Kountz v. State University of New York

• Decision Date: 10 January 1977
• Citation: 89 Misc.2d 483,391 N.Y.S.2d 942
• Parties: Samuel L. KOUNTZ, and others whose names are listed on the annexed schedule v. The STATE UNIVERSITY OF NEW YORK and Calvin H. Plimpton, as President of Downstate Medical Center College of Medicine.
• Court: New York Supreme Court

Page 942

391 N.Y.S.2d 942

89 Misc.2d 483

Samuel L. KOUNTZ, and others whose names are listed on the

annexed schedule v. The STATE UNIVERSITY OF NEW YORK and Calvin H. Plimpton, as

President of Downstate Medical Center College of Medicine.

Supreme Court, Special Term, Kings County.

Jan. 10, 1977.

Morris Weissberg, New York City, for plaintiffs.

Louis J. Lefkowitz, Atty. Gen., for defendants.

IRWIN BROWNSTEIN, Justice.

May the State, via legislative enactment, take away from doctors the fees they earn in their private practice? A shocking consequence, perhaps, on the face of it, but nevertheless this is the position taken by the defendants in this case of first impression concerning the applicability of Article 8--AA of the Education Law entitled 'Clinical Practice Income Management Corporations' (hereinafter sometimes referred to as Corporation).

The plaintiffs in this action consist of 29 licensed physicians in the State of New York who teach medicine full time at Downstate Medical Center College of Medicine (Downstate), which is operated, managed, and controlled by defendant The State University of New York (SUNY). They seek the following relief with respect to Article 8--AA:

1. A declaratory judgment that this statute does not apply to fees for medical services rendered by plaintiffs to their own private practice patients because such services are not related to their employment at Downstate;

2. Alternatively, if Article 8--AA is found to be applicable to their private practice of medicine, then a declaratory judgment that the statute unconstitutionally deprives the plaintiffs of property without due process of law and denies them the equal protection of the Laws, and that, consequently, such provisions of Article 8--AA are unconstitutional and invalid;

3. An injunction restraining the defendants from requiring each plaintiff, as a condition of his employment by Downstate, to join and participate in a Clinical Practice Income Management Corporation at Downstate;

4. An injunction restraining the defendants from dismissing or disciplining any plaintiff for his non-participation in a clinical practice program.

This action was commenced on August 8, 1975. On August 27, 1975, prior to serving their answer, defendants moved to dismiss the complaint pursuant to CPLR 3211(a)7 on the ground that the complaint fails to state a cause of action. The motion was granted by Special Term. The Appellate Division, Second Department, in a decision dated July 6, 1976, 53 A.D.2d 856, 857, 385 N.Y.S.2d 362, 363, reversed the dismissal of the complaint, stating 'Insofar as the complaint alleges that plaintiffs' private clinical practice income would fall under the control of defendants in the event they exercised their authority under article 8--AA, the complaint is adequate in seeking a declaration and related injunctive relief to determine what portion of plaintiffs' income is comprehended by the statutes in question.

We have examined defendants' arguments that plaintiffs are barred from commencing this action because of the terms of an existing collective bargaining agreement, or because they possessed the absolute right to sever their employment relationship with the State, and find them to be without merit (citing cases).'

An answer was thereafter submitted by the defendants containing eight defenses. Plaintiffs then brought the instant motion seeking dismissal of each of the defenses and summary judgment.

One of the defenses interposed by the defendants is that 'this case raises no case or controversy' in that no Corporation has yet been established at Downstate. Plaintiffs, however, allege, and this is sufficiently supported by them, that SUNY is considering the installation of such Corporations in its medical and dental schools. The establishment of a Corporation at Downstate could have a very serious impact on the plaintiffs in view of the defendants' contention herein that the Corporation would encompass all of the doctors' private practice income. Consequently, at the outset, this court concludes that this case involves a justiciable controversy which is now ripe for declaratory relief.

The court further concludes that there are no relevant triable issues of fact yet to be resolved. The only question for the court's determination is the interpretation of Article 8--AA--i.e., does it apply to the doctors' private practice income?--an issue appropriately suitable for resolution on this motion for summary judgment.

Article 8--AA was added to the Education Law in 1973 as sections 385--a. through 385--i. Because of its relatively recent adoption, counsel for the parties were unable to cite--and research has failed to reveal--any reported cases concerning this statute. Resort must therefore be had to the Act itself.

In construing the statute, three considerations, at least, are pertinent--the purpose of the legislation, the intent of the legislators to achieve this purpose, and a reading of the provisions of the law so that a reasonable relationship of the parts to the whole will result (Babcock v. County of Dutchess, 55 A.D.2d 37, 41, 389 N.Y.S.2d 394, 396 (2d Dept.); these three criteria are also found in the rules on statutory construction, to wit, respectively, McKinney's Cons.Laws, Book 1, Statutes, sections 96, 92, 97, and 98).

The purpose and intent of Article 8--AA are conveniently set forth in the statute as section 385--a. It reads in its entirety as follows:

'Statement of legislative intent

It is the sense of the legislature that the current methods for the collection of, and accounting for, income generated by teaching professionals employed in a medical or dental school at a state university of New York medical center or health science center in the course of performing services related to their employment are inadequate and fail to serve properly the needs of the medical and dental schools, the state university system or the people of the state of New York. The purpose of this article is to provide a mechanism for the collection, management and ultimate disbursement, including disbursements for the purpose of making salary adjustments, of all such income and pursuant to which proper accounting and auditing measures may be implemented, and such purpose is hereby declared to be a public purpose, essential to the public interest.'

Other significant (at least for purposes of this court's determination) provisions of the article include the following:

' § 385--b. Definitions

As used in this article, unless the context otherwise requires:

(a) 'Clinical practice' means the act of providing any form of medical and health care, including patient consultations, and the act of performing clinical investigation involving patients, for which acts a fee for professional services is customarily charged.

(b) 'Clinical practice income' means all income resulting from fees charged for professional services rendered in connection with clinical practice, but shall not include research grants, royalties, honoraria for lectures or income from consultations unrelated to patient care.'

' § 385--c. Restriction on clinical practice

Notwithstanding any other law or the provisions of any agreement or contract, no employee serving in a position of academic rank in a medical or dental school at a state university of New York medical center or health science center having in operation a clinical practice income management corporation formed pursuant to this article may engage in any clinical practice except as a member of such corporation and in accordance with the provisions of this article and with the rules and procedures promulgated by the governing board of such corporation. For the purposes of this section, clinical practice at an affiliated institution shall be deemed to be clinical practice at a state university of New York medical or dental school. In addition to membership in the corporation, every such employee shall be a member of either a school-wide clinical practice plan or a clinical practice plan organized along one or more departmental lines. Selection of the plan structure shall be made on a departmental basis by vote of a majority of the members of the department. Membership in a corporation and a clinical practice plan shall, for the purposes of this chapter, be a condition of employment for any such employee who engages in clinical practice, except that the trustees may exempt from the provisions of this section such employees as are deemed to be engaged in part-time employment. Nothing herein shall prohibit the employment by the corporation of any member thereof.'

' § 385--e. Purposes and powers of the corporation

The purposes of the corporation shall be to collect, manage and disburse, on behalf of the medical or dental school, all clinical practice income generated by employees of the school engaged in clinical practice in connection with their employment, and each corporation created pursuant to this article shall have the following powers:

(g) To collect all clinical practice income generated by any of its members in accordance with a system established by the governing board and approved by the trustees and the state comptroller; * * *.'

Defendants' construction of the scope of this entire article would encompass the following scenario:

Downstate establishes a clinical practice income management corporation ( § 385--d.). All professional employees, i.e., doctors, if they engage in clinical practice as defined in section 385--b. (viz., rendering any patient care), must, as a condition of employment, become a member of the Corporation ( § 385--c.). The Corporation would then collect all clinical practice income generated by the doctors, including, in accordance with the defendants' interpretation, all fees earned by the doctors in their private practice ( § 385--e. (g)). How much, if any, of this income is then given back to the physicians is not discussed by the defendants and is...