ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF
THE CASE
This matter comes
before the Administrative Law Court (ALC or Court) pursuant to a request for a contested
case hearing by Mr. Fayeq Yousef, owner of College Corner Grocery
(Respondent). Respondent challenges the decision of the South Carolina
Department of Health and Environmental Control (Department) to disqualify
College Corner from participation as a vendor in the Special Supplemental
Nutrition Program for Women, Infants and Children (WIC). After proper notice,
a contested case hearing was held on March 20, 2007, at the Administrative Law
Court.
ISSUES
1. Did College Corner Grocery violate Section 7 CFR 246.12, S.C. Code Ann.
§§ 43-5-910, et seq. and 25A S.C. Code Ann. Regs. § 61-94?
2. What
penalties are appropriate for the above named violations?
STIPULATIONS
OF FACT
At the hearing into
this matter and pursuant to ALC Rule 25(C), the parties entered the following
written stipulations of fact into the Record:
1. College Corner has been a participating WIC Vender since February 12,
2001.
2. In the Agreement with DHEC, College Corner agreed to follow all applicable
WIC regulations.
3. College Corner received the WIC Training Manual.
4. College
Corner staff attended WIC training sessions on August 31, 2005 and August 15,
2006.
FINDINGS
OF FACT
Having observed the
witnesses and exhibits presented at the hearing and taking into consideration
the burden of persuasion and the credibility of the witnesses, I make the
following findings of fact by a preponderance of evidence:
1. College
Corner is a convenience store owned and operated by Fayeq Yousef. It is
located at 1 Coming Street, Charleston, South Carolina, 29401.
2. College
Corner has been a participating WIC vendor since February 12, 2001. Mr. Yousef
entered into the most recent agreement with the Department in January of 2005
for College Corner to participate in the WIC program. Mr. Yousef also attended
WIC Vender Training on behalf of College Corner on two separate occasions. The
training sessions included information on how to properly redeem vouchers and
what foods qualify for the program. Vendors accepted into the WIC Program
receive posters of varying sizes and a WIC manual, all of which list the
authorized foods. DHEC also maintains a list of authorized foods on their
website.
The WIC Program
operates by issuing vouchers to eligible participants for use in obtaining
authorized supplemental foods. A dietician helps to determine what
supplemental foods each individual participant needs in their diet. The
allowable foods are selected to meet the daily nutritional needs of each
individual WIC participant. Junk foods are not authorized by the WIC Program.
3 College
Corner was flagged as a high risk vendor based on established criteria such as
redemption history, an increase in dollar volume and error rates. College
Corner was deemed to be a high risk vendor partly because of their extremely
high volume of WIC purchases. High risk vendors have a high probability of committing
vendor violations. Once a vendor is flagged as high risk, the state WIC
Program conducts compliance investigations on the store.
A two person DHEC team
was assigned to conduct three compliance buys at College Corner. A violation
was found during each of the following compliance buys:
a. On
April 4, 2006, a DHEC Buyer observed a female WIC participant using WIC
vouchers to obtain two gallons of Pet Coolie drinks, which are not authorized
under the WIC Program. Buyer then selected the following items for purchase:
two one-gallon containers of Pet Blue Raspberry Coolie and two one-gallon
containers of Pet Lemon Lime Coolie, one pound of Parade American cheese
singles, one thirty-six ounce container of Quaker quick grits and two one-dozen
cartons of Nature’s Design large white eggs. The only item displaying a shelf
or sticker price was the Quaker Quick Grits. The cashier did not ask Buyer for
her WIC identification card nor did she enter the purchase price of the goods
on the WIC voucher before asking the Buyer to sign it. Furthermore, the
cashier did not inform Buyer that six of her items were unauthorized. When the
voucher was returned to DHEC, it was noted that College Corner had entered a
purchase price of $42.60 for the above listed products.
b. On May
25, 2006, the DHEC Compliance Buyers made a second visit to College Corner. Buyer
purchased one fifteen ounce box of Kellogg’s Apple Jacks, one twenty ounce box
of Kellogg’s Frosted Flakes, one sixteen ounce package of Parade American
Cheese Product, one eighteen ounce jar of Peter Pan Peanut Butter, six one
gallon jugs of Pet Coolie Fruit Drinks and two dozen Nature’s Design eggs. Again,
the cashier did not request the Buyer’s ID Card, did not fill out the purchase
price of each item and did not inform the Buyer that some of her items were
unauthorized. The cashier also allowed Buyer to purchase foods in excess of
the amount permitted by WIC. This voucher came back to DHEC in the amount of
$50.13. The only authorized items Buyer purchased were two dozen eggs.
c. On May
28, 2006, the Compliance Buyers made their third and last visit to College
Corner. Buyer purchased six one-gallon jugs of ValuTime Grape and Fruit Punch,
one jar of Peter Pan Crunchy peanut butter, one fourteen-ounce box of General
Mills Lucky Charms cereal and one nineteen ounce box of Kellogg’s Fruit Loops
cereal. None of these items were authorized foods under the WIC Program. The
cashier did not ask for the Buyer’s ID Card and did not fill out the prices on
the voucher. Furthermore, the cashier repeatedly asked the Buyer if he could
have the milk listed on the WIC voucher that was not purchased. The total purchase
price on the WIC voucher returned to DHEC for this purchase was $49.47.
Following the three
compliance buys, DHEC sent a letter to Respondent informing him of the
violations documented during the buys. The letter informed Respondent that he
would be disqualified from the program for a period of four years and two
months from the date of the letter. The letter listed the following sanctions:
a. Not
marking WIC items with price labels or shelf tags-5 points
b. The
failure to properly redeem food instruments-5 points
c. Providing
unauthorized food items in exchange for food checks, including charging for
supplemental food provided in excess of those listed on the food check-
Automatic disqualification for one year
d. Charging
for supplemental foods not received- Automatic disqualification for three
years.
At
the hearing Mr. Yousef offered no evidence or testimony to support his case.
He argued that he should have been given prior warning and put on probation for his violations. He stated that he tried to follow the
regulations but during the first few months of last year he hired new cashiers,
including his brother who does not speak English, who were untrained and
inexperienced.
CONCLUSIONS OF LAW
Based upon the foregoing
Findings of Fact, I conclude the following as a matter of law:
1. The
Administrative Law Court has jurisdiction over this contested case matter
pursuant to S.C. Code Ann. § 1-23-600(B) (Supp. 2006). Specifically, S.C. Code
Ann. § 43-5-970 (Supp. 2006) provides an opportunity for a hearing from
decisions of “the department imposing disqualification, penalties or requiring
a vendor to refund monies for overcharging.” Furthermore, 25A S.C. Code Ann.
Regs. § 61-94, Section 1001 provides for appeals from the Department’s
determination.
In contested case
hearings, the Administrative Law Judge is the fact finder. Brown v. S.C. Dep’t
of Health and Envtl. Control, 348 S.C. 507, 560 S.E.2d 410 (2002). In
weighing the evidence and deciding the merits of the case, the Administrative
Law Judge must make findings of fact by a preponderance of the evidence. Anonymous
(M-156-90) v. State Bd. of Medical Examiners, 329 S.C. 371, 496 S.E.2d 17
(1998). Furthermore, the Department as an agency seeking to enforce an
administrative order and the assessment of a civil penalty bears the burden of
proof. ALC Rule 29(b); see also Nat’l Health Corp. v. S.C.
Dep’t of Health and Envtl. Control, 298 S.C. 373, 380 S.E.2d 841 (Ct. App.
1989).
2. DHEC
administers the Special Supplemental Food Program for Pregnant and
Breast-feeding Women, Infants, and Children (WIC) in South Carolina pursuant to an agreement with the U.S. Department of
Agriculture. S.C. Code Ann. § 43-5-920 (Supp. 2006) To carry out that
function, DHEC “may promulgate and enforce regulations to govern the
participation of vendors in the WIC Program including a point system to
determine periods of disqualification; to impose other sanctions and civil
penalties for violation of this article and regulations issued under it…” S.C.
Code Ann. § 43-5-930 (Supp. 2006). Any person violating any of the provisions
of Article 7, Title 43, titled “Women, Infants and Children Supplemental Food
Program,” or any regulation, agreement or final determination of the department
“is subject to disqualification, or a civil penalty not to exceed five thousand
dollars each day of the violation, or both.” S.C. Code Ann. § 43-5-960 (Supp.
2006).
3. Mr. Yousef
is clearly a WIC Vendor who is bound by the regulations of the WIC Vendor Act. See S.C. Code Ann. § 43-5-910(3) (Supp. 2006) (vendor is defined as “any
food store or pharmacy approved for participation in the WIC Program which has
a valid Vendor Agreement on file at the WIC Program office.”). A vendor under
this program
“must comply with the vendor
agreement and Federal and State statutes, regulations, policies, and procedures
governing the Program, including any changes made during the agreement period.”
7 C.F.R. 246.12 (h)(3)(xxii) (2006). In that regard, there are very specific
criteria a participating vendor must follow when redeeming a WIC voucher. 25A
S.C. Code Ann. Regs. § 61-94, Section 301(B) states that a vendor must
“[a]ccept food instruments only from individuals who present a valid South
Carolina WIC Program ID Card listing them as authorized to redeem the food
instruments and receive the supplemental foods.” The vendor must also
“[o]btain the signature of the person receiving the supplemental foods and
check that signature against the signature on the WIC Program ID Card.” 25A
S.C. Code Ann. Regs. § 61-94, Section 301(I). College Corner clearly did not follow
those procedures. The compliance buyers were never asked to show a WIC
Participant’s ID card during any of the three compliance buys that were
conducted. Furthermore, because the buyer’s ID was never checked, the
signature on the voucher could not have been compared to the signature on the
WIC Program ID Card, as required by Section 301(I). Therefore, College Corner
clearly did not properly redeem the vouchers presented.
During the redemption
process, the cashier is also required to enter the date and total purchase
amount on the voucher, prior to obtaining the signature of the WIC Participant. See 25A S.C. Code Ann. Regs. § 61-94, Section 301(H). Again, College
Corner failed to comply with this Regulation. Instead of filling out the
voucher and then obtaining the signature, the cashier requested on all three
occasions that the buyer sign the voucher prior to entering any information on
it.
Additionally, 25A S.C.
Code Ann. Regs. § 61-94, Section 301(C) states that the vendor must “[p]rovide
the supplemental foods at the current price or less than the current price
charged to other customers, as indicated on individual food items or shelf
labels indicating the price of the items.” (emphasis added); see also 7 C.F.R. 246.12 (h)(3)(v) (2006) (“The vendor must ensure that the purchase
price is entered on food instruments in accordance with the procedures
described in the vendor agreement.”) The only qualified WIC purchases during
the April 4, 2006 and May 25, 2006 compliance buys were two dozen Nature’s
Design eggs. The price of the eggs was not listed on the shelf or the carton
on either occasion.
Therefore, College Corner was in violation of Section 301(C) on both the April
4 and May 25 visits by not displaying a sticker price or shelf price on the
qualified WIC items purchased.
Finally, 25A S.C. Code
Ann. Regs. § 61-94, Section 301 requires that “[i]n providing supplemental
foods to participants, the Vendor shall: (A) Only provide the supplemental
foods as specified on the food instrument and only the types, sizes and
quantities specified on the food instrument.” Likewise, 7 C.F.R. 246.12
(h)(3)(ii) sets forth that: “The vendor may provide only the authorized
supplemental foods listed on the food instrument. The vendor may not provide
unauthorized food items, non-food items, cash, or credit (including rainchecks)
in exchange for food instruments.” Here, all but four items purchased during
the three compliance buys were not qualified under the WIC Program.
Based on the monetary amount the vouchers were redeemed for, it is clear that
the WIC Program was charged for supplemental foods that were not in fact
received. College Corner charged the WIC Program $42.60 for the April 4, 2006
buy, $50.13 for the May 25, 2006 buy and $49.47 for the May 28, 2006 buy. The
items that were not received are as follows:
April 4, 2006- two gallons milk, four 11.5-12 ounce or
46 ounces of approved juice, 36 ounces approved cereal, 1 pound approved cheese
May 25, 2006- two gallons milk, six 11.5-12 ounce or
46 ounces of juice, 36 ounces of approved cereal, one pound of approved
cheese, one jar of approved peanut butter.
May 28, 2006- two gallons milk, two dozen eggs, six
11.5-12 ounce or 46 ounces of juice, 36 ounces of approved cereal, one
pound of approved cheese, one jar of approved peanut butter.
Mr. Yousef did not
dispute that he violated the above Regulations. Rather, he simply argued that
his sanction for the violations should be lessened because his cashiers were
newly hired at the time of the compliance buys and therefore, not well
trained. However, a vendor must specifically inform and train cashiers and
other staff on program requirements. See 7 CFR § 246.12(h)(xii); see also 25A S.C. Code Ann. Regs. 61-94 Section 201(B)(9) (Supp. 2006) (setting
forth that a participant in the WIC Program must inform and train cashiers and
other staff on program requirements). More importantly, pursuant to 7 CFR §
246.12 (h)(3)(xiii) the vendor is accountable inter alia for all
violations committed by its managers and employees who violate the WIC
regulations. See also 25A S.C. Code Ann. Regs. 61-94 Section 201(B)(10)
(a WIC Vendor must “[b]e accountable for the actions of employees in the
utilization of WIC Food Instruments.”) Therefore, Mr. Yousef is responsible for
the actions of his employees, even if they are inexperienced and unable to
communicate in English.
4. 7 C.F.R.
246.12 (l)(1)(iii) provides for a mandatory three year disqualification if a
vendor exhibits “[a] pattern of charging for supplemental food not received by
the participant.” See also 25A S.C. Code Ann. Regs. 61-94
Section 901 (4)(14) (“Charging for supplemental food not received by the
participant shall result in a three (3) year disqualification.”). Over the
course of three compliance buys, the WIC Program was charged each time for food
items that were not received by the buyer. Furthermore, 7 C.F.R. 246.12
(l)(1)(iv) provides for a one year disqualification if a vendor shows a pattern
of “providing unauthorized food items in exchange for food instruments.” On
each occasion, the buyer was allowed to purchase multiple products not listed
on the WIC voucher or approved by the WIC Program. Some of the unauthorized
food items include cheese product, bacon, “coolie” drinks, quick grits and
unauthorized cereals. Moreover, despite Respondents entreaties to the
contrary, a “[s]tate agency does not have to provide the vendor with prior
warning that violations were occurring before imposing any of the sanctions in
paragraph (l) of this section.” 7 C.F.R. 246.12 (l)(3); see also 25A S.C. Code Ann. Regs. 61-94 Section 901 (4)(8). Therefore, in light of the
repeated blatant violations of federal and state regulations, I find that a
three year disqualification is warranted.
ORDER
IT IS HEREBY ORDERED that College Corner be disqualified from the WIC Program for a period of three
(3) years from the date of this Order.
AND IT IS SO
ORDERED.
______________________________
Ralph
King Anderson, III
Administrative
Law Judge
May 21, 2007
Columbia, South Carolina
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