Brief Amici Curiae Community Service Society of New York et al.
Public Court Documents
December 16, 1998
47 pages
Cite this item
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Case Files, Campaign to Save our Public Hospitals v. Giuliani Hardbacks. Brief Amici Curiae Community Service Society of New York et al., 1998. 5501a073-6835-f011-8c4e-7c1e5267c7b6. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/c8e53a5b-cfe9-4a84-a762-2960fbca06ee/brief-amici-curiae-community-service-society-of-new-york-et-al. Accessed July 26, 2025.
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COURT OF APPEALS
STATE OF NEW YORK
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. MELTING, ANNE YELLIN, and
| MARILYN MOSSOP,
| Plaintiffs-Respondents-Cross-Appellants,
-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-Appellants-Cross-Respondents.
BRIEF OF AMICI CURIAE
COMMUNITY SERVICE SOCIETY OF NEW YORK
COMMITTEE OF INTERNS AND RESIDENTS
PUBLIC HEALTH ASSOCIATION OF NEW YORK CITY
IN SUPPORT OF PLAINTIFFS-RESPONDENTS-CROSS-APPELLANTS
Juan Cartagena
Arlene Kohn Gilbert
COMMUNITY SERVICE SOCIETY
OF NEW YORK
105 E. 22nd St.
New York, NY 10010
(212)254-8900
Of Counsel,
| Harry Franklin
4 COMMITTEE OF INTERNS AND
RESIDENTS
386 Park Ave. South
| New York, New York 10016
(212) 725-5500
TABLE OF CONTENTS
| Nable Of AUINOTILICS cciveiiccississirscrinescssnsasssinsssivasestonssssscsnsoassiseressssesssasesessrassensnnsesnarssnsnsiisne 1-3
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I. The State’s constitutional duty to care for the needy is reflected in
the HHC enabling statute and the legislature clearly delegates this
public function to the HHC public Denelit.....c.snssssassscsssssssnsrsssssscssssissnsrsssssssesse 6-11
II. In approving the proposed 99 year sublease with PHS-NY, HHC has
abdicated its duty to operate a public health care system that provides
SerVICES 00 SC MICOON bri irsrstsisiisiinstllliisiiuitiississsnrremmersrsssirsssatostossessessstasessessssnssnniin 11-20
III. The transfer of the complete operation, management and administration
of Coney Island Hospital to PHS-NY raises additional, complex, public
policy issues that only the legislature an AeCiBe ....vecccscrirrrrseciiccsessnrrssrssrssssese 20-23
CC OMCIUIB EON oss vesesininstisonsases srancssssersnssnsrostrosivssmtanssiassrciorsrnsnrenraissarssrnonenensrshionennnthesenssuaambens 23
Table of Authorities
Statutes
N.Y. Constitution Art. XVI, 831. 3 (MCKINNEY 1087)...ccicccctcerciicrrsuinnrisivisnsrssiisssosvionassns Passim
NY. Constitution Art: X, 35 (MCI INCE L087)... ciuusrssssssonrcisnnssscvmssroeon ets sos eoeniats vasnsinrms 0
N.Y. Unconsol. Law §§7381-7406 (McKinney 1979 & Supp.
SL ihe ite 1 nN el EE CS a Br me Passim
N.Y. Gen. Constr. Law 866.3 {McKinney Supp. 1998)......covciviiiinnciisnissnmsenssmsssentnsss 7
N.Y. Pub. Off, Law §384-111 (McKinney 1983 & Supp. 1098)......cccccomiiiieiccsinssins 21
NEC5Gen. Stat § 31 608-272 (1079 ick devine -Fhupass-doisifiscorsisersscrrssssessorsossisssus sans sssrsassuns 2
Fla. Stal. Ann, S1S5.40. (West 1000)... oo cisiviriimsiosissmenisenirmenisdsiossirsinsnsthirssrnsasnss sons nunnss 21.22
Cal. Gov't. Code §54950 (West 1997); Cal. Health & Safety Code §1462(e) (West 1990),
CREE TS RELY PRG Ce i be Ne 21
NeW Y orl City Charter CB BS 07-0 utli. H ii fe ii essnsscesinnsnsnonsssssaisessssnss sessnnssiunnannnnnt 5
Cases
Council of the City of New York v. Giuliani, No. 97-01337 (N.Y. App. Div.
JUG 0, F000 a i rte tiaras dtntetess sttinstsmits sss vomsssersusissorsvisammmemasoasb sans ennai sean ck 8
Council of the City of New York v. Giuliani, No. 4897/96 (N.Y. Sup. Ct.
Oucens™ Cry: an I 007) x 0 7 humm iin mtmnnicisinsmmmusms isis smsisimss ios 8
Doc 'v. Dinkins 192 A.D: 24 170.600 N.Y.S.2d939. (1st Dept 1993)..0 i hei ini vmielits 7
Tuckerv. Toi. 43 N.Y. 2d 1 AO0O NY. SOA 728 11077 Yc coco coms inionnissimissninssmrssincasansenahon 7
Clavton County Hospital Authority v. Webb. 208 Ga. App. 91. 430 S.E.2d 89 (1993)....... 23
Fox v. Cuyahooa County Hospital System. 329 N.E. 2d 443 (Ohio 1988).......ccoonsrrecrennnnns 23
1
Palm Beach County Health Care District v. Everglades Memorial Hospital, Inc., 658
So. 2d 577 (Fla, Dist, Ct. App. T9035 dic snddi dh cin cedide dies n haniidiian Shi sani. 20,21
Jess Parrish Mem. Hosp. Inc. v. City of Titusville, 506 So.2d 22 (Fla. Dist. Ct. App. 1987)
WANA, Semler tester Masten hE EE Lg a Sel ELT Tl ITT LTD RC 22
Other Authority
Opinion S.C. Atty: Gen. 82-18(Mar. 12 0982) cr iiih dil ds sed ds cdoodetheditecessolgaindbrssntinsssssnions 23
Miscellaneous
Sandra Opdycke, David Rosner, Hospitals, The Encyclopedia of New York City,
560-563 (Kenneth {..Jackson, ‘ed., Yale Univ, Press 1995)...........ccceessiinsssstnsrinsececsvuninessese 8
James J. Walsh, History of Medicine in New York: Three Centuries of Medical Progress
(National Americans SOCIELY 1919.5. ccviici ni liuniniiisiiineinmsmmtisosidsanirssnsdstnridisdonnsusiescsaes 8
Community Service Society, Frontiers in Human Welfare: The Story of a Hundred
Years of Service to the Community of New York (1948). ...cccccrmieiiecsiesssunirmiinesensenunennnmussans 8
A. Camper, L. Gage, B. Eyman, S. Stranne, The Safety Net in Transition. Monograph II,
Reforming the [egal Structure and Governance of Safety Net Health Systems, (National
Association of Public Hospitals and Health Systems, JUNE 1996)..........ccceessseevurssssevassssnens 11
David Seifman & Carl Campanile, Rudy Wants WTC’s Taxes, New York Post, Sept. 25,
DO 11 1 oh 000s AL pentinsabtswsaiessisas hibisinimnsassSamroliE the ass AH eGR SEALS HERAT TS eee sur 0s 13
New York City Comptroller Alan Hevesi, Analysis of Fundamental Issues That Have Yet
To:Be Resolved AINOVEMDEL 7, 1996)...........vinssciiservinmsssorssrssmnmsssssasesoinsasnsssssssssiois in tiey fore: Passim
J.P. Morgan, Report to the City of New York Concerning the Privatization of Coney Island
Hospital. Elmhurst Hospital Center. Oueens Hospiial Center (Mar. 1993)... ...00 ccc vnvrunne. 13
Office of N.Y.S. Comptroller H. Carl McCall, Challenges Facing New York City’s Public
Hospital SYSIem (AUE.S, TOR)... co crvsciirrmiensrinaresnersnenisee rr dr en EL REI rs scnerus severe 16
Charles Brecher, Sheila Spiezo, Privatization and Public Hospitals: Choosing Wisely
for New York City (Twentieth Century Fund 1.993). ...5 10 tne co leave earsiiinl dL 50 17
NYC Department of Health, Bureau of Disease Intervention Research, Epidemiologic
Profile of HIV/AIDS in New York CUV (AUG. 1006)..........ccopicercearisscinsm cir ssemmssorosisnsosss 17
NYC Department of Health, Bureau of Tuberculosis Control, Tuberculosis in New York
City 1904 Information SUIVEY {1994).........c.conevrciensonsanhorsesivircssmassbissnisnsrasseassssbasssns ones 17
Health Systems Agency of New York City, Interim HIV/AIDS Strategic Plan for the
City.of New York, Voli L(1996).5 uu. aa deisintad is alii 0n JA MBL HELE 17
Phyllis E. Bernard, Privatization of Rural Public Hospitals: Implications for Access
and Indigent Core. 47. Mer. L. Rev. 901 (1990) .......ccoieveioiiiens shinai iinssinississnssinsionsasenmagies 18
Mark V. Napel, Cong. General Accounting Office, Rural Hospital: Closures and Issues
Qf Access Noll, at 200] Yi. A a ie A A er ecisccusncionare 18
Marsha Lillie-Blanton, et al., Rural and Urban Hospital Closures, 1985-1988: Operating
and Ponvironmental Characteristics that Affect Risk, 29 Inquiry 332 (1992)..cccccunrrererenrnens 18
Deborah Williams, et al., Profits, Community Role. and Hospital Closure: An
Lihanand Rural Analysis, 30 Med. Care 174, (1900)... ccicicieceerrerisessseseerssurssressnsnsrasens 18
Gordon W. Josephson. Private Hospital Care For Profit? A Reappraisal, Hlth. Care
Mom. Bev. (June 20. 1007)... ci... oi isissioniissiarsstsmptaserinsarmnonsnisiniirs inchgonstunnpsans ane tates 18,
Consumers Union, Southwest Regional Office, Preserving the Charitable Trust: Nonprofit
Hospitai Conversion iniTexas (uly VIO8Y L......coc ire. cirri iees issn sssssnsrsrntersssssssmemesnsnsses 18
Terese Hudson. Faster. Stronger. Private? Converting Hospitals from Public to Private
Status to Improve Competitiveness, Hospitals & Health Networks (July 5. 1997)............... 18
Louise Kertesz. Public Facilities Going Private: L.A. County Moves Forward After Crisis,
ModerniHealilveare (Sept. 9, 1990)..............ccoreremsmsnissrasssssmsessrshrenssssssssasusnsssssorassapansns sos ne 18
Maria Rothouse. Change in Nonprofit Entities, Issue Brief. Health Policy Tracking
Service (JULY 1, 1098)... ooiciieienstoniorsimsisinsnesornsismmmtinsigisotups siast tinstatihuns: thos sdeamstbonme tigate 20
AFSCME Public Policy Department, Making the Case for Safety Net Hospitals,
Health Focus tVarch 1807)... corre sccinritio revssioss sures sabe nsisitanatonss frusnnsvntinssunsmntnsssdssnnsn simbnris 20
J. Weissman, Uncompensated Hospital Care: Will It Be There If We Need It,
]
2)
270 TAMA 10. GS00h Th, 100) ito hie i ti as tora 20
Bureau of National Affairs, Hospital Conversions Spur States to Examine Community Benefit
Issues, 6 Health Care Policy Report 16 81 660 ...........concvniciminmsessmssssenssssssonsiossmessaneasmessnusis 21
PRELIMINARY STATEMENT
The duty to care for the needy is a constitutional obligation that requires attention to the
health needs of the public. New York has delegated this obligation, in part, to the Health and
Hospitals Corporation of New York City (“HHC”), a public benefit corporation created by the
legislature. Public hospitals in the City serve an essential public function: they are the first
source of medical attention to the poor and uninsured. In approving a sublease with a private, for
profit corporation to manage and operate Coney Island Hospital, HHC abdicates its duty to care
for the poor and delegates, in some cases, to a third party arbitrator, decisions over the
continuation of core services to the public. Amici will show how Coney Island Hospital, under
the proposed deal at issue herein, will no longer guarantee that it will provide health care to those
who need but cannot afford care. The results of this 198 year arrangement proposed by the City
will have an adverse impact upon the public health of the Coney Island community.
The state legislature in 1969 had a number of options available to it to resolve what was
then an inefficient and decentralized system of health care management in the City. It chose to
establish HHC as a public benefit corporation in order to operate all of the City’s hospitals under
statutory and constitutional mandates. Privatization of New York City’s public hospitals may or
may not be in the best interest of the city’s residents and quite frankly, the merits of privatization
are not before this Court. However, privatization raises significant public policy issues that can
276 JAMA YO (Septy Ly 1000). co bth a bi in SSL 0 on JUL Ss ud fe de 20
Bureau of National Affairs, Hospital Conversions Spur States to Examine Community Benefit
Issues. 6 Health Care Policy Report 18 aL 080 ................cciiiiriniscocisnisissimindescasssssmanttuninrensoss 21
PRELIMINARY STATEMENT
The duty to care for the needy is a constitutional obligation that requires attention to the
health needs of the public. New York has delegated this obligation, in part, to the Health and
Hospitals Corporation of New York City (“HHC”), a public benefit corporation created by the
legislature. Public hospitals in the City serve an essential public function: they are the first
source of medical attention to the poor and uninsured. In approving a sublease with a private, for
profit corporation to manage and operate Coney Island Hospital, HHC abdicates its duty to care
for the poor and delegates, in some cases, to a third party arbitrator, decisions over the
continuation of core services to the public. Amici will show how Coney Island Hospital, under
the proposed deal at issue herein, will no longer guarantee that it will provide health care to those
who need but cannot afford care. The results of this 198 year arrangement proposed by the City
will have an adverse impact upon the public health of the Coney Island community.
The state legislature in 1969 had a number of options available to it to resolve what was
then an inefficient and decentralized system of health care management in the City. It chose to
establish HHC as a public benefit corporation in order to operate all of the City’s hospitals under
statutory and constitutional mandates. Privatization of New York City’s public hospitals may or
may not be in the best interest of the city’s residents and quite frankly, the merits of privatization
are not before this Court. However, privatization raises significant public policy issues that can
only be addressed by our elected representatives in the legislature -- the very body which
established HHC in the first place.
Accordingly, amici urge this Court to affirm the judgment below which held that the act
of approving a long-term lease of Coney Island Hospital by HHC was an act of ultra vires.’
INTEREST OF AMICI CURIAE
Amici are united in their concern for the health of New York City’s residents and by their
experience of the problems faced in obtaining adequate health care, especially for the poor in the
City. It is their hope that this experience and the insights it has given each of them into the needs
and problems inherent in modifying the health care system, will be of assistance to this court in
resolving the issues raised in this case.
The Community Service Society of New York (“CSS”) is a social welfare advocacy
organization with over 150 years of service to the City of New York. It works cooperatively
with community-based, social policy and advocacy groups to fight and overcome poverty
through research, volunteerism, advocacy, community development and services to individuals
and families. CSS works to identify problems that continue to create a poverty class in New
York City and to bring about the changes needed to eliminate these problems. CSS addresses
' Amici curiae support the position advanced by the respondents herein, Campaign to
Save Our Public Hospitals -- Queens Coalition, that the actions taken by the HHC in privatizing
Coney Island Hospital trigger the protections of the Uniform Land Use Review Procedure of
sections 197-c and 197-d of the New York City Charter, providing an additional reason to void
the decision of the HHC. However, this brief is limited to the question of whether the act of the
HHC is an ultra vires act.
only be addressed by our elected representatives in the legislature -- the very body which
established HHC in the first place.
Accordingly, amici urge this Court to affirm the judgment below which held that the act
of approving a long-term lease of Coney Island Hospital by HHC was an act of ultra vires.
INTEREST OF AMICI CURIAE
Amici are united in their concern for the health of New York City’s residents and by their
experience of the problems faced in obtaining adequate health care, especially for the poor in the
City. It is their hope that this experience and the insights it has given each of them into the needs
and problems inherent in modifying the health care system, will be of assistance to this court in
resolving the issues raised in this case.
The Community Service Society of New York (“CSS”) is a social welfare advocacy
organization with over 150 years of service to the City of New York. It works cooperatively
with community-based, social policy and advocacy groups to fight and overcome poverty
through research, volunteerism, advocacy, community development and services to individuals
and families. CSS works to identify problems that continue to create a poverty class in New
York City and to bring about the changes needed to eliminate these problems. CSS addresses
' Amici curiae support the position advanced by the respondents herein, Campaign to
Save Our Public Hospitals -- Queens Coalition, that the actions taken by the HHC in privatizing
Coney Island Hospital trigger the protections of the Uniform Land Use Review Procedure of
sections 197-c and 197-d of the New York City Charter, providing an additional reason to void
the decision of the HHC. However, this brief is limited to the question of whether the act of the
HHC is an ultra vires act.
issues of health care need and delivery of service; CSS’s social workers assist the indigent to
obtain needed health care when they have trouble gaining access to care. CSS is concerned by
the issues raised in this case because, regardless of what form health delivery takes in the City,
poor and uninsured New Yorkers must have access to acute care hospitals.
The Committee of Interns and Residents (“CIR”) is a labor union that represents 10,000
resident physicians nationwide, the majority of whom work in public hospitals. CIR has
represented physicians who work in New York City’s public hospitals for 40 years. CIR believes
that the extensive public hospital network operated by New York City’s Health and Hospitals
Corporation is vital to the city’s health care delivery system. The proposed privatization of
Coney Island Hospital is a significant departure from health care policy of this state and at a
minimum, requires an opportunity for full public debate and analysis in the state legislature
where HHC was created. CIR firmly believes that if that debate and analysis were to occur, the
alarming increase of uninsured would confirm that every hospital in HHC is now more vital to
maintaining the public health than when HHC was first created by the legislature.
The Public Health Association of New York City (“PHANYC”) is the City affiliate of
the American Public Health Association, an organization of public health professionals. For the
past six decades, PHANYC has worked to improve the health of all those who live and work in
New York City by: (1) sponsoring forums and conferences of public health professionals,
providers and consumers to learn about and discuss public health issues; (2) advocating for
improvements in the City’s public health structure; and (3) working with a number of coalitions
to establish a more responsive and equitable health care system in the City. Its more than 400
members are physicians, nurses, educators, health administrators, researchers, students and health
6
issues of health care need and delivery of service; CSS’s social workers assist the indigent to
obtain needed health care when they have trouble gaining access to care. CSS is concerned by
the issues raised in this case because, regardless of what form health delivery takes in the City,
poor and uninsured New Yorkers must have access to acute care hospitals.
The Committee of Interns and Residents (“CIR”) is a labor union that represents 10,000
resident physicians nationwide, the majority of whom work in public hospitals. CIR has
represented physicians who work in New York City’s public hospitals for 40 years. CIR believes
that the extensive public hospital network operated by New York City’s Health and Hospitals
Corporation is vital to the city’s health care delivery system. The proposed privatization of
Coney Island Hospital is a significant departure from health care policy of this state and at a
minimum, requires an opportunity for full public debate and analysis in the state legislature
where HHC was created. CIR firmly believes that if that debate and analysis were to occur, the
alarming increase of uninsured would confirm that every hospital in HHC is now more vital to
maintaining the public health than when HHC was first created by the legislature.
The Public Health Association of New York City (“PHANYC”) is the City affiliate of
the American Public Health Association, an organization of public health professionals. For the
past six decades, PHANYC has worked to improve the health of all those who live and work in
New York City by: (1) sponsoring forums and conferences of public health professionals,
providers and consumers to learn about and discuss public health issues; (2) advocating for
improvements in the City’s public health structure; and (3) working with a number of coalitions
to establish a more responsive and equitable health care system in the City. Its more than 400
members are physicians, nurses, educators, health administrators, researchers, students and health
6
care consumers. Each of these members is concerned with the impact of privatization of Coney
Island Hospital upon the public health of New Yorkers.
ARGUMENT
I. The State’s constitutional duty to care for the needy is reflected in the HHC enabling
statute and the legislature clearly delegates this public function to the HHC public benefit
corporation.
The government of the state of New York enjoys a long history of providing for its
neediest citizens. This commitment stems directly from Article XVII of the state constitution
which creates an obligation to promote a public policy to protect and provide for the “health of
the state’s inhabitants” and the concomitant duty to provide for the “aid, care and support of the
needy.” This Court has ruled that Article XVII places upon the State an affirmative duty to
provide assistance to the needy? and this mandate has also been held to create an affirmative duty
to provide for the poor despite a claim of insufficient funds.’
N.Y. Constitution, Art. XVII, §3 (McKinney 1987), in its entirety states: “ The
protection and promotion of the health of the inhabitants of the state are matters of public
concern and provision therefor shall be made by the state and by such of its subdivisions and in
such manner, and by such means as the state legislature shall from time to time determine.”
N.Y. Constitution, Art. XVII, §1(McKinney 1987), states that the “aid, care and support
of the needy are public concerns and shall be provided by the state and by such of its
subdivisions, and in such manner and by such means, as the legislature may from time to time
determine.”
‘Tucker v. Toia, 400 N.Y.S.2d 7281, 731 (1977).
Doe v. Dinkins, 600 N.Y.S.2d 939, 943 (1st Dep’t 1993).
7
care consumers. Each of these members is concerned with the impact of privatization of Coney
Island Hospital upon the public health of New Yorkers.
ARGUMENT
I. The State’s constitutional duty to care for the needy is reflected in the HHC enabling
statute and the legislature clearly delegates this public function to the HHC public benefit
corporation.
The government of the state of New York enjoys a long history of providing for its
neediest citizens. This commitment stems directly from Article XVII of the state constitution
which creates an obligation to promote a public policy to protect and provide for the “health of
the state’s inhabitants”? and the concomitant duty to provide for the “aid, care and support of the
needy.” This Court has ruled that Article XVII places upon the State an affirmative duty to
provide assistance to the needy’ and this mandate has also been held to create an affirmative duty
to provide for the poor despite a claim of insufficient funds.’
N.Y. Constitution, Art. XVII, §3 (McKinney 1987), in its entirety states: ““ The
protection and promotion of the health of the inhabitants of the state are matters of public
concern and provision therefor shall be made by the state and by such of its subdivisions and in
such manner, and by such means as the state legislature shall from time to time determine.”
N.Y. Constitution, Art. XVII, §1(McKinney 1987), states that the “aid, care and support
of the needy are public concerns and shall be provided by the state and by such of its
subdivisions, and in such manner and by such means, as the legislature may from time to time
determine.”
*Tucker v. Toia, 400 N.Y.S.2d 7281, 731 (1977).
Doe v. Dinkins, 600 N.Y.S.2d 939, 943 (1st Dep’t 1993).
7
The City’s history with public health is comparatively long and distinguished. Since the
1736 opening of Bellevue Hospital, New York City has owned and managed hospitals for the
benefit of those who could not afford medical care and to secure the public health of the entire
city. Over a period of virtually two centuries, the City responded to the public’s health care
needs with an unbroken commitment to evolving communities by opening additional public
hospitals, Kings County in 1831, Elmhurst in 1832, Lincoln in 1841, Harlem in 1877 and Bronx
Hospital Center in 1954. Coney Island Hospital, the subject of these proceedings was
completed in 1910.7 Its predecessor, the Sea Breeze Hospital at Coney Island was established in
1904 .°
In 1969, faced with inadequate and inefficient public health facilities for the City’s
residents,’ the state legislature attempted to meet its constitutional duty under Article XVII'® by
consolidating all of the City’s hospitals into a new public benefit corporation, the Health and
Hospitals Corporation. The statutory language as well as the legislative history of the enabling
® Sandra Opdycke, David Rosner, Hospitals, The Encyclopedia of New York City, 560-
563 (Kenneth T. Jackson, ed., Yale Univ. Press 1995).
7 James J. Walsh, History of Medicine in New York: Three Centuries of Medical Progress
(National Americana Society 1919) at 851.
81d. Sea Breeze Hospital at Coney Island was established by the Association for
Improving the Condition of the Poor, the predecessor of the Community Service Society of New
York, amicus herein. See also Community Service Society, Frontiers in Human Welfare: The
Story of a Hundred Years of Service to the Community of New York (1948).
’Council of the City of New York v. Giuliani, No. 97-01337, 2d Dept. (N.Y. App. Div.,
2d Dep’t., June 9, 1997), at 3 [hereafter Appellate Division Decision].
"Council of the City of New York v. Giuliani, No. 4897/96, (N.Y. Sup. Ct. Queens Cty.,
Jan. 13, 1997), at 20 [hereafter Posner Decision].
8
The City’s history with public health is comparatively long and distinguished. Since the
1736 opening of Bellevue Hospital, New York City has owned and managed hospitals for the
benefit of those who could not afford medical care and to secure the public health of the entire
city. Over a period of virtually two centuries, the City responded to the public’s health care
needs with an unbroken commitment to evolving communities by opening additional public
hospitals, Kings County in 1831, Elmhurst in 1832, Lincoln in 1841, Harlem in 1877 and Bronx
Hospital Center in 1954. Coney Island Hospital, the subject of these proceedings was
completed in 1910.7 Its predecessor, the Sea Breeze Hospital at Coney Island was established in
1904.8
In 1969, faced with inadequate and inefficient public health facilities for the City’s
residents,’ the state legislature attempted to meet its constitutional duty under Article XVII'® by
consolidating all of the City’s hospitals into a new public benefit corporation, the Health and
Hospitals Corporation. The statutory language as well as the legislative history of the enabling
® Sandra Opdycke, David Rosner, Hospitals, The Encyclopedia of New York City, 560-
563 (Kenneth T. Jackson, ed., Yale Univ. Press 1995).
7 James J. Walsh, History of Medicine in New York: Three Centuries of Medical Progress
(National Americana Society 1919) at 851.
®1d. Sea Breeze Hospital at Coney Island was established by the Association for
Improving the Condition of the Poor, the predecessor of the Community Service Society of New
York, amicus herein. See also Community Service Society, Frontiers in Human Welfare: The
Story of a Hundred Years of Service to the Community of New York (1948).
’Council of the City of New York v. Giuliani, No. 97-01337, 2d Dept. (N.Y. App. Div.,
2d Dep’t., June 9, 1997), at 3 [hereafter Appellate Division Decision].
1°Council of the City of New York v. Giuliani, No. 4897/96, (N.Y. Sup. Ct. Queens Cty.,
Jan. 13, 1997), at 20 [hereafter Posner Decision].
8
statute reflect the Legislature’s directive that the new corporation was to perform a public act by
operating and maintaining all City hospitals to the needs of the poor and uninsured. In addition,
the legislature’s commitment to ensuring that health services are provided to those city residents
who are least able to pay, was equally clear and direct. The HHC Act’s “Declaration of policy
and statement of purposes” again provides the proper framework:'' “A system . . . is required for
the provision and delivery of high quality, dignified and comprehensive care and treatment for
the ill and infirm, particularly those who can least afford such services.”
The HHC Act’s “Declaration of policy and statement of purposes”'? addresses both the
health care needs of the population and its responsibility to meet those needs as an essential
public and governmental function.” Furthermore, the HHC Act contains a number of clear
references that indicate that HHC must operate the City’s hospitals for as long as it exists: “ the
corporation shall operate the hospitals then being operated by the city for the treatment of acute
and chronic disease.”'* Coney Island Hospital was specifically listed among the hospitals leased
"N.Y. Unconsol. Law (McKinney 1979 & Supp. 1998) §§ 7381 et seq.[hereafter HHC
Act].
2 HHC Act §7382.
13 “[The provision and delivery of comprehensive care and treatment of the ill and infirm,
both physical and mental, are of vital and paramount concern and essential to the protection and
promotion of the health, safety and welfare of the inhabitants of the state of New York and the
city of New York.... [The creation and operation [of HHC] is in all respects for the benefit of the
people of the state of New York and of the city of New York.... is a state, city and public
purpose, and . . . the exercise of [its] functions, powers and duties. . . constitutes the performance
of an essential public and governmental function.” HHC Act §7382.
'“ HHC Act §7386[1][a].
statute reflect the Legislature’s directive that the new corporation was to perform a public act by
operating and maintaining all City hospitals to the needs of the poor and uninsured. In addition,
the legislature’s commitment to ensuring that health services are provided to those city residents
who are least able to pay, was equally clear and direct. The HHC Act’s “Declaration of policy
and statement of purposes” again provides the proper framework:'' “A system . . . is required for
the provision and delivery of high quality, dignified and comprehensive care and treatment for
the ill and infirm, particularly those who can least afford such services.”
The HHC Act’s “Declaration of policy and statement of purposes”! addresses both the
health care needs of the population and its responsibility to meet those needs as an essential
public and governmental function.” Furthermore, the HHC Act contains a number of clear
references that indicate that HHC must operate the City’s hospitals for as long as it exists: “ the
corporation shall operate the hospitals then being operated by the city for the treatment of acute
and chronic disease.”'* Coney Island Hospital was specifically listed among the hospitals leased
"N.Y. Unconsol. Law (McKinney 1979 & Supp. 1998) §§ 7381 et seq.[hereafter HHC
Act].
2 HHC Act §7382.
13 “['The provision and delivery of comprehensive care and treatment of the ill and infirm,
both physical and mental, are of vital and paramount concern and essential to the protection and
promotion of the health, safety and welfare of the inhabitants of the state of New York and the
city of New York.... [The creation and operation [of HHC] is in all respects for the benefit of the
people of the state of New York and of the city of New York.... is a state, city and public
purpose, and . . . the exercise of [its] functions, powers and duties. . . constitutes the performance
of an essential public and governmental function.” HHC Act §7382.
'“ HHC Act §7386[1][a].
by the City to HHC “for its corporate purposes, for so long as it [HHC] shall be in existence’
Even the authority vested in HHC to contract with the private sector limit that power to health
facilities operated by HHC.'® And finally, HHC as a public benefit corporation must ensure that
through its operations any profits must “inure to the benefit of this state, or to the people
thereof.” This clear statutory mandate finds ample support in the legislative history which
reflects the goal of establishing HHC as a vehicle to improve municipal hospitals rather than as a
means to shed its public responsibility to operate them:
In establishing a public benefit corporation, the City is not getting out of the
hospital business. Rather it is establishing a mechanism to aid it in better
managing that business for the benefit not only of the public served by the
hospitals but the entire City health service system. The municipal hospitals and
health care system will continue to be the City’s responsibility governed by its
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.
(Letter of Mayor John V. Lindsay to Governor Nelson A. Rockefeller, Governor’s Bill Jacket, L.
1969, ch. 1016; emphasis added).
Accordingly, the legislature decided, in its wisdom, to embody the dual constitutional
mandates to provide for the needy and address the public health in a new public benefit
corporation. This entity, HHC, was to sit independent of governmental bureaucratic control. It
IS HHC Act §7387[1].
' HHC Act §7385(8) grants the power “[t]o 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.”
'"”N.Y. Gen. Constr. Law §66.3 (McKinney Supp. 1998).
10
by the City to HHC “for its corporate purposes, for so long as it [HHC] shall be in existence"
Even the authority vested in HHC to contract with the private sector limit that power to health
facilities operated by HHC.'® And finally, HHC as a public benefit corporation must ensure that
through its operations any profits must “inure to the benefit of this state, or to the people
thereof.” This clear statutory mandate finds ample support in the legislative history which
reflects the goal of establishing HHC as a vehicle to improve municipal hospitals rather than as a
means to shed its public responsibility to operate them:
In establishing a public benefit corporation, the City is not getting out of the
hospital business. Rather it is establishing a mechanism to aid it in better
managing that business for the benefit not only of the public served by the
hospitals but the entire City health service system. The municipal hospitals and
health care system will continue to be the City’s responsibility governed by its
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.
(Letter of Mayor John V. Lindsay to Governor Nelson A. Rockefeller, Governor’s Bill Jacket, L.
1969, ch. 1016; emphasis added).
Accordingly, the legislature decided, in its wisdom, to embody the dual constitutional
mandates to provide for the needy and address the public health in a new public benefit
corporation. This entity, HHC, was to sit independent of governmental bureaucratic control. It
IS HHC Act §7387[1].
' HHC Act §7385(8) grants the power “[t]o 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.”
'”N.Y. Gen. Constr. Law §66.3 (McKinney Supp. 1998).
10
was to operate a failing public health system in New York City and do so for the benefit of the
public, and in particular, those who are least able to pay for health services. Public benefit
corporations by their very nature span the bridge between direct governmental control and
private-sector management, be it non-profit or for profit. In New York they are the exclusive
province of the legislature'® and are but one of a myriad of organizational forms that the
legislature could have adopted to address the health care needs of the city’s residents, such as:
(I) the continued direct operation by state or local government; (ii) the creation of a separate
hospital board within the government; (iii) the establishment of an independent hospital taxing
district; (iv) the creation of a hospital authority; (v) the establishment of a new nonprofit
corporation; (vi) the authorization for a management contract; (vii) the creation of a new form of
public - private partnership; or (viii) the transfer of the entire system to another existing private
health system.” The legislature did not grant HHC the authority to act unilaterally to divest
itself of a hospital through a sublease that, as explained below, threatens the very purpose for
which it was created: to run a public health care system that guarantees access to the poor and
uninsured.
II. In approving the proposed 99 year sublease with PHS-NY, HHC has abdicated its duty
to operate a public health care system that provides services to the needy.
The Appellate Division and the Supreme Court opinions in this case do not extensively
'8 NY Constitution Art. X, §5 (McKinney 1987).
9 A. Camper, L. Gage, B. Eyman, S. Stranne, The Safety Net in Transition, Monograph
II. Reforming the Legal Structure and Governance of Safety Net Health Systems, (National
Association of Public Hospitals and Health Systems, June 1996), at 8.
11
was to operate a failing public health system in New York City and do so for the benefit of the
public, and in particular, those who are least able to pay for health services. Public benefit
corporations by their very nature span the bridge between direct governmental control and
private-sector management, be it non-profit or for profit. In New York they are the exclusive
province of the legislature'® and are but one of a myriad of organizational forms that the
legislature could have adopted to address the health care needs of the city’s residents, such as:
(I) the continued direct operation by state or local government; (i1) the creation of a separate
hospital board within the government; (iii) the establishment of an independent hospital taxing
district; (1v) the creation of a hospital authority; (v) the establishment of a new nonprofit
corporation; (vi) the authorization for a management contract; (vii) the creation of a new form of
public - private partnership; or (viii) the transfer of the entire system to another existing private
health system.'” The legislature did not grant HHC the authority to act unilaterally to divest
itself of a hospital through a sublease that, as explained below, threatens the very purpose for
which it was created: to run a public health care system that guarantees access to the poor and
uninsured.
II. In approving the proposed 99 year sublease with PHS-NY, HHC has abdicated its duty
to operate a public health care system that provides services to the needy.
The Appellate Division and the Supreme Court opinions in this case do not extensively
8 NY Constitution Art. X, §5 (McKinney 1987).
9 A. Camper, L. Gage, B. Eyman, S. Stranne, The Safety Net in Transition, Monograph
II, Reforming the I.egal Structure and Governance of Safety Net Health Systems, (National
Association of Public Hospitals and Health Systems, June 1996), at 8.
11
explore the terms of the 99 year sublease of Coney Island Hospital to Private Health Systems -
New York (“PHS-NY”). They conclude, however, that the legislature did not authorize HHC to
adopt such a contract. The Appellate Division unanimously determined that the sublease’s
transfer of “the operation of the hospital and the provision of medical services” to a private
entity -- is an act that “is not authorized by HHC’s governing statute.” The Supreme Court
notes that the sublease contains an arbitration clause regarding core services that may be
discontinued, thus wresting authority, illegally, from HHC to a third party.?! Amici concur with
both conclusions. However, an exploration of the salient terms of the sublease is in order
particularly as they affect the continued provision of health services to poor and uninsured
residents of Coney Island. The defects in this proposed arrangement with PHS-NY when
superimposed upon the medically underserved Coney Island community, makes the actions of
HHC not only unlawful but potentially harmful to the health of its residents as well.
The approval of the 99 year sublease by HHC Board of Directors on November 8, 1996
was made in the context of a definite plan by the current mayoral administration to privatize all
New York City public hospitals. What started with the Mayor’s musings on the role of
municipal government in the delivery of health care,” developed into specific plans to sell the
public hospitals, first with the New York City Economic Development Corporation and then
20 Appellate Division Decision at 3.
21 Posner Decision at 23.
22 Judge Posner’s decision below recounts how Mayor Rudolph Giuliani was intent on
“getting out of the hospital business” in his engagements with the local media Posner Decision at
23.n3.
12
explore the terms of the 99 year sublease of Coney Island Hospital to Private Health Systems -
New York (“PHS-NY?”). They conclude, however, that the legislature did not authorize HHC to
adopt such a contract. The Appellate Division unanimously determined that the sublease’s
transfer of “the operation of the hospital and the provision of medical services” to a private
992 entity -- is an act that “is not authorized by HHC’s governing statute.””® The Supreme Court
notes that the sublease contains an arbitration clause regarding core services that may be
discontinued, thus wresting authority, illegally, from HHC to a third party.?' Amici concur with
both conclusions. However, an exploration of the salient terms of the sublease is in order
particularly as they affect the continued provision of health services to poor and uninsured
residents of Coney Island. The defects in this proposed arrangement with PHS-NY when
superimposed upon the medically underserved Coney Island community, makes the actions of
HHC not only unlawful but potentially harmful to the health of its residents as well.
The approval of the 99 year sublease by HHC Board of Directors on November 8, 1996
was made in the context of a definite plan by the current mayoral administration to privatize all
New York City public hospitals. What started with the Mayor’s musings on the role of
municipal government in the delivery of health care,?? developed into specific plans to sell the
public hospitals, first with the New York City Economic Development Corporation and then
20 Appellate Division Decision at 3.
21 Posner Decision at 23.
22 Judge Posner’s decision below recounts how Mayor Rudolph Giuliani was intent on
“getting out of the hospital business” in his engagements with the local media Posner Decision at
23.0.3
12
with its consultant, J.P. Morgan Securities, Inc. The latter issued a plan which extolled the
desirability of Coney Island Hospital to prospective buyers but stopped short of analyzing how
such a sale would work in the face of the City’s obligation to continue to provide care to the
indigent.
With this backdrop HHC approved the 99 year lease, with a 99 year renewal clause,”
effectively approving a sale of the Coney Island Hospital to PHS-NY.?> The sublease? is
significant in at least two ways: first, it places a cap on services to the indigent without
guaranteeing continued access to health care at the hospital for Coney Island residents. To the
contrary, it affirmatively protects PHS-NY from any action HHC may take to enforce an
obligation to continue to care for the needy. Second, it creates a mechanism to allow a third
party, via arbitration, to bind the parties to decisions about the continued provision of core
services to community residents.
Simply put, Coney Island Hospital, under the proposed deal with PHS-NY, will no longer
guarantee that it will provide health care to those who need but cannot afford care. A number
23 J.P. Morgan, Report to the City of New York Concerning the Privatization of Coney
Island Hospital, Elmhurst Hospital Center, Queens Hospital Center (Mar. 1995) at 30
24 Draft Agreement of Sublease, Section 2.02 ( R. at 421) [hereafter Sublease].
2> This much is clear at least in the opinion of the Mayor, the chief proponent of the
privatization of the city’s public hospitals who was quoted as saying: “I’m a lawyer. I
understand that a 99-year lease is tantamount to a sale.” D.Seifman and C.Campanile Rudy
Wants WTC’s Towering Taxes, New York Post, Sept. 25, 1998, at 2 (regarding potential long
term lease of the World Trade Center).
2¢ The transaction is denominated a sublease since the City leased Coney Island Hospital
to HHC for $1.00 per year “for its corporate purposes for so long as it [HHC] shall be in
existence.” HHC Act §7387[1].
13
with its consultant, J.P. Morgan Securities, Inc. The latter issued a plan which extolled the
desirability of Coney Island Hospital to prospective buyers but stopped short of analyzing how
such a sale would work in the face of the City’s obligation to continue to provide care to the
indigent.?
With this backdrop HHC approved the 99 year lease, with a 99 year renewal clause,”
effectively approving a sale of the Coney Island Hospital to PHS-NY.* The sublease? is
significant in at least two ways: first, it places a cap on services to the indigent without
guaranteeing continued access to health care at the hospital for Coney Island residents. To the
contrary, it affirmatively protects PHS-NY from any action HHC may take to enforce an
obligation to continue to care for the needy. Second, it creates a mechanism to allow a third
party, via arbitration, to bind the parties to decisions about the continued provision of core
services to community residents.
Simply put, Coney Island Hospital, under the proposed deal with PHS-NY, will no longer
guarantee that it will provide health care to those who need but cannot afford care. A number
23 J.P. Morgan, Report to the City of New York Concerning the Privatization of Coney
Island Hospital, Elmhurst Hospital Center, Queens Hospital Center (Mar. 1995) at 30
24 Draft Agreement of Sublease, Section 2.02 ( R. at 421) [hereafter Sublease].
25 This much is clear at least in the opinion of the Mayor, the chief proponent of the
privatization of the city’s public hospitals who was quoted as saying: “I'm a lawyer. I
understand that a 99-year lease is tantamount to a sale.” D.Seifman and C.Campanile Rudy
Wants WTC’s Towering Taxes, New York Post, Sept. 25, 1998, at 2 (regarding potential long
term lease of the World Trade Center).
26 The transaction is denominated a sublease since the City leased Coney Island Hospital
to HHC for $1.00 per year “for its corporate purposes for so long as it [HHC] shall be in
existence.” HHC Act §7387{1].
13
of features of the agreement make this clear. First, there is a specific limit to PHS-NY’s
obligation to assume the care for the needy. The cap is defined as the current level of care to the
indigent by the hospital, adjusted for inflation, plus 15 per cent.”” Second, the cap is defined in
monetary terms, not in per capita terms, which means that the hospital will spend only a certain
amount on charity care irrespective of patient volume. This is a complete departure from the
status quo and the legislative and constitutional mandate discussed above. In fact, by couching
the limitation in monetary terms, Coney Island residents are subject to the vagaries of cost
formulae developed exclusively by the private, for profit corporation, PHS-NY 28
Worse yet, the sublease does not prohibit PHS-NY from calculating the cap based on its
own fee schedule, instead of its actual costs in providing services to the uninsured.” While HHC
does in fact commit itself to reimburse PHS-NY for services to the indigent above and beyond
the cap, it does so for only one year after the cap is reached.’® Thus, after this one-year
reimbursement period, HHC specifically allows PHS-NY to “manage access to health care in
299
such a manner. . . so as to avoid "Excess Incurrence’” of indigent care if the costs of providing
indigent care services exceed PHS-NY’s cap in any given year.’! Finally, HHC waives its right
to force Coney Island Hospital to provide care to the indigent once the cap is reached, after this
27 Sublease § 28.05 (R. at 473j-473K).
28 Analysis of Fundamental Issues That Have Yet To Be Resolved, NYC Comptroller
Alan Hevesi, November 7, 1996 at 1,2(R. At 606-07) [hereafter Hevesi
2” Hevesi Report at 1 (R. At 606)].
30 Sublease § 28.05 (R.at 473k).
31 1d. at 473j-473k.
14
of features of the agreement make this clear. First, there is a specific limit to PHS-NY’s
obligation to assume the care for the needy. The cap is defined as the current level of care to the
indigent by the hospital, adjusted for inflation, plus 15 per cent.’ Second, the cap is defined in
monetary terms, not in per capita terms, which means that the hospital will spend only a certain
amount on charity care irrespective of patient volume. This is a complete departure from the
status quo and the legislative and constitutional mandate discussed above. In fact, by couching
the limitation in monetary terms, Coney Island residents are subject to the vagaries of cost
formulae developed exclusively by the private, for profit corporation, PHS-NY 28
Worse yet, the sublease does not prohibit PHS-NY from calculating the cap based on its
own fee schedule, instead of its actual costs in providing services to the uninsured.” While HHC
does in fact commit itself to reimburse PHS-NY for services to the indigent above and beyond
the cap, it does so for only one year after the cap is reached.’® Thus, after this one-year
reimbursement period, HHC specifically allows PHS-NY to “manage access to health care in
99% such a manner. . . so as to avoid "Excess Incurrence’” of indigent care if the costs of providing
indigent care services exceed PHS-NY’s cap in any given year.’ Finally, HHC waives its right
to force Coney Island Hospital to provide care to the indigent once the cap is reached, after this
27 Sublease § 28.05 (R. at 473j-473k).
28 Analysis of Fundamental Issues That Have Yet To Be Resolved, NYC Comptroller
Alan Hevesi, November 7, 1996 at 1,2(R. At 606-07) [hereafter Hevesi
2° Hevesi Report at 1 (R. At 606)].
30 Sublease § 28.05 (R.at 473k).
31 1d. at 473j-473k.
14
one year period, regardless of any offer to reimburse in the future.’ The City Comptroller’s
office rightfully concludes that under this arrangement, Coney Island Hospital will cease to be a
public hospital:
The sublease requires only that PHS-NY spend a certain amount on “charity
care.” The terms protect PHS-NY, by limiting its liability. But they do not
guarantee that the hospital will continue to carry out the mission of a public
1.33 hospita
HHC requires PHS-NY to maintain core departments within Coney Island Hospital
substantially to the same degree that exists the day prior to its takeover. These departments
include emergency medicine, medicine, obstetrics/gynecology, pediatrics, psychiatry,
rehabilitation medicine, and general surgery.’* However, HHC concedes that a decision by the
hospital to discontinue any of these core services can be made without HHC approval, if PHS-
NY seeks and wins outside arbitration.®®> As a result, HHC is not only delegating operation of a
public hospital to a private entity, but in this critical area it is “essentially stripped. . .of its
control over the carrying out of its duties.”*® This is an unnecessary and unauthorized concession
by a public benefit corporation specifically created to operate the city’s hospitals in a manner
214d.
33 Hevesi Report, at 1, (R.at 606) (emphasis in original).
3% Sublease § 28.01(a) ( R. at 473c¢).
35 Sublease, § 28.01(b) (R. at 473d). HHC will get 90 days notice to object to such an
action. But PHS-NY can discontinue core services in the event an outside arbitrator agrees with
it on grounds that “changes in health care practices, changes in the health care needs of the
Coney Island community, [or] fundamental changes in government reimbursement mechanisms,
or other fundamental changes which materially affect the delivery of health care services” led to
the decision to terminate core departments. Id.
36 Posner Decision, at 23-24.
15
one year period, regardless of any offer to reimburse in the future.’ The City Comptroller’s
office rightfully concludes that under this arrangement, Coney Island Hospital will cease to be a
public hospital:
The sublease requires only that PHS-NY spend a certain amount on “charity
care.” The terms protect PHS-NY, by limiting its liability. But they do not
guarantee that the hospital will continue to carry out the mission of a public
1.33 hospita
HHC requires PHS-NY to maintain core departments within Coney Island Hospital
substantially to the same degree that exists the day prior to its takeover. These departments
include emergency medicine, medicine, obstetrics/gynecology, pediatrics, psychiatry,
rehabilitation medicine, and general surgery.** However, HHC concedes that a decision by the
hospital to discontinue any of these core services can be made without HHC approval, if PHS-
NY seeks and wins outside arbitration.>> As a result, HHC is not only delegating operation of a
public hospital to a private entity, but in this critical area it is “essentially stripped. . .of its
control over the carrying out of its duties.”® This is an unnecessary and unauthorized concession
by a public benefit corporation specifically created to operate the city’s hospitals in a manner
214.
33 Hevesi Report, at 1, (R.at 606) (emphasis in original).
34 Sublease § 28.01(a) ( R. at 473c¢).
35 Sublease, § 28.01(b) (R. at 473d). HHC will get 90 days notice to object to such an
action. But PHS-NY can discontinue core services in the event an outside arbitrator agrees with
it on grounds that “changes in health care practices, changes in the health care needs of the
Coney Island community, [or] fundamental changes in government reimbursement mechanisms,
or other fundamental changes which materially affect the delivery of health care services” led to
the decision to terminate core departments. Id.
36 Posner Decision, at 23-24.
15
consistent with statutory and constitutional mandates.’
The Coney Island community is medically underserved and desperately needs a hospital
that will serve all of its residents, particularly the needy. Coney Island Hospital is the largest
facility in southern Brooklyn serving 750,000 people with 457 beds for the communities of
Coney Island, Brighton Beach and Sheepshead Bay. At least 21% of its households had incomes
below the poverty level and of the noninstitutional population, over 22% were not covered by
health insurance on a twelve-month basis in 1996 (not including Medicaid and Medicare
recipients),’® a proportion higher than the statewide and citywide rate.>* Coney Island Hospital
directly serves this needy population as noted by Judith B. Wessler, health policy analyst:
According to the Coney Island Hospital Offering Memorandum, in 1995 more
than 87.8% of outpatient visits to Coney Island were made by participants in
public programs, i.e., Medicaid or Medicare, or by patients categorized as "self-
pay,” the vast majority of whom are uninsured. Medicaid patients alone account
for 53.1% of outpatients visits. Similarly, participants in public programs and
“self-pay’ patients account for 87.6% of inpatient discharges, with Medicaid
patients alone comprising 65.3% The majority of Coney Island’s net patient
service revenue flows from Medicaid and the bad debt and charity pools.*
These local community trends only reflect the larger city and statewide trends that reveal
a dramatic increase in the number of uninsured persons. The New York State Comptroller
37 The City Comptroller raises this very question: “Why is there an arbitration process in
the first place? Why doesn’t HHC have more power in defining the services that it wants its
vendor to provide? If the vendor does not want to provide those services, shouldn’t the contract
be voided?” Hevesi Report at 7 (R.at 612) (emphasis in original).
38 HHC Board of Directors’ Briefing Book, Sublease Project Description at A-1.(R. at
543).
2d
“Affidavit of Judith B. Wessler, para. 8 (R. at 591).
16
consistent with statutory and constitutional mandates.*’
The Coney Island community is medically underserved and desperately needs a hospital
that will serve all of its residents, particularly the needy. Coney Island Hospital is the largest
facility in southern Brooklyn serving 750,000 people with 457 beds for the communities of
Coney Island, Brighton Beach and Sheepshead Bay. At least 21% of its households had incomes
below the poverty level and of the noninstitutional population, over 22% were not covered by
health insurance on a twelve-month basis in 1996 (not including Medicaid and Medicare
recipients),*® a proportion higher than the statewide and citywide rate.*® Coney Island Hospital
directly serves this needy population as noted by Judith B. Wessler, health policy analyst:
According to the Coney Island Hospital Offering Memorandum, in 1995 more
than 87.8% of outpatient visits to Coney Island were made by participants in
public programs, i.e., Medicaid or Medicare, or by patients categorized as self-
pay, the vast majority of whom are uninsured. Medicaid patients alone account
for 53.1% of outpatients visits. Similarly, participants in public programs and
“self-pay’ patients account for 87.6% of inpatient discharges, with Medicaid
patients alone comprising 65.3% The majority of Coney Island’s net patient
service revenue flows from Medicaid and the bad debt and charity pools.*
These local community trends only reflect the larger city and statewide trends that reveal
a dramatic increase in the number of uninsured persons. The New York State Comptroller
37 The City Comptroller raises this very question: “Why is there an arbitration process in
the first place? Why doesn’t HHC have more power in defining the services that it wants its
vendor to provide? If the vendor does not want to provide those services, shouldn’t the contract
be voided?” Hevesi Report at 7 (R.at 612) (emphasis in original).
38 HHC Board of Directors’ Briefing Book, Sublease Project Description at A-1.(R. at
543).
#14
“Affidavit of Judith B. Wessler, para. 8 (R. at 591).
16
reports that statewide the number of uninsured individuals increased by fifty percent since 1991,
with nearly 2 million individuals without health insurance living in New York City alone-- much
higher than the national average.*’ Incredibly, a full 96 percent of all inpatient health care
provided by HHC in 1994 was for indigent residents (i.e., those on Medicaid and Medicare and
uninsured individuals).* County-wide statistics are pertinent given the interdependence of the
entire municipal public health system’s acute care hospitals. Many of Brooklyn’s poor residents
suffer from chronic and disabling condition, as well. For example, 24% of the City’s AIDS cases
in 1996 lie in Brooklyn;* the rate of tuberculosis in Brooklyn exceeds the city average;** and
30% of the substance abuse cases in the City lie in Brooklyn as well.**
Finally, the fact that HHC has chosen a private, for profit corporation as its business
partner in its first privatization arrangement is not an insignificant matter. Currently, Coney
Island Hospital is operated by law so that profit must “inure to the benefit of this state, or to the
eople thereof.” In contrast, the proposed owner/operator for the hospital is a for-profit entity peop prop p p p
“I Office of N.Y.S.Comptroller H. Carl McCall, Challenges Facing New York City’s
Public Hospital System, (Aug. 5, 1998) at 8.
42 Charles Brecher and Sheila Spiezo, Privatization and Public Hospitals: Choosing
Wisely for New York City, Twentieth Century Fund (1995) at 9.
$3 NYC Department of Health, Bureau of Disease Intervention Research, Epidemiologic
Profile of HIV/AIDS in New York City(Aug. 1996) at 1 [hereinafter DOH Profile]
“NYC Department of Health, Bureau of Tuberculosis Control, Tuberculosis in New
York City 1994 Information Survey (1994) at 12.
45 Health Systems Agency of New York City, Interim HIV/AIDS Strategic Plan for the
City of New York Vol. I (1996) at 62.
% N.Y. Gen. Constr. Law §66.3 (McKinney Supp. 1998).
17
reports that statewide the number of uninsured individuals increased by fifty percent since 1991,
with nearly 2 million individuals without health insurance living in New York City alone-- much
higher than the national average.’ Incredibly, a full 96 percent of all inpatient health care
provided by HHC in 1994 was for indigent residents (i.e., those on Medicaid and Medicare and
uninsured individuals). County-wide statistics are pertinent given the interdependence of the
entire municipal public health system’s acute care hospitals. Many of Brooklyn’s poor residents
suffer from chronic and disabling condition, as well. For example, 24% of the City’s AIDS cases
in 1996 lie in Brooklyn;* the rate of tuberculosis in Brooklyn exceeds the city average;* and
30% of the substance abuse cases in the City lie in Brooklyn as well.’
Finally, the fact that HHC has chosen a private, for profit corporation as its business
partner in its first privatization arrangement is not an insignificant matter. Currently, Coney
Island Hospital is operated by law so that profit must “inure to the benefit of this state, or to the
people thereof.”*® In contrast, the proposed owner/operator for the hospital is a for-profit entity
41 Office of N.Y.S.Comptroller H. Carl McCall, Challenges Facing New York City’s
Public Hospital System, (Aug. 5, 1998) at 8.
42 Charles Brecher and Sheila Spiezo, Privatization and Public Hospitals: Choosing
Wisely for New York City, Twentieth Century Fund (1995) at 9.
NYC Department of Health, Bureau of Disease Intervention Research, Epidemiologic
Profile of HIV/AIDS in New York City(Aug. 1996) at 1 [hereinafter DOH Profile]
“NYC Department of Health, Bureau of Tuberculosis Control, Tuberculosis in New
York City 1994 Information Survey (1994) at 12.
4 Health Systems Agency of New York City, Interim HIV/AIDS Strategic Plan for the
City of New York Vol. I (1996) at 62.
N.Y. Gen. Constr. Law §66.3 (McKinney Supp. 1998).
17
where its owners will have a property right to their share of the organizations profits.
Presumably, the management and board of PHS-NY owe a duty to maximize profits for its
economic survival regardless of whatever strictures appear in the sublease. This obligation to
reach profitability, whether market-based or legal in nature, will lead to pressures that are
inconsistent with the public purposes embodied in the HHC Act. For example, in a study on
rural public hospitals the General Accounting Office found in 1991 that:
Hospitals owned by a for-profit entity were more likely to close than publicly
owned hospitals. This was not an unexpected finding. For-profit hospitals have
the greatest incentive to leave an unprofitable market area since they must earn an
adequate return on investment. Although public hospitals have a larger burden of
uncompensated care, their public status gives them financial alternatives, such as
seeking increased local government appropriations, that generally are not
available to private nonprofit or for-profit hospitals.*’
As expected, proprietary hospitals (i.e., private, for-profit, investor-owned) have their champions
as well,*® and much has been said about the relative merits of privatization via the nonprofit route
47 Mark V. Napel, Congr.General Accounting Office, Rural Hospitals: Closures and
Issues of Access, No. 12, at 29 (1991), cited in, Phyllis E. Bernard, Privatization of Rural Public
Hospitals: Implications for Access and Indigent Care, 47 Mer. L. Rev. 991, 998 (1996)
(hereafter “Bernard”). Ms. Bernard goes on to cite additional studies that both support and
contradict the GAO report on the risk of hospital closure. Cf., Marsha Lillie-Blanton, et al.,
Rural and Urban Hospital Closures, 1985-1988: Operating and Environmental Characteristics
that Affect Risk, 29 Inquiry 332 (1992) (among public and for-profit hospitals, urban/rural
differences in risk of closure were not statistically significant) and Deborah Williams, et al.,
Profits. Community Role. and Hospital Closure: An Urban and Rural Analysis, 30 Med. Care,
174, 186 (1992) (“public hospitals are about half as likely to close in both urban and rural areas,
and proprietary hospitals [i.e., private, for-profit] are from two to four times as likely to close as
private nonprofit hospitals in rural areas”).
8 Gordon W. Josephson, Private hospital care for profit? A reappraisal, Hlth. Care
Mgmt. Rev. (June 22, 1997).
18
where its owners will have a property right to their share of the organization’s profits.
Presumably, the management and board of PHS-NY owe a duty to maximize profits for its
economic survival regardless of whatever strictures appear in the sublease. This obligation to
reach profitability, whether market-based or legal in nature, will lead to pressures that are
inconsistent with the public purposes embodied in the HHC Act. For example, in a study on
rural public hospitals the General Accounting Office found in 1991 that:
Hospitals owned by a for-profit entity were more likely to close than publicly
owned hospitals. This was not an unexpected finding. For-profit hospitals have
the greatest incentive to leave an unprofitable market area since they must earn an
adequate return on investment. Although public hospitals have a larger burden of
uncompensated care, their public status gives them financial alternatives, such as
seeking increased local government appropriations, that generally are not
available to private nonprofit or for-profit hospitals.*’
As expected, proprietary hospitals (i.e., private, for-profit, investor-owned) have their champions
as well,*® and much has been said about the relative merits of privatization via the nonprofit route
47 Mark V. Napel, Congr.General Accounting Office, Rural Hospitals: Closures and
Issues of Access, No. 12, at 29 (1991), cited in, Phyllis E. Bernard, Privatization of Rural Public
Hospitals: Implications for Access and Indigent Care, 47 Mer. L. Rev. 991, 998 (1996)
(hereafter “Bernard™). Ms. Bernard goes on to cite additional studies that both support and
contradict the GAO report on the risk of hospital closure. Cf., Marsha Lillie-Blanton, et al.,
Rural and Urban Hospital Closures, 1985-1988: Operating and Environmental Characteristics
that Affect Risk, 29 Inquiry 332 (1992) (among public and for-profit hospitals, urban/rural
differences in risk of closure were not statistically significant) and Deborah Williams, et al.,
Profits, Community Role, and Hospital Closure: An Urban and Rural Analysis, 30 Med. Care,
174, 186 (1992) (“public hospitals are about half as likely to close in both urban and rural areas,
and proprietary hospitals [i.e., private, for-profit] are from two to four times as likely to close as
private nonprofit hospitals in rural areas’).
“8 Gordon W. Josephson, Private hospital care for profit? A reappraisal, Hlth. Care
Mgmt. Rev. (June 22, 1997).
18
versus the for-profit route.*” HHC has unilaterally embarked on a path between two extremes:
public hospitals operated by a public benefit corporation to private, profit-based, investor-owned
operation. As noted below in point III, this decision raises a myriad of concerns that amici
submit must be answered by our elected representatives.
Whether privatization can ever work in the context of a public benefit corporation is a
larger question that is not before this Court. Whether this specific lease arrangement between
HHC and PHS-NY constitutes an unauthorized abdication of statutory duties, is. In transferring
operations HHC is not merely transferring this duty with an eye towards effective control if
something should go awry. Instead, HHC is setting itself up for complete abdication of its duty -
- and not just to a contracting party but to an outsider arbitrator in the most critical core
departments.”® Moreover, the sublease contains numerous protections in favor of PHS-NY and
against HHC regarding enforcement efforts to ensure that the needy will be guaranteed access to
Coney Island Hospital once the cap is reached as per the calculations devised by PHS-NY, and
4 “IN]on profit does not mean no profit, as both sectors pursue profitability with equal
vigor.” Id. at 112. See e.g., Consumers Union, Southwest Regional Office, Preserving the
Charitable Trust: Nonprofit Hospital Conversion in Texas, (July 1998); Terese Hudson, Faster.
Stronger, Private? Converting Hospitals from Public to Private Status to Improve
Competitiveness, Hospitals & Health Networks, (July 5, 1997); Louise Kertesz, Public Facilities
Going Private: L.A. County Moves Forward After Crisis, Modern Healthcare, (Sept. 9, 1996).
50 And apparently within the other services currently provided by Coney Island Hospital,
there are even fewer controls in place for HHC: “In all other departments -- which are not
considered “core” departments -- PHS-NY can make changes (including closure) without any
effective limitation (e.g.. to have the service provided by referring patients to another site, or by
bringing in different doctors). The departments where it has such discretion include cardiology.
urology. pulmonary care, pharmacy. dentistry, podiatry, oral surgery. anesthesiology,
endocrinology. ophthalmology, orthopedic surgery, and special hematology.” Hevesi Report at 8
(R. at 612-613).
19
versus the for-profit route.” HHC has unilaterally embarked on a path between two extremes:
public hospitals operated by a public benefit corporation to private, profit-based, investor-owned
operation. As noted below in point III, this decision raises a myriad of concerns that amici
submit must be answered by our elected representatives.
Whether privatization can ever work in the context of a public benefit corporation is a
larger question that is not before this Court. Whether this specific lease arrangement between
HHC and PHS-NY constitutes an unauthorized abdication of statutory duties, is. In transferring
operations HHC is not merely transferring this duty with an eye towards effective control if
something should go awry. Instead, HHC is setting itself up for complete abdication of its duty -
- and not just to a contracting party but to an outsider arbitrator in the most critical core
departments.’ Moreover, the sublease contains numerous protections in favor of PHS-NY and
against HHC regarding enforcement efforts to ensure that the needy will be guaranteed access to
Coney Island Hospital once the cap is reached as per the calculations devised by PHS-NY, and
49 “[N]on profit does not mean no profit, as both sectors pursue profitability with equal
vigor.” Id. at 112. See e.g., Consumers Union, Southwest Regional Office, Preserving the
Charitable Trust: Nonprofit Hospital Conversion in Texas, (July 1998); Terese Hudson, Faster,
Stronger, Private? Converting Hospitals from Public to Private Status to Improve
Competitiveness, Hospitals & Health Networks, (July 5, 1997); Louise Kertesz, Public Facilities
Going Private: L.A. County Moves Forward After Crisis, Modern Healthcare, (Sept. 9, 1996).
°® And apparently within the other services currently provided by Coney Island Hospital,
there are even fewer controls in place for HHC: “In all other departments -- which are not
considered ‘core’ departments -- PHS-NY can make changes (including closure) without any
effective limitation (e.g.. to have the service provided by referring patients to another site. or by
bringing in different doctors). The departments where it has such discretion include cardiolo
urology, pulmonary care, pharmacy. dentistry, podiatry, oral surgery. anesthesiology.
endocrinology. ophthalmology, orthopedic surgery, and special hematology.” Hevesi Report at 8
(R. at 612-613).
19
PHS-NY alone.
In sum, the privatization arrangement initiated by HHC, when considered in its totality, is
an abdication of its duty to operate a public health care system and to guarantee medical services
to those who cannot pay.
III. The transfer of the complete operation, management and administration of Coney
Island Hospital to PHS-NY raises additional, complex, public policy issues that only the
legislature can decide.
The predominant public health issue in hospital conversions is the growing number of
private-sector companies which are purchasing nonprofit health facilities.’ Even so, government
owned hospitals are still a significant proportion of all hospitals in the country: of the 5,250 acute
care hospitals, 57% are private, nonprofit facilities; 28% are public hospitals; and 15% are
proprietary and investor owned.® As expected, public hospitals provide more than their share of
services to the poor and uninsured. For example, while accounting for only 15% of the patient
revenue in this country, public hospitals provide 34% of all the uncompensated care.*
Privatization of public hospitals is an issue that has been addressed in other states **which
>! Maria Rothouse, Change in Nonprofit Entities, Issue Brief, Health Policy Tracking
Service (July 1, 1998).
>? See Josephson, Supra note 48, at 103.
3 AFSCME Public Policy Department, Making the Case for Safety Net Hospitals, Health
Focus (March 1997) at 4,( citing, J. Weissman, Uncompensated Hospital Care: Will It Be There
If We Need It, 276 JAMA 10 (Sept. 11, 1996)).
>*As noted in this Point III of this brief, a number of states have passed legislation
specifically addressing the conversion of public hospitals to private control. Palm Beach County
20
PHS-NY alone.
In sum, the privatization arrangement initiated by HHC, when considered in its totality, is
an abdication of its duty to operate a public health care system and to guarantee medical services
to those who cannot pay.
III. The transfer of the complete operation, management and administration of Coney
Island Hospital to PHS-NY raises additional, complex, public policy issues that only the
legislature can decide.
The predominant public health issue in hospital conversions is the growing number of
private-sector companies which are purchasing nonprofit health facilities.’ Even so, government
owned hospitals are still a significant proportion of all hospitals in the country: of the 5,250 acute
care hospitals, 57% are private, nonprofit facilities; 28% are public hospitals; and 15% are
proprietary and investor owned.”? As expected, public hospitals provide more than their share of
services to the poor and uninsured. For example, while accounting for only 15% of the patient
revenue in this country, public hospitals provide 34% of all the uncompensated care.”
Privatization of public hospitals is an issue that has been addressed in other states **which
>! Maria Rothouse, Change in Nonprofit Entities, Issue Brief, Health Policy Tracking
Service (July 1, 1998).
32 See Josephson, Supra note 48, at 103.
3 AFSCME Public Policy Department, Making the Case for Safety Net Hospitals, Health
Focus (March 1997) at 4,( citing, J. Weissman, Uncompensated Hospital Care: Will It Be There
If We Need It, 276 JAMA 10 (Sept. 11, 1996)).
“As noted in this Point III of this brief, a number of states have passed legislation
specifically addressing the conversion of public hospitals to private control. Palm Beach County
20
have enacted specific legislation to address conversions of hospitals from either the public sector
or the private, non-profit sector.” Some of these states include: North Carolina which authorizes
counties to privatize public hospitals;*® Florida;*’ California.® These statutes seek to balance the
limitations placed upon this process partially because of the conflicts discussed above between
the goals and motives of private versus public actors. This conflict has much to do with the
dynamic between the commitment government has to promote the general welfare and the
promises, real or illusory, that privatization of government functions bodes for the future.
A short list of the important, yet complex, issues that must be addressed in this regard
includes:
Health Care District v. Everglades Memorial Hospital, Inc., 658 So0.2d 577 (Ct. App., 4th Dist.
1995) illustrates some the problems amici raise herein. Florida statutes permit public hospitals
to reorganize as private nonprofit hospitals in the form of leases for the hospital administration
and operation. Nonetheless, where such a lease does not reserve sufficient control in the district
board, the lease arrangement is illegal: “Here the district essentially pledged public funds to the
non-governmental entity, without provision for insuring operations and expenditure in the public
interest.” Id. at 580. And similar to the points raised above by amici about the PHS-NY fee
schedule, the court in this case noted: “Not only does the private hospital board have substantial
autonomy. . . but the district is obligated to pay the hospital from ad valorem taxes based upon
rates charged and expenses incurred by the hospital over which the district has no ultimate
influence.” 1d.
>> As of April 1998, thirteen states and the District of Columbia had legislation
controlling nonprofit hospital conversions, alone. A total of 28 states have legislation controlling
conversions of nonprofit hospitals, public hospitals, state and local health or hospital authorities,
public or university hospitals, insurers and other nonprofit health care entities. Bureau of
National Affairs, Hospital Conversions Spur States to Examine Community Benefit Issues,
6 Health Care Policy Report 16 at 666.
%N. C. Gen. Stat. §§ 160A-272, (1979).
°7 Fla. Stat. Ann. § 155.40 (West 1990); see also, Palm Beach County 658 So.2d 577.
58 Cal. Gov’t. Code § 54950, et seq. (West 1997) (Open Meeting requirements); Health
and Safety Code § 32125 (West 1990)(Freedom of Information).
21
have enacted specific legislation to address conversions of hospitals from either the public sector
or the private, non-profit sector.” Some of these states include: North Carolina which authorizes
counties to privatize public hospitals;>® Florida;>’ California.®® These statutes seek to balance the
limitations placed upon this process partially because of the conflicts discussed above between
the goals and motives of private versus public actors. This conflict has much to do with the
dynamic between the commitment government has to promote the general welfare and the
promises, real or illusory, that privatization of government functions bodes for the future.
A short list of the important, yet complex, issues that must be addressed in this regard
includes:
Health Care District v. Everglades Memorial Hospital, Inc., 658 So.2d 577 (Ct. App., 4th Dist.
1995) illustrates some the problems amici raise herein. Florida statutes permit public hospitals
to reorganize as private nonprofit hospitals in the form of leases for the hospital administration
and operation. Nonetheless, where such a lease does not reserve sufficient control in the district
board, the lease arrangement is illegal: “Here the district essentially pledged public funds to the
non-governmental entity, without provision for insuring operations and expenditure in the public
interest.” Id. at 580. And similar to the points raised above by amici about the PHS-NY fee
schedule, the court in this case noted: “Not only does the private hospital board have substantial
autonomy. . . but the district is obligated to pay the hospital from ad valorem taxes based upon
rates charged and expenses incurred by the hospital over which the district has no ultimate
influence.” Id.
55 As of April 1998, thirteen states and the District of Columbia had legislation
controlling nonprofit hospital conversions, alone. A total of 28 states have legislation controlling
conversions of nonprofit hospitals, public hospitals, state and local health or hospital authorities,
public or university hospitals, insurers and other nonprofit health care entities. Bureau of
National Affairs, Hospital Conversions Spur States to Examine Community Benefit Issues,
6 Health Care Policy Report 16 at 666.
®N. C. Gen. Stat. §§ 160A-272, (1979).
37 Fla. Stat. Ann. § 155.40 (West 1990); see also, Palm Beach County 658 So0.2d 577.
58 Cal. Gov’t. Code § 54950, et seq. (West 1997) (Open Meeting requirements); Health
and Safety Code § 32125 (West 1990)(Freedom of Information).
2]
Gifts of Public Assets: As noted above, PHS-NY will have the right to claim expenses
above and beyond the “cap” in servicing the needy for a one year period. These monies will be
paid by HHC directly to PHS-NY under an arrangement where PHS-NY will bill presumably on
the basis of its fee schedule, not on actual costs.” In the absence of clear legislative mandates
regarding conversions of public hospitals to the public sector, will the transfer of monies from
HHC to PHS-NY violate the prohibition of gifts of public monies under Article VII of the New
York Constitution?¢° Moreover, the lease term in this matter (99 years with 99 year renewal) is
tantamount to a sale, as noted above, of both the property and the City land it is located on.
Without clear legislative direction to regulate this and similar transactions, will the conveyance
violate the prohibition of gifts of public monies?®!
Open Meetings & Public Access: The current mechanism to allow community access to
Coney Island Hospital will no longer exist under the proposed sublease. Instead, its replacement,
a Community Advisory Board, will specifically not be considered a public body by HHC or
PHS-NY.% This clearly raises the question of how the public will have access to meetings and
59 Hevesi Report, at 1 (R. at 606).
0 Amici adopt the arguments advanced by the appellees, Campaign to Save Our Public
Hospitals, Queens Coalition, et al., on this point. Respondent’s Brief, pp. 43-46.
®! In Florida a conveyance of a district hospital to a non-profit corporation was ruled null
and void under a state statute (Section 155.40, Florida Statutes) that only authorized district
hospitals to reorganize as nonprofits for the purpose of entering into management contracts. See
Jess Parrish Memorial Hospital v. City Titusville, 506 So.2d 22 (Fla. Dist.Ct. App. 1987)(statute
permitting reorganization unlawfully delegates legislative powers to a District Board and allows
use of public assets in violation of Florida constitution).
62 “In no event shall the Community Advisory Board be deemed hereunder a public
body.” Sublease, § 28.03(a)(1)(C) (R. at 473g).
22
Gifts of Public Assets: As noted above, PHS-NY will have the right to claim expenses
above and beyond the “cap” in servicing the needy for a one year period. These monies will be
paid by HHC directly to PHS-NY under an arrangement where PHS-NY will bill presumably on
the basis of its fee schedule, not on actual costs.” In the absence of clear legislative mandates
regarding conversions of public hospitals to the public sector, will the transfer of monies from
HHC to PHS-NY violate the prohibition of gifts of public monies under Article VII of the New
York Constitution?®® Moreover, the lease term in this matter (99 years with 99 year renewal) is
tantamount to a sale, as noted above, of both the property and the City land it is located on.
Without clear legislative direction to regulate this and similar transactions, will the conveyance
violate the prohibition of gifts of public monies?®'
Open Meetings & Public Access: The current mechanism to allow community access to
Coney Island Hospital will no longer exist under the proposed sublease. Instead, its replacement,
a Community Advisory Board, will specifically not be considered a public body by HHC or
PHS-NY.% This clearly raises the question of how the public will have access to meetings and
> Hevesi Report, at 1 (R. at 606).
0 Amici adopt the arguments advanced by the appellees, Campaign to Save Our Public
Hospitals, Queens Coalition, et al., on this point. Respondent’s Brief, pp. 43-46.
®! In Florida a conveyance of a district hospital to a non-profit corporation was ruled null
and void under a state statute (Section 155.40, Florida Statutes) that only authorized district
hospitals to reorganize as nonprofits for the purpose of entering into management contracts. See
Jess Parrish Memorial Hospital v. City Titusville, 506 So.2d 22 (Fla. Dist.Ct. App. 1987)(statute
permitting reorganization unlawfully delegates legislative powers to a District Board and allows
use of public assets in violation of Florida constitution).
62 “In no event shall the Community Advisory Board be deemed hereunder a public
body.” Sublease, § 28.03(a)(1)(C) (R. at 473g).
22
documents. In other words, will the legislature allow de facto exceptions to the Open Meetings
Law?’ and the Freedom of Information Law?%* Other states have addressed some of these
concerns with specific legislation.®®
Resale Rights: Articles 10 and 11 of the sublease to PHS-NY give it the right to sell or
sublease its interest in Coney Island Hospital, subject to limitations.®® Without legislative
guidance should the private entity that is granted control over operations and management of a
public hospital be permitted to sell its interest? Under what limitations? And should the
legislature require that if such a lease is authorized to a private entity, that the hospital should
revert back to HHC in the event the lessee decides to terminate the agreement?®’
The proposed privatization arrangement for Coney Island Hospital raises a number of
significant public policy issues that can only be properly addressed by the legislature. Amici urge
the Court to hold that these vital issues regarding the health care options available to all City
residents, and to Coney Island residents in particular, have not been fully aired. Truncated and
© N.Y. Public Officers Law, §§ 100-111 (McKinney 1988 & Supp. 1998).
% N.Y. Public Officers Law, §§84-99 (McKinney 1988 & Supp. 1998).
% In South Carolina the county’s continued obligation to reimburse for indigent care, but
otherwise relinquish control to the private sector, was insufficient to require compliance with the
open meetings provisions of state law. Bernard, supra, at 49, citing, South Carolina Opinion of
the Attorney General, 82-15 (Mar. 12, 1982). California allows a limited exemption to the open
meetings and records laws for sessions of public hospitals that address “trade secrets.” Cal.
Health & Safety Code §1462(e) 1990). And both Georgia (see, Clayton County Hospital
Authority v. Webb, 208 Ga. App. 91, 430 S.E.2d 89 (1993)) and Ohio(see, Fox v. Cuyahoga
Hospital System, 529 N.E. 2d 443 (Ohio 1988) do not permit public hospitals to impede
disclosure during the deliberations regarding privatization.
6 Sublease (R. at 444-449 and 449-454, respectively).
67 See, Hevesi Report, at 18 (R. at 623).
23
documents. In other words, will the legislature allow de facto exceptions to the Open Meetings
Law® and the Freedom of Information Law?** Other states have addressed some of these
concerns with specific legislation.®
Resale Rights: Articles 10 and 11 of the sublease to PHS-NY give it the right to sell or
sublease its interest in Coney Island Hospital, subject to limitations.®® Without legislative
guidance should the private entity that is granted control over operations and management of a
public hospital be permitted to sell its interest? Under what limitations? And should the
legislature require that if such a lease is authorized to a private entity, that the hospital should
revert back to HHC in the event the lessee decides to terminate the agreement?®’
The proposed privatization arrangement for Coney Island Hospital raises a number of
significant public policy issues that can only be properly addressed by the legislature. Amici urge
the Court to hold that these vital issues regarding the health care options available to all City
residents, and to Coney Island residents in particular, have not been fully aired. Truncated and
N.Y. Public Officers Law, §§ 100-111 (McKinney 1988 & Supp. 1998).
* N.Y. Public Officers Law, §§84-99 (McKinney 1988 & Supp. 1998).
% In South Carolina the county’s continued obligation to reimburse for indigent care, but
otherwise relinquish control to the private sector, was insufficient to require compliance with the
open meetings provisions of state law. Bernard, supra, at 49, citing, South Carolina Opinion of
the Attorney General, 82-15 (Mar. 12, 1982). California allows a limited exemption to the open
meetings and records laws for sessions of public hospitals that address “trade secrets.” Cal.
Health & Safety Code §1462(e) 1990). And both Georgia (see, Clayton County Hospital
Authority v. Webb, 208 Ga. App. 91, 430 S.E.2d 89 (1993)) and Ohio(see, Fox v. Cuyahoga
Hospital System, 529 N.E. 2d 443 (Ohio 1988) do not permit public hospitals to impede
disclosure during the deliberations regarding privatization.
6 Sublease (R. at 444-449 and 449-454, respectively).
67 See, Hevesi Report, at 18 (R. at 623).
23
unilateral actions taken by HHC have frustrated this public right. The fact that the hospital at
issue lies within a system specifically created by the legislature in 1969 makes this concern
paramount. Only the legislature can provide the authorization to transfer a public hospital to a
private entity for any period, especially 198 years.
CONCLUSION
For all the reasons noted above, amici respectfully request that the judgment entered
below, and affirmed by the Appellate Division, which ruled that the actions taken by HHC
constituted an ultra vires act, be affirmed by this Court.
Dated: New York, New York
16 December 1998
Respectfully submitted,
=~
4 J) uan Cartagena
\—_—" Arlene Kohn Gilbert
COMMUNITY SERVICE SOCIETY OF NEW YORK
105 East 22nd Street
New York, NY 10010
212.254.8900
Of Counsel,
Harry Franklin
COMMITTEE OF INTERNS
AND RESIDENTS
386 Park Ave. South
New York, New York 10016
(212) 725-5500
24