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

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Courts will defer to an administrative decision madeby an agency pursuant to its authority if it acted rationallywithin its area of expertise Roberts v Gavin, 2012 NY Slip Op 05239, AppellateDivision, First Department
Lillian Roberts, Executive Director of District Council 37,AFSCME, AFL-CIO [DC 37], petitioned Supreme Court seeking an order annullingthe Personnel Review Board of the New York City Health and HospitalsCorporation [PRB] determination the Health and Hospitals Corporation [HHC]decision to restructure its layoff units in response to a recent financialcrisis.
Supreme Court dismissed DC 37’s petition; the AppellateDivision affirmed the lower court’s ruling.
HHC, which initially had a single corporation-wide layoffunit that included all of its facilities throughout New York City, subsequentlycreated smaller layoff units based on individual hospitals and health carefacilities within HHC. In 2009, in response to financial pressures faced by theCity, HHC again restructured its layoff units by creating eighteen additional,smaller, layoff units within the existing hospital and medical centers that hadpreviously been designated as the layoff units. HHC then announced plans toeither close or reduce staff at the clinics and programs designated as the newlayoff unit, which would affect about 87 HHC employees.
After noting that Supreme Court “should not have dismissedthe proceeding as time-barred,” the Appellate Division considered the merits ofDC 37’s petition.
DC 37’s contended that PRB’s action was arbitrary andcapricious. 
The Appellate Division said that an administrative body’s act oromission is arbitrary if it "is without sound basis in reason and isgenerally 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 existsfor an agency's action, a court may not substitute its judgment for that of theagency, and the agency's determination, acting pursuant to legal authority andwithin its area of expertise, is entitled to deference.”
The Appellate Division said that DC 37 failed to show thatPRB's upholding HHC's creation of additional layoff units was arbitrary orcapricious, or affected by an error of law, pointing out that HHC actedconsistent 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 individualfacility or division of any facility of [HHC] as separate units forlayoff or demotion under this rule," the court concluded that the HHCRules explicitly grant HHC the discretion to designate programs and clinics ofHHC facilities as layoff units. 
At the hearing, HHC explained that the closing of the clinicand hospital-based programs was necessary to provide continuity of patient carein light of the budget deficit crisis facing the City. And in its decision, PRBfound that HHC's actions were predicated on budgetary deficits that requiredclosure and/or consolidation of programs and clinics in order to minimize theimpact on patient care. PRB's decision was consistent with its previousprecedent that "a presumption of regularity exists in the establishment ofseparate layoff units, until it is demonstrated that the layoffs werenot done in accordance with a rational plan" (PRB Decision No. 682 [May27, 1992] [emphasis in original]).
Noting that "A public employer may abolish civilservice positions for the purpose of economy or efficiency," the courtrejected DC 37’s claim that the creation of the new layoff units violated theseniority and displacement rights of certain employees, commenting  “although some longtime employees may losetheir jobs, and newer employees may not,” in the absence of any nonconclusoryshowing of bad faith, it declined to disturb HHC's determination establishingthe additional layoff unit.
Recognizing that there may have been a different way for HHCto structure its layoff plan, the Appellate Division said that it could not saythat the agency acted in an arbitrary or capricious manner as "a court'sopinion that a particular outcome is not fair or is not in the interests ofjustice is not sufficient to overcome the deference to be afforded an agencyacting rationally within its area of expertise" and declined to substituteits judgment as to how HHC “should implement personnel decisions whendetermining how best to provide health care to the people of New York City” asto do so “would be an unwarranted intrusion into the managerial prerogative ofHHC, which acted within its rule-making authority.”
The decision is posted on the Internet at:http://www.courts.state.ny.us/reporter/3dseries/2012/2012_05239.htm