The Court of Appeals of New York held, in Council of the City of New York u. Giuliani, slip op. 02634, 1999 WL 179257 (N.Y. Mar. 30, 1999), that New York City may not privatize a public city hospital without state statutory authorization. The court found invalid a sublease of a municipal hospital operated by a public benefit corporation to a private, for-profit entity. The court reasoned that the controlling statute prescribed the operation of a municipal hospital as a government function that must be fulfilled by the public benefit corporation as long as it exists, and nothing short of legislative action could put an end to the corporation's existence.In 1969, the New York State legislature enacted the Health and Hospitals Corporation Act (HHCA), establishing the New York City Health and Hospitals Corporation (HHC) as an attempt to improve the New York City public health system. Thirty years later, on a renewed perception that the public health system was once again lacking, the city administration approved a sublease of Coney Island Hospital from HHC to PHS New York, Inc. (PHS), a private, for-profit entity.
The value of a public benefit corporation