Judge to plaintiffs on St. Vincent’s: FYI, wrong court

By Albert Amateau

A federal bankruptcy judge last week canceled the State Supreme Court Freedom of Information lawsuit for documents relating to the state Department of Health’s closing of St. Vincent’s Hospital.

Bankruptcy Judge Cecilia Morris ruled from the bench on Sept. 2 that the lawsuit filed by Yetta Kurland on behalf of the Coalition for a New Village Hospital was out of bounds because the federal court has superior jurisdiction on all matters relating to St. Vincent’s Chapter 11 bankruptcy reorganization proceedings.

The ruling canceled a scheduled Sept. 8 State Supreme Court hearing in Manhattan on the Freedom of Information lawsuit that Kurland filed on Aug. 16. The lawsuit — which names the state Department of Health as a defendant but not St. Vincent’s — included accusations of hospital mismanagement, including a $300,000 golf event and $10 million in annual compensation for the top 10 St. Vincent’s administrators.

Judge Morris said those accusations were an attempt to build a fraud case against hospital administrators, an issue that belongs exclusively in bankruptcy court. Morris also noted at one point that a forensic consultant has been hired to look into St. Vincent’s fiscal actions in preparing the bankruptcy case.

Kurland said she was “deeply disappointed” by the ruling and called the decision “unbelievable.”

“This is really a chilling day for freedom of information,” she told reporters who covered the Sept. 2 bankruptcy hearing in the U.S. Customs House on Bowling Green.

Kurland noted in court that the Freedom of Information lawsuit named only the state Department of Health, representatives of which did not appear at the Sept. 2 hearing. While she acknowledged that the department had submitted some documents the previous week relating to the disposition of St. Vincent’s services to other healthcare providers, Kurland said the state had not fully complied with the Freedom of Information request.

However, in response to Morris’s question of what was missing from the Department of Health submission, Kurland and her associates in the case, Thomas Shanahan and David Rankin, said they did not know.

“We don’t what’s there. We want any document that relates to the closure of St. Vincent’s,” Kurland said, adding that the New York State Legislature Freedom of Information Law, or FOIL, was intended to promote the people’s right to know.

Rankin said the question of whether the Department of Health fully complied with the request for documents would be for the state court to decide.

Morris, however, closed that option.

“You have a fraud allegation here that doesn’t belong in state court,” she said.

Kurland insisted that the state court case does not have an adverse impact on the bankruptcy proceeding and that the motivation for the Freedom of Information request does not matter.

But Morris replied, “Motivation makes a difference to me.”

Adam Rogoff, a bankruptcy lawyer representing St. Vincent’s, called the Coalition for a New Village Hospital’s lawsuit “outrageous.” Rogoff said the state court action was “an attempt to drag the case out of bankruptcy court into State Supreme Court.” He added, “It seems that they’re really going to the court of public opinion,” citing Kurland’s press conference in front of State Supreme Court when she filed the suit last month.

Rogoff also cited a submission by Shanahan in the FOIL suit that charged the bankruptcy was “shrouded in secrecy.” The allegation, Rogoff said, “is simply offensive and incorrect.” He added that the suit was “a sideshow” and an insult to the federal bankruptcy court. David Botter, attorney for the unsecured creditors of St. Vincent’s, also said he was offended by the charge that the bankruptcy was shrouded in secrecy.

Also at the Sept. 2 hearing were attorneys for TD Bank and GE Capital, major creditors who hold at least $800 million of St. Vincent’s debt. One of them cited Community Board 2’s support of a “land lock” on St. Vincent’s property and said he thought the FOIL lawsuit was an attempt to block any sale of St. Vincent’s real estate.