State of North Carolina s55

STATE OF NORTH CAROLINA IN THE OFFICE OF ADMINISTRATIVE HEARINGS COUNTY OF WAKE 04 DHR 0641

ZACK’S FOOD MART, ) NIDAL DAHIR, ) Petitioner, ) ) v. ) DECISION ) N.C. DEPARTMENT OF HEALTH AND ) HUMAN SERVICES, WIC,DIVISION OF ) PUBLIC HEALTH, ) Respondent. )

THIS MATTER came on for hearing before the undersigned administrative law judge on July 1, 2004, in Raleigh, North Carolina. Petitioner, Nidal Dahir, appeared pro se. Special Deputy Attorney General, Mabel Y. Bullock, represented the Respondent. The Respondent presented three witnesses and introduced 12 exhibits. The Petitioner testified on his own behalf. The transcript of the proceeding was complete and received on July 23, 2004. Respondent filed their proposed findings of fact and conclusions of law on August 23, 2004. Petitioner did not file any proposed decision documents.

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 finding that the Petitioner, Nidal Dahir, owner of Zack’s Food Mart, had a pattern of claiming reimbursement for the sale of an amount of a specific supplemental food item which exceeds the store’s documented inventory of that supplemental food item for a specific period of time, March 21, 2003 through June 12, 2003.

BASED UPON careful consideration of the testimony and evidence presented at the hearing, the documents and exhibits received into 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 the evidence and has assessed the credibility of the witnesses by taking into account the appropriate and traditional factors for judging credibility, such as the demeanor of the witness, 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. 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. Participants, in their 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. 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.

5. Petitioner, Nidal Dahir, is the owner of Zack’s Food Mart, a convenience store located in Raleigh, North Carolina. The Petitioner operates as an authorized WIC vendor, stamp #4787. Petitioner first became authorized as a WIC vendor in May 1993, and has continued WIC vendor authorization since that time. Petitioner signed a WIC Vendor Application and WIC Vendor Agreement on May 16, 2002.

6. The Wake County Health Department WIC Program conducted annual vendor training on WIC Program procedures, rules and regulations May 9, 2002 and April 24, 2003. Copies of the North Carolina WIC Vendor Manual were distributed to the vendor representatives attending these training sessions. Petitioner’s representative attended the May 9, 2002 and April 24, 2003 training sessions and received the Vendor Manuals.

7. Vendors are reimbursed for WIC approved items that are actually sold to participants. Vendors are required to maintain a minimum inventory of WIC approved foods. Vendors must have purchased sufficient WIC foods to equal the WIC redemptions received for that period. Inventory audits involve reviewing a vendor’s inventory records of WIC supplemental foods over a sixty-day period to analyze redemption data. A Vendor is subject to disqualification for receiving reimbursements that exceed the store’s documented inventory.

8. Craig Forsythe is employed by the North Carolina Department of Health and Human Services as an Internal Auditor for the WIC Program. Part of his duties for the WIC Program includes conducting inventory audits at authorized WIC vendors to determine compliance with

2 the laws, rules and regulations governing the WIC Program. Mr. Forsythe conducted an inventory audit at Zack’s Food Mart for the period March 21, 2003 through June 12, 2003. Forsythe entered Petitioner’s store on March 21, 2003 to begin the inventory audit. He returned around 60 days later to determine the ending inventory count.

9. An inventory audit for the period of March 21, 2003 through June 12, 2003 showed that reimbursement was claimed for the sale of an amount of specific supplemental food items which exceeded the store’s documented inventory for those items by 10% or more.

10. Craig Forsythe initiated an inventory audit of Petitioner's store in order to examine the documentation of the Vendor’s inventory, accounts and available records to determine whether the vendor had purchased sufficient quantities of supplemental foods to provide participants the quantities specified on the food instruments redeemed by the vendor during the audit period.

12. Forsythe requested all vendor purchase invoices of all supplemental foods purchased during the audit period. Forsythe compared the redeemed WIC Food Instruments to the Vendor’s beginning inventory, purchases and ending inventory.

13. Forsythe found that the vendor’s records of specific supplemental food items detailed a pattern of claiming reimbursement for the sale of supplemental food items that exceeded the store’s documented inventory for those supplemental food items by more than 10 percent. Specific supplemental foods reimbursed in excess of documented inventory were cheese, cereal, beans/peas/peanut butter, infant formula concentrate, carrots and juice.

14. Petitioner acknowledges that some purchase documents were not kept. Petitioner testified to issuing IOU’s for unavailable food so participants could return to the store at a later time to get the WIC items but there is no documentation that participants received such food items. Evidence shows that the Vendor was paid for these food items as if disbursed to participant. Petitioner also testified he purchased WIC Supplemental foods from other stores to provide to participants but vendor failed to provide receipts to substantiate these purchases.

15. Forsythe determined that during the audit period of March 21, 2003 through June 12, 2003, the Vendor was reimbursed for WIC sales in excess of documented inventory resulting in an overpayment of $1536.29 based on available documentation.

16. On March 26, 2004, Respondent informed Petitioner of the Notice of Intent to Disqualify Petitioner from the WIC Program. The Notice of Intent to Disqualify dated March 26, 2004, stated that a recent inventory audit of his store, Zack’s Food Mart, had revealed a pattern of claiming reimbursement for the sale of an amount of a specific supplemental food item which exceeded the store’s documented inventory of that supplemental food item for a specific period of time.

3 17. The evidence shows that 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.

BASED UPON the foregoing Findings of Fact and upon the preponderance of the evidence in the whole record, the Undersigned makes the following Conclusions of Law.

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. Title 7 C.F.R. § 246.12(l)(1)(iii)(B) and 10A N.C.A.C. 43D .0706(g) provide that the state agency must disqualify a vendor for three years for a pattern of claiming reimbursement for the sale of an amount of a specific supplemental food item which exceeds Vendor’s documented inventory of that supplemental food for a specific period of time.

3. Title 10A N.C.A.C. 43D .0706(g)(2)(A) provides that a pattern is established when a vendor claims reimbursement for the sale of an amount of a specific supplemental food item over a 60-day period which exceeds the store’s documented inventory of that supplemental food item by 10% or more.

4. 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.

5. A pattern of vendor overcharges has been established at Petitioner's store, Zack’s Food Mart, by the two occurrences of vendor claiming reimbursement for the sale of an amount of a specific supplemental food item over a 60-day period which exceeded the store’s documented inventory of that supplemental food item by 10% or more in violation of 7 C.F.R. § 246.12(l)(1) (iii)(B), 10A N.C.A.C. 43D .0706(g), .0706(g)(2)(A) and the WIC Vendor Agreement.

6. 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.

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

DECISION

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

4 NOTICE

The agency making the final decision in this contested case is required to give each party an opportunity to file exceptions and to present written arguments regarding this Decision issued by the Undersigned in accordance with N. C. Gen. Stat. § 150B-36.

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, giving due regard to the opportunity of the administrative law judge to evaluate the credibility of witnesses. 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. Every finding of fact not specifically rejected as required by Chapter 150B shall be deemed accepted for purposes of judicial review. 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 establishing that the new finding of fact is supported by a preponderance of the evidence in the official record.

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. The agency that will make the final decision in this case is the North Carolina Department of Health and Human Services.

IT IS SO ORDERED.

This the 21st day of September, 2004.

______Augustus B. Elkins II Administrative Law Judge