decided: July 13, 1981.
NATHAN D. APPLE, D.D.S. ET AL., PETITIONERS
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF INSURANCE AND PENNSYLVANIA DENTAL SERVICE CORPORATION T/D/B/A DELTA DENTAL OF PENNSYLVANIA, RESPONDENTS
Appeal from the Order of the Insurance Commission of the Commonwealth of Pennsylvania in the case of In Re: Nathan D. Apple, D.D.S., John B. Bubeck, D.D.S., Daniel D. Cohen, D.D.S., John I. Gilson, D.D.S., Frederick M. Keiper, D.D.S., Charles M. Ludwig, D.D.S., William F. Marfizo, D.D.S., Ronald W. Niklaus, D.D.S., George M. Shopp, D.D.S., and John T. Ziegler, D.D.S. v. Pennsylvania Dental Service Corporation, alias Delta Dental of Pennsylvania, No. R78-12-11.
Thomas A. Beckley, with him Bradley S. Gelder, Beckley & Madden, for petitioners.
David T. Kluz, Assistant Attorney General, with him Albert J. Strohecker, III, Assistant Attorney General, and Harvey Bartle, III, Acting Attorney General, for respondent, Commonwealth of Pennsylvania, Department of Insurance.
James H. Stewart, Jr., with him Spencer G. Nauman, Jr., Nauman, Smith, Shissler & Hall, for respondent, Delta Dental of Pennsylvania.
President Judge Crumlish and Judges Blatt and MacPhail, sitting as a panel of three. Opinion by President Judge Crumlish.
[ 60 Pa. Commw. Page 494]
This appeal by ten Pennsylvania dentists, the Pennsylvania Dental Association (DPA), and two of its employees is rooted in an Insurance Commission order dismissing their complaint against the Pennsylvania Dental Service Corporation, a/k/a Delta Dental Association of Pennsylvania (Delta). It held that they lacked standing to litigate alleged violations of the Professional Health Services Plan Corporations Act (PHSPCA) and the Unfair Insurance Practices Act (UIPA).*fn1 We affirm.
Delta operates a certified non-profit dental service plan designed to provide dental care to low-income persons or their dependents without sacrificing the necessities of life. 40 Pa. C.S. § 6303. The licensed practicing dentists have no contractual relationship with Delta as qualified dental care providers. Rather, they are classified as "non-participating" dentists who perform dental services for patients holding Delta dental coverage but do not receive payment from Delta for their services. Instead, payment is made directly by Delta to the patients who in turn must pay their non-participating dentists. On the other hand, "participating" dentists have a contractual arrangement with Delta through which they receive direct payment.
[ 60 Pa. Commw. Page 495]
On August 22, 1977, Delta initiated a new payment policy for non-participating dentists, by which coverage is limited to 88% of the customary and reasonable charge for services rendered to participating dentists as distinguished from 100% reimbursement. Delta then publicized this new payment policy and identified "participating" dentists to its subscriber groups. Although implemented, this "two-tier" payment system was not approved by the Insurance Department.*fn2 After initial disapproval, Delta resubmitted a proposal to the Insurance Department allowing for a "two-tier" plan designed to reimburse non-participating dentists at the rate of 88% of the usual, customary and reasonable rate. Delta was informally advised that the Department would not approve the proposal as filed, but continued payment on this basis.
On December 19, 1978, a group of these non-participating dentists filed a complaint with the Department claiming that the 12% payment differential was prohibited by statute. On February 20, 1979, Delta responded with an answer and a motion to dismiss, raising lack of standing and failure to state a cause of action upon which relief could be granted.
Following negotiations between Delta and the Department, a consent order was entered on May 11, 1979, whereby the 100% payment plan was approved and the 88% "two-tier" plan was withdrawn from Department consideration. However, the Department did permit existing service contracts to remain in effect for one year or their anniversary date, whichever came sooner, and imposed a $500 civil penalty.
On August 27, 1979, Pennsylvania Dental Association and two of its employees petitioned to intervene.
[ 60 Pa. Commw. Page 496]
On January 16, 1980, a Hearing Examiner at pre-hearing conference limited argument to the status of the proposed intervenors. Motions to Dismiss were also considered. On May 6, 1980, the Insurance Commissioner denied the proposed intervention and granted Delta's motion to dismiss for lack of standing and mootness; hence, this appeal by complainants and intervenors.
Petitioner-dentists argue that their standing to litigate at the Insurance Department*fn3 is demonstrated by the General Rules of Administrative Practice and Procedure, which purportedly allow all persons to file complaints with an administrative agency.*fn4 We reject this assertion.
The dentists do not have a right to pursue a complaint at the Insurance Department. The clear wording
[ 60 Pa. Commw. Page 497]
of the regulation grants an agency the discretionary power to not only review the complaint to determine violations but to determine the modus operandi. 1 Pa. Code § 35.9. The Department may permit third parties to proceed, but only "aggrieved persons" are entitled to judicial review of such proceedings. Delaware County Community College v. Fox, 20 Pa. Commonwealth Ct. 335, 342 A.2d 468 (1975). Here, the question is one of standing and we may only determine whether there has been either an abuse of discretion or a purely arbitrary exercise of authority. Slanina v. Sheppard, 27 Pa. Commonwealth Ct. 376, 366 A.2d 963 (1976).
The basic principles of standing require an "adversely affected" or "aggrieved" party to have an interest in the subject matter or particular question litigated which is substantial, immediate, and direct. Strasburg Associates v. Newlin Township, 52 Pa. Commonwealth Ct. 514, 415 A.2d 1014 (1980). Although the interest must be "substantial" in its individual adverse effect and "immediate" in terms of the nature and proximity of the action, the harm caused by the aggrieved person must be "direct." See William Penn Parking Garage, Inc. v. City of Pittsburgh, 464 Pa. 168, 346 A.2d 269 (1975). In this controversy, standing only can be based upon the alleged PHSPCA and UIPA violations. Although this jurisdiction rests with the Department, each of the provisions seeks to protect the subscriber-patient, except for PHSPCA Section 6324(b), 40 Pa. C.S. § 6324(b), which prohibits restrictions on doctors' diagnosis or treatment and interference with the subscriber's choice or selection of a doctor after the choice or selection is made. Clearly, the proposed two-tier payment system neither restricts nor interferes with petitioners' practice or the subscribers' interests. In Pennsylvania Dental Association v. Insurance Department, 41 Pa. Commonwealth Ct. 47,
[ 60 Pa. Commw. Page 498398]
A.2d 729 (1979), this Court rejected a similar argument based on a finding that the service contract merely granted Blue Shield the authority to determine whether services were "medically and dentally necessary" and to be payable. In addition, we have found no legal or contractual relationship between the dentists and Delta or their patients, as subscribers or otherwise, by which they could assert patients' rights. We must conclude that they have failed to show a basis for standing.*fn5
The Pennsylvania Dental Association and two of its employees claim possession of the requisite standing as "consumers" and "customers" of Delta,*fn6 while PDA also asserts its representative capacity on behalf of "participating" and "non-participating" dentists in the Commonwealth. We cannot agree.
Although PDA contracted with Delta for dental services for its employees and can raise certain issues
[ 60 Pa. Commw. Page 499]
on behalf of its membership, the alleged harm is registered against its non-participating members. PDA's standing clearly may rise no higher than its complainant, non-participating members. Delaware Valley Apartment House Owners' Association v. Department of Revenue, 36 Pa. Commonwealth Ct. 615, 389 A.2d 234 (1978). Compare Pennsylvania Dental Association v. Insurance Department, where PDA contested a comprehensive prepaid dental program by Pennsylvania Blue Shield for dental insurance payments to subscribers and participating dentists. There, as here, participating dentists were paid directly by the plan and therefore alterations in the dental service contracts directly affect subscribers and dentists alike. However, as we have so concluded, non-participating dentists have no legal stake in the action, and DPA's attempt to intervene must fail for lack of standing.
Turning to the individual employee's standing as Executive Director and lobbyist for PDA, the Petition to Intervene fails to plead or fairly infer diagnosis or treatment by non-participating dentists during the time the "two-tier" system was in effect. Since no facts were pleaded to support an injury suffered under the dental service contract, we must conclude that standing was lacking and therefore the petition to intervene was properly denied.*fn7
Accordingly, we affirm the Insurance Commissioner's decision granting the Motion to Dismiss and denying the Petition to Intervene.
[ 60 Pa. Commw. Page 500]
The Insurance Commissioner's adjudication and order, dated May 6, 1980, is affirmed.