| Date: | 08/11/2009 |
|---|---|
| Organization: | Division of Administrative Law Appeals |
| Docket Number: | PH-08-487 |
Petitioner performed undercover compliance buys on four visits to Country Farms in March and April 2008, and found two different Class II violations of the WIC Vendor Agreement that trigger a mandatory three year disqualification from participation in the WIC Program. A Class IV violation was found on two of the visits with 20 sanction points imposed. Respondent questioned the reliability of the procedures involved in the compliance buys and claimed that at all times proper WIC check transactions were followed by the clerks during the transactions. This defense was found to be insufficient, and Petitioner's evidence is sufficient proof to support the two Class II and two Class IV violations of the WIC Vendor Agreement.
On June 12, 2008, Petitioner, Department of Public Health-WIC Program (DPH) issued an "Agency Notice of Termination of WIC Vendor Agreement and Disqualification from the WIC Program with Right of Appeal" to Respondents, Rahim Corporation d/b/a Country Farms, Rashid Amin (President & Treasurer of Rahim Corporation), Muhammad Amin (Secretary & Director of Rahim Corporation), and Mohammad Shafiq (a manager at Country Farms). Country Farms is located at 689 North Main Street, Leominster, MA 01453. (Ex. A) Respondents timely filed a claim for hearing on July 7, 2008 with DPH. (Ex. B) The case was referred for hearing to the Division of Administrative Law Appeals (DALA). Thereafter, on September 4, 2008, a pre-hearing conference was held before Administrative Magistrate Bonney Cashin. At the pre-hearing conference, Magistrate Cashin allowed Petitioner's Motion in Limine to permit Petitioner's undercover Compliance Buyer to testify at the hearing from behind a screen so that no one other than the Administrative Magistrate could see the witness.
(Ex. C) A hearing was held before Administrative Magistrate Sarah Luick on May 7, 2009, at the offices of the DALA, 98 North Washington Street, 4th Floor, Boston, MA 02114, pursuant to 801 CMR 1.02, the Informal Rules of Adjudicatory Practice and Procedure.
Various documents are in evidence. (Exs. A, B, C, 1-18. Exhibit 18 was filed post-hearing by Respondents and is an affidavit of Rashid Amin explaining that he adheres to and understands all the proper WIC check transaction procedures, and has properly trained all the Country Farms clerks in these procedures.) One tape was used. Petitioner presented the testimony of an undercover Compliance Buyer who made monitoring visits to Country Farms, and Mary Blocksidge, the Manager of the WIC Vendor Program at DPH. Respondents presented no witnesses. Both parties made arguments on the record. The record closed June 12, 2009.
1. Rashid Amin is the President and Treasurer of Rahim Corporation, that operates Country Farms, a convenience-grocery store at 689 North Main Street in Leominster, MA. Country Farms has been in business under Rahim Corporation from about May 2006. Mr. Amin is the principal store manager. The store is an independent business, operating Monday through Sunday. The store carries grocery items of three or more brands. The store participates in the federal EBT/Food Stamp Program. The Rahim Corporation officers and managers have not previously owned, operated or managed a store participating in the WIC Program. (Exs. 14 & 18.)
2. In October 2006, Rashid Amin filed an application to have Rahim Corporation d/b/a Country Farms become a WIC Vendor. He filed a Food Vendor Price List covering the food items sold at Country Farms. After going through required training on how to conduct WIC purchase transactions, the application was accepted by DPH. The WIC vendor stamp number given for Country Farms was 6432. Thereafter, Country Farms had its WIC Vendor Agreement renewed annually. Rashid Amin signed the renewal for the fiscal year September 24, 2007 through September 30, 2008. On the same renewal form he signed-off that the annual training had been received. (Exs. 1A, 1B, 14, 15 & 18. Testimony.)
3. The WIC vendor stamp number is the identifier that is stamped by the
store onto each WIC check that is used in a WIC purchase transaction so that the WIC check can be honored for reimbursement by the bank. A different design is used on the
stamp each renewal year. (Ex. 1B. Testimony.)
4. In signing the WIC Vendor Agreement, Rashid Amin, on behalf of Rahim Corporation, agreed to satisfy various federally required criteria when participating in the WIC Program including the following:
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. 1A) Another important requirement Mr. Amin for Rahim Corporation acknowledged in signing the WIC Vendor Agreement makes 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. 1A) Mr. Amin trained all his store clerks in how to conduct proper WIC
transactions with a WIC shopper. (Ex. 18.)
5. The WIC Vendor Agreement sets forth the specific steps involved in a WIC check transaction with a WIC authorized shopper. Some of the basic procedures include:
a. Accept only WIC checks with the WIC imprint on the right side of the check;
b. Never accept a WIC check before the "NOT GOOD BEFORE" date or after the
"NOT GOOD AFTER" date printed on the check;
c. Never accept a pre-signed WIC check;
d. Accept checks only from authorized WIC shoppers;
e. Observe the authorized WIC shopper as she/he signs the WIC check, and be
sure the signature on the WIC check matches the authorized signature in the
WIC ID folder on the official Massachusetts WIC ID card …;
f. Never demand identification other than the WIC ID folder or an official
Massachusetts ID card from a WIC participant;
g. Never accept a WIC check on which the name, date, food message or signature
has been altered in any way;
h. Never accept a WIC check in payment for credit or a charge account.
(Ex. 1A)
6. After each training, the WIC vendor is provided with a "Cashier's Guide to Successful WIC Transactions" with summarized WIC transaction information including step by step directions to accomplish successful transactions, and examples of acceptable WIC food items. The WIC vendor is also provided with information covering "Special Situations and Solutions" that could arise during WIC transactions, along with bookkeeping summary information about how to process WIC checks. This information is set up in an easy to read and understand format to use as a handy reference, and is recommended by DPH to be kept near the cashier. (Ex. 17. Testimony.)
7. Included in the WIC Transactions Guide is the following summary:
1. Separate WIC items from other food items.
2. Make sure the customer has their WIC Gold Card and a valid WIC check.
…
5. Make sure the types and quantities of food listed on the WIC check have been selected.
…
7. Enter the total amount of the WIC items - using pen - in the designated space on the WIC check.
8. Have the customer sign the WIC check.
9. Verify signature with the WIC Gold Card.
(Ex. 17) This information includes a sample WIC check with indicators pointing from these numbered sentences to pertinent parts of the WIC check. Highlighted in the Guide document is the following:
WIC customers can decide not to buy all of the items listed on the checks.
(Ex. 17)
8. DPH uses undercover Compliance Buyers to monitor compliance by the WIC vendor with the WIC Vendor Agreement. The Compliance Buyer conducts transactions at the WIC vendor's store posing as an authorized WIC shopper with a WIC ID card. (Ex. 1A at page 9, 1. Disqualification, A. Mandatory Disqualification, footnote 5. Testimony)
9. WIC Compliance Buyers use a reporting form to record the events at each compliance visit. The date and time of the visit are listed, how the prices of the food items are addressed at the check-out, whether the WIC ID card is requested by the clerk, and the course of events during the WIC transaction. The form also calls for a description of the clerk, including whether the clerk helped the Compliance Buyer at any previous visit. The Compliance Buyer is given two WIC checks to use at each visit, each of a different type. The Compliance Buyer is instructed by DPH on what food items to purchase with each WIC check. The report form calls for recording as to each item purchased, the kind of food product, its brand and quantity, its price and where the price of the item is listed. The Compliance Buyer is instructed to separate out the food items for purchase at the check-out by WIC check type. The report form calls for the Compliance Buyer's observations and comments about the compliance visit, and requires the Compliance Buyer to sign the report under the pains and penalties of perjury that the information provided in the report is true and accurate. The Compliance Buyer completes the report form shortly after leaving the WIC vendor's store. The report is sent to DPH soon after it is completed. (Exs. 2, 5, 8 & 11. Testimony.)
10. Each WIC check type lists the items that can be purchased by the authorized WIC shopper using that check. (Exs. 1A, 3, 6, 9 & 12. Testimony.)
11. Once a WIC transaction has occurred, the WIC vendor stamps the WIC check received from the WIC Shopper and submits the WIC check to the bank for reimbursement. The actual purchase price total of all the WIC food items purchased using a particular WIC check should have been entered onto that WIC check by the time it is submitted for reimbursement. The amount listed is what the WIC vendor will receive in reimbursement from the WIC Program. (Exs. 1A, 3, 6, 9 & 12. Testimony.)
12. After DPH receives both the WIC Compliance Buyer's report on a visit and the WIC checks used at the compliance visit, DPH investigates for any violations of the WIC Vendor Agreement. DPH uses a form to do price calculations by each check type used at the monitoring visit, listing the authorized WIC items purchased, the actual price of the items at the time, and the source of that price such as on the item. (Exs. 4, 7, 10 & 13. Testimony.)
13. DPH sent an undercover Compliance Buyer to Country Farms in Leominster to ensure WIC check transactions were being done correctly and not in violation of the WIC Vendor Agreement. The Compliance Buyer works for a private investigations company. She has done the job of WIC Program Compliance Buyer for three years, and has accomplished over one-thousand compliance visits. She has a college degree (B.A.) in criminal justice. (Testimony)
14. The Compliance Buyer performed the first undercover monitoring visit at Country Farms on March 5, 2008. She had been provided with two WIC checks; type 156A-1 and type 156A-2. She was given a list of food items to purchase of milk, cheese, beans, cereal, and juice. She had not been to this store before. She gathered these foods and went to the check-out area. She sorted the food items by the check types she was using. The store clerk who helped her was a middle-eastern looking male with black hair and a mustache, about six feet tall with a medium build, forty-five years of age or older. He asked her for her WIC ID card. He totaled the prices of the food items. He did not enter the total cost onto the WIC checks before having her sign each WIC check. The clerk did not give her a receipt. Shortly after leaving the store, she completed her report of the visit for DPH. (Ex. 2. Testimony.)
15. Once DPH received the Compliance Buyer's report, and once the two WIC checks were returned, DPH investigated for violations of the WIC Vendor Agreement. Country Farms submitted the WIC checks for reimbursement with total purchase prices on each WIC check that reflected total charges beyond the actual cost totals of the purchases. For check type 156A-1, the actual cost of the food items totaled $16.85. The total charged to the WIC Program for that check was $29.41, so the overcharge was $12.56. For check type 156A-2, the actual cost of the food items totaled $16.85. The total charged to the WIC Program for that check was $29.41, so the overcharge was $12.56. (Exs. 2, 3 & 4. Testimony.)
16. Because the purchases made by the Compliance Buyer on March 5, 2008 resulted in overcharges to the WIC Program, the Compliance Buyer performed three
more compliance visits to Country Farms to detect whether there was a pattern of
conduct in violation of the WIC Vendor Agreement. This is the practice DPH engages in of doing two or three more compliance visits once overcharging occurs. (Testimony)
17. The next monitoring visit to Country Farms occurred on March 26, 2008 with the same Compliance Buyer. She shopped for the same food items. She used the same two types of WIC checks. She again separated out the food items at the check-out area by WIC check type. She was helped by a different clerk, a brown haired middle-eastern man about five feet ten inches tall, about thirty-five to forty years old. She had not seen him before. She was asked for her WIC ID card. He told her she could purchase more food items under the WIC checks she presented. She said no. The clerk entered a total amount on each WIC check before she was asked to sign the WIC checks. She received no receipt. Shortly after leaving the store, the Compliance Buyer completed her report on the visit. (Ex. 5. Testimony.)
18. Once DPH received the Compliance Buyer's report on the March 26, 2008 visit, and once the two WIC checks were returned, DPH investigated for violations of the WIC Vendor Agreement. Country Farms submitted the WIC checks for reimbursement with total purchase prices on each WIC check reflecting a total charge by check type. The actual costs of the food items totaled less than the total amounts listed on each of the WIC checks. For check type 156A-1, the actual cost of the food items totaled $14.16. The total charged by the store to the WIC Program was $30.31, so the overcharge was $16.15. For check type 156A-2, the actual cost of the food items totaled $14.31. The total charged by the store to the WIC Program was $17.61, so the overcharge was $3.30. (Exs. 5, 6 & 7. Testimony.)
19. The next monitoring visit to Country Farms occurred on April 3, 2008.
The same Compliance Buyer was sent. She shopped for the same food items as before, and used two WIC checks, one type 156A-1 and one type 156A-2. She again separated out the food items by WIC check type at the check-out. She was helped by the same clerk who helped her at the March 5, 2008 visit. The clerk asked her for her WIC ID card. He told her she could purchase further food items under the WIC checks she presented. She said no. The clerk did not enter a total amount on each WIC check before she was asked to sign them. She received no receipt. Shortly after leaving the store, she completed her report for DPH on the transactions. (Ex. 8. Testimony.)
20. Once DPH received the Compliance Buyer's report on the April 3, 2008 visit, and once the two WIC checks were returned, DPH investigated for violations of the WIC Vendor Agreement. Country Farms submitted the WIC checks for reimbursement with total purchase prices on each WIC check reflecting a total charge by check type. The actual costs of the food items totaled less under each of the WIC checks than what Country Farms entered on each WIC check. For check type 156A-1, the actual cost of the food items totaled $17.45. The total charged by the store to the WIC Program was $30.31, so the overcharge was $12.86. For check type 156A-2, the actual cost of the food items totaled $12.82. The total charged by the store to the WIC Program was $17.61, so the overcharge was $4.79. (Exs. 8, 9 & 10. Testimony.)
21. The next monitoring visit to Country Farms occurred on April 15, 2008. The same Compliance Buyer was sent. She shopped for the same food items as before, and again had two WIC checks, type 156A-1 and type 156A-2. She again separated out the food items by WIC check type at the check-out area. She was helped by the clerk who had helped her at the March 26, 2008 visit. She was asked for her WIC ID card. He told her she could purchase more food items using her WIC checks, but she said no. The clerk entered a total amount on each WIC check before she was asked to sign the WIC checks. She received no receipt. Shortly after leaving the store, she completed her report for DPH on the transactions. (Ex. 11. Testimony.)
22. Once DPH received the Compliance Buyer's report on the April 15, 2008 visit, and once the two WIC checks were returned, DPH investigated for violations of the WIC Vendor Agreement. Country Farms submitted the WIC checks for reimbursement with total purchase prices on each WIC check reflecting a total charge by check type. The actual costs of the food items totaled less under each of the WIC checks than what Country Farms entered on each WIC check. For check type 156A-1, the actual cost of the food items totaled $13.46. The total charged by the store to the WIC Program was $30.31, so the overcharge was $16.85. For check type 156A-2, the actual cost of the food items totaled $12.76. The total charged by the store to the WIC Program was $17.61, so the overcharge was $4.85. (Exs. 11, 12 & 13. Testimony.)
23. For the monitoring visits to Country Farms on March 26, 2008, April 3, 2008, and April 15, 2008, the totals entered on the WIC checks by Country Farms reflected set prices by the check type and not the actual price totals, i.e., $30.31 on three WIC checks of one type and $17.61 on three WIC checks of another type. All of these checks were submitted for reimbursement. DPH concluded this was a violation of the
WIC Vendor Agreement at section 6.g. DPH concluded this was a Class II violation
because it involved a pattern of committing this violation. (Exs. A & 1A. Testimony.)
24. For the compliance visits to Country Farms on March 5, 2008, March 26, 2008, April 3, 2008, and April 15, 2008, the totals entered on each of the WIC checks by Country Farms that were submitted for reimbursement were higher than the actual costs of the items purchased so that on each of these WIC checks the WIC Program was overcharged. DPH concluded this was a violation of the WIC Vendor Agreement at section 6.b. DPH concluded this was a Class II violation because it involved a pattern of committing this violation. (Exs. A & 1A. Testimony.)
25. The WIC Vendor Agreement defines two or more instances of the same violation as a pattern of conduct under the federal regulation at 7 CFR 246.12. (Ex. 1A at page 21, Appendix A, Class II Violations at footnote 11.) The WIC Vendor Agreement categorizes Class II violations as serious and as undermining the integrity of the WIC Program. The WIC Vendor Agreement calls for a Class II violation to result in a mandatory three year disqualification from the WIC Program for a first Class II violation. (Exs. A & 1A at page 9, 1. Disqualification, A. Mandatory Disqualification. Testimony.)
26. For the monitoring visits to Country Farms on March 5, 2008 and April 3, 2008, the same clerk failed to fill in the amount of the actual costs of the WIC purchases on each WIC check before the Compliance Buyer signed the WIC check. DPH concluded this was a violation of the WIC Vendor Agreement at section 6.h. This section calls for the clerk to enter the actual totals of the items purchased on the WIC checks only in the presence of the WIC shopper after the WIC products have been obtained, and before the WIC shopper signs the WIC check. The WIC Vendor Agreement makes this a Class IV violation. The WIC Vendor Agreement permits DPH to assign sanction points for each Class IV violation. Each section 6.h. violation can be assigned ten sanction points. DPH assigned twenty sanction points to Country Farms for the two instances of the Class IV violation. Under the WIC Vendor Agreement, twenty sanction points can be sufficient grounds to disqualify the WIC Vendor for one year. (Exs. A & 1A at page 23, Appendix A, Class IV Violations. Testimony.)
27. If during the course of investigating a WIC vendor's store, including a series of monitoring visits, DPH determines that the WIC Vendor Agreement has been violated by multiple violations, then the WIC vendor is disqualified from the WIC Program for the time corresponding to the most serious of the mandatory violations found. (Exs. A & 1A at page 9, 1. Disqualification, A. Mandatory Disqualification. Testimony.)
28. The WIC Vendor Agreement allows DPH not to issue warning letters to the WIC vendor after violations are found from monitoring visits of an overcharging of the WIC Program or submission for reimbursement by a set price per WIC check instead of the lower actual costs under each WIC check. This is because if these violations occur more than once, the WIC Vendor Agreement makes that a pattern of conduct and a Class II violation carrying a mandatory disqualification from the WIC Program. Such a warning letter could compromise the investigation into discovering if there is a pattern of a violation. (Ex. A & 1A at page 10, 1. Disqualification, C. Warning Letter. Testimony.)
29. Based on the determinations reached by DPH that Country Farms violated the WIC Vendor Agreement, a "Notice of Termination of WIC Vendor Agreement and Disqualification From the WIC Program/Right of Appeal" letter was issued on June 12, 2008 to the following: Rahim Corporation d/b/a Country Farms, Rashid Amin as President and Treasurer of Rahim Corporation, Muhammad Amin as Secretary and Director of Rahim Corporation, and Mohammad Shafiq as manager of Country Farms. (Exs. A & 1A at page 11, 1. Disqualification, E. Notice of Disqualification.)
30. This letter explained how DPH determined that Country Farms violated the WIC Vendor Agreement with Class II violations causing an automatic disqualification from the WIC Program for three years for a first offense, and that the Class II violations were found at the monitoring visits done to Country Farms in March and April 2008. The Class IV violation was also explained. Thereafter, this Corporation and persons named in this Notice filed a timely request for a hearing. (Exs. A, B & 1A at page 17, General Provisions, 13. Vendor's Right to Request Administrative Review.)
31. Food items purchased by Compliance Buyers are donated to charities and are not shown to DPH after each compliance visit. There is no on-site observations of the Compliance Buyer at the time of the monitoring visit by either the Compliance Buyer's employer or by DPH. (Testimony.)
32. In the Leominster area where Country Farms is located, there are thirty-one other stores that are WIC vendors. (Exs. 1A at page 12, II. Civil Monetary Penalties in Lieu of Disqualification, Policy and Procedure & 16.)
Conclusion
DPH carries the burden of proof to show Respondents are responsible for Class II violations of the WIC Vendor Agreement to trigger the automatic disqualification of participation in the WIC Program for three years. I conclude this burden of proof has been met, and that the arguments and affidavit of Mr. Amin do not overcome Petitioner's proof.
The record was held open for an affidavit from Respondents to set-forth the WIC transaction procedures followed by Country Farms clerks, and the procedures followed when Respondents submit WIC checks for reimbursement. The affidavit does not prove proper procedures were followed at the March and April 2008 monitoring visits of Country Farms. The assertions in the affidavit are too general and are not specific evidence to refute the credible testimony of the Compliance Buyer as to what occurred at each monitoring visit. I found the Compliance Buyer's testimony to be reliable and believable as to what transpired during the monitoring visits. The Compliance Buyer explained her familiarity with a proper WIC purchase transaction, and with the specific steps she takes during a monitoring visit. I found significant her extensive experience as an undercover WIC Compliance Buyer. I found her reports on each of her monitoring visits to be understandable and consistent with her testimony about what happened during the visits.
DPH's practice is not to have the Compliance Buyer return to DPH the actual food items purchased at the monitoring visit along with the report about the visit. Perhaps this extra step would better ensure that a Compliance Buyer could not make up or mistakenly list the costs or quantities of the food items purchased, but I do not find this to be a flaw to make unreliable the Compliance Buyer's testimony or reported information that is recorded so close in time to the actual monitoring visit. The Compliance Buyer also signs-off that the information in the report is accurate under the pains and penalties of perjury. This same reasoning applies to find no merit to Respondents' argument that there should be someone from DPH or from the Compliance Buyer's employer monitoring the actions of the Compliance Buyer, or having different Compliance Buyers instead of just one Compliance Buyer carrying out the monitoring visits. It is an obvious core requirement of the WIC Vendor Agreement not to overcharge the WIC Program, and a very serious violation of the Agreement if it occurs. Both the WIC Vendor Agreement and Ms. Blocksidge's testimony amply support this conclusion. To appreciate the basic requirements of a WIC check transaction does not require detailed complicated understandings of how the WIC Program operates. But, it does require due care on the part of the WIC Vendor or his employees to ensure no serious violations occur such as overcharging or submitting WIC checks for reimbursement for more than the total amount of the WIC purchases made using the checks. The fact that overcharging was found at each of the four monitoring visits to Country Farms spread out over just two months, demonstrates a pattern of overcharging has occurred as that term is defined in the WIC Vendor Agreement. The record shows the method of conducting a series of compliance visits without issuing a warning letter after the first instance of overcharging is consistent with the terms of the WIC Vendor Agreement as the warning letter could undermine the investigation of Class II violations.
The same conclusion concerning core requirements of the WIC Vendor Agreement and the seriousness of the violation, particularly when a pattern of conduct is shown, is pertinent to the conduct of Country Farms submitting WIC checks for reimbursement for a set price on the WIC checks and not for the actual costs of the food items purchased using the WIC check. This violation is supported by the Compliance Buyer's report, the WIC checks that were returned to DPH, and DPH's price calculations for each of the monitoring visits to Country Farms.
Although the March 5, 2008 and April 3, 2008 monitoring visits showed Class IV violations occurred, these two Class IV violations are not why the Respondents is being disqualified from participating in the WIC Program for three years. DPH did not need to rely on these violations to support the three year disqualification because there is no exercise of discretion permitted once Class II violations are found.
For these reasons, the WIC Vendor Agreement covering all Respondents is terminated, and there is a mandatory disqualification for all of them from participating in the WIC Program for three years as proposed by DPH. (Ex. A)
SO ORDERED.
DIVISION OF ADMINISTRATIVE
LAW APPEALS
//s//
Sarah H. Luick, Esq.
Administrative Magistrate
DATED: 8/11/09
