On November 6, 2007, the Department of Public Health issued a "Notice of Termination of WIC [Women, Infants, and Children] Vendor Agreement and Disqualification from the WIC Program/Right of Appeal" to the Variety Store at 94 Meadow Street in Westfield, Massachusetts, and its owner, Mohammad Azam. In the notice the Department stated that, based on its analysis of five visits to the store by a compliance buyer, it had found that the store had violated its WIC Vendor Agreement. Mr. Azam filed a timely appeal on behalf of himself and his store in a letter dated November 23, 2007.
I held a hearing on June 1, 2008 at the Division of Administrative Law Appeals, 98 North Washington Street, Boston, Massachusetts. Mary Blocksidge, the WIC vendor manager for the Department of Public Health, testified for the Department, as did an undercover compliance buyer. I granted the Department's motion in limine to conceal the identity of the compliance buyer. The compliance buyer testified behind a visual barrier positioned to allow me to see the witness, but not to allow Mr. Azam or his counsel to do so. Mr. Azam testified for himself and the Variety Store. I made two tapes of the hearing.
The Department of Public Health asked that 25 documents it submitted be introduced into evidence. Counsel for Mr. Azam objected to the admission of documents concerning the five visits to the store by the undercover compliance buyer. The documents objected to included compliance reports by the undercover buyer with her name redacted, WIC checks used by the undercover buyer with check numbers redacted except for the final two digits, and the WIC program's calculations of the differences (if any) between the amounts the store should have charged the WIC program and the amount it actually charged. These documents are not self-authenticating. Because the WIC program introduced no testimony concerning documents relating to visits by the compliance buyer to the Variety Store on September 24, 2007, October 8, 2007, and October 17, 2007, I declined to admit these documents into evidence.
FINDINGS OF FACT
Based on the testimony and exhibits presented at the hearing, I make the following findings of fact:
1. The Massachusetts Department of Public Health/WIC program administers the Special Supplemental Food Program for Women, Infants and Children of the United States Department of Agriculture, Food and Nutrition Services. Ex. 3. Women eligible to participate in the WIC program use checks provided by the program to pay for specified foods at stores that have been selected by the program as vendors and who have entered into a vendor agreement with the WIC program. Blocksidge testimony and Exs. 3 and 25.
2. Mohammed Azam has owned the Variety Store at 94 Meadow Street in Westfield since 1999. He recalls that the Variety Store became a WIC vendor in 2004. He signed vendor agreement for the periods from September 2006 to September 2007 and September 2007 to September 2008. Exs. 4 and 5.
3. The WIC vendor agreement requires that the store owner or manager participate in training to learn how to handle WIC checks and train all relevant store staff in the correct WIC check handling procedure. Ex. 3 (sections 1 and 2). Mr. Azam received this required training. Azam testimony. The agreement also informs vendors that they are accountable for the actions of their employees. Ex. 3 (section 3).
4. The WIC vendor agreement also requires the vendor to (a) provide correct vendor price lists to the WIC program, (b) comply with federal, state, and local law by affixing a price to any items offered for sale to WIC shoppers, (c) never charge the WIC program except for products actually purchased and received, (d) write on the WIC check a price no higher than the actual, current shelf price of an item actually purchased with a WIC check, (e) fill in the WIC check with the actual price of the items purchased before the WIC shopper signs the WIC check, and (f) observe the WIC shopper sign the check and be user the signature matches the authorized signature in the WIC ID folder. Ex. 3 (sections 5, 6, and 9). The WIC program requires vendors to provide price lists annually on a form that seeks the "highest actual shelf prices" of WIC food items; vendors may amend their lists as prices change. Blocksidge testimony and Es. 22 and 23.
5. The WIC vendor agreement warns that vendors may be disqualified from participating in the WIC program if they violate its requirements. Ex 3 (Sanction Policy).
6. Class II violations include overcharging the WIC program. A pattern of overcharging, which the vendor agreement explains is two or more incidences of a violation, will result in a three year disqualification. Ex. 3 (Sanction Policy and Appendix A).
7. Class IV violations include failure to observe an authorized WIC shopper sign the check and to ensure that the signature matches the authorized signature in the WIC ID folder, failure to affix prices on food items offered for sale, and failure to fill in the WIC check price in the presence of the authorized shopper before the shopper has signed the check. Vendors who commit Class IV violations are assigned sanction points and may be disqualified depending on the cumulative total of sanction points. The accumulation of twenty or more sanction points constitutes sufficient grounds to disqualify a vendor for one year. The examples of Class IV violations just noted each are worth ten sanction points. Ex. 3 (Sanction Policy and Appendix A).
8. The WIC program monitors vendors' compliance with the vendor agreement by hiring an investigative company to send anonymous compliance shoppers to stores selected by the WIC program and purchase specified items with WIC checks. Blocksidge testimony.
9. The compliance buyer visits the store on multiple occasions, purchases the items she has been directed to buy with WIC checks, and after doing so prepares a report of each visits that notes the items purchased, whether the item price was listed by the store, whether the store clerk asked for her WIC identification, and whether the clerk filled out the purchase amount on each WIC check before presenting it to the WIC compliance buyer for her signature. Compliance buyer testimony and Exs. 6 and 9.
10. The compliance buyer then submits her reports to the WIC program. The WIC vendor manager, Mary Blocksidge, reviews the reports and prepares calculations for each check used to determine whether the vendor charged the WIC program the correct amount. To prepare these reports, she compares the figure shown on each check with the prices of the items purchased. She determines the price of the items purchased by reviewing the prices shown on the corresponding compliance report, and if no price is shown there, the price list the vendor has submitted to the WIC program that year. Blocksidge Testimony.
11. On August 22, 2007, a compliance buyer visited the Variety Store. She purchased milk, cereal, and juice with one WIC check and milk, cheese, and beans with another WIC check. No price was posted in the store for any of these items except for the beans. Mr. Azam was the cashier who waited on her. Although Azam testified that he tries to follow WIC check protocol consistently and believes he did so on this occasion, the compliance buyer's report shows that her she was not asked for identification. Compliance buyer and Azam Testimony and Ex. 6. Azam did, however, fill in the purchase price in the presence of the compliance buyer before he had her sign the check. Ex. 6. Furthermore, on the section of the preprinted checks listing items that can be purchased the with the check, he crossed out those items the compliance buyer did not purchase. Ex. 7.
12. The check totals for the items purchased that day were $23.43 and $7.18 respectively. Ex. 7. Mr. Azam testified that he calculated the total price based on a WIC price list he maintains at the cash register. Azam testimony. That list is not in evidence.
13. Blocksidge, working with the prices reported by the compliance buyer and a price list the Variety store submitted on June 6, 2007, calculated that the correct totals should have been $17.34 and $8.97 respectively. Blocksidge testimony and Ex. 8. Based on this calculation, the store overcharged the WIC program by $6.09 on the first check and undercharged it by $1.79 on the second check. Ex. 8.
14. The compliance buyer returned to the Variety Store on August 29, 2007. This visit turned up no violations of WIC program requirements. Blocksidge testimony. Mr. Azam was once again the cashier who waited on the compliance buyer. Compliance buyer testimony.
15. On September 12, 2007, the compliance buyer returned to the store for a third time. She purchased milk, cereal, and juice with one WIC check and milk, cheese, beans, and juice with a second WIC check. She found a price posted only for the milk. A young man was the cashier to whom she presented her purchases. Mr. Azam identified him as his 19 year old son, who is familiar with WIC requirements. Azam testimony. The compliance buyer reported, however, that the cashier neither checked her identification nor entered the purchase total on the checks before he had her sign them. Compliance buyer testimony and Ex. 9.
16. The check total for the items purchased were $27.61 and $16.15. Ex. 10. Blocksidge compared the check totals with the prices as reported by the compliance buyer and the vendor price list. She determined that the correct price for the items purchased should have been $14.95 and $12.16. Based on these calculations, the Variety Store overcharged the WIC program by $12.66 and $3.99 respectively. Blocksidge testimony and Ex. 11.
17. On November 6, 2007, the Department of Public Health/WIC program sent Mr. Azam a notice of termination of his WIC vendor agreement for the Variety Store. It informed him that he and the store would be disqualified from participating as vendors for the following three years because the compliance buys had turned up a pattern of Class II violations involving overcharging the WIC program. The termination notice also recited three types of Class IV violations revealed by the compliance buys: failure to affix prices on goods for sale, failure to observe the authorized WIC shopper sign the WIC check and to ensure her signature matches the authorized signature in the WIC ID folder, and failure to fill out the amount of the purchases in the presence of the authorized WIC shopper before the shopper signs the check. Ex. 1.
18. On November 23, 2007, Mr. Azam appealed the termination notice and requested a hearing. Ex. 2.
CONCLUSION AND ORDER
The Department of Public Health met its burden of proving that the Variety Store and its owner, Mohammed Azam, violated the WIC vendor agreement by overcharging the WIC program on three separate WIC checks presented at the store on two separate occasions. This is sufficient to establish a pattern of Class II violations of the vendor agreement, the sanction for which is disqualification from participating in the WIC program for three years.
The evidence establishes that one of the two WIC checks presented by the compliance buyer at the Variety Store on August 27, 2007 was completed by Mr. Azam with an amount that represented an overcharge to the WIC program of the items purchased by the compliance buyer, as calculated by Ms. Blocksidge using the pricing information she obtained from the compliance buyer and the vendor price the Variety Store had filed with the WIC program. The evidence also establishes that both WIC checks presented by the compliance buyer at the Variety Store on September 12, 2007 were completed by Mr. Azam's son in amounts representing overcharges, again as calculated by Ms. Blocksidge using pricing information she obtained from the compliance buyer and the vendor price list.
Counsel for Mr. Azam argues that this case boils down to a matter of credibility and that Mr. Azam is more believable that the compliance buyer. I am not convinced either that credibility is the key issue here or that the compliance buyer's credibility has been shown to be compromised. The only concession that counsel obtained from the compliance buyer was that she may have lied sometime in the past to family members or friends. If this truly made her testimony unbelievable, then it would discredit the bulk of humanity as well and make hearings impossible. There is simply no evidence that the compliance buyer lied about anything to do with her interactions with the store. Indeed, her testimony to some degree helps demonstrate Mr. Azam's assertion that he endeavored to comply with the requirements of the program for of the four WIC checks she presented to him when he was her cashier on August 22 and 29, 2007, only one of those checks represented an overcharge to the WIC program and on at least one of the checks Mr. Azam undercharged the program.
The problem here appears to be not with the veracity of the witnesses - I find both Mr. Azam and the compliance buyer to be credible - but with the different manner in which the store and the WIC program calculated the value of purchases made by the compliance buyer purchased. The WIC program used the in-store price on those items for which the compliance buyer found a price. When the buyer could not find a price, the program used the price from the relevant vendor price list submitted by the Variety Store. The cashier at the store, on the other hand, relied on a price list posted near the register.
There is every reason to believe that the price list the cashier had differed in some respects from the list possessed by the WIC program. That is the only plausible explanation for the results of the August 22, 2007 compliance buy in which one check represented an overcharge, while the other represented an undercharge. Had the store been deliberately overcharging the program, both checks would likely have been overcharges and certainly none would have been undercharges.
The only evidence of what the price was or should have been for items without a price tag purchased by the compliance buyer is the June 6, 2007 vendor price list submitted by the Variety Store. The instruction for completing this list tells the vendor to list "the highest actual shelf prices" of each item. Exs. 22 and 23. It is conceivable that between June 2007 and late August and early September 2007, the Variety Store raised the price on some of the items that may be purchased by a WIC shopper to an amount greater than that reflected by the June 2007 price list. It may even be that the store charged the compliance buyer no more on August 22 and September 12, 2007 than the actual shelf prices of the items she purchased on those occasions. But there is simply no evidence of this because the store failed to affix a price on each of the food items for sale to WIC shoppers, failed to submit any price changes to the WIC program, and failed to submit the price list it was using into evidence.
Because the only information in evidence on what the shelf prices should have been at the time of the compliance buys is the June 2007 vendor price list, I accept Ms. Blocksidge's calculations of the price that should have been charged the WIC program that she based in part on that price list. Her calculations show that on three checks, reflecting purchases on two visits by the compliance buyer, the Variety Store overcharged the WIC program. Because the WIC program demonstrated more than one incidence of overcharging, it established a pattern of overcharging.
Counsel objects that there is a tremendous disparity between the charge and the three year disqualification sanction that follows from proof of a pattern of overcharging. That may be so under the present circumstances - particularly if the store's lapse was in failing to alert its customers and the WIC program accurately to the correct shelf price, both of which are Class IV violations that could lead, at most, to a one year suspension from the program - but I do not set the sanction. That is established by the WIC program. WIC vendors are informed in the WIC vendor agreement that Class II violations, including a pattern of overcharging the WIC program are "serious, ... prevent WIC Program goals from being achieved, undermine the integrity of the WIC Program, and will result in mandatory disqualification for three years for first time offenders." Ex. 3 (emphasis in original). The evidence having shown a pattern of overcharging, the sanction follows automatically. The store could have avoided this result by affixing prices to food items sold to WIC shoppers, maintaining an accurate and up-to-date price list with the WIC program, and taking steps to ensure both that WIC customers are charged no more than the current shelf price and that this would be evident to the WIC program.
I note that there was little if any testimony concerning the allegations made by the Department of Public Health that the Variety Store committed Class IV violations by failing to affix prices to food items offered for sale, failing to observe the authorized WIC shopper sign the WIC check and ensure her signature matched the authorized signature in the WIC ID folder, and failing during the September 12, 2007 buy to fill out the amount of the purchases in the presence of the authorized WIC shopper before the shopper signed the check. I conclude that the Department has proven these violations, but that this does not affect the disposition of this case because the sanction for Class IV violations is a one year suspension from the program.
Because the Department of Public Health has established a pattern of overcharging by the Variety Store, the store and its owner, Mohammed Azam, are disqualified from participating in the WIC program for three years.
DIVISION OF ADMINISTRATIVE LAW APPEALS
/s/James P. Rooney
DATED: March 13, 2009