SUMMARY OF DECISION
Affirms DPH's decision to terminate Petitioner's WIC vendor agreement for fiscal years 2007 through 2009 and to disqualify its owner and manager from participation in the WIC program for a period of three years as a consequence of multiple Class II, III and IV violations of the WIC vendor agreement.
On December 3, 2007, the Petitioner, the Department of Public Health - WIC Program, issued a Notice of Termination of WIC Vendor Agreement for fiscal year 2007-2009 and disqualification from the WIC Program for three years to the Respondents, K P Bari, Inc. d/b/a South End Package Store and Khalida P. Bari, owner of the store, and Aftab Bari, manager of the store, located at 32 Fort Pleasant Avenue in Springfield, Massachusetts. (Ex. 1.) The Respondent filed a timely notice of appeal of the Department's action. See 7 CFR 246.18. (Ex. 2.) The appeal was referred for hearing to the Division of Administrative Law Appeals (DALA) on February 25, 2008.
The procedural history of this case is tortuous. A series of pre-hearing conferences were scheduled. The first was scheduled for April 25, 2008. Pursuant to a joint motion to continue, the pre-hearing conference was rescheduled for April 28, 2008. Shortly before the scheduled April 28 pre-hearing conference, Mr. Pearson, counsel for the Respondents, orally requested a continuance, which ultimately was granted to June 2, 2008. At the same time, a hearing in the matter was scheduled for June 25, 2008. After Mr. Pearson failed to appear for the June 2 pre-hearing conference, an Order to Show Cause was issued. After hearing from both parties, the appeal was dismissed on June 16, 2008. An amended decision was issued on July 7, 2008. On July 31, 2008, the Respondents filed a motion for reconsideration of the July 7, 2008 amended decision, which was allowed on August 13, 2008. A prehearing conference was scheduled and finally held on October 7, 2008.
On December 2, 2008, I conducted a full hearing in this matter at the offices of DALA, 98 North Washington Street, Boston, Massachusetts, pursuant to 801 CMR 1.02, the Informal/Fair Hearing Rules of Procedure. Various documents were entered into evidence at the hearing. (Exs. 1-27.) Upon the motion of the Respondent, Exhibits 24-27 were stricken from the record as irrelevant. Additionally, the parties submitted twenty-nine joint stipulations of fact, which were marked as Exhibit 28. Mary Blocksidge, Vendor Unit Manager for the Massachusetts WIC Program, testified on behalf of the Department, as did an undercover compliance buyer. Aftab Bari, manager of the South End Package Store, was present for the hearing but chose not to testify. There are three cassette tapes of the hearing.
FINDINGS OF FACT
Based upon the testimony and documents presented at the hearing, I make the following findings of fact:
1. The Special Supplemental Nutrition Program for Women, Infants & Children (WIC) was created by federal statute, 42 U.S.C. 1786. The regulations governing the WIC program are found at 7 C.F.R. 246. (Stipulation.)
2. The WIC program is funded from year to year by federal appropriations and some state appropriations. (Stipulation.)
3. The WIC program is administered by the U.S. Department of Agriculture and USDA's designated agencies. In Massachusetts, the program is administered by the Massachusetts WIC program, within the Department of Public Health. (Stipulation.)
4. The WIC program serves pregnant, breastfeeding and postpartum women, infants, and children under the age of five. (Stipulation.)
5. Each WIC participant receives a food prescription, also referred to as a "WIC check" or "voucher," that is tailored to the particular health needs of the participant. WIC checks are used to obtain supplemental food products at WIC-authorized retail grocery stores. (Stipulation.)
6. WIC-authorized grocery stores are known as WIC vendors. WIC vendors and the Massachusetts WIC program sign written contracts, known as WIC vendor agreements, each federal fiscal year. The WIC vendor agreement specifies the requirements for WIC vendors, the consequences for violating the requirements, and the sanctions for each violation. (Stipulation; Ex. 3.)
7. Consistent with Federal regulations which govern vendor disqualification from the WIC Program, 7 C.F.R. 246.12, the Massachusetts WIC Program has classified violations into four classes. Violations in the Class II category result in mandatory disqualification from the WIC Program for three years for first-time offenders. Class III violations result in mandatory disqualification of one year for first-time offenders, while Class IV violations are assigned sanction points and result in discipline based upon the number of points accumulated. (Ex. 3.)
8. WIC vendors are required to attend annual trainings and cannot enter into a WIC vendor agreement until after the training is completed. (Stipulation; Ex. 3.)
9. The regulations at 7 C.F.R. 246.4(a)(11)(iv) and 7 C.F.R. 246.19(b)(2) require the Massachusetts WIC program to monitor WIC vendors for compliance with the rules and regulations governing the WIC Program. (Stipulation.)
10. During the periods relevant to this appeal, Khalida Parveen Bari, of 24 Homan Avenue, Leominster, Massachusetts, was President, Treasurer, Secretary and Director of a domestic profit corporation known as K P Bari, Inc., which was organized in Massachusetts on October 26, 2006. The corporation's principal place of business is 32 Fort Pleasant Avenue, Springfield, Massachusetts, which is where the South End Package Store is located. (Stipulation.)
11. Aftab Bari, who managed the South End Package Store during all times relevant to this appeal, received WIC training and training materials on May 10, 2007 and October 12, 2007. (Stipulation; Ex. 23.)
12. Between January 20, 2007 and February 14, 2007, K P Bari, Inc. d/b/a South End Package Store, applied to the Department for authorization to become a WIC vendor by submitting a written application. The application included a written food vendor price list, which included the highest actual shelf prices for WIC-approved foods to be sold at South End Package Store. (Stipulation; Ex. 18.)
13. K P Bari, Inc.'s WIC vendor application was approved on May 10, 2007, and K P Bari, Inc. entered into a vendor agreement that was effective until September 30, 2007. The agreement was subsequently renewed for Fiscal Years 2007-2009. (Stipulation; Exs. 3, 4, 5.)
14. Sections 1 and 2 of the vendor agreement require the vendor to assure that the store manager and all other employees authorized to conduct WIC transactions participate in a WIC training program, which includes a detailed review of the requirements outlined in the vendor agreement. (Stipulation; Ex. 3)
15. Section 6(b) of the WIC vendor agreement requires the vendor to "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 actually purchased by the authorized WIC shopper." (Ex. 3.)
16. Section 6(h) of the WIC vendor agreement further provides: "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." (Ex. 3 (emphasis in original).)
17. Section 4(f) of the WIC vendor agreement further provides: "Never substitute an unauthorized product for WIC product, e.g., a more expensive brand when store brand or least expensive is specified or a nine (9) ounce box of cereal when twelve (12) ounce or larger boxes of cereal are specified." (Ex. 3.)
18. Section 9(e) of the vendor agreement provides: "Comply with all Federal, State and Local laws and regulations pertaining to the disclosure of prices for any items offered for sale. For vendors located in Massachusetts, this includes but is not limited to M.G.L. c. 93A violation as described in 940 C.M.R. 3.13 (1)(a) which states: 'It is an unfair and deceptive act or practice for any person subject to this act to fail to affix to any goods offered for sale to the public the price at which the goods are to be sold' . . . ." (Ex. 3.)
19. On May 29, 2007 Khalida Bari signed and submitted an updated certified food vendor price list, which showed the highest actual shelf prices for WIC-approved foods sold at South End Package Store. (Stipulation; Exs. 19, 20.)
20. K P Bari, Inc. submitted a request to the WIC Vendor Unit for approval to increase its food vendor prices for milk. The company included a written price invoice dated September 7, 2007, from its wholesale supplier, Guida. The WIC Vendor Unit approved the requested milk prices on September 11, 2007. (Stipulation; Ex. 21.)
21. The WIC Program uses undercover compliance buyers to ascertain whether the WIC vendors are properly administering the WIC program. The compliance buyers are compensated by a straight salary. They earn no more or less if they find violations or do not find violations. Nor are they compensated more for testifying at a hearing than for work in the field. (Testimony Blocksidge, Compliance Buyer ("CB").)
22. On August 22, 2007, an undercover compliance buyer contracted by the WIC Program visited the South End Package Store in the normal course of her duties. She was given two authorized WIC checks by Mary Blocksidge, the WIC Vendor Unit Manager, to make purchases of milk, cereal, juice, cheese and beans. (Testimony CB, Blocksidge; Exs. 1, 15.)
23. The prices of the items that the compliance buyer purchased that day totaled $8.17 on the first check and $11.46 on the second check. Instead of entering the actual cost of the goods purchased, K P Bari, Inc. wrote in totals of $24.52 and $11.07 and submitted the corresponding WIC checks to the WIC Program for payment. This resulted in a net overcharge of $15.96. (Testimony CB, Blocksidge; Exs. 1, 6, 7, 8.)
24. On August 29, 2007, the same compliance buyer made another visit to South End Package Store, where she bought milk, cereal, juice, cheese and peas. The prices of the items totaled $18.15 on the first check and $11.46 on the second check. Instead of entering the actual cost of the goods purchased, K P Bari, Inc. wrote in totals of $26.31 and $15.65 and submitted the corresponding WIC checks for payment. This resulted in a net overcharge of $12.35. (Testimony CB, Blocksidge; Exs. 1, 9, 10, 11.)
25. On September 12, 2007, the same compliance buyer made a third visit to South End Package Store, where she bought milk, cereal, juice, cheese and beans. The prices of the items totaled $19.54 on the first check and $7.57 on the second check. Instead of entering the actual cost of the goods purchased, K P Bari, Inc. wrote in totals of $24.52 and $7.48 and submitted the corresponding WIC checks for payment. This resulted in a net overcharge of $4.89. (Testimony CB, Blocksidge; Exs. 1, 12, 13, 14.)
26. On September 24, 2007, the same compliance buyer made a fourth visit to South End Package Store, where she bought milk, cereal, juice, cheese and beans. The prices of the items totaled $21.83 on the first check and $5.28 on the second check. Instead of entering the actual cost of the goods purchased, K P Bari, Inc. wrote in totals of $25.32 and $6.28 and submitted the corresponding WIC checks for payment. This resulted in a net overcharge of $4.49. (Testimony CB, Blocksidge; Exs. 1, 15, 16, 17.)
27. During the August 22, 2007 visit, the compliance buyer purchased two nine-ounce boxes of Kix cereal. The WIC check used to purchase the cereal specified boxes of cereal no smaller than twelve ounces. (Testimony CB; Exs. 1, 6.)
28. K P Bari, Inc. failed to affix prices to the following products purchased by the compliance buyer on the following dates: juice and cheese on August 22, 2007; juice and cheese on August 29, 2007; cereal, cheese and juice on September 12, 2007; and cereal, juice and cheese on September 24, 2007. (Testimony CB; Exs. 1, 6, 9, 12, 15.)
29. During the August 29, 2007 compliance buy, the cashier failed to fill in the amount of the purchases on the WIC checks before the compliance buyer countersigned the checks. (Testimony CB; Ex. 1.)
30. Based on the above-listed violations that occurred during the four compliance vistis, on December 3, 2007 the WIC Program issued a notice of termination of the WIC vendor agreement for fiscal years 2007-2009 and disqualification from the WIC Program for three years to K P Bari, Inc., d/b/a South End Package Store; Khalida P. Bari, owner; and Aftab Bari, manager. (Stipulation; Ex. 1.)
31. On December 28, 2007, the Respondents filed a timely appeal of the Department's notice of termination and disqualification and requested an adjudicatory hearing. (Ex. 2.)
CONCLUSION AND ORDER
After reviewing the testimony and evidence presented, I conclude that the Department has proved by a preponderance of the evidence that the statutory and regulatory Class II, III and IV violations occurred on August 22, 2007, August 29, 2007, September 12, 2007, and September 24, 2007, as set forth in the December 3, 2007 notice of termination of the WIC vendor agreement and disqualification from the WIC program.
The Respondents violated section 6(b) of the WIC vendor agreement, and thereby committed a Class II violation, by overcharging the WIC Program for food purchased by the compliance buyer on four different occasions using six different WIC checks. In each of the six overcharges the store clerk wrote on a WIC check a total greater than the actual price of the products purchased, and then K P Bari, Inc. fraudulently submitted the check to the WIC Program for payment. These multiple instances constitute a pattern of overcharging the WIC Program. See Ex. 3, Appendix A. The fact that the store clerk slightly undercharged the WIC Program on two other WIC checks does not remedy, even in part, the overcharges, as the clerk was required to write the exact amount of the purchase on the WIC check, no more and no less.
The Respondents violated section 4(f) of the WIC vendor agreement, and thereby committed a Class III violation, by substituting two nine-ounce boxes of cereal for a twelve-ounce box of cereal during the compliance buyer's August 22, 2007 compliance visit. Section 4(f) of the WIC vendor agreement prohibits substituting unauthorized products for WIC products and cites as a specific example the substitution of two nine-ounce boxes of cereal for one twelve-ounce box.
The Respondents violated section 9(e) of the WIC vendor agreement, and thereby committed a Class IV violation, by failing to disclose the price of a variety of items on each compliance visit, including juice, cheese and cereal. The compliance buyer examined each of the products for attached prices; when she could not find a price she looked for the price posted elsewhere in the store. Finding no prices on the items, she duly noted the fact in her report.
The Respondents violated section 6(h) of the WIC vendor agreement, and thereby committed a Class IV violation, by failing to fill in the purchase total in the presence of the compliance buyer before she countersigned a WIC check. Instead, the clerk asked the compliance buyer to sign her name to a blank WIC check. This violation occurred during the August 29, 2007 compliance visit.
The Department presented a strong case through both testimony and documents. In rendering these conclusions I have credited the testimony of the compliance buyer, who, for each visit, timely and systematically recorded observations and the items purchased and their prices directly after she left the store and returned to her automobile. She appeared to be a methodical professional who demonstrated no bias or other hidden agenda against the Respondents, nor any motive to be less than truthful.
The Respondents' sole defense to the allegations against them consisted of attacking the credibility of the compliance buyer through cross-examination. Aftab Bari, one of the Respondents, was present for the entire hearing, but he chose not to testify. The Respondents' main attack on the compliance buyer's credibility consisted of asking her whether she had ever lied in her lifetime, whether she had ever lied to her mother, and when she had last told a lie. The Respondents' vague and general attacks, without showing some particular motivation in the circumstances of this case, do not undercut the credibility of the witness. Contrary to the Respondents' assertions, the compliance buyer appeared to have no motive to lie about her work. She testified that she is not compensated based upon whether or not she finds violations, nor upon whether she is working in the field or testifying at a hearing.
The Respondents also attempted to prove that the compliance buyer is unreliable because she is saddled with so much responsibility, is not observed on each compliance buy by a supervisor, and spent between five and seven minutes inside the store on each compliance buy. The compliance buyer was professional and appeared to be able to handle her duties, as evidenced by her professional reports and her demeanor while testifying. The Respondent never submitted any evidence why five to seven minutes was too short a time to complete her duties. Moreover, having a supervisor along to observe the observer makes no sense in the context of an undercover operation, where the buyer is trying to remain anonymous.
In light of the fact that K P Bari, Inc., Khalida P. Bari and Aftab Bari have committed multiple Class II, III and IV violations of their WIC vendor agreement, violations which are serious and undermine the integrity of the WIC Program, the Department was authorized to impose sanctions as outlined in the agreement. Accordingly, the Department's decision to terminate K P Bari's WIC vendor agreement for fiscal years 2007 through 2009 and to disqualify Khalida P. Bari, its owner, and Aftab Bari, its manager, from participation in the WIC program for a period of three years is affirmed.
DIVISION OF ADMINISTRATIVE LAW APPEALS
/s/ Kenneth J. Forton
DATED: March 13, 2009