City Council Plaintiff's Reply Memo of Law of Defendants’ Supplemental Affirmation

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SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF QUEENS 

THE COUNCIL OF THE CITY OF NEW YORK, 

PETER F. VALLONE, SPEAKER OF THE + Index No.: 004897/96 

COUNCIL, and ENOCH H. WILLIAMS, CHAIR OF: 

THE COUNCIL HEALTH COMMITTEE, 

Plaintiffs, 

-against- 

RUDOLPE W. GIULIANI, THE MAYOR OF THE, 

CITY OF NEW YORK, NEW YORK CITY HEALTH 

AND HOSPITALS CORPORATION, and NEW YORK 

CITY ECONOMIC DEVELOPMENT CORPORATION 

Defendants. 

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - 

QUEENS COALITION, an unincorporated . Index No. 10763/96 

association, by its member WILLIAM 

MALLOY, CAMPAIGN TO SAVE OUR PUBLIC 

HOSPITALS - CONEY ISLAND HOSPITAL 

COALITION, an unincorporated assocC.- 

ation, by its member PHILIP R. METLING, 

ANNE YELLIN, and MARILYN MOSSOP, 

Plaintiffs, 

-against- 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, NEW YORK CITY HEALTH 

AND HOSPITALS CORPORATION, and NEW 

YORK CITY ECONOMIC DEVELOPMENT 

CORPORATION, 

Defendants. 

REPLY MEMORANDUM OF LAW OF CITY COUNCIL PLAINTIFFS 

TO DEFENDANTS’ SUPPLEMENTAL AFFIRMATION 
  

This Memorandum is submitted in response to the Court's 

direction, pursuant to the telephone conference call on November 

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12, 1996, that the parties submit further briefing to the Court on 

  

the issue of whether the Mayor's proposed dismantling of the HHC 

hospital system is an ultra vireg act in derogation of the HHC Act 

(G.L.. § 7381, etseq.,) (McKinney 1979) (the "Act") because only the 

State Legislature has the power to amend the Act to accomplish such 

‘a diminution of the statutory purposes of the Act and the statutory 

obligations of the HHC to operate the municipal hospital system. 

The Supplemental Affirmation of Daniel Turbow, dated November 

19, 1996 (the "Turxbow Affirmation") is a futile, transparent 

attempt to rationalize the Mayor's attempt tO dismantle the HHC. 

The Privatization program is Ultra Vires Because it 

Abrogates the Statutory Purposes and Objectives of the HHC Act 
  

Mayor Lindsay pledged to the State Legislature, in urging 

adoption of the HHC Act, that "the City is not getting out of the 

hospital business [and] the municipal and health care syste will 

continue to be the City’s responsibility governed by policies 

determined by the City Council, the Board of Estimate, the Mayor, 

and the Health Services Administration on behalf of and in 

consultation with the citizens of New York City." (Exhibit A to 

Affidavit of Richard M. Weinberg, sworn to August 23, 1896). In 

reliance on that pledge, the Legislature passed the HHC Act, and 

gpecifically provided in the Act’s "Declaration of Policy and 

Statement of Purpose" (HHC Act § 2; U.L. §7382) that the HHC was 

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created as a Public Benefit Corporation to "provide ... health and 

medical services and health facilities . . . for the benefit of the 

people of the state of New York and of the city of New York, [to 

fulfill] a state, city and public purpose." That ssction also 

provides that nthe exercise by [the HHC] of the functions, powers 

and duties as hereinafter provided constitutes the performance of 

an essential public and governmental function." 

Mr. Turbow’s claim that the Mayor is abiding by Mayor 

Lindsay’s commitment and the State Legislature’s intent, but 

performing the City’s obligation in a different way (Turbow 

Affirmation, § 3), is utterly disingenuous and beside the point. 

The City’s obligation under the HHC Act is to provide health care 

through HHC, and not merely to provide health care by any means the 

Mayor decides to employ, including wholesale contracting out of the 

hogpital system, i.e., privatization. The Mayor's program is to 

get the City out of the hospital business,’ and, surely, to 

  

Mayor Rudolph Giuliani recently announced 

plans to sell Coney Island Hospital and two 

other Queens hospitals into private hands. 

Giuliani said he was worried about rising 

health-care costs and deficits at city-owned 

hospitals, and wants to get the city out of 

the hospital business. 
  

(Newsday, March 5, 1995, emphasis supplied). The structuring of . 

the transaction as a lease rather than a sale is a matter of 

form, not substance, given the 198 year term of the lease. As 

Mayor Giuliani told the press: 

(continued...) 

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privatize the hospitals means getting out of the hospital business. 

once the hospitals are disposed of, either by sale or long-term 

lease, the HHC would become an empty shell, stripped it of its 

legislative purposes and Spligaiiony. This frustration of the 

purposes and obligations of the HHC to the people of the City is an 

act that only the State legislature is empowered to accomplish. See 

Matter of Gallagher v. Regan, 42 NY2d 230, 234, 397 NYS2d 714 1977 (" [A] 

legislative act of equal dignity and import" is required to modify 

2 statute, and "nothing less than another statute will suffice."); 

Matter of NYPIRG wv. Dinkins, 83 NY2d 377, 610 NYs2d 932, 936 (1994) (City 

officials cannot frustrate a legislative purpose by eviscerating an 

agency or office created by statute for a public purpose). 

The sublease is also ultra vireg because it goes so far as to 

restrict the ability of the State Legislature to amend or repeal 

the HHC Act. For example, Section 7 of the Act (U.L. § 7387) 

provides for the manner in which the City is to lease the City 

hospitals to the HEC. This section provides that the term of the 

  

.continued) 
Twenty years from now the mayor of New York 

City will not be standing here with New York 

City owning 11 acute-care hospitals. That 

will not be the case. It is going to happen, 

it’s going to change. That change is either 

going to be foxced on us or we’re going to 

guide it. | 

(National Public Radio, Interview with Mayor Giuliani, Morning Edition, 

September 5, 1995.) 

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city’s lease to the HHC for its corporate purposes shall be vfor 80 

long as [the HHC] shall be in existence. . . ." (The lease of the 

hospitals from the City to the HHC incorporates the statutory 

Latizuage.) i OnLy the Cediatative can determine how long the HHC may 

remain in existence. However, the sublease purports to sublet CIH 

to PHS for an initial term of 399 years, and for an optional renewal 

term of another 99 years, for a total of 198 years, during which 

the HHC has certain monitoring and oversight rights and 

responsibilities. Nowhere 1is the sublease made subject to the 

HEC's continued statutory existence. 

The Mayor and the HHC are Without Statutory 

Authority to Digmantle the Hogpital System 
  

My. Turbow’s assertion that the HHC has power to dispose of 

all of its health facilities in furtherance of its corporate 

purposes (Turbow Affirmation § 6) is also without merit. This is 

not a situation in which a particular hospital property is no 

longer needed or usable as a hospital (U.L. § 7387(4)), or a 

situation in which a portion or particular service of a health 

facility is being subcontracted or leased for operation by another 

corporation (U.L. § 7385(8)). This is a situation in which Coney 

Island and the other HHC-operated hospitals are concededly needed 

for the health and welfare of the City’s sdsiddned, but the Mayor 

proposes the Coney Island disposition as the first step in 

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dismantling the entire hospital system and to evade the express 

purpose of the HHC Act. such action that 1s inconsistent with 

HHC's statutory and corporate purposes as set forth in the Act, 

which is for the HHC to operate hospitals, not to spin them Off in 

derogation of its legislatively-conferred duties. 

The Sublease Falls Far Short of HHC’S Statutory 

Obligation To Provide Adequate Care for the Indigent 
  

Mr. Turbow’s analysis of the indigent care provisions of the 

sublease (Turbow Affirmation, page 3) is also disingenuous. Mr. 

Turbow attempts to give the impression that these provisions are 

expansive. The reality 1is otherwise. In fact, they are highly 

restricted. 

A prime example is the situation in which the City concludes 

that the well-being of patients required a substantial increase in 

"core services." In that case, the City could not require the 

subtenant to provide them. (Sublease (Ex. B to Vol. II of Turbow 

Affirmation), § 28.01) With respect to so-called "non-core 

services," if the subtenant decides to discontinue them, all it has 

to do is to consult with the landlord. 

When PHS's funding of health services to the indigent reaches 

a "Trigger Point," PHS has no further obligation to fund servites 

to the indigent: 

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Tenant shall have the right to manage Access to health 

care in such manner as it may deem appropriate so as to 

avoid Excess Incurrence in the future. Nothing herein 

shall be deemed to relieve Tenant of its obligation in 

any year to provide Indigent Care up to the Trigger Point 

and nothing herein shall give Landlord the right to 

require the Tenant to provide Indigent Care in excess of 

such amount. 

(Sublease, § 28.01 (c)) 

Mr. Turbow concedes that the ngublease does not address the 

jssue of what happens if costs [of providing for the indigent] 

exceed the trigger point indefinitely" (Turbow Affirmation, p. 3). 

As the law now stands, the obligation of the City to provide 

indigent care is not subject to any "Trigger Point" or any other 

limitation. The delegation and abandonment of the HHC’s 

responsibility and accountability under the HHC Act is a direct 

violation of the Act’s statutory purposes and the HHC'’s obligations 

under the HHC Act. 

Further, the spinning off of the HHC hospitals under such 

restricted terms is in derogation of the city’s obligation under 

the State Constitution to provide for health of the indigent. In 

addition to abrogating the statutory purposes of the HHC Act, the 

Mayor's attempt to slough off and reduce the obligation to provide 

medical care for the indigent violates Article XVII of the New York 

atate Constitution, which provides, in relevant part: 

§ 3 The protection and promoticn of the health of 

the inhabitants of the state are matters of 

public concern and provision therefor shall be 

made by the state ... as the legislature shall 
  

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from time to time determipe. 
  

The care and treatment of persons suffering 

from mental disorder or defect and the 

protection of the mental health of the 

inhabitants of the state may be provided by 

state and local authorities and in such manner 

as the legislature way from time to time 

determine. 
  

pursuant to these Constitutional requirements, the State 

Legislature "determined" that the HHC operate the municipal 

hospital system to provide general chronic, ambulatory and skilled 

nursing care to residents of the City, particularly those who could 

not otherwise afford hospital services. The HHC is a public 

benefit corporation created by the State Legislature to fulfill the 

State’s Constitutional obligation (HHC Act, § 1, U.L. 8,2) to 

operate the largest municipal hospital system in the United States, 

second in size to the U.S. Department of Veteran Affairs as a 

governmental health provider. 

It is important that the Court understand what is meant by the 

"indigent." The indigent consist of the "working poor," persons 

who (i) are not elderly (and thus eligible for Medicare); (ii) are 

not eligible for charity care; (1ii) are not eligible for Medicaid, 

or are persons who are not eligible in any other governmental or 

private medical, hospital insurance or other benefit plan; and (iv) 

are not financially able to afford to pay for hospital services. 

(See, e.g., Sublease §28.02(d) (2)) The indigent consist of 

thousands, perhaps a million workers (bodega employees, restaurant 

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deliverymen, and in marginal employment situations), and their 

families, who constitute the uninsured or underinsured of the City. 

Hospitals outside the HHC system are required by State law to treat 

uninsured patients only when there is an emergency need for 

immediate hospitalization. (Public Health Law § 2805(b)). 

The indigent are the primary group underserved by regular 

hospitals because they lack any medical coverage, and cannot afford 

medical care. In New York City, their primary safety net consists 

of the HHC hospitals. This safety net is a primary purpose of the 

HHC under the Act, which the Mayor now seeks to delegate and limit 

without approval by the State Legislature. 

The Sublease is a Disposition 

of the Property of the City 
  

The defendants’ oft-asserted pretext that the transaction with 

PHS is a sublease by HHC and not a disposition of real property by 

the City under Section 384 of the city Charter is proven false by 

the terms of the sublease. The sublease does not contain the usual 

provision found in a sublease stating that it the sublease 1s 

subject to the terms of the overlease. (It is hornbook law that a 

subtenant may not be granted any greater rights than those 

possessed by the tenant under his own lease, -1 Rasch New York Landlord 

and Tenant, §9.60.) Instead, the sublease contains the following 

"Whereas" clause: 

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the Mayor of the City of New York, pursuant to ju...) 8 

7385.6, has authorized [HHC] to gublease the Premises to 

Tenant on the terms and conditions of this Sublease, 

pursuant to Mayoral authorization. 

(Sublease, page 1) This provision pelies the defendants’ assertion 

that Section 384 of the City Charter is not implicated here, since 

Section 384 is the only conceivable source for the Mayor's 

nauthorization." In fact, even without amendment of the City’s 

lease of the hospitals to the HHC (that the defendants attempt to 

avoid through the proposed Mayoral authorization), the sublease is 

in actuality a disposition of the real property of the City 

pursuant to Section 384 of the City Charter, because the 

astronomical combined term of the sublease and option to renew (198 

years) truly amounts to a disposition of the property. 

If the Disposition of the Hospitals is 

Not Ultra Vires, The Council Must Play 

a Role In Any Proposed Digposition 
  

Finally, even if the disposition of CIE or any other HHC 

facility is found not to be ultya vireg, the Council must play a 

role in such disposition. To be sure, the Council does not posit 

that its role under the HHC Act is identical or coterminous with 

its powers under ULURP. To the contrary, the Council avers that 

the land use powers formerly held by the Board of Estimate 

  (including but pot limited to those set forth in ULURP) devolved to 

the Council. Contrary to Mr. Turbow's assertions, the adoption of 

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ULURP was not intended to give the Board of Estimate land use 

powers that it did not already possess (because those powers did 

exist before ULURP), but to establish more definite procedures and 

time frames in order to expedite the process leading up to ultimate 

land use review by the Board of Estimate (now the City Council). 

Indeed, Charter Section 1152 guarantees that the Council play a 

role in the disposition of real property of the City as the 

successor in interest to the Board of Estimate’s land use powers, 

powers that existed at the time of the passage of the HHC Act and 

ULURP. The Mayor -- not the Council -- takes the position that the 

Council's role under the HHC Act is confined to ULURP. Neither the 

HHC Act nor the City Charter set forth any such restriction. 

Accordingly, Mr. Turbow’s assertion that ULURP was not yet enacted 

at the time of adoption of the HHC Act misstates the land use 

powers of the Board of Estimate that existed at the time the Act 

was passed, powers that indeed were reflected in the requirement of 

the Act that the Board of Estimate (now the City Council) must 

approve any sale or lease of HHC hospitals. | 

CONCLUSION 

For the reasons stated above, the City Council plaintiffs’ 

motion for summary judgment should be granted, -and the defendants’ 

motion for summary judgment should be denied. 

Dated: New York, New York 

December 1, 1896 

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Respectfully submitted, 

TENZER GREENBLATT LLP 

The Chrysler Building 

405 Lexington Avenue 

New York, New York 10174 

(212) 885-5000 

EDWARD L. SADOWSKY 

IRA A. FINKELSTEIN 

Of Counsel 

-and- 

RICHARD M. WEINBERG 

General Counsel 

GAIL ZWEIG 

Of Counsel 

City Council of the City 

of New York 

75 Park Place 

New York, New York 10007 

(212) 788-7000/7001 

" Attorneys for Plaintiffs in 

No. 004898/96 

“12 

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