Supplemental Memorandum of Law In Support of Defendants’ Motion for Summary Judgment and In Opposition to Plaintiffs’ Cross-Motion for Summary Judgement

    SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF QUEENS 

THE COUNCIL OF THE CITY OF NEW YORK, 

et al., 

Plaintiffs, Index No. 004897-96 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS 

- QUEENS COALITION, an unincorporated 

association, et al., | Index No. 10763/96 

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 

SUPPLEMENTAL MEMORANDUM OF LAW IN SUPPORT 

OF DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND IN 

OPPOSITION TO PLAINTIFFS’ CROSS-MOTION FOR SUMMARY JUDGMENT 

  

  

  

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 

DANIEL TURBOW, 

DAVID KARNOVSKY, 

ROBERT CARVER 

Of Counsel. 

 



  

SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF QUEENS 
S.-C -——-—— --- X 

THE COUNCIL OF THE CITY OF NEW YORK, 

et al., 

Plaintiffs, Index No. 004897-96 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 
SS a Se SS X 

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS 

- QUEENS COALITION, an unincorporated 

association, et al., Index No. 10763/96 

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 
i X 

SUPPLEMENTAL MEMORANDUM OF LAW IN SUPPORT 

OF DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND IN 
OPPOSITION TO PLAINTIFES’ CROSS-MOTION FOR SUMMARY JUDGMENT 

  

  

  

Defendants submit this supplemental memorandum of law in further support of 

their motion for summary judgment and in opposition to plaintiffs’ cross-motion for summary 

judgment. In particular, we address those arguments made in connection with amendments to 

 



  

the complaints, and the papers submitted by plaintifls in support thereof, which post-dated our 

previous submissions. 

* k k kk 

1. The express terms of the HHC Act contradict plaintiffs’ continued assertion 

that HHC lacks the authority to enter into the proposed sublease for CIH. U.L.-§ 7385(6) 

grants HHC the power to “dispose of by . . lease or sublease, real . . . property, including but 

not limited to a health facility,? or any interest therein for its corporate purposes.” U.L. 
  

§ 7385(7) clearly contemplates that HHC may sublease a hospital for continued use as a 

hospital, by authorizing HHC "to establish and collect fees, rentals or other charges, including 

reimbursement allowances, for the sale, lease or sublease of any such health facility . . . ." And 

U.L. § 7385(8) explicitly authorizes entry into a lease with a private corporation, without regard 

as to whether it is a for-profit or not-for-profit entity. That section grants HHC the power: 

[t]Jo 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. . . . (emphasis added) 

  

  

In the face of these crystal-clear provisions, plaintiffs’ contention that HHC is 

acting inconsistently with the legislative intent of the HHC Act or ultra vires of its legislative 

authority is frivolous. McKinney’s Statutes § 92(b)(“The intention of the Legislature is first to 

  

I Specifically, by stipulation dated December 17, 1996, the Campaign plaintiffs amended their 

complaint by adding a third cause of action and by stipulation dated December 17, 1996, the 

Council plaintiffs amended their complaint to add an item in their prayer for relief. A copy of 

these stipulations is being submitted herewith as Exhibits to the accompanying December 20, 

1996 affirmation of Robert Carver. By these stipulations, defendants’ answers were also 

amended, and it was agreed that the parties’ pending motions for summary judgment would be 

deemed as having been made with respect to these amended pleadings. 

2 The definition of "health facility" expressly includes, among other things, a "general hospital." 

U.L:§ 7383(12). ‘ 

2. 

 



  

  

be sought from a literal reading of the act itsell." ); id. § 94; accord Lloyd v. Grella, 83 NY2d 

537, 545-46 (1994). Indeed, as we have previously noted, the Court has summarily rejected 

a comparable claim that simply because HHC had the authority to provide ambulance services 

directly, it was ultra vires for it to contract with a private entity for the delivery of those 
    

services. Hill v. Boufford, 141 Misc.2d 654 (Sup. Ct. N.Y. Co. 1988). 
  

Tellingly, plaintifls have not cited a single New York case or statute to support 

their challenge to the plain application of these grants of legislative authority. Instead, the 

Campaign plaintiffs rely upon a Michigan case and a letter by a Deputy Attorney General of 

Calilornia, each of which questions the legality of particular transactions by a not-for-prolit 

hospital with a for-profit entity. The short answer to these citations is that they are completely 

irrelevant -- they discuss restrictions on the not-for-profit hospitals found in particular provisions 

of state law or Articles of Incorporation uniquely germane to those transactions. The HHC Act 

simply does not contain similar restrictions. And, to the extent there is any question under New 

York law as to whether a for-profit entity such as PHS-NY may enter into the sublease, that 

question will be decided by the State Department of Health, which must approve the entity’s 

participation in the transaction pursuant to Public Health Law § 2805. 

2. Plaintiffs’ contention that the sublease is unlawful because it undermines 

HHC’s mission of serving the indigent is also meritless. They acknowledge that PHS-NY must 

pay for all the charity care HHC currently provides at CIH, plus an additional 15% over the 

  

> By reason of these express statutory mandates, plaintiffs’ claim that the legislative intent 

behind the HHC Act should be divined from the statements of Mayor Lindsay is similarly 

meritless. McKinney’s Statutes § 76 ("Where words of a statute are free from ambiguity and 

express plainly, clearly and distinctly the legislative intent, resort may not be had to other means 

ol interpretation.") (emphasis added). 

-3- 

 



  

current HHC levels of payments, plus a medical inflation factor.* They further acknowledge that 

HHC must rcimburse PHS-NY for the sums in excess ol that "trigger point" ("Excess 

Incurrence") for one year. They take issue, however, with the right granted PHS-NY to 

thereafter "manage access to health care in such manner as it may deem appropriate so as to 

avoid Excess Incurrence in the future." According to plaintilts, "HHC [acilitics cannot similarly 

‘manage access to care.’" Affidavit of Judith B. Wessler (“Wessler Aff.”) 117. Plaintiffs’ 

argument is legally irrelevant and premised on a fundamentally flawed assumption. 

While HHC provides care to the indigent, it has no statutory or constitutional 

obligation to provide a particular level ol care or particular types of services to a particular 

number of indigent patients at any particular facility -- including CIH. See, ¢.g., Jackson v.     

HHC, 419 F.Supp. 809 (S.D.N.Y. 1976)("Within the context of providing . . . services [to the 

indigent] the Corporation must have the discretion to determine in what manner its services are 

to be dispensed. There is no constitutionally protected right to a particular number of hospital 

beds or to a particular kind of medical services."); Love v. Koch, 161 AD2d 209 (1st Dept. 
  

1990); Klostermann v. Cuomo, 126 Misc.2d 247, 251 (Sup. Ct. N.Y. Co. 1984)(Wallach, 
  

J.)(Under Article XVII, Secs. 1, 4 and the Mental Hygiene Law, "since plaintiffs are not 

presently in the care or custody of the State, they have no general claim to a particular type of 

care and treatment . . . ". Accordingly, as a matter of law, plaintiffs may not attack the 

proposed sublease by asserting that it does not provide adequate assurances that some particular 

level of care -- or particular services -- will continue to be provided at CIH. 

  

* Because of these contractual obligations, plaintiffs’ extensive discussion of the limited nature 
of the indigent care obligations normally associated with voluntary hospitals is completely 

irrelevant. 

wis 

 



  

In any event, given economic realities there can be no assurance that a particular 

level of services will be provided if CIH continues under HHC management. HHC’s mission 

ol providing care to the indigent (and others) can only be implemented by the exercise of its 

necessary authority to "manage" its provision of services. In other words, HHC does not have 

an unlimited budget which would permit it to provide unlimited levels of service at all its 

[acilitics. Rather, it must -- while honoring its commitment to the indigent and ellectuating its 

overall mission -- allocate its resources wisely. To that end, it is a method of public record that 

HHC has adjusted stalling levels, shifted the availability of services from one facility to another, 

modified hours of service and indeed, where appropriate, closed entire programs or facilities. 

  

ce, ¢.g., Bryan v. Koch, 627 F.2d 612 (2d Cir. 1980); Jackson v. HHC, 419 F.Supp. 809   

(S.D.N.Y. 1976). 

Because of future economic uncertainties the sublease commits PHS-NY to provide 

a greater level of care to the indigent at CIH than could otherwise be assured. Given the current 

cconomic situation and ongoing changes in the health care environment, if CIH remains under 

HHC management, there could be increased pressure to reduce the range and availability of 

services. 

  

On the other hand, PHS-NY is committed for the lile of the lease’ to pay for all 

the charity care currently provided at CIH, plus an additional 15%, plus a medical inflation 

factor, and without counting towards that figure any available third party reimbursements. In 

  

> The Affidavit of Judith. B. Wessler is thus totally misleading when it suggests that PHS-NY’s 

obligation terminates when the trigger point is met. Wessler Aff. 1 18 ("The Sublease also 
explicitly states that HHC cannot require PHS-NY to provide indigent care if the trigger point 

is met."). 

-5- 

 



  

addition, PHS-NY is obligated to maintain in-paticnt and out-patient programs in all "core 

service" arcas offered at CIH as of the day before the closing on the sublease. 

In sum, the proposed sublease is not, in any way, inconsistent with HHC’s mission 

ol providing health care services to the indigent. Indeed, to the contrary, it is an innovative 

instrument for assuring that mission will continue to be fulfilled in the future. 

3. Plaintiffs criticize at length particular terms of the transaction, including 

the choice of PHS-NY as the sublessee, and the adequacy of the specilic provisions of the 

sublease designed to assure that PHS-NY will meet its contractual obligations. These contentions 

deal with the wisdom, rather than the lawfulness of the transaction, and are thus irrelevant to this 

proceeding. See Kelly v. Merry, 262 N.Y. 151, 160 (1933)(“The possible lack ol wisdom is 
  

not the lack of authority.”); sce also Tuck v. Heckscher, 65 Misc.2d 1059, 1065 (Sup. Ct. N.Y. 
  

Co.), all’d 37 AD2d 558 (Ist Dept.), all’d 29 NY2d 288 (1978); Leider v. Beth Israel Hospital 
  

  Association, 33 Misc.2d 3, 6 (Sup. Ct. N.Y. Co.)(Under business judgment rule, “courts may 

not interfere in the internal management of corporations in the absence of fraud or bad faith, if 

  

  

kept within corporate powers.”), all’d 13 AD2d 746 (1st Dept.), all’d 11 NY2d 205 (1962). 

Finally, little comment is warranted with respect to Council plaintiffs’ contention 

that the absence of a clause subjecting the sublease to the lease between HHC and the City will 

“restrict the ability of the State Legislature to amend or repeal the HHC Act” (Council plaintiffs’ 

Reply Memo at p. 4). Obviously, the sublease cannot bind the legislature. In any event, by 

  

® PHS-NY may make changes only with HHC approval and only if the practice of medicine 

changes fundamentally. 

" 

 



  

operation of law, a sublease cannot conler rights greater than those afforded the tenant by the 

prime lease. See Millicom, Inc. v. Breed, Abbott & Morgan, 160 AD2d 496 (1st Dept. 1990). 
  

CONCLUSION 
  

For the foregoing reasons, it is respectfully requested that defendants’ motion for 

summary judgment be granted, plaintiffs’ cross-motion for summary judgment be denied, and 

the Court award defendants such other and further relief as is deemed just and proper. 

Dated: New York, New York 

December 20, 1996 

Respectfully submitted, 

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 

DANIEL TURBOW, 

DAVID KARNOVSKY, 

ROBERT CARVER 

Of Counsel.