Courts will defer to an administrative decision made by an agency pursuant to its authority if it acted rationally within its area of expertise

Courts will defer to an administrative decision made by an agency pursuant to its authority if it acted rationally within its area of expertise
Roberts v Gavin, 2012 NY Slip Op 05239, Appellate Division, First Department

Lillian Roberts, Executive Director of District Council 37, AFSCME, AFL-CIO [DC 37], petitioned Supreme Court seeking an order annulling the Personnel Review Board of the New York City Health and Hospitals Corporation [PRB] determination the Health and Hospitals Corporation [HHC] decision to restructure its layoff units in response to a recent financial crisis.

Supreme Court dismissed DC 37’s petition; the Appellate Division affirmed the lower court’s ruling.

HHC, which initially had a single corporation-wide layoff unit that included all of its facilities throughout New York City, subsequently created smaller layoff units based on individual hospitals and health care facilities within HHC. In 2009, in response to financial pressures faced by the City, HHC again restructured its layoff units by creating eighteen additional, smaller, layoff units within the existing hospital and medical centers that had previously been designated as the layoff units. HHC then announced plans to either close or reduce staff at the clinics and programs designated as the new layoff unit, which would affect about 87 HHC employees.

After noting that Supreme Court “should not have dismissed the proceeding as time-barred,” the Appellate Division considered the merits of DC 37’s petition.

DC 37’s contended that PRB’s action was arbitrary and capricious. 

The Appellate Division said that an administrative body’s act or omission is arbitrary if it "is without sound basis in reason and is generally taken without regard to the facts," citing Pell v Board of Educ. of Union Free School Dist., 34 NY2d 222. In contrast, said the court, “Where a rational basis exists for an agency's action, a court may not substitute its judgment for that of the agency, and the agency's determination, acting pursuant to legal authority and within its area of expertise, is entitled to deference.”

The Appellate Division said that DC 37 failed to show that PRB's upholding HHC's creation of additional layoff units was arbitrary or capricious, or affected by an error of law, pointing out that HHC acted consistent with its past practice of designating hospital programs as layoff units.

Citing the relevant HHC Rules, which, in pertinent part, sets out HHC’s the authority to amend its own rules and regulations and which, in particular, provides that HHC "may by rule designate an individual facility or division of any facility of [HHC] as separate units for layoff or demotion under this rule," the court concluded that the HHC Rules explicitly grant HHC the discretion to designate programs and clinics of HHC facilities as layoff units. 

At the hearing, HHC explained that the closing of the clinic and hospital-based programs was necessary to provide continuity of patient care in light of the budget deficit crisis facing the City. And in its decision, PRB found that HHC's actions were predicated on budgetary deficits that required closure and/or consolidation of programs and clinics in order to minimize the impact on patient care. PRB's decision was consistent with its previous precedent that "a presumption of regularity exists in the establishment of separate layoff units, until it is demonstrated that the layoffs were not done in accordance with a rational plan" (PRB Decision No. 682 [May 27, 1992] [emphasis in original]).

Noting that "A public employer may abolish civil service positions for the purpose of economy or efficiency," the court rejected DC 37’s claim that the creation of the new layoff units violated the seniority and displacement rights of certain employees, commenting  “although some longtime employees may lose their jobs, and newer employees may not,” in the absence of any nonconclusory showing of bad faith, it declined to disturb HHC's determination establishing the additional layoff unit.

Recognizing that there may have been a different way for HHC to structure its layoff plan, the Appellate Division said that it could not say that the agency acted in an arbitrary or capricious manner as "a court's opinion that a particular outcome is not fair or is not in the interests of justice is not sufficient to overcome the deference to be afforded an agency acting rationally within its area of expertise" and declined to substitute its judgment as to how HHC “should implement personnel decisions when determining how best to provide health care to the people of New York City” as to do so “would be an unwarranted intrusion into the managerial prerogative of HHC, which acted within its rule-making authority.”

The decision is posted on the Internet at: