Ala. Dep't of Pub. Health v. Lee

236 So. 3d 863
CourtCourt of Civil Appeals of Alabama
DecidedApril 7, 2017
Docket2160139
StatusPublished

This text of 236 So. 3d 863 (Ala. Dep't of Pub. Health v. Lee) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ala. Dep't of Pub. Health v. Lee, 236 So. 3d 863 (Ala. Ct. App. 2017).

Opinion

DONALDSON, Judge.

The Alabama Department of Public Health ("the Department") appeals from a judgment of the Montgomery Circuit Court reversing the decision of the State Health Officer to disqualify First Avenue Meat and Fish Market ("First Avenue"), a grocery store owned by Su Won Lee ("Mr. Lee"), from participating for three years as an authorized vendor in the Alabama Women, Infants, and Children program ("the WIC program"). We reverse the judgment of the circuit court.

Factual Background and Procedural History

We have previously provided an explanation of the WIC program in a related case.1

"The United States Congress created the WIC program in 1966 primarily to provide supplemental dietary and nutritional aid to low-income pregnant, breast-feeding, and non-breast-feeding postpartum women and to infants and children up to age five who are found to be at nutritional risk. See 42 U.S.C. § 1786(a). The United States Department of Agriculture ('USDA') issues cash grants to the various states to administer the WIC program. See generally 42 U.S.C. § 1786(c)(2) ;
*8657 C.F.R. § 246.1. The USDA requires appropriate state agencies to use a portion of those cash grants to deliver approved supplemental foods and nutritional aid to eligible participants. 42 U.S.C. § 1786(f)(11).
"The Department administers the WIC program for the State of Alabama. See Ala. Code 1975, § 22-12C-1 et seq. The Department has adopted a food-delivery system by which it issues 'food instruments' to eligible participants that can be redeemed at authorized retail vendors for approved supplemental foods. See Ala. Admin. Code (Dep't of Public Health), Rule 420-10-2-.05(1). The food instruments designate specific types and quantities of food items that the participant may purchase, i.e., 'one gallon of whole milk.' The participant obtains the described food items at retail stores operated by an authorized WIC vendor and tenders the food instrument as a form of payment for the food items. To accept the food instrument, the vendor stamps the food instrument with the vendor's identification number and fills in the total purchase price of the food items. The participant then signs the food instrument. The vendor deposits the food instrument into its bank account, and the vendor's bank then presents the food instrument for payment at the Department's 'contract bank.' Id.
"The Department assures that its authorized vendors are properly complying with the WIC program and redeeming the food instruments for the purchase of approved supplemental foods through a variety of measures, including monitoring, 'compliance buys,' and inventory audits. See Ala. Admin. Code (Dep't of Public Health), Rule 420-10-2-.05(5).
" 'An inventory audit is the official examination and documentation of a WIC vendor's inventory, accounts, and records to determine whether the vendor has purchased sufficient quantities of supplemental foods to provide participants the quantities specified on the food instruments redeemed by the vendor during a given time period.'
" Rule 420-10-2-.05(5)(c)."

Alabama Dep't of Pub. Health v. Bessemer Meat/Se. Meat, 216 So.3d 448, 449-50 (Ala. Civ. App. 2016).

First Avenue had been approved to participate as a vendor in the WIC program since at least 2011. From July 17, 2013, until September 17, 2013, the Department conducted an inventory audit on First Avenue. In September 2013, at the conclusion of the audit, the Department mailed a letter to Mr. Lee requesting all original records that would show First Avenue's purchases of infant formula and milk between July 17, 2013, and September 17, 2013. In October 2013, the Department sent an additional request to Mr. Lee for receipts and invoices of First Avenue for the same period.

On November 25, 2013, the State Health Officer sent a letter notifying Mr. Lee that, during the inventory audit, the Department had discovered a difference of $7,790.02 between the total retail value of infant formula available for sale at First Avenue and the amount of redeemed WIC-program food instruments for formula. The letter also noted a difference of $3,086.52 between the retail value of First Avenue's available milk inventory and the amount of redeemed WIC-program food instruments for milk. The letter instructed First Avenue to reimburse the Department for the $10,876.54 difference.

In December 2013, the Department sent a letter notifying Mr. Lee of its intent to disqualify First Avenue from participation as an authorized vendor in the WIC program for three years. The Department *866held an administrative-review hearing regarding the intended action at Mr. Lee's request in March 2014. At the hearing, Amanda Martin, the Alabama WIC-program director, testified that, in order to become an authorized WIC vendor, a vendor must comply with specified program requirements. Martin testified that the Department conducts monitoring visits, compliance buys, and inventory audits in which it reviews the vendor's redemptions and compares them to the vendor's documented inventory to ensure compliance with the WIC-program requirements.

Martin explained that, during an inventory audit, the Department physically counts the initial inventory of a product at the store and then reviews the redemption of food instruments for that product during a specified period. Martin stated that the Department requests inventory receipts for the period for which it audits the vendor.

Stacey Neumann is the director of vendor management for the WIC program. Neumann testified that First Avenue was selected for the inventory audit based on "the amount of redemptions and high risk indicators." Neumann explained that First Avenue had zero variance between the two most highly redeemed food-instrument types, which, she said, is an indicator of price fixing. Neumann also testified that First Avenue had a high redemption rate in comparison to other vendors in its peer group.

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Related

Tug Allie-B, Inc. Ex Rel. Allie-B v. United States
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Ex Parte Beverly Enterprises-Alabama, Inc.
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Alabama Department of Public Health v. Bessemer Meat/Southeastern Meat
216 So. 3d 448 (Court of Civil Appeals of Alabama, 2016)
Williamson v. Wynnwood Personal Care Home I
907 So. 2d 407 (Supreme Court of Alabama, 2004)
Foodland v. State ex rel. WV Department of Health & Human Resources
532 S.E.2d 661 (West Virginia Supreme Court, 2000)

Cite This Page — Counsel Stack

Bluebook (online)
236 So. 3d 863, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ala-dept-of-pub-health-v-lee-alacivapp-2017.