STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF DURHAM 03 DHR 0917

)

ALI ALSARAS d/b/a UNIVERSITY )

MARKET, )

)

Petitioner, )

)

v. ) DECISION )

N.C. DEPARTMENT OF HEALTH AND )

HUMAN SERVICES, )

)

Respondent. )

)

This matter came on for hearing before the undersigned administrative law judge on August 29, 2003, in Raleigh, North Carolina. Petitioner, Ali Alsaras, appeared pro se. Assistant Attorney General, Donna D. Smith, represented the Respondent. The Respondent presented three witnesses and introduced 10 exhibits. The Petitioner testified on his own behalf and introduced 5 exhibits.

ISSUE

The issue is whether the Respondent was correct in issuing its intent to disqualify the Petitioner from doing business as a vendor in the Special Supplemental Nutrition Program for Women, Infants and Children (“WIC Program”) for a period of three years for the following violation:

Vendor overcharging for WIC supplemental foods provided on or about 10/21/02 and 1/10/03, in violation of 7 C.F.R. § 246.12(l)(1)(iii)(C), 10A N.C.A.C. 43D .0706(c)(3), .0706(c)(4), .0706(c)(5), .0706(g), .0706(g)(2)(B) and the WIC Vendor Agreement.

Based on the evidence presented by the parties, including sworn testimony of witnesses and documentary evidence, the undersigned makes the following:

FINDINGS OF FACT

1. WIC is the federally funded Special Supplemental Nutrition Program for Women, Infants, and Children, administered in North Carolina by the Department of Health and Human Services, Division of Public Health.

2. The purpose of the WIC Program is to provide supplemental foods to pregnant women, infants, and children up to age five (called "participants"), who are at nutritional risk.

3. WIC foods are supplied to participants through the retail grocery system via food instruments which list the authorized foods that the participant may obtain with the food instrument. The WIC Program contracts with retail grocery stores to serve as authorized WIC vendors. Under the contract, the WIC vendor agrees to accept WIC food instruments in exchange for WIC supplemental foods provided to the participants. A participant, in her discretion, may get some or all of the foods listed on the WIC food instrument. The WIC vendor deposits the food instrument in its bank and is reimbursed by the WIC Program for the supplemental foods provided to the participant.

4. Petitioner, Ali Alsaras, is the owner of University Market, a convenience store located at 1108 West Chapel Hill Street in Durham, North Carolina. The Petitioner operates as an authorized WIC vendor, stamp #7990.

5. The WIC Vendor Agreement is the contract between the Petitioner and the Respondent under which the Petitioner agrees to comply with the terms of the Agreement and state and federal WIC Program rules, regulations and laws. A WIC vendor enters into a new Agreement each year to continue WIC vendor authorization.

6. Petitioner first became authorized as a WIC vendor in 1996 and has continued WIC vendor authorization since that time. Petitioner signed a WIC Vendor Application and WIC Vendor Agreement on May 28, 2002 , which covered the period of July 1, 2002 through June 30, 2003, the time period of the charged violations.

7. The proper handling of a WIC food instrument by a vendor includes totaling the price of the authorized supplemental foods provided, entering the total price for the supplemental foods provided in the “Pay Exactly” box on the food instrument, filling in the date of the transaction on the food instrument, and then obtaining the countersignature of the WIC participant on the food instrument. The price entered by the vendor on the food instrument cannot exceed the total amount of the current shelf prices for the supplemental foods provided.

8. On May 16, 2002, the Lincoln Community Health Center WIC Program conducted annual vendor training on WIC Program procedures, rules and regulations. Copies of the North Carolina WIC Vendor Manual were distributed to the vendor representatives attending these training sessions. Petitioner attended the May 16, 2002 training session.

9. Respondent informed Petitioner by Notice of Violation dated December 11, 2002, that a recent compliance buy at his store, University Market, had revealed a violation of vendor overcharging. The Notice advised Petitioner that additional compliance buys would be conducted at his store and any further violations could lead to disqualification of University Market from the WIC Program. The Notice specifically informed Petitioner that an additional occurrence of a vendor overcharge would result in a three year disqualification of the store from the WIC Program. The Notice also offered Petitioner the opportunity to receive additional vendor training through the local WIC agency. The local WIC agency never received a request from Petitioner or anyone from his store for additional vendor training. Respondent resumed its investigation of Petitioner's store on January 10, 2003.

10. Cheryl Thomas is employed by the North Carolina Department of Health and Human Services as an Administrative Assistant for the WIC Program. Part of her duties for the WIC Program includes conducting compliance buys at authorized WIC vendors to determine compliance with the laws, rules and regulations governing the WIC Program. Ms. Thomas conducted compliance buys at University Market on October 16, 2002, October 21, 2002 and January 10, 2003. On each of these dates, Thomas posed as a WIC participant and obtained WIC supplemental foods using a WIC food instrument.

11. Immediately following each compliance buy, Thomas went to a safe location and recorded the supplemental foods obtained with the food instrument and the price marked for each item. Therefore, for each of the compliance buys conducted by Thomas, the WIC Program was able to determine the actual total price of the supplemental foods provided to Thomas in exchange for the WIC food instrument.

10/16/02 COMPLIANCE BUY:

12. When investigator Thomas entered Petitioner's store on 10/16/02, she used food instrument #55570120 to obtain WIC supplemental foods listed on the food instrument.

13. Thomas selected one gallon of Maola 2% milk marked at $3.99, two 46-oz. Libby's Juicy Juice marked at $3.29 each, and one dozen Latta’s large eggs marked at $1.70.

14. The actual total price of the supplemental foods obtained by Thomas with food instrument #55570120 was $15.56. The amount entered in the "Pay Exactly" box of the redeemed food instrument was $17.42.

15. The amount entered in the "Pay Exactly" box of redeemed food instrument #55570120 exceeded the actual total price of the supplemental foods provided to Thomas by $1.86.

10/21/02 COMPLIANCE BUY:

16. When investigator Thomas returned to Petitioner's store on 10/21/02, she used food instrument #55570194 to obtain WIC supplemental foods listed on the food instrument.

17. Thomas selected one gallon of Maola 2% milk marked at $3.99, two 18-oz. boxes of Kellogg’s Corn Flakes marked at $4.99 each, and two 46-oz. Libby’s Juicy Juice marked at $2.81 each.

18. The actual total price of the supplemental foods obtained by Thomas with food instrument #55570194 was $19.59. The amount entered in the "Pay Exactly" box of the redeemed food instrument was $30.65.

19. The amount entered in the "Pay Exactly" box of redeemed food instrument #55570194 exceeded the actual total price of the supplemental foods provided to Thomas by $11.06.

1/10/03 COMPLIANCE BUY:

20. When investigator Thomas returned to Petitioner's store on 1/10/03, she used food instrument #55570243 to obtain WIC supplemental foods listed on the food instrument.

21. Thomas selected two 18-oz. boxes of Richfood Corn Flakes marked at $3.99 each, one gallon of Maola whole milk marked at $3.99, two 46-oz. Libby’s Juicy Juice marked at $3.29 each, and two 8-oz. packages of Jesse Jones mild cheddar cheese marked at 2.99 each.

22. The actual total price of the supplemental foods obtained by Thomas with food instrument #55570243 was $24.53. The amount entered in the "Pay Exactly" box of the redeemed food instrument was $29.58.

23. The amount entered in the "Pay Exactly" box of redeemed food instrument #55570243 exceeded the actual total price of the supplemental foods provided to Thomas by $5.05.

OTHER FINDINGS

24. Petitioner has been a WIC vendor for about ten years, without previous problems. He was out of the country dealing with family problems during at least some of the compliance buys. He has voluntarily taken erroneous WIC vouchers to Respondent for correction in the past.

25. 10A N.C.A.C. 43D .0202(20) provides that a vendor overcharge is intentionally or unintentionally charging more for supplemental food provided to a WIC customer than to a non-WIC customer or charging more than the current shelf price for supplemental food provided to a WIC customer.

26. 7 C.F.R. § 246.12(l)(1)(iii)(C), incorporated by reference at 10A N.C.A.C. 43D .0706(g), provides that a vendor must be disqualified for three years for a pattern of vendor overcharges.

27. 10A N.C.A.C. 43D .0706(g)(2)(B) provides that a pattern shall be established when there are two occurrences of vendor overcharging within a 12-month period.

28. Applying the foregoing provisions to the results of the compliance buys on 10/21/02 and 1/10/03, the Respondent notified Petitioner by certified letter dated April 29, 2003, of its intent to disqualify Petitioner’s store from participating as a WIC vendor for a period of three years. Respondent advised the Petitioner of his right to appeal to the Office of Administrative Hearings. Petitioner filed a petition for a contested case hearing on May 30, 2003.

29. Prior to issuing its intent to disqualify the Petitioner’s store, the Respondent complied with 7 C.F.R. 246.12(l)(1)(ix), 246.12(l)(8), and 10A N.C.A.C. 43D .0706(k) by considering participant access to other WIC vendors. There are seven other WIC vendors within three miles of this store, and four WIC vendors within one mile of Lincoln Community Health Center.

CONCLUSIONS OF LAW

1. The North Carolina WIC Program is vested with the authority to authorize and disqualify WIC vendors pursuant to G.S. § 130A-361 and 10A N.C.A.C. 43D .0700 et seq.

2. As an authorized WIC vendor, the Petitioner is bound by the terms of the WIC Vendor Agreement and the administrative rules, regulations and laws governing the WIC Program.

3. A pattern of vendor overcharges has been established at Petitioner's store, University Market, by at least two occurrences of vendor overcharging within a 12-month period, in violation of 7 C.F.R. § 246.12(l)(1)(iii)(C), 10A N.C.A.C. 43D .0706(c)(3), .0706(c)(4), .0706(c)(5), .0706(g), .0706(g)(2)(B) and the WIC Vendor Agreement.

4. Pursuant to the regulatory scheme set forth at 7 C.F.R. § 246.12(l)(1)(iii)(C) and 10A N.C.A.C. 43D .0706(g)(2)(B), the Respondent correctly issued its intent to disqualify the Petitioner's store from participating as a WIC vendor for a period of three years.

5. The Respondent did not act in an arbitrary and capricious manner in administering the WIC Program rules, regulations and law, did not fail to act as required by law or rule, did not fail to use proper procedure, did not act erroneously, nor did it exceed its authority or jurisdiction.

DECISION

Based on the foregoing Findings of Fact and Conclusions of Law, the Petitioner's store, University Market, shall be disqualified as an authorized WIC vendor for a period of three years.

ORDER

It is hereby ordered that the agency serve a copy of the final decision on the Office of Administrative Hearings, 6714 Mail Service Center , Raleigh, NC 27699-6714, in accordance with G.S. § 150B-36(b3).

NOTICE

The parties have the right to file exceptions and to present written arguments to the agency making the final decision. G.S. § 150B-36(a). The agency making the final decision in this contested case is the North Carolina Department of Health and Human Services. The agency is required to serve a copy of the final decision upon each party and to furnish a copy to each party’s attorney of record and the Office of Administrative Hearings. G.S. § 150B-36(b3).

This the 25th day of November, 2003.

______

James L. Conner, II

Administrative Law Judge