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STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF GUILFORD 06 DHR 0271

06 DHR 0488

Deloris Johnson
Petitioner
vs.
N. C. Department of Health and Human
Services, Division of Public Health,
Child and Adult Care Food Program
Respondent / )
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)
)
)))) / DECISION

THIS MATTER came on for hearing before the Honorable Beecher R. Gray, Administrative Law Judge, on March 28, 2006, in High Point, North Carolina.

APPEARANCES

For Petitioner: Pro se.

For Respondent: The Honorable Roy A. Cooper III, Attorney General, North Carolina Department of Justice, Raleigh, North Carolina; Iain M. Stauffer, Assistant Attorney General, appearing.

ISSUE

Whether Respondent acted properly in disallowing meals and asserting an overclaim based on Petitioner’s failure to maintain required records?

EXHIBITS

Respondent’s Exhibits 1 through 10 were admitted in evidence.

BASED UPON careful consideration of the sworn testimony of the witnesses presented at the hearing, along with documents and exhibits received and admitted in evidence and the entire record in this proceeding, the Undersigned makes the following Findings of Fact. In making the Findings of Fact, the Undersigned has weighed all the evidence and has assessed the credibility of the witnesses by taking into account the appropriate factors for judging credibility, including but not limited to the demeanor of the witnesses, any interests, bias, or prejudice the witness may have, the opportunity of the witness to see, hear, know, or remember the facts or occurrences about which the witness testified, whether the testimony of the witness is reasonable, and whether the testimony is consistent with all other believable evidence in the case.

FINDINGS OF FACT

1. The Child and Adult Care Food Program (“CACFP”) is a federally funded program administered in North Carolina by the North Carolina Department of Health and Human Services, Division of Public Health (“Respondent”). The purpose of the CACFP is to reimburse child care centers, day care homes or adult care centers for providing nutritious meals to qualified participants.

2. Respondent and the United States Department of Agriculture entered into a Federal-State Agreement for the period of October 1, 2005 to September 30, 2006. This agreement provides that Respondent will comply with the program statutes and regulations that govern the CACFP. The federal regulations that govern the CACFP are found at 7 C.F.R. Part 226.

3. Petitioner, Deloris Johnson, is the Administrator for COGIC Cathedral International Prayer and Life Clinic which operates COGIC Cathedral Day Care Center. COGIC Cathedral Day Care Center is a child care center located in Greensboro, North Carolina.

4. Deloris Johnson signed and submitted an application for participation in the CACFP for the current CACFP Program year which is October 1, 2005 through September 30, 2006.

5. Respondent approved COGIC’s application and agreement for participation in the CACFP on October 31, 2005. The agreement is effective until September 30, 2006.

6. Deloris Johnson signed the CACFP Agreement as the authorized representative for COGIC.

7. Petitioner has participated in the CACFP for seventeen years.

8. Child care centers are reimbursed for serving nutritious meals to eligible participants. All claims for reimbursement must be supported by records required by the federal regulations that govern the CACFP.

9. One required record is the documentation of enrollment captured in the CACFP Enrollment Form.

10. The CACFP Agreement executed by Petitioner and Respondent provides that an “Enrollment form for each enrolled participant as required by 7 CFR 226.15” must be maintained by the centers. It further provides that “missing . . . records or discrepancies between records shall be grounds for the disallowance of meals and/or reclaim of reimbursement.”

11. Pursuant to the federal regulations that govern the CACFP, effective September 30, 2005, Documentation of Enrollment must be updated annually, signed by a parent or legal guardian, include information on each child’s normal days and hours of care, and the meals normally received while in care.

12. Respondent notified all participating institutions in North Carolina of the amendments to the federal regulations, including documentation of enrollment, by notice sent September 21, 2004.

13. Respondent by notice dated March 17, 2005, again notified all institutions participating in North Carolina of the requirements for documentation of enrollment. Respondent also provided a copy of the Enrollment Form developed by Respondent which contained all the required information for institutions and child care centers to use.

14. The use of the enrollment form produced by Respondent was not required so long as the institution collected and maintained documentation of enrollment information which was updated annually, signed by a parent or legal guardian, included information on each child’s normal days and hours of care, and the meals normally received while in care.

15. Flo Smith, a Special Nutrition Programs Consultant, scheduled an Administrative Review of COGIC for January 19, 2006. Ms. Smith sent a letter on January 6, 2006 to Deloris Johnson scheduling the date and advising Petitioner of the necessary records and information that would need to be available on the day of the review. Number 20 on the list of forms was “Enrollment forms”.

16. A Federal Express tracking sheet shows that this letter was received by COGIC on January 9, 2006. Deloris Johnson also called Ms. Smith confirming the date of the administrative review.

17. Ms. Smith conducted an administrative review of COGIC on January 19 and 23. Ms. Smith found during the review that COGIC did not maintain Enrollment Forms to comply with the required documentation of enrollment information for the CACFP.

18. COGIC did not maintain the Enrollment Form provided by Respondent or other form showing documentation of enrollment which was updated annually, signed by a parent or legal guardian, included information on each child’s normal days and hours of care, and the meals normally received while in care.

19. Failure to maintain required records is grounds for disallowance of meals.

20. Ms. Smith sent Petitioner a letter on January 26, 2006 informing Petitioner of the results of the administrative review and that the reimbursement for October 2005 was disallowed because of the failure to maintain Enrollment Forms to satisfy the documentation of enrollment requirements. The disallowance for October 2005 was $2,046.55.

21. Ms. Smith conducted a follow-up review on March 2, 2006, because of the findings from the administrative review. During this review, Ms. Smith disallowed meals for November and December 2005 based on the failure to keep and maintain the required documentation of enrollment for those months. Ms. Smith disallowed the meals claimed by COGIC for November 2005 in the amount of $2,586.54 and for December 2005 in the amount of $2,436.56.

22. On January 30, 2006, Petitioner requested an informal review of the disallowance of meals for October 2005.

23. Arnette Cowan, Head of the Special Nutrition Programs Unit, received the informal review request from Ms. Johnson. Ms. Cowan conducted an informal review and reviewed the records and documents from the administrative review. Ms. Cowan determined that COGIC did not maintain the required documentation of enrollment to comply with the CACFP. Ms. Cowan sent Ms. Johnson a letter on February 7, 2006, advising her that the disallowance was appropriate.

24. Deloris Johnson admitted that at the time of the administrative review, COGIC did not use the Enrollment Form developed by Respondent.

25. Deloris Johnson received the March 17, 2005 notice from Respondent and testified that it was discovered in their office files unopened after the administrative review.

BASED UPON the foregoing Findings of Fact, the undersigned makes the following:

CONCLUSIONS OF LAW

1. The Office of Administrative Hearings has personal and subject matter jurisdiction of this contested case. The parties received proper notice of the hearing in the matter. To the extent that the Findings of Fact contain Conclusions of Law, or that the Conclusions of Law are Findings of Fact, they should be so considered without regard to the given labels.

2. The North Carolina Department of Health and Human Services, Division of Public Health, Women’s and Children’s Health Section, Nutrition Services Branch, is vested with the authority to administer the CACFP in North Carolina. The regulations for the operation of the CACFP are contained within 7 C.F.R. § 226. 7 C.F.R. § 226.1. The North Carolina Department of Health and Human Services, in its rules, incorporated by reference 7 C.F.R. § 226 along with all its subsequent amendments and editions. N.C. Admin. Code tit. 10A, r. 43J.0101.

3. An institution is a child care center which enters into an agreement with the State agency to assume final administrative and financial responsibility for CACFP operations. 7 C.F.R. § 226.2. COGIC is an institution as defined in 7 C.F.R. § 226.2.

4. Institutions participating in the CACFP must establish procedures to collect and maintain all CACFP records required by 7 C.F.R. § 226. 7 C.F.R. § 226.15(e). Documentation of enrollment for each participant at a child care center is a required record. 7 C.F.R. §§ 226.15(e)(2) and 226.17(b)(7).

5. Documentation of enrollment for child care centers must be updated annually, signed by a parent or legal guardian, include information on each child’s normal days and hours of care and the meals normally received while in care. 7 C.F.R. §§ 226.15(e)(2) and 226.17(b)(7).

6. The preponderance of the evidence in this case reveals that COGIC did not maintain documentation of enrollment as set out in 7 C.F.R. § 226.15(e) which was updated annually, signed by a parent or legal guardian, included information on each child’s normal days and hours of care and the meals normally received while in care.

7. “State agencies shall disallow any portion of a claim for reimbursement and recover any payment to an institution not properly payable under this part.” 7 C.F.R. § 226.14(a). “Failure to maintain such records shall be grounds for the denial of meals served during the period covered by the records in question . . . .” 7 C.F.R. § 226.15(e).

8. Respondent properly disallowed meals for the October 2005 in the amount of $2,046.55, November 2005 in the amount of $2,586.54, and December 2005 in the amount of $2,436.56, based on COGIC’s failure to properly maintain documentation of enrollment.

9. Respondent did not act erroneously and did not act arbitrarily or capriciously.

BASED UPON the foregoing Findings of Fact and Conclusions of Law, the Undersigned makes the following:

DECISION

There is sufficient evidence in the record to properly and lawfully support the Conclusions of Law cited above. Based on those conclusions, and the facts in this case, it is the decision of the Undersigned that Respondent has not exceeded its authority, acted erroneously, failed to use proper procedure, or failed to act lawfully. Respondent did not act arbitrarily or capriciously in its disallowance of meals, and hereby is affirmed.

NOTICE

The agency making the final decision in this contested case is the North Carolina Department of Health and Human Services, Division of Public Health.

The agency is required to give each party an opportunity to file exceptions to this decision issued by the Undersigned, and to present written arguments to those in the agency who will make the final decision. N. C. Gen. Stat. § 150B-36(a).

In accordance with N.C. Gen. Stat. § 150B-36 the agency shall adopt each finding of fact contained in the Administrative Law Judge's decision unless the finding is clearly contrary to the preponderance of the admissible evidence. For each finding of fact not adopted by the agency, the agency shall set forth separately and in detail the reasons for not adopting the finding of fact and the evidence in the record relied upon by the agency in not adopting the finding of fact. For each new finding of fact made by the agency that is not contained in the Administrative Law Judge's decision, the agency shall set forth separately and in detail the evidence in the record relied upon by the agency in making the finding of fact.

The agency shall adopt the decision of the Administrative Law Judge unless the agency demonstrates that the decision of the Administrative Law Judge is clearly contrary to the preponderance of the admissible evidence in the official record.

This the 17th day of May, 2006.

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Beecher R. Gray

Administrative Law Judge