The opinion of the court was delivered by: METZNER
Plaintiffs, the National Union of Hospital and Health Care Employees, RWDSU, AFL-CIO, and District 1199 of that union (hereinafter collectively "the unions"), move for a preliminary injunction to bar the enforcement of two recently promulgated regulations of the defendant Commissioner of Health of the State of New York. These regulations, it is claimed, effectively freeze the rate of Medicaid reimbursement at 1975 levels. 10 N.Y.C.R.R. §§ 86.21(k), 86.17 (eff. Nov. 26, 1975).
The action seeks declaratory and injunctive relief based on the claim that such a freeze of Medicaid rates is in violation of two federal statutes. The first is 42 U.S.C. § 1396a(a)(13)(D) which requires reimbursement to hospitals and nursing homes for the full reasonable cost of health care services rendered pursuant to the statute. The second is the Labor Management Relations Act of 1947 (LMRA), 29 U.S.C. § 141, et seq., which is claimed to be violated because the freeze places an undue burden on free collective bargaining.
Section 86.21(k) of Title 10 provides:
"(k) Effective for fiscal years ending in 1976 and thereafter allowable costs per unit of service (in-patient day, clinic visit, etc.) in a base year will not include any cost increases over the prior year which are in excess of the inflation factor used by the department in determining the reimbursement rate in effect during such base year unless the cost increases in the base year resulted in a rate revision during the rate year in accordance with section 86.17 of this Part."
(10 N.Y.C.R.R. § 86.21(k).)
Section 18.17 does not include any provision for a raise in reimbursement due to a negotiated contract with a union for an increase in wages.
There is no question that labor is the major expense in the operation of a health care facility. The facilities have already stated to the unions that pay increases over present levels will be impossible as contracts come due, since such increases would not be covered by Medicaid reimbursement except for an inflation factor determined by the Department of Health. The department takes the position that rate increases cannot be relied on by provider health services to solve their labor problems. Hence, the union brings this action to declare the regulations void.
The defendants claim that this action is premature, since payments under existing contracts have not been affected, that plaintiffs lack standing to sue, and that the regulations do not conflict with either of the federal statutes relied on by plaintiffs.
As to the state's claim that the action is premature, the complaint states that a strike has already been prolonged, and a collective bargaining agreement rendered null and void because of the application of the regulations. The plaintiffs also claim that they have been informed by employers that the Medicaid freeze precludes consideration of any increase in wages when the present contract expires on June 30, 1976.
Obviously, it is advantageous to negotiate a new contract in advance of the expiration date of the existing contract. The wage question is already being discussed. The impact of the regulations is being felt now. It would be counter-productive to await a strike in July before deciding the issues presented by this application.
We come then to the question of standing. As the most recent expostulation of standing has put it, the plaintiff must allege that he himself has suffered "'some threatened or actual injury resulting from [a] putatively illegal action . . . .'" Warth v. Seldin, 422 U.S. 490, 499, 95 S. Ct. 2197, 2205, 45 L. Ed. 2d 343, 354 (1975) (citation omitted). This has been characterized as the minimum constitutional mandate of Article III.
The Court went on to state that "even when the plaintiff has alleged [injuries] sufficient to meet the 'case or controversy' requirement, this Court has held that the plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties." Id. (citations omitted).
Finally, when it comes to the prudential rules of standing, the source of the claim to relief assumes critical importance, and in such cases the question is whether "the constitutional or statutory provision on which the claim rests properly . . . be understood as granting persons in the plaintiff's position a right to ...