Cobble Hill

Brooklyn judge places LICH property in ‘constructive trust,’ says Othmer Fund must be repaid

OKs SUNY’s request for LICH delay

August 28, 2013 By Mary Frost Brooklyn Daily Eagle
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In a two-part decision and order on Wednesday, state Supreme Court Justice Carolyn Demarest approved SUNY Downstate’s request to put off reopening Long Island College Hospital’s (LICH) Intensive Care Unit and restoring full operation of the Emergency Department and ambulance service until September 3.

While Justice Demarest had originally ordered that SUNY Downstate must work to restore the above services by Aug. 26, both SUNY and the Concerned Physicians of LICH agreed that more time was needed to hire additional doctors.  (More on this story here.)

In the second part of her order, Justice Demarest made it clear that funds previously “borrowed” in 2000, 2006 and 2011 from the Othmer Endowment Fund at LICH must be restored by LICH and SUNY. She imposed “a constructive trust for the benefit of the Othmer Endowment Fund” on all of LICH’s real property currently in control of SUNY Downstate.

According to Cornell University’s Legal Information Institute, a constructive trust orders the person who would otherwise be unjustly enriched to transfer property to the rightful owner. Unlike other common trusts, a constructive trust is a temporary measure ordered by a court to correct a wrong.

“As this Court’s Order of August 20, 2013 provides for the restoration of property to LICH, no effort shall be made to dissolve LICH pending further Order of this Court,” she warned, ordering a full accounting of LICH finances and the status of all funds since May, 2011, when SUNY took over LICH.

Justice Demarest warned that no LICH properties previously transferred to SUNY could be sold or otherwise conveyed. LICH’s valuable Cobble Hill real estate is held by SUNY in a “Downstate at LICH Holding Company.”

On Aug. 20, Justice Demarest found that SUNY Downstate Medical Center had violated a contractual obligation to keep LICH open and ordered that LICH assets be transferred back to either Continuum Health Partners or another willing operator.

Continuum, set to merge with Mount Sinai Medical Center, said in a statement that they would not reassume management of LICH, but seven other potential operators are said to have expressed interest.

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