COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. Division of Administrative Law Appeals

Department of Public Health -
WIC Program,

Petitioner

v. Docket No. PH - 07 - 1135

Union Mart, Hanks Variety, Yasir Khattak and
Mohammad Farooq Anjum,

Respondents


Appearance for Petitioner:

Madeline Grace Piper, Esq.

Department of Public Health
Office of General Counsel
250 Washington Street, 2nd Floor
Boston, MA 02108-4619

Appearance for Respondent:

Yasir F. Khattak, pro se

Union Mart
420 Union Street
Westfield, MA 01085

Administrative Magistrate:

Sarah H. Luick, Esq.


DECISION

On November 6, 2007, the Petitioner, Department of Public Health (DPH) - WIC Program, issued an Agency Notice of Termination of WIC Vendor Agreement and Disqualification from the WIC Program with Right of Appeal, to the Respondents; Yasir F. Khattak, Mohammad Farooq Anjum, Union Mart, located at 420 Union Street, Westfield, MA 01085, and Hanks Variety store, located at 457 Granby Road, Chicopee, MA 01013. (Ex. 1) The Respondents timely filed a claim for hearing on December 10, 2007, on the merits of the proposed termination and disqualification. (Ex. 2) The case was referred for hearing to the Division of Administrative Law Appeals (DALA). Thereafter, on February 25, 2008, a pre-hearing conference was held and then on June 25, 2008, a hearing was held, both at the offices of DALA, 98 North Washington Street, 4th Floor, Boston, MA 02114, pursuant to 801 CMR 1.02, the Informal Rules of Procedure.

Various documents are in evidence. (Exs. 1 - 27) One tape was used. The Petitioner filed a Motion in Limine ("A") on February 25, 2008 at the pre-hearing conference to permit one of its witnesses, an undercover Compliance Buyer for the DPH - WIC Program, to testify in such a manner as to protect his/her identity from the Respondents. This Motion was allowed on June 25, 2008. The Respondents had not filed anything in opposition to the motion. The Petitioner presented the testimony of Mary Blocksidge, the DPH-WIC Program Vendor Manager, and the testimony of the undercover Compliance Buyer. The Respondent testified on his own behalf as the owner of both Union Mart and Hanks Variety store. Both parties made arguments on the record.

FINDINGS OF FACT

1. Sharad Shah is the owner of Bread Basket Convenience Store located at 535 Broadway in Revere. He leases this space. He works on-site at this store. It opened for business on April 26, 2004. For 2005, the store had annual gross food sales of $179,794.00. The store includes a full line of grocery items with three or more brands to chose from for most food lines. The store sells lottery tickets, and participates in the EBT/Food Stamp Program. The food sales are made by customers using cash about eighty percent of the time and food stamps about twenty percent of the time. No credit or debit card transactions are available for customers. The store hours are 7:00 AM to 9:00 PM every day except Sunday when it closes at 8:00 PM. In 2006, Mr. Shah owned just this store as a sole proprietor. (Ex. 17)

2. On May 11, 2006, Mr. Shah filed for the first time to have Bread Basket Convenience Store become a WIC Program Vendor. He expected that WIC checks would be used to purchase food by a large number of his customers. As required for the application process, Mr. Shah filled out a Food Vendor Price List and a Food Vendor Survey. He provided to the DPH-WIC Program a current milk invoice to support the milk pricing he sought for the WIC purchases. Mr. Shah underwent required trainings for being a WIC Vendor which included training in the procedures to use for proper WIC check transactions with WIC shoppers. The training went into great detail, and included receiving a brochure summarizing the WIC program and how to carry out WIC check transactions for future reference. Once all his application information was in order, Mr. Shah and Bread Basket Convenience Store was allowed to become a WIC Vendor covering the time period of September 29, 2006 through September 30, 2007. The WIC Vendor stamp number was 0743. (Exs. 3, 4, 17, 18, 19, 20 & 22. Testimony)

3. In signing the WIC Vendor Agreement, Mr. Shah agreed to satisfy various federally required criteria when participating in the WIC Program. One significant requirement was to:

Have the store manager and/or other authorized employee(s)
of the store participate in, all required training programs or sessions at which WIC procedures and requirements are
taught, including but not limited to annual WIC vendor
training sessions …. (Ex. 3)

Another important requirement made the WIC Vendor:

Accountable for the actions of all … managers, agents,
employees and personnel, paid or unpaid, who may be
involved in WIC transactions at the Vendor's store …. (Ex. 3)

4. The WIC Vendor Agreement sets forth the specific steps involved in a WIC check transaction with a WIC shopper. Some of the basic procedures include:

Observe the authorized WIC shopper sign the WIC
check in the presence of the cashier, and ensure that
the signature on the WIC check matches an authorized
signature in the WIC ID folder or an official
Massachusetts WIC ID card ….

Write in the space provided on the WIC check a price
no higher than the actual, current shelf price of only
those WIC products authorized on the WIC check and
purchased by the authorized WIC shopper;

Price each check for WIC products actually purchased
and received by the authorized WIC shopper;

Never charge authorized WIC shoppers more than the
current shelf price; never charge authorized WIC shoppers
more for WIC products than non-WIC shoppers;

Never charge the WIC Program for WIC products provided
in excess of those listed on the WIC check;

Do not price WIC transactions by check type instead of pricing each check for the actual, authorized WIC products purchased
and received;

Fill in the WIC check price only in the presence of the
authorized WIC shopper after the authorized WIC shopper
has obtained the WIC products and before the authorized
WIC shopper has signed the WIC check; ensure that the
authorized WIC shopper signs the WIC check only after
the Vendor personnel fills in the WIC check price;

Never claim reimbursement for the sale of an amount
of a specific WIC product that exceeds the store's
documented inventory of that WIC product for a specified
period of time. (Ex. 3)

5. The DPH-WIC Program uses Compliance Buyers to monitor compliance with the WIC Vendor Agreement requirements. The Compliance Buyers conduct transactions at WIC Vendor stores posing as WIC shoppers. Such undercover compliance purchases are tracked using particular WIC checks. (Exs. 3 & 19. Testimony.)

6. The DPH-WIC Program sent an undercover Compliance Buyer to perform WIC purchases at Bread Basket Convenience Store as part of its regular monitoring visits to ensure compliance with the WIC Vendor Agreement and to ensure WIC transactions were being done correctly. The same Compliance Buyer made these WIC purchases using WIC checks on June 21, June 28, July 20 and July 30, 2007. Violations of the WIC Vendor Agreement were detected at each visit. The Compliance Buyer took notes on the transactions soon after each visit was made, and then transferred the data onto standard WIC Compliance Buyer reports provided to the DPH-WIC Program for review. (Exs. 5, 6, 8, 9, 11, 12, 14 & 15. Testimony.)

7. On June 21, 2007, the Compliance Buyer made purchases at Bread Basket Convenience Store using two WIC Program checks with serial numbers ending in 36 and 37. The following items were purchased: two one-gallon containers of milk with the prices not posted on the items; two fifteen-ounce boxes of cereal with the prices posted on the items; three eleven and one-half-ounce containers of fruit juice with the prices not posted on the items; one portion of cheese without a brand name or weight with the price not posted on the item; and, one sixteen-ounce container of peas with the price not posted on the item. The cashier did not ring up the items. No overall price was entered onto the WIC checks before they were offered to the purchaser for signing. The cashier was described by the Compliance Buyer on the WIC report as male, 5'5", with a large build, about 40-45 years old and black hair with glasses. The apparent ethnicity of the clerk was listed as "other" and not white, black or Hispanic. (Exs. 5 & 6. Testimony.)

8. The two checks with serial numbers ending in 36 and 37 were submitted to the WIC Program for reimbursement by Bread Basket Convenience Store. The DPH-WIC Program examined the amounts charged to the DPH-WIC Program by the store on each of these two WIC checks, and also added up the price of each of the items purchased by the Compliance Buyer on June 21, 2007. The DPH-WIC Program found on one check an overcharge to the WIC Program of $12.46 and an overcharge on the other check of $4.59. The source of the price used per item by the DPH-WIC Program in doing its calculations was the June 6, 2007 price list the store filed with the DPH-WIC Program, but on the cereal the price posted on the item was used. The DPH-WIC Program referred to the items listed on the checks to see whether they matched the items contained in the Compliance Buyer's report as having been the purchases made on June 21, 2007. (Exs. 5, 6 & 7. Testimony.)

9. On June 28, 2007, the same Compliance Buyer made purchases at Bread Basket Convenience Store using two WIC Program checks with serial numbers ending in 40 and 41. The following items were purchased: two twelve-ounce boxes of cereal with the prices not posted on the items; two one-gallon containers of milk with the prices not posted on the items; three forty-six-ounce containers of fruit juice with the prices not posted on the items; one portion of cheese without a brand name or weight with the price not posted on the item; and, one sixteen-ounce container of peas with the price posted on the item. The cashier did not ring up the items. No overall price was entered onto the WIC checks before they were offered to the purchaser for signing. The cashier was described by the Compliance Buyer in the WIC report as male, 5'5", with a large build, about 40-45 years old and black hair with glasses. The apparent ethnicity was listed as "other" and not white, black or Hispanic. (Exs. 8 & 9. Testimony.)

10. The two checks with serial numbers ending in 40 and 41 were submitted to the WIC Program for reimbursement by Bread Basket Convenience Store. The DPH-WIC Program examined the amounts charged to the WIC Program by the store on each of these two WIC checks, and also added up the price of each of the items purchased by the Compliance Buyer on June 28, 2007. The DPH-WIC Program found on one check an overcharge to the WIC Program of $11.46 and an overcharge on the other check of $4.69. The source of the price used per item by the DPH-WIC Program in doing its calculations was the June 6, 2007 price list the store filed with the DPH-WIC Program, but on the peas the price posted on the item was used. The DPH-WIC Program referred to the items listed on the checks to see whether they matched the items contained in the Compliance Buyer's report as having been the purchases made on June 28, 2007. (Exs. 8, 9 & 10. Testimony.)

11. On July 20, 2007, the same Compliance Buyer made purchases at Bread Basket Convenience Store using two WIC Program checks with serials number ending in 35 and 36. The following items were purchased: two one-gallon containers of milk with the price not posted on the items; two fifteen-ounce boxes of cereal with the prices not posted on the items; three forty-six-ounce containers of fruit juice with the prices not posted on the items; one portion of cheese without a brand name or weight with no price posted on the item; and, one sixteen-ounce container of peas with the price posted on the item. The cashier did not ring up the items. No overall price was entered onto the WIC checks before they were offered to the purchaser for signing. The cashier was described by the Compliance Buyer in the WIC report as male, 5'5", with a large build, about 40-45 years old and black hair with glasses. The apparent ethnicity was listed as "other" and not white, black or Hispanic. (Exs. 11 & 12. Testimony.)

12. The two checks with serial numbers ending in 35 and 36 were submitted to the WIC Program for reimbursement by Bread Basket Convenience Store. The DPH-WIC Program examined the amounts charged to the WIC Program by the store on each of these two WIC checks, and also added up the price of each of the items purchased by the Compliance Buyer on July 20, 2007. The DPH-WIC Program found on one check an overcharge to the DPH-WIC Program of $11.96 and an overcharge on the other check of $4.19. The source of the price used per item by the DPH-WIC Program in doing its calculations was the June 6, 2007 price list the store filed with the WIC Program, but for the peas the price posted on the item was used and for the milk a July 10, 2007 letter providing a revised WIC milk price was used. The DPH-WIC Program referred to the items listed on the checks to see whether they matched the items contained in the Compliance Buyer's report as having been the purchases made on July 20, 2007. (Exs. 11,12 & 13. Testimony.)

13. On July 30, 2007, the same Compliance Buyer made purchases at Bread Basket Convenience Store using two WIC Program checks with serial numbers ending in 39 and 40. The following items were purchased: two one-gallon containers of milk with the prices not posted on the items; two fifteen-ounce boxes of cereal with the prices not posted on the items; three forty-six-ounce containers of fruit juice with the prices not posted on the items; one portion of cheese without a brand name and weight with no price posted on the item; and, one sixteen-ounce container of bean soup mix with the price not posted on the item. The cashier did not ring up the items. No overall price was entered onto the WIC checks before they were offered to the purchaser for signing. The cashier was described by the Compliance Buyer in the WIC report as male, 5'5", with a large build, about 40-45 years old and black hair with glasses. The apparent ethnicity was listed as "other" and not white, black or Hispanic. (Exs. 14 & 15. Testimony.)

14. The two checks with serial numbers ending in 39 and 40 were submitted to the DPH-WIC Program for reimbursement by Bread Basket Convenience Store. The DPH-WIC Program examined the amounts charged to the DPH-WIC Program by the store on each of these two WIC checks, and also added up the price of each of the items purchased by the Compliance Buyer on July 30, 2007. The DPH-WIC Program found on one check an overcharge to the DPH-WIC Program of $11.96 and an overcharge on the other check of $4.19. The source of the price used per item by the DPH-WIC Program in doing its calculations was the June 6, 2007 price list the store filed with the DPH-WIC Program, but on the milk a July 10, 2007 letter providing a revised milk price was used. The DPH-WIC Program referred to the items listed on the checks to see whether they matched the items contained in the Compliance Buyer's report as having been the purchases made on July 30, 2007. (Exs. 14,15 & 16. Testimony.)

15. After evaluating what had happened at these Compliance Buyer visits to Bread Basket Convenience Store, the DPH-WIC Program determined that there were violations of the WIC Program Vendor Agreement. The following violation was found to have occurred at each of the Compliance Buyer's visits:

Class II Violation - Overcharging the WIC Program
by writing on the check an amount which is higher
than the actual price of the products purchased by
the authorized WIC compliance buyer.

Agreement Fiscal Year 2007-2009 section 6.b (Ex. 1)

16. Also at each of the Compliance Buyer's visits, the DPH-WIC Program found the following additional violations of the WIC Vendor Agreement:

Class IV violation - Failure to comply with Federal,
State and Local laws and regulations pertaining to the
disclosure of prices for any items offered for sale in
violation of M.G.L.c. 93A, §2 as defined in 940 CMR
3.13(1)(a) which states: "It is an unfair and deceptive
act or practice for any person subject to 940 CMR
3.13 to fail to affix to any goods offered for sale to
consumers the price at which the goods are to be sold."
Agreement Fiscal Year 2006 section 9.e. (Ex. 1)

The items involved on June 21, 2007 were the fruit juice, cheese and peas. The items involved on June 28, 2007 were the cereal, fruit juice and cheese. The items involved on July 20, 2007 were the cereal, fruit juice and cheese. The items involved on July 30, 2007 were the cereal, fruit juice, cheese and beans. (Ex. 1)

17. Further violations of the WIC Vender Agreement found at each of the visits by the Compliance Buyer were for:

Class IV Violation - Failing to fill in the amount of
purchase in the presence of the authorized WIC shopper
before the authorized WIC shopper has countersigned the
WIC check.

Agreement Fiscal Year 2007-2009 section 6.h. (Ex. 1)

18. Sanction points were determined for the Class IV Violations at section 9.e
of ten points for each of the Compliance Buyer's visits, and forty points for the WIC Vendor Agreement violation at Class IV section 6.h. The total was 80 sanction points. No sanction points were involved with the overcharging violation of WIC Vendor Agreement section Class II section 6.b. (Ex. 1)

19. The Vendor Agreement Fiscal Year 2007-2009 states at Appendix A,
that a pattern of Class II violations disqualifies the WIC Vendor from the DPH-WIC Program for three years if it is a first offense. A pattern of conduct is what the DPH-WIC Program determined occurred at Bread Basket Convenience Store when the overcharging occurred at each of the visits of the Compliance Buyer, and it was a first offense. Typically, the DPH-WIC Program does four visits to determine if there is a pattern. The WIC Vendor Agreement requires only two visits to show such a pattern. This disqualification can also result in simultaneous disqualification from participation in the Federal Food Stamp Program. The WIC Vendor Agreement at 10. Termination for Cause, is the source the DPH-WIC Program used for the disqualification determination against Bread Basket Convenience Store. In pertinent part it states:

Violations listed in Appendix A [which includes the kind
of overcharging Bread Basket Convenience Store engaged
in] and/or non-compliance with any provision of this
Agreement, or violation of any of the rules, regulations,
policies or procedures of the WIC Program shall constitute sufficient cause for termination of this Agreement. Failure
to maintain compliance with vendor selection criteria,
including changes to selection criteria made during the
Vendor Agreement period, shall constitute sufficient cause
for termination. (Ex. 3)

20. Due to these violations, on August 29, 2007, the DPH-WIC Program issued to Bread Basket Convenience Store and its owner, Sharad Shah, a Notice of Termination of WIC Vendor Agreement and Disqualification from the WIC Program/Right of Appeal. The Class II violations were explained. They were found to show a pattern of overcharging and meriting a disqualification from the DPH-WIC Program for three years as consistent with a first offense. (Ex. 1. Testimony.)

21. As allowed by the terms of the WIC Vendor Agreement, the DPH-WIC Program does not issue a warning letter when overcharging is found to occur so as not to compromise its investigation of a pattern of overcharging. (Ex. 3 at 1. Disqualification at C. Warning Letters. Testimony.)

22. If Bread Basket Convenience Store is unable to participate in the DPH-WIC Program for three years, there are forty-three other stores in Revere and its neighboring communities of Chelsea and Charlestown area where WIC Program customers can shop. (Ex. 21. Testimony.)

23. Mr. Shah timely filed a request for hearing in response to receipt of this Notice. (Ex. 2)

Conclusion

The course of events in connection with the WIC purchases conducted at Bread Basket Convenience Store show violations of the WIC Vendor Agreement as determined by the DPH-WIC Program based on the purchase transactions made by the Compliance Buyer. No evidence was presented to refute that Class II overcharging violations occurred at each visit, and no evidence was presented to refute that Class IV violations occurred at the same four visits by the same Compliance Buyer. It is a core requirement not to overcharge the DPH-WIC Program and a serious violation of the WIC Vendor Agreement. Both the WIC Vendor Agreement and Ms. Blocksidge's testimony amply support this determination.

To appreciate the basic requirements of a DPH-WIC Program check transaction does not require detailed complicated understandings of how the WIC Program operates. It requires due care on the part of the WIC Vendor or his employees to ensure no serious violations occur such as overcharging the DPH-WIC Program. The fact that overcharging was found at each of the visits at Bread Basket Convenience Store spread out between June 21 and July 30, 2007, demonstrates a pattern of overcharging.

The DPH-WIC Program's evidence for overcharging that relies on the data collected and the purchase experiences of the undercover Compliance Buyer, is credible, supported by the underlying documentation concerning each visit, and is reliable support for the DPH-WIC Program's determination to disqualify Mr. Shah and Bread Basket from the DPH-WIC Program for three years. The testimony of Ms. Blocksidge on how she used the Compliance Buyer's data from the visits is understandable and reasonable. There is sufficient proof the violations set forth in the Notice of Termination of WIC Vendor Agreement and Disqualification/Right of Appeal all occurred.

The Respondent argues that the overcharging would have likely not happened again after the June 21, 2007 visit if only the DPH-WIC Program had issued a warning letter. The Respondent contends not issuing that warning letter is tantamount to entrapment. I disagree. The WIC Vendor Agreement informs the WIC Vendor that the DPH-WIC Program can investigate such violations as overcharging without issuing a warning letter so as not to hinder the DPH-WIC Program from finding a pattern of such overcharging. Overcharging is a serious violation of the DPH-WIC Program and an investigation of it to catch the WIC Vendor's pattern of overcharging is a reasonable and permissible determination made by the DPH-WIC Program. The Respondent's defense is not persuasive.

For these reasons, the WIC Vendor Agreement for Mr. Shah and Bread Basket Convenience Store is terminated, and there is a disqualification from participating in the WIC Program for three years as proposed by the DPH- WIC Program.

SO ORDERED.

DIVISION OF ADMINISTRATIVE LAW APPEALS


/s/ Sarah H. Luick

Administrative Magistrate

DATED: March 13, 2009