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A federal appeals court on Friday reversed a judge's order making the state provide apartments and small homes to thousands of mentally ill people, questioning the scope of the order and delaying a resolution to a controversy that even the court acknowledged will continue.

The 2nd U.S. Circuit Court of Appeals in Manhattan said the Albany-based plaintiff — Disability Advocates Inc. — lacked standing to bring the claim because it was a non-membership organization with limited interaction with the people it claimed to represent. The nonprofit is contracted to provide services to New York's Protection and Advocacy System.

The ruling takes the 9-year-old case back to the starting block on an issue that is being grappled with by several other states, including Connecticut and Illinois.

Lawyers for Disability Advocates, which filed its lawsuit in 2003 against New York's governor and various state agencies, did not immediately return messages seeking comment. Messages sent to lawyers representing the state also were not immediately returned.

The ruling negates a 2010 order by U.S. District Judge Nicholas Garaufis in Brooklyn calling for the state to create 1,500 housing units in New York City over three years, enabling people to leave group homes and live in homes scattered throughout the city.

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