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March 21, 1996

LINCOLN CERCPAC, STACEY ELLIS, in her individual capacity and as general guardian of infant Abraham Ellis; ABRAHAM ELLIS, an infant; MARGARITA AGOSTA in her individual capacity and as general guardian of infant Jesus Cortes, Jr.; JESUS CORTES, Jr. an infant; ELSA LOPEZ, in her individual capacity and as general guardian of infant Victor Galarza, Jr.; VICTOR GALARZA, Jr., an infant; ERCILIA SANTOS, in her individual capacity and as general guardian of infant Anthony Perez; ANTHONY PEREZ, an infant, Plaintiffs, against HEALTH AND HOSPITALS CORPORATION, Defendant.

The opinion of the court was delivered by: MOTLEY

 I. Introduction

 This action is brought under the Americans with Disabilities Act of 1990 (the "ADA"), 42 U.S.C. sec. 12101, et seq., and section 504 of the Federal Rehabilitation Act of 1973 (the "Rehab Act"), 29 U.S.C. sec. 794. Plaintiffs, who seek class certification, claim to represent approximately 3500 developmentally disabled children and parents in the South Bronx and North Manhattan areas who formerly received services from the Children's Evaluation and Rehabilitation Clinic. This clinic was operated for twenty years by Lincoln Medical and Mental Health Center in the Bronx and was closed on August 31, 1995. Plaintiffs now move for a preliminary injunction to compel its reopening by defendant Health and Hospitals Corporation. *fn1" For the reasons described below, plaintiffs' motion is denied. *fn2"

 II. Background Facts

 In order to serve the exceptional needs of children with developmental disabilities, Lincoln Medical and Mental Health Center ("Lincoln") developed a specialized clinic called the Children's Evaluation and Rehabilitation Clinic ("CERC"). CERC provided physical rehabilitative services to approximately 10% of its clients; however, its main role was to evaluate and diagnose their disabilities. CERC was not its clients source of general, or primary, health care, but rather offered them supplemental services. Thus part of CERC's role was to refer clients to primary health care providers when appropriate. Although there is dispute over the size of CERC's client base, from July 1994 to June 1995, CERC actively monitored about 1,000 patients of the alleged total 3,500 under its care. Tr. 254-55; 509. *fn3"

 In the spring of 1995, the Health and Hospitals Corporation ("HHC") notified Lincoln that it faced a 25% cut in its 1996 operating budget due to the city, state, and federal governments' retrenchment of health care. In order to accommodate these imminent cuts, Lincoln's executive director, Roberto Rodriguez, in consultation with Lincoln's Chief Financial Officer and Senior Cabinet, decided to close three programs including CERC, eliminate 250 Lincoln staff positions, and cut Lincoln's supply and equipment budget by $ 2 million. CERC was selected for termination because it was expensive to maintain and had been operating at a deficit of approximately $ 700,000 a year. Tr. 255-56; 296; 460-63.

 It was further decided that CERC's diagnostic and evaluative services would be relocated to the Morrisania Center for Child Development ("Morrisania"), a diagnostic center located about one mile, or twenty city blocks, from CERC in the Bronx. Since Morrisania did not have rehabilitation facilities for the 10% of CERC's former clients in need of them, HHC planned to continue to provide rehabilitative services at Lincoln. Eventually, Morrisania would provide all services on its premises. Morrisania was considered the optimal transfer site for several reasons: (1) it is near Lincoln; (2) it has a twenty-year professional relationship with Lincoln; (3) it is equipped to provide evaluative services to CERC's clients; (4) it offers bilingual health care workers to assist Spanish speaking patients; and (5) it receives greater reimbursement from Medicaid than CERC for providing the same services. Tr. 517, 564-65; Declaration of Dr. Coll Ruiz, dated November 3, 1995.

 The financial savings involved in transferring CERC's services to Morrisania was integral to the decision to relocate. HHC institutions like Morrisania and Lincoln can receive medicaid reimbursement under two alternative provisions: Article 16 of the Mental Hygiene Law and Article 28 of the Administrative Code. HHC obtains reimbursement under Article 28 since it allows for greater flexibility. *fn4" Under this provision, Morrisania receives $ 150.20 reimbursement per visit and Lincoln receives $ 92.47. Thus HHC saves a significant sum by providing services to the developmentally disabled at Morrisania rather than at Lincoln. Morrisania also had the capacity to provide the services formerly offered by CERC to CERC's clients. Morrisania is one of HHC's largest diagnostic and treatment centers and had been handling approximately 5,000 visits a year from developmentally disabled child patients before CERC was closed. Tr. 464; 505-21.

 HHC then notified the parents by letter of the transition and sent them information packets. Parents were requested to execute consent forms releasing their children's medical records to Morrisania. Efforts were also made to replicate CERC's staffing at Morrisania. *fn5" In the third week of June, Lincoln notified CERC's clients that the clinic would be permanently closed on August 31, 1995, and clients referred elsewhere. *fn6" Tr. 264-65; 308-14; 514.

 On August 29, 1995, plaintiffs moved for an ex parte temporary restraining order to enjoin defendant from closing CERC two days later, as scheduled. Judge Kaplan, in Part 1, denied this application since plaintiffs had failed to provide sufficient reason why defendant should not be notified. Plaintiffs then filed a complaint on August 30, 1995 requesting: (1) class certification; (2) a temporary restraining order to prevent CERC's closing; (3) a preliminary injunction to prevent CERC's closing; (4) a permanent injunction to enjoin defendant from discriminating against the disabled and from failing to provide an effective grievance procedure or properly evaluate its policies; and (5) a declaratory judgment that defendant had violated the ADA and section 504 by failing to provide equal access to its health care services.

 A hearing on the temporary restraining order was held before Judge Kaplan on August 31, 1995, and on the same day plaintiffs' application was denied. Judge Kaplan found that:

The conflicting evidence fails to persuade the Court that plaintiffs will suffer irreparable injury as a result of the transfer of the functions previously performed by Lincoln CERC to Morrisania Hospital. There is no evidence that the decision to close Lincoln CERC was made because plaintiffs' children are disabled and no persuasive evidence of disparate impact of a character likely to result in plaintiffs prevailing. See Alexander v. Choate, 469 U.S. 287, 83 L. Ed. 2d 661, 105 S. Ct. 712 (1985).

 Lincoln Cercpac, et al. v. Health and Hospitals Corp., No. 95-7154 (Order filed August 31, 1995) (Kaplan, J.) (emphasis in original). On August 31, 1995, defendant closed CERC as planned, and only a skeleton staff remained behind to facilitate the transfer of services to Morrisania.

 On September 14, 18, 19, 20 and 21 of 1995, this court held a hearing on plaintiffs' motion for a preliminary injunction and witnesses for both sides testified. ...

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