Case Name: P & C # 139, Petitioner, v. DEPARTMENT OF HEALTH, Division of Special Food Programs (WIC), Respondent
Court: Commonwealth Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 2003-05-06
Citations: 822 A.2d 881
Docket Number: 
Parties: P & C # 139, Petitioner, v. DEPARTMENT OF HEALTH, Division of Special Food Programs (WIC), Respondent.
Judges: BEFORE: COLINS, President Judge, McGINLEY, Judge, SMITH-RIBNER, Judge, PELLEGRINI, Judge, FRIEDMAN, Judge, LEADBETTER, Judge, and SIMPSON, Judge.
Reporter: West's Atlantic Reporter, Second Series
Volume: 822
Pages: 881–888

Head Matter:
P & C # 139, Petitioner, v. DEPARTMENT OF HEALTH, Division of Special Food Programs (WIC), Respondent.
Commonwealth Court of Pennsylvania.
Argued April 1, 2003.
Decided May 6, 2003.
Mark D. Bradshaw, Harrisburg, for petitioner.
Karin Simpson, Harrisburg, for respondent.
BEFORE: COLINS, President Judge, McGINLEY, Judge, SMITH-RIBNER, Judge, PELLEGRINI, Judge, FRIEDMAN, Judge, LEADBETTER, Judge, and SIMPSON, Judge.

Opinion:
OPINION BY
Judge PELLEGRINI.
P & C # 139 (P & C) appeals from a decision of the Hearing Examiner who affirmed the determination of the Department of Health, Division of Special Food Programs WIC (Department) disapproving its recertification to the State's Special Supplemental Food Program for Women, Infants and Children (WIC Program) for its failure to meet the Department's mandatory inventory requirements.
P & C is a supermarket located in Sayre, Pennsylvania, and is owned by Penn Traffic Corporation. P & C has been a participant in the Department's WIC Program for many years. The WIC Program is a federal program designed to provide nutritious foods to supplement the diets of certain low-income women, infants and children at nutritional risk and is governed by regulations set forth at 7 C.F.R. § 246.1-246.28 and 28 Pa.Code § 8.1-8.7, 1101-1113. The Department has authority in Pennsylvania over the administration of the WIC Program, and it enters into two-year contracts with vendors certified to participate in the Program. The Department issues to all vendors a set of WIC regulations which explain the Program, outlines criteria for selecting and limiting WIC retail stores, and describes the terms and conditions of participation.
By letter dated April 22, 2002, the Department notified P & C that it was going to conduct an onsite review of the store during the week of May 13, 2002. The letter indicated that the review would include surveying the highest shelf prices for WIC allowable foods, checking expiration dates and checking inventory requirements. The announced certification visit was held on May 15, 2002, to determine whether P & C met the mandatory criteria for recertification as a WIC authorized store. Because the review revealed that there were only five of the six required 14 ounce cans of soy-based powdered formula (Isomil) on the shelves on the day of review in violation of 28 Pa.Code § 1103.4(a)(5) and § 1103.5(a) and (b)(ii)(C), the Department denied P & C's application for recertification based on its failure to meet the mandatory minimum inventory criteria.
P & C filed an appeal, but at the hearing before the Hearing Examiner, it failed to present any evidence. The Department, however, presented the testimony of the agency representative who conducted the onsite recertification review, who testified that the store did not have sufficient quantities of Isomil. The Hearing Examiner affirmed the Department's decision denying P & C's recertification and this appeal followed.
P & C contends that based on our decision in Giant Food Stores, Inc. v. Department of Health (Giant I), 123 Pa.Cmwlth. 418, 554 A.2d 174 (1989), we are required to reverse the Department's decision denying its recertification. It further argues that our decision in Giant Food Stores, LLC v. Department of Health (Giant II), 808 A.2d 299 (Pa.Cmwlth.2002), which disallowed a store's recertification based upon a one-time infraction of the Department's regulations, was decided incorrectly and that it should not be the basis for our decision.
In Giant I, the vendor entered into an agreement with the Department that its authorization to participate in the WIC Program would be reviewed no earlier than 18 months after authorization was granted. A recertification review took place less than 14 months after the original certification, at which time it was found that there was a shortage of canned formula on the shelves, and the vendor was denied recertification even though it was its first offense. The Department conceded that had the first offense occurred during an inspection review, the vendor would have received a warning; however, because it occurred during a recertification inspection, removal from the program was required. On appeal, we found that the Department was not justified in removing the vendor from the WIC Program because it was arbitrary for the Department to deny recertification to a store for failure to meet the minimum standards when it would not remove a store's certification for the same reason during an inspection review. We also held that the removal was inappropriate because the agreement specified that a review would not be conducted until 18 months after the authorization was granted and the review occurred within 14 months. Notably, at the time this case was decided, the Department had not enacted any regulations regarding the WIC Program.
In Giant II, a recertification review conducted revealed that the store had formula on its shelf that had already passed the expiration date in violation of the Department's regulation at 28 Pa.Code § 1107.1a(d), and the store had not been recertified as a result of that one infraction. On appeal, Giant argued that the Department's regulations were incompatible with our decision in Giant I, and that the Department could not distinguish between recertification inspections and routine reviews. We first noted that since our decision in Giant I, the Department had promulgated regulations governing certification and recertification and routine inspections of vendors making Giant I no longer extant. We went on to hold that a valid distinction existed between certification/recertification because that procedure was to determine eligibility to be a contractor or remain a contractor in the WIC Program, while the unannounced monitoring review was done to ensure that the contractor was complying with the terms of the contract. We explained that the Department had differing sanctions depending upon the type of review conducted and then held that the distinction between the sanctions imposed for announced reviews and routine reviews was valid stating the following:
Under the federal regulations, the Department is required every two years to review the qualifications of all authorized vendors. 7 C.F.R. § 246.12(g). The vendors understand that their participation in the WIC program is reviewed every two years and that there is no obligation on the part of the Department or the vendor to .renew the vendor agreement. The re/certification procedure is used to decide which stores are to be selected to participate in the WIC program. 29 Pa. B. 3841 (1999). The procedure provides an equitable opportunity for all stores to compete for limited store authorizations, at least once every 2 years, and allows the Commonwealth to select and authorize stores which provide the best value to the Commonwealth. This, in turn, provides for the most efficient use of Federal grant funds and allows the Commonwealth to serve more participants.
Id. at 3842.

In other words, given the limited number of store slots available, the re/certification procedure is to ascertain whether the vendor under review is the best-qualified applicant within that geographic area. If not, other applicants are considered. Conversely, a routine inspection is designed to ensure compliance with the regulations during the period of authorization. Thus, a valid distinction exists between the re/certification and routine inspections.
Giant II, 808 A.2d at 303-304. Not only does Giant II authorize the Department to deny recertification based on a vendor's failure to keep its shelves properly stocked, but the federal regulations prohibit recertifying a vendor for the same reason as well.
Because both the state and federal regulations provide that a store will not be permitted to continue participating in the WIC Program if it does not have adequate stock on hand to serve the needs of WIC mothers, the Department did not err in denying P & C recertification into the WIC Program.
Accordingly, the decision of the Hearing Examiner is affirmed.
ORDER
AND NOW, this 6th day of May, 2003, the order of the Department of Health, Office of the Hearing Examiner, dated October 18, 2002, is affirmed.
. 28 Pa.Code § 1103.4(a)(5) provides:
(a) Selection criteria. The Department will use the following selection criteria to identify stores that meet the operational criteria to serve as a WIC authorized store:
(5) The store shall have available on the premises at all times the minimum inventory requirements in § 1103.5 (relating to minimum inventory) of allowable foods.
. 28 Pa.Code § 1103.5(a) and (b)(ii)(C) provide:
(a) A store shall have available on the premises at the time of the certification or recertification onsite review, and maintain at all times thereafter while participating as a WIC authorized store, minimum requirements of allowable foods.
(b) Minimum inventory requirements of allowable foods are as follows:
(ii) Contract soy-based formula:
(C) Six 14 ounce cans of powdered.
.Our scope of review is limited to determining whether constitutional rights were violated, whether errors of law were committed and whether necessary findings of fact are supported by substantial evidence on the record. Superior Stores Co. v. Department of Health, Special Supplemental Food Program For Women, Infants and Children, 151 Pa. Cmwlth. 102, 616 A.2d 166 (1992).
. P & C also contends that we should ignore our holding in Giant II because the principle of collateral estoppel applies due to our decision in Giant I and our unreported decision in Bi-Lo # 299 v. Department of Health, Division of Special Food Programs (WIC) (No. 1716 C.D.2000, Pa.Cmwlth., filed August 16, 2001). The dissent agrees, stating that P & C is owned and operated by Penn Traffic Corporation, who was the respondent in Bi-Lo # 299 as well, and that these cases all dealt with the same legal and factual issues that were litigated to final judgment, the party against whom the doctrine was asserted was a party to the prior litigation, and the party had a full and fair opportunity to litigate the issues. However, were we to accept the dissent's argument, there would be different rules for different food chains; there would be one interpretation for all stores owned by Penn Traffic and another interpretation for stores owned by other food stores. Further, this argument suggests that if all of Penn Traffic's stores were to receive the benefit from the decision relative to one store, conversely, it would be necessary for all of its stores to lose their certifications when one store did not meet the WIC Program requirements. Collateral es-toppel has no application in this type of situation, and P & C's argument borders on being frivolous.
. We stated:
During a re/certification review, which is an announced inspection, the vendor is not provided with an opportunity to correct the problem. 28 Pa.Code § 1103.1(f).
However, the Department's regulations further provide for two types of reviews for WIC authorized vendors: high risk and routine reviews. A routine review is conducted to determine whether an authorized vendor is in compliance with 28 Pa.Code § 1103.4(a) and (b). See 28 Pa.Code § 1105.6(c). Unlike the re/certification process, routine reviews are unannounced inspections of the vendor's premises. Id. If the vendor is found to be deficient, a second routine review occurs. Id. If two routine reviews detect violations, then the Department provides corrective training to the vendor's personnel. Id. A third routine review is then conducted and, if the vendor is still found to be in violation of the regulations, sanctions will be imposed in accordance with 28 Pa.Code. § 1107.1 (including disqualification from the participation for a specific period of time, monetary penalties, and withdrawal or nonrenewal of the agreement). Id.
Giant II, 808 A.2d at 302.
. 7 C.F.R. § 246.12(g)(3)(h) provides:
(ii) Minimum variety and quantity of supplemental foods. The State agency must establish minimum requirements for the variety and quantity of supplemental foods that a vendor applicant must stock to be authorized. The State agency may not authorize a vendor applicant unless it determines that the vendor applicant meets these mínimums. The State agency may establish different mínimums for different vendor peer groups. (Emphasis added.)