Bank CEO Stephen M. Calk Charged With Corruptly Soliciting A Presidential Administration Position In Exchange For Approving $16 Million In Loans

  Audrey Strauss, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Patricia Tarasca, the Special Agent-in-Charge of the New York Region for the Federal Deposit Insurance Corporation Office of Inspector General (“FDIC OIG”), announced today the unsealing of an indictment charging STEPHEN M. CALK with financial institution bribery for corruptly using his position as the head of a federally insured bank to issue millions of dollars in high-risk loans to a borrower in exchange for a personal benefit: assistance from the borrower in obtaining a senior position with an incoming presidential administration.  CALK is expected to be presented this afternoon before U.S. Magistrate Judge Debra Freeman.

Ms. Strauss said:  “As alleged, Stephen M. Calk abused the power entrusted to him as the top official of a federally insured bank by approving millions of dollars in high-risk loans in an effort to secure a personal benefit, namely an appointment as Secretary of the Army or another similarly high-level position in the incoming presidential administration.  Calk’s alleged attempt to obtain such an appointment was unsuccessful, and the loans he approved were ultimately downgraded by the bank’s primary regulator.  Thanks to the outstanding work of the FBI and FDIC OIG, Calk’s alleged corrupt scheme has now resulted in a federal criminal charge.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Calk went to great lengths to avoid banking violations in an attempt to secure a senior position in a presidential administration. He curried favor with an influential borrower, exploited his position as CEO of a bank and its holding company, and exercised control over the bank and the borrower’s loans, intentionally turning his back on the many red flags posted along the way.  His attempt at petitioning for political favors was unsuccessful in more ways than one – he didn’t get the job he wanted, and he compromised the one he had.”  

FDIC OIG Special Agent-in-Charge Patricia Tarasca said:  “Today’s indictment charges Stephen Calk with misusing his position as Chairman and Chief Executive Officer of a bank for his own personal gain.  The FDIC Office of Inspector General remains committed to investigating cases where bank officials cause multimillion-dollar losses to a financial institution and undermine its integrity.  We will continue to work with our law enforcement partners to bring to justice those who commit such offenses.”

According to the allegations in the Indictment:[1]

CALK, the Bank, and the Borrower

STEPHEN M. CALK is the chairman and chief executive officer of the “Bank,” a federal savings association headquartered in Chicago, Illinois, with an office in New York, New York.  The Bank is owned in its entirety by the “Holding Company,” a Chicago-based bank holding company, and CALK is the chairman, chief executive officer, and owner of approximately 67% of the Holding Company.

The “Borrower” was, at all relevant times, a lobbyist and political consultant.  Beginning in or about March 2016, the Borrower held a senior role with a presidential campaign (the “Presidential Campaign”), and from June 2016 through August 2016, he served as chairman of the Presidential Campaign.  After the Borrower’s formal role with the Presidential Campaign concluded in or about August 2016, the Borrower continued to be informally involved in the campaign.  Beginning in or about November 2016, when the candidate for whom the Borrower had been working was elected President of the United States, the Borrower provided informal input to the presidential transition team (the “Presidential Transition Team”).

The Corrupt Scheme

Between in or about July 2016 and January 2017, CALK engaged in a corrupt scheme to exploit his position as the head of the Bank and the Holding Company in an effort to secure a valuable personal benefit for himself, namely, the Borrower’s assistance in obtaining for CALK a senior position in the presidential administration.  During this time period, the Borrower sought millions of dollars in loans from the Bank.  CALK understood that the Borrower urgently needed these loans in order to terminate or avoid foreclosure proceedings on multiple properties owned by the Borrower and the Borrower’s family.  Further, CALK believed that the Borrower could use his influence with the Presidential Transition Team to assist CALK in obtaining a senior administration position.

CALK thus sought to leverage his control over the Bank and the loans sought by the Borrower to his personal advantage.  Specifically, CALK offered to, and did, cause the Bank and Holding Company to extend $16 million in loans to the Borrower in exchange for the Borrower’s requested assistance in obtaining a high-level position in the presidential administration.  For example, and while the Borrower’s loans were pending approval, CALK provided the Borrower with a ranked list of the governmental positions he desired, which started with Secretary of the Treasury, and was followed by Deputy Secretary of the Treasury, Secretary of Commerce, and Secretary of Defense, as well as 19 ambassadorships similarly ranked and starting with the United Kingdom, France, Germany, and Italy.

In approving these loans to the Borrower, CALK was aware of significant red flags regarding the Borrower’s ability to repay the loans, such as his history of defaulting on prior loans.  Moreover, given the size of the loans, the Borrower’s debt became the single largest lending relationship at the Bank.  In order to enable the Bank to issue these loans without violating the Bank’s legal limit on loans to a single borrower, CALK authorized a maneuver never before performed by the Bank, in which the Holding Company – which CALK also controlled – acquired a portion of the loans from the Bank.

During the same time period, the Borrower provided CALK with valuable personal benefits.  First, in or about the summer of 2016, during the Presidential Campaign – and just days after CALK and the rest of the Bank’s credit committee conditionally approved a proposed $9.5 million loan to the Borrower – the Borrower appointed CALK to a prestigious economic advisory committee affiliated with the campaign.  And second, in or about late November and early December 2016 – after the presidential candidate had been elected president, after the Borrower’s first loan from the Bank had been issued, and while a second set of loans worth more than $6 million sought by the Borrower was pending approval by the Bank – the Borrower used his influence with the Presidential Transition Team to assist Calk, recommending CALK for an administration position.  Due to the Borrower’s efforts, CALK was formally interviewed for the position of Under Secretary of the Army in or about early January 2017 at the Presidential Transition Team’s principal offices in New York, New York.  CALK was not ultimately hired.

As a result of its independent review of the Bank’s loans to the Borrower, in or around July 2017, the bank’s primary regulator, the Office of the Comptroller of the Currency (“OCC”), downgraded the credit quality of those loans to “substandard,” concluding that the Bank’s classification of them as satisfactory had been inappropriate.  Moreover, to conceal the unlawful nature of his scheme, CALK made false and misleading statements to the OCC regarding the loans to the Borrower.  Among other things, CALK falsely stated to the OCC regulators that he had never desired a position in the presidential administration. 

In or about October 2017, the Borrower was charged with federal crimes and the U.S. Government sought the forfeiture of the Borrower’s interests in properties securing the loans he had received from the Bank.  The Borrower subsequently ceased making loan payments to the Bank, and the Bank and the Holding Company foreclosed on the cash collateral securing the loans and have currently written off the remaining principal balance – totaling over $12 million – as a loss.

STEPHEM M. CALK, 54, is charged with one count of financial institution bribery, which carries a maximum sentence of 30 years in prison.

The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI and FDIC OIG.

The allegations contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 [1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

U.S. Attorney Announces Indictment Of Michael Avenatti For Aggravated Identity Theft, Engaging In A Scheme To Defraud A Former Client

Avenatti Separately Indicted on Previously-Announced Charges Relating to a Scheme to Extort the Athletic Apparel Company Nike, Inc.

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the indictment today of MICHAEL AVENATTI on fraud and aggravated identity theft charges.  As alleged, AVENATTI used misrepresentations and a fraudulent document purporting to bear his client’s name and signature to convince his client’s literary agent to divert money owed to AVENATTI’s client to an account controlled by AVENATTI.  AVENATTI then spent the money principally for his own personal and business purposes.  The fraud and aggravated identity theft case is assigned to U.S. District Judge Deborah Batts of the Southern District of New York.

AVENATTI was separately indicted today on extortion charges, which were the subject of a previous Complaint and arrest of AVENATTI, relating to his alleged attempt to extract more than $20 million in payments from Nike, Inc., by threatening to use his ability to garner publicity to inflict substantial financial and reputational harm on the company if his demands were not met.  That case is assigned to U.S. District Judge Paul Gardephe of the Southern District of New York.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michael Avenatti abused and violated the core duty of an attorney – the duty to his client.  As alleged, he used his position of trust to steal an advance on the client’s book deal.  As alleged, he blatantly lied to and stole from his client to maintain his extravagant lifestyle, including to pay for, among other things, a monthly car payment on a Ferrari.  Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client.”

According to the allegations in the Indictment unsealed today[1]:

From August 2018 through February 2019, AVENATTI defrauded a client (“Victim-1”) by diverting money owed to Victim-1 to AVENATTI’s control and use.  After assisting Victim-1 in securing a book contract, AVENATTI allegedly stole a significant portion of Victim-1’s advance on that contract.  He did so by, among other things, sending a fraudulent and unauthorized letter purporting to contain Victim-1’s signature to Victim-1’s literary agent, which instructed the agent to send payments not to Victim-1 but to a bank account controlled by AVENATTI.  As alleged, Victim-1 had not signed or authorized the letter, and did not even know of its existence.

Specifically, prior to Victim-1’s literary agent wiring the second of four installment payments due to Victim-1 as part of the book advance, AVENATTI sent a letter to Victim-1’s literary agent purportedly signed by Victim-1 that instructed the literary agent to send all future payments to a client trust account in Victim-1’s name and controlled by AVENATTI.  The literary agent then wired $148,750 to the account, which AVENATTI promptly began spending for his own purposes, including on airfare, hotels, car services, restaurants and meal delivery, online retailers, payroll for his law firm and another business he owned, and insurance.  When Victim-1 began inquiring of AVENATTI as to why Victim-1 had not received the second installment, AVENATTI lied to Victim-1, telling Victim-1 that he was still attempting to obtain the payment from Victim-1’s publisher.  Approximately one month after diverting the payment, AVENATTI used funds recently received from another source to pay $148,750 to Victim-1, so that Victim-1 would not realize that AVENATTI had previously taken and used Victim-1’s money.

Approximately one week later, pursuant to AVENATTI’s earlier fraudulent instructions, the literary agent sent another payment of $148,750 of Victim-1’s book advance to the client account controlled by AVENATTI.  AVENATTI promptly began spending the money for his own purposes, including to make payments to individuals with whom AVENATTI had a personal relationship, to make a monthly lease payment on a luxury automobile, and to pay for airfare, dry cleaning, hotels, restaurants and meals, payroll, and insurance costs.  Moreover, to conceal his scheme, and despite repeated requests to AVENATTI, as Victim-1’s lawyer, for assistance in obtaining the book payment that Victim-1 believed was missing, AVENATTI led Victim-1 to believe that Victim-1’s publisher was refusing to make the payment to the literary agent, when, as AVENATTI knew, the publisher had made the payment to the literary agent, who had then sent the money to AVENATTI pursuant to AVENATTI’s fraudulent instructions.

AVENATTI, 48, of Los Angeles, California, is charged in the fraud and aggravated identity theft indictment with one count of wire fraud, which carries a maximum penalty of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory term of imprisonment of two years in addition to the sentence imposed for the wire fraud charge. 

AVENATTI is charged in the extortion indictment with one count of conspiracy to transmit interstate communications with intent to extort, which carries a maximum penalty of five years in prison, one count of conspiracy to commit extortion, which carries a maximum penalty of 20 years in prison, one count of transmission of interstate communications with intent to extort, which carries a maximum penalty of two years in prison, and one count of extortion, which carries a maximum penalty of 20 years in prison.  

The maximum potential sentences in both cases are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Mr. Berman praised the work of the FBI and the Special Agents of the United States Attorney’s Office for the Southern District of New York, and noted that the investigation is ongoing.

 [1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.

BRONX DISTRICT ATTORNEY DARCEL D. CLARK ANNOUNCES BRONX SAFE SLEEP TASK FORCE

Free “Infant Safety Expo” Will Be Held On June 13, 2019

  Bronx District Attorney Darcel D. Clark today announced the Bronx Safe Sleep Task Force, a partnership between the Office of the Bronx District Attorney, BronxCare Health System, Administration for Children’s Services/NYC Safe Sleep Initiative, Office of the Chief Medical Examiner, the Children’s Hospital at Montefiore, the NYPD Bronx Homicide Squad, the Department of Health and Mental Hygiene, Department of Homeless Services, Safe Horizon and Lincoln Hospital, in an effort to prevent infant fatalities. 

 District Attorney Clark said “I am excited to announce the Bronx Safe Sleep Task Force, which was formed to reduce the deaths of infants due to unsafe sleep practices. Our children’s safety is paramount, and this new Task Force will inform the people of the Bronx on how they can keep their babies from harm. So far this year, six Bronx infants have died in their sleep, tragedies that were preventable.”

 Between 2014 and 2017, the Office of the Bronx District Attorney was notified of and investigated 32 sleep-related infant fatalities. In 2018, there were 14 sleep-related infant fatalities in the borough; and so far this year there have been six deaths. The Bronx has the most infant fatalities and infant deaths related to sleep among the five boroughs. The Bronx Safe Sleep Task Force works to raise awareness and to generate a cultural shift that will decrease infant deaths caused by suffocation from co-sleeping in a bed, excess bedding in cribs, and unsafe sleep positions.

 Additionally, the Bronx Safe Sleep Task Force will hold a free “Infant Safety Expo” at the New Settlement Community Center at 1501 Jerome Avenue on Thursday, June 13, 2019, for expectant parents, and parents or caregivers of children under the age of one year. The event will provide information from pediatricians and nurses on safe sleeping, infant CPR, babyproofing households and positive parenting. There will also be raffle prizes and refreshments.

Rep. Adriano Espaillat to Host 2020 Census Town Hall Thursday, May 23rd in the Bronx

The Constitutionally-mandated Decennial Census is undeniably one of the most consequential duties carried out by our federal government

  Representative Adriano Espaillat (NY-13) will host a district town hall discussion on the 2020 Census on Thursday, May 23rd from 6:00 p.m. – 8:00 p.m. EDT at Serviam Hall located at 2848 Bainbridge Avenue, Bronx, NY 10458. During the event, Rep. Espaillat will be joined by special guest Julie Menin, Director of the Census for New York City, and city leaders and will provide constituents an overview of the upcoming United States Census.

This event is open to the public.

WHO:            Rep. Adriano Espaillat (NY-13)

 Julie Menin, Director of the Census for New York City

Confirmed participants:

New York State Assemblyman Jeffrey Dinowitz

New York City Council member Andrew Cohen  

New York City Council member Fernando Cabrera

                             

New York City Council member Vanessa L. Gibson

WHAT:          2020 Census Town Hall

WHEN:          Thursday, May 23, 2019

                        6:00 p.m. until 8:00 p.m. EDT

                       

WHERE         Serviam Hall

                        2848 Bainbridge Avenue

                        Bronx, NY 10458

                                              

RSVP:            RSVP.Espaillat@mail.house.gov or by phone at 212-663-3900

Governor Cuomo Honors Seven Fallen EMS Providers Who Served in the Aftermath of the 9/11 Terrorist Attacks

Ceremony Coincides with National EMS Week - Honoring the Dedicated Professionals Who Serve as EMS Providers

  Governor Andrew M. Cuomo today recognized seven emergency medical service providers who died as a result of injuries or illnesses sustained while performing their duties after the 9/11 terrorist attack. The honorees - William Ryan, Joeddy Friszell, Felipe Torre, Joseph Rodriguez, Walter Nelson, Martha Stewart and Dr. Michael Guttenberg — were added to the Tree of Life EMS Memorial today, at the annual ceremony on the Empire State Plaza in Albany. 

"New Yorkers are fortunate to be served by the brave men and women who provide emergency medical services and who respond to situations day and night, often placing their own safety at risk to serve their communities," Governor Cuomo said. "We stand together to honor these selfless emergency service providers who ultimately gave their lives by running towards danger on September 11, 2001."

Governor Cuomo recently called on the federal government for increased funding for victims still grappling with health effects from 9/11.  

Today's ceremony was attended by Lieutenant Governor Kathy Hochul and EMS professionals and first responders from across New York State. 

"Whenever we call on them, our emergency medical service professionals selflessly protect the lives of New Yorkers across the state," said Lieutenant Governor Kathy Hochul, who spoke at today's event. "We honor the courage, dedication, and commitment of all EMS providers, and remember those who lost their lives in the line of duty or as a result of being exposed to 9/11 contaminants during their service. Their bravery and many contributions will not be forgotten."

Each year New York State honors the brave men and women who make the ultimate sacrifice while serving their fellow New Yorkers. This year's honorees join 75 other EMS professionals represented on the memorial. 

Those honored today are:

Name	Agency	Date of Death
William Ryan	Bay Community VAC	August 19, 2018
Joeddy E. Friszell	FDNY EMS	March 5, 2018
Felipe A. Torre	FDNY EMS	October 10, 2018
Joseph A. Rodriguez	FDNY EMS	November 23, 2018
Walter J. Nelson	FDNY EMS	May 2, 2014
Martha Stewart	FDNY EMS	November 18, 2018
Michael G. Guttenberg	Northwell Health Center for EMS	October 17, 2017

Dr. Howard A. Zucker, Commissioner of Health, said, "We are saddened by the loss of these seven courageous emergency services professionals and offer our condolences to their families, friends, and colleagues. We all stand with the fallen, and we thank them for their dedicated service to the community."

EMS professionals in New York State include certified first responders, EMTs, advanced EMTs, and paramedics who provide pre-hospital emergency patient care and transport. New Yorkers are served by nearly 2,000 ambulance and emergency medical response and transportation agencies that provide advanced and basic life support services. 

Federal Correctional Officer Arrested For Sexually Abusing Female Inmates

Colin Akparanta Engaged in Sexual Acts With Four Inmate Victims Between 2012 and 2018

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Guido Modano, Special Agent-in-Charge of the New York Field Office of the Department of Justice Office of the Inspector General (“DOJ OIG”), announced today the unsealing of a nine-count indictment charging federal correctional officer COLIN AKPARANTA with four counts of sexual abuse of a ward, four counts of abusive sexual contact, and one count of deprivation of civil rights.  The charges stem from AKPARANTA’s alleged sexual abuse of four female inmates housed at the Metropolitan Correctional Center (“MCC”), a Manhattan detention facility that houses federal inmates, spanning the years 2012 through 2018.  AKPARANTA was arrested today and will be presented and arraigned in Manhattan federal court before U.S. Magistrate Judge Debra Freeman later today.  AKPARANTA’s case is assigned to U.S. District Judge Lorna G. Schofield. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Colin Akparanta was a predator in uniform, exploiting his position to sexually abuse multiple inmates over a several-year period.  No inmate in a Bureau of Prisons facility should fear sexual abuse at the hands of a correctional officer, and thankfully, Akparanta will have no more victims.  I encourage all victims of this or similar conduct to contact my Office at the number below.” 

DOJ OIG Special Agent-in-Charge Guido Modano said:  “Correctional officers have a duty to protect federal inmates, but Akparanta allegedly abused his power over female inmates.  Our office is committed to bringing to justice any Justice Department employee who commits sex crimes in federal correctional institutions.”

According to the Indictment, which was unsealed today in Manhattan federal court[1]:

AKPARANTA has been employed as a correctional officer at the MCC since 2004.

Between in or about late 2012 and in or about April 2018, AKPARANTA used his official position to engage in sexual acts and contact with at least four female inmates at the MCC while they were under AKPARANTA’s custodial, supervisory, and disciplinary authority.  AKPARANTA digitally penetrated the victims’ vaginas and touched their breasts, buttocks, and/or genitalia.  AKPARANTA also had some of the victims touch his penis over his pants.  In addition, AKPARANTA smuggled contraband, including, but not limited to, personal hygiene items, makeup, and food into the MCC for some of the victims, and, with respect to at least one of the victims, explicitly conditioned his provision of contraband on the inmate’s continued performance of sexual acts with him.  AKPARANTA also asked the victims for their contact information in order to reach them after their release.

COLIN AKPARANTA, 42, of Irvington, New Jersey, is charged with four counts of sexual abuse of a ward, which carries a maximum sentence of 15 years in prison, four counts of abusive sexual contact, which carries a maximum sentence of two years in prison, and one count of deprivation of civil rights, which carries a maximum sentence of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Any individuals who believe they have information concerning COLIN AKPARANTA or any similar conduct should contact the United States Attorney’s Office at (866) 874-8900.

Mr. Berman praised the investigative work of the DOJ Office of the Inspector General and the Special Agents of the United States Attorney’s Office. 

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 [1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Attorney General James Commends The State Assembly On Passage Of The Double Jeopardy Bill

  Attorney General Letitia James commends Speaker Carl Heastie and the New York State Assembly for passing important legislation to close New York’s “double jeopardy” loophole. In response to its passage, Attorney General James released the following statement:  

“The law against double jeopardy, as currently written, contains a gaping loophole which could be exploited to deny justice altogether. The legislation that has now passed both legislative chambers, would close that loophole. It ensures that in the event that a person receives a presidential pardon based on a close relationship or self-interest, New York would preserve its authority to pursue legal action against that individual for crimes committed under state law. This legislation is a commonsense, good government measure that will ensure a reasonable check on the presidential pardon power for not only this President, but all future presidents. I thank Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins as well as the bill’s sponsors for working with my office on this critical legislation to ensure that no one is above the law.”  

Assembly Bill A6653 adds another exception to the state’s “double jeopardy” law by establishing a narrow set of criteria that would prevent the pardon power from being used for a president’s self-interest and self-dealing. To date, the state legislature has established twelve exceptions to the “double jeopardy” law. The legislation passed the State Senate on May 8th. 

Attorney General James Leads Coalition Of 23 Cities And States Suing Trump Administration To Stop Health Care Discrimination

HHS Final Rule Would Expand Ability of Businesses and Individuals to Refuse to Provide Necessary Health Care on the Basis of Their Own “Religious, Moral, Ethical, or Other” Beliefs 

  Attorney General Letitia James, leading a coalition of 23 states, cities, and municipalities, filed a lawsuit today against a Final Rule issued by the Trump Administration’s Department of Health and Human Services, which seeks to expand the ability of businesses and individuals to refuse to provide necessary health care on the basis of businesses' or employees’ “religious beliefs or moral convictions.” The federal lawsuit, filed in the Southern District of New York, seeks to enjoin the Final Rule and prevent it from going into effect. The suit follows upon a comment letter filed by the New York Attorney General and a coalition of states in March 2018, when the rule was first proposed, urging that the rule be withdrawn. 

“Once again, the Trump Administration is putting politics over the health and safety of Americans,” said Attorney General Letitia James. “The federal government is giving health care providers free license to openly discriminate and refuse care to patients – a gross misinterpretation of religious freedom that will have devastating consequences on communities throughout the country. When the health of our residents is at stake, and the safety of vulnerable populations hang in the balance, we cannot rest until this ‘health care refusal’ rule is stopped.” 

The lawsuit alleges that the Final Rule, which will take effect in July 2019, would undermine the delivery of health care by giving a wide range of health care institutions and individuals a right to refuse care, based on the provider’s own personal views. The Rule drastically expands the number of providers eligible to make such refusals, ranging from ambulance drivers to emergency room doctors to receptionists to customer service representatives at insurance companies. The Rule makes this right absolute and categorical, and no matter what reasonable steps a health provider or employer makes to accommodate the views of an objecting individual, if that individual rejects a proposed accommodation, a provider or employer is left with no recourse. 

Under the Rule, a hospital could not inquire, prior to hiring a nurse, if (s)he objected to administering a measles vaccination—even if this was a core duty of the job in the middle of an outbreak of the disease. Or an emergency room doctor could refuse to assist a woman who arrived with a ruptured ectopic pregnancy, even if the woman’s life was in jeopardy.  

The Rule would also allow businesses, including employers, to object to providing insurance coverage for procedures they consider objectionable, and allow individual health care personnel to object to informing patients about their medical options or referring them to providers of those options. The devastating consequences of the Rule would fall particularly hard on marginalized patients, including LGBTQ patients, who already confront discrimination in obtaining health care.  

The lawsuit further alleges that the risk of noncompliance is the termination of billions of dollars in federal health care funding. If HHS determines, in its sole discretion, that states or cities have failed to comply with the Final Rule – through their own actions or the actions of thousands of sub-contractors relied upon to deliver health services – the federal government could terminate funding to those states and cities, to the price tag of hundreds of billions of dollars. States and cities rely upon those funds for countless programs to promote the public health of their residents, including Medicaid, the Children’s Health Insurance Program, HIV/AIDS and STD prevention and education, and substance abuse and mental health treatment.  

The lawsuit argues that this drastic expansion of refusal rights, and the draconian threat of termination of federal funds, violates the federal Administrative Procedures Act and the Spending Clause and separation of powers principles in the U.S. Constitution.  

In addition to New York, the lawsuit was filed by the City of New York, Colorado, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Wisconsin, the City of Chicago, and Cook County, Illinois.