SC Administrative Law Court Decisions

This matter came before me upon request for a contested case hearing by Mohammed Rahal, owner of Food Mart In & Out ("Respondent") pursuant to S.C. Code Ann. § 1-23-600 (Supp. 1997) and S.C. Code Ann. § 43-5-970 (Supp. 1997), contesting the staff decision of the South Carolina Department of Health and Environmental Control ("Department") finding that Respondent has violated various provisions of the Food Program for Women, Infants, and Children, as contained in S.C. Code Ann. §§ 43-5-910, et seq. (Supp. 1997) and S.C. Code Regs. 61-94.

After notice was given to the parties, a contested case hearing was held at the offices of the Administrative Law Judge Division ("Division") in Columbia, South Carolina on October 27, 1998.

Mr. Rahal had requested an interpreter and Professor Maha O'Hasha, who teaches Arabic at the University of South Carolina, was hired by the Division and assisted Mr. Rahal in giving testimony. Also at the hearing was Respondent's son, Mr. Rahal Rehal, who assisted his father during the hearing.

After a thorough review of the evidence and consideration of the testimony presented at the hearing, I conclude that Respondent has violated the provisions of the Food Program for Women, Infants and Children as enumerated in this order. As a result, I find that the Respondent shall be disqualified from participating in the Special Supplemental Nutrition Program for Women, Infants and Children ("WIC Program") for a period of three (3) years from the date of this Order.

At the outset, it should be noted that the case caption has been changed to reflect that the Department is the Petitioner in this matter. The Department is designated as Petitioner and bears the burden of proof since this is a contested case conducted as a de novo proceeding and, the Department, through its administrative order, asserts that Respondent is in violation of statutory and regulatory provisions. Respondent simply requested a contested case hearing pursuant to S.C. Code Ann. §1-23-320(a) (Supp. 1995), which requires that all parties be afforded an opportunity for a hearing.

Basic administrative law principles establish that an agency bears the burden of proof in an enforcement action. See Peabody Coal Co. v. Ralston, 578 N.E.2d 751 (Ind. Ct. App. 1991); David E. Shipley, South Carolina Administrative Law 5-79, -80 (1989). Because the Department is seeking enforcement of its order charging a violation of the provisions of the Food Program for Women, Infants and Children, this is an enforcement action requiring that the Department bear the burden of proof in establishing that Respondent committed the alleged violation.

ISSUE

Is Respondent in violation of any provision of S.C. Code Ann. §§ 43-5-910, et seq. and S.C. Code Regs. 61-94? If so, what is the appropriate penalty?

Stipulations

At the beginning of the hearing, the parties stipulated to the following four exhibits which were marked as Petitioner's exhibits 1, 2, 7 and 8, respectively:

1. WIC Vendor Application - Food Mart In & Out, dated December 8, 1997 (containing 2 pages).

2. Agreement for Participation in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC Program) signed by Mr. Rahal, owner, dated 12-5-97 (containing 6 pages).

3. DHEC/WIC TRAINING SEMINAR SUMMARY SHEET, dated January 20, 1998 (containing 1 page) and attachments (containing 2 pages).

4. WIC VENDOR MANUAL (containing 15 pages, excluding cover sheets).

Also, introduced into the record upon motion of Petitioner were seven additional exhibits which were marked as Petitioner's exhibits 3, 4, 5, 6, 9, 10 and 11, respectively:

5. WIC Transaction Report dated December 13, 1997

6. WIC Transaction Report dated February 12, 1998.

7. WIC Transaction Report dated April 2, 1998.

8. WIC Transaction Report dated May 21, 1998.

9. WIC Transaction Report dated August 2, 1997.

10. Certified letter to Respondent from the Director of Vendor Management, Division of WIC Services, Bureau of Maternal and Child Health, Department of Health and Environmental Control, dated September 25, 1997.

11. Transaction log sheet dated October 2, 1997.

FINDINGS OF FACT

Based upon the evidence presented, I make the following findings of fact, taking into consideration the burden of the parties to establish their respective cases by a preponderance of the evidence and taking into account the credibility of the witnesses:

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and nature of the hearing was timely given to the parties.

3. Food Mart In & Out is a grocery store business owned and operated by Mohammed Rahal as a sole proprietorship. It is located at 5023A Rivers Avenue, Charleston, Charleston County, South Carolina. The store is assigned Federal ID # A043703279 and has S.C. Sales Tax # 01060802-3. Respondent opened his store for business on May 15, 1997.

4. Respondent participates in the Food Stamp Program and has Food Stamp Authorization # 2869071.

5. Karen Furr, the WIC Program Integrity Investigator, preapproved Mr. Rahal and his store/business, Food Mart In & Out, as a WIC Vendor on September 5, 1997 at a meeting with Mr. Rahal at his store. During that visit, she explained to him the procedures, went over the written agreement which he would need to sign with the WIC Program ("agreement"), went over the provisions contained in the manual and explained the potential violations. During the visit, she gave Mr. Rahal his vendor number (# 49201) which he would use with banks, and his vendor stamp. Mr. Rahal stipulated that he was initially approved as a WIC Vendor on that date.

6. Respondent signed the written Agreement (hereafter known as the "agreement") with the Department on December 5, 1997 to participate as a vendor in the Special Supplemental Nutrition Program for Women, Infants and Children (known as the "WIC" program). The agreement was for the period from January 1, 1997 through December 31, 1999. See Petitioner's exhibit # 2.

7. Pursuant to the agreement Respondent was authorized to obtain certain foods and stock and sell them as a part of the WIC Program. Further, he was authorized to accept WIC checks upon presentment of a WIC Program Identification card by the customer. Each WIC check must have a project stamp on it.

8. The agreement lists 27 provisions or conditions that must be complied with and also provides that the vendor must agree to a number of conditions and provisions. Vendors are aware pursuant to the terms of the agreement that failure to comply with the terms can result in disqualification from the WIC program. The agreement further provides the process for appealing any decision by the Department.

9. On Tuesday, January 20, 1998, Respondent attended a WIC Training Seminar at the Sheraton Hotel in Charleston, South Carolina. See Petitioner's exhibit # 7. At the training seminar, the Respondent was trained in the WIC program and the provisions in the WIC VENDOR MANUAL were thoroughly explained to him. Further, at the seminar which lasted approximately two and one-half to three hours, the instructor went over the list of foods which are approved for the WIC Program. Violations of the program are explained to the vendors. Each vendor is provided a vendor manual. At the seminar, Mr. Rahal executed a subsequent agreement with the Department dated January 5, 1998.

10. Ms. Theresa Rienzie, an employee with the WIC Program at the Department since 1994, has a responsibility as a part of her job description to conduct investigations of vendors in the WIC Program. On December 13, 1997 at approximately 2:30 p.m., she went to the Food Mart In & Out location in North Charleston, South Carolina and purchased several WIC approved items from Mr. Rahal with WIC Food Check # 6668325. Mr. Rahal failed to write in the date of the transaction nor the amount of the transaction.

11. On February 12, 1998, Ms. Rienzie again went to the location at approximately 8:10 p.m. She purchased one 45 ounce Colt 45 beer and one pack of Newport cigarettes. She tendered WIC Food Check # 6668340 and signed it "Shannon Wilson." She asked for a twenty dollar bill ($20.00) in addition to the beer and cigarettes for the WIC check which was given to her by Mr. Rahal. See Petitioner's exhibit # 4 for copy of the items obtained at the store from Mr. Rahal.

12. On April 2, 1998, Ms. Rienzie again went to the store owned by Mr. Rahal. At approximately 9:35 p.m. she approached Mr. Rahal and asked to purchase one Stroh beer, one pack of Newport cigarettes and wished to obtain a twenty dollar bill ($20.00) for WIC Food Check # 6668357. He gave her the Stroh beer and a twenty dollar bill for the WIC check. See Petitioner's exhibit # 5 for a copy of the beer and twenty dollar bill.

13. On May 21, 1998, Ms. Rienzie went to the Food Mart In & Out at 8:50 p.m. She obtained from Mr. Rahal two (2) 12 packs of Budweiser can beer and one six pack of Budweiser bottle beer in exchange for WIC Food Check # 6668372.

14. Ms. Rienzie went to the Food Mart In & Out grocery store originally on August 2, 1997. On that occasion Mr. Rahal sold to her Enfamil milk, juice and infant cereal which are approved WIC food items. She showed Mr. Rahal her WIC identification card and gave him WIC Food Check # 5941100 for the items which she purchased. Mr. Rahal did not enter on the check the price of the items nor the items which were purchased, nor did he enter the date of the transaction. See Petitioner's exhibit # 9.

15. On none of the occasions on which Ms. Rienzie conducted the transactions with Mr. Rahal did he enter the purchase amount or the date of the transaction.

16. On June 23, 1998, Joseph J. Pearson, Jr., Director, Vendor Management , Branch of WIC Services, Division of Preventive & Personal Health Services, Department of Health & Environmental Services, sent a certified letter to Respondent. In the letter Mr. Pearson addressed the purchases on December 13, 1997, February 2, 1998, April 2, 1998 and May 21, 1998. The various alleged violations were also addressed in the letter. The Department informed Respondent that his store would be disqualified from participation in the WIC Program for a period of three (3) years effective fifteen (15) days from the date of the letter. Mr. Rahal appealed that staff decision and sought a contested case hearing within fifteen days of his receipt of that letter.

CONCLUSIONS OF LAW

Based upon the foregoing Findings of Fact and the applicable law, I conclude as a matter of law the following:

1. S.C. Code Ann. § 1-23-600(B) (Supp. 1997) authorizes the South Carolina Administrative Law Judge Division to hear contested cases, as defined in S.C. Code Ann. § 1-23-310 (Supp. 1997), involving the departments of the executive branch of government in which a single hearing officer is authorized or permitted by law or regulation to hear and decide such cases.

2. The Department is delineated as a "department" within the executive branch of state government in the state of South of South Carolina. S.C. Code Ann. § 1-30-10(A)(Supp. 1997).

3. A "contested case" is defined as a "proceeding, including but not restricted to rate making, price fixing, and licensing, in which the legal rights, duties or privileges of a party are required by law to be determined by an agency after an opportunity for hearing." S.C. Code Ann. § 1-23-310(2) (Supp. 1997).

4. "Party" is defined as a "person or agency named or admitted as a party, or properly seeking and entitled as of right to be admitted as a party." S.C. Code Ann. § 1-23-310 (4) (Supp. 1997).

5. Prior to the passage of the Restructuring Act (Act 181) in 1993 and the creation of the Division (effective February 1, 1994), contested case proceedings in which the Department was a "party" were governed by procedural rules promulgated by the Department. See S.C. Code Reg. 61-72 (Supp. 1997).

6. S.C. Code Ann. § 1-23-350 (1986) requires that a final decision in a contested case shall be in writing and shall include findings of fact and conclusions of law.

7. The decision of an Administrative Law Judge who conducts and hears a contested case is a "final decision" as defined in the Administrative Procedures Act. See S.C. Code Ann. § 1-23-610 (Supp. 1997).

8. S.C. Code Ann. § 43-5-970 (Supp. 1997) provides an opportunity for a hearing from decisions of "the department imposing disqualification, penalties, or requiring a vendor to refund monies for overcharging". Further, S.C. Code Ann. Regs. § 61-94, Section 1001 provides for appeals from the Department determination.

9. The Department bears the burden of proof in an action to enforce the provisions of this act. See Peabody Coal Co. v. Ralston, 578 N.E.2d 751 (Ind.Ct.App. 1991); David E. Shipley, South Carolina Administrative Law 5-79, -80 (1989).

10. 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. 1997).

11. The Department is granted the authority and responsibility for the administration of the WIC Program in South Carolina. Further, the Department "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. §§ 43-5-920 and -930 (Supp. 1997).

12. "WIC" is defined as the "Special Supplemental Food Program for Pregnant and Breast-feeding Women, Infants, and Children." S.C. Code Ann. § 43-5-910(2) (Supp. 1997).

13. "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." S.C. Code Ann. § 43-5-910 (3) (Supp. 1997).

14. S.C. Code Regs. 61-94 (1987), titled "WIC Vendor Regulation," consists of a number of regulations consisting of definitions, approval provisions for Vendors, provisions for redemption of food instruments or checks, provisions outlining the procedure for submitting the food checks/redemptions for redemption and for the payment of the food instruments, monitoring of

Vendors, disqualifications of Vendors and violations of the Program. The regulation was amended in 1991. S.C. Code Ann. Reg. § 61-94 (Supp. 1997).

15. Reg. 61-94, Section 301 (H) (Supp. 1997), requires a Vendor "to enter the date of purchase and the total purchase amount (less tax) for the supplemental foods on the food instruments prior to obtaining the signature of the person authorized to receive the foods." Mr. Rahal failed to do so on the transactions which occurred on December 13, 1997, February 12, 1998, April 2, 1998 and May 21, 1998.

16. Reg. 61-94, Section 201 (B). 12 (Supp. 1991), provides that a WIC Vendor must provide to "WIC participants only those foods authorized by the State WIC Program and in exact quantities prescribed." A listing of the acceptable foods is provided thereafter in the section. On February 12, 1998, Mr. Rahal sold to Ms. Rienzie a pack of cigarettes and a malt liquor which are not authorized in the regulation. On April 2, 1998, Mr. Rahal also sold to Ms. Rienzie an unauthorized food item, i.e., a bottle of Stroh beer. On May 21, 1998, Mr. Rahal sold to Ms. Rienzie two twelve packs of Budweiser beer and one six pack of Budweiser beer which are unauthorized food items.

17. Regs. 61-94, Section 901 (Supp. 1997), titled "Program Violations," sets a point value for each violation and a specific time period during which the points will remain on the vendor's record. It provides that if a vendor accumulates fifteen (15) or more violation points, the store will be disqualified from the program.

18. On February 12, 1998 and April 2, 1998, Mr. Rahal gave Ms. Rienzie a twenty dollar bill ($20.00) or cash in exchange for a WIC Check or Food Instrument, in violation of the regulation.

19. On each of February 12, 1998, April 2, 1998 and May 21, 1998, Mr. Rahal entered an amount in the WIC Check which represented an overcharge to the Department, in violation of the regulation.

20. The letter of the Department to Mr. Rahal dated June 23, 1998, sought sanctions for the following:

1. Failure to properly redeem food stamps-----------------------5 points

2. Providing cash and non-food items in a WIC transaction---three year

disqualification under Reg. 61-74, Section 901. 4. 6. (Supp. 1997).

21. A thorough review of these regulations and the facts in this case support the allegations of the Department that Respondent has violated them on each of the occasions its agent visited his store. Respondent has offered no excuse for his failure to comply with the regulations and statutes governing the Special Supplemental Food Program for Women, Infants, and Children. The Department issued its determination in its letter of June 23, 1998 which is consistent with the provisions in the regulations governing violations.

22. An elementary principle of administrative law is that the fact finder has the authority to impose an administrative penalty after the parties have had an opportunity to have a hearing and be heard on the issues. See Ohio Real Estate Comm'n v. Aqua Sun Investments, 655 N.E.2d 266 (Ohio A.. 2 Dist. 1995); Shadow Lake of Noel, Inc. v. Supervisor of Liquor Control, 893 S.W.2d 835 (Mo. App. S. D. 1995); Matter of Henry Youth Hockey Ass'n, 511 N.W.2d 452 (Minn. App. 1994); Vermont Agency of Natural Resources v. Duranleau, 617 A.2d 143 (Vt. 1992); City of Louisville v. Milligan, 798 S.W.2d 454 (Ky. 1990); Com., Dept. Of Transp. v. Slipp, 550 A.2d 838 (Pa. Cmwlth . 1988); Dept. Of Transp. v. Miller, 528 A.2d 1030 (P. Cmwlth. 1987); State Police v. Cantina Gloria's, 639 A.2d 14 (Pa. 1994). The Administrative Law Judge, as the current fact-finder, must impose a penalty based on the facts presented at the contested case hearing. As parties are entitled to present evidence on all issues arising out of the contested agency action, it follows that the tribunal responsible for conducting the contested case proceedings as mandated by the legislature must have the authority to decide the issues and make the final decisions.

23. Based upon the evidence in this case, it is clear that Respondent is in violation of numerous provisions of Regs. 61-94 as enumerated herein. I find and conclude that the penalty determined by the Department of disqualifying the grocery store of Mr. Rahal, namely Food Mart In & Out, for a three year period is fair and reasonable and comports with the regulation.

ORDER

Based upon the above Findings of Fact and Conclusions, it is hereby:

ORDERED that Respondent is disqualified from participating in the WIC Program, also known as the Special Supplemental Food Program for Women, Infants and Children for a period of three (3) years from the date of this order,

AND IT IS SO ORDERED.

__________________________________________

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

December ___, 1998