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 North Corner Grocery (Respondent).
Respondent challenges the decision of the South Carolina Department of Health
and Environmental Control (Department) to disqualify North 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 North 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. North Corner has been a participating WIC Vender since February 12,
2001.
2. In the Agreement with DHEC, North Corner agreed to follow all applicable
WIC regulations.
3. North Corner received the WIC Training Manual.
4. North
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. North Corner
is a convenience store owned and operated by Fayeq Yousef. It is located at 1489 Sumner Avenue, North Charleston, South Carolina, 29406.
2. North Corner
has been a participating WIC vendor since 2001. Mr. Yousef entered into an
agreement with the Department in 2001 for North Corner to participate in the
WIC 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 North Corner
was flagged as a high risk vendor based on established criteria such as
redemption history, an increase in dollar volume and error rates. North Corner
was deemed to be a high risk vendor partly because of their extremely high
volume of WIC purchases, especially when compared with a large chain grocery
store in the area. 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 North Corner. A violation was
found during each of the following compliance buys:
a. On
April 4, 2006, the DHEC compliance buyers first visited North Corner. Buyer
selected the following items for purchase: one gallon of Pet Lemon Lime Coolie,
one pound of Parade processed cheese product, one 36 ounce package of Quaker
Quick Grits, five 46 ounce bottles of Great Value Apple Juice, two dozen
Nature’s Design eggs, one eighteen ounce jar of Our Family Peanut Butter, one
ten ounce box of General Mills Kaboom cereal and one twelve ounce box of
Kellogg’s Cornflakes. Neither the Great Value Apple Juice nor Nature’s Design
eggs displayed a shelf or sticker price. 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 three of her items were unauthorized. When the
voucher was returned to DHEC, it was noted that North Corner had entered a
purchase price of $49.92 for the above listed products.
b. On April
28, 2006, the DHEC Compliance Buyers made a second visit to North Corner. Buyer
purchased two boxes of Kellogg’s Fruit Loops, one box of Quaker Quick Grits,
one twelve ounce package of sliced bacon, one can of Royal Pink Salmon, four
gallons of Fruit Train Fruit Punch, two dozen Nature’s Design large white eggs
and one sixteen ounce package of Kraft Cheddar cheese. Again, the cashier did
not request the Buyer’s ID Card and did not fill out the purchase price of each
item. The cashier did, however, challenge a few of the unauthorized items.
Upon doing so, the store manager instructed the cashier to accept the WIC
voucher for all of the items. This voucher came back to DHEC in the amount of
$48.91. The only authorized items Buyer purchased were two dozen eggs and one
sixteen ounce package of Kraft Cheddar cheese.
c. On May
24, 2006, the Compliance Buyers made their third and last visit to North
Corner. Buyer purchased five gallons of Pet Coolie Fruit Drink, one can of
Double Q Pink Salmon, two boxes of Kellogg’s Fruit Loops, one box of Kellogg’s
Apple Jacks, one package of Kraft Cheddar Cheese and two dozen Nature’s Design
eggs. Again, the only authorized items were the two dozen eggs and cheddar
cheese. The cashier did not ask for the Buyer’s ID Card and did not fill out
the prices on the voucher. Furthermore, the cashier requested that Buyer sign
the voucher before filling any information in. The total purchase price on
the WIC voucher returned to DHEC for this purchase was $53.23.
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). North 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, North 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, North
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 28,
2006 and May 24, 2006 compliance buys were two dozen Nature’s Design eggs and
one package of Kraft Cheddar cheese. The price of the eggs was not listed on
the shelf or the carton on either occasion. During
the April 4, 2006 compliance buy, five authorized items were purchased. Of
those five items, neither the Great Value Apple Juice nor the Nature’s Design
eggs had a shelf or sticker price. Therefore, North Corner was in violation of
Section 301(C) on all three 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 nine 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. North Corner charged the WIC Program $42.60 for the April 4, 2006
buy, $48.91 for the April 28, 2006 buy and $53.23 for the May 24, 2006 buy.
The items that were not received are as follows:
April 4, 2006- two gallons milk and 1 pound of WIC
approved cheese.
April 28, 2006- two gallons milk, six 11.5-12 ounce or
46 ounces of juice, 36 ounces of approved cereal and 26 ounces of tuna.
May 28, 2006- two gallons milk, six 11.5-12 ounce or
46 ounces of juice, 36 ounces of approved cereal and 26 ounces of tuna.
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, “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 North Corner Grocery 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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