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

    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 

 



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LIAM MALLOY, CAMPAIGN TO SAVE 

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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.    

   

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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 
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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 ¢ ; 

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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 § 

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pr 11, 1996, and the exhibits thereto, submitted in support of defendants’ motion 10 3 

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consolidate and for summary judgment, the Affirmation of Daniel Furbo dad September 12 

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1996 2nd the exhibits thereto, the Reply Affirmztion of David Kamovsky dated September 30, 

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1995 and the exhibits thareio, th2 Supplemental Affirmation of Daniel Turcow dated Novembst   
    

  

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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 

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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 

  

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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 : 

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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 

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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
 

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      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, 

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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 

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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 

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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. 

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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 & 

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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- 

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€ 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 

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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 

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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." 

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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 

  

     



  

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Legislature's approval. Although the HHC Act concededly allows 

  for provision of health and medical services "by acreement or 

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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 

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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 

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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 
  

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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   

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- 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