BRIEF ON BEHALF OF PETITIONERS IN SUPPORT OF PETITION

Transcription

1 STATE OF NEW YORK SUPREME COURT COUNTY OF ROCKLAND In the Matter of the Application of CIVIL SERVICE EMPLOYEES ASSOCIATION, INC., LOCAL 1000, AFSCME, AFL-CIO, and WILLIAM J. RICCALDO, Index No Petitioners, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules, -against- COUNTY OF ROCKLAND, ROCKLAND COUNTY LEGISLATURE, ALDEN H. WOLFE as Legislative Chair, EDWIN J. DAY as County Executive, and ROCKLAND COUNTY HEALTH FACILITIES CORPORATION, Respondents. BRIEF ON BEHALF OF PETITIONERS IN SUPPORT OF PETITION Aaron E. Kaplan, of counsel Leslie C. Perrin, of counsel Eric E. Wilke, of counsel STEVEN A. CRAIN and DAREN J. RYLEWICZ Attorneys for Petitioners Civil Service Employees Association, Inc. Box 7125, Capitol Station 143 Washington Avenue Albany, New York (518)

2 TABLE OF CONTENTS PAGE PRELIMINARY STATEMENT...1 STATEMENT OF FACTS...2 POINT I POINT II POINT III POINT IV POINT V THE DE FACTO ABOLITION OF THE DEPARTMENT OF HOSPITALS VIOLATED THE LAW, THE CHARTER, AND THE ADMINISTRATIVE CODE...9 SUMMIT PARK NURSING CARE CENTER AND HOSPITAL MAY ONLY BE CONVEYED IN THE NAME OF THE COUNTY...11 THE TRANSFER OF SUMMIT PARK NURSING CARE CENTER IS INVALID BECAUSE THE COUNTY LEGISLATURE IS NOT AUTHORIZED TO LEASE COUNTY-OWNED REAL PROPERTY THAT IS REQUIRED FOR COUNTY USE...12 THE DETERMINATION THAT SUMMIT PARK HOSPITAL IS NOT REQUIRED FOR USE, AS WELL AS THE RESULTING TRANSFER OF AN INTEREST THEREIN, WERE ARBITRARY AND CAPRICIOUS ACTIONS AND CONTRARY TO LAW...14 BY CREATING RCHFC UNDER NOT-FOR-PROFIT CORPORATIONS LAW 1411, THE COUNTY SEEKS TO CIRCUMVENT THE STRINGENT REQUIREMENTS OF PUBLIC HEALTH LAW ARTICLE 28-A...19 CONCLUSION...22 PL/ /LCP/mv/Brief Cover #339551

3 PRELIMINARY STATEMENT This memorandum is submitted in support of the hybrid declaratory judgment action and Article 78 petition filed by the Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO (hereinafter CSEA ), along with the individually named Petitioner, seeking a determination that Respondents Rockland County, Rockland County Legislature (hereinafter Legislature ), Edwin J. Day as Rockland County Executive, and Alden H. Wolfe as Chair of the Rockland County Legislature (hereinafter collectively referred to as County or County Respondents ) acted in violation of law and in an arbitrary and capricious manner by transferring County Respondents interest in the County-owned and -operated Summit Park Nursing Care Center to Respondent Rockland County Health Facilities Corporation (hereinafter RCHFC ), a Local Development Corporation (hereinafter LDC ). Petitioners further seek a determination that the County acted in violation of law and in an arbitrary and capricious manner by authorizing the transfer of County Respondents interest in the County-owned and -operated Summit Park Hospital to Respondent RCHFC. Petitioners seek an Order and Judgment invalidating the resolution authorizing the transfer of Summit Park Hospital, and the transactions purporting to transfer an interest in Summit Park Nursing Care Center and Summit Park Hospital to RCHFC. Petitioners further seek a Judgment declaring the process and agreements intended to effectuate the sale of Summit Park Nursing Care Center and Summit Park Hospital to be violative of law, and declaring the delegation of authority to RCHFC to determine the terms for sale of County property to be violative of New York State law.

4 STATEMENT OF FACTS Rockland County is a charter County and is thereby bound by the structural and procedural requirements of the Rockland County Charter (hereinafter Charter ) which sets forth the form of government as consisting of a County Legislature and a County Executive. (Petition 10.) The County has owned and operated Summit Park Nursing Care Center, which is a 321-bed long-term residential health care facility that provides services to its residents, with or without insurance, in its current location since (Petition 20.) Among the residents of Summit Park Nursing Care Center are those subsidized by federal Medicaid funds, medically complex patients, and individuals difficult to place for receipt of long-term residential care. (Petition 21.) Summit Park Nursing Care Center includes a 41-bed Alzheimer s/dementia care unit. (Petition 21.) All the beds at Summit Park Nursing Care Center are Medicare and Medicaid certified. (Petition 21.) In addition, Rockland County has owned and operated Summit Park Hospital since The Hospital has been in its current physical location since (Petition 22.) The Hospital became a Long Term Acute Care (LTAC) Hospital in the 1990 s. (Petition 22.) It is the only LTAC Hospital serving Rockland, Orange, and Westchester Counties. (Petition 22.) The County operates the facility pursuant to a New York State Department of Health License and under the federal Social Security Act. (Petition 22.) Summit Park Hospital was established by the County through the adoption of Local Law No , as delineated in Chapter 80 of the Administrative Code. (Petition Ex. E.) According to Section 80-1, the County established a public general hospital for the care and treatment of the chronically ill, to be located in the County of Rockland. Id. The County Charter sets forth at Article VIII the existence of a Department of Hospitals which has among its responsibilities the charge and supervision of any hospital established by the 2

5 County, including Summit Park Hospital and the Summit Park Nursing Care Center. (Petition Ex. C, Section C8.02.) The Charter does not authorize the County Legislature to abolish, transfer, or sell the Summit Park Hospital or Nursing Care Center, or to effectively eliminate the Department of Hospitals, to the extent that such are mandated to exist by the Charter. (Petition Exs. B, C.) The two facilities, Summit Park Nursing Care Center and Summit Park Hospital, occupy different floors in the same building, owned entirely by the County and located at 50 Sanitorium Road, Building A, in Pomona, New York. (Petition 22.) The Nursing Care Center is located on floors 3, 5, 6, 7, 8, and 9. (Petition 22.) The Hospital is located on floor 4. (Petition 22.) The first and second floors of the building house various services, departments, and offices that support both the Nursing Care Center and the Hospital including, but not limited to, the kitchen, laboratory, x-ray facilities, clinic, laundry, stationery engineers, purchasing, general services, special projects, administration, finance, information technology, nursing administration, and supervisors for specialties. (Petition 21.) In order to provide patient services and to maintain the facility that houses the Nursing Care Center and the Hospital, Rockland County employs approximately 520 CSEA-represented employees, including the individually named Petitioner William J. Riccaldo ( Riccaldo ). (Petition 24.) CSEA and the County have agreed upon and executed a collective bargaining agreement (hereinafter CBA ) covering various employees of the County, including approximately 520 employees at Summit Park Nursing Care Center and the Hospital, for the period from January 1, 2007 through December 31, (Petition 25; Ex. F.) The County and CSEA entered into a Memorandum of Agreement ( MOA ) for a successor CBA covering the period from January 1, 2011 through December 31, (Petition 26; Ex. G.) Pursuant to Article 14 of New York 3

6 State Civil Service Law, the terms of the CBA, as modified by the MOA, continue in full force and effect until such time as a successor agreement has been reached. Petitioner Riccaldo, at all times relevant to this proceeding, was and is employed by Rockland County holding the title of Coordinator of Special Projects in the Facilities Department located in the building that houses both the Nursing Care Center and the Hospital, and was charged with providing services to both the Nursing Care Center and the Hospital. (Petition 28.) As an employee of the County, Petitioner Riccaldo is a member of the Rockland County General Bargaining Unit and his employment is covered by the CBA between CSEA and Rockland County. (Petition 28.) When Respondents sells the Summit Park Nursing Care Center and the Hospital, as planned, Petitioner Riccaldo will lose his position, his employment with Rockland County, and his status as a municipal employee. (Petition 45.) On April 16, 2013, the Rockland County Legislature passed Resolution No. 192 of 2013 authorizing the creation of the Rockland County Health Facilities Corporation LDC as well as the transfer to RCHFC of the County s interest in the real and personal property of Summit Park Nursing Care Center to the newly formed Local Development Corporation. (Petition 29, Ex. H.) In so resolving, the Legislature stated that Section 1411 of the LDC Act [codified at 1411 of the New York Not-for-Profit Corporations Law] authorizes the legislative body of the County, by resolution, to determine that certain real property of the County not required for use by the County may be sold or leased to a not-for-profit local development corporation. (Petition 30, Ex. H, third whereas clause.) However, the Legislature did not declare that the real property associated with Summit Park Nursing Care Center was not required for use by the County prior to authorizing the transfer of that property to the LDC, or at any time thereafter, up to and including the date of transfer of the property as discussed below. (Petition 30, Ex. H.) 4

7 The Rockland County Health Facilities Corporation, LDC, was incorporated on or about April 25, (Petition 31; Ex. I.) On August 6, 2013, at RCHFC s initial meeting, the LDC accepted a ninety-nine (99) year leasehold interest in Summit Park Nursing Care Center. In conjunction with the lease, the RCHFC and the County executed a leaseback agreement, the terms of which oblige the County to continue to finance and operate the facility until such time as RCHFC unilaterally executes its exclusive option to purchase the facility and contemporaneously transfers the facility to a third-party, private owner/operator. (Petition 32; Ex. J.) At the same meeting, RCHFC resolved to solicit responses to a Request for Proposals ( RFPs ) for the acquisition and operation of the facility. (Petition 32; Ex. J.) Shortly thereafter, in or about September 2013, RCHFC issued a Request for Proposals, seeking responses from bidders interested in purchasing the Summit Park Nursing Care Center. (Petition 33; Ex. L.) In the same RFP, RCHFC solicited responses from any bidders who might also be interested in procuring the remainder of the property in the same building, to wit, Summit Park Hospital and all areas, facilities, and services shared in common by the Nursing Care Center and the Hospital. (Petition 33; Ex. L.) According to the RFP, any proposed purchaser will be required to provide evidence of sufficient assets to purchase the Property, and to operate the Summit Park Nursing Care Center at the same or similar level of services over future years. (Petition 34; Ex. L, p. 6, Terms and Conditions of Sale, 2.) In addition, the proposed purchaser must agree to keep all residents at the facility, to continue to operate the Nursing Care Center at its current location for up to ten years, and not to re-sell any of the beds purchased. (Petition 34; Ex. L, p. 7, 8; p. 8, 14.) Any proposed purchaser must be qualified to operate a skilled nursing facility. (Petition 34; Ex. L, p. 10, Proposer Qualifications.) Then, on November 4, 2013, the County executed a Lease Agreement with Exclusive 5

8 Option to Purchase (hereinafter lease ) transferring all of the County s right, title, and interest in Summit Park Nursing Care Center to RCHFC, for a period of ninety-nine (99) years, paying rent to the County in the amount of one dollar ($1.00) per year. (Petition 35; Ex. M.) The County further provided RCHFC with an exclusive option to acquire all or portions of the facility for the amount of one dollar ($1.00). (Petition 35; Ex. M.) This lease with exclusive option to purchase was subject to a Reservation of Rights Lease Agreement (hereinafter leaseback ) by which the County maintained an interest in the Nursing Care Center, as well as the obligation to finance and operate the facility until such time as RCHFC exercises its exclusive option to purchase the facility, paying rent in the amount of one dollar ($1.00) per year. (Petition 35; Ex. M.) The County s leaseback of the property may be terminated by RCHFC, such that RCHFC will have sole rights to the property in order to transfer it by sale to a third-party purchaser. (Petition 35; Ex. M.) Based on the foregoing, the County will retain responsibility for the continued operation of the Nursing Care Center, along with related costs, until the facility is re-sold by RCHFC to a private buyer, approved to operate the facility. (Petition 36; Exs. L, M.) Essentially, RCHFC is authorized to find a prospective buyer for Summit Park Nursing Care Center. It is envisioned by all Respondents that Summit Park Nursing Care Center will continue to function as a long-term care skilled nursing facility before and after the lease/leaseback agreements, as well as before and after sale to a private buyer. (Petition 37; Ex. M.) As a result of the reservation of rights and any associated lease agreement, the County maintains both the real property and beneficial interest in Summit Park Nursing Care Center. (Petition 38.) Following the execution of the lease and leaseback agreements and the RFP, the County Respondents acted to transfer the County s remaining interest in 50 Sanatorium Road, Building A, to RCHFC. (Petition 40.) To this end, the Legislature passed Resolution No. 663 of

9 authorizing the transfer of the County s remaining residual rights, title, and interest in Building A to RCHFC. (Petition 41; Ex. N.) In so resolving, the Legislature stated that the Residual Building A Facilities are not required for use by the County. (Petition Ex. N, p. 2, second Resolved paragraph.) As with the transfer of the Nursing Care Center, the Resolution described a transfer of the Hospital and other parts of Building A pursuant to a ninety-nine (99) year lease to RCHFC, subject to a leaseback to the County, until the building is sold. (Petition Ex. N.) However, the Resolution seeks to limit the transfer such that, even after sale to a third-party purchaser, the County will retain the right to lease those portions of the Residual Building A Facilities currently utilized by the County for its Departments of General Services -- Facilities Management, Purchasing, MIS and Medical Examiner and for Laundry facilities for a fee of ten dollars ($10.00) per square foot per year. (Petition Ex. N, p. 2, second Resolved paragraph.) The County further seeks to retain the right to lease, even from a future purchaser, those portions of the Residual Building A Facilities currently utilized by the County for its Department of Hospitals on terms to be agreed upon between the County and such future user. (Petition Ex. N, p. 2, second Resolved paragraph.) The County has taken no steps to amend the Charter, as would be required pursuant to Municipal Home Rule Law and Open Meetings Law. No local law amending the Charter to eliminate the County-created Summit Park Hospital, Summit Park Nursing Care Center, or alter the responsibilities of the Hospital Department has been presented. No public notice, hearing, debate, or discussion has been held with regard to the elimination of the Hospital, the LTAC beds, or the Department. RCHFC is currently reviewing responses to the RFP and is selecting from two proposed purchasers, each of which submitted proposals to obtain the Nursing Care Center as well as the 7

10 Hospital and the remainder of the building. (Petition 44.) When Respondents sell Summit Park Nursing Care Center, as planned, Petitioner Riccaldo will lose his position, his employment with Rockland County, and his status as a municipal employee. (Petition 45.) Although for the time being employees of Summit Park Nursing Care Center and Hospital will remain employees of the County, Resolutions 192 of 2013 and 663 of 2013 do not provide that the future purchaser or operator must offer employment to the current County employees assigned to work at Summit Park Nursing Care Center and Hospital. (Petition Exs. H, N.) Should Summit Park Nursing Care Center and Hospital be closed there can be no doubt that many of the 520 CSEA-represented County employees working at Summit Park Nursing Care Center will lose their employment with the County. 8

11 POINT I THE DE FACTO ABOLITION OF THE DEPARTMENT OF HOSPITALS VIOLATED THE LAW, THE CHARTER, AND THE ADMINISTRATIVE CODE. Pursuant to Municipal Home Rule Law, Rockland County has adopted a Charter that sets forth the form of government of the County. (Petition Exs. A, B.) Article VIII of the Charter expressly mandates the existence of a Department of Hospitals responsible for the management and supervision of Summit Park Nursing Care Center and Hospital. (Petition Ex. C.) The Charter does not authorize the County Legislature to abolish, transfer, or sell the Summit Park Nursing Care Center and Hospital, or to cease operations of the Department of Hospitals. (Petition Ex. C.) Thus the actions of Respondents of transferring the property of Summit Park Nursing Care Center and Hospital exceeded legislative authority as prescribed in the Charter, violated the Charter, and violated Municipal Home Rule and Open Meetings Law. The doctrine of legislative equivalency requires that a position created by a legislative act can only be abolished by a correlative legislative act. See, N.Y. Const., Art. 9; Mun. Home Rule L. 2(9), 10(1)(ii)(b)(1); 33(1), (7)(b). The doctrine of legislative equivalency has been uniformly applied to changes to the Charters and Local Laws of local government. See e.g., Matter of NYPIRG v. Dinkins, 83 N.Y.2d 377, (1994); JEM Realty Co. v. Town Bd. of the Town of Southold, 297 A.D.2d 278, 746 N.Y.S.2d 41 (2d Dept. 2002). Pursuant to that doctrine, changes to the functions of government, where created by Charter or Local Law, can only be accomplished by an equal legislative act, namely a change in the Charter or Local Law with the accompanying required public hearing, and not by a resolution of the County Executive or Legislature. The County Charter sets forth at Article VIII the existence of a Department of Hospitals which has among its responsibilities the charge and supervision of any hospital established by the 9

12 County, including Summit Park Hospital and the Summit Park Nursing Care Center. (Petition Ex. C, Section C8.02.) The Charter does not authorize the County Legislature to abolish, transfer, or sell the Summit Park Hospital or Nursing Care Center, or to effectively eliminate the Department of Hospitals, to the extent that such are mandated to exist by the Charter. (Petition Ex. C.) The County has taken no steps to amend the Charter, as would be required pursuant to Municipal Home Rule Law and Open Meetings Law. No local law amending the Charter to eliminate the Countycreated Summit Park Hospital, Summit Park Nursing Care Center, or alter the responsibilities of the Hospital Department has been presented. No public notice, hearing, debate, or discussion has been held with regard to the elimination of the Hospital, the LTAC beds, or the Department. In addition, the County Administrative Code, at Section 5-115, states that the Commissioner of Hospitals shall have charge and supervision of any hospital established by the County. (Petition Ex. D.) The County has taken no steps to pass a local law to amend the Administrative Code to eliminate the County-created Summit Park Hospital, Summit Park Nursing Care Center, or alter the responsibilities of the Hospital Department. Summit Park Hospital was established by the County through the adoption of Local Law No , as delineated in Chapter 80 of the Administrative Code. (Petition Ex. E.) According to Section 80-1, the County established a public general hospital for the care and treatment of the chronically ill, to be located in the County of Rockland. Id. Yet, the County has taken no action to amend the Administrative Code or to pass another Local Law eliminating the hospital, as would be required by Municipal Home Rule Law. The abolition of the Department, along with the positions employed within it, without passing an amendment to the County Charter, was arbitrary, capricious, an abuse of discretion, violative of law, and in excess of the County Executive s and the Legislature s jurisdiction. 10

13 POINT II SUMMIT PARK NURSING CARE CENTER AND HOSPITAL MAY ONLY BE CONVEYED IN THE NAME OF THE COUNTY. By statute, all contracts and conveyances made by or to the county, or on its behalf, shall be made in the name of the county. County Law 215(2). In Resolution Nos. 192 of 2013, and 663 of 2013, Respondent County authorized RCHFC to negotiate the terms of the sale and transfer ownership of Summit Park Nursing Care Center and Hospital to a third party. (Petition Exs. H and N.) Upon determining the third-party purchaser of Summit Park Nursing Care Center and Hospital, RCHFC is empowered to take ownership of the Summit Park Nursing Care Center and Hospital from the County executing a bargain and sale deed with the County. (Petition Ex. M, Lease Agreement, 7.) Then, RCHFC will sell said property to a third party. (Petition Ex. M, Lease Agreement, 7.) Therefore, the County property will be sold on behalf of the County but in the name of RCHFC. This results in a questionable transaction that takes the County s name off of the sale of Summit Park Nursing Care Center and Hospital to a new owner-operator. Insofar as Respondents have passed a resolution and entered into a lease agreement, of which the combined effect is to convey County property in a name other than that of the County, such action was in excess of the authority to act under County Law 215(2). 11

14 POINT III THE TRANSFER OF SUMMIT PARK NURSING CARE CENTER IS INVALID BECAUSE THE COUNTY LEGISLATURE IS NOT AUTHORIZED TO LEASE COUNTY-OWNED REAL PROPERTY THAT IS REQUIRED FOR COUNTY USE. The lease and transfer of county-owned real property to an LDC is governed by N-PCL 1411, which expressly limits the authority of a county s governing body to sell real property by requiring that it first determine that the property to be sold is not required for use by such County. N-PCL 1411(d)(1). Respondent Rockland County Legislature not only failed to determine that Summit Park Nursing Care Center was not required for use by the County but the Agreement entered into with RCHFC requires the County to continue operating Summit Park Nursing Care Center as a residential adult care facility. (Petition Ex. M, Reservation of Rights Lease Agreement, 6.) Thus, the lease transferring the Summit Park Nursing Care Center property to RCHFC is invalid because the County Legislature exceeded its authority by leasing countyowned real property still required for County use. As a political subdivision of the State, a municipal corporation such as a county has lawmaking authority only to the extent that such authority is delegated to it by the State. Albany Area Builders Ass n, et al., v. Town of Guilderland, 74 N.Y.2d 372, 376 (1989); Town of Montauk, Inc. v. Pataki, et al., 40 A.D.3d 772, 773 (2d Dept. 2007), citing N.Y.Const. Art. IX, 2; Matter of Ames v. Smoot, 98 A.D.2d 216, 217 (2d Dept. 1983). Here, the relevant delegation of authority is contained in N-PCL 1411 which provides, in relevant part, that the governing body of a county may by resolution determine that specifically described real property owned by the county, city, town or village is not required for use by such county, city, town or village and authorize the county, city, town or village to sell or lease such real property to a local development corporation 12

15 incorporated or reincorporated under this article. N-PCL 1411(d)(1). This provision expressly limits a county s authority to sell or lease its real property when such property remains required for County use. Because of this limitation, the New York State Comptroller s Office firmly opined that it was improper for Rensselaer County to sell a county owned-office building to raise needed capital and subsequently lease it back for the same purpose as it was previously used, thus avoiding the loss of the use of the building. Op. St. Comp. No (1982). Similarly, Respondent County Legislature exceeded its authority to lease County-owned real property to RCHFC when it leased Summit Park Nursing Care Center without a prior determination that Summit Park Nursing Care Center was no longer required for use by the County. In fact, rather than expressing a belief that the property is no longer required, the County Legislature expressed in its resolution a belief that the sale would allow services to Summit Park Nursing Care Center residents to continue without disruption. (Petition Ex. H, 5th Whereas Clause.) Thus, the County clearly acted in excess of its authority and in violation of state law when it executed the lease of the Summit Park Nursing Care Center property to RCHFC. Likewise, the LDC is without authority to accept an interest in the Summit Park Nursing Care Center insofar as that property had not been declared to be not required for County use. 13

16 POINT IV THE DETERMINATION THAT SUMMIT PARK HOSPITAL IS NOT REQUIRED FOR USE, AS WELL AS THE RESULTING TRANSFER OF AN INTEREST THEREIN, WERE ARBITRARY AND CAPRICIOUS ACTIONS AND CONTRARY TO LAW. As a municipal corporation, Respondent Rockland County s authority is limited to those powers delegated to it by the State. In 1411(d) of the Not-for-Profit Corporations Law, the Legislature delegates to each county s governing body the authority to sell county-owned real property to an LDC provided that the governing body determines that is not required for use by such county. Thus, a county lacks authority to sell county-owned real property unless it first determines that such property is not required for county use. The decision to declare Countyowned real property not required for use by the county is a statutorily required fact-based determination made after a public hearing. Here, the facts and circumstances reveal that the County s declaration that its right, title and interest to Summit Park Hospital was not required for use by the County was specious, rendering the declaration arbitrary and capricious and insufficient under the law. (Petition Ex. N, second Resolved clause.) The County has owned and operated Summit Park Center, which is a specialized LTAC Hospital, since (Petition 22.) It is the only LTAC hospital in Rockland, Orange, and Westchester Counties. (Petition 22.) The County operates the facility pursuant to a New York State Department of Health License and under the federal Social Security Act. (Petition 22.) Presently, the County continues to be responsible for the operations and operating costs associated with the provision of services at Summit Park Hospital. (See Petition Exs. H, M, and N.) Indeed, the County will remain responsible for the Hospital s operations for an indeterminate period of time into the future. Moreover, the County has indicated its intent to lease portions of 14

17 Building A, even after it is sold to a third party, for purposes of continuing to use the space that is currently allocated for certain County services, including but not limited to Department of General Services -- Facilities Management, Purchasing, MIS and Medical Examiner, and for laundry facilities. (Petition Ex. N, second Resolved clause.) Consequently, the County has conceded the County s need for the facility and services rendered therein. Moreover, according to the RFP, any proposed purchaser will be required to provide evidence of sufficient assets to purchase the Property, and to operate it at the same or similar level of services over future years. (Petition 34; Ex. L, p. 6, Terms and Conditions of Sale, 2.) In addition, the proposed purchaser must agree to keep all residents at the facility, to continue to operate the facility at its current location for up to ten years, and not to re-sell any of the beds purchased. (Petition 34; Ex. L, p. 7, 8; p. 8, 14.) Any proposed purchaser must be qualified to operate the facility and obtain all required licenses. (Petition 34; Ex. L, p. 10, Proposer Qualifications.) Thus, the Respondents seek to preserve the services provided within the County, for current and future County residents. Accordingly, the County Respondents concede that there is a continued need for the Summit Park Hospital to exist, and that they have sought to provide assurance that it will continue to function as a hospital by requiring that prospective owners guarantee it will operate as such while RCHFC looks for a buyer and afterwards. (Petition Ex. L, p. 6-7, 2, 8.) Nevertheless, the County Respondents declared that, under the authority of the LDC Act with respect to the real property and under County Law Section 215 and Section of the Rockland County Code with respect to the personal property, it being hereby determined that disposition of such personal property in this manner is in the best interest of the County, the County hereby determines that the 15

18 Residual Building A Facilities are not required for use by the County. (Petition Ex. N, second Resolved clause.) However, in this context, it is not sufficient simply to declare that the real property is not required for county use; any statement to that effect must be factually accurate. In accordance with the fundamental principles of statutory interpretation, the enacting body will be presumed to have inserted every provision for some useful purpose. Matter of Albano v. Kirby, 36 N.Y.2d 526, 530 (1975), citing Matter of Smathers, 309 N.Y. 487, 495 (1956) and Matter of Tonis v. Board of Regents of Univ. of State of New York, 295 N.Y. 286, 293 (1946). For that reason, [w]henever practicable, the court must give effect to all the language employed. Home and City Savings Bank v. Ritter, 192 A.D.2d 1037, 1038 (3d Dept. 1993), quoting McKinney s Cons. Laws of N.Y., Book 1, Statutes 98, at 223 and Matter of Albano, 36 N.Y.2d at 530. To rely solely on the County Respondents declaration that fee title to Summit Park Hospital is not required for use by the County, without looking at the surrounding facts, would render the condition precedent explicitly provided for in Not-for-Profit Corporations Law 1411(d)(1) meaningless. The facts reflect that, in Resolution No. 663 of 2013, Respondent County Legislature proposed to transfer its fee title interest in Summit Park Hospital to RCHFC subject to the County s reserved leasehold interest, following which transactions the County would continue to operate [Summit Park Hospital] until such time as the Corporation has given 60 days written notice to the County terminating the reserved rights (the "Residual Building A Facilities Termination Date"), and subject further to the County's retention of all supplies and inventory with any remaining supplies and inventory at the time of the Residual Building A Facilities Termination Date being disposed of by the County to a future user of the Residual Building A Facilities at market value. (Petition Ex. N, second Resolved clause.) 16

19 Presently, the County continues to be responsible for the operations and operating costs associated with the provision of services at Summit Park Hospital. The County will remain responsible for Summit Park Hospital s operations for an indeterminate period of time into the future. Moreover, the County has conceded the need for the facility and services rendered therein, and has indicated that the County will continue to finance and oversee the facility. Further, the County has conditioned the sale of portions of the building on a reserved right to use the property. Resolution No. 663 of 2013 places the following condition a sale of the property: subject further to the County's right to lease from such future user (i) those portions of the Residual Building A Facilities currently utilized by the County for its Departments of General Services - Facilities Management, Purchasing, MIS and Medical Examiner and for laundry facilities, for an annual gross lease payment (inclusive of taxes, insurances, utilities and any common area charges or maintenance or capital costs) of Ten Dollars ($10.00) per square foot per annum, payable monthly, subject to annual renewal at the election of the County for up to ten (10) years, and (ii) those portions of the Residual Building A Facilities currently utilized by the County for its Department of Hospitals on terms to be agreed upon between the County and such future user. (Petition Ex. N, second Resolved clause.) It is beyond logic and statute that a County may declare property not required for use by such County while reserving a right to continue the use of such property even after it has been transferred to a third party. Op. St. Comp. No (1982). Insofar as Respondents acted to justify the transfer of an interest in Summit Park Hospital and residual interests in Building A while retaining the operating responsibility for same by declaring the facility was not required for County use, but in the face of an admitted need for the facility and its services in the County, and while stating the intent for the facility and services to continue, it is apparent that such property is required for use by the County and that the 17

20 determination that the fee title of the property is not required for use by the County was arbitrary and capricious and contrary to law. 18

21 POINT V BY CREATING RCHFC UNDER NOT-FOR-PROFIT CORPORATIONS LAW 1411, THE COUNTY SEEKS TO CIRCUMVENT THE STRINGENT REQUIREMENTS OF PUBLIC HEALTH LAW ARTICLE 28-A. As a municipal subdivision of the State, Respondent Rockland County s authority is limited to those powers delegated to it by the State Legislature. Relevant here, Article 28-A of the Public Health Law provides for the creation of Nursing Home Companies. These companies are notfor-profit corporations which own nursing homes and are highly regulated by the State Department of Health. Like RCHFC, Nursing Home Companies are incorporated under the Not-for-Profit Corporations Law but, due to their status and responsibility, are required by the Public Health Law to contain additional terms in their certificates of incorporation and subject themselves to oversight by the Commissioner of Health. They may acquire real property from a municipality for the purposes of providing nursing home accommodations. See, Public Health Law 2852, In creating RCHFC for purposes of holding an interest in Summit Park Nursing Care Center and to sell Summit Park Nursing Care Center and Hospital, the County has created a Nursing Home Company subject to the strictures of Public Health Law Article 28-A. Yet, Respondents have not complied with the statute. As an initial matter, Public Health Law 2853 enumerates a number of requirements that must be contained in the articles of incorporation of a Nursing Home Company, including, That the real property of the company shall not be sold, transferred, encumbered or assigned except as permitted by the provisions of this article. The certificate of incorporation of RCHFC does not contain the provisions required by Public Health Law (See Petition Ex. I.) In addition, the articles of incorporation for a Nursing Home Corporation must be approved by the Commissioner of Health and will only be accepted if approved by the public health council. Pub. Health L. 19

22 2854, Further, a Nursing Home Company may not acquire, sell, or lease real property, or issue bonds and notes, without prior written approval of the Commissioner of Health. Pub. Health L. 2856(3)(a), 2856(3)(b), 2856(3)(c)(ii). The Respondents failed to comply with any of these provisions. In the instant case, RCHFC is a not-for-profit corporation to which an interest in property consisting of a nursing home has been transferred. (Petition Ex. M) This is a valid action for a Nursing Home Company and allowable under Article 28-A of the Public Health Law, but only under the oversight and with the approval of the Commissioner of Health. Respondents have not complied with Public Health Law and, instead, created an LDC in an attempt to subvert the more rigorous oversight of the Department of Health. The purpose of Article 28-A of the Public Health Law is to ensure and promote the provision of low cost nursing home accommodations, such provision of which is a public use and purpose. Pub. Health L The Legislature recognized that this purpose cannot be achieved through ordinary private enterprise and provided for Nursing Home Companies to own skilled nursing facilities like Summit Park Nursing Care Center and to continue their existence. The manner in which Rockland County incorporated and transferred an interest in Summit Park Nursing Care Center to RCHFC was in violation of Article 28-A of the Public Health Law and must be annulled. Moreover, the statement of purpose found in Public Health Law 2851 includes a declaration that the operation of a nursing home which makes accommodations for persons of low income is a public use. Residents at Summit Park Nursing Care Center include those who are subsidized by federal Medicaid funds. (Petition 21.) As such, the accommodations provided by Summit Park Nursing Care Center are precisely those which the State has labeled a public use and 20

23 purpose. Pub. Health L As stated in Point III, supra, the transfer property is not permitted via Not-for-Profit Corporations Law 1411, where it is still required for municipal use and, therefore, such transfer to RCHFC is illegal. This demonstrates that Rockland County is illegally subverting Public Health Law and the oversight of the Commissioner of Health in violation of Article 28-A. The transfer of fee title to Summit Park Nursing Care Center to RCHFC, and the leaseback of Summit Park Nursing Care Center to Rockland County, as provided for in the Lease Agreement, are actions taken without approval by the Commissioner of Health and in violation of Public Health Law Article 28-A. Insofar as Respondents acted to create a not-for-profit corporation to own property which includes a nursing home, Respondents have done so in circumvention and violation of the Public Health Law and the authority of the Commissioner of Health, and such action was in excess of their authority and was arbitrary and capricious. 21

24 CONCLUSION Petitioners respectfully request an order and judgment overturning and annulling the illegal lease and leaseback of Summit Park Nursing Care Center between the County and Rockland County Health Facilities Corporation, overturning and annulling Resolution 663 of2013, overturning and annulling the illegal lease and leaseback of Summit Park Hospital to RCHFC, and declaring the process adopted through lease and leaseback agreements for effectuating the sale of Summit Park Nursing Care Center and Hospital to a private purchaser as violative of law. Dated: March 10,2014 Albany, New York Respectfully submitted, STEVEN A. CRAIN and DAREN J. RYLEWICZ Attorneys for Petitioners By: a! Z',~ Aaron E. Kaplan, of co sel Leslie C. Perrin, of counsel Eric E. Wilke, of counsel Civil Service Employees Association, Inc. Box 7125, Capitol Station 143 Washington Avenue Albany, New York (518) PL/ / AEK/mv/Brief.body#