St. Joseph Hospital v. Novello

43 A.D.3d 139, 840 N.Y.S.2d 263

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: July 18, 2007
• Status: Published

Opinions

OPINION OF THE COURT

Centra, J.

At issue on this appeal is the constitutionality of certain Enabling Legislation, i.e., section 31 of part E of chapter 63 of the Laws of 2005, adding part K (hereafter, Legislation). Pursuant to the Legislation, the Legislature created defendant New York State Commission on Health Care Facilities in the 21st Century (Commission) and charged it with “examining the supply of general hospital and nursing home facilities, and recommending changes that will result in a more coherent, streamlined health care system in the state of New York” (Legislation § 1). The Commission recommended the closing of plaintiff St. Joseph Hospital of Cheektowaga (St. Joseph). We note at the outset that the issue whether the Commission’s recommendation to close St. Joseph was rational is not before us. Rather, the sole issue before us on this appeal, as framed by the parties, is whether the Legislation is constitutional, and we conclude that it is.

II

Plaintiff Catholic Health System, Inc. (CHS) is a not-for-profit corporation that operates an integrated network of health care ministries throughout western New York, including St. Joseph. Plaintiffs commenced this action seeking injunctive, declaratory, and other relief, and they thereafter moved for summary judgment seeking a declaration pursuant to several causes of action and seeking a permanent injunction enjoining defendants from taking any steps to revoke or rescind St. Joseph’s certificate of operation (operating certificate), to close St. Joseph, or otherwise to interfere with St. Joseph’s ongoing operations and business. Defendants cross-moved for summary judgment declaring that the Legislation does not violate the New York and United States Constitutions and dismissing the remainder of the amended complaint. Supreme Court denied plaintiffs’ motion and granted defendants’ cross motion, stating that the amended complaint “is in all respects dismissed” (St. Joseph Hosp. of Cheektowaga v Novello, 15 Misc 3d 333, 349 [2007]). Although the court properly declared that the Legislation is constitutional, it erred in dismissing the amended complaint “in all respects” (id.). We therefore conclude that the order and judgment should be modified by vacating the provision dismissing those causes of action seeking a declaratory judgment (see Boyd v Allstate Life Ins. Co. of N.Y., 267 AD2d 1038, 1039 [1999]).

Ill

The Legislature created the Commission to maximize return from resources that have been invested in the health care system by aligning resources “so that excess capacity is minimized” (Legislation § 1). The Legislation set forth nine specific factors for the Commission to consider in completing its task. A regional advisory committee (RAC) was formed for each of six regions, and each RAC was charged with conducting public hearings within its region and developing “recommendations for reconfiguring its region’s general hospital and nursing home bed supply to align bed supply with regional and local needs” (Legislation § 7 [d]). The RACs were to transmit their recommendations to the Commission, including their recommendations concerning which facilities should be closed, resized, consolidated, converted, or restructured.

The Legislation further directed the Commission to transmit to the Governor a report containing its final recommendations on or before December 1, 2006. The recommendations of the Commission would not be implemented unless the Governor transmitted the Commission’s report with his written approval to the Commissioner of Health and transmitted a message to the Legislature indicating his approval of the recommendations on or before December 5, 2006. In addition, the recommendations would not be implemented if, after receiving the message from the Governor, “a majority of the members of each house of the legislature vote to adopt a concurrent resolution rejecting the recommendations of the [Cjommission ... in their entirety” by December 31, 2006 (Legislation § 9 [b] [ii]).

On November 28, 2006, the Commission sent its report to Governor Pataki recommending, inter alia, the closing of St. Joseph. On November 30, 2006, the Governor transmitted a message to the Legislature indicating that he approved the Commission’s report. The Legislature did not adopt a resolution rejecting the recommendations of the Commission by December 31, 2006, and the recommendations therefore became effective.

IV

In order to prevail on their challenge to the facial constitutionality of the Legislation, plaintiffs “must surmount the presumption of constitutionality accorded to legislative enactments by proof ‘beyond a reasonable doubt’ ” (Matter of Moran Towing Corp. v Urbach, 99 NY2d 443, 448 [2003]).

Plaintiffs first contend that the Legislation violates their rights to procedural and substantive due process pursuant to the Fourteenth Amendment of the United States Constitution and article I, § 6 of the New York Constitution. We agree with plaintiffs that they have a protected property interest in St. Joseph’s operating certificate (see generally Bell v Burson, 402 US 535, 539 [1971]; Honey Dippers Septic Tank Servs. v Landi, 198 AD2d 402 [1993]). We conclude, however, that the Legislation satisfies the minimum procedural due process requirements (see Morgenthau v Citisource, Inc., 68 NY2d 211, 221 [1986]). “It is not the role of the courts to rewrite statutes that have been promulgated by the legislative branch of government nor is it our role to comment on the wisdom of the statute” (id. at 223). The determination concerning “what process is constitutionally due . . . [is] based on the balancing of three factors: (1) the private interests affected by the proceeding; (2) the risk of error created by the State’s chosen procedure; and (3) the countervailing governmental interest supporting use of the challenged procedure” (Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686, 691-692 [2000]; see Mathews v Eldridge, 424 US 319, 334-335 [1976]; LaRossa, Axenfeld & Mitchell v Abrams, 62 NY2d 583, 588 [1984]).

Plaintiffs’ private interests involved are substantial inasmuch as plaintiffs face the loss of St. Joseph’s operating certificate. The interest of the State in the matter is also substantial, however, inasmuch as the State must attempt to contain rising Medicaid costs while still maintaining adequate health care facilities. “[D]ue process is a flexible constitutional concept calling for such procedural protections as a particular situation may demand” (LaRossa, Axenfeld & Mitchell, 62 NY2d at 588). Plaintiffs were aware of the task of the Commission and thus were aware that the closing of a CHS hospital was a possibility. Plaintiffs were given the opportunity to appear before the western RAC at a public hearing, and they in fact did so. Plaintiffs also were entitled to submit unlimited documents to the western RAC to assist the Commission in its task, and plaintiffs took advantage of that procedure by submitting various documents. Plaintiffs contend that the Commission should have informed them that St. Joseph was targeted for closure and then held an extensive hearing to discuss that prospect. That additional procedural safeguard would create an enormous fiscal and administrative burden. In the western region alone, the Commission recommended, inter alia, the closing of two hospitals, the downsizing of numerous other hospitals and nursing homes, and the joining under a single unified governance structure the facilities controlled by the Erie County Medical Center Corporation and Kaleida Health. We thus conclude that defendants met their burden on their cross motion with respect to plaintiffs’ right to procedural due process by establishing that the procedure set forth in the Legislation, i.e., conducting public hearings to elicit comments from all of the health care facilities and affording the health care facilities the opportunity to submit unlimited documents, was adequate and sufficient to protect that right.

We further conclude that defendants met their burden on their cross motion with respect to the contention of plaintiffs that they were denied their right to substantive due process. The denial of the right to substantive due process occurs only when “the governmental action was wholly without legal justification” (Bower Assoc. v Town of Pleasant Val., 2 NY3d 617, 627 [2004]) and, importantly, “ ‘only the most egregious official conduct can be said to be arbitrary in the constitutional sense’ ” (id. at 628, quoting Cuyahoga Falls v Buckeye Community Hope Foundation, 538 US 188, 198 [2003]). Plaintiffs acknowledge that the Commission’s task in “right-sizing” health care was a legitimate government concern, but they contend that the Commission did not have a compelling interest to achieve that goal by closing health care facilities. The test, however, is not whether the State, through the Commission, had a compelling interest in closing health care facilities. Rather, the test is whether the Commission’s action in recommending the closure of a health care facility was without legal justification, or “outrageously arbitrary” (Natale v Town of Ridgefield, 170 F3d 258, 263 [1999]).

We conclude that plaintiffs were not deprived of their right to substantive due process because it cannot be said that the Commission’s recommendation to close St. Joseph was without legal justification, nor was it “outrageously arbitrary” (id.). The Commission was charged with the task of “examining the supply of general hospital and nursing home facilities, and recommending changes that will result in a more coherent, streamlined health care system in the state of New York.” To accomplish that task, the western RAC was charged with making “recommendations for reconfiguring its region’s general hospital and nursing home bed supply to align bed supply with regional and local needs.” The Legislation contemplated that some facilities should be closed and others resized, consolidated, converted, or restructured. Thus, the Commission’s recommendation to close St. Joseph was in keeping with the purpose of the creation of the Commission.

V

Plaintiffs next contend that the Legislation violates the Presentment Clause of the New York Constitution (NY Const, art iy § 7) and the separation of powers doctrine based on the legislative veto provision of the Legislation. Pursuant to the Legislation, the Commissioner of Health is required to implement the recommendations of the Commission unless the Governor does not approve them or the Legislature enacts a concurrent resolution rejecting them, which is the equivalent of a legislative veto. Plaintiffs contend that the legislative veto provision runs afoul of the Presentment Clause because a resolution rejecting the recommendations would not be presented to the Governor. Plaintiffs further contend that the legislative veto violates the separation of powers doctrine because the Commission’s recommendations were subject to the disapproval of the Legislature after prior approval by the Governor, which is “a total inversion of the legislative process.”

Plaintiffs contend that the entire Legislation is invalid based on the legislative veto. We conclude, however, that the legislative veto provision is severable from the Legislation. Thus, even if the legislative veto provision is unconstitutional, that provision does not invalidate the remainder of the Legislation.

The legislative veto provision may be severed from the Legislation unless, as plaintiffs contend, it is determined that the Legislature would not have enacted the Legislation without the legislative veto (see Alaska Airlines, Inc. v Brock, 480 US 678, 685 [1987]; CWM Chem. Servs., L.L.C. v Roth, 6 NY3d 410, 423 [2006]). Here, plaintiffs contend that it is inconceivable that the Legislature intended to grant the Commission such powers if the recommendations of the Commission were not subject to subsequent review by the Legislature. We cannot agree.

The Legislation contains a severability clause providing that, if any part of the act is adjudged to be invalid, “such judgment shall not affect, impair, or invalidate the remainder thereof . . . .” (Legislation § 10.) The severability clause further states that “[i]t is hereby declared to be the intent of the legislature that this act would have been enacted even if such invalid provisions had not been included herein.” (Id.) The inclusion of a severability clause creates a presumption that the Legislature “did not intend the validity of the statute in question to depend on the validity of the constitutionally offensive provision” (Alaska Airlines, 480 US at 686). “[U]nless there is strong evidence” that the Legislature intended otherwise, the unconstitutional provision is severable (id.).

Here, the requisite “strong evidence” that the Legislature intended otherwise is plainly lacking. The Legislature enacted the Legislation with specific directives to the Commission and some control over the Commission through appointments. The Legislature set forth nine specific factors that the Commission was required to consider in making its recommendations. The Legislation is also specific with respect to the hearings that were required and the input the Commission was to receive from each RAC. Some members of the Commission and the RAC members were appointed by the temporary president of the senate and the speaker of the assembly. Because of the Legislature’s specific directives and appointments to the Commission, we are compelled to reject plaintiffs’ contention that it is inconceivable that the Legislature intended the Commission to make its recommendations without those recommendations being subject to subsequent review by the Legislature.

VI

Plaintiffs further contend that the Commission’s recommendations are invalid under the Free Exercise Clause of the New York Constitution (NY Const, art I, § 3). The Court of Appeals has held that “when the State imposes ‘an incidental burden on the right to free exercise of religion’ [a court] must consider the interest advanced by the legislation that imposes the burden, and that ‘[t]he respective interests must be balanced to determine whether the incidental burdening is justified’ ” (Catholic Charities of Diocese of Albany v Serio, 7 NY3d 510, 525 [2006], rearg denied 8 NY3d 866 [2007]). In determining whether legislation violates the Free Exercise Clause, “substantial deference is due the Legislature, and . . . the party [challenging the legislation] bears the burden of showing that the challenged legislation, as applied to that party, is an unreasonable interference with religious freedom” (id.). Here, defendants met their burden on their cross motion and plaintiffs failed to raise an issue of fact whether the Legislation is an unreasonable interference with religious freedom. The Legislation did not target Catholic hospitals for closing, and there is nothing in the Legislation itself that imposes any restrictions on religious freedom.

VII

Finally, plaintiffs contend that the Commission’s recommendations violate the Contract Clause of the United States Constitution (US Const, art I, § 10 [1]). Plaintiffs contend that, because St. Joseph is required to close, there will be substantial impairment of CHS contracts with various vendors, suppliers, and employees.

We conclude that the Legislation does not violate the Contract Clause. “[N]ot all impairments of contract are unconstitutional” (Association of Surrogates & Supreme Ct. Reporters Within City of N.Y. v State of New York, 79 NY2d 39, 46 [1992]). A court must first determine whether there was a substantial impairment of a contractual relationship (see 19th St. Assoc, v State of New York, 79 NY2d 434, 442 [1992]; Association of Surrogates & Supreme Ct. Reporters Within City of N.Y., 79 NY2d at 46). If there was, then the impairment “must be examined in light of the nature and purpose of the State legislation, and will be upheld if it is reasonable and necessary to accomplish a legitimate public purpose” (Association of Surrogates & Supreme Ct. Reporters Within City of N.Y., 79 NY2d at 46; see United States Trust Co. ofN.Y.v New Jersey, 431 US 1, 22 [1977], reh denied 431 US 975 [1977]; Matter of Subway-Surface Supervisors Assn, v New York City Tr. Auth., 44 NY2d 101, 109 [1978]). “[C]ourts generally defer to legislative judgment as to necessity and reasonableness” (Association of Surrogates & Supreme Ct. Reporters Within City ofN.Y., 79 NY2d at 46).

Here, the purpose of the Legislation was for the Commission to examine the current supply of hospital and nursing home facilities and to reconfigure the supply to align with the demand or need. The Legislature determined that minimizing excess capacity was necessary to promote stability and efficiency in the health care system. That is a legitimate public purpose, and the task of the Commission in recommending facilities to close, downsize, or consolidate was both necessary and reasonable to accomplish that purpose.

VIII

Accordingly, although the court properly declared that the Legislation is constitutional, we conclude that the order and judgment should be modified by vacating the provision dismissing those causes of action seeking a declaratory judgment.