Original Notice.

Preproposal statement of inquiry was filed as WSR 99-13-082.

Title of Rule: Chapter 246-790 WAC, Special supplemental nutrition program for women, infants, and children (WIC).

Purpose: To comply with new federal regulations which explain program violations in more explicit terms and increase the severity of mandatory sanctions for those violations.

Statutory Authority for Adoption: RCW 43.70.120.

Statute Being Implemented: RCW 43.70.120, 7 C.F.R. 246.12, [246.]15 and [246.]18.

Summary: The rules spell out mandatory sanctions for specific violations, identify what is and is not appealable under the new regulations, address when monetary penalties can be used in lieu of disqualification, and explain the formula for calculating monetary penalties.

Reasons Supporting Proposal: The USDA is focusing on program integrity to reduce fraud and abuse in all aspects of the WIC program. The first action taken was to promulgate rules tightening the sanctions for violating program regulations for the food delivery component of the program. The regulations explicitly state the violations and the mandatory sanctions for committing those violations. The regulations provide a formula for calculating monetary penalties using redemption data. In addition, the regulations remove the ability of the state agency to negotiate reduced penalties.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Susan Evans/Becky Waite, P.O. Box 47886, Olympia, 98504-7886, (360) 236-3636.

Name of Proponent: Department of Health, WIC Program, governmental.

Rule is necessary because of federal law, 7 C.F.R. 246.12.

Explanation of Rule, its Purpose, and Anticipated Effects: This rule provides the procedures by which food items and retailers become authorized to participate in the WIC program. It also lists in detail the responsibilities of authorized retailers, the violations of program requirements, the sanctions a noncompliant retailer is subject to, and the appeal hearing process. The new federal regulations tighten the integrity of the program by increasing the severity of the sanctions, both in the length of time for disqualification and in the amount of any monetary penalty imposed.

By making sure all authorized retailers are aware of the program requirements, the violations, and the sanctions, the program intends to increase voluntary compliance of the authorized retailers with the program requirements. It is the program's goal to enable retailers to successfully participate in the WIC program.

Proposal Changes the Following Existing Rules: In the proposed rule, the violations of program requirements and the corresponding sanctions are spelled out in more detail, as is the formula for calculating monetary penalties.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The revisions to the current rule are necessary to comply with federal regulations in 7 C.F.R. 246.12 and the state agency must comply with federal regulations to ensure continued funding.

RCW 34.05.328 applies to this rule adoption. The rule contains requirements stipulated in the federal regulations which subject an authorized retailer to sanctions if violated. The Administrative Procedure Act requires a rule be in place when violation of program requirements subjects the violator to monetary sanctions. One of the types of sanctions listed in the federal regulations is monetary.

Hearing Location: Department of Health, New Market Campus, 7171 Cleanwater Lane, Building 1, Tumwater, WA 98504-7880, on April 25, 2000, at 9:00 a.m.

Assistance for Persons with Disabilities: Contact Nina Benson by April 17, 2000, (360) 236-3615.

Submit Written Comments to: Susan Evans, WIC Program, P.O. Box 47886, Olympia, WA 98504-7886, fax (360) 586-3890, by April 17, 2000.

Date of Intended Adoption: April 28, 2000.

March 14, 2000

Mary Selecky

Secretary

OTS-3586.3

(1) "Alternate endorser" means a person authorized by the WIC client to pick up WIC checks at the local WIC agency and use the WIC checks at the retailer when the client is unable to do so.

(2) "Appeal process" means a formal proceeding to appeal ((a)) certain program decisions.      The appeal hearing process provides a contractor the opportunity to review the case record prior to the hearing, to present its case in an impartial setting, to confront and cross-examine witnesses, and to be represented by counsel.

(((2))) (3) "Applicant retailer" means any ((retailer)) contractor submitting a completed request for authorization on behalf of a retailer requesting participation in the program.

(((3))) (4) "Authorized" or "authorization" means the applicant retailer has met selection criteria as determined by the United States Department of Agriculture (USDA) and signed a contract ((with)) offered by the department signifying eligibility to participate in the WIC program.

(((4))) (5) "CFR" means the Code of Federal Regulations.

(((5))) (6) "Contract" means a written legal document binding the contractor and the department, represented by the WIC program, to designated terms and conditions.

(((6))) (7) "Contractor" means the owner, chief executive officer, controller, or other person legally authorized to obligate a retailer to a contract.

(((7))) (8) "Department" means the Washington state department of health.

(((8))) (9) "Disqualification" means the act of revoking the authorization and terminating the contract of an authorized retailer for noncompliance with WIC program requirements.

(((9))) (10) "Effective policy and program to prevent trafficking" means a written document that states what you can and cannot do with WIC checks and the consequences for failing to follow program requirements. Effectiveness is determined by documentation that a retailer has provided this written policy to all employees prior to any noncompliance being detected, including employees' signatures verifying they have been advised of the policy and understand the consequences of noncompliance, both for the retailer and for the employee.

(11) "Food company" means a manufacturer or broker of food items.

(((10))) (12) "Inadequate participant access" means the decision the state agency makes considering a variety of factors to determine how disqualification of a WIC retailer might affect a WIC client's access to WIC foods. The procedure includes, but is not limited to, assessing how many WIC authorized retailers are in a given service area, how many clients currently use the retailer in question, and any geographical barriers a client would contend with to access WIC foods at a different authorized retailer.

(13) "Local WIC agency" means the contracted clinic or agency where a client receives WIC services.

(((11))) (14) "Monetary penalty" means a sum of money imposed by the program for noncompliance with program requirements.

(((12))) (15) "Pattern" means more than one documented incidence of noncompliance with WIC program requirements in any given contract period.

(16) "Providing credit" means the retailer submitted and received payment on a WIC check for which the client did not receive all the foods listed on the check at the time the check was redeemed. The client may or may not receive the remaining foods or something of equal value at a later time.

(17) "Reauthorization" or "subsequent authorization" means the process when a retailer who has a contract with the ((department)) program which is expiring, has ((again applied and)) reapplied, met the selection criteria, and signed ((a subsequent)) another contract with the department signifying eligibility to participate in the WIC program.

(((13))) (18) "Supplemental WIC foods" means those foods containing nutrients determined to be beneficial for pregnant, breast-feeding, and postpartum women, infants and children, as prescribed by federal regulations and state requirements, and, as authorized by the Washington state WIC program.

(((14))) (19) "Trafficking" means buying or selling WIC checks for cash.

(20) "WIC program" or "program" means the federally funded special supplemental nutrition program for women, infants, and children administered in Washington state by the department of health.

(((15))) (21) "WIC retailer" or "retailer" means an individual store owned by a contractor ((which is)) authorized to participate in the WIC program.

(((16))) (22) "Wholesaler" means a business entity ((which)) that sells food and other items to a retailer.

(((17))) (23) "WIC check" means a negotiable instrument issued to and used by a WIC client or ((a WIC client's designee)) alternate endorser to obtain specified supplemental WIC foods at a contracted WIC retailer.

(((18))) (24) "WIC client" or "client" means a ((pregnant, breast-feeding, or postpartum)) woman who is pregnant, breast-feeding, or postpartum, infant, or child receiving WIC benefits.

(((19) "WIC client's designee" means a person authorized by the client to pick up WIC checks at the local WIC agency and use the WIC checks at the retailer when the client is unable to do so.))

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-010, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-010, filed 10/27/92, effective 11/27/92.      Statutory Authority: RCW 43.17.060, 43.21C.120 and 43.20A.550.      91-01-098 (Order 3118), § 246-790-010, filed 12/18/90, effective 1/18/91.]

(1) The WIC program in the state of Washington is administered by ((the division of community and family health, office of public health nutrition services in)) the department of health.

(2) The WIC program is a federally funded program established in 1972 by an amendment to the Child Nutrition Act of 1966.      ((It is)) The purpose of the program is to provide nutrition and health assessment, nutrition education, nutritious food; breast-feeding counseling; and referral services to pregnant, breast-feeding, and postpartum women, infants, and children in specific risk categories.

(3) Federal regulations governing the WIC program (7 CFR Part 246) require implementation of standards and procedures to guide the state's administration of the WIC program and are hereby incorporated in this rule by reference.      ((These regulations are designed to promote consistent and high quality services to clients, promote consistent application of procedures for eligibility and food issuance, and promote client and retailer compliance.))      These regulations define the rights, responsibilities, and legal procedures of clients and retailers. They are designed to promote:

(a) Consistent and high quality services to clients;

(b) Consistent application of procedures for eligibility and food issuance; and

(c) Client and retailer compliance.

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-050, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-050, filed 10/27/92, effective 11/27/92.      Statutory Authority: RCW 43.20A.550.      91-01-097 (Order 3117), recodified as § 246-790-050, filed 12/18/90, effective 1/18/91; 90-12-112 (Order 2960), § 388-19-005, filed 6/6/90, effective 7/7/90; 88-14-037 (Order 2638), § 388-19-005, filed 6/30/88.]

(((1))) WIC eligible women, infants, and children receive supplemental WIC foods from one or more of the following food categories.      These foods ((shall)) must meet nutritional standards established by federal regulations and state requirements:

(((a))) (1) Cereals,

(((b))) (2) Juices,

(((c))) (3) Infant formula,

(((d))) (4) Infant cereal,

(((e))) (5) Liquid nutritional supplements,

(((f))) (6) Milk,

(((g))) (7) Eggs,

(((h))) (8) Dry beans and peas,

(((i))) (9) Peanut butter,

(((j))) (10) Cheese,

(((k))) (11) Tuna, and

(((l))) (12) Carrots.

Additionally, the WIC program authorizes specific brands of juice, cereal, and infant formula based on federal and state nutritional requirements.      The WIC program limits the selection of authorized WIC foods in accordance with federal cost containment requirements, including, but not limited to, the competitive procurement of a single manufacturer's infant formula.

(((2) The procedure for initially authorizing a food is:

(a) By December 31 of odd-numbered years, a food company or other entity, such as a local WIC clinic, shall submit a written request to the WIC program for authorization of a food, to include:

(i) Package flats or labels, information on package sizes and prices, and a summary of current distribution, including identification of the wholesaler carrying the food; and

(ii) Assessment of when the new food replaces the old on store shelves when there is a change in formulation.

(b) The WIC program shall verify if a food considered for authorization fits within one of the authorized food categories, meets the federal requirements of nutritional standards, is available to retailers, and has been available to retailers for one year or more;

(c) A public health nutrition services work group shall make a recommendation based on the food's ingredients and value to the promotion of healthful and economic food buying practices;

(d) The WIC program has the option to survey local WIC agency staff and clients for their recommendation regarding need and demand for the food;

(e) The WIC program shall review data and recommendations and shall notify the food company of the program's decision;

(f) The WIC program shall add the newly authorized foods to the WIC check and related materials to coincide with the retailer contract period.

(3) Food companies shall notify the WIC program in writing of any changes in product formulation, product name, packaging, label design, size, or availability.      A food company shall notify the WIC program of any such changes before any Washington state wholesaler receives the new product.

If a food company fails to notify the WIC program of any changes, the WIC program may revoke or deny the food's WIC authorization.

(4) A food company shall not use the term "WIC approved" or the WIC program logo without prior written approval from the WIC program.

(5) The WIC program may require a food company to submit a statement guaranteeing a minimum period of time during which a food will be available in the state of Washington.

(6) The WIC program shall refuse any food that contradicts the principles promoted by the WIC program's nutrition service component.

(7) The WIC program may limit the number of authorized foods within a food category.

(8) The WIC program may initiate reassessment of any WIC authorized food.))

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-060, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-060, filed 10/27/92, effective 11/27/92.      Statutory Authority: RCW 43.20A.550.      91-01-097 (Order 3117), recodified as § 246-790-060, filed 12/18/90, effective 1/18/91; 90-12-112 (Order 2960), § 388-19-015, filed 6/6/90, effective 7/7/90; 88-14-037 (Order 2638), § 388-19-015, filed 6/30/88.]

(1) The procedure for initially authorizing a food is:

(a) By December 31 of odd-numbered years, a food company or other entity, such as a local WIC clinic, submits a written request to the WIC program for authorization of a food, to include:

(i) Package flats or labels, information on package sizes and prices, and a summary of current distribution, including identification of the wholesaler carrying the food; and

(ii) Assessment of when the new food replaces the old on store shelves when there is a change in formulation.

(b) The WIC program verifies if a food considered for authorization fits within one of the authorized food categories, meets the federal requirements of nutritional standards, is available to retailers, and has been available to retailers for one year or more;

(c) The WIC program may survey local WIC agency staff and clients for their recommendation regarding need and demand for the food;

(d) The WIC program reviews data and recommendations and notifies the food company whether or not a food is authorized;

(e) The WIC program will add any new authorized food to the WIC check and related materials to coincide with the retailer contract period.

(2) Food companies must notify the WIC program in writing of any changes in product formulation, product name, packaging, label design, size, or availability.      A food company must notify the WIC program of any such changes before any Washington state wholesaler receives the new product.

If a food company fails to notify the WIC program of any changes, the WIC program may revoke or deny the food's WIC authorization.

(3) A food company must obtain written approval from the WIC program before using the term "WIC approved" or the WIC program logo.

(4) The WIC program may require a food company to submit a statement guaranteeing a minimum period of time during which a food will be available in the state of Washington.

(5) The WIC program shall refuse any food that contradicts the principles promoted by the WIC program's nutrition service component.

(6) The WIC program may limit the number of authorized foods within a food category.

(7) The WIC program may initiate reassessment of any WIC authorized food.

[]

(1) Applicant retailers interested in participating in the WIC program must apply for authorization and enter into a contract with the department.

(2) Application procedure.

(a) ((Upon request, the WIC program will send an application packet to interested applicant retailers.))      Applicant retailers ((shall)) submit ((the)) a completed application to the WIC program, including a price list for authorized WIC foods.     

(b) The WIC program may require applicant retailers to provide information regarding shelf price records and inventory records showing all purchases, both wholesale and retail, including but not limited to, wholesale receipts, cash and carry receipts, purchase orders, books of account, invoices that identify the quantity and prices of specific WIC foods and other pertinent records that substantiate the volume and the prices charged.      Cash register receipts without specific identification of the quantity, unit price, and WIC food purchased are not acceptable as evidence of WIC food purchases.

(c) The WIC program ((shall)) conducts and documents an on-site visit prior to, or at the time of, initial authorization of an applicant retailer((, for the purpose of evaluating)) to evaluate the inventory of WIC foods and ((providing)) provide training on the WIC retailer handbook.

(d) Applications are accepted from April 1 of odd-numbered years until September 30 of even-numbered years.      Exceptions can be made in the case of an ownership change or where there is a documented need for a location in order to assure client access.      The WIC program may limit acceptance of new applications.

(3) The WIC program shall authorize a distribution of retailers ((that facilitates)) to ensure client access((, and enables effective management of the retailers)).      The WIC program may limit the number of authorized retailers in any given geographic area or state-wide to enable effective management of the retailers.

(4) The WIC program bases selection ((is based)) of authorized retailers on the following:

(a) ((The applicant retailer shall have)) Requests from or the potential of serving fifteen or more WIC clients as verified by the local WIC agency for new stores.

(b) ((Applicant retailers applying for re-authorization shall have)) A check redemption record averaging forty or more checks per month over a six-month period, documented by WIC program statistics reports for stores who are reapplying.

(c) Exceptions may be made for:

(i) Pharmacies needed as suppliers of special infant formulas; or

(ii) Applicant retailers in isolated areas where client access cannot otherwise be assured.

In either case, the need ((shall)) must be documented by the local WIC agency.

(d) ((Applicant retailers shall)) Stock of representative items with current shelf lives from all food categories on the authorized WIC food list.      Minimum quantities specified on the authorized WIC food list ((shall)) must be on the shelf available for purchase before a contract is offered to the retailer.      An applicant retailer seeking a waiver from the minimum formula stock requirement ((shall)) must request the waiver in writing for each contract period.      No waivers ((shall be)) are granted unless there is an insufficient number of authorized retailers in a given service area to assure client access((;)).

(e) Prices of individual foods ((shall not exceed)) less than one hundred twenty percent of the state-wide average price as calculated at least annually.      An applicant retailer seeking a waiver from the one hundred twenty percent requirement ((shall)) must request the waiver in writing for each contract period.      No waivers shall be granted unless there is an insufficient number of authorized retailers in a given service area to assure client access;

(f) ((The applicant retailer shall possess)) Possession of a valid Washington state tax registration number;

(g) ((The applicant retailer shall agree)) Agreement to comply with training sessions and monitor visits, and provide shelf price records and inventory records showing all purchases, both wholesale and retail, including but not limited to, wholesale receipts, cash and carry receipts, purchase orders, books of account, invoices that identify the quantity and prices of specific WIC foods, and other pertinent records that substantiate the volume and prices charged upon the WIC program's request;

(h) ((The applicant retailer shall operate)) Business operation from a fixed location;

(i) ((The applicant retailer shall be)) Open for business ((at)) a minimum of eight ((or more)) hours per day, six days per week.

(j) ((The applicant retailer shall be)) In compliance with local sanitation rules;

(k) ((The applicant retailer with a)) Have no history of any of the following ((shall be denied authorization unless client access can not otherwise be assured)):

(i) WIC or food stamp disqualification;

(ii) Redeeming WIC checks without authorization;

(iii) Changing ownership more than twice during a two-year contracting period;

(iv) Failing to implement corrective action imposed by the program;

(v) Failing to complete payment within the time specified, of an imposed monetary penalty or reimbursement of an overcharge; and

(vi) Refusing to accept training from the WIC program.

Exceptions may be made if client access cannot otherwise be assured.

(5) The WIC program may deny a retailer authorization for failure to meet any of the stated selection criteria.

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-070, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-070, filed 10/27/92, effective 11/27/92; 91-06-029 (Order 145), § 246-790-070, filed 2/26/91, effective 3/29/91.      Statutory Authority: RCW 43.20A.550.      91-01-097 (Order 3117), recodified as § 246-790-070, filed 12/18/90, effective 1/18/91; 90-12-112 (Order 2960), § 388-19-020, filed 6/6/90, effective 7/7/90; 88-18-022 (Order 2681), § 388-19-020, filed 8/30/88; 88-14-037 (Order 2638), § 388-19-020, filed 6/30/88.]

(1) All authorized retailers ((shall)) must enter into written contracts with the department.      The contract ((shall)) must be signed by the contractor and the designee of the contracting officer of the department of health.

(2) The contract ((shall)) lists all authorized retailers by name and location.      Individual retailers may be added, changed, disqualified, or ((terminated)) deleted by contract amendment without affecting the remaining retailers.

(3) Duration of contract.

(a) The WIC program ((shall)) issues contracts for a maximum period of two years.      All contracts expire on March 31 of odd-numbered years.

(b) Neither the WIC program nor the contractor is obligated to renew the contract.      The WIC program ((shall)) must notify contractors in writing not less than fifteen days before the expiration of a contract not being renewed by the program.

(c) Authorization is valid for no longer than the period stated in the contract.      The retailer must reapply to be considered for subsequent authorization in the WIC program.

(d) The contractor or the WIC program may terminate the contract at any time by submitting a written notice to the other party thirty days in advance.

(e) The contract is null and void in the event of a retailer closure or change in ownership.

(f) The contractor cannot voluntarily withdraw from participating in the WIC program in order to avoid being disqualified.

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-080, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-080, filed 10/27/92, effective 11/27/92; 91-23-078 (Order 215), § 246-790-080, filed 11/19/91, effective 12/20/91. Statutory Authority: RCW 43.20A.550.      91-01-097 (Order 3117), recodified as § 246-790-080, filed 12/18/90, effective 1/18/91; 90-12-112 (Order 2960), § 388-19-025, filed 6/6/90, effective 7/7/90; 88-14-037 (Order 2638), § 388-19-025, filed 6/30/88.]

(1) The retailer ((shall)) must comply with WIC program requirements and terms of the retailer contract.

(2) The retailer ((shall)) must stock sufficient quantities of authorized WIC foods to meet the needs of WIC customers, but not less than the minimum stock levels.

(3) The retailer ((shall)) must redeem WIC checks made payable only to ((that specific retailer)) their store or with the words "any authorized WIC vendor."

(4) The retailer ((shall)) must accept WIC checks from a WIC customer on the "first day to use," the "last day to use," or any day in between the dates printed on the WIC check.      The retailer ((shall)) must submit the WIC check for payment within sixty days from the "first day to use."

(5) The retailer ((shall)) must refuse ((to accept)) WIC checks that have the purchase price missing, the client's signature missing, the "first day to use" or the "last day to use" missing, or that are ((postdated or stale)) dated too early or too late.

(6) The retailer must refuse WIC checks with purchase amounts over the "not to exceed" amount printed on the check.

(7) The retailer ((shall)) must enter the actual purchase price of the specific quantity of WIC authorized foods on each WIC check before the WIC customer countersigns the check.

(((7))) (8) The retailer ((shall)) must accept only WIC checks on which the WIC customer's countersignature matches the first customer signature on the check.

(((8))) (9) The retailer ((shall)) must refuse ((to accept)) WIC checks that are altered in any way.

(((9))) (10) The retailer must refuse to accept WIC checks from any other retailer.

(11) The retailer ((shall)) must redeem WIC checks for only the supplemental WIC foods and in no more than the quantity specified on the check.

(((10))) (12) The retailer ((shall)) must post the prices of WIC foods so they are visible to the public.

(((11))) (13) The retailer ((shall)) must provide supplemental foods at the current price or at less than the current price charged to other customers.

(((12))) (14) The retailer ((shall)) must not sell WIC-authorized foods after the manufacturer's expiration date.

(((13) The retailer shall not accept WIC checks with purchase amounts over the "not to exceed" amount printed on the check.

(14))) (15) The retailer ((shall)) must reimburse the WIC program for documented overcharges and payments made on improperly handled WIC checks.

(((15))) (16) The retailer ((shall)) must not seek restitution from WIC ((clients)) customers for WIC checks not paid by the WIC program, nor ((shall the retailer)) seek restitution through a collection agency.

(((16))) (17) The retailer ((shall)) must not request cash or give change in a WIC transaction.

(((17))) (18) The retailer ((shall)) must not impose a surcharge or charge sales tax on any food purchased with WIC checks.

(((18))) (19) The retailer ((shall)) must refuse WIC ((client's)) customer's requests for exchanges or cash refunds for returned WIC foods.      Exceptions may be made for exchange of food due to spoilage or expired date not noticed by the WIC ((client)) customer at the time of the WIC transaction.

(((19))) (20) The retailer ((shall)) must not issue rain checks, any form of credit, or otherwise charge the WIC program for foods not received by the WIC customer at the time the WIC check is redeemed.

(((20))) (21) The retailer ((shall)) must treat WIC customers with the same courtesy provided to other customers.

(((21))) (22) The retailer must comply with federal and state nondiscrimination laws.

(23) The contractor ((shall be)) is responsible for the actions or inactions of employees, agents, and authorized retailers with regard to participation in the WIC program.

(((22))) (24) The manager of the retailer or an authorized representative such as head cashier ((shall)) must attend training on WIC program requirements and procedures prior to issuance of a contract and as otherwise required by the WIC program.      Those individuals receiving training must sign a document verifying attendance and understanding of the contents of the training. The WIC program ((shall)) provides this training at no cost to the retailer.

(((23) Those who attend)) (25) The individuals attending training ((shall)) must inform and train other employees on WIC program requirements and WIC check cashing procedures.

(((24))) (26) The retailer ((shall)) must provide access to its facilities at all reasonable times for WIC program representatives to monitor, to provide training or technical assistance, and to evaluate performance, compliance, and quality assurance.

(((25) During any WIC program visit of a retailer,)) (27) The retailer ((shall)) must provide access to redeemed WIC checks for the purpose of review by the program representative during any on-site visit.

(((26))) (28) Retailers ((shall)) must maintain inventory records showing all purchases, both wholesale and retail, for a period of at least ((three years, including)) one year after the expiration of the contract with the WIC program. These inventory records include, but are not limited to, shelf price records, wholesale receipts, cash and carry receipts, purchase orders, books of account, invoices that identify the quantity and prices of specific WIC foods, and other pertinent records that substantiate the volume and prices charged and provide WIC program representatives access to those records on request.

(((27))) (29) Each retailer ((shall)) must provide the WIC program with a completed price list of authorized WIC foods on request, but not more than twelve times per year.

(((28))) (30) The contractor ((shall)) must notify the WIC program of any change of ownership, retailer name, location and/or cessation of operation for any reason ((no later than the tenth of the month prior to)) at least thirty days before the effective date of the change.

(((29))) (31) Contractors ((shall)) must observe time lines, such as deadlines for submitting price lists and returning properly signed contracts.      Failure of contractors to do so may result in denial of authorization.

(((30))) (32) Contractors ((shall)) must take corrective action as directed by the WIC program. Examples of corrective action include, but are not limited to, payment of monetary penalties and reimbursements, conducting monthly education buys, and filing requested progress reports.

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-085, filed 8/6/97, effective 9/6/97.]

(1) The WIC program conducts on-site compliance reviews at retailer locations to monitor retailer compliance with program requirements.

(2) Preauthorization visits.

(a) Visit is scheduled in advance.

(b) ((The WIC program representative identifies self.

(c))) The WIC program representative provides training on the WIC retailer handbook which includes information on WIC foods and WIC check handling, and collects information on WIC food stock levels and shelf prices.

(((d))) (c) The retailer signs the preauthorization visit form verifying receipt of the training, understanding of program requirements, and the commitment to train store personnel.

(3) Compliance visits.

(a) Visit may or may not be scheduled in advance;

(b) ((The WIC program representative identifies self;

(c))) The WIC program representative may do some or all of the following during a visit: Review WIC check handling procedures, WIC food stock levels, expiration dates and prices, WIC checks negotiated but not yet deposited, shelf price records, wholesale receipts, cash and carry receipts, purchase orders, books of account, invoices that identify the quantity and prices of specific WIC foods, and other pertinent records that substantiate the volume and prices charged, provide training or technical assistance, and verify implementation of a corrective action plan.

(((d))) (c) The WIC program representative documents the name of the retailer, the name of the program representative, the names of all persons interviewed, the date of the visit, any problems or concerns detected or the observation the retailer appears to be in compliance, any corrective action plan if problems are detected, and the signatures of the program representative and the retailer.

(4) Compliance purchases.

(a) The WIC program representative ((does not identify self)) acts covertly;

(b) The WIC program representative may make((s)) a purchase using WIC checks ((applying a predetermined methodology)) or may attempt trafficking;

(c) The WIC program representative completes a report on the visit itemizing information including but not limited to, a description of the checker involved, the time and date of the transaction, the number of check stands opened and closed, other customers in line, exact items purchased and/or refused, the prices charged ((or the purchase prices)), comments of the checker, observations of the investigator or the investigative aide, any stock deficiencies noted, any other pertinent information, and the signature of the investigator.

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-090, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-090, filed 10/27/92, effective 11/27/92.      Statutory Authority: RCW 43.20A.550.      91-01-097 (Order 3117), recodified as § 246-790-090, filed 12/18/90, effective 1/18/91; 90-12-112 (Order 2960), § 388-19-030, filed 6/6/90, effective 7/7/90; 88-14-037 (Order 2638), § 388-19-030, filed 6/30/88.]

(1) Retailers who commit acts of noncompliance are liable to prosecution in accordance with federal regulations (7 CFR 246.12 and 7 CFR 246.23).      Noncompliance is failure to follow WIC program requirements including, but not limited to:

(a) Buying or selling WIC checks for cash (trafficking);

(b) Selling firearms, ammunition, explosives, or controlled substances for WIC checks;

(c) Selling alcohol or tobacco for WIC checks;

(d) Charging WIC for food not available to buy and having no documentation of having had enough food on the shelf for WIC clients to buy;

(e) Providing ((cash,)) unauthorized food((, nonfood items,)) or other items to WIC customers in lieu of or in addition to authorized WIC supplemental foods;

(((b))) (f) Selling or offering to sell foods with expired shelf lives;

(((c))) (g) Charging the WIC program for foods not received by the customer;

(((d))) (h) Charging the WIC program more for authorized WIC supplemental foods than other customers are charged for the same food;

(((e) Inflating the purchase price of a WIC transaction;

(f))) (i) Providing ((rain checks or)) credit or nonfood items to customers in a WIC transaction;

(((g))) (j) Charging WIC customers cash or giving change in a WIC transaction;

(((h))) (k) Redeeming WIC checks outside of authorized channels; for example, accepting WIC checks without having ((authorization from)) a signed contract with the WIC program and accepting checks payable elsewhere then working out an exchange at that other retailer;

(((i))) (l) Failing to write the actual purchase price on the WIC check at the time of the WIC transaction; and

(((j))) (m) Failing to maintain adequate stock of WIC foods on the retailer's shelves.

(2) The WIC program may deny payment to, impose monetary penalties on and disqualify retailers for noncompliance with WIC program requirements and terms of the retailer contract.

(3) The WIC program ((shall)) must seek reimbursement from retailers for documented overcharges and for payments made on improperly handled WIC checks.

(4) Retailers found in noncompliance, except for the offenses listed in the first five rows of the table in subsection (((9))) (6) of this section, will be notified by the WIC program and given the opportunity to correct the deficiency.      Methods of notification include, but are not limited to, technical assistance contacts and notice of correction letters.      Repeating any act of noncompliance ((may)) will subject a retailer to sanctions.

(5) When the WIC program denies a retailer authorization, denies payment, imposes a monetary penalty, requests reimbursement, or disqualifies a retailer, the program ((shall)) must give the contractor written notice not less than fifteen days prior to the effective date of the action.      The notice ((shall)) must state what action is being taken, the effective date of the action, and the procedure for requesting an appeal hearing if the action is one which can be appealed.

(6) ((Monetary penalties shall be imposed when noncompliance of a same or similar type of noncompliance occurs following notification and the opportunity for correction.

(7) Monetary penalties, in accordance with federal regulations, are:

(a) If the value of the unauthorized items was less than one hundred dollars, the monetary penalty shall be not less than one hundred dollars and not more than one thousand dollars.

(b) If the value of the unauthorized items was one hundred dollars or more, the monetary penalty shall be not less than five hundred dollars and not more than ten thousand dollars.

(8) Monetary penalties and reimbursements shall be paid to the revenue section of the department within the time period specified in the notice.      Retailers who fail to pay within the time period specified in the notice shall be referred to a commercial collection agency and may be disqualified.

(9))) The WIC program ((shall)) must disqualify the WIC retailer for the following((, after providing advance notice of not less than fifteen days)):

(((a) Redeeming a WIC check for the purchase of any form of alcohol or tobacco;

(b) Purchasing a WIC check for partial value and redeeming at full value (commonly referred to as trafficking or discounting);

(c) Redeeming a WIC check for the purchase of nonfood items;

(d) Using a pattern of overcharging;

(e) Noncomplying in a same or similar nature following notification and the opportunity for correction;

(f) Being disqualified from the food stamp program by the food and consumer service.

(10) The WIC program shall disqualify the retailer from the WIC program for a specified period of time, not to exceed three years.))

Violation	Length of Disqualification
Disqualification from the food stamp program by the food and nutrition service;	Time period corresponding to food stamp program disqualification
Conviction for trafficking in WIC checks or exchanging firearms, ammunition, explosives, or controlled substances for WIC checks;	Permanent
One incidence of trafficking;	Six years
One incidence of exchanging firearms, ammunition, explosives, or controlled substances for WIC checks;	Six years
One incidence of exchanging any form of alcohol or tobacco for a WIC check;	Three years
A documented pattern of charging WIC for food not available to buy and having no documentation of having had enough food on the shelf for WIC clients to buy;	Three years
A documented pattern of overcharging, including charging more than the shelf price, charging more than for non-WIC customers, and charging for food not received by the customer;	Three years
A documented pattern of redeeming WIC checks outside of authorized channels;	Three years
A documented pattern of providing credit or nonfood items, other than alcohol, alcoholic beverages, tobacco products, cash, firearms, ammunition, explosives, or controlled substances as defined in 21 N.S.C. 802, in exchange for WIC checks;	Three years
A documented pattern of selling unauthorized foods or selling more than the amount of food listed on the WIC check.	One year

(7) At the end of the disqualification period, the retailer must reapply to be considered for authorization.

(((11))) (8) Prior to disqualifying a retailer, the WIC program ((shall)) must consider whether the disqualification would create ((undue hardships)) inadequate access to WIC foods for WIC clients.      ((In these cases)) If the WIC program determines a retailer's disqualification would result in inadequate client access to WIC foods, the WIC program may ((agree on)) impose a monetary penalty in lieu of disqualification.

(((12))) (9) Monetary penalties are calculated in accordance with federal regulations using the following formula:

(a) Average the retailer's monthly volume of WIC business over at least the six-month period ending with the month preceding when the notice to the retailer is dated;

(b) Multiply the average by ten percent (.10);

(c) Multiply that number by the number of months for which the store would be disqualified. This is the amount of the monetary penalty.

(10) Monetary penalties must not exceed ten thousand dollars for each violation. For a violation warranting permanent disqualification, the monetary penalty is ten thousand dollars. If several violations are documented during the course of one investigation, the department must impose a monetary penalty for each violation, not to exceed a total of forty thousand dollars.

(11) Monetary penalties and reimbursements must be paid to the revenue section of the department within the time period specified in the notice. Retailers who fail to pay within the time period specified in the notice will be referred to a commercial collection agency and disqualified for the length of time corresponding to the violation.

(12) When a retailer who has already been sanctioned for noncompliance is found out of compliance again, the department must double the sanction. A monetary penalty in lieu of disqualification is not an option for third or subsequent incidences of noncompliance.

(13) A contractor who fails to give the specified notice of closure, a change in ownership, retailer name, and/or location ((shall be)) is liable for resultant costs incurred by the WIC program.

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-100, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-100, filed 10/27/92, effective 11/27/92.      Statutory Authority: RCW 43.20A.550.      91-01-097 (Order 3117), recodified as § 246-790-100, filed 12/18/90, effective 1/18/91; 90-12-112 (Order 2960), § 388-19-035, filed 6/6/90, effective 7/7/90; 88-14-037 (Order 2638), § 388-19-035, filed 6/30/88.]

(1) ((The contractor may appeal notice of denial of payment, denial of authorization, monetary penalty, reimbursement, or disqualification.      Expiration and nonrenewal of a WIC contract is not subject to appeal.

(2))) The contractor may appeal:

(a) Notice of denial of payment;

(b) Denial of authorization;

(c) Monetary penalty;

(d) Reimbursement; or

(e) Disqualification.

(2) Actions not subject to appeal are:

(a) Expiration or nonrenewal of a WIC contract;

(b) Department determination regarding inadequate client access to WIC foods; and

(c) Disqualification based on a food stamp program disqualification. When the action being appealed is disqualification, the retailer ((shall)) must cease redeeming WIC checks effective the date specified in the notice and ((shall)) must not accept WIC checks during the appeal period.      ((Payments shall not be made for)) The department will not pay any WIC checks redeemed by a retailer during a period of disqualification.

(3) A request for an appeal hearing ((shall)) must be in writing and:

(a) State the issue raised;

(b) Contain a summary of the contractor's position on the issue, indicating whether each charge is admitted, denied, or not contested;

(c) State the name and address of the contractor requesting the appeal hearing;

(d) State the name and address of the attorney representing the contractor, if applicable;

(e) State the contractor's need for an interpreter or other special accommodations, if necessary; and

(f) Have a copy of the notice from the program attached.

(4) A request for an appeal hearing ((shall)) must be filed at the ((Office of Professional Standards (OPS))) Adjudicative Clerk's Office, Department of Health, 1107 Eastside St., P.O. Box ((47872)) 47879, Olympia, WA 98504-((7872)) 7879.      The request ((shall)) must be made within twenty-eight days of the date the contractor received the notice.

(5) The decision concerning the appeal ((shall)) must be made within sixty days from the date the request for an appeal hearing was received by the ((office of professional standards (OPS))) Adjudicative Clerk's Office.      The time ((shall)) for rendering the decision may be extended by as many days as ((the contractor requests, assents to, or necessitates a delay in the proceedings)) all parties agree to with ((due)) good cause.

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-120, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-120, filed 10/27/92, effective 11/27/92.      Statutory Authority: RCW 43.20A.550.      91-01-097 (Order 3117), recodified as § 246-790-120, filed 12/18/90, effective 1/18/91; 90-12-112 (Order 2960), § 388-19-045, filed 6/6/90, effective 7/7/90; 88-18-022 (Order 2681), § 388-19-045, filed 8/30/88; 88-14-037 (Order 2638), § 388-19-045, filed 6/30/88.]

(1) The WIC program may establish a retailer advisory committee for the purpose of soliciting input on policies, procedures, and other matters pertinent to retailer participation in the WIC program.

(2) The retailer advisory committee ((shall)) meets at least two times per year.

(3) The membership of the retailer advisory committee ((will)) consists of representation of at least the following:

(a) ((The)) Washington Food ((industries)) Industry;

(b) Manager or checker trainer from a large chain;

(c) Manager or checker trainer from a small chain;

(d) Minority-owned retailer;

(e) Instructor of a checker training program with a technical college;

(f) Local WIC agency staff person;

(g) Current or former WIC client;

(h) Administrative representative, such as loss prevention or risk manager or human resources representative, from any size retailer;

(i) Owner of an independent retailer (single store); and

(j) A military commissary.

[Statutory Authority: RCW 43.70.120.      97-16-117, § 246-790-130, filed 8/6/97, effective 9/6/97; 92-22-036 (Order 314), § 246-790-130, filed 10/27/92, effective 11/27/92.      Statutory Authority: RCW 43.20A.550.      91-01-097 (Order 3117), recodified as § 246-790-130, filed 12/18/90, effective 1/18/91; 88-18-022 (Order 2681), § 388-19-050, filed 8/30/88; 88-14-037 (Order 2638), § 388-19-050, filed 6/30/88.]

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