WSR 02-07-020

PROPOSED RULES

DEPARTMENT OF HEALTH


[ Filed March 11, 2002, 1:59 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 01-13-115.

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

Purpose: The United States Department of Agriculture (USDA) has released comprehensive federal regulations affecting the entire WIC food delivery system. The new regulations address many things including the imposition of monetary sanctions. To comply with the Administrative Procedure Act, chapter 34.05 RCW, the Washington WIC program must revise its rule.

Statutory Authority for Adoption: RCW 43.70.120.

Statute Being Implemented: 7 C.F.R. 246.

Summary: The regulations address many things, including the length of a contract period with a retailer, the way the WIC program trains the retailers and how often required, the criteria used for choosing stores to monitor, the way stores are selected for participation, the business integrity of a retailer, the minimum stock required of a retailer, and how the program reimburses retailers for the checks they accept.

Reasons Supporting Proposal: The federal regulations give the WIC program authority to impose monetary sanctions. In order to continue receiving federal funding, we must comply with the federal regulations. In addition, we are obligated to incorporate the federal regulations into a state rule to remain in compliance with the Administrative Procedure Act.

Name of Agency Personnel Responsible for Drafting: Susan Evans, WIC Program, 236-3636; Implementation and Enforcement: Becky Waite, WIC Program, 236-3640.

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

Rule is necessary because of federal law, 7 C.F.R. 246.

Explanation of Rule, its Purpose, and Anticipated Effects: The USDA establishes the federal regulations by which the WIC program must operate. Part of those regulations require the state WIC program impose sanctions, including monetary penalties, on authorized retailers for documented violations of program requirements. For that reason, the Washington state WIC program has had a state rule in place since 1988.

USDA recently released new federal regulations with an implementation deadline of October 1, 2002. These long anticipated regulations affect all parts of the WIC food delivery system from the length of the contract period, to how we conduct training, to how we select retailers for participation and how we select them for routine monitoring and compliance investigations. In addition, the regulations address additional sanctions for violations in the food stamp program and in other state WIC programs and stress business integrity of not only the owner or officers of a company but of the store manager as well.

Our goal is to make the program requirements clear and easy to understand so that compliance with the requirements is easy for our contracted retailers. We want to facilitate success for our retailers. We want to levy sanctions only when there is no remaining option.

Proposal Changes the Following Existing Rules: All changes with the exception of wordsmithing and rearranging sentences for clarity are in direct response to the federal regulations. The selection criteria used for determining which retailers to authorize for participation in the WIC program are strengthened. Training is now mandatory for continued participation. The contract time period is longer. How we choose retailers for routine monitor visits and compliance investigations is addressed. The list of what kind of actions and decisions can and cannot be appealed is expanded.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The impact on the smallest businesses will be mitigated through the efforts of state WIC staff to conduct the required training onsite at the retail location on an individual basis instead of requiring the store owner or representative travel to attend.

Participation in the WIC program by a qualifying retailer is voluntary on the part of the retailer.

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 does not apply to this rule adoption. This rule incorporates federal statutes without material change.

Hearing Location: Department of Health, Building 1 Conference Room, 7171 Cleanwater Lane, Tumwater, WA 98501, on April 23, 2002, at 10:30 a.m.

Assistance for Persons with Disabilities: Contact Susan Evans by April 16, 2002, TDD (800) 833-6388.

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

Date of Intended Adoption: May 1, 2002.

Mary C. Selecky

Secretary

OTS-5384.2


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-010   Definitions.   (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)) hearing" means a formal proceeding to appeal 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.

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

(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 offered by the department signifying eligibility to participate in the WIC program.

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

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

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

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

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

(10) "Effective policy and program to prevent trafficking" means a written document that states what ((you)) can and cannot ((do)) be done 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, prior to any noncompliance being detected.

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

(12) "Inadequate ((participant)) client 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 or man-made 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.

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

(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)) a WIC check even though the client did not receive all the foods 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) "Redeeming WIC checks outside of authorized channels" means not following the rules regarding who can accept WIC checks and how to redeem them. Examples include, but may not be limited to:

(a) A retailer accepting WIC checks without having a signed contract with the WIC program;

(b) A retailer accepting WIC checks payable to a different authorized retailer or a different outlet of the same chain and redeeming them through that other retailer; or

(c) A retailer using WIC checks to repay a debt at a different retailer.

This violation also applies to the retailer who receives and deposits the WIC checks from the retailer who accepted them.

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

(((18))) (19) "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.

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

(((20))) (21) "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.

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

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

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

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

[Statutory Authority: RCW 43.70.120 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-010, filed 6/9/00, effective 7/10/00. 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.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-050   What is the WIC program?   (1) The WIC program in the state of Washington is administered by 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. 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 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 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-050, filed 6/9/00, effective 7/10/00. 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.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-065   What is the process for getting a food WIC authorized?   (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)). The request includes:

(i) Package flats or labels, information on package sizes and prices, and a summary of current distribution, including identification of the wholesaler(s) 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 currently available to retailers, and has been available to retailers for at least 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 of the product.

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

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

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

(7) The WIC program may evaluate a food for authorization outside of the three-year food review cycle if necessary.

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

[Statutory Authority: RCW 43.70.120 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-065, filed 6/9/00, effective 7/10/00.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-070   How do I become a WIC retailer?   (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) Applicant retailers submit 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 conducts and documents an on-site visit prior to, or at the time of, initial authorization of an applicant retailer to evaluate the inventory of WIC foods and provide training on ((the)) WIC ((retailer handbook)) requirements.

(d) Applications are accepted ((from April 1 of odd-numbered years until September 30 of even-numbered years)) on an ongoing basis, except for the six months prior to contract expiration during which no applications are accepted. 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 further limit acceptance of new applications as needed.

(3) The WIC program shall authorize a distribution of retailers to ensure client access. The WIC program may limit the number of authorized retailers in any given geographic area or statewide to enable effective management of the retailers.

(4) The WIC program bases selection of each authorized retailer((s)) on the following:

(a) Number of clients served.

(i) An applicant retailer needs to have requests from or the potential of serving at least fifteen ((or more)) WIC clients who are currently receiving checks from the WIC program as verified by the local WIC agency ((for new stores)).

(((b) A)) (ii) Retailers applying for reauthorization must have a documented check redemption record averaging at least forty ((or more)) checks per month over a six-month period((, documented by WIC program statistics reports for stores who are reapplying)).

(((c))) (iii) Exceptions may be made for:

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

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

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

(((d))) (b) Minimum stock levels.

(i) A retailer or applicant retailer must stock ((of representative items)) a reasonable variety of items with current shelf lives from all food categories on the authorized WIC food list. Minimum quantities specified on the authorized WIC food list 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 must request the waiver in writing for each contract period. No waivers are granted unless there is an insufficient number of authorized retailers in a given service area to assure client access)).

(((e))) (ii) A retailer or applicant retailer is not required to carry every brand of WIC allowed infant formula, but must carry at least the minimum quantity of the WIC contract formulas.

(c) Prices. A retailer's prices ((of)) for individual WIC foods ((less than)) must not exceed one hundred twenty percent of the statewide average price ((as calculated at least annually. An applicant retailer seeking a waiver from the one hundred twenty percent requirement 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)) for that food at time of authorization or at any given time in the contract period;

(((f) Possession of)) (d) Business operations. A retailer or applicant retailer must:

(i) Possess a valid Washington state tax registration (UBI) number;

(((g) Agreement to)) Exception may be made for a store needed in border towns of Oregon and Idaho to ensure client access to WIC foods.

(ii) Possess a valid food stamp authorization number.

Exception may be made for a pharmacy needed to ensure client access to hard to find formulas.

(iii) Operate from a fixed location.

(iv) Be open for business a minimum of eight hours per day, six days per week.

(v) Maintain a clean and safe interior environment by, for example, complying with local sanitation rules.

The WIC program may request a health inspection and report by the local health department at any time in the contract period.

(e) Business integrity.

(i) The WIC program will take into consideration if a retailer or applicant retailer has been disqualified from WIC or the food stamp program or has been assessed a monetary penalty in lieu of a food stamp disqualification in the last six years.

(ii) An owner, officer, or partner of a retailer or applicant retailer must not have sold a store to circumvent a WIC sanction.

(iii) A retailer or applicant retailer with any owner, officer, partner, or manager who has been convicted of or had a civil judgment for any of the following in the last six years will be denied authorization or have authorization revoked: Fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, or obstruction of justice.

(iv) The WIC program reserves the right to conduct background checks on any retailer, owner, officer, partner, or manager.

(f) Compliance with the WIC contract.

(i) A retailer must attend face-to-face training on WIC requirements at least once per contract period.

(ii) A retailer must comply with ((training sessions and)) monitor visits((,)) and provide shelf price records and inventory records, upon the WIC program's request, 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) Business operation from a fixed location;

(i) Open for business a minimum of eight hours per day, six days per week.

(j) In compliance with local sanitation rules;

(k) Have no history of any of the following:

(i) WIC or food stamp disqualification;

(ii))) (g) History. A retailer or applicant retailer with a history of any of the following may be denied authorization unless client access to WIC food cannot otherwise be assured:

(i) Redeeming WIC checks without ((authorization)) having a signed contract with the department;

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

(((iv))) (iii) Failing to implement corrective action imposed by the WIC program within the time specified;

(((v))) (iv) 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.

(6) The WIC program may reassess an authorized retailer's compliance with the retailer selection criteria any time in the contract period and must terminate the contract of any retailer which fails to meet them.

[Statutory Authority: RCW 43.70.120 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-070, filed 6/9/00, effective 7/10/00. 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.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-080   What do I need to know about WIC retailer contracts?   (1) All authorized retailers must enter into written contracts with the department. The contract must be signed by the contractor and the designee of the contracting officer of the department of health.

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

(3) Duration of contract.

(a) The WIC program issues contracts for a maximum period of ((two)) three 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 must notify contractors in writing not less than fifteen days before the expiration of a contract which is 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 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-080, filed 6/9/00, effective 7/10/00. 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.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-085   What is expected of WIC retailers?   (1) The retailer must comply with WIC program requirements and terms of the retailer contract.

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

(4) The retailer 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 must submit the WIC check for payment within sixty days from the "first day to use."

(5) The retailer must refuse 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 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 must ((enter)) write the actual purchase price of the specific quantity of WIC authorized foods on ((each)) the WIC check before witnessing the WIC customer countersign((s)) the check.

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

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

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

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

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

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

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

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

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

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

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

(19) The retailer must refuse WIC customers' 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 customer at the time of the WIC transaction. The exchange must be for the identical WIC allowed brand and size as the original authorized food.

(20) The retailer 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.

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

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

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

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

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

(26) The retailer 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.

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

(28) Retailers must maintain inventory records showing all purchases, both wholesale and retail, for a period of at least 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.

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

(30) The contractor must notify the WIC program in writing of any change of ownership, retailer name, location and/or cessation of operation for any reason at least thirty days before the effective date of the change.

(31) Contractors 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 or termination of authorization.

(32) Contractors 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 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-085, filed 6/9/00, effective 7/10/00. Statutory Authority: RCW 43.70.120. 97-16-117, 246-790-085, filed 8/6/97, effective 9/6/97.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-090   How are WIC retailer contracts monitored?   (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 provides training on the WIC Retailer Handbook ((which)) that includes information on WIC foods and WIC check handling, and collects information on WIC food stock levels and shelf prices.

(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 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.

(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 acts covertly;

(b) The ((WIC)) program representative may make a purchase using WIC checks 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, 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.

(5) Inventory audits.

(a) The WIC program representative requests inventory records showing all purchases, both wholesale and retail, by a contractor for a retailer. Acceptable forms of inventory records include 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 of WIC foods purchased and 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.

(b) The WIC program representative compares the inventory records provided by the contractor with information from the WIC data system showing the volume of WIC food purchased.

[Statutory Authority: RCW 43.70.120 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-090, filed 6/9/00, effective 7/10/00. 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.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-100   What happens if I don't comply with the WIC retailer contract or rules?   (1) Retailers who commit acts of noncompliance ((are)) may be 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)). Examples of noncompliance include, but are 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 unauthorized food or other items to WIC customers in lieu of or in addition to authorized WIC supplemental foods;

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

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

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

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

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

(k) Redeeming WIC checks outside of authorized channels((;)). For example, a retailer accepting WIC checks without having a signed contract with the WIC program ((and)); a retailer accepting WIC checks ((payable elsewhere then working out an exchange with that other retailer)) and redeeming them through a different authorized retailer or a different outlet of the same chain; or a retailer using WIC checks to repay debt at a different authorized retailer. This also includes the retailer who receives and deposits the WIC checks from another retailer;

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

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

(n) Providing false information in connection with an application for WIC authorization.

(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 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 (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)) After the opportunity for corrective action, a retailer who repeats an act of noncompliance will be subject ((a retailer)) to sanctions according to the sanction schedule.

(5) When the WIC program denies ((a retailer authorization, denies)) payment, imposes a monetary penalty, requests reimbursement, or disqualifies a retailer, the program must give the contractor written notice not less than fifteen days prior to the effective date of the action. ((The)) Denial of authorization and permanent disqualification are effective the date the notice is received by the contractor. Every notice 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) The WIC program must disqualify the WIC retailer for the following:


Violation
Length of Disqualification
Disqualification from the food stamp program by the USDA 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((,)) and charging more than for non-WIC customers((, and charging for food not received by the customer)); Three years
A documented pattern of 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.

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

(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 is liable for resultant costs incurred by the WIC program.

[Statutory Authority: RCW 43.70.120 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-100, filed 6/9/00, effective 7/10/00. 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.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-120   How do I appeal a WIC decision I don't agree with?   (1) The contractor may appeal:

(a) Notice of denial of payment;

(b) Denial of authorization;

(c) An authorization determination made using retailer selection criteria;

(d) Termination of the retailer contract for cause;

(e) Termination of the retailer contract because of a change in ownership or location, or cessation of operations;

(f) Monetary penalty in lieu of disqualification;

(((d))) (g) Reimbursement; or

(((e))) (h) 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))) The validity or appropriateness of client access criteria;

(c) The department determination regarding inadequate client access to WIC foods;

(d) The validity or appropriateness of retailer selection criteria;

(e) The determination whether the retailer had an effective policy and program in place to prevent trafficking and whether ownership was aware of, approved of, or was involved in the violation;

(f) Disputes regarding check payments (other than the opportunity to justify or correct an overcharge or other check error); and

(g) Disqualification based on a food stamp program disqualification.

(3) When the action being appealed is disqualification, the retailer must cease redeeming WIC checks effective the date specified in the notice and must not accept WIC checks during the appeal period. The department will not pay any WIC checks redeemed by a retailer during a period of disqualification.

(((3))) (4) A request for an appeal hearing 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))) (5) A request for an appeal hearing must be filed at the Adjudicative Clerk's Office, Department of Health, 1107 Eastside St., P.O. Box 47879, Olympia, WA 98504-7879. The request must be made within twenty-eight days of the date the contractor received the notice.

(((5))) (6) The decision concerning the appeal must be made within sixty days from the date the request for an appeal hearing was received by the Adjudicative Clerk's Office. The time for rendering the decision may be extended by as many days as all parties agree to with good cause.

[Statutory Authority: RCW 43.70.120 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-120, filed 6/9/00, effective 7/10/00. 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.]


AMENDATORY SECTION(Amending WSR 00-13-009, filed 6/9/00, effective 7/10/00)

WAC 246-790-130   How does the WIC program get input from the food industry?   (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 meets at least two times per year.

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

(a) Washington Food 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 union representative; and

(k) A military commissary.

[Statutory Authority: RCW 43.70.120 and 7 C.F.R. 246.12, 15, and 18. 00-13-009, 246-790-130, filed 6/9/00, effective 7/10/00. 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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