Campaign to Save Our Public Hospitals - Queens Coalition v. Giuliani Respondents' Brief

    To be argued by- 
Rachel D. Godsil 
(20 minutes Requested)

SUPREME COURT OF NEW YORK 
APPELLATE DIVISION : SECOND DEPARTMENT

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

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,

Plaintiffs-Respondents, Case No. 
97-01339

against

Defendants-Appellants.

RESPONDENTS' BRIEF

ATTORNEYS FOR PLAINTIFFS-RESPONDENTS
ELAINE R. JONES 
Director-Counsel 
NORMAN J. CHACHKIN 
RACHEL D. GODSIL 
NAACP LEGAL DEFENSE & 
EDUCATIONAL FUND, INC.
99 Hudson Street 
New York, New York 10013 
(212) 219-1900 EVETTE SOTO-MALDONADO 

PUERTO RICAN LEGAL 
DEFENSE FUND 
99 Hudson Street 
New York, New York 10013 
(212) 219-1340

BARBARA OLSHANKSY
CENTER FOR CONSTITUTIONAL
RIGHTS
666 Broadway
New York, New York 10012 
(212) 614-6439

KENNETH KIMERLING 
719 Greenwich Street 
New York, New York 10014 
(212) 242-7713
April 9, 1997

(REPRODUCED ON RECYCLED PAPER)



TABLE OF CONTENTS

Paae

PRELIMINARY STATEMENT

QUESTIONS PRESENTED

STATEMENT OF THE CASE

SUMMARY OF ARGUMENT 

POINT ONE

THE SUPREME COURT CORRECTLY HELD 
THAT THE HHC ACT ESTABLISHED HHC TO 
OPERATE THE PUBLIC HOSPITALS, NOT TO PRIVATIZE THEM

POINT TWO

THE SUPREME COURT CORRECTLY HELD
THAT THE SUBLEASE OF CONEY ISLAND HOSPITALTO PHS-NY VIOLATES THE HHC ACT

POINT THREE

THE SUPREME COURT CORRECTLY HELD THAT IF 
HHC WERE PERMITTED TO SUBLEASE CONEY ISLAND 
HOSPITAL TO PHS-NY UNDER THE HHC ACT, THE 
HHC ACT WOULD REQUIRE ULURP REVIEW AND 
FINAL CONSENT OF THE CITY COUNCIL

CONCLUSION



SUPREME COURT OF NEW YORK 
APPELLATE DIVISION : SECOND DEPARTMENT

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS - QUEENS 
COALITION, an unincorporated association bv 
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, Case No.
97-01339

c i y  d - L i i o  l .

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.

RESPONDENTS' BRIEF 

PRELIMINARY STATEMENT
The New York State Constitution requires New York 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. Pursuant to this mandate, in 
1969, the State Legislature created the New York City Health and 
Hospitals Corporation ("HHC") to operate the public hospital 
system in the City. See The New York City Health and Hospitals 
Corporation Act, §§ 7381 et seq. ("HHC Act"). 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

1



special access problems due to conditions such as HIV/AIDS 
tuberculosis, and psychiatric disorders. Unlike private 
hospitals, by law, public hospitals may not turn away patients 
because of their inability to pay.

Facing a budget deficit and committed generally to the 
privatization of selling certain assets of the City, in 1993 
Mayor Rudolph Giuliani commenced his plan to dismantle the HHC 
system though the sale or long-term lease the public hospitals. 
Under this plan, 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 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. On November 8, 1996, the HHC Board 
of Directors approved a resolution authorizing the HHC President 
to negotiate the terms of a 99-year sublease of Coney Island 
Hospital to PHS-New York ("PHS-NY"), a for-profit corporation.

Plaintiffs-Respondents Campaign to the Save the Public 
Hospitals et al. (the "Campaign") urge this Court to affirm the 
judgment of the Supreme Court, Queens County (Posner, J.), 
entered February 5, 1997, which declared that: (1) the HHC Act
precludes the dismantling of the HHC system generally, and the 
long-term sublease of Coney Island Hospital to PHS-NY, 
specifically; (2) any lease of an HHC facility must be approved 
pursuant to the New York City Charter Uniform Land Use Review 
Procedure; and (3) any lease of any HHC facility must be approved

2



bY City Council as well as the Mayor.
QUESTIONS PRESENTED

1. Does the HHC Act authorize Appellants to privatize the 
public hospitals, when the Act established HHC to operate the 
municipal hospitals in order to fulfill the State's and the 
City's constitutional obligations to provide health care for the
residents of New York, especially those who cannot afford such 
services?

2. Are Appellants empowered to sublease Coney Island 
Hospital to PHS-NY, a private for-profit corporation, despite the 
fact that the 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?

3. Must the lease of Coney Island Hospital be evaluated 
under the City's land use review process and be approved by the 
City Council since the HHC Act provides that HHC leases must be 
consented to by the Board of Estimate and the City Charter 
divides the authority for approving dispositions of City property

formerly vested m  the Board of Estimate -- between the Mayor 
(for business terms) and the City Council (for land use terms)?

STATEMENT OF THE CASE
The parties below filed cross-motions for summary judgment. 

While they had very different opinions of the underlying merits 
of the privatization decision and the effects that decision would

3



have on indigent city residents and their communities,1 both 
sides agreed that those views, and with the exception of the 
terms of the proposed sublease, the various facts marshalled in 
support of them were irrelevant to the legal issues presented for 
resolution by the Supreme Court. Appellants chose to include an 
extremely lengthy Statement of Facts in their Appeal brief ("App. 
Br. ) despite the fact that the respective cross-motions, and the 
Supreme Court's decision, were based only on the terms of the 
proposed sublease and legal argument.

In response to Appellants' characterization of the proposed 
transaction and its ramifications, Respondents are compelled to 
set forth a brief synopsis of the factual predicate for the 
transaction at issue and the detrimental impact of the proposed 
privatization plan.

1 There was no agreement between the parties, for examnle 
about the motives of the Appellants, the value to the p“ u f o i  

the credentials of the chosen sublessee, PHS-NY, the 
d erS?™ °f the PJocess for Public review of any of the underlying 
are Dartie^ fact' forHHC review. Indeed, several Respondents bJ two other lawsuits challenging the procedures usedy Appellants in implementing their privatization plan. These 
suits are currently pending before Justice Gangel-Jacob in New York 
ounty Supreme Court: David R, Jones, et al. v. The City of New

York, et al., Index No. 96-117768 (contending that prior to the 
o?ov-\ °Z * PJ°posed sublease to PHS-NY, HHC Board members were not
fulfil?dthPiff%C1Hent lnf°rmatlon about the proposed sublease to fulfill their fiduciary duties and that the City and HHC violated
al°5Urmlrnt ;«and £pmmission on the Public's Health System er
New YorkC'q °• 97‘103242 (contending that HHC violated the New York State Environmental Quality Review Act in failing to

H ^ t a \ ) I"?>aCt SCatement for the sublease
4



Statement of Facts
The Municipal Health Care System

The New York City Health and Hospitals Corporation was 
created by the New York State Legislature at the request of New 
York City in order to fulfill the City's constitutional 
obligation to provide comprehensive health care services .to its 
residents, and was specifically charged with ensuring the 
provision of "high quality, dignified" care to "those who can 
least afford such services." Unconsolidated Law § 7382; New York 
State Constitution Article XVII.

In 1970, HHC and the City executed an agreement in which HHC 
leased the public hospitals from the City and was authorized to 
maintain and operate them. Record on Appeal [hereinafter "Ca"] 
at 116. Today, under this agreement, HHC operates eleven acute 
care hospitals, five long-term care facilities, seven free­
standing diagnostic and treatment centers, two satellite clinic 
networks, several hospital and neighborhood clinics, and a health 
maintenance organization. Ca at 166.

Unlike private hospitals, which can turn away uninsured and 
underinsured persons except in cases of emergency (Public Health 
Law, § 2805-b), public hospitals primarily serve people who are 
poor and uninsured. Ca at 590. For example, in 1995, 87.8 
percent of outpatient visits to Coney Island Hospital were made
by participants in public programs or by uninsured patients. Ca
at 591.

HHC facilities also play a disproportionately large role in

5



caring for patients who suffer special access problems. Ca at 
590-594. For example, last year, HHC facilities provided care 
for 51 percent of HIV/AIDS patients who received hospital-based 
outpatient care and 37 percent of HIV/AIDS patients who required 
inpatient visits. Ca at 590-594.
The Municipal Hospital Privatization Plan

In 1994, Appellant Mayor announced his decision to privatize 
the public hospital system through the sale or long-term sublease 
of HHC facilities. Ca at 107. He targeted three hospitals as 
the first step in the privatization plan: Queens Hospital Center
and Elmhurst Hospital Center, the only public hospitals in 
Queens, and Coney Island Hospital, which serves a community of 
750,000 people. Ca at 22-23.

The Mayor developed his privatization plan without public
consideration or debate, relying instead upon assessments made at
his request by the New York City Economic Development Corporation
("EDC") and J.P. Morgan, Inc. Ca at 107-109. At that point, the
HHC Board of Directors, the very entity charged with operating
the public hospitals, did not vote whether or not to privatize,
to select the facilities to be leased, to determine the terms and
conditions of the dispositions, or to select the bidders for the
sale or lease of the three chosen hospitals. Ca at 108-109.

Moreover, the J.P. Morgan Report, Ca at 157, commissioned by
the Mayor, did not consider the impact of the sale upon the
continuity of care for indigent residents of New York:

The financial benefits to the City of New York, of 
course, also depend upon factors not considered in this

6



analysis, such as conditions of sale relating m  

thetlikendi9ent' pr°vision °£ services to thl City and
Ca at 190.

Despite this glaring omission, the City proceeded with its 
plan. On October 26, 1995, EDC received two Offering Memoranda 
that had been prepared by J.P. Morgan for the privatization of 
the three hospitals. Ca at 113. No input from the HHC Board of 
Directors, the HHC Community Advisory Boards, the City Council or 
the public was solicited, received or incorporated in the 
^raft-̂ n9 of these marketing materials. Ca at 113.

The Offering Memoranda failed to delineate any level of care 
to be provided, to require any specific level of access for 
uninsured patients, or to set any objective standard for 
determining the impact of the privatization plan on the City's 
service delivery or its costs. See Ca at 86, 89. The Offering 
Memoranda thus neglected to include criteria to evaluate 
competing offers or to evaluate whether any of the offers would 
result m  better care, increased access or lower cost.

The Offering Memoranda were distributed to a secret list of 
potential purchasers to allow them to submit bids on the 
hospitals. The bidders list was not provided to, and was never 
approved by the HHC Board of Directors. Ca at 113.
The Coney Island Hospital Transaction

Although, according to the Offering Memoranda, the 
privatization was to be accomplished through long-term subleases 
of the facilities to not-for-profit health care providers, such

7



was not to be the case. Instead, without input from the HHC 
Board, the Mayor chose a for-profit corporation, a subsidiary of 
Primary Health Systems, Inc.2 ("PHS"), named PHS-NY3 to sublease 
Coney Island Hospital. Ca at 114. As required by the HHC Act, § 
7385(6), a public hearing was held on October 8, 1996. Although 
the hearing was scheduled in order to receive public input on the 
sublease, the ninety-page sublease was not released prior to the 
hearing. Instead, a ten-page summary was circulated four days 
prior to the hearing. See App. Br. at 10. The summary did not 
contain several major provisions of the proposed sublease.
The Vote and The Missing Information

On November 8, 1996, just two weeks after the dissemination 
of the proposed sublease, the HHC Board approved a resolution 
authorizing the long-term sublease of Coney Island Hospital. In 
this approval process, Board members were denied critical 
information regarding key terms of the deal,4 * and at the same

2

principal
PHS-NY.

PHS is; a privately-held Delaware corporation whose 
officers also serve as the officers and shareholders of

»j_ vl .PHS_NY WaS inc-orPorat:ed on June 25, 1996 in Kings County, New York as a privately-held, for-profit corporation.
... These documents include: (1) the contract setting forthconditions to closing,- (2) the agreement embodying PHS Inc 's

indigent care Sbiigations, A g r e e m e n t  setting forth the terms of financing for the sublease- (4) a 
complete and enforceable agreement between the City and HHC
ex?essinof ‘th^ ' 8 reimbursement °f ‘he costs of indigent care in excess of the trigger point; (5) a delineation of the specific
su^eSse- T gT  rhpH f"NYd -Wi11 a* re^ ired Provide under the' J 6 .-h findings and underlying documentation regarding^ vestl9atlon into. the background and financial interests of tne corporate and individual stockholders of PHS, Inc • (7) an
appraisal of Coney Island Hospital that would indicate its market

8



time they were constrained to evaluate the limited information 
that was provided to them in an extremely compressed time frame. 
The Proposed Coney Island Hospital Sublease

Analyses of the Coney Island Hospital transaction are fully 
developed in the Affidavit of Judith B. Wessler, M.P.H., an 
expert in New York's public health system, Ca at 586, and an 
attached report by Comptroller Alan G. Hevesi, Ca at 605.
Briefly, the proposed transaction is problematic in at least two 
areas: it fails to ensure that PHS-NY will treat all indigent
residents of New York who seek care at the Hospital and it fails
to guarantee that PHS-NY will provide the full range of necessary 
health services.5
The Cap On Indigent Care Serv-i

The proposed sublease does not guarantee that PHS-NY will 
treat everyone who needs care without regard to ability to pay. 
Indeed, it does not even require that PHS-NY treat a specific 
number of uninsured patients. Instead, Article 28 of the 
proposed sublease requires PHS-NY merely to continue the 
provision of health care services to indigent and uninsured 
persons up to the "trigger point" -- 15 percent over Coney Island

theUbest°dearnit?R?SSe?Sment °f whether the transaction represents 
providffreJ r /  rmatl°n °n whether pHS-NY will continue to

S e J  CPa a T 4 0 1 % °8 £4£ % T 6 a CT i y0 . I S la n d  H° S P i t a l  ° n th e  ™ C SysC em -

The entire Proposed Sublease is included at Ca 404 - 473aa.
9



Hospital's current charity care expense level.6 id. This
provision represents a complete departure from HHC's practice of
seeing all patients without regard to insurance status or ability 
to pay.

After the first year of reaching the trigger point, the 
proposed sublease explicitly permits PHS-NY to "manage access to 
health care in such manner as it may deem appropriate so as to 
avoid 'Excess Incurrence'" of indigent care if the costs of
providing indigent care services exceed PHS-NY's cap in any given 
year. Ca at 473j.

The proposed sublease also explicitly states that after the 
first year that PHS-NY reaches the trigger point, HHC cannot 
require PHS-NY to provide indigent care beyond the trigger point:
"[N]othing herein shall give Landlord [HHC] the right to require 
Tenant [PHS-NY] to provide Indigent Care in excess of such 
amount." Ca at 473k.
PHS-NY's Control Over The Continuation Of Existing Servirps

The proposed sublease distinguishes between "Core" services 
and "Non-core" services. Under Article 28, PHS-NY would continue 
to provide "core" services, including "Emergency Medicine, 
Medicine, Obstetrics/Gynecology, Pediatrics, Psychiatry,

costs of such J L p W  t- ' PHS-NY is only required to absorb the
ooint iqrparhoS S UP the tri99er point. After the trigger fo ' however, HHC will be obliged to reimburse PHS-NYincurred above that point for one year. Ca at 473k
sich°outlaVse it -ill r a  &such outlays, there is no provision detailing how such expenditures
aiiLf budat?1 n8d ^  what^imPact theY might have botl? on HHC's 
other facilities pr°CeSS and on the all°cation of funds among HHC's

10



Rehabilitation Medicine and General Surgery," "to substantially 
the same degree as provided by Coney Island Hospital on the day 
prior to Commencement Date." Ca at 473c - d.

However, this list of "core" services delineates the various 
departments of the Hospital, not the specific services to be 
provided by each of the departments. There is, therefore, no 
designation, for example, as to which of the Hospital's 90 out­
patient clinics (including allergy, asthma, diabetes, cardiac 
rehabilitation, out-patient surgery, hearing, geriatrics 
continuing care, pre-natal, alcoholism, and family planning 
clinics, for example) PHS-NY will continue to operate.

The proposed sublease thus permits PHS-NY both to change the 
ways and means of delivering these "core" services, and to alter 
the services offered within the enumerated departments. PHS-NY 
may even close a "core" department altogether without getting 
HHC's approval for certain articulated reasons -- for example, 
changes m  government reimbursement mechanisms. Ca at 473d.

The proposed sublease would similarly permit PHS-NY to 
change the ways and means of delivering "non-core" services 
(which include dental care, cardiology, urology, endocrinology, 
ophthalmology, orthopedic surgery, podiatry, anesthesiology, oral 
surgery, cardiac cath, pharmacy, surgical subspecialties and all 
other services not listed as "core") at PHS-NY's "reasonable 
discretion." Ca at 473d. Under this provision, PHS-NY can close 
or transfer any non-core service without any effective 
limitation. Before doing so, PHS-NY need only give HHC notice,-

11



HHC is provided with no recourse should PHS-NY reject its 
re c ommenda t i on.

The proposed sublease would also allow PHS-NY to transfer 
responsibility for performing inpatient and outpatient "non-core 
services to other providers without any assurance that such 
providers will accept referred patients without regard for 
ability to pay. No assurance is required regarding the 
accessibility of services to uninsured patients when they are 
referred to private providers (e.g., for lab work or to private 
practices for follow-up patient care). These provisions could 
seriously jeopardize the continuity of care for the chronically 
ill, for diabetics, asthmatics or persons living with AIDS.
The Troubling Health Care Record of PHS

Finally, contrary to the documents concerning PHS' 
background submitted by Appellants in the Record, Ca at 473bb et 
seq., documentation provided by PHS and reports filed by 
Appellant HHC's own staff from their initial reviews of PHS' 
current operations raise significant questions regarding both 
quality of care and access to care at PHS' three Cleveland 
hospitals. Ca at 617. According to data provided by PHS itself 
for the years 1993 through 1996, total levels of uncompensated 
care have dropped significantly since PHS assumed control of 
these two facilities. Ca at 609. A report by Comptroller Alan 
Hevesi that relies on figures supplied by PHS shows significant 
declines in the amount of care provided to the uninsured working 
poor and total uncompensated care after PHS assumed control of

12



two of the hospitals, St. Alexis and Deaconess.7 Ca at 609. 
According to Dr. Walid Michelen, Senior Vice President for 
Medical & Professional Affairs for HHC, St. Alexis hospital 
performed worse than expected in its most recent survey in the 
areas of patient satisfaction, mortality, and length of stay. Ca 
at 643 - 645. Finally, Dr. Michelen was also informed that both 
Deaconess and St. Alexis Hospitals "subtly" turn away indigent 
care patients. Ca at 644. Other issues raised by HHC staff 
include concerns regarding PHS' practice of discontinuing and 
outsourcing services. Ca at 485 - 88.

The proposed sublease presents a great risk to poor people 
and those without insurance who rely upon Coney Island Hospital 
for their health care.

SUMMARY OF ARGUMENT
As the Supreme Court held, 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. The State Legislature established HHC as the

According to the analysis, at St. Alexis Hospital, care for
HoLi?a?SUr,?lW°r}CinF P°or ^r°PPed by 3 0 percent, and at Deaconess Hospital, such care dropped by 39 percent. The analysis also shows
ofS ln the t0tal uncoraPensated care provided at boththese hospitals. At St. Alexis, the drop was 17 percent, and at Deaconess, the drop was 47 percent. Ca at 609.

13



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. In the Legislative 
History to the Act, the Mayor of the City of New York assured the 
Governor and the State Legislature that: "In establishing a
public benefit corporation, the City is not getting out of the 
hospital business. Rather it is establishing a mechanism to aid 
it in better managing that business . . . "  id. at 8.

In seeking to privatize the public hospitals, the current 
Mayor has improperly sought to dismantle this state-created 
institution. The Supreme Court thus appropriately held that 
Appellants are not authorized to "simply jump ship. They must go 
back to the Legislature, and seek an amendment or repeal of the 
HHC Act . . . ." Opinion at 24.

The Supreme Court also correctly recognized that the 
proposed sublease of Coney Island Hospital to PHS-NY is ultra vires

under the HHC Act. Coney Island Hospital is the first hospital 
targeted for immediate disposition by the Mayor as part of the 
privatization plan. Appellants plan to sublease Coney Island 
Hospital to PHS-NY, a for-profit corporation, to be operated for 
the economic gain of its shareholders. This sublease thus would 
transfer operational control of a public hospital, established 
for a purely public purpose, to a for-profit corporation to be 
used for a private purpose. It is a long-held principle that 

public property held for a public use may not be diverted to a private 

body for private use without specific legislative authorization.
14



As the Supreme CourtThe HHC Act contains no such authorization, 
held, "HHC, by contracting with PHS-NY by means of a 99 year 
sublease, to have PHS-NY take over the operation of CIH, is 
shirking its own statutorily imposed responsibility, without the 
Legislature's approval." Opinion at 20-21.

Finally, the Court below correctly held that, were such a 
transaction authorized, it nevertheless would have to be approved 
by the New York City Council following a review pursuant to the 
Uniform Land Use Review Procedure ("ULURP"). Indeed, this is the
only conclusion that is consistent with the terms and purposes of 
the HHC Act.

The HHC Act ensured the City's continuing control over its 
real property by requiring consent from the Board of Estimate 
prior to the disposition of a health facility or any other real 
property of the City. HHC Act § 7385(6). When the HHC Act was 
passed, the Board of Estimate was vested with the authority under 
the City Charter to consider both the business terms and the land 
use effects of any disposition of the City's property. After the 
demise of the Board of Estimate, the City Charter divided that 
authority: the Mayor was granted authority to approve the
business terms of any disposition of City property and, through 
ULURP, the City Council was granted the authority to review the 
land use implications of any such disposition. See Final Report
of the New York City Charter Revision Commission (March 1990) at
19 .

Following this clear devolution of power to the two branches

15



of City government, the Supreme Court appropriately concluded 
that the only interpretation of the HHC Act consistent with its 
language and its purposes is one which conforms to the City 
Charter revisions: the authority to consent to business terms
lies with the Mayor and the authority to review the land use 
implications lies with the City Council through ULURP.

Accordingly, Respondents urge this Court to affirm the
judgment of the Supreme Court, Queens County (Posner, J.) entered 
on February 5, 1997.

POINT ONE
THE SUPREME COURT CORRECTLY HELD THAT THE HHC ACT
PRIVATIZE^THEM^” ”  °PERATE *** PUBLIC HOSPITALS, NOT TO

The Supreme Court correctly decided that the HHC Act does 
not authorize the dismantling (directly or through privatization) 
of the HHC system. Since the Supreme Court's decision, the Court 
of Appeals has decided Giuliani v, Hevesi, N.Y.L.J., March 21, 
1997 at 25, col.1, 1997 WL 126040 (N.Y. March 20, 1997), which 
mirrors this case precisely. in Giuliani, the Court of Appeals 
considered whether the Mayor has 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 of Appeals held that 
the Act did not permit the Authority to finance this purchase. 
Gipliam, N.Y.L.J. at 25, col.4. The Court of Appeals rested its 
decision upon the ground that the Act permitted the Authority to

16



issue bonds to cover costs for water projects but did not 
contemplate the use of such bonds to transfer ownership of the 
Water System itself. Giuliani. N.Y.L.J. at 26, col.i.

Similarly, in this case, the HHC Act provides authority to 
transfer a health facility for its corporate purposes, but 
nowhere authorizes the transfer of the entire public health 
system. 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
r f ’S E S 'E S E h S E i S  S E E S  b y . Che. CiCy £° r  the

HHC Act, § 7386(1)(a) (emphasis added). No provision of the Act 
permits HHC to delegate this responsibility.

In fact, the HHC Act very specifically delineates the limits 
of HHC's authority to acquire or dispose of entire health 
facilities in sections 7385(6) and 7387(4). Under § 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 (or any other real property) is no longer 
required for its corporate purposes and powers, HHC may 
"surrender its use and occupancy to the City" or otherwise 
dispose of the facility" and must "use the proceeds derived from 
the sale, lease or other disposition thereof for its corporate

17



purposes." HHC Act § 7387(4).
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 Appellants' claim, App. 
Br. at 17, no provision of the Act permits HHC to turn over 
complete control of the operation and management 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 § 7385(6) -- it 
only governs HHC's authority to provide "health and medical 
services." HHC Act § 7385(8). The distinction here 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 
specific services to be provided, based on its assessment of 
their potential for economic gain. Indeed, as described supra in 
the Statement of Facts, the proposed sublease of Coney Island 
Hospital in no way restricts PHS-NY from doing so.

The only section of the HHC Act that allows for a full 
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

18



more wholly-owned subsidiary public benefit corporations.» HHC Act § 7385(20) 
Section 7385(20) also provides that "no such subsidiary 
corporation shall be established for the purpose of operating a 
health facility or the delivery of direct patient care without 
the prior approval of the mayor." HHC Act, § 7385(20). Thus, 
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's 
making such decisions directly. Consistent with the purpose of 
the HHC Act, the provision limits the exercise of HHC's purposes 
powers, duties, functions and activities to a public benefit 
corporation which, by law, would have the same public purpose as 
HHC itself. it is notable that § 7385(20) requires mayoral 
approval while § 7385(8) imposes no such requirement. It is 
inconceivable that the HHC Act would set up an approval process 
for the transfer of operational authority to a subsidiary public 
benefit corporation, but not for a transfer to "any person, firm 
or private or public corporation or association," HHC Act § 
7385(8), as Appellants would have this Court believe.

Giuliani v. Heyesi, N.Y.L.J. at 25 is instructive on this 
issue as well. in Giuliani, the Court of Appeals recognized the 
distinction intended by the State Legislature between the 
financing of a particular water project and financing the 
purchase of the entire water system. N.Y.L.J. at 26, col.1.
After examining the relevant provisions of the Municipal Water 
Finance Act, the Court of Appeals concluded that a "water

19



project" refers to a specific facility (Public Authorities Law § 
1045-b [20]) while the "Water System" refers to all of the water 
assets owned by the City or Board (Public Authorities Law § 1045- 
b[l4], [21]). Here, one provision of the HHC Act grants HHC the
authority to enter into a "sale, lease or sublease of a health 
facility for its corporate purposes," (HHC Act, § 7385(6)), while 
another grants HHC authority to "provide health and medical 
services for the public [by] lease with any person, firm or 
private or public corporation." HHC Act, § 7385(8). Appellants' 
argument that § 7385(8) governs the transfer of entire health 
care facilities, App. Br. at 17, despite the presence of §
7385(6) which expressly does so, is disingenuous at best.

Here, as in Giuliani, the statutory grant of authority to 
delegate the agency's power is limited. HHC is 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, the Court of 
Appeals 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.'"
N.Y.L.J. at 26, col.1. So too, the statutory authority granted 
to HHC by the HHC Act to dispose of "a health facility for its 
corporate purposes" contemplates something less than the 
disposition of the health facilities operated by HHC to private 
corporations -- which would both contravene the express language 
m  the Act and wholly undermine the purpose of the statute by

20



effectively putting HHC out of operation.
It is clear that the State Legislature created HHC to 

operate the public hospitals, and there is no evidence that the 
Legislature contemplated that HHC would privatize them. See 
People v. Hill, 624 N.Y.S.2d 79, 85 N.Y.2d 256, 648 N.E.2d 455 
(1995) (statutory construction is an exercise of determining the 
intent of the legislature when the act was passed). In fact, the 
opposite is true. The Legislature intended for HHC to be the
"mechanism" to manage the hospitals! As the Supreme Court aptly 
quoted below:

JLJ.n '̂tabiishmg a public benefit corporation, the City is not getting out of the hospital business. Rather it isY 
establishing a mechanism to aid it in better managing that
tha1?688•5°f t?e beneflt not only of the public served by the hospitals but the entire City health service system/

Opinion at 20, guoting Letter of Mayor John V. Lindsay to
Governor Nelson A. Rockefeller, Governor's Bill Jacket, L. 1969 
ch. 1016.
If HHC privatizes the public hospitals, it will turn over full 
operational authority to other corporations and thereby abdicate 
its statutory obligations. Privatization therefore constitutes a 
fundamental alteration of the scheme established by the HHC Act.

The HHC Act did not empower HHC to engineer its own demise. 
Giuliani, N.Y.L.J. at 26, col.1. Only the State Legislature has 
that authority. Opinion at 21; see Matter of New York Publ -i r  

Interest Research Group, 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

21



the statute for a public purpose)
While Appellants may now consider privatization to be a 

preferable method of managing the public hospitals, the HHC Act, 
as the Supreme Court correctly held, neither contemplated nor 
does it authorize privatization, and such action is therefore 
ultra vires. Opinion at 24; see People v. Smith 582 N.Y.S.2d 946,
947, 79 N .Y .2d 309, 311, 591 N.E.2d 1132, 1133 (1993) (the 
purpose of statutory interpretation "is not to pass on the wisdom 
of the statute or any of its requirements, but rather, to
implement the will of the Legislature as expressed in its
enactment").

J . n u

C0RRECTLY HELD THAT THE SUBLEASE OF CONEY ISLAND HOSPITAL TO PHS-NY VIOLATES THE HHC ACT
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 related 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.

A. The Proposed Sublease is Inconsistent With the Public Purpose of the HHC Act
Appellants concede, as they must, that in enacting the HHC 

Act, the New York State Legislature intended to create an entity
22



that would operate New York City's public hospitals and thereby 
fulfill the constitutional obligations of the City and the State 
to provide "high quality, dignified and comprehensive care and 
treatment for the ill and infirm, particularly to those who can 
least afford such services." HHC Act § 7382; see App. Br. at 16• 
17. The Act thus provided for the creation of HHC as a public 
benefit corporation8 charged with carrying out this mandate.
HHC Act § 7382. The Act also expressly delineated 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 
jp°Ple ^tate £f New York and of the city of New
~Pr ' and,ls a state, city and public purpose; and that the exercise by such corporation of the functions, 
powers and duties as hereinafter provided constitutes
function01111̂ 06 °f ^  essential public and governmental

Id. (emphasis supplied). Thus, both the legislative charge to 
HHC and the scope of its power are eminently clear.9 * Given

8 A public benefit corporation is "a corporation orqanized to 
operate a public improvement wholly or partly within 

nrhpf ^ e; the Proflts fr°™ which inure to the benefit of this or her states, or to the people thereof." General Construction Law

9 Under the State Constitution, the HHC Act the Oopratinn 
Agreement between HHC and the City, and HHC's own'Bylaws? HHC is 
vo Jgated to Pr°vide care to all the residents of the City of New
Article6™  It Pay' NeW Y°rk State Constitution,
2 !r •Xn11; §§ . 4; HHC Act § 7382; HHC Lease, Article II, §
equally to^all^wp^lcle 11 (B) ■ H H C ' S  Purpose is to "[e]xtend ^  to all we serve comprehensive health services of the
Highest quality in an atmosphere of human care and respect » HHC 
provides r h ^ t h  "v, <B.> ' , The Operating Agreement similarly
K ^ i c e l  that if ! i n splts under IHHC'SI jurisdiction and the leJIt a f = , 1 k ■ render are particularly for those who caneast afford such services." Operating Agreement, Art. II, § 2.1.

23



these facts, this Court's mandate is unambiguous, it must give 
the HHC Act "a sensible and practical over-all construction, 
which is consistent with and furthers its scheme and purpose." 
Long v. Adirondack Park Agency, 76 N.Y.2d 419, 420, 559 N.E.2d 
635, 636-37, 559 N.Y.S.2d 941, 942-43 (1990), since " [i]t is a 
general rule in the construction and interpretation of statutes 
that the intent of the legislature is the primary object sought 
and generally courts do not favor a departure from literal 
construction." American Dock Co. v, City of New VnrV 21 
N.Y.S.2d 943, 952, 174 Misc. 813 (1940).

In fact, the public purpose that compelled creation of HHC 
constitutes the underlying framework for the entire HHC Act, and 
was intended to govern the operations and actions of the 
Corporation. Thus, 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 
delineates the specific conditions 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 that provision allows for such

24



delegation only to "wholly-owned subsidiary public benefit
corporations." HHC Act, § 7385(20) (emphasis supplied).

Section 7385(6), cited by Appellants as the primary support
for their claim that HHC has the authority to sublease the public
hospitals to a private corporation, App. Br. at 16, 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 °r P?rsonal property, including but not limited to a nealth facility, or any interest therein for its corporate purposes...

HHC Act § 7385(6) (emphasis supplied). Indeed, the limited 
authority granted under this provision is even further 
constrained by the Act. 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) .10

Appellants' argument that the power to close a hospital facil^y necessarily includes the power to sublease a facility to 
corporation is plainly inconsistent with this section, ppellants have made no determination here that HHC's health care 

arS ^  lor[ger needed in the South Brooklyn community. To he contrary, Appellants' plan is based upon their recognition of 
the continuing need for such services. Ca at 389. HowevS PHS-Sy 
has not agreed to provide all of these services and to mental” tte
cfaf w 7 °fT.Ser7 ing a11 Patients regardless of ability to pay. ta at 592. it plainly does not further HHC's public purpose to

OVHe H ltS aSS6tS t0 a f°r-Pr°fit corporation tha^Ts not required by statute, constitution, or contract to provide the same
25



Appellants urge this Court to overlook the plain meaning of 
the Act and to permit them to stretch the statutory license 
granted HHC to carry out its mission beyond its carefully defined 
limits. See App. Br. at 16-18. Such a determination would be 
patently in error. £ee Lloyd v. Grella. 83 N.Y.2d 537, 545-46 
634 N.E.2d 171, 611 N.Y.S.2d 799 (1994) (where the statutory 
language is unambiguous, courts must give effect to the plain 
meaning of the statute). No provision of the Act permits HHC to 
transfer an entire health facility that is needed to provide health care to 

indigent City residents to a for-profit corporation.

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 returns to its 
shareholders." Alpert v._28 William Street Cor-p . 478 N.Y.S.2d

frSe services that HHC is mandated to furnish. HHC Act §
16 o/(4) .

The federal cases cited by Appellants as support for their contention, gryan v .— Koch. 627 F.2d 612 (2d Cir. 1980), aff'a 492 
F. • ^upp. 212 (S.D.N.Y.) and Jackson v. HHC. 419 F.' Supp 809 
(b.D N.Y. 1976) are wholly unavailing. Both cases were challenges 
to decisions to close health care facilities following a 
determination that the facilities were no longer needed to provide 
care and, more importantly, were civil rights cases brouqht 
pursuant to the Fourteenth Amendment to the United States 
Constitution and Title VI of the Civil Rights Act of 1964, not the 
statutory mandates of the HHC Act.

26



443, 448 (N.Y. Co. Sup. Ct. 1983) aff'd 63 N.Y.2d 557, 473 N.E.2d 
19, 483 N.Y.S.2d 667 (1984); see also 1 J.D. Cox et al.,
Corporations § 1.2 (1995) (defining a business corporation as an

association of persons "in a business enterprise with the object 
of economic gain"). As a for-profit corporation with general 
shareholders, PHS-NY has the "direct object of promoting private 
ends." 14 N.Y. Jur.2d Business Relationalps § 23. Thus, under 
New York law, the directors of PHS-NY, who are charged by law 
with managing the corporation's affairs, N.Y. Bus. Corps. Law §
701 (McKinney's 1986), owe a legal duty to the corporation and 
its stockholders in their quest for economic gain, see Cohen v. 
Cocoline Products, Inc , 309 N.Y. 119, 123, 127 N.E.2d 906 
(1955), not to the uninsured patients seeking care and treatment 
at Coney Island Hospital. 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. Such a 
transaction simply is not a permissible mechanism for pursuing 
HHC's public purpose.

Appellants' claim is belied as well by the decisional 
authority addressing the use of public assets for private gain.
In fact, decisional authority dictates 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

27



houses, and other public buildings, the [municipal] corporation 
has no 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."11 
Meriwether v. Garrett, 102 U.S. 472, 513, 26 L.Ed. 197 (1880) 
(emphasis supplied) (emoted in Cotrone v. City of New York 38 
Misc. 2d 580, 237 N.Y.S.2d 487, 489 (Sup. Ct. Kings Co. 1962);
—gcord American Dock Co. v. City of New York 174 Misc. 183, 21 
N .Y .S.2d 943, 957 (Sup. Ct. N.Y. Co. 1940), aff'd.. 261 A.D.
1063, 26 N .Y .S.2d 704, aff'd., 286 N.Y. 658, 36 N.E.2d 696 
(1941); see also Lake George Steamboat 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); Aldrich y, city 
of_New York, 208 Misc. 930 145, N.Y.S.2d 732 (Queens Co. Sup. Ct. 
1955), aff'd 2 A.D.2d 760, 154 N.Y.S.2d 927 (Dept. 2 1956).

Moreover, it is well-established that legislative authority 
authorizing the diversion of public land to a private entity must 
be "clear and certain." Lake George Steamboat Cn . 30 N.Y.2d at
52, 281 N .E.2d at 149, 330 N.Y.S.2d at 339; s^e also American 
Pock Co-' 174 Misc- at 824, 21 N .Y.S.2d at 957 (legislative

Charter ch 9 forth in Section 383 of the CityanH t- t- ' PeJtinent part, States: "The rights of the city
ltS ,waterfront' fsrries, wharf property . . . and allpubIlc Places are hereby declared to be inalienable (Emphasis supplied). . . . .

28



authority must be "special"). 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.

B‘ ?r°P°sed Sublease Constitutes An ImpermissibleSubsidization Of A For-Profit Corporation
The use of public assets by, and the possible diversion of 

public funds to, PHS-NY contemplated by the sublease also clearly 
contravenes the HHC Act. The sublease states that HHC will 
reimburse PHS-NY for the provision of charity care for any year 
m  which the cost of such care exceeds a "Trigger Point." Ca at 
473j. under this provision, HHC funds are promised to a for- 
profit corporation. This violates the HHC Act.

Section 7386(1)(a) of the Act provides in pertinent part
that:

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 7 the city
tax l e w Cfo?ethe ^  SXpenSe bud^et an appropriation of tax levy for the services provided by the corporation

HHC Act § 7386(1)(a) (emphasis supplied). Pursuant to this
provision, the City reimburses HHC for its operation of the
public hospitals in a manner consistent with HHC's corporate 
purposes.

Contrary to Appellants' intimations, no provision of the Act 
permits HHC or the City to cede HHC (public) assets to a private 
corporation for its private gain. HHC is not empowered to use

29



City tunds to reimburse a for-profit corporation for providing 
these services through a facility that it manages for its 
shareholders' profit. If economic gains are realized from 
increased efficiency or superior management, such monies will go 
directly to the PHS-NY shareholders' pockets -- not to the HHC 
system. Under the terms of the sublease, then, HHC may be 
required to transfer much-needed funds to PHS-NY even when PHS- 
NY' s shareholders are garnering a considerable profit.

The illegality of mingling the assets of a health facility 
with the sole purpose, under state law, of providing care with 
the assets of a for-profit corporation with the objective, under 
state law, of providing an economic benefit to its shareholders 
has been addressed in other jurisdictions. In Michigan and 
California, mergers of for-profit hospitals and not-for-profit 
hospitals were found to violate those states' not-for-profit 
laws. See Kelley v. Michigan Affiliated Healthcare System Tnr 
No. 96-8384B-CZ, September 5, 1996 Court Ruling, Michigan Circuit 
Court (Michigan Ruling") (Ca at 688); Decision of Daniel E. 
Lungren, Attorney General for the State of California, November 
8, 1996 ("Attorney General Letter") (Ca at 701). While these 
cases involved not-for-profit hospitals and the states' not-for- 
profit laws, rather than public benefit corporations, the legal 
principles involved are similar.

In Michigan, the court held that a local not-for-profit 
hospital would be committing an ultra vires act by entering into a 
partnership with a for-profit health care conglomerate. The

30



the state'scourt found that the partnership would violate 
Nonprofit Corporation Act because "no one is entitled to profit 
from [the] operation" of a not-for-profit hospital. Ca at 693 
The Court noted that the sale of the hospital to the conglomerate 
would be permitted if the proceeds were used purely for 
charitable purposes, but a joint venture would be prohibited 
because it would result in impermissible commingling of 
charitable assets with assets used to generate profits for the 
for-profit corporation and its shareholders. See Ca at 696.

Similarly, in California, the State Attorney General 
determined that a provision of the Articles of Incorporation of a 
not-for-profit health organization would be violated if it merged 
two of its hospitals into a for-profit entity. The Articles of 
Incorporation require that the assets of the two hospitals be 
used for the purpose of "acquiring and operating a non-profit 
charitable hospital and medical center in the City of San Diego." 
Ca at 703. The Attorney General stated that "the transfer of 
these hospitals into the for-profit LLC constitutes an 
abandonment and breach of that trust." Ca at 703. The Attorney 
General plans to initiate legal proceedings if the merger is not 
halted. Ca at 707.

That the case at bar involves the assets of a public benefit 
corporation rather than those of a not-for-profit corporation if 
anything makes this concern even more compelling here. The 
Michigan court and the California Attorney General both found 
that the commingling of assets was impermissible because the not-

31



for-profits were required either by state law or their internal 
corporate rules to use their assets solely for charitable 
purposes -- and not for the economic gain of another 
corporation's shareholders. Here, HHC was created to fulfill a 
vital public purpose, HHC Act § 7382, and must use its assets to 
fulfill that purpose, see, e,g.. HHC Act § 7387(4).

Beyond their strained statutory interpretation, Appellants 
proffer solely the self-serving justification that HHC cannot 
continue on its current path due to "economic realities," and 
that the proposed transaction represents the best course of 
action. App. Br. at 19. However, Appellants cannot insulate 
their blatant disregard of the language and intent of the HHC Act
by cloaking their actions in the guise of a discretionary policy 
determination.

The question whether the proposed transaction is consistent 
with the underlying legislative purpose of the Act -- although 
not with its language -- and therefore warrants an amendment of 
the statutory language, is an issue for inquiry, debate and 
ultimate resolution by the State Legislature. Appellants cannot 
change the scope of their authority as codified in the Act by
fiat; they must seek any such changes through the legislative 
process.

C. The Proposed Sublease Would Directly Undermine The Mission Of Coney Island Hospital
By asserting that PHS-NY's profit motive will be reined in 

by the terms of the proposed sublease, Appellants disingenuously

32



argue that there is no conflict between the express public 
purpose of HHC and the profit motive of PHS-NY. App. Br. at 18 
Thus, according to Appellants, the Court should permit this 
unauthorized transaction because "HHC put strict limits on how 
far the profit motive could go; the sublessee must provide 
charity care for the poor and uninsured and continue all 
important medical services." Id. However, even a cursory 
examination of the sublease refutes Appellants' claim. Indeed, 
the terms of the sublease illustrate in bold relief the ways in 
which the wholesale transfer of control to a for-profit 
corporation will undermine HHC's stated purpose of providing
comprehensive and quality health care to all those who cannot 
afford it.

First and most significantly, the proposed sublease does not 
guarantee that PHS-NY will continue to provide care to those who 
need it without regard to their ability to pay. In fact, it does 
not even require that PHS-NY treat a specific number of uninsured 
patients. Instead, the sublease establishes a cap on PHS-NY's 
obligation to serve indigent persons and defines the level of 
obligation in terms of a specific dollar amount.12 Ca at 473j.

12

dollar t-^^USe *I?s"NY's charity care obligation is expressed in liar terms, rather than in numbers of patients treated, and
oecause it is not broken down in terms of inpatient and outpatient 
services, there is no guarantee whatsoever that the current volume 
o service at Coney Island Hospital will be maintained by PHS-NY. 
in fact, the number of patients treated by PHS-NY will depend 
mti^|ly upon the method of cost calculation used by the company.
f PHS-NY calculates charity care costs allocable to the cap by 

^ ^ r^Ct^n9 Payments from its own charges, as opposed to the HHC method of expenses minus revenues, the volume of service will in tact be significantly lower than that currently provided.
33



These provisions represent a complete departure from HHC's 
practice of seeing all patients without regard to insurance 
status or ability to pay and plainly contravene HHC's mission.

Second, there is no provision in the sublease that addresses 
what will happen if, and most likely when, the charity care cap 
is reached and exceeded. With the exception of the single year 
of reimbursement by HHC (for which the City has ostensibly 
promised to reimburse HHC), there is no articulated plan either 
for the provision of services to this population or for the 
payment of the costs attendant to such care.

Third, if PHS-NY exceeds its dollar cap in any given year, 
the sublease allows PHS-NY to "manage access to health care in 
such manner as it may deem appropriate so as to avoid 'Excess 
Incurrence' of indigent care." Id. HHC facilities cannot 
similarly "manage access to care" to limit the services provided 
to indigent persons: HHC by law must never turn patients away
because of inability to pay. Allowing PHS-NY to do so is clearly
at odds with the mission of the public hospitals to provide such 
care.

Fourth, as discussed above, see pp. 10-11, supra. the 
proposed sublease would permit PHS-NY to eliminate or greatly 
reduce services that are costly but essential to the vulnerable 
populations currently served by Coney Island Hospital. id_ at Ca 
473d. For example, expensive but critical services for the 
chronically ill, people with AIDS, asthma, and diabetes could be 
cut by PHS-NY to ensure profit for its shareholders.

34



Finally, contrary to Appellants' characterization of HHC's 
authority after commencement of the sublease, the sublease does 
not provide for effective oversight by HHC. For example, HHC 
cannot require PHS-NY to provide indigent care beyond the trigger 
point: "[N]othing herein shall give Landlord [HHC] the right to
require Tenant [PHS-NY] to provide Indigent Care in excess of 
such amount." Ca at 473k. In addition, the sublease would 
permit PHS-NY to alter or even close "core" services offered 
within the enumerated departments without HHC approval. Id. at 
473d. Furthermore, PHS-NY would have the authority to close or 
transfer a "non-core" service without any effective 
limitation. Before closing or transferring the department, PHS- 
NY must only give HHC notice and an opportunity to provide input. 
The sublease grants HHC no recourse should PHS-NY reject HHC's 
recommendations.

lnKiLiL

THE SUPREME COURT CORRECTLY HELD THAT IF HHC WERE 
PERMITTED TO SUBLEASE CONEY ISLAND HOSPITAL TO PHS-NY 
UNDER THE HHC ACT, THE HHC ACT WOULD REQUIRE ULURP REVIEW AND FINAL CONSENT OF THE CITY COUNCIL
The Supreme Court properly held that if the sublease of 

Coney Island Hospital to PHS-NY were permitted, it would still be
required to undergo a ULURP review and be approved by the City
Council.

Section 7385(6) of the HHC Act requires that there be Board

PHS NY would also be permitted to transfer responsibility 
tor performing inpatient and outpatient "non-core" services off­
site to other providers, including its affiliates, without any 
assurance that these providers will accept the referred patients.

35



of Estimate consent prior to any disposal of City-owned health 
facilities:

[N]o health facility or other real property acquired or 
constructed by the corporation shall be sold, leased, or 
otherwise transferred by the corporation . . . without the consent of the board of estimate of the city;

This section of the HHC Act parallels the provisions of the City
Charter concerning city property that were in effect when the HHC 
Act was passed:

Section 384. Disposal of property of the city. a. No 
property of the city may be sold, leased, exchanged or 
otherwise disposed of except with the approval of the board of estimate . . . .

Thus, both the HHC Act and the City Charter plainly required 
Board of Estimate approval or consent prior to a disposition of
the City's real property.

The Supreme Court correctly held that in the absence of the 
Board of Estimate, HHC must obtain consent from the Mayor (for 
business terms) and the City Council (for land use terms) after a
review under ULURP prior to a disposition of a health facility. 
Opinion at 19.

When the HHC Act was passed, 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. 
When the voting distribution of the Board, under which each of 
the city officers had two votes and each of the Borough 
Presidents had one vote, was held to violate the constitutional 
requirement of one person, one vote, see Morris v. Board of 
Estimate, 592 F.Supp. 1462 (E.D.N.Y. 1984), aff'd 831 F.2d 384,

36



aff\i 483 U.S. 688 (1989), the Board of Estimate was dissolved 
and its powers transferred to the reconstituted City government.

The Board of Estimate's dissolution rendered § 7385(6) -- 
the terms of which were previously clear -- ambiguous. People v 
Bolden, 81 N.Y.2d 146, 613 N.E.2d 145 597 N.Y.S.2d 270 (1993) (an 
unambiguous statute must be read as written, unless changed 
circumstances render it anachronistic). The plain language of 
the HHC Act makes clear that the goal of § 7385(6) was to require 
formal City review of dispositions of City property leased to 
HHC. The State Legislature has chosen not to amend that section, 
either to eliminate the need for consent or to substitute one 
existing body for the now-defunct Board of Estimate. As the 
Supreme Court held below, "The Legislature, by not having acted 
to eliminate the 'board of estimate' language, can be said to 
have opted to allow the consent power to devolve upon the body, 
agency or officer designated in the revised Charter to succeed 
the powers of the Board of Estimate." Opinion at 12. Indeed, 
the City Charter contemplated and provided for such inaction by 
the State Legislature.

Section 1152(e) of the City Charter provides that upon 
dissolution of the Board of Estimate, the powers it exercised 
"set forth in any state or local law that are not otherwise 
devolved by the terms of such law" are to "devolve upon the body, 
agency or officer of the city charged with comparable and related 
powers and responsibilities under" the Charter. New York City 
Charter § 1152(e) (emphasis added).

37



The revised City Charter divides the Board of Estimate's 
authority between the Mayor and City Council. Section 384 now 
provides:

Disposal of property of the city. a. No real property of 
the city may be sold, leased, exchanged or otherwise 
disposed of except with the approval of the mayor
b •(5) Any application for the sale, lease (other than lease 
of office space), exchange or other disposition of real 
property of the city shall be subject to review and approval 
pursuant to sections one hundred ninety-seven c [ULURP] and 
one hundred ninety-seven-d. Such review shall be limited to the land use impact and implications of the proposed transaction.

The Final Report of the City Charter Commission14 stated that:
"The basic change made by the 1989 charter amendments was to 
substitute the Council for the Board as the final decisionmaker 
m  land use." Id. at 20. Later in the Report, the Commission 
summarized the City Council's authority to "review other City 
Planning Commission approvals of land use matters subject to 
ULURP . . . ." Id. Appendix A at 6.

In other words, as the Supreme Court held, the Mayor is 
authorized to review business implications, and the City Council 
is granted the authority, formerly vested in the Board of 
Estimate, to be the final decisionmaker under ULURP (§ 197-c) to

In response to ruling that the Board of Estimate was 
unconstitutional, the New York City Charter Revision Commission was 
formed to cure the constitutional deficiency and to revise the Charter accordingly.

38



review land use concerns.15 New York City Charter § 384(a) & 
(b)(5); City Charter Commission Final Report at 19; see also 
Tribeca Community Assoc. Inc, v. New York State Urban DpvpI 
g-orP • ' Index No- 20355/92 (April 1, 1993 Sup. Ct. N.Y.) (under 
the revised § 384, the Mayor approves the business terms of a
sale or lease of city property, and the land use impacts are 
subject to ULURP) ,16

The ULURP provision in the City Charter provides:
Section 197-c. Uniform land use review procedure. a. 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 real 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 real property o f the city

§ 197-c New York City Charter (1995) (emphasis added).
In sum, the Supreme Court below followed the correct 

analysis. Section 7385(6) of the HHC Act -- now ambiguous --

15 Section 197-c provides that the City Council reviews the decision of the City Planning Commission. The Mayor has an 
opportunity to file a written disapproval of the City Council's 
decision, which can be overridden by a 2/3 vote of the Council

Appellants cite Tribeca Community Assoc. for the proposition that "The City Council does not have authority to 
approve the terms and conditions of sales, leases or other 
dispositions," App. Br. at 29, conveniently ignoring a passage on 
the previous page of the decision which states: "the City Council 
makes land use determinations." Tribeca Community Assnr at 30.

39



must be interpreted to effectuate its purpose. See^ e^., Book 
Center,— Inc, v. Tax Appeals Trib. of State of n v 83 N.Y.2d 
240, 631 N .E .2d 86, 609 N.Y.S.2d 144 (1994) (when language is 
vague the Court of Appeals has instructed courts to "resort[] to 
rules of construction and interpretation of an enactment with 
reference to the objective sought to be achieved and the 
contextual spirit and purpose of the enactment"). The HHC Act 
intended for a review by the City of dispositions by HHC as 
lessee of City-owned property. Coney Island Hospital is City- 
owned property. To effectuate the purpose of the HHC Act in the 
absence of the Board of Estimate, the Supreme Court appropriately 
looked to the revised City Charter for guidance, under which such 
a review now takes place under the auspices of the ULURP process
with final decisionmaking authority residing in the City Council. 
Opinion at 17.

Appellants attempt to obscure the clear purpose of ULURP to 
appiy to dispositions of any City-owned property by raising

40



irrelevant property law concepts.17 Appellants contend that the 
City holds the fee and HHC holds the leasehold, and that, 
therefore, the disposition does not concern the City's property 
the fee -- because the sublease involves only the leasehold. 

App. Br. at 23. The HHC Act, however, requires consent from the 
fee holder -- the City -- in § 7385(6) . That consent can no

The. cases cited by Appellants in support of this argument 
a£e inaPPllcable to the issue at hand. By Appellants' own 

^ « Zatci°?\T:Lv Cl0ar that ^atter of Davis v. Dinkins 206
N Y -2d 804 '(1995) N/p’VS'2d i933 (2d DePt- 1994) lv. app. den 85riot- 1 (1995) (Clty only agreed to refer families to hotel, itleaae rooms' thus ULURP did not apply), and Matter of
rr ; q! r ! : r nn, H?mfeowners Assnr ■ I n c - v  ^  ° f  Newbecause ' 1997) lv~ app' pendin3 (ULURP requiredaleasp) t0„USe Premises to b°use homeless men constituted
issul were in fari-a ?eterminatf ^  whether the transactions at fact laases' and thus whether ULURP should apply to
discussion of0'̂ hp1^  firSt tnstance- The ^ses cited contain no a ™ h dlfference between a fee and a leasehold or of any other property law concepts that Appellants seek to inject

more c°/ ® otherncases cited by Appellants is evenmore attenuated. See Rowe v. Great Atlantic & Pacific Tps Pn
Inc,, 46 N . Y . 2d 62, 38? N.E.2d 566, 412 N.Y.S 2d 827 (1978)
(concerning whether a lease agreement of real property does or does
SssiQCn°nthen ipn ^ P lie rd covenant limiting the lessee's power to assign the lease) ,- Great Atlantic & Pacific Tea Co Inc v-
7^atf' 22 .N -Y -2d 75, 238 N. E . 2d 705, 291 N.Y.S.2d 299 (igcfl)(dealing with assessing damages on property when there are two or 
more interests in the estate) ; Mann Theatre, C om v . Mf I t^ ° h
S f ?gin6q2 Nava^ 94o,An D -2d 466' ^ N.Y.S.2d 793 %  Dept 1 9 8 3 K  7~^Hd 62 N ‘Y *2d 930' 462 N.E.2d 51, 479 N.Y.S.2d 213 (1984)
subleasing^ Whether a lessee is bound by lease terms which prohibit

cmim PellantS alS° Cite a number of cases which hold that a right 
S n aSM % eXi StS' —  Qppenheimer & Co. v, Qppenheim. 86 N. Y. 2d 

York Pi r v  p* '2d ,415' 636 N.Y.S.2d 734 (1995); Perlbinder v. New
k ^  Y Clliati0n and Appeals 67 N . Y . 2d 697, 490 N.E.2d844, 499 N.Y.S.2d 925 (1986); Maidgold Assoc, v Pi tv of Np>w Vnrlr 

64 N.Y 2d 1124, 479 N.E.2d 8237 490 N.Y.S.2d !87 (1985) S e s e
thirULTO^di^t-^rfm8- 7  ^  leSS support ”  Appellants' contention tnat ULURP distinguishes between fees and leaseholds.

41



longer be obtained from the Board of Estimate; accordingly, in 
the absence of an amendment to the HHC Act, consent must be 
secured from the entity that, under the City Charter, replaces 
the Board of Estimate. Section 384 of the City Charter now 
divides the consent authority of the former Board of Estimate 
between the Mayor on the one hand, and the City Council through 
ULURP on the other.

Appellants' argument that ULURP does not apply because the 
sublease of Coney Island Hospital does not fit under the terms of 
ULURP is equally meritless. ULURP applies to "any disposition of the 
real property of the City" by "any p erso n ." n .Y. City Charter §
197-c (emphasis added). The statute is written broadly and not 
limited to specific property interests. Section 197-c plainly 
encompasses subleases, since a sublease is one way any "person" 
other than the City or a City agency could dispose of City 
property. Had the intention been to limit the application of 
ULURP only to sales and leases by the City of certain property 
interests, the statute would have so provided.

ULURP is written to reflect the overriding principle at 
issue: the City has continuing interest in any disposition of
its land by any person -- not merely in a disposition by the City
itself or agencies governed by the City. ULURP is intended to 
identify, at the earliest possible stage, those activities by any 
person concerning the use of City-owned land that will have a 
"significant impact on the community." Ferrer v. Dink-ins 218

42



A.D.2d 89, 94, 635 N.Y.S.2d 965, 967 (1st Dept. 1996), appeal 
denied, 88 N.Y.2d 801, 644 N.Y.S.2d 493, 666 N.E.2d 1366 
(1997).18 ULURP was adopted specifically to provide greater 
participation by local communities in the development and use of 
such land. See Lai—Chun Chan Jin v. Board of Estimate. 92 A.D.2d 
218, 460 N.Y.S.2d 28 (1st Dept. 1983). In short, ULURP is 
intended to apply to all dispositions of City-owned property 
because the government of the City and the community have an 
interest in such dispositions. The sublease of Coney Island 
Hospital -- if it can be subleased -- falls squarely in the realm
of significant decision concerning the property of the City that 
ULURP is intended to govern.

Appellants also argue that ULURP should not be applied to

t , Appellants assertion that this transaction does not raise land use concerns misses the point. App. Br. at 32. The ULURP 
process is designed to identify potential land use impacts from 

°f Clty ProPerty (or to determine that none, in fact, 
r i d  L ' tAPpellants are not authorized to make unilateral determinations that a disposition will not raise land use concerns 
fff if thereby exempt from the review required by the statute.

requirement that any disposition of city property undergo 
HHc^ nd^ Use review reflects a legislative judgment that any 
See °p pr°perty Potentially raises land use concerns77s Falbros Realty v. Michetti. 200 A.D.2d 85, 612 N.Y.S.2d 561

Dept• 1994) (recognizing that changes in income level of
esidents of housing development may raise land use concerns 

because of different demands for public services). Finally
P°df V  land „use imPaots that may arise from this transactioA include, e.g. demand for services from the City following change 
of services or discontinuance of services by PHS-NY (like Falbros) 
and an increased need for ambulances if emergency care is provided

43



this transaction because it is inconsistent with the HHC Act.19 
For this contention, Appellants rely upon Wavbro Corn, y Mow 
York City Board of Estimate, 67 N.Y.2d 349, 493 N.E.2d 931, 502 
N .Y.S.2d 707 (1986), which held that the New York State Urban 
Development Corporation ("UDC") Act preempted local land use 
regulations. App. Br. at 25.

As the Supreme Court noted, however, "Wavbro . . .  is 
distinguishable from this case." Opinion at 15. The UDC Act 
expressly grants UDC the authority to override the local charter; 
there is no such provision in the HHC Act. In contrast, "[t]he 
HHC Act, by requiring consent of the Board of Estimate under § 
7385(6) for dispositions of property, expresses, if anything the 
contrary intent." Opinion at 15.

In the context of land use restrictions specifically, the 
Legislature has granted to certain public benefit corporations, 
like UDC, license to supersede local land use restrictions,

prc J9 . APPellants seek to rely upon the 1985 disposition of the
E s t i m a t e S p f  Bellevue hospital to imply that the Board of
use e?fect? of , y .thori.ty. unde/  the HHC Act to consider the land se effects of a disposition of City property. App. Br. at 30-31ppellants' argument fails for several reasons.

of thafrr?^oc?^°ard °f Bstimate did consider the land use impacts 
1R4 L S  j1101!; S S £ qounci1 Record on Appeal at 323-324; Ca at no?' argument that the Board of Estimate didnot subject the sublease itself to ULURP is irrelevant to this 
Court s analysis. The Board of Estimate complied with ULURP in the 
companion resolution to sublease in which it approved the z^ninq 

necess^ ry for the Purchase. Therefore, the disposition if WJS subject to ULURP. See Ca at 362-367. Finally, since the Board of Estimate did exercise its recognized land use powers
A^ellan?^1119 that sudlease' such a decision would not support powers argument that the Board of Estimate lacked those

44



giving them unique authority to "override" local land use 
regulatory provisions. Seg Wavbro. 67 N.Y.2d at 355, 502 
N.Y.S.2d at 710, citing New York State Urban Development Act, ch. 
252, § 16 (McKinneys). However, Legislative releases from local 
land use restrictions to public benefit corporations have varied 
greatly. As a result of this considerable variation, courts must 
scrutinize each particular statute to glean the legislative
intent. See Connor v ._Cuomo. 161 Misc. 2d 889, 614 N.Y.S.2d 1011
(Sup. Ct. Kings Co. 1994) (requiring an inquiry into the 
Facilities Development Corporation Act to determine whether local 
restrictions apply). As noted above, in contrast to the UDC Act 
at issue in Waybro, in the HHC Act, the Legislature explicitly 
required consent from the Board of Estimate for any disposition 
of City property. HHC Act § 7385(6); Opinion at 15.

Appellants further argue that under Municipal Home Rule Law 
§ 10(5), state law must take precedence where compliance with 
local law is inconsistent with the state law. App. Br. at 25.
Of course it must. As the Supreme Court correctly noted, 
however, the Court of Appeals has interpreted the Municipal Home 
Rule Law to exempt public benefit corporations from local 
regulations only when those regulations would interfere with the
purpose of the corporation. Opinion at 19. In the case at bar, 
"it is the HHC Act itself which grants a check on HHC's authority 
to dispose of real property." Id. (emphasis in the original). 
Therefore, a local law fulfilling this objective cannot be viewed 
as impairing HHC's power in any way.

45



In addition, Appellants assert that the HHC Act's intention 
of relieving HHC from compliance with City laws and regulations 
which burdened the efficient delivery of care and treatment 
somehow exempts HHC from compliance with ULURP. App. Br. at 26. 
However, Appellants are unable to proffer any evidence in support 
of the bald contention that the Legislature intended to free HHC 
from restrictions on the disposition of City-owned property. In 
fact, the reverse is true. The HHC Act specifically requires

consent from the Board of Estimate. Appellants cannot apply the 
general principle that the Legislature intended to free HHC from 
local restrictions regarding the provision of health care, and at 
the same time ignore the Legislature's specific instruction 
limiting HHC's freedom to dispose of City property. HHC Act § 
7582(6). No canon of statutory construction permits Appellants 
to pick and choose which provision of the HHC Act may be 
enforced.

It is clear from the legislative history that the 
legislature's concern over inefficient City laws and regulations 
concerned the Department of Hospital's authority to make 
decisions such as purchasing supplies and equipment, not

decisions concerning the disposition of entire hospitals. In the 
Letter from Mayor Lindsay to Governor Rockefeller, discussed 
supra, the Mayor explains that investigations have shown 
inadequacies in "existing procedures for purchasing, supplies, 
recruiting and utilizing needed personnel, accounting for 
purposes of reimbursement, managing vital patients records,

46



repairing and maintaining the physical plant." Letter of Mayor
Lindsay to Governor Rockefeller dated May 8, 1969, Governor's
Bill Jacket at 15. As a result, the Mayor stated:

The City is proposing a public benefit corporation to 
facilitate solving the problem of effective management of 
municipal health facilities and programs. . . . The 
creation of a public benefit corporation establishes in one 
action freedom from detailed operational review by the 
City's overhead agencies, and the capacity to design 
disciplined and appropriate internal systems of operation.
In contrast, when discussing the disposition of health care

facilities, the Mayor stated: "The corporation could not
transfer or dispose of any health facility or real property
acquired from or constructed for the City without public hearing
and consent of the Board of Estimate." id. at 14.

The first section of Mayor Lindsay's letter to the Governor
urging the Governor to sign into law the HHC Act discusses the
need to grant the public benefit corporation freedom from the
onerous requirements and constraints upon daily operation and
management. The second reassures the Governor that the
corporation would not have the power to dispose of a health
facility without a public hearing and consent from the Board of 
Estimate. HHC Act § 7385(6).

Nor does any other section of the legislative history 
provide support for Appellants' argument. There are several 
explicit references in the materials contained in the Governor's 
Bill Jacket to HHC's power to sell, lease, or otherwise dispose 
of real property of the City. Each such reference is accompanied 
by an explicitly delineated limitation upon this power: the Board

47



of Estimate must consent. Relevant quotes from the Governor's 
Bill Jacket are listed below:

• "The corporation could not transfer or dispose of any 
health facility or real property acquired from or 
constructed for the City without public hearing and 
consent of the Board of Estimate." Letter of Mayor 
Lindsay to Governor Rockefeller dated May 8, 1969, 
Governor's Bill Jacket at 14 (urging passage).

• "Real or personal property could be disposed of by 
sale, lease, or sublease but could not be transferred 
from the corporation without a public hearing and the 
approval of the Board of Estimate." Legislative 
Memorandum, Community Service Society of New York, 
Committee on Health, April 14, 1969, Governor's Bill Jacket at 29 (urging opposition).

• "The powers of the Corporation are set forth, including 
that of receiving direct payment for health services 
rendered; to borrow money and issue bonds but if for 
construction of a health facility, only on prior 
approval of the Mayor; to dispose of real property 
after public hearing and with consent of the Board of 
Estimate." Letter of State of New York Department of Health to Counsel to the Governor dated May 20, 1969 
Governor's Bill Jacket at 66 (recommending enactment).

• 'Mr- Lindsay also said that the corporation would not be authorized to sell or lease any hospital or health 
facility without the permission of the Board of 
Estimate, the same procedure now followed by the Health 
Services Administration. " New Health Unit Urged by Mayor: 
Public Corporation Would Manage City Hospitals, New York Times, 
December 13, 1968, Governor's Bill Jacket at 78.

The legislative history therefore illustrates that the Act
intended to provide HHC power to dispose of real property of the
City only with the consent of the Board of Estimate -- exercising
its full powers of review. Clearly, the purpose of freeing HHC
from inefficient laws and regulations did not include sole
authority to make major land use decisions.

★ ★ *

48



In sum, the Supreme Court correctly held that the sublease 
of Coney Island Hospital to PHS-NY -  if the HHC Act was amended 
to permit such a transaction -- must undergo a ULURP review, with 
the final decision resting with the City Council.

CONCLUSION
THE ORDER AND JUDGEMENT APPEALED FROM SHOULD BE AFFIRMED.

Dated: New York, New York
April 9, 1997

RESPECTFULLY SUBMITTED

ELAINE R. JONES 
Director-Counsel NORMAN J . CHACHKIN 
RACHEL D. GODSIL 
NAACP LEGAL DEFENSE & 
EDUCATIONAL FUND, INC.
99 Hudson St., 16th Floor 
New York, New York 10013 (212) 219-1900
BARBARA OLSHANSKY
CENTER FOR CONSTITUTIONALRIGHTS
666 Broadway, 7th Floor 
New York, New York 10012 (212) 664-6464
KENNETH KIMERLING 
719 Greenwich Street 
New York, New York 10014 
(212) 242-7713
EVETTE SOTO-MALDONADO 
PUERTO RICAN LEGAL DEFENSE & EDUCATION FUND, INC.
99 Hudson St., 14th Floor 
New York, New York 10013 
(212) 219-3360
ATTORNEYS FOR RESPONDENTS

49