Appellants' Brief

    SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - 
QUEENS COALITION, an unincorporated 
association, by its member WILLIAM 
MALLOY, CAMPAIGN TO SAVE OUR PUBLIC 
HOSPITALS - CONEY ISLAND HOSPITAL 
COALITION, an unincorporated association, 
by its member PHILIP R. METLING, ANNE 
YELLIN, and MARILYN MOSSOP, : NOTICE OF CROSS- 

MOTION FOR SUMMARY 

JUDGMENT 
  

Plaintiffs, INDEX NO. 10763/96 

- 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. 

PLEASE TAKE NOTICE, that upon the annexed 

affidavit of DAVID R. JONES, dated August 22, 1996, and RACHEL D. 

GODSIL, ESQ., dated August 23, 1996, and upon all of the 

pleadings and proceedings heretofore had herein, the undersigned 

will move this Court at IAS Part 5, at the Courthouse located at 

88-11 Sutrphin Boulevard, in the Borough of Queens, City and State 

of New York, on the 20th day of September, 1996, at 9:30 A.M. , OY 

as soon thereafter as counsel may be heard, for an order (i) 

pursuant to CPLR § 3212, granting summary judgment in plaintiffs’  



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favor and (ii) granting such other and further relief as this 

Court may deem just and proper. 

Dated: New York, New York 

August 23, 1996 

Kenneth Kimerling 
Puerto Rican Legal Defense & 
Education Fund, Inc. 

+98 Hudson St ., 14th Floor 

New York, New York 10013 

(212) 219-3360 

Elaine R. Jones 
Director-Counsel 
Norman Chachkin 
Marianne L. Engelman Lado 
Rachel D. Godsil 
NAACP Legal Defense & 
Educational Fund, Inc. 
99 Hudson St., 16th Floor 

New York, New York 10013 

(212) 219-1900 

Barbara Olshansky 
Center For Constitutional 
Rights 

666 Broadway, 7th Floor 

New York, New York 10012 

(212) 664-6464 

Attorneys for Plaintiffs 

TO: Paul A. Crotty 

Corporation Counsel of the 
City of New York 

Attorney for Defendants 
100 Church Street 
New York, New York 10007 

(212) 788-0412 
By: Daniel Turbow 

Assistant Corporation Counsel 

Edward Sadowsky, Esq. 

Tenzer Greenblatt LLP 
Attorneys for City Council 
The Chrysler Building 
405 Lexington Avenue 
New York, New York 10174 

(212) 855-5000 

 



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SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 

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

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE AFFIDAVIT OF 
CITY OF NEW YORK, NEW YORK CITY HEALTH DAVID R. JONES 

  

AND HOSPITALS CORPORATION, and NEW 
YORK CITY ECONOMIC DEVELOPMENT 
CORPORATION, 

Defendants. 

STATE OF NEW YORK ) 

COUNTY OF NEW YORK Pe 

David R. Jones, being duly sworn, deposes and says: 

1. I am President and Chief Executive Officer of the 

Community Service Society and serve on the Board of the New 

York City Health and Hospitals Corporation ("HHC"). Pursuant 

to the HHC Act,’ HHC is administered by the board of 

directors on which I serve. I have served on the HHC Board 

since 1993. 1 submit this affidavit in support of 

plaintiffs’ opposition to defendants’ motion for an order 

granting summary judgment in their favor. The facts set 

forth below are within my personal knowledge or are based 

  

' Unconsolidated Laws § 7384 (McKinneys 1996) . 

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upon information obtained from officials and employees of the 

City, HHC, and the New York City Economic Development 

Corporation ("EDC"), books and records of these entities, or 

other public documents. 

INTRODUCTION 

2. In this suit, plaintiffs seek to ensure that the 

defendants undertake the legally mandated public comment and 

review as they proceed with the disposition of the Elmhurst 

Hospital Center, Queens Hospital Center, and Coney Island 

Hospital Center (the "target hospitals"). 

i The Uniform Land Use Review Procedure ("ULURP") is 

a procedure mandated by the New York City Charter for 

ensuring community, borough, and City Council participation 

in the sale, lease or other disposition of city property. 

New York City Charter § 197-c. 

4. Defendants claim that ULURP is not applicable to 

the disposition of the target hospitals because HHC, and not 

the City, is subleasing the target hospitals. I submit this 

affidavit to place into the record the facts to show that 

defendants are wrong. 

5. What is at issue in this case is the Mayor’s plan 

to lease the target hospitals to a private entity. The Mayor 

of the City of New York -- not HHC -- decided to privatize 

the public hospitals. The Mayor chose ‘to: put the 

privatization plan into the hands of the New York City 

Economic Development Corporation. The Mayor decided that the 

 



  

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first three hospitals to be "sold" are the target hospitals. 

The Board of HHC has never voted upon, reviewed or formally 

discussed whether to privatize the public hospitals or 

whether to dispose of the target hospitals specifically. 

THE HEALTH AND HOSPITALS CORPORATION 

6. The New York State Constitution mandates the State 

and its political subdivisions to provide aid, care, and 

support for the needy and to provide for the protection of 

the health of the inhabitants of the State and the City of 

New York. New York State Constitution Article XVII, Section 

3 54. 

7. in order to fulfill this constitutional mandate to 

provide health care for the poor, on May 26, 1969, the New 

York State Legislature enacted the HHC Act, Unconsolidated 

Laws §§ 7381 et seq., establishing the Health and Hospitals 

Corporation. 

8. HHC was created at the request of New York City to 

provide comprehensive physical and mental health care to the 

ill and infirm of the City, and was specifically charged with 

ensuring the provision of "high quality, dignified" care to 

"those who can least afford such services." U.L. § 7382. 

9. In order to effect the purposes of the Act to 

provide such care, HHC’s creation was intended to overcome 

the "myriad of complex and often deleterious constraints" 

which inhibited the provision of care by the City 

government's operation of the municipal hospital system. 

 



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U.L. §:7382. 

10. However, many of the powers granted to HHC were 

constrained, and in some instances, subject to direct 

oversight by the City. See U.L.: §8 7385(19); 7386{1){(a), 

(2) (Db), (7); 7390(5)-(8). Among these were 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 . . w. ..°" U.L. “8 “738546: This 

authority was contingent upon approval by the then-existing 

New York City Board of Estimate. U.L. § 7385(6). 

11. On July 1, 1970, the City and HHC entered into an 

agreement ("Operating Agreement") under which HHC agreed to 

assume responsibility for maintaining and operating the 

City’s public hospitals. Por ics part, the City agreed to 

lease its hospital facilities to HHC for an annual rent of 

$1, for a term coexistent with the life of HHC. A copy of 

the Operating Agreement is annexed hereto as Exhibit 1. 

12. Among the eleven hospitals operated by HHC, the 

target hospitals are intended for immediate disposition by 

the Mayor as part of his privatization plan. 

13.% The public ® hospitals, including the target 

hospitals, provide a disproportionate amount of care for 

those who are indigent or uninsured. Private hospitals are 

just that -- "private." Under state law, private hospitals 

generally may turn away the uninsured and underinsured except 

in cases of emergency. Public Health Law § 2805-b.  



  

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14. Queens and Elmhurst Hospital Centers are the only 

public acute care facilities in Queens. If they are 

privatized, there will be no facility in Queens that is 

required under state law to provide non-emergent care to the 

indigent or uninsured. Similarly, Coney Island Hospital is 

the largest facility in South Brooklyn, serving a population 

of 750,000. The privatization of this targeted hospital may 

result in the lack of care for many within its catchment area 

unable to afford private care. 

15. Queens Hospital Center has existing plans for 

renovation and reconstruction. The "sale" of the hospital to 

a private entity could affect the plans for and completion of 

those much needed repairs and modernization. 

THE MAYOR'S PRIVATIZATION PLAN 

A. The Privatization Initiative 

16. As set forth below, in 1994, Mayor decided to 

privatize the public hospitals. The HHC Board was not 

consulted as to this decision. 

17. The Mayor has yet to forward evidence that 

privatizing HHC facilities would save the City money. The 

Mayor, not the HHC Board, requested from J.P. Morgan a 

feazgibility study of privatization. Significantly, in ics 

report to the City regarding the financial feasibility of 

privatizing the target hospitals, J.P. Morgan specifically 

did not consider the costs or benefits to the delivery of 

services to the indigent. A copy of the Report to The City of New 

 



  

6 Fa - f 

York Concerning the Privatization of Coney Island Hospital, Elmhurst Hospital Center, 

Queens Hospital Center [hereinafter J.P. Morgan Report] at 30, 

annexed hereto as Exhibit 2 ("The financial benefits to the 

City of New York, of course, also depend upon factors not 

considered in this analysis, such as conditions of sale 

relating to care of the indigent, provisions of services to 

the City and the like.") 

18. Nor did the Mayor provide evidence that the 

provision of care will be superior if the HHC hospitals are 

privatized. Indeed, the medical care at HHC hospitals is 

already provided by private medical centers or medical 

corporations; the Queens Hospital Center and Elmhurst 

Hospital have affiliation contracts with Mount Sinai Medical 

School and Coney Island Hospital has worked in partnership 

with University Group Medical Associates. P.C. ("UGMA"), a 

medical group that employs more than 300 physicians. 

19. From the inception of his extensive privatization 

program, the Mayor has exercised total control over the 

entire process. While on some occasions, the Mayor’s office, 

often through Maria Mitchell, Special Advisor to the Mayor 

for Health Policy and Chairperson of the HHC Board, has 

briefed the HHC Board about City policies and plans, the 

Mayor has never consulted the Board. Indeed, the HHC Board 

has never voted to proceed with privatization. This affiant 

asserts that it is the exclusive fiduciary responsibility of 

the HHC Board to determine the fate of the HHC facilities. 

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The Mayor’s actions to date do not respect this legislatively 

mandated authority. 

20. In 1994, it is my recollection that the Mayor's 

advisors circulated proposals to transfer control of Lincoln, 

North Central Bronx, Elmhurst, and Queens to their respective 

voluntary affiliates and Coney. Island into an independent 

voluntary hospital. The HHC Board was not presented with 

these proposals. 

21. The Mayor chose EDC to manage the privatization 

initiative and, in summer of 1994, EDC engaged J.P. Morgan to 

consider the sale of one or more of the HHC hospitals and to 

issue a report. The HHC Board was neither consulted, nor 

were public discussions held, nor a vote ever taken on these 

actions. 

B. Disposition of the Target Hospitals 

22. In February of 1995, prior to the issuance of the 

J.P. Morgan Report, the Mayor publicly announced that the 

City would proceed with his plan to privatize the target 

hospitals; again the Board was not consulted regarding this 

decision and did not give its approval. In this connection, 

and without consultation with or approval from the Board, the 

Mayor created and alone appointed an "Advisory Panel" to 

study the sale of the Target Hospitals. Maria Mitchell, the 

Special Advisor to the Mayor for Health Policy and HHC Chair, 

Lo serve as Executive Director of the Mayoral Advisory Panel. 

I question how an Advisory Panel could supplant the vote of 

 



  

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the HHC Board. Moreover, despite my protestations at HHC 

Board meetings to have the Advisory Panel make a presentation 

to the HHC Board, no such presentations have taken place. 

23. The J.P. Morgan Report was issued in March of 1995. 

While the Report concluded that the target hospitals have 

desirable assets which will attract buyers, it did not 

consider the cost of providing care to the indigent. J.P. 

Morgan Report at 30, annexed hereto as Exhibit 2. 

24. Once again, the HHC Board was not given an 

opportunity to review or authorize the J.P. Morgan Report or 

any recommendations in it prior to its dissemination. The 

HHC Board only received a copy of the report after it was 

made public. 

25. Shortly after the issuance of the J.P. Morgan 

Report, in April of 1995, six members of the HHC Board, 

including myself, sent a letter to the Mayor protesting the 

inadequacy of the J.P. Morgan report as well as the entire 

privatization process. In the letter we also stated: 

We are further disappointed that the Board of Directors 
of HHC, as the designated governing body under state 
law, was not sought in this decision making. As members 
of the Board of Directors, we would be breaching our 
fiduciary duty to the institution, as well as our 
responsibility to the public, by allowing this decision 
process to move forward without asking that our concerns 
about this report be addressed and that the Board be 
informed, full participants in this process. 

26. At the HHC Board Meeting I attended held April 27, 

1995, Ms. Mitchell announced that "The J.P. Morgan report was 

a logical first step in a multi-tiered process which the City 

 



  

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required in order to determine whether privatization was in 

its financial interest, and if it was, then to determine how 

to proceed. The report analyzes the financial implications 

of the City’s ownership of Coney Island, Elmhurst, and Queens 

Hospitals, the anticipated interest by other organizations in 

taking over these facilities, and the financial ramifications 

of transferring those assets. From a strictly financial 

perspective, the ‘report. finds that privatization is 

overwhelmingly in the City’s interest." A copy of the April 

27 Meeting Minutes is annexed hereto as Exhibit 3. 

27. At the July 27, 1995 meeting, Ms. Mitchell reported 

that " [tlhe City’s Economic Development Corporation last 

Friday announced the selection of J.P. Morgan as the 

financial advisor for the sale of Coney Island, Elmhurst and 

Queens Hospitals. . . . The EDC Board approved J.P. Morgan 

and selected them over a group of four other firms that had 

responded to the Request for Proposals. The firms were 

identified from a pool of thirty-six Firms that responded to 

EDC regarding the City’s privatization and financing 

initiatives." A copy of the July 27, 1995 Meeting Minutes is 

annexed hereto as Exhibit 4. 

28. At this meeting, Ms. Mitchell also notified us of 

the schedule of the sale/lease process for the target 

hospitals. She stated that the City would receive 

indications of interest from potential purchasers and select 

finalists by January 1996, complete due diligence and receive 

 



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binding offers by March 1996, and complete negotiations and 

finalize the sale by June 1996. Id. at 12. 

29. Responding to the objection of a Board Member that 

the Board had never discussed the issue of whether to sell 

any HHC facilities or the criteria to be employed in deciding 

which facilities, if any, to sell, Ms. Mitchell stated that 

the Administration had already made the decision to proceed 

with the sale, and had already selected the three facilities 

to be sold as well. Id. at ‘16-21. Ar no point in this 

meeting, did Ms. Mitchell request approval by the HHC Board 

of this Mayoral decision. 

30. When Board members raised objections to the fact 

that the Board had never had an opportunity to decide whether 

to dispose of the target hospitals, Ms. Mitchell stated that 

the "intent of the Administration to go forward with the sale of those three facilities 

has been clear for sometime and has been discussed previously 

before the Board." (emphasis added) Id. at 28. 

31... On August 1, 1995, EDC on behalf of the City 

entered into a Supplemental Agreement with J.P. Morgan to act 

as the financial advisor "with respect to the sale, transfer, 

conveyance or other disposition of, in one or a series of 

transactions (which may include or take the form of the 

execution of management contracts or leases in respect 

of) (each, a "Transaction" and, collectively, the 

"Transactions"), Coney Island Hospital, Elmhurst Hospital 

Center and Queens Hospital Center (each, a "Hospital" and, 

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collectively, the "Hospitals"). The Supplemental Agreement 

provides no role for the HHC Board, reserving, instead, for 

EDC the right to accept or reject, in its sole discretion, 

any proposed transaction. A copy of the Supplemental 

Agreement 1s annexed hereto as Exhibit 5. 

C Offering Memoranda and Letter of Intent 

32..0n October: 26, 1995, EDC issued two Offering 

Memoranda prepared by J.P. Morgan for the privatization of 

the target hospitals. According to the Memoranda, the 

privatization will be accomplished through long-term leases 

of the facilities to the health care providers. Neither the 

Offering Memoranda, nor any of the terms incorporated in them 

were submitted to the HHC Board for its advice, comment or 

approval. 

33.. They were distributed to a confidential list of 

potential purchasers to allow them to submit bids on the 

hospitals. As an HHC Board member, I never received nor 

approved the bidders list. 

34. BDC hag retained counsel: to handle the legal 

aspects of the disposition of the target hospitals. The HHC 

Board was never consulted, neither did we approve this 

decision. 

35. On June 26, 1996,:a letter of intent setting forth 

the framework for the sublease of Coney Island Hospital to 

Primary Health Systems, Inc. and PHS New York, Inc. was 

signed by Peter Powers, First Deputy Mayor of the City of New 

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York, Luls Marcos, for HHC, and Steven Volla for both PHS New 

York and Primary Health Systems, Inc. ("Letter of Intent"). 

A copy of the letter of intent is annexed hereto as Exhibit 

6 

36. The HHC Board has not been consulted, neither have 

we approved or delegated the .authority to Mr. Marcos to 

approve the Letter of Intent with PHS New York. 

37. The fact that a Letter of Intent was signed with 

PHS-New York, a for-profit entity, represents a significant 

departure from the current method of providing medical care 

in New York City. A for-profit entity has never operated a 

hospital in New York City. The HHC Board was not consulted, 

neither were public discussions held or a vote taken to allow 

a for-profit entity to operate a hospital in New York City. 

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AUG 22 ’S6 ‘@ NAACP LEGAL DEF FUND 212 226 7592 TO 92682849 P.83/83 

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CONCLUSION 

38. In sum, the Board of HHC has never been consulted, nor 

had public discussions about, nor voted upon the issue of the 

privatization of the hospitals in general, the disposition of the 

target hospitals, or any steps in between. Therefore, it is 

evident that it is the Mayor, and not HHC, who is undertaking the 

disposition of the target hospitals. 

Dated: New York, New York 

August 22, 1996 

TLE 
TTR ose T— 
  

Sworn to before me this 

22nd day of August, 1996. 

Na ic Se 

NOTARY HUBLIC 
  

  

JONATHAN FELDMAN 
Notary Public, State of New York 

No. 02FE5035948 
Qualified in New York Count 

Commission Expires __L| L [dt] Me 
  

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SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 

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

HOSPITALS - CONEY ISLAND HOSPITAL 
COALITION, an unincorporated association, INDEX NO. 10763/96 
by its member PHILIP R. METLING, ANNE 
YELLIN, and MARILYN MOSSOP, 

Plaintiffs, 

- against - 

AFFIRMATION OF 
RUDOLPH W. GIULIANI, THE MAYOR OF THE RACHEL D. GODSIL 
CITY OF NEW YORK, NEW YORK CITY HEALTH 

AND HOSPITALS CORPORATION, and NEW 

YORK CITY ECONOMIC DEVELOPMENT 

CORPORATION, 

  

Defendants. 

STATE OF NEW YORK ) 

COUNTY OF NEW YORK i 

Rachel D. Godsil, Esq. hereby affirms that the following is 

true under the penalty of perjury: 

1. 1 am an attorney duly authorized to practice in the State 

of New York. I am Assistant Counsel to the NAACP Legal Defense and 

Educational Fund, Inc. 1 make this affirmation din support of 

plaintiffs’ motion for summary judgment and in opposition to 

defendants’ motion for summary judgment. The facts set forth below 

are within my personal knowledge or are based upon information 

obtained from books and records of New York City, the New York City 

Health and Hospitals Corporation ("HHC"), and the New York City 

Economic Development Corporation ("EDC"), or other public documents. 

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25 In April of 1994, EDC issued on behalf of New York City 

a Request for Qualifications ("RFQ") from Firms qualified to 

perform financial advisory services in connection with "the 

privatization of certain City-owned assets" including "hospitals 

and related medical facilities." A copy of the Request for 

Qualifications is annexed hereto as Exhibit 1. Upon information 

and belief, the HHC Board was not consulted nor did it approve the 

issuance of an RFQ relating to the privatization of HHC facilities. 

3. In May of 1994, EDC issued on behalf of New York City a 

Request for Proposals from Firms ("RFP") qualified to assist and 

advice EDC with respect to the privatization of "certain City-owned 

assets" including "hospitals and related medical facilities." A 

copy of the Request for Proposals is annexed hereto as Exhibit 2. 

Upon information and belief, the HHC Board was not consulted nor 

did it approve the issuance of an RFP relating to the privatization 

of HHC facilities. 

4. In August of 1994, EDC retained J.P. Morgan to "provide 

General Services to the Corporation generally in respect of the 

City’s asset disposition initiative." Financial Advisory Agreement 

between New York City Economic Development Corporation and J.P. 

Morgan Securities, Inc. at 21. A copy of the Financial Advisory 

Agreement is annexed hereto as Exhibit 3. 

Dated: . New York, New York 

August 23, 1996 

  

RACHEL D. GODSIL, ESQ. 

 



  

SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - 
QUEENS COALITION, an unincorporated 
association, by its member WILLIAM 
MALLOY, CAMPAIGN TO SAVE OUR PUBLIC 
HOSPITALS - CONEY ISLAND HOSPITAL 
COALITION, an unincorporated association, 
by its member PHILIP R. METLING, ANNE 
YELLIN, and MARILYN MOSSOP, 

Plaintiffs, 

- against - 

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

Defendants. 

INDEX NO. 10763/96 

NOTICE OF MOTION; 
AFFIDAVIT OF DAVID R. JONES; 
AFFIRMATION OF RACHEL D. 
GODSIL 

KENNETH KIMERLING 
PUERTO RICAN LEGAL DEFENSE & EDUCATION FUND, 
99 Hudson St., 14th Floor 
New York, N.Y. 10013 
212-219-3360 

ELAINE R. JONES 
Director-Counsel 

NORMAN CHACHKIN 
MARIANNE L. ENGELMAN LADO 
RACHEL D. GODSIL 
NAACP LEGAL DEFENSE & EDUCATIONAL FUND, INC. 
99 Hudson St., 16th Floor 
New York, New York 10013 
212-219-1900 

BARBARA OLSHANSKY 
CENTER FOR CONSTITUTIONAL RIGHTS 
666 Broadway, 7th Floor 
New York, N.Y. 10012 
212-664-6464 

ATTORNEYS FOR PLAINTIFFS 

INC. 

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