
    In the Matter of the Dental Society of the State of New York, Respondent, v Hugh Carey, as Governor of the State of New York, et al., Appellants.
    Argued February 15, 1984;
    decided March 27, 1984
    
      POINTS OF COUNSEL
    
      Robert Abrams, Attorney-General (William J. Kogan and Peter H. Schiff of counsel), for appellants.
    I. The court below erred in finding that petitioner has standing to prosecute this proceeding. (National Union of Hosp. & Health Care Employees v Carey, 557 F2d 278; Matter of Bradford Cent. School Dist. v Ambach, 56 NY2d 158; Valley Forge Coll. v Americans United, 454 US 464; Warth v Seldin, 422 US 490; Matter of Dairylea Coop. v Walkley, 38 NY2d 6; Boryszewski v Brydges, 37 NY2d 361; Nassau Neuropsychiatric Soc. v Adelphi Univ., 18 NY2d 370; Singleton v Wulff 428 US 106.) II. Petitioner’s request for a judgment mandating that respondents revise upward Medicaid reimbursement rates for dental services does not present a justiciable cause of action. (Board of Educ. v 
      
      Nyquist, 57 NY2d 27; Matter of Quinton A., 49 NY2d 328; Jones v Beame, 45 NY2d 402; Matter of Kerness v Berle, 57 NY2d 1042; Dulberg v Mock, 1 NY2d 54; Green v Cashman, 605 F2d 945; Georgia Hosp. Assn. v Department of Med. Assistance, 528 F Supp 1348; Briarcliff Haven v Department of Human Resources, 403 F Supp 1355; Howard v Lecher, 42 NY2d 109.)
    
      Lawrence M. Monat arid John M. Power for respondent.
    I. The court below correctly held that the Dental Society has standing to prosecute this proceeding. (Boryszewski v Brydges, 37 NY2d 361; Wein v City of New York, 36 NY2d 610; Matter of Burke v Sugarman, 35 NY2d 39; Matter of Douglaston Civic Assn. v Galvin, 36 NY2d 1; National Organization for Women v State Div. of Human Rights, 34 NY2d 416; Matter of Bradford Cent. School Dist. v Ambach, 56 NY2d 158; Data Processing Serv. v Camp, 397 US 150; Singleton v Wulff, 428 US 106; Coe v Hooker, 406 F Supp 1072; National Union of Hosp. & Health Care Employees v Carey, 557 F2d 278.) II. The court below correctly held that the Dental Society’s petition states a cause of action. (DeGregorio v O’Bannon, 500 F Supp 541; District of Columbia Podiatry Soc. v District of Columbia, 407 F Supp 1259; Simpson v Wilson, 480 F Supp 97; White v Beal, 413 F Supp 1141; Dodson v Parham, 427 F Supp 97; Virginia Hosp. Assn. v Kenley, 427 F Supp 781; Matter of Schlemowitz v Lavine, 75 Misc 2d 529; Alabama Nursing Home Assn. v Califano, 433 F Supp 1325; Becker v Toia, 439 F Supp 324; Becker v Blum, 464 F Supp 152.) III. The State has totally failed to present persuasive grounds for reversal. (Matter of Dairylea Coop. v Walkley, 38 NY2d 6; Matter of Fritz v Huntington Hosp., 39 NY2d 339; New York Tel. Co. v Public Serv. Comm., 29 NY2d 164; Alabama Nursing Home v Harris, 617 F2d 388; Alabama Nursing Home Assn. v Califano, 433 F Supp 1325; Rosado v Wyman, 397 US 397.)
   OPINION OF THE COURT

Kaye, J.

Respondent, the Dental Society of the State of New York, an organization of all but a small percentage of the State’s licensed dentists, by an article 78 proceeding on behalf of its members sought a judgment mandating appellants (the Governor, the Commissioner of the Department of Social Services, and the Commissioner of the Department of Health) to increase the Medicaid dental fee reimbursement schedule. Both the standing of respondent and the justiciability of the claim were challenged below. While Special Term dismissed the petition on the ground that the matters raised are for the Legislature, not the courts, the Appellate Division reversed and reinstated the petition, concluding that respondent has standing and that the petition states a cause of action. We now affirm.

Respondent’s petition asserts that, in electing to adopt the Federal Medicaid law and Federal cost-sharing, the State Legislature in the Social Services Law declared its objective to offer a comprehensive program of high quality dental care for the needy, and that the legislative intention has been undermined by appellant’s refusal to fix a realistic dental fee reimbursement schedule. While the schedule promulgated in 1966 was reasonably related to the actual cost of delivering dental services and induced a great many dentists to provide such services, the petition alleges that owing to skyrocketing costs the dental fee reimbursement schedule is now inadequate, discouraging dentists from participating in the program and frustrating the mandate of the Medicaid law. According to the petition, because of an outdated reimbursement schedule, only 5% of the licensed dentists in this State are Medicaid providers, thus depriving the needy of the equal access to dental services envisioned by the Medicaid law and Social Services Law. The relief requested is a judgment mandating the revision of the reimbursement schedule to a level reasonably reflecting the current cost of delivering dental services.

The standing of an organization such as respondent to maintain an action on behalf of its members requires that some or all of the members themselves have standing to sue, for standing which does not otherwise exist cannot be supplied by the mere multiplication of potential plaintiffs. Additionally, the interests which the organization seeks to protect must be germane to its purposes, the court should be satisfied that the organization is an appropriate one to act as the representative of the group whose rights it is asserting, and neither the relief requested nor the claims asserted must require participation of the individual members. (Hunt v Washington State Apple Adv. Comm., 432 US 333.) It is enough to allege the adverse effect of the decision sought to be reviewed on the individuals represented by the organization (Matter of Douglaston Civic Assn. v Galvin, 36 NY2d 1, 7); the complaint need not specify individual injured parties. (National Organization for Women v State Div. of Human Rights, 34 NY2d 416.)

Respondent’s petition satisfies these criteria for standing. First, it is plain from the petition that certain of respondent’s members would themselves have standing to bring this proceeding. To have standing to challenge the Medicaid reimbursement schedule an individual must be within the zone of interest to be protected by the legislation and must suffer injury from administrative action or inaction. (Matter of Bradford Cent. School Dist. v Ambach, 56 NY2d 158, 164; Matter of Dairylea Coop. v Walkley, 38 NY2d 6, 9.) In the case of actual Medicaid providers, clearly within the zone of interest (Singleton v Wulff, 428 US 106, 112-113), injury in fact need not be demonstrated by out-of-pocket loss. Medicaid providers, who are subject to pecuniary loss if adequate reimbursement schedules are not established, suffer injury in fact if the body charged with setting the proper schedules fails to do its job. “Put another way, the failure properly to conduct the required review (which guarantees that plans which do not meet statutory and regulatory criteria will not be given effect) in itself constitutes injury in fact.” (Hospital Assn. v Toia, 438 F Supp 866, 870, affd 577 F2d 790; see, also, Coe v Hooker, 406 F Supp 1072, 1080.) Respondent alleges that its members include virtually every licensed dentist in the State, and licensed dentists are the sole providers of dental services under Medicaid. Where the organization represents nearly every practicing dentist, its numbers of necessity include providers of Medicaid services, who individually have standing to maintain this claim.

The remaining criteria for association standing similarly appear, from the face of the petition, to be satisfied. The interests sought to be protected by this proceeding are germane to the organization’s purpose, and the organization is an appropriate one to act in a representative capacity. The petition alleges both the individual interest of its provider-members in meeting the escalating costs of delivering dental services and the collective professional interest of dentists in wider participation to make the program effective so that indigent recipients will receive the dental care to which they are entitled. Finally, nothing in the relief requested or the cause of action asserted requires the participation of individual dentists. Respondent thus is a proper person to bring this proceeding.

Appellants’ attack on the justiciability of the claim is likewise misdirected. Appellants’ concerns that the courts are ill equipped to fix reimbursement rates for individual dental services or will be embroiled in the allocation of limited financial resources (see Jones v Beame, 45 NY2d 402) misperceive the thrust of the petition. Respondent does not ask the courts to set fees for dental work or allocate the State’s budget for such services. The question is whether the reimbursement schedule promulgated by the State meets the test set forth in the applicable Federal regulations to which the State, having elected to participate in the program, must conform:

“Each service must be sufficient in amount, duration and scope to reasonably achieve its purpose.” (42 CFR 440.230 [b].)

“The [State] agency’s payments must be sufficient to enlist enough providers so that services under the plan are available to recipients at least to the extent that those services are available to the general population.” (42 CFR 447.204.)

Whether administrative action violates applicable statutes and regulations is a question within the traditional competence of the courts to decide. The relief requested by respondent requires the court neither to fix rates for dental services nor to determine budgetary priorities, and we agree with the court below that, if respondent were to establish its contentions, adequate relief could be afforded without judicial encroachment on executive or legislative prerogatives.

Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified questions answered in the negative.

Simons, J.

(dissenting). The majority holds today that a professional society has standing to maintain a court challenge to administrative rulings which may or may not affect its members. It has not said so expressly. It rests its decision upon a determination that providers of Medicaid services have standing to maintain this action and that some of the providers are probably members of petitioner society. That is where the rabbit comes out of the hat. The petition does not contain allegations from which it may be determined that the providers have standing nor does it allege that any of the providers are members of plaintiff organization. The majority assume that to be so by empirical intuition because 5% of the dentists in New York State are providers and 87% of the dentists in the State are members of petitioner. Thus, it holds, some aggrieved providers must be members of petitioner. There is nothing before us to support these assumptions. By inferring standing on this record the majority has removed any limits to the concepts of zone of interest and injury in fact and has approved this court rendering, in effect, an advisory opinion on the law. I therefore dissent and vote to reverse the order of the Appellate Division and dismiss the petition.

Petitioner’s claim of standing rests upon the allegations that it is the only State-wide professional association for all licensed dentists, that 87% of them are members, that the society fairly represents the dental profession as a whole and that the Medicaid reimbursement schedule “directly” affects its members. It is then alleged in the petition that “[sjince the Society’s members very closely correspond to the entire class of potentially aggrieved parties” the society has standing to maintain this suit.

Two observations should be made. First, there is nothing in the petition or in the record to establish that providers of dental services have standing to challenge the Medicaid reimbursement rates paid to them (cf. Singleton v Wulff, 428 US 106, 109, 112-113). Second, even if the providers could establish standing to maintain this litigation there is nothing in the petition or record to support the claim that petitioner may represent them in doing so. One might as well maintain that grocers have an abstract right of standing to challenge the rate of assistance payments made to public aid recipients, or, to draw the analogy finer, that the Better Business Bureau has the right to do so on the grocers’ behalf on the assumption that some of the grocers selling to public assistance recipients must be members of the Better Business Bureau. Even the liberal standing requirements of our past decisions do not permit petitioner to maintain the proceeding under such circumstances.

Under New York law a petitioner, if it is to establish standing, must allege that the challenged administrative action will have a harmful effect on it and that the interest asserted is arguably within the zone of interest to be protected by the relevant statute or regulation in question (Matter of Bradford Cent. School Dist. v Ambach, 56 NY2d 158, 164; see, also, Matter of City of New York v City Civ. Serv. Comm., 60 NY2d 436; Matter of Dairylea Coop. v Walkley, 38 NY2d 6). Additionally, the court is required to examine the relevant statutes and precedents to ascertain the presence or absence of a legislative intent to preclude review of the claim (Matter of Bradford Cent. School Dist. v Ambach, supra, at p 164). This formulation of our standing rule is directly traceable to the Federal rule set forth in Data Processing Serv. v Camp (397 US 150, 153). In Data Processing, petitioner providers of data processing services to businesses generally, sought to challenge a ruling of the Comptroller of the Currency permitting national banks, such as respondent bank, as an incident to their banking services, to make data processing services available to other banks and bank customers. The court granted petitioners standing to maintain the action because they had alleged injury in fact and they were within the protected zone of interest. It found that the bank’s competition in the data processing field caused competitive injury, thereby establishing a “case or controversy” under article III of the United States Constitution, and that the interest sought to be protected by petitioners was arguably within the zone of interests to be protected or regulated by the relevant statute. Additionally, the court found no intent on the part of Congress to preclude review of the Comptroller’s rulings. Former Chief Judge Breitel identified the many substantial reasons against applying the Data Processing standard in his dissenting opinion in Matter of Dairylea Coop. v Walkley (supra, at pp 12-13). Nevertheless it has become embedded in our case law and it is too late in the day to change it. Before further liberalizing the rule, however, it is worth noting that the court which originated the zone of interest concept has moved away from it and now relies on a different, more stringent, stándard and references to the zone of interest test are conspicuously absent from its recent decisions (see, e.g., Duke Power Co. v Carolina Environmental Study Group, 438 US 59, 72; and see 94 Harv L Rev 489, 525-526, n 221). Supreme Court decisions now require a plaintiff to allege: (1) the requisite threatened or actual injury (Linda R. S. v Richard D., 410 US 614, 617); (2) a “fairly traceable” causal connection between the claimed injury and the challenged conduct (Duke Power Co. v Carolina Environmental Study Group, 438 US 59, 72, supra); and (3) the likelihood that the injury would “be redressed by a favorable decision” (Simon v Eastern Ky. Welfare Rights Organization, 426 US 26, 38). Thus the court that originally sponsored the zone of interest concept is refining its rule for standing and imposing additional requirements to insure concrete adverseness in the litigation and to regulate the volume of cases before the court.

The majority has also relied on the fact that petitioner is a professional society, citing Matter of Douglaston Civic Assn. v Galvin (36 NY2d 1) and National Organization for Women v State Div. of Human Rights (34 NY2d 416). As it concedes, however, the fact that petitioner is an organization adds nothing to its claim of standing. It must allege that its members, or any one of them, are suffering immediate or threatened harm as a result of the challenged action (Hunt v Washington Apple Adv. Comm., 432 US 333; Warth v Seldin, 422 US 490, 511). Moreover, both cited decisions are distinguishable from this case. In Douglaston we held that petitioner, a civic association of over 1,000 owners and residents, had standing to challenge the grant of a zoning variance which affected the immediate vicinity of members’ residences. We did so, however, without relating petitioners’ interests to a relevant statute, holding that the impact of the variance was within the zone of interest to be protected. Earlier we held that the National Organization for Women had standing to challenge the lawfulness under the Human Rights Law of separate “Male” and “Female” help wanted columns in newspaper classified advertising because it was a recognized organization with a specific interest in the litigation, even though it was conceded that none of the named plaintiffs were refused employment based on sex as a result of the separate listings (National Organization for Women v State Div. of Human Rights, 34 NY2d 416, supra).

The result in Douglaston was appropriate because the harm to the individual members of the association who owned land affected by the grant of the variance was apparent and real. Thus it was irrelevant that the association owned none; it had standing as the alter ego of the individual members. The record in this case does not establish that providers of medical services are members of plaintiff; nonproviders are, but they are not directly affected by the existing Medicaid reimbursement rates and petitioner’s contention that an increase in the rate would induce nonproviders to provide services relies upon speculative possibilities of future aggrievement, not present injury. The NOW case is also distinguishable. In NOW plaintiff based its complaint upon the antidiscriminatory provisions of the Human Rights Law which were specifically enacted to benefit and protect women as a class. The reimbursement statute petitioners challenge does not benefit dentists as a class and it certainly does not benefit dentists who do not provide Medicaid services. The statute was intended to benefit the dentists’ patients, those who cannot afford ordinary dental care.

Petitioner has either failed or is unable to plead facts establishing its standing to sue. The allegations in its petition must state a basis for standing factually and specifically, not in a conclusory or speculative manner (see Roberts, Fact Pleading, Notice Pleading, and Standing, 65 Cornell L Rev 390, 415; see, also, Warth v Seldin, 422 US 490, supra; Albany Welfare Rights Organization Day Care Center v Schreck, 463 F2d 620, cert den 410 US 944). Standing is a threshold jurisdictional issue in every action and proceeding and it should appear clearly from the pleadings. An allegation that society members are “potentially aggrieved” is patently insufficient to. meet any reasonable standard of specificity (see Arlington Hgts. v Metropolitan Housing Corp., 429 US 252). An allegation of harm to Medicaid recipients is similarly unavailing because a party cannot obtain standing on a jus tertii basis (see Gladstone Realtors v Village of Bellwood, 441 US 91, 100). Petitioner has failed to assert any basis to support its claim that it has standing.

This State’s standing requirements, which were never very stringent, are now almost undefined. Where once we held that under our rule standing would be denied only if there was a clear legislative intent to negate review or want of injury in fact to the plaintiff (see Matter of Dairylea Coop. v Walkley, 38 NY2d 6,11, supra), now in the absence of legislative preclusion, standing will be found if any superficial connection can be found between the subject matter in the suit and the petitioner. Injury in fact need not be shown and the limits of the zone of interest concept, which were always unclear, are now amorphous.

The requirement of standing is not a technicality to be palmed off as a minor defect in pleading, easily ignored because it is subject to correction by repleading. Allegations to support standing may be supplied on repleading or they may not. Nothing in this record establishes that this plaintiff can meet the established tests to maintain this litigation and it should be required to prove that it can. Only aggrieved parties should be permitted to sue and unless the plaintiff is aggrieved the court lacks jurisdiction of the cause of action (see Siegel, NY Prac, § 136). The recognition of standing on the pleadings of this case provides a sweeping precedent for the maintenance of litigation by any organization, including the thousands of ad hoc groups formed in response to the aggravation of the moment, if only it can prove that the statute or regulation under attack does not preclude its suit. If this petitioner can challenge the Medicaid reimbursement rates, anyone can.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler and Meyer concur with Judge Kaye; Judge Simons dissents and votes to reverse in a separate opinion.

Order affirmed, etc.  