Defendant ELCO Administrative Services Co. has moved, in effect, for summary judgment dismissing the Verified Complaint of Ava Acupuncture PC for first-party no-fault benefits in the total amount of $4,484.01. Plaintiff has, in turn, also moved for summary judgment. As will appear, both Defendant's motion and Plaintiff's motion are denied.

Seven bills for acupuncture services are at issue: two of the bills, in the total amount of $1,734.33, were denied on the stated ground that they were submitted after the statutory claim period; two of the bills, paid only in part and leaving a balance of $1,084.68, were denied on the stated ground that the amounts billed were above the amounts provided for in an applicable fee [*2]schedule; and three of the bills, in the total amount of $1,665.00, were denied on the stated ground of lack of medical necessity. Defendant also asserts that Plaintiff is not eligible to receive

any payment, because it is not in compliance with licensing requirements. This last defense was not articulated in any denial.

Defendant's stated defenses of untimeliness, excess billing, and lack of medical necessity are all of the type that must be asserted in a timely denial. (See New York and Presbyterian Hospital v Eagle Ins. Co., 17 AD3d 646, 646-47 [2d Dept 2005]; Westchester Medical Center v American Transit Ins. Co., 17 AD3d 581, 582 [2d Dept 2005]; Mount Sinai Hospital v Triboro Coach Inc., 263 AD2d 11, 18 [2d Dept 1999].)

Plaintiff relies on Contemp. Med. Diag. & Treatment, P.C. v Government Employees Ins. Co. (6 Misc 3d 137[A], 2005 NY Slip Op 50254[U][App Term, 2d and 11th Jud Dists]) in contending that Defendant has failed to show that it timely denied any of the claims. The lower court had granted the plaintiff's summary judgment motion, denying the defendant's cross-motion, and the defendant appealed. Appellate Term affirmed, concluding that the defendant had not introduced sufficient evidence that timely verification requests were made that would have tolled the 30-day period.

"[T]he assertion of defendant's no-fault claims examiner that it was the usual and customary course of business at GEICO that all documents are mailed on the same day they are generated' was conclusory and failed to specify either that it was the duty of the claims examiner to ensure compliance with said office procedures or that the claims examiner had actual knowledge that said procedures were complied with....[D]efendant's opposition papers did not contain an affidavit of someone with personal knowledge that its verification requests were actually mailed, or describing the standard office practice or procedures it used to ensure that such requests were properly addressed and mailed." (Id., at *2 [emphasis added].)

In concluding that "defendant failed to establish by competent evidence that it timely mailed its verification requests" (id. [emphasis added]), Appellate Term relied upon the Second Department's decisions in Hospital for Joint Diseases v Nationwide Mutual Ins. Co. (284 AD2d 374 [2d Dept 2001]) and Residential Holding Corp. v Scottsdale Ins. Co. (286 AD2d 679 [2d Dept 2001].) Although, however, both decisions recognize that proof of office practices might constitute proof of mailing, neither decision articulates a requirement that proof of office practices come from someone with the "duty...to ensure compliance with" the office practices or with "actual knowledge that [they] were complied with." (See Contemp. Med. Diag. & Treatment, P.C. v Government Employees Ins. Co. , 2005 NY Slip Op 50254[U], *2.)

It is also worthy of note that, although the Second Department in Hospital for Joint [*3]Diseases v Nationwide Mutual Ins. Co. (284 AD2d 374) found the defendant's proof of mailing to be inadequate (id., at 374), it reversed the lower court's granting of the defendant's motion for summary judgment, but let stand the lower court's denial of the plaintiff's motion for summary judgment. One might suspect, therefore, that a showing on mailing insufficient to support granting a party's motion for summary judgment might, nonetheless, be sufficient to warrant denial of the other party's summary judgment motion. (See Hospital for Joint Diseases v New York City Transit Authority, 16 AD3d 376, 376-77 [2d Dept 2005].) Appellate Term's opinion in Contemp. Med. Diag. & Treatment, P.C. v Government Employees Ins. Co. (2005 NY Slip Op 50254[U]) clearly addressed the defendant's evidence of mailing on opposition to the plaintiff's motion, and it was found wanting for the reasons stated.

Subsequent Appellate Term opinions that addressed the defendant's evidence of mailing in opposition to the plaintiff's motion for summary judgment made no mention of the "competence" requirement found in Contemp. Med. Diag. & Treatment, P.C. v Government Employees Ins. Co. (See Id., at *2; see also Amaze Medical Supply Inc. v State Farm Mutual Automobile Ins. Co., 8 Misc 3d 139[A], 2005 NY Slip Op 51315[U][App Term, 2d and 11th Judicial Dists]; S & M Supply Inc. v Progressive Ins. Co., 8 Misc 3d 138[A], 2005 NY Slip Op 51312[U][App Term, 2d and 11th Jud Dists]; Ocean Diagnostic Imaging P.C. v New York Central Mutual Fire Ins. Co., 9 Misc 3d 138[A], 2005 NY Slip Op 51772[U][App Term, 2d and 11th Jud Dists]; Careplus Medical Supply Inc. v Travelers Home and Marine Ins. Co., 7 Misc 3d 133[A], 2005 NY Slip Op 50648[U][App Term, 2d and 11th Jud Dists].) In the only one of these subsequent cases in which Justice Golia was on the panel, he dissented, stating that "[a]lthough the defendant's affidavits do not contain detailed mailing procedures necessary to establish proof that a certain item was mailed when faced with a sworn statement that it was not received, I do find that the sworn statements by defendant's medical examination scheduler' are sufficient for the purpose of denying a motion for summary judgment." (See Ocean Diagnostic Imaging P.C. v New York Central Mutual Fire Ins. Co., 2005 NY Slip Op 51772[U], at *3 [Golia, J., dissenting][emphasis added].)

Most recently, in Viktor Gribenko, M.D., P.C. v Allstate Ins. Co. (10 Misc 3d 139[A], 2005 NY Slip Op 52201[U][App Term, 2d and 11th Jud Dists]), Appellate Term reversed summary judgment granted to the plaintiff providers, concluding that "plaintiffs...failed to establish by competent proof that the claim forms were submitted to defendant" (id., at *2 [emphasis added].)

"Although the affiants stated that it was the practice of their offices to mail claim forms within five business days of the date on the claim form, this was not sufficient to constitute proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed...Nor did the affidavits state that it was the duty of the affiants to ensure compliance with said office procedures or that the affiants had actual knowledge that said office procedures were complied with." (Id.)

This time, Justice Golia concurred, stating that "an incomplete' proof of mailing can be sufficient to warrant denying a motion for summary judgment but is not sufficient to warrant granting a motion for summary judgment." (See id., at *4 [Golia, J., concurring][emphasis in original].)

It seems quite clear, however, that Appellate Term has not accepted the "important distinction" (see id.) Justice Golia would like drawn between proof of mailing sufficient to support summary judgment and proof of mailing sufficient to oppose it.

One could argue that the "competence" requirement that Appellate Term has articulated in two of its decisions on proof of mailing, but not in others, is intended to apply only when the affiant's statement as to office practice is "conclusory" (see Contemp. Med. Diag. & Treatment, P.C. v Government Employees Ins. Co. , 2005 NY Slip Op 50254[U], at *2), but not when the "affidavit contain[s] a sufficiently detailed description of standard office mailing procedure so as to give rise to the presumption of mailing" (see, for example, S & M Supply Inc. v Progressive Ins. Co., 2005 NY Slip Op 51312[U], at *2.) But this Court finds it difficult to conclude that a requirement addressed to competence should vary depending on the degree of detail in the description of the procedure. In any event, such a distinction has not been articulated in any opinion, concurrence, or dissent.

Applying, therefore, the same standard to the Affidavit of Defendant's Claim Administrator, whether used to support its motion for summary judgment or its opposition to Plaintiff's motion, the Court must conclude that it is insufficient to establish timely denial of Plaintiff's claims. It may be that the description of the office mailing process should be considered "conclusory" in any event; the only "details" as to mailing are that the envelope containing the denial is sealed and stamped on the date the denial is created, and then brought to the local post office the following day. There is nothing in the Affidavit to establish the affiant's duty to ensure compliance or her personal knowledge that there was compliance.

Unless, therefore, Defendant's contention that Plaintiff is ineligible for payment is a defense of the type that may be asserted even in the absence of a timely denial, and is established prima facie by evidence in admissible form, Defendant's motion must be denied in its entirety. Defendant has presented a certificate pursuant to CPLR 4540, by a clerk in the Division of Professional Licensing Services of the New York State Education Department, staying that Plaintiff "is not current' at this time for failure to remit their (sic) triennial statement and fee", and that "[t]he date that they (sic) became not current' was July 1, 2003." The certificate is dated November 28, 2005, and bears a raised seal.

Although not cited in the certificate, the reference to Plaintiff's failure to remit a triennial statement and fee is apparently a reference to section 1514 of the Business Corporation Law. The statute requires that "[e]ach professional service corporation shall, at least once every three years on or before the date prescribed by the licensing authority, furnish a statement to the licensing authority listing the name and residence address of each shareholder, director and officer of such corporation and certifying that all such individuals are authorized by law in this [*5]state to practice a profession which such corporation is authorized to practice." (BCL §1514.) There is no stated penalty for the professional corporation's failure to furnish the statement, but there is a similar requirement for biennial statements applicable to business corporations in general (see BCL §408), and the fine for a failure to file the statement after a notice of delinquency is $250.00 (see BCL §409).

As of April 5, 2002, the no-fault regulations state that "[a] provider of health care services is not eligible for reimbursement...if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York." (11 NYCRR §65-3.16[a][12].) In State Farm Mutual Automobile Ins. Co. v Mallela (4 NY3d 313 [2005]), the Court of Appeals held that a carrier may deny payment of a provider's claim if the provider is not eligible for reimbursement because of a "fail[ure] to meet any applicable... licensing requirement necessary to perform such service in New York." (See id., at 320 and 11 NYCRR §65-3.16[a][12].)

The Court indicated, however, that not every noncompliance with a "licensing requirement" would constitute an eligibility defense. Addressing the scope of the carriers' investigatory authority, the Court stated that they "may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law." (See State Farm Mutual Automobile Ins. Co. v Mallela, 4 NY3d at 321.) Noting that the regulations only permit investigation for good cause, the Court continued:

"In the licensing context, carriers will be unable to show good cause' unless they can demonstrate behavior tantamount to fraud. Technical violations will not do. For example, a failure to hold an annual meeting, pay corporate filing fees or submit otherwise acceptable paperwork on time will not rise to the level of fraud." (Id. at 322.)

Although these statements are made in the context of the carriers' investigatory authority, the statements can be read as setting substantive limitations on the failures to comply with licensing requirements that will render a provider ineligible to receive payment for its services. (See Metroscan Imaging PC v Geico Ins. Co., 8 Misc 3d 829, 835 [Civ Ct, Queens County 2005].) Assuming that the substantive limitations are surpassed, this Court agrees with the courts that have held that the Mallela defense survives preclusion. (See Multiquest, P.L.L.C. v Allstate Ins. Co., 10 Misc 3d 1061[A], 2005 NY Slip Op 52069[U], *7 [Civ Ct, Queens County]; Multiquest, PLLC v Allstate Ins. Co., 9 Misc 3d 1031, 1034 [Civ Ct, Queens County 2005]; Metroscan Imaging PC v Geico Ins. Co., 8 Misc 3d at 835; see also Rockaway Boulevard Medical P.C. v Progressive Ins., 9 Misc 3d 52, 54 [App Term, 2d and 11th Jud Dists 2005].)

The noncompliance alleged by Defendant here, however, does not in itself surpass the substantive limitations set by Mallela. Defendant offers no evidence, other than Plaintiff's failure to remit the triennial statement and fee, to support Plaintiff's ineligibility to receive payment, and Plaintiff's noncompliance was not made the basis of any timely denial. (The Court offers no opinion on whether the type of noncompliance shown here would constitute a defense [*6]to payment if raised in a timely denial.) The result, therefore, is that Defendant's motion for summary judgment must be denied in its entirety.

Turning to Plaintiff's motion, a provider makes its prima facie showing with evidence of submission of proper proof of claim. (See A.B. Medical Services PLLC v Lumbermens Mutual Casualty Co., 4 Misc 3d 86, 87 [App Term, 2d and 11th Jud Dists 2004].) The insurer's denial is sufficient evidence that the claim was submitted. (See A.B. Medical Services PLLC v USAA General Indemnity Co., 9 Misc 3d 19, 20 [App Term, 2d and 11th Jud Dists 2005].) With the provider's verification of treatment, there is a "presumption of medical necessity" which attaches to "a properly-completed claim form." (See Stephen Fogel Psychological, P.C. v Progressive Casualty Ins. Co., 7 Misc 3d 18, 22-23 [App Term, 2d and 11th Jud Dists 2004].)

Similarly, when the provider's services are covered by a fee schedule, proper billing in accordance with the schedule is apparently also "presumed", in the sense that the provider need not make any showing on the issue; rather, the insurer must seek verification of the amount or deny payment in a timely denial. (See Westchester Medical Center v American Transit Ins. Co., 17 AD3d 581, 582 [2d Dept 2005].) Here, however, Plaintiff contends that there is no fee schedule that covers acupuncture treatment by a licensed acupuncturist, and, therefore, Plaintiff may charge "the prevailing fee in the geographic location of the provider subject to review by the insurer for consistency with the charges permissible for similar procedures under schedules already adapted or established." (See 11 NYCRR §68.5[b].)

Neither the Second Department nor Appellate Term has articulated the requirements for proper proof of claim when the services billed for are not covered by a fee schedule. Specifically, there appears to be no appellate decision that addresses whether the provider's prima facie showing must include some evidence that the amount billed is the "prevailing fee in the geographic location of the provider." (See id.) Accepting, therefore, for present purposes, that, as Plaintiff contends, there is no fee schedule for its services, the question on this motion, on which Plaintiff's affidavit makes no mention of "prevailing fee", and says no more about its charges than the total amount billed and the total amount outstanding, is whether Plaintiff has made its prima facie showing by sufficiently "setting forth the facts and the amount of the losses sustained." (See A.B. Medical Services PLLC v USAA General Indemnity Co., 9 Misc 3d at 20.)

In a somewhat analogous situation, under regulations that have now been revised (see Careplus Medical Supply, Inc. v Allstate Indemnity Co., 9 Misc 3d 128[A], 2005 NY Slip Op 51527[U], *2 [App Term, 2d and 11th Jud Dists]), a provider of medical supplies was compensated at 150% of its "documented cost" for the supplies. (See 11 NYCRR Appendix 17-C, part E [b][1].) Courts have disagreed about whether the provider must submit evidence of its "documented cost". (Compare King's Medical Supply Inc. v Country-Wide Ins. Co., 5 Misc 3d 767, 772 [Civ Ct, Kings County 2004][not required] with Careplus Medical Supply Inc. v Allstate Indemnity Co., 5 Misc 3d 1002[A], 2004 NY Slip Op 51148[U], *3 [Civ Ct, Kings County][required] and King's Medical Supply Inc. v Travelers Property Casualty Corp., 194 Misc 2d 667, 671-72 [Civ Ct, Kings County 2003][required].) [*7]

A "documented cost" is quite different from a "prevailing fee" both from a conceptual standpoint and an evidentiary standpoint. In the context of medical supplies, at least where the providers all appear to be retailers who purchase the supplies from wholesalers, "cost" is a fairly definite concept and can be easily "documented". It is not at all as clear when a fee amount will qualify as "prevailing", nor is the method of proof obvious for purposes of proof of claim either to the insurer or to a court. If it is appropriate to "presume" compliance with the regulations at all when there is no fixed fee in a schedule, the case appears even weaker for "prevailing fee".

But what if the insurer is precluded from defending on the ground of excessive billing because it failed to raise the defense in a timely denial? Generally, the provider is not required to prove the carrier's preclusion in making its prima facie showing (see Ocean Diagnostic Imaging P.C. v Travelers Indemnity Co., 7 Misc 3d 133(A), 2005 NY Slip Op 50644[U], *1-*2 [App Term, 2d and 11th Jud Dists], but what if the provider does so?

This Court is not aware of any decision holding that a provider can make its prima facie showing only with the carrier's denial. Even though, moreover, Defendant did not establish the timeliness of its denials with competent evidence, its evidence did not, of course, establish that the denials were untimely. Indeed, Plaintiff submits the denials in support of its motion, and acknowledges that they are "dated timely on their faces". (See Affirmation in Support, ¶50.) The statement in Plaintiff's Affidavit that "Defendant failed to issue timely denials and/or timely verification requests" is purely conclusory, and is made in a "generic" affidavit that refers to "services and/or supplies" and "wholesale invoices". (See Plaintiff's Affidavit, ¶¶ 3, 4, 6.) The conclusory statement is not supported by any documentary evidence, such as the envelope(s) postdated beyond the 30-day period. (See King's Medical Supply, Inc. v Hereford Ins. Co.,

5 Misc 3d 55, 57 [App Term, 9th and 10th Jud Dists 2004].)

Whatever the ultimate burden of persuasion, particularly on an insurer's contention that the acupuncturist's fee is not "consistent[] with charges permissible for similar procedures under schedules already adopted or established" (see 11 NYCRR §68.5[b]), the burden of coming forward with evidence of "the prevailing fee in the geographic location of the provider" (see id.) is on the provider when the provider seeks summary judgment for payment of charges not covered by the fee schedule.

The Court does not agree with Plaintiff that placing the burden of production on the provider is tantamount to requiring that the provider "accompany each bills (sic) presented for reimbursement with a market survey" (see Affirmation in Support, ¶25.) There is much room for collateral estoppel, even for arbitrator's findings. (See Matter of Ranni, 58 NY2d 715, 717 [1982]; Simpson v County of Westchester, 5 AD3d 780, 781 [2d Dept 2004].)

In any event, the Court need not determine the nature and extent of the evidence that will meet the provider's burden of production because here the provider presented none. The extensive discussion of "prevailing fee" found in Plaintiff's counsel's Affirmation (see Affirmation in Support, ¶¶ 16-53) might well have sufficed if it were supported by the affidavit of someone competent to make the showing, a deficiency that counsel acknowledges (see id., [*8]¶28). (See also Great Wall Acupuncture, P.C. v Geico General Ins. Co., 8 Misc 3d 1019[A], 2005 NY Slip Op 51199[U], *2-*3 [Civ Ct, Kings County].)

Again, the Court is not determining on these motions whether the acupuncture services rendered by Plaintiff are covered by a fee schedule. Accepting arguendo Plaintiff's contention that they are not, the Court concludes that a provider bears the burden of coming forward with evidence of the "prevailing fee" when the applicable regulations make that the benchmark for permissible charges, and that Plaintiff has failed to carry the burden on its current motion.

Each party shall serve a copy of this Decision and Order with Notice of Entry upon the other within 20 days after entry.

February 7, 2006__________________________

Judge, Civil Court