sCafutory construction 'geverin: the consent 

portion’ as obsolete. In fact, the dcontrary iz Lrue. The 

Legislature, «by not “having zcted to eliminate the "board of 

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

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powar to devolve upon tne body, agency or of 

revised Charter to succeed to the powers of the Boeri of Estimate, 

The ‘Charter itself contemplates this result. 

Section 1152(e), adopted by the voters ir 1383, as part 

of the Charter revisions, in relevant part, provides: 

nthe powsrs and responsibilities of ths 

board of € te, get Forth in zn 

ha 

 



  

628 

  

  

shzll devolve upon the bodv, agencv or 

Officer of +hae citv charged wich 

comparable na 
  

and related ovowers a 

= responsibilities under this charte 

consistent with the purposes and intent 

of this charter... ..? 

(Emphasis supplied.) 

  

ral — i - =~ — —- —_ ~r ER a plac dag A a BY applying such savings" provision to The HED Reb the 

-— - - = h YT oe -~ —~ "tT i —~ original dntent of the lLegislaturas (to allow a cnesck on HiC's power 

-— ~ — vn ~~ - } —- -— 3 ne ~~ = > - - -— *o lease or transfer & health facility or. real propsrty) may be 

accomplished (see, McKinnev's Statutes §§ 351-382, § 357; see glso, 
    

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eo} Matter of New York Pub. Interes:- Regs 
  

  

  
  

£17, 622) Moreover, none of the parties involved herein claim 

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

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

the Board of Estimate in this regard 

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

N 

the, Council ‘end the Mayor. They point to the faci that the powers 

 



      

cof ‘the Charter "{“*ULURP"), and the Mayor, 

ribeca Communi 
  

  

  

  

exclusively pursuant 

no. role in the 

ssocliated with propsriy  



Defendants further argue thzt the Council 

review role under the consent power of § 7385(6) becauss ULURP,: as ane 

03 
  

ro, howesvar 

- 

bacausz unlike thes statu 

de disposition 
  

  
    

if this court was fo adopt defendants! 

have to hold that the HH 

 



including the HHC subleass, 

Section 384(=s) 

  

  

  

  

  

law unless such power is 

"as may be 

review sales, 

the City is 'besstiows 

ULURPD was enscted in 

ocal community involvement 1 

and professional review of 

accountable body, the City's Board of Estimate.  



  

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

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

Charter Revision Commission - Januza 1S889-November 1%:%, po 7 and 

18 respectively) it" noted thet "(tlhe basic change nade by the 

— Yt a -— = IS = = 1 = — 3 = ~~ =~ 3 as the final decision maker in land use,” and that "because raelal 

- ~~ _- a —- ~ > $= — - « -~ ~ ~ oa on - - and language minority croups will enjoy greaterirveprezentztion on 

ni — 

ULURP, 2&8 ravised, "in pertinent part, providss: 

8: 187-C Uniform land use revie 

procedure a Except as otherwiss 
a ; 

  

y any pers ag 3% : 
gpprovels, contracts, consents, Permits 

or authorization thereof, respecting ths 

use, Gevelopment or improvement of rezl 

properly subject ‘to city "regulation 

shall be reviewed pursuant to a uniforr 

review procedure” in ‘the following 

categories *%** (10) Sale, lease (othe: 

than the lease of office = space), 

exchange, or other disposition of the 

real property of the city.’ {Emphasis 
supplied) 

  

‘person’ is not specifically definsd in § 1%7-¢, or in the New York 

 



  

    Ee ® Cn ER al BR = } 

633 

City Administrative Code concerning land use topics. Nevertheless, 

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

  

s = 

29 ‘8 public bensfit corporation, ray be considered sz "person® for 

Ls for the rwezning of “disposition, Lhe term 18 not 

defined by statute, charter or code provision Tris court must 

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

disposing, transferring to the care or possession of another Tne 

parting with, or alienation of, or giving up properiy.' (Black's 

Law Dictionary 471 [eth ed. 1990})) By z2pplying this cefinition, 

zs well as service Cuties from HHC to PHS-NY. 

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

Council, it cannot actually apply to the CIH subleases bscause ULURP 

"¥%* a local governmen 

18 

 



  

® 1 ¢ 

Tne 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, Levv v Citv Comm. on           

Human Richis, 85 NY2C 740). ilgsin, it is the IDC Act irgael® which 

  

  

Defendants alternatively contend ULURP is inapplicable 

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

by the City, but instead, az disposition by -HHC They argue that 

under traditionzl notions of property law, & lessees 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 § 

THE ULTR2E VIPFES ISSUE 
  

  

19 

 



  

The primary issue presented is whether ths subleasing 

of CIH, along with 'the wholegale turnover of HEC's: service 

obligations, constitutes an ultrz vires act in violation of tne 
  

FHC Ect 

- NE ay - NY re - a - es a gly re RE - > 

As Mayor Lindsay pledged to the State Lecislature, in 

3 —~ p= we To n ~ < =~ 

hig letter to Governor Nzlson A. Rocxeieller, 

  

      

  

    

  

  

  

  

  

of the hospital business Rather it is 

establishing a mechanism to aid rin 

better managing that business for tne 

penefit not only of ths public served DY 

the hospitals but the entire City heaith 

service system The mupnicipsl end 

health care svstem will continue fo OF 

the Citv's responsibilitv, governed DY 

policies. determined bv the City 

Council, the Bosrd of Estimate. Lhe 
  

  

consultation with the citizens of Kew 

York City.’ 

(Letter of Mayor John V. Linaszy, 

Governor's Bill Jacket, L 182%, 

ch. 1036.) 

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

pledges and created HC, a public benefit cowporsilion, to carry 

out the City's constitutional responsibilities. 

HHC, by contracting with PHS-NY by means 

 



636 

Legislature's approval. Although the HHC Act conceiedly allows 

for provision of ealth and medical services "by agreeme 

vate or public corporatio 

~~ 
- rLuOuUS resulr 

  
Research Group, 
  

83 NY2d 277, [City officials cannot 

purpose by eviscerating an 

    
MY24 230,234 ["{a) legislative act of 

is required to modify a & Statute, and "nothing les 

. 

Tnis situation is inherently different from one in which 

  

   



  

  

ckson v New York Citv E=alth & Eoso, 5
 

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 I Corp... 2419 F Supp   

  
  

BOS; B32e¢ also, Brvan v Koch, 627 Fa 612, affe £92 ¥ Supp 21327, 

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

Saving costs or improving delivery of care Por iniescn'of those 

- — Fe ga, TRUER a yp — - = -e -— vn Sy - —— _ l= —~ 
instances, HEC maintains the reins of control znd Cecis_Onrmaking, 

Put another way, HEC cannot put itself out ¢f business 

in relation stor "CIE: by, subleasing 2ll of ite szssets and 

transferring all of its duties, without the consent of the 

Directors,” could divest itself of its zszets and propzrty without 

permission of its shareholders (gee, Business Corporztion Law § 

Davie 2ircrafe Prods. Col, 133 ED24 770,   

908 [a]}; Dukes v 

evidence presented on these motions makes 

that defendants seek to privatize all the HHC hospitzls. 

Chat ‘the “turning over” «of also . obvious 

ultimate goal 

22 

 



  

» ¢ 
638 

or the private sector.? AL: the: least, defendants .ssak to 

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

¥ole), for: an examination of the sublezse terms reveals such 

. ° 3 
I event PES-NY wishes to discontinue a cores sexvice, by which an 

arbitration ‘award can become binding on HHC Tne Legislature 

cannot possibly have intended or expected that by granting HHC the 

er into agreements or leases, HHC would b= put ‘into H
N
 

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's Board of Directors essentially s:irippzd the 

  

  

  

3 

"Mayor Rudolph Giuliani recently announced plans Zo sell 
Coney Island Hospital and two other Queens hospitals into private 
-hands. Giuliani said hs was worried about rising hezith-care 
costs and deficits ed hospitals, and wants to get ths at city-owne 

l business." 

S5, 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-czre 
hospitels. | That will not be the case. It is going to nappen, 
it's going to change That change is either going to t= forced 
on us or we'rs going to guides it.” 

(National Public Radio, Interview with Mayor Giuliani, Morning 
Edition, September 5, 1895.) 

 



i. $ Ta 
639 

  

AE he Foi ’ corporation of its control over the carrying out of its duties 

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The history of th 

. > sy = = 3 3 be hd - . - was borne out of the City's nsed to salvage a hospital system that 

was floundering If HHC likewise is confronted with =a system 

nearly drowning in red ink, defendants’ response cannsi bz simply 

to jump ship They must go back to ths Legislature, znd seek an 

amendment Or repeal of tha nuc Act, or cevise some o:ir:zr plan for 

  

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

judgment by. the Counciliipleintiffs in Action No. 3.208 by the 

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

declaring that. ‘the sublessing of ;HHC facilitites recoives the 

 



* h J 
640 

  

declaring that the sublease of CIE to PHS-NY constitutes an ultra 

  

vires act and violates thes HHC Act. 

Settle ordasrs. 

  
25