Bombshell: Brooklyn judge orders SUNY Downstate to account for LICH’s money, property
Judge Demarest: Complete accounting by August 5
A Brooklyn judge has ordered SUNY Downstate Medical Center to account for every stick of property and every dollar it has transferred from Long Island College Hospital (LICH) to itself since it took over LICH on May 29, 2011.
Brooklyn Supreme Court Justice Carolyn E. Demarest on Thursday ordered SUNY Downstate to present a full accounting of all LICH property, assets and funds transferred to Downstate, the income derived from the properties, details about the other LICH properties SUNY plans to dispose of and more, no later than August 5.
According to Justice Demarest’s order, the Court originally approved the transfer of LICH’s assets to SUNY Downstate back in 2011 “on the express representation” that “SUNY Downstate will continue Petitioner’s [LICH’s] operation as a hospital.” (Related story here.)
SUNY Downstate has made it quite clear, however, that it has no intention of continuing to operate LICH as a hospital. In March, the SUNY Board of Trustees told Downstate to “mitigate financial losses” by closing LICH, and Downstate began shutting down the hospital.
In spite of a court order prohibiting SUNY Downstate from closing LICH, entered by Justice Johnny Lee Baynes in a related matter, Downstate ended the residency program at LICH, and closed the maternity ward, cardiac catheterization lab, radiation oncology department and coronary care unit. Downstate has also banned ambulances from delivering patients to LICH’s emergency room.
Sources told the Brooklyn Eagle late Thursday that Justice Baynes has appointed retired Appellate Division Court Judge William C. Thompson, Sr. as a Referee in the matter. While there was no official confirmation as of Friday, Judge Thompson acknowledged the appointment to the New York Daily News. “Putting people together is what I do,” he said. The 88-year-old Thompson served as a City Council member and State Senator as well as a judge.
“We think William Thompson is a good choice and that he will get the job done,” said Jill Furillo, RN executive director of the New York State Nurses Association. “He’s well qualified for this role, and we look forward to working with him.”
Justice Demarest ordered the complete financial accounting “in light of the public acknowledgment by SUNY Downstate of its intent to close LICH, and press coverage reciting continuing efforts to close LICH in spite of injunctive relief prohibiting such closure.”
Local residents, area representatives and hospital employees have been fighting tooth and nail to keep the hospital open, and advocates point out that LICH’s health care infrastructure is crucial to a swath of Brooklyn from Red Hook to Williamsburg. But real estate developers are salivating over the prime Brownstone properties, said to be worth a half a billion dollars or more.
SUNY spokesperson Robert Bellefiore told the Brooklyn Eagle late Thursday, “Judge Demarest’s order is being reviewed by SUNY Downstate’s attorneys.”
Leon Bell, Political Director of the New York State Nurses Association, told the Brooklyn Eagle, “The order issued by Judge Demarest is yet another indication of SUNY’s total disregard for the health care needs of the people of Brooklyn. SUNY has flouted court orders and diverted ambulances, causing havoc throughout the Brooklyn hospital network. When SUNY bought LICH it made a commitment to keep the hospital open for care and Brooklyn patients and residents demand that it honors that commitment.”
Elected state representatives appear to be rolling steadily ahead with plans to sell 18 LICH properties to finance a “health trust.” (Update: This is unrelated to SUNY’s move to close LICH. Story to come.)
A bill introduced by Senators Eric Adams and Kevin Parker on June 11 would fund this health trust through the sale of the LICH properties. In Bill S5741-2013, Adams called the 18 LICH buildings “surplus assets.”
Justice Demarest’s order delves further into the finances of LICH than any previous accounting.
According to the order, Downstate must explain what happened to $15 million authorized to be withdrawn from the LICH Liability Fund on June 13, 2012, which was “to be applied exclusively to the costs of continued operation of LICH.”
Further, Downstate must account for the costs incurred in the operation of LICH since May 29, 2011, and the income to LICH since that date.
LICH’s money trail is murky at best. Doctors and other LICH staff estimate that Continuum Health Partners, contracted to process LICH’s bills, has neglected to collect as much as $14 million a year in fees. In February, LICH Dr. Alice Garner said that over the past year she personally billed $1.6 million for medical care, but that the hospital only collected $200,000 of that.
According to a report from state Comptroller Thomas P. DiNapoli issued January 17, $32.7 million was transferred from LICH’s accounts to SUNY’s “Health Science Center at Brooklyn Foundation, Inc.”
In spite of its claim that it would open LICH’s books to groups interested in taking over the hospital, SUNY Downstate has so far failed to turn over LICH’s financial records to interested parties. In a letter to Governor Andrew Cuomo, the Brooklyn Heights Association complained, “SUNY Downstate has made representations about LICH finances that are simply not true. Without open books, potential suitors cannot evaluate LICH’s economic viability — and there is no assurance that the disposition of LICH will be a fair one. SUNY Downstate’s actions have revived fears that its real goal is to sell the land to a real estate developer.”
As part of the initial agreement giving SUNY Downstate control of LICH, the court approved the transfer of LICH’s real estate and other assets like fixtures, plant and equipment to SUNY by way of a holding company called “Downstate at LICH Holding Company, Inc.,” controlled entirely by SUNY Downstate. Non-real estate assets, such as clinics and emergency services, were transferred directly to SUNY Downstate.
LICH staff are employed through a separate company called “Staffco of Brooklyn, LLC,” whose sole member is a foundation controlled by SUNY Downstate.
Justice Demarest has ordered SUNY Downstate to supply complete lists of all personnel employed by LICH on May 29, 2011, May 29, 2012 and at the present time. She is also requiring Downstate to provide the number of patients served in 2011, 2012 and to the date of the report in 2013, indicating the specific services used by patients.
Updated June 28 at 3:50 p.m. to add details about the unconfirmed appointment of Judge William C. Thompson, Sr. as a Referee.
Updated June 28 at 4:10 p.m. with recent photo of Justice Demarest.
Updated June 28 at 6 p.m. to reflect that the state is “rolling steadily ahead with plans to sell 18 LICH properties.” The article previously stated that SUNY was rolling ahead with plans.
Updated July 1 to add quotation mark.
Updated July to change description of bill introduced by Sen. Adams to sell 18 LICH properties as being unrelated to SUNY’s move to close LICH.