Plaintiffs Cross-Motion Opposing Leave to Appeal and in the Alternative Seeking Leave to Appeal the Dismissal of Respondents’ First and Second Causes of Action
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February 26, 1998

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Case Files, Campaign to Save our Public Hospitals v. Giuliani Hardbacks. Plaintiffs Cross-Motion Opposing Leave to Appeal and in the Alternative Seeking Leave to Appeal the Dismissal of Respondents’ First and Second Causes of Action, 1998. 6111c1a0-6835-f011-8c4e-002248226c06. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/ed4eb8ec-754f-4c82-9dfc-2fb7c92c32ce/plaintiffs-cross-motion-opposing-leave-to-appeal-and-in-the-alternative-seeking-leave-to-appeal-the-dismissal-of-respondents-first-and-second-causes-of-action. Accessed July 26, 2025.
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2 . COURT OF APPEALS STATE OF NEW YORK CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - QUEENS COALITION, an unincorporated association, its member WILLIAM MALLOY, CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - CONEY ISLAND HOSPITAL COALITION, an unincorporated association, by its member PHILIP R. METLING, ANNE YELLIN, NOTICE OF CROSS8-MOTION OPPOSING APPELLANTS’ REQUEST FOR LEAVE TO APPEAL AND IN THE ALTERNATIVE SEEKING LEAVE TO APPEAL THE DISMISSAL OF RESPONDENTS’ FIRST AND SECOND CAUSES OF ACTION and MARILYN MOSSOP, Plaintiffs-Respondents, Appellate Division - against - Case No. 97-01339 RUDOLPH W. GIULIANI, THE MAYOR OF THE CITY OF NEW YORK, NEW YORK CITY HEALTH AND HOSPITALS CORPORATION, and NEW YORK CITY ECONOMIC DEVELOPMENT CORPORATION, Queens County Index No. 10763-96 Defendants-Appellants. PLEASE TAKE NOTICE THAT, upon the orders and judgment in this action, and the annexed affirmation of Barbara J. Olshansky, dated February 25, 1998, plaintiffs-respondents will oppose defendants-appellants’ Motion for An Order Granting Leave to Appeal to the Court of Appeals, and in the alternative, will move this Court for leave to appeal the dismissal of the first and second causes of action on March 9, 1998, at the Courthouse at 20 Eagle Street, Albany, New York. Dated: New York, New York February 26, 1998 CENTER FOR CONSTITUTIONAL RIGHTS By: AB p [rren J lotr ll} Barbara JF. Olshansky 7 666 Broadway, 7th Floor New York, New York 10012 (212) 614-6439 Tel. TO: ELAINE R. JONES Director-Counsel Norman J. Chachkin Olati Johnson NAACP LEGAL DEFENSE & EDUCATION FUND, INC. 99 Hudson Street New York, New York 10013 Tel. (212) 965-2241 PAUL A. CROTTY Corporation Counsel of the City of New York By: Elizabeth Dvorkin Attorney for Defendants-Appellants 100 Church Street New York, New York 10007 Tel: (212) 788-0412 COURT OF APPEALS STATE OF NEW YORK CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - QUEENS COALITION, an unincorporated association, its member WILLIAM MALLOY, CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - CONEY ISLAND HOSPITAL COALITION, an unincorporated association, by its member PHILIP R. METLING, ANNE YELLIN, and MARILYN MOSSOP, Plaintiffs-Respondents, - 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. AFFIRMATION IN SUPPORT OF CROSS-MOTION OPPOSING APPELLANTS’ REQUEST FOR LEAVE TO APPEAL AND IN THE ALTERNATIVE SEEKING LEAVE TO APPEAL THE DISMISSAL OF RESPONDENTS’ FIRST AND SECOND CAUSES OF ACTION Appellate Division Case No. 97-01339 Queens County Index No. 10763-96 BARBARA J. OLSHANSKY, an attorney duly admitted to practice law before the courts of this State, affirms under penalty of law: 1, I am an attorney with the Center for Constitutional Rights, counsel for plaintiffs-respondents in the above-captioned matter. I am fully familiar with the record in this matter, and submit this affirmation in support of plaintiffs’ opposition to defendants-appellants’ motion for an order granting leave to appeal to this Court from the opinion and order of the Appellate Division, Second Department, dated September 8, 1997. In that opinion, the court affirmed the order and judgment of the Supreme Court, Queens County (Posner, J.) entered on February 5, 1997, which declared that the proposed sublease of Coney Island Hospital to a private, for-profit entity constitutes an ultra vires act by the New York City Health and Hospitals Corporation ("HHC"). A copy of the Supreme Court’s judgment and order is annexed hereto as Exhibit A. In addition to affirming the Supreme Court’s holding, the Appellate Division, Second Department modified the order of the lower court by: (i) deleting those provisions of the order and judgment which declared that the sublease of any facility of HHC requires the approval of both the Mayor and the City Council, and that such a sublease is subject to the requirements delineated in the Uniform Land Use Review Procedures, and (ii) substituting a provision dismissing plaintiffs’ first and second causes of action of the Amended Complaint which had raised these claims. A copy of the Appellate Division, Second Department’s order and opinion is annexed to this affirmation as Exhibit B. 2. On October 9, 1997, defendants moved before the Appellate Division, Second Department for leave to appeal. The Appellate Division denied the motion by order dated January 12, 1998. A copy of the Appellate Division’s order denying leave to appeal is attached hereto as Exhibit C. Statement of the Question Presented for Review 3. The question presented for adjudication to the Appellate Division, Second Department was whether defendants are empowered to sublease Coney Island Hospital to PHS-NY, a private for-profit corporation, despite the fact that the New York Health and Hospitals Corporation Act, §§ 7381 et seq. ("HHC Act"), established HHC as a public benefit corporation with a public purpose and does not authorize the transfer of a public hospital to a private corporation to be operated for private gain? Grounds for Denying Review A. The Supreme Court Correctly Held That HHC Was Established To Operate The Public Hospitals, Not To Privatize Them 4. The New York State Constitution requires New York State ("State") and New York City ("City") to ensure that dignified and comprehensive health care is available to all New York residents regardless of their ability to pay for such care. See New York State Constitution Article XVII. Pursuant to this mandate, the New York State Legislature created HHC in 1969 to operate the public hospital system in the City. See HHC Act, §§ 7381 et seq. Since that time, HHC’s public hospital system has provided care for hundreds of thousands of poor and uninsured New Yorkers, and has played a disproportionately large role in caring for those who suffer from special access problems due to conditions such as HIV/AIDS, tuberculosis, and psychiatric problems. Unlike private hospitals, by law, public hospitals cannot turn away patients because of their inability to pay. 5. Under Mayor Giuliani’s plan for the privatization of the public hospital system, HHC would no longer be the primary mechanism by which the City provides health care services to its residents; instead, private companies would operate and manage the municipal hospitals for their own benefit or that of their shareholders. Coney Island Hospital in Brooklyn was chosen as one of the first public hospitals to be privatized. 6. As the Supreme Court held, and the Appellate Division, Second Department properly affirmed, the HHC system is a state- created institution and, as such, cannot be privatized absent an amendment to the HHC Act. HHC was created in response to the fiscal and operational crisis facing New York City’s municipal hospitals in the late 1960s, and was designed to be "an agent of the City." May 8, 1969 Letter of Mayor John V. Lindsay to Governor Nelson Rockefeller, Governor’s Bill Jacket 1969, Chapter 1016 at 12 ("Lindsay Letter"). The State Legislature established HHC as the mechanism by which the State and the City would fulfill their constitutional obligation to provide dignified and comprehensive health care to all New York residents. See McKinney’s Unconsolidated Laws of New York, § 7382. This public benefit corporation was specifically intended to revitalize the City’s inadequate health care system and to provide "needed health and medical services and health facilities" to the residents of the City and particularly "to those who can least afford such services." See id. 7. Furthermore, the plain language of the HHC Act, see id. at § 7387[1], confirms that "[t]he Legislature clearly contemplated that the municipal hospitals would remain a governmental responsibility and would be operated by HHC as long as HHC remained in existence." Exhibit A, Opinion at 4, 20. Thus, there can be no doubt that defendants’ proposed construction, which would permit HHC to divest itself of its statutory responsibility, contravenes the HHC Act’s purpose and intent "to establish one entity accountable to the public to operate the municipal hospitals for the benefit of the public." 14. 8. The Supreme Court correctly decided that the HHC Act does not authorize the dismantling (directly or through privatization) of the HHC system. The Supreme Court’s decision in this regard is wholly supported by this Court’s recent decision in Giuliani v. Hevesi, 90 N.Y.2d 27, 681 N.E.2d 326, 659 N.Y.S.2d 159 (1997). In Giuliani, this Court considered whether the Mayor had authority to sell the New York City Water System to the City Water Board and to finance the purchase through bonds that would be issued by the Water Finance Authority ("Authority"). After a careful review of the New York City Municipal Water Finance Act, the Court held that the Act did not permit the Authority to finance this purchase. Giuliani, 90 N.Y.2d at 39, 659 N.Y.S.2d at 165. The decision rested upon the ground that the Act permitted the Authority to issue bonds to cover the costs of water projects, but did not contemplate the use of such bonds to transfer ownership of the Water System itself. Giuliani, 90 N.Y.2d at 39-40, 659 N.Y.S.2d at 165. 9. Similarly, in this case, the Supreme Court recognized that the HHC Act’s mandate to HHC is to operate the public hospitals with the goal of providing health care to the residents of the City of New York: The city shall . . . enter into an agreement . . . with the corporation . . . whereby the corporation shall operate the hospitals then being operated by the city for the treatment of acute and chronic diseases . . . . HHC Act, § 7386(1) (a) (emphasis added). No provision of the Act 5 permits HHC to delegate this responsibility. 10. In fact, the HHC Act very specifically delineates the parameters of HHC’s authority to acquire or dispose of entire health facilities in sections 7385(6) and 7387(4). Under section 7385(6) , HHC is empowered to acquire and to dispose of real property, including a health facility, "for its corporate purpose," provided that it holds a public hearing and obtains the consent of the Board of Estimate. HHC Act § 7385(6). If HHC determines that a health facility is no longer required for its corporate purpose, HHC may "surrender its use and occupancy to the City" or "otherwise dispose of the facility," but it must "use the proceeds derived from the sale, lease or other disposition thereof for its corporate purposes." HHC Act § 7387 (4). 11. While the Act permits HHC to contract with a private corporation for the provision of a discrete set of health care services, HHC Act § 7386(8), contrary to defendants’ claim, no provision of the Act permits HHC to turn over complete control of the operation of a municipal hospital to a for-profit corporation. Section 7386(8) does not govern the sale, lease or other transfer of entire health facilities -- such dispositions are governed by section 7385(6) -- it merely governs HHC’s authority to provide "health and medical services." HHC Act § 7385(8). The distinction between these two scenarios is obvious, and has significant ramifications in the current situation. Under a contract with a for-profit corporation for the provision of specified services, HHC delineates, oversees, and retains ultimate authority over the provision of services with HHC’s public purpose underlying those decisions. In contrast, a complete transfer of management and control would enable the for- profit corporation to make critical decisions regarding the provision of specific services based on its assessment of their potential for economic gain. 12. Indeed, the only section of the HHC Act that allows for a complete transfer of HHC'’s operating authority is § 7385(20) which provides that HHC may "exercise and perform all or part of its purposes, powers, duties, functions or activities through one or more wholly-owned subsidiary public benefit corporations." HHC Act § 7385(20). This provision permits a wholly-owned subsidiary public benefit corporation to operate and control entire facilities and to decide which health services are to be provided in lieu of HHC making such decisions directly. However, consistent with the purpose of the HHC Act, the provision expressly limits the delegation of HHC’s powers, duties, functions and activities to public benefit corporations which by law have the same public purpose as HHC itself. 13. In this case, as in Giuliani, the statutory grant of authority to delegate the agency’s powers is limited. HHC was not granted the authority in its enabling statute to privatize the public hospitals; i.e. to dismantle the public hospital system and turn it over to private corporations. In Giuliani, this Court held that the statutory authority to "issue bonds for payment of the cost of a ‘water project’ contemplates something less than financing the purchase of the entire ‘system.’" Giuliani, 90 N.Y.2d4 at 37, 659 N.Y.S5.2d at 163. So too, the statutory authority granted to HHC to dispose of "a health facility for its corporate purposes" contemplates something less than the disposition of entire health facilities operated by HHC to private corporations -- which would both contravene the express language in the Act and wholly undermine the purpose of the statute by effectively putting HHC out of operation. 14. The HHC Act did not empower HHC to design its own demise. Only the State Legislature has that authority; defendants cannot unilaterally alter the statutory scheme. Exhibit A, Opinion at 21; see New York Pub. Interest Research Group v. Dinkins, 83 N.Y.2d 377, 632 N.E.2d 1255, 610 N.Y.S.2d 932 (1984) (City officials cannot frustrate a legislative purpose by eviscerating an agency or group created by the statute for a public purpose). B. The Supreme Court Correctly Held That The Sublease Of Coney Island Hospital To A For-Profit Entity Would Violate The HHC Act 15. HHC was created by the State Legislature for a purely public purpose: to provide health care to the City’s poorest residents. Under the HHC Act, it is authorized to sublease a health facility only to further this corporate purpose. HHC Act § 7385(6) (emphasis added). It is wholly inconsistent with HHC'’s public purpose, and thus a violation of the Act and pertinent decisional authority, to transfer management and control of a health facility needed to fulfill HHC'’s public mission to a corporation created for the profit of its shareholders. 16. The HHC Act expressly delineates the precise nature of HHC’s mandate: that the creation and operation of the New York city health and hospitals corporation, as hereinafter provided, is in all respects for the benefit of the people of the state of New York and of the city of New York, and is a state, city and public purpose; and that the exercise by such corporation of the functions, powers and duties as hereinafter provided constitutes the performance of an essential public and governmental function. HHC Act § 7382 (emphasis supplied). Thus, both the legislative charge to HHC and the scope of its mandate are eminently clear. 17. While the Act grants HHC the requisite authority to carry out its obligation to provide health care to the indigent and uninsured residents of New York City, it also sets forth the specific constraints under which HHC may delegate these responsibilities or alter the scope of any of its statutorily- delegated obligations. For example, HHC is empowered to "make and execute contracts and leases and all other agreements or instruments necessary or convenient for the exercise of its powers." HHC Act § 7385(5). This power is limited by the proviso that it be exercised when "necessary" for "the fulfillment of [HHC’s] corporate purposes." Id. As discussed supra, only § 7385(20) of the Act authorizes HHC to fully delegate its authority and this provision that such delegation may only be through "wholly-owned subsidiary public benefit corporations." HHC Act § 7385(20) (emphasis supplied.) i S 18. Section 7385(6), cited by defendants as the primary support for their claim that HHC has the authority to sublease the public hospitals to a private corporation, Affirmation of Elizabeth Dvorkin, dated February 24, 1998 ("Dvorkin Affirmation"), at q8, contains precisely the same constraining language: To acquire, by purchase, gift, devise, lease or sublease, and to accept jurisdiction over and to hold and own, and dispose of by sale, lease or sublease, real or personal property, including but not limited to a health facility, or any interest therein for its corporate purposes... HHC Act § 7385(6) (emphasis supplied). Indeed, the limited authority granted HHC under this provision is even further constrained by the Act. As noted above, section 7383 (4) specifies that "if the corporation determines that the use and occupancy of a health facility or any other real property is no longer required for its corporate purposes and powers," HHC must either "surrender its use and occupancy to the City" or otherwise dispose of the facility "and use the proceeds derived from the sale, lease or other disposition thereof for its corporate purposes." HHC Act § 7387 (4). 19. The proposed sublease and transfer of management and control of Coney Island Hospital to PHS-NY, a for-profit corporation, directly contravenes the express purpose of the HHC Act. For-profit corporations are created to provide an economic benefit for their owners and shareholders. Indeed, the courts have explicitly recognized that the "ultimate goal" of any corporation under state law is to "provide maximum economic 10 . & ~ returns to its shareholders." Alpert v. 28 William Street Corp., 124 Misc. 512, 478 N.Y¥.S.24:443, 448 (Sup. Ct. N.Y. Co. 1983). It would be inimical to the express purpose of the Act to permit the transfer of an entire HHC health facility to a for-profit corporation which has, as its core purpose, the seeking of profits for its shareholders. 20. Finally, defendants’ claim to an "unlimited statutory grant of authority to HHC to sublease hospitals," Dvorkin Affirmation at 99, is belied as well by the decisional authority addressing the use of public assets for private gain. In fact, the pertinent decisional authority indicates that HHC cannot transfer the management and control of Coney Island Hospital, a public property, to PHS-NY for private use, without specific legislative approval. In this regard, the United States Supreme Court has stated: "In its streets, wharves, cemeteries, hospitals, court houses, and other public buildings, the [municipal] corporation has not proprietary rights distinct from the trust for the public. It holds them for public use, and to no other use can they be appropriated without special legislative sanction."! Meriwether v. Garrett, 102 U.S. 472, 513, 26 L.Bd4. 197 (1880) (emphasis supplied) (quoted in Cotrone v. New York, 38 Misc.2d 580, 237 N.Y.S.2d 487, 489 (Sup. Ct. Kings Co. 1962); accord American Dock Co. v. New York, 174 Misc. 813, 21 N.Y.S.2d This general rule is set forth in Section 383 of the New York City Charter which, in pertinent part, states: "The rights of the city in and to its waterfront, ferries, wharf property . . . and all other public places are hereby declared to be inalienable . . . «" (Emphasis supplied). 11 943, 957 (Sup. Ct. N.Y. Co. 1940), aff’d., 261 A.D. 1063, 26 N.Y.Ss.2d 704, aff’d., 286 N.Y. 658, 36 N.E.2d 696 (1941); see also Lake George Steamboat Co. v. Blais, 30 N.Y.2d 48, 51, 281 N.E.2d 147, 148, 330 N.Y.S.2d 336, 338 (1972) ("It has long been the rule that a municipality, without specific legislative sanction, may not permit property acquired or held by it for public use to be wholly or partly diverted to a possession or use exclusively private.") (citations omitted). Moreover, it is well-established that the legislative authority authorizing the diversion of public land to a private entity must be "clear and certain." Id. at 52, 330 N.Y.5.24 at 339. Plainly, in the instant case, HHC has not obtained the requisite "clear and certain" authority from the New York State Legislature prior to attempting to transfer Coney Island Hospital to PHS-NY. 21. Contrary to defendants’ contention, this case does not present a novel issue necessary for resolution by the Court of Appeals. The law is clear that only the State Legislature has the authority to modify or dissolve a public benefit corporation. See Rye v. Metropolitan Transp. Authority, 24 N.Y.2d 627, 634, 301 N.Y.S.2d 569, 573 (1969); Town of Hoosick v. Eastern Rensselaer County Solid Waste Management Authority, 182 A.D.2d 37, 592 N.Y.S.2d 472 (3d Dep’t 1992); New York Constitution, Article X, § 5. For this reason, plaintiffs respectfully submit that leave to appeal to this Court is not appropriate. 22. In the alternative, plaintiffs respectfully request that if defendants’ motion for leave to appeal is granted by this 12 Court, that plaintiffs’ cross-motion for leave to appeal the dismissal of the first and second causes of action be granted to preserve those claims. These claims address other issues of law governing the appropriate procedure to be followed in the event that the Court of Appeals overturns the decisions below. WHEREFORE, it is respectfully requested that this Court deny defendants’ motion for leave to appeal, and in the alternative, grant plaintiffs’ request for leave to appeal the dismissal of the first two causes of action. Dated: New York, New York February 26, 1998 oer btn () . Ohhants Barbara J/ Olshansky Center for Constitutional Rights 666 Broadway, 7th Floor New York, New York 10012 Tel. (212) 614-6439 13 Exhibit A IE AN ES D L V E S P I T R s e i a l b i B L nm 4 P n P < e e t , “ e i it e e t WB . - J At.as IAS Motion Part 5, of the Supreme @ Court of the State of New York, heid in and for the County of Queens, at the Courthouse located at 88-11 Sutphin Boulevard, Jamaica, New York, on the $3 | day of January, 1997. T I F E L R R R Cal TR C I E n a e a — v8 Fl ee re t r t s 0 n e a t ot Wn os 1 B n 4 ct + B A at mt [ E R I E ESENT: ~ HON. HERBERT A. POSNER, JUSTICE. [ A R 3 5 wn V a s u L) A C S I I B C YI # 5 MPAIGN TO SAVE OUR PUBLIC SPITALS - QUEENS COALITION, an ORDER AND porporated: association, by its member JUDGMENT LIAM MALLOY, CAMPAIGN TO SAVE R PUBLIC HOSPITALS - CONEY ISLAND Index No. 10763/96 SPITAL COALITION, an unincorporated peiation by its member PHILIP R. METLING, ENE YELLIN, and MARILYN MOSSOP, 3 cr is a , y y E Y RE A E A R E E R S e a m a n 3 is d 22 3 N D ABT S R E C i - T e [ E L S S t Y z. E T . Plaintiffs, - against - UDOLPH W. GIULIANI, THE MAYOR OF 8E CITY OF NEW YORK, NEW YORK CITY EALTH AND HOSPITALS CORPORATION, I NEW YORK CITY ECONOMIC EYELOPMENT CORPORATION, Defendants. , 2h : Coney Island Hospital Coalition, an unincorporated association by its member Philip nne Yellin, and Marilyn Mossop, having commenced this action seeking a ) defendants violated New York City Charter § 197-b by failing to submit their . a Ps - - > | plans for privatization of Coney Island Hospital, Queens Hospital Center and Elmhurst Hospital : yy . Center (the "Subject Hospitals") and requests for proposals to the New York City Planning | Lf Commission and the affected community boards and borough presidenis; (ii) defendants are | Peel required to submit ie Eahsc: fob lease of the Subject Hospitals for review and approval } $e - under the Uniform Land Use Review Procedures ("ULURP") set forth in New York City of Charter § 197-c; and (iii) defendants’ proposed sublease of Coney Island Hospital to 2 Aff corporation vidlites vk New York City Health and Hosglials Corporation Act (Laws of 1969, of J ch. 1016, Unconsolidated Laws §§ 7381 et sea.), and defendants Rudolph W. Giuliani, the | Aff. Mayor of the City of New York, the New York City Health and Hospitals Corporation, and the 1 in ¢ ; mo ! New York City Economic Development Corporation, having moved to consolidate this action with an action entitled The Council of the City of New York, et al. v. Rudolph W. Giuliani, The 1 Mavor of the Citv of New York, et al., Index No. 004897-96 (Sup. Ct. Queens Co.) (the T "Council Action"), and for summary judgment in both actions, and plainiifis having cross-moved for summary judgment, and the motions having duly come on to be hsard, NOW, upon the reading and filing of the defendants’ Notice of Motion to Consolidate and for Summary Judgment dated iy 12, 1996, the plaintiffs’ Notide of Cross, 7 Noloh for Summary Redemen: dated August 23, 1996, the Affidavit of Luis Magios, M. D § / Zz a pr 11, 1996, and the exhibits thereto, submitted in support of defendants’ motion 10 3 ~ consolidate and for summary judgment, the Affirmation of Daniel Furbo dad September 12 "4 oF J ; v ; YY’ v cv A 1996 2nd the exhibits thereto, the Reply Affirmztion of David Kamovsky dated September 30, 4 v A» . : v 5 v . ~ k v Y . 1995 and the exhibits thareio, th2 Supplemental Affirmation of Daniel Turcow dated Novembst »4 (13 c+, fs 4 4 Tied 1", *% 0 tbe bm rgd Lor 19, 1996 a= Wu Sl oi Wd ° ~ P L T ra gs , | * i r { -— - . e - . . - - aid Ji rts znd In SPpesition to ptt cross-motion for summary judgment, Ce har felert aes ded a3 h rg-a-S4 i Peorter i7, 1950 | arcade He Asver, lise A fizz, or! Hi Ice cf Crocs Hates -d i ober 22 lit oe -d be exhib ed Ahercie yiltey & Sipol diz drted [4 acel se ~— e°cs ) n, and ~ e'éNree Te EG Opn, To v > Law the Affidavit of David R. Jones deizd August 22, 1996 and the exhibits thereto, the Affirmation : / Fg i of Rachel D. Godsil dated August” 23, 1996 and the’ exhibits thereto, the Supplements] Affirmation of Rachel D. Godsil dated November 19, 1996 and the exhibits thereto, the Affidavit - Ouwrtir IO vd Y. . v of Judith B. Wessler, M.P.H., €z:ed-November 27, 1996 and the exhibits thereio, the Reply Attmaion of Rachel D. Godsil dated November 30, 1996 and the Suiits thereto, all submitted ir suppart of plaintiffs’ cross-motion for summary judgment and in opposition to defendants’ mation far summary judgment, and plainiifts having appeared by the Puerto Rican Legal Defense & Eleaation Fund, Inc. (Kenneth Kimeriing, of counsel), the NAACP Legal Defense & Educational Fund, Inc. (Marianne Engelmzn Lzdo and Rachel D. Godsil, of counsel) and the Center for Constitutional Rights (Barbara Olshansky, of counsel), and defendants having gppeared by Paul A. Cromy, Corporaiion Counsel of the City of New York (Daniel Turbow and Robert Carver, of counsel), and upon the Order dated September 18, 1996, granting defendants’ . motion ta consolidate to the extent tha: the Council iy was combined with the instant 24 jon fo te Teme of a joint trial, without consolidation, 2 pon the Decision of the “tia dafed ORDERED and ADJUDGED that defendants’ motion for summary judgment is nd it is furthe P B E E Se E l KL I p rt ied 8 red Ami t sb md r nll BE I CO UL EN PE TR A py » ES tE e N E T Som P D eT U r i s $ 5 5 0 C t e rd P K a r S T A I T E R V ER ST YA : Oy . ha Phd + e 3 4 2 0] au’ i l hd " « 3 h a u re . F A - — MR P E s e v e r e l y > o r e w e — - ’ L I approval of the Mayor and the City Council; (ii) the subleasing of HHC facilities requires the a application of ULURP; and (iii) the proposed sublease of Coney Island Hospital to PHS New : T T F oe Ar es = n F g o r York, Inc., constitutes an ultra vires act and violates the Health and Hospitals Corporation Act, c e p + 9 and it 1s further ORDERED that the County Clerk is directed to enter this order and judgment ’ ' {dT IRA ha 0 ad en d e n n Lo oo n co JF T T S E P U I N without costs. ik i ENTER: 3S 1 3 A LJ H ‘ D2 Lo > me B p LEY ha ’ ou rl MEMORANDUM 3 SUPREME COURT, QUEENS COUNTY IA PART 5 i aliueiewessabassumcen amsesuannay X uE COUNCIL OF THE CITY OF NEW YORK, . BY: POSNER, J. psTER F. VALLONE, SPEAKER OF THE ; COUNCIL, and ENOCH H. WILLIAMS, CHAIR . Action No. 1 gf THE COUNCIL HEALTE COMMITTEE, ; : INDEX NO.: 004897/55 1 Plaintiffs, pint : '. DATED: January 13, 1887 -ggeinst - RUDOLPE W. GIULIANI, THE MAYOR OF THE CITY OF NEW YORK, NEW YORK CITY EEALTE IND HOSPITALS CORPORATION, and NEW YORK CITY ECONOMIC DEVELOPMENT CORPORETION, . Defendants. CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - : INDEX NO.: QUEENS CORLITION, an unincorporated - associztion, by its member WILLIAM : Action No. 2 MALLOY, CAMPAIGN TO SERVE OUR PUBLIC : BOSPITELS - CONEY. ISL2ND EOSPITAL _ COALITION, an unincorporated associ- ation, by its member PHILIP R. METLING, INNE YELLIN, and MARILYN 140SSOP, 10763/96 - E E 5 SD § eS & Bt S n + RE S Sn S b 0 0 Plaintiffs, - BOEINSL - RUDOLEE W. GIULIANI, THz MEYO: CITY OF NEW YORK, NZW YORE C IND HOSPITALS CORPORATION, and CITY ECONOMIC DEVELOPMENT CORPORATION, D=fenaznts. Dafendants, Mayor Rudolph Giuliani (“Giuliani”), the NeW York City Health and Hospitals Corporation (“HCC”) and the New York City Economic Development Corporation (“NYCED") have moved ‘for summary judgment. Plaintiffs in Action No. 1, The Council cf ‘the city Of Naw. York -{“Council®) tad its principal leaders, and plaintiffs in Action No. 2, The Campaign to Save Our Public Eospitals, (“Campaign”) have Cross novel for summary Judson. Both Action No. 1 and Action No. 2 were combined for joint trial, without consolidation. (See Order of this court dated September 18, 1996.) The parties all agree that there are no issues of fact and that the legal issues are ripe for adjudication; though, initially, defendants had raised the issue of "ripeness" in their answer. The conflict between the Mayor of the City of New York and the Council of the City of New York is founded upon the age-old: controversy between the executive and legislative branches of government . Fortunately, unlike the resolution adopted by the protagonists (Cassius and Erutus) in Shakespeare's "Julius Caesar", the zuthors of our State and Federal constitutions have wisely established the third branch of government as arbiter of disputes batwaen the two. . Flaintiffs in both actions originzlly ps-itioned th (0 a am Se ee 843 tion 7385(6) of r a declaratory judgment interpreting Sec curt fo McKinney's Unconsolidated Laws of 1969. This section of the Health and Hospitals Corporation Act (“HHC Act”) subjected the EC's power ro sell or lease its health facilities to the approval of the Beara of Estimate. When the Board of Estimate was abolished by the new City Charter of 1989, no specific language Was included to inciczte which person Or entity inherited this particular power previously exercised by the Board of Estimate. Furthermore, the New York -zte Legislature has failed to exercise its power toc amend the statute substituting a specific oificer or body to succeed Bosra. (See A.8896 and A.11048 of 1996.) Defendant GCGiulizni claims that the new Charter intended that he alone should exercise that power. Plaintiffs contend that the new Charter cives the pawer to the Council acting in conjunction with the Mayor. - - A second issue has arisen since November 8, 185¢ when the Bozrd of Directors of defendant EHHC voted to empower the HHC's president to execute a Jease with a for-profit corporation. Said lezse in effect turns over the operation of Coney Islznd Hospital in tota to the lessee for eight (8) generations. (198 yesars). RAs a result of this action, plaintiffs amended their complaints to jncluds a new cause of action agzinst HEC alleging it exceeded its statutory powers. 844 E_ BACKGROUND Defendant Giuliani took office as chief executive of the city of New York in 1994. When he realized that he had inherited z budget with fiscal problems (stretching back to the 70's), he sought numerous weys to bring the City's expenses in balance with its revenue. One of his proposals was for the privatization of the City's public hospitals - a continuous drain on the City's resources. It is his belief that a private for-profit corporation can more efficiently run the City's hospitals. Whether the plaintiffs agree or disagree with this philosophy is not the issue. Bar is the debate over that philosophy one in which the court has any right or power to immerse itself. To explore properly the. issues involved herein, it is necessary to step back and consider the history of the HHC Act. HISTORY The New. York State Constitution, Article XVII, § 3 states: "The protection and promotion of the health of the inhabitants of the state dre matters of public concern and provision ‘therefor shzll bs made by th state and by such of its subdivisions a in such manner, and by such means as th legislature shall from time to time - determine." 845 Prior to 1970, in comp i:z.nce with this constitutional requirement, the city of New York constructed, maintained and aperated hospital facilities providing care to residents of t city, including those persons who could not otherwise. a: hospital services. In 1369, the New York State Legisiature enzcted the Hezlth and Hospital Corporation Act ("EHC Act"), creating the EHC and authorizing the City to transfer the municipzl hospitals to gnc for the purpose of continuing to fulfill the constitutional = mandates (L 1969, ch 1016, McKinney's Uncons Laws of NY. §§ 7381 et seg, the HHC Act). HHC's mission is to ensure the provision of "high quality, dignified and comprehensive" care to the ill and infirm of the City, and particularly those persons who can least afford such services (see, McKinney's Uncons Laws of NY § 7382). HHC was established at the behest of the City in part to permit independent financing of municipal hospital construction and improvements and ta facilitate professional management of the hospital system. EC's creation was intendsd to overcome the "myriad cf complex and often deleterious constraints” which inhibited ths provision of care by the City in its own ‘operation of the aunicipal hezlth system (McKinney's Uncons Laws of NY § 7382). To effect that goal, 5 . io s L B A oe R a d C e a m a a I T T I N 1 ane. RE emai ; - . Pepe i momen me oor. o the Legislature gave HHC a number of powers designed to provide the *legal, financial and managerial" flexibility necessary to carry qut its purpose (McKinney's Uncons Laws of NY §§ 7382, 7385). It was authorized "[t]o make and execute contracts and lezses and all ather agreements or instruments necessary or convenient for the - exercise of its powers and the fulfillment of its covphrate purpases® (McKinney's Uncons Laws of NY § 7385[5]). In addition, BHC was granted the power "[t]o provide health and medical services for the public directly or by agreement or lease with any person, firm gr private or public corporation or association thyoush and in the health facilities of the corporation *##* vu (McKinney's Uncons Laws § 7385(8]). Nevertheless, some of the powers conferred on EHC were constrained, and in some instances, subject to direct oversight and cmtinuing control by the City.? ~mong these powers was the power 3 A See, e.g., McKinney's Uncons Laws of NY § 7386 (1) (a); HHC submits its program budget to the City in time for inclusion in the Mayor's executive budget and culminates in the City budget which the City Council has the sole authority to adopt; § 7386(2) (b); the City has the right to acquire zany health facility held by EHC; § 7386(7); HHC must exercise its powers in accordance with licies and plans determined by the City; § 73950(5)-(8); EHC employee grievances are governed by NYC Ri ministrative Code; : § 7385(19); HHC may use City agents, employees and facilities 6 TL a T p — — 847 relevant to the issues herein: "To dispose of by sale, lease or sublease, real *** property including but not limited to a health facility, or any interest therein for its corpora: purposes, provided, however, that no health facility or other real pro acquired or constructed by : corporation shall be sold, leased cr otherwise transferred by the corporation without public hearing by the corporation "J ( c r o after twenty days notice and without the nsent of th rgd of im the city.” ; (McKinney's Uncons Laws § 7385[6]). (Emphasis added). On July 1, 170, in accordance with the HEC Act and with the approval and authorization of the Board of Estimzte, the City, by rover Lindsay, and EHC entered into an agreement under which HHC agreed to assume responsibility for maintaining and operating the . City's public” hospitals. Eleven hospitals, included under that agreement, have continued in opsranion since 1970. In 199¢, the City, throuch the Mayor's oifice, began exploring the possibility of transferring the operation of three of those hospitals, Coney Isiand Hospital (“*CIH”), Elmhurst Hospital Center and Quesns Eospitel Center (“the Queens Health Network”) to subject to collective bargaining agreements &nc the Mayor's consent. er m n . — — — — Co e 848 defendant EDC 2s financial advisor to prepare offering memoranda for proposals to privatize the operations of the three hospitals and tao sublease their facilities. In spring of this year, HHC began receiving proposals, and on June 26, 1956, Peter 3. Povers, First Deputy Mayor of the ity, Dr. Luis R. Marcos, as President of EHC, and Steven Volla, as Cie Lan Of PES New York Inc. ("PHS-NY") and of Primary Health Systems, Inc. ("Primary") executed a letter dfdnsent calling for regaotizations to achieve a long-term sublease of property, plant and equipment of CIE to PHS-NV, and a contract for PHES-NY to operate CTE as 2 community based, atte care Suvbatient hospital during the term of the sublease. On October 8, 1996, HHC and the New York. City Department or Health held a public hearing on the proposed sublezse of CIE. On November 8, 1996, the HHC Board of Directors authorized and approved the Sublease of CIH to PHS-NY for an thizial term of 09 years (and renewable by PXIS-NY for an additional §¢ year term). The sublease is rather unusual in that it recites thase service obligations bsing imposed upon PHS-NY, including that PES-NY take over HHC's operation of the hospital services and provide access to healith care to indigent persons, in addition to er, lezve Both plaintiffs claim that (1) any sale, trans FRAETT We Srey Bids £20 oe -— er a 849 ar sublease of any HHC facilities to private lessees requires the approval of the Council pursuant to Unconsolidated Laws § 7385(6); (2) any such disposition requires the application of and compliance with the Uniform Land Use Review Procedure ("ULUR?") process oI sections 197-c and 157- dof the New York city Crarter. The Cozlition plaintiffs also originally claimed ther defendants viciated section 197-b of the Charter by failing to submit their plans for privatizing the hospitals to the New York City Planning commission and affected community boards and borough presidents. On December 4, 1996, all parties stipulatec, on the -d record in open court, to permit plaintiffs in Actions No. 1 and 2 to amend their respective complaints to add a cause of action against HEC asking the court to void HHC's action on November 8, ¥995 85 an uylLrs vires act. . Defendants served a second amended answer to each second amended complaint denying various allegations and asserting zffirmative defenses based upon the failure to state a2 cause of zction and lack of ripeness, and sections 7385(6) and 7385(8) of the Unconsolidated Laws. fzilure to state & cause Oo: action are stricken. 2n aiiirmative gefense based upon the failure to state a cause of & S le te .t e i . : 5 h i ; # # P R R Fe l it h me s d "ei t 8. ue Py AY — 2312 850 interposed in an answer, but must be raised by a motion to dismiss pursuant to CPLR 3211 (a) (7) (see, Propoco. Inc. v Birnbaum, 157 AD2d 774, 775). The affirmative defense based upon lack of ripeness must glsa be skziekah.r At the time of the commencement of the action, the BHC Board of Directors had not yet considered the proposed sublease of CIX, and an argument could have been made that the suits were premature. Nevertheless, at this juncture, where the EEC board has acted to approve the sublease, the issues raised by the Council and Campaion plaintiffs are ripe for adjudication. This issue will be dealt with after consideration of the issue of the gGevalvement of the powers of the Board of Estimate (HHC Act 73851el}. ‘ THE BOARD OF ESTIMATE ISSUE Tne HHC Act expressly provides that the HHC may "dispose af by szle, lease or sublease, real or personal property, including but pot Iimited to a health facility, or any interest therein for Its corporate purposes" (emphasis supplied) (McKinney's Uncons Laws § 7385([€1). Such provision goes on to condition the exercise of thet power upon the consent of ths Board of Estimate of the City iC 9 (emphasis added) .? at the time of the passage of the HHC Act, the Board of Estimate consisted of eight elected members; the Mayor, the City Comptroller, the president of the City Council and the five Borough presidents. Each of the citywide officers had two votes and each rh of the borough presidents had one vote. This voting distribution of the Board oi Estimate members was declared violative of the constitutional requirement of one person, one vote (see, Morris Vv = he. Bozrd of Estimate, 592 F Supp 1262 [E.D.N.Y. 1984], a2fid 831 F2d 384, z2ffd 489 US 688 (1989]). As a consequence of such ruling, and the United States District Court order that a plan be developed by the City to cure the constitutional deficiency (see, Morris v Board of Estimate, 647 F Supp 1463), the New York City Charter Revision Commission was formed, with one of its objectives for Charter revision being to build greater participation in policy debates and decisions (see, Final Report of the New York City Charter Revision Commission - 2 The zuthority of the Board to approve OI consent to terms of f sales transactions was also recognized by the State Legislature in other States laws, €.¢., Urban. Davelopment Corporation Act § 3(c), codified at Uncons Laws § 6253 (1); Not- for-Profit Corporation Law § 1&1l1; Racing, Pari-Mutusl Wagering & Breeding Law §§ €07(1), (3). 1) 1852 January 1989-November 1989 p 4). Following the enactment on Baovember 7, 1989 at the general election of sweeping Charter anek iments proposed by the Commission, the Board of Estimate was abolished and its power distributed elsewhere. Notwithstanding the abolition of the Board of Estimate, the’ requirement that the Board of Estimate give its consent to any transfer of a health facility or real property by HHC remains “on the books" (McKinney's Uncons Laws § 7385[b)]) and the Legislature 2s not taken the opportunity to amend it. However, the fzilure of the Legislature to amend the Sedition does not mandate a conclusion that it prefers a statutory construction severing the consent partion as obsolete. In fact, the contrary is true. The ‘Legislature, by not having acted 80 eliminate the "board of estimate” language, can be said to have opted to allow the consent pawer to devolve upon the body, agency or officer designated in the revised Charter to succeed to the powers of the Board of Estimate.’ The ‘Charter itself contemplates this result. Section 1152 (e), adopted by the voters in 1989, as part af the Charter reviviols. in relevant part, provides: "the powers and responsibilities of the board of estimate, set forth in any state or local law, that are not otherwise devolved by the terms of such law, upon another body agency or officer 12 853 shall devolve upon the bodv, agencv or officer of the city charced with comparable and related DOWCIS and responsibilities under this charter, consistent with the purposes and intent of this charter....” (Emphasis supplied.) By applying such "savings" provision to the EEC Act, the original intent of the Legislature (to allow 2 check cn EHC's power to lease or transfer & health facility or real property) may be accomplished (see, McKinnev's Statutes §§ 391-392, § 357; see glso, Matter of New York pub. Interest Research Croup Vv Dinkins, 83 NY2d 377, 386; Matter of Nzturesl Resources Council v New York City Dept. of Sanitation, 83 NY2d 215, 222; Ball v State of New York, 41 Nv2d 617, €22). Moreover, none of the parties jnvolved herein claim that no consent by & city agency, body or officer is required. This court concludes that section 7385(6) must be construed to continue to require consent; the question to be resolves is which body, agency or officer, or combination thereof, has Siicoaeden to the Board of Estimate in Chis ey The Council plaintiffs. urge that ths consent power granted the Board of Estimate in § 2385 (6) has davolved upon both the Council and ths IMzyOr. They point to the fact that thes powers to consider land use eiiects and business terms have been split under ths Charter revisions between the Council, unasr section 197- 33 Mu S N . de se te se is es nh as T O R N J A A o P I T PR A To n 3 N g ar e A T L p h o s ~ t € of the Charter (“ULURP") Charter, respectively (see, Tribeca Community Assn. State Urban Dev. Coro. , 854 + and the Mayor, under § 384 (a) of the 2Q355/92, 2ffd 200 AD24 £36, gopeal denied 8¢ NY2d 805). Act nor the Charter restricts the Council to ULURE considerations arly. Defendants Ect's enactment, the business terms under Yet exist, the Legislature intended that the Board of relegated to consideration of the business terms o Supreme Court, appeal dismissed 83 NV24 They also contend thas that because at the of Estimate had the the then Charter Qr lease of property helc by EHC. consideration of busin exclusively pursuant to § 384 of the Charter, no role in the consent power oF § 7385 (6) . The HHC Act, limits on the type of issues the Board consideration whan exerci terms has been assigned to the Mayor however, ing the consent power Cns Zct granted the Boaré ef Estimat sociated with property disposi Vv New York Queens County, Index No. right to consider ULURP did not Estimate be of any sale According to defendants, and the Council has guidelines or of Estimate could take into By its silence, e full authority to contemplate 855 Defendants further argue that the Council has no land use review role under the consent power of § 7385(6) because ULURP," as rhe mechanism for the Council's exercise of land use review is inapplicable ’ to HHC. According to defendants, the EHC Act supersedes any Charter provision regulating its power to sublease, citinc Wavbro v New York citv Board of Estimate, Wzvbro, however, is distinguishable fre: this cease, because unlike the statute at issue therein (the Urban Development Corporation Act [L. 1968, ch 172, as amended], McKinney's Uncons Law § €251), nothing in the HHC Act indicates HHC hes the suthority ta override requirements of the local charter in relation to disposition of health facilities or property (see, HWavbro v New vork Citv Bozrd of Estimate, supra at 355; see ziso, Connor v Cuomo, 161 Misc 2d 889, 896). The HHC Act, by requiring consent of the Board of Estimate under § 7385(6) for dispositions of property, expresses, if anything, the contrary intent. Similarly, ;f this court was to adopt defendants’ reasoning, then it would have to hold that the HHT Act supersedes even § 384(z), the Charter provision granting the Mayor the power to review business terms of cr | (1 0 fv nn H {) {) Oo fa Gispositions of City property. To the extent the par anything, they agree that this section gives the Mayor the power of dispositions oi City property, tg review business terms AS: : : 856 including the HHC sublease. Section 384 (a) of the Charter provides: "No real property of the city may be sold, leased, exchanged or otherwise disposed of exceot with the aporoval of the mzvor and as mav be brovided bv law unless such power is 2xpressly vested by law in another agency. (Emphasis added.) The section's language granting the Mayor the approval power bowever, includes the conjunctive "and," followed by vas may be pravided Wy law unless such power is expressly vested by law in enqther agency." The phrase "as may be provided by law" gan be read without strain or force to include ULURP wherein the power to review sales, leases znd other dispositions of real property af the City is bestowed upon the Council (see, New York City Charter §§ 197-c, 197-4). ULURP was enacted in 1975, "in response to & perceived reed for informed local community involvement in land use planning, for adequate technical ana professional review of land use decisions and for final decision making by = politically &ccquntable body, the City's Board of Estimate." (2 Morris, New York Practice Guide, Rezl Estate § 20.04, p 20-47.) 1In its final TeDort, the Charter Revision Commission indicated thar prior to the 1989 revision of the Charter, the Bozrd of Estimate had "finz1 16 authority over land use decisions ***" and the Council "had no role in the land use review process" (Final Report of the New York City Charter Revision Commission - January 1989-November 1989, pp 7 and 19 respectively). It noted that " [t]he basic change made by the 1989 charter amendments was to substitute the Council for the Board as the final decision maker in land use," and that "because racial ana language minority groups will enjoy greater representation on the Council than they have had on the Board, they will be able to | exert more influence if there is conflict with the mayor on a land use metter" (The Final Report, pp 20-21). ! ULURP, as revised, in pertinent part, provides: . "§ 197-c. Uniform land use review procedure. ‘&. Except as otherwise provided in this charter, applications. by any person or agency for changes, approvals, contracts, consents, permits or authorization thereof, respecting the use, development or improvement of rezl property subject to city regulation shall be reviewed pursuant to a uniform review procedure in the following categories *** (10) Sale, lease (other than the lease of office space), exchange, or other disposition of the real property of the city." (Emphasis } : supplied). HEC has beer h2ld not to be an "agency" of the City (see, Brennan v Citv of New York, 59 NY24 791, 722), and :he rarm Ll “person” is not specifically defined in § 197-c¢, or in the New York 17 » h . . [ly SE R PC L RA I' D W A ’ iu BA EU AR Y I R A N I AS rao ct va t «1 1 01 a e e r — T A M E LM a L L 1 n L Pa p City Administrative Code concerning land use topics. Nevertheless, § 137-c of the Charter should be liberally construed (see, Maudlin ¥ New York Citv Transit Auth., 64 AD2d 114, 177), and thus, HHC, as a public benefit corporation, may be considered z "person" for the purposes of ULURP (see, General Construction Law §§ 37, 65). As for the meaning of "disposition," the term is Hah defined by statute, charter or code provision. This court must interpret the word. The word has been defined as "the act of disposing, transferring to the care or possession of another. The parting with) or alienation of, or giving up property." (BYsckts Law Dictionary 471 [6th ed. 1990]). By applying this definition, the court finds the sublease of CIH constitutes =a "disposition" under ULURP because it is a transfer of az real property interest, &s well as service duties from RHC to PHS-NY. . Defendants further argue that even assuming ULURP evinces the partial devolvement of the consent power under § 7385(¢6) to the Council, it cannot aotutly apply ‘to the CIH sublease because ULURP violates § 10(5) of the Municipal Home Rule Law. Section 10(5) states: "*** a local government shzll not have the power to adopt local laws which impair the powers of any other public corporation." 18 r r T Y lh i ls I b t boi l Che ab a Ll ae a Sa ni o d T I T A N A TT RR T IY RY S E R RI N A R I S r Tea en dh C H O R A L A P I N T I E Y H 8 ¥ H # 3 3 ® a P O E c P 3 RE T, A I N A A N S Y: = T R , A, w p B E R P C 859 The Court of Appeals has interpreted § 10(S) to provide that public benefit corporations are exempt only from regulations which would interfere with their purpose (see, Levv v Citv Comm. on Again, it is the HHC Act itself which Human Rights, 85 NY2d 740). grants a check on HuC's zuthority to dispose of real property, zlbeit via the Board of Estimate, now a nonexistent body. 2s explained zbove, the consent power of the Board of Estimate under cection 7385(6) has devolved to both the Council and the Mayor. Hence, ULURP must be viewed as not impairing the exercise of HHC's power to dispose of property by sublease. Defendants alternatively contend ULURP is inapplicable - because the sublease of CIH is not the subject of any disposition by the City, but insteaa, 2 disposition by HHC. They argue that under traditional notions of property law, a lessee is free to exercise possession and Gente] ovat the property as against the world, including the landlord. According to defendants, HHC is legally allowed to sublease, and to require it to Widergo ULURP review would render its leasehold less significant. Charter § 8c. hohever, 3% not restricted to dispositions bv the City, but instezd, is applicable to any dispositions of the real property in TEE ULTRA VIRES ISSUE The primary issue presented is whether the subleasing of CIE, along with the wholesale turnover of HHC's service obligations, constitutes an ultra vires act in violation cf the HHC Act. As Mayor Lindsay pledged to the State becisigture. in bis letter to Governor Nelson A. Rockefeller, "[iln esteblishing = opublic benefit corporation. the Citv is not gettino 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 hezlth service system. The municipal znd health care svstem will continue to be the Citv's responsibility, coverned bv policies. determined bv the City Council, the Board of Estimate. the Mevor, and the Health Services Administration on behalf of and in consultation with the citizens of New York City." (letter - of Mayor John V. Lindsay, Governor's Bill Jacket, 1. i¢g9, ch. 1016.) The Legislature, by enacting the HHC Act chose to rely upon such pledges and created HEC, a public benefit corporation, to carry out the City's constitutional responsibilities. EHC, by contracting with PHS-NY by means of a S¢ year. sublease, to have DPHS-ITY tzke over the operation of CI¥, is -shirking its own statutorily imposed responsibility, without ths 20 861 a T R Legislature's approval. Although the HHC Act concededly allows for provision of health and medical services "by acreement or M R BE S r t e r y a h — r a r — oh Jease with any person firm or private or public corporation cr =ssociation, through and in the health facilities of [£HC] and to make rules and regulations governing admissions and health and medical services" (McKinney's Uncons Laws § 73€5(8]), such zllowznce may not be construed to permit the incongruous result that HHC can delegate or shift all of its responsibilities to a mon-public entity as a means of "furthering its corporate . L E — — — A A 8 —— — gurposes.” (McKinney's Uncons Law § 7385(8)). Moreover, that | reading would frustrate the purposes and obligations oi the HHC ta the people of the City (see, Matter of New York Public Interest W A A L , Resezrch Group, ‘83 NY2d 377, [City officials cannot Irustrate a legislative purpose by eviscerating an agency or group created by | J gEatite for & public purpose] ;- Matter of Gallagher wv Pega, a2: KY2d 230, 23¢ ["(a) legislative act of equal dignity and {npr is required to modify a statute, and "nothing less than another statute will suffice"]): This situation is inhasrently different from one in which g particular hospital property is no longer needed, usable or gffordable, requiring its closure by HHC (see, NMestter ¥ Creenovoint Renszissance Enterprise Corp. v Citv of New York, 137 21 A ph on y on A A A S R S n gs A N R S A FE RI A Wy r e e a m b ce So A R T E 2 =v g n a r AD2d 597; Jackson v New York Citv Health & Hosp. Corp., £19 F Supp 805; see also, Bryan v Koch, 627 F2d 612, affo 492 F Supp 212), or even one in which a specific portion or service of a health 3 facility is leased, subcontracted or merged by EHEC with a2 view to saving costs or [improving delivery of care. For in each of those instances, HHC maintains the reins of control and decision-making, 2nd does not leave both the administration ang day-to-day operation entirely to someone else. Put another way, HHC cannot put itself out of business in relation to CIH by subleasing all of its asseus and transferring all of its duties, without the consent of the Legislature, any more than a private corporation, by its Board of Directors, could divest itself of its assets and property without permission of its shareholders (see, Business Corporation Law § 20g [a]; Dukes v Davis 2ircraft Prods...Co., 131 ap2d 720, 721). The evidence presented on these motions makes it clear that defendants seek to privatize all the HHC hospitals. 1It is &lso obvious that the "turning over" of CIH to = non-public corporation, is the first sted towards defendants' ultimate goal of disengaging the City from the municipal hospital system ani placing municipzl hospital services in the hands of &n outsider 22 863 or the private sector.’ At the least, defendants seek to "downsize" HHC and minimize its role (and therefore the City's role), for an examination of the sublease terms reveals such limited fatained control by HHC as to raise the question of whether HHC's continued existence could be justified if such subleasing is repeated in connect ich with the other HHC hospitals. For example, ths sublease provides o arbitration process in the event PHS-NY wishes to discontinue a core service, by which an arbitration award can become binding on HHC. The Legislature cannot possibly have intended or expected that by granting HHC the right to enter into agreements or leases, HHC would be put into 2 position where HHC's Board of Directors essentially stripped the 3 *Mayor Rudolph Giuliani recently announced plans to sell Coney Island Hospital and two other Queens hospitals into private bands. Giuliani said he was worried about rising hezlth-care costs and deficits at city-owned hospitals, and wants to get the itv L pita iness." (Newsday, March 5, 1995, emphasis supplied). Bs the Mayor told the press: "Twenty years irom now the mayor of New York City will not bs stznding here with New York City owning 11 acute-care hospitals. That will not be the case. It is going to happen," it's going to change. That change is either going to be forced on us or wa2're going to guide it." (National Public Rzcéio, Interview with Mayor Giuliani, Morning Edition, September 5, 1995.) 23 I N N YI I T R TO T AL ET AT Pe S Y - 864 corporation of its control over the carrying out of its duties. The history of the creation of HHC is instructive. HEC was borne out of the City's need to salvage a hospital system that was floundering. If HHC likewise is confronted with a system nearly drowning in red ink, defendants’ response cannot be simply to jump ship. They must go back to the Legislature, znd seek = emendment or repeal of the HHC Act, or devise some Skits PIar Ed managing the crisis. By finding that HHC has committed an ultra vires act in entering into a sublease to privatize CiH, this court is not gttempting to second guess HHC or thé other defendants or to substitute its own beliefs for that of the HHC Board of Directors. instead, it is holding that HHC must give meaning to the intent gf the People as expressed through the State Legislature's enactment of the HHC Act. Accordingly, the summary Judgment motions by defendants. In BEction Nos. 1 and 2 are denied. The cross motions for summary judgment by the Council plaintiffs in Action No. 1 and by the Campaign plaintiffs in Action No. 2 are granted to Ehe extent of dsclaring that the subleasing of HHC facilitites requires the goplication of ULURP and the approval oi the Council, and furthsr 865 declaring that the sublease of CIH to PHS-NY constitutes an ultra vires act and violates the HHC Act. 3 5 i : Settle orders. Exhibit B SUPREME COURT OF THE STATE OF NEW YORK APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT 8799Z S/hu AD2d Argued - June 9, 1997 CORNELIUS J. O'BRIEN J.P. : THOMAS R. SULLIVAN GLORIA GOLDSTEIN DANIEL F. LUCIANO, JJ. 97-01339 Campaign To Save Our Public Hospitals - DECISION & ORDER Queens Coalition, etc., et al., respondents, v Rudolph W. Giuliani, etc., et al., appellants. Paul A. Crotty, Corporation Counsel, New York, N.Y. (Jeffrey D. Friedlander, David Kamovsky, Daniel Turbow, and Elizabeth Dvorkin of counsel), for appellants. NAACP Legal Defense & Educational Fund, Inc., New York, N.Y. (Elaine R. Jones, Norman J. Chachkin, and Rachel D. Godsil of counsel); Kenneth Kimerling, New York, N.Y.; Barbara Olshanksy, New York, N.Y.; and Evette Soto-Maldonado, New York, N.Y. for respondents (one brief filed). New York Lawyers for the Public Interest, Inc., New York, N.Y. (Cary Lacheen, Lourdes I. Reyes, and Edward Copeland of counsel), for Commission on the Public's Health System, amicus curiae. In an action for a judgment declaring, inter alia, that the New York City Health and Hospitals Corporation is not authorized to sublease Coney Island Hospital to a - private entity, the defendants appeal from an order and judgment (one paper) of the Supreme Court, Queens County (Posner, J.), dated January 31, 1997, which denied their motion for summary judgment and granted the plaintiffs’ cross motion for summary judgment and declared (1) that the proposed sublease of Coney Island Hospital constitutes an ultra vires act on the part of the New York City Health and Hospitals Corporation, (2) that any sublease of a facility of the New York City Health and Hospitals Corporation requires the approval of both the Mayor of the City of New York and the City Council, and (3) that the subleasing of a facility of the New York City Health and Hospitals Corporation requires the application of the Uniform Land Use Review Procedures (see, New York City Charter § 197-c). September 8, 1997 Page l. - CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - QUEENS COALITION v GIULIANI Exhibit C PRE SUPREME COURT OF THE STATE OF NEW YORK APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT 1947E S/bl CORNELIUS J. O'BRIEN, J.P. THOMAS R. SULLIVAN GLORIA GOLDSTEIN DANIEL F. LUCIANO, JJ." 97-01339 : DECISION & ORDER ON MOTION Campaign To Save Our Public Hospitals- Queens Coalition, etc., et al., respondents, v Rudolph W. Giuliani, etc., et al., appellants. Motion by the appellants for leave to appeal to the Court of Appeals from a decision and order of this court, dated September 8, 1997, which determined an appeal from an order and judgment (one paper) of the Supreme Court, Queens County, dated January 31, 1997, and cross motion by the respondents for the same relief. Upon the papers filed in support of the motion and the cross motion and the papers filed in opposition thereto, it is : ORDERED that the motion and cross motion are denied. O'BRIEN, J.P., SULLIVAN, GOLDSTEIN and LUCIANO, JJ., concur. ENTER: Martin H. Brownstein Clerk January 12, 1998 CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS v GIULIANI