IN THE MATTER OF MARGARET HAMBURG, AS ACTING COMMISSIONER OF THE NEW YORK
  CITY DEPARTMENT OF HEALTH, ET AL. v. LORNA MCBARNETTE, AS ACTING COMMISSIONER
  OF THE NEW YORK STATE DEPARTMENT OF HEALTH, ET AL.,

    83 N.Y.2d 726, 635 N.E.2d 1225, 613 N.Y.S.2d 355 (1994).
    June 14, 1994

   1 No. 104 (1994 NY Int. 101)
   Decided June 14, 1994
     _________________________________________________________________

   This opinion is uncorrected and subject to revision before publication
   in the New York Reports.

   SMITH, J.:

   The issue in this case is whether the determination of the State
   Department of Health (State DOH), denying State aid reimbursement to
   the New York City Department of Health (City DOH) for certain public
   health services that were contracted-out to other City agencies, was
   arbitrary and capricious.

   In 1986, the Legislature enacted, effective January 1, 1988, a new
   article VI of the Public Health Law (L 1986, ch 901) "to increase
   State assistance for public health and to encourage enhanced local
   public health activities" (Governor's Mem approving L 1986, ch 901,
   1986 NY Legis Ann, at 367). The new legislation was designed to assist
   localities in providing specific health care needs. The legislation
   was designed to support and increase the level of funding and
   oversight for such programs but not to supplant such funding.

   The new article VI governs State reimbursement for local public health
   services and establishes new procedures for State review of those
   services to determine eligibility for reimbursement. A municipality is
   required, among other things, to submit to the State DOH an
   application for State aid, a municipal public health services plan and
   a detailed report of all expenditures on public health services funded
   by the State (see, Public Health Law § 600). The municipality is also
   required to employ a Commissioner of Health to supervise the provision
   of public health services (see, id.; § 604). The application for State
   aid must include an organizational chart of the municipal health
   agency, a detailed budget of proposed expenditures, a description of
   proposed program activities, a copy of the municipal public health
   services plan and a certification from a governing body of the
   municipality that the proposed expenditures are consistent with the
   plan (see, id., § 601).