Opinion ID: 2102244
Heading Depth: 1
Heading Rank: 2

Heading: The Contemporary Context and Present Litigation

Text: Today New York City is experiencing a deja vu regarding the provision of health care to the needy. Although different forces are at work in the contemporary health care industry, once again spiraling costs and a shortage of funds are the hallmarks of New York City's health care system ( see, Report of State Comptroller H. Carl McCall, Challenges Facing New York City's Public Hospital System, at 4-99 [Aug. 5, 1998]). The current administration, like its predecessor 30 years ago, began considering various ways to revive and redefine the provision of health care services to the needy. In 1994 the City explored the possibility of transferring the operation of three public hospitals under the auspices of HHC  Coney Island Hospital, Elmhurst Hospital Center and Queens Hospital Centerto private entities. In October 1995, the City, through the New York City Economic Development Corporation, and HHC issued an Offering Memorandum requesting proposals from health care providers for the operation and management of Coney Island Hospital under a long-term sublease of the hospital. In an effort to obtain broader public review of the privatization plan, the City Council in March 1996 commenced this declaratory judgment action against the Mayor and HHC. The City Council alleged that the privatization of the target hospitals by means of subleases with private entities required City Council approval and was subject to the Uniform Land Use Review Procedure ([ULURP] NY City Charter § 197-c). A second declaratory judgment action, raising the same issues, was commenced in May 1996 by two unincorporated associations whose members live and work in the communities served by Coney Island Hospital and the targeted hospitals in Queens ( see, Campaign To Save Our Pub. Hosps.Queens Coalition v Giuliani, 242 AD2d 518). All parties moved for summary judgment. While the motions and cross motions were pending, the City and PHS New York, Inc. (PHS-NY), a private entity, executed a letter of intent on June 26, 1996 calling for negotiations to achieve a long-term sublease of the property, plant and equipment of Coney Island Hospital to PHS-NY. A contract for PHS-NY to operate Coney Island Hospital as a communitybased, acute care inpatient hospital during the term of the sublease was executed as well. Following a public hearing, on November 8, 1996 the HHC Board of Directors authorized and approved the sublease of Coney Island Hospital to PHS-NY for an initial term of 99 years, with a renewal option for an additional 99 years. The sublease requires PHS-NY, as the tenant under the proposed sublease of Coney Island Hospital, to make a commitment to HHC, as the landlord, to operate Coney Island Hospital as an acute care inpatient hospital during the term of the sublease and to provide a range of inpatient, outpatient and emergency health care services to the Coney Island community, including indigent members of that community. Thus, the proposed sublease would obligate PHS-NY to provide specified essential health care services to substantially the same degree as Coney Island Hospital currently provides. The sublease further provides that the City and HHC would enter into a separate agreement with PHS-NY in which they would agree not to compete with PHS-NY by operating a hospital within the catchment area of Coney Island Hospital. The sublease also includes several significant terms that would benefit the City and the communities served by the hospital. For example, there is a charity care provision in the sublease, providing that for the life of the lease PHS-NY would offer care without regard to ability to pay, up to a level 115% greater than the charity care expense currently carried by Coney Island Hospital. [] Another provision requires PHS-NY to spend at least $25 million in the first five years of the sublease on capital projects, in addition to assuming all routine maintenance costs. PHS-NY also is obligated to assume the outstanding HHC and City bonds associated with Coney Island Hospital and all liability for using and operating the hospital. The plaintiffs in both actions amended their complaints to allege that the sublease of Coney Island Hospital constituted an ultra vires act; the motion papers were amended to address this issue. Supreme Court granted summary judgment to plaintiffs and declared that the subleasing of HHC facilities was subject to ULURP, that the sublease required the approval of the Mayor and City Council, and that HHC did not have the statutory authority to sublease Coney Island Hospital. The Appellate Division affirmed, holding that the Coney Island Hospital sublease is not authorized by HHC's governing statute. We granted leave from the Appellate Division order of modification in Campaign and a stipulation withdrawing certain pending claims in Council, treated as a final judgment, to bring up for review the prior Appellate Division order in that case. Concluding that the proposed lease is not authorized by the controlling statute, we now affirm and therefore do not need to consider the remaining issues.