Affirmation Supporting Cross-Motion Opposing Appellants' Request for Leave and Seeking to Appeal Dismissal of Respondents' Causes of Action
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October 14, 1997

42 pages
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Case Files, Campaign to Save our Public Hospitals v. Giuliani Hardbacks. Affirmation Supporting Cross-Motion Opposing Appellants' Request for Leave and Seeking to Appeal Dismissal of Respondents' Causes of Action, 1997. 6f11c1a0-6835-f011-8c4e-002248226c06. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/1707e482-4127-44b9-b2bd-5d983382963a/affirmation-supporting-cross-motion-opposing-appellants-request-for-leave-and-seeking-to-appeal-dismissal-of-respondents-causes-of-action. Accessed July 26, 2025.
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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) 75 ct mn Ww 4 4 H e 0 i 3 O in 'g ] | ct N) o e n f 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 a NV 0. oO ‘O o Tr -" § 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 J 0p ] go in i M = n ih 53 4% = I = 3! A} = Ie M pe (1 0 ~~ cr M 3, [4) ) ~ ~ ( cr 3 ( is 0 H h 3 ! [8] r (@] 1) a d = - ™ wn 3 @) x 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 -— ys ~~ sch second = (b F h MD i Q, ) § or mn 0 (D i < a (b (d ,s A] wn (D 0 O 43 Q, fv D 3 QQ (D £Y , 3) 3 wn p- 3 (b [a EE O (D CAN aa ——— —~ 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 0, S o N (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 th = 0) (¢0 ) = , (b h mn I Q NY rr (MD QQ , 1 ct 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, IN 0 -y 0) 1 5 0 ce (@] < co =) £43 = ln fo) w = d N) 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 ND 0, wn 0 ~) 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 (e } 2 cr + 0 MD = cr '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 (b 0 H m 0 cr = 0 = 0) r ’ od (® ] = e 0n | 4% 0 hf ) 4 < (Db i 3 i CY —- haw a 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