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12/04/95 CRYSTAL FOOD AND LIQUOR v. HOWARD

December 4, 1995

CRYSTAL FOOD AND LIQUOR, INC., PLAINTIFF-APPELLANT,
v.
HOWARD CONSULTANTS, INC., HOWARD GOLIN, CLARENCE E. JORDAN A/K/A CLARENCE ROBINSON, THE DEPARTMENT OF PUBLIC HEALTH, JOHN R. LUMPKIN, INDIVIDUALLY AND AS DIRECTOR OF THE DEPARTMENT OF PUBLIC HEALTH, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County. Honorable Robert Ericsson and Honorable Thomas Hourihane, Judges Presiding.

The Honorable Justice Buckley delivered the opinion of the court: Wolfson and Braden, JJ., concur.

The opinion of the court was delivered by: Buckley

The Honorable Justice BUCKLEY delivered the opinion of the court:

The Illinois Department of Public Health (the Department) found plaintiff, a vendor in a Federal supplemental food program for women, infants, and children, in violation of the Department regulations regulating such vendors. The Department terminated plaintiff from the program for three years, imposed a $7,500 fine, and demanded reimbursement for the violations. Plaintiff filed a complaint for administrative review and the circuit court dismissed it, finding that the Department's decision was not against the weight of the evidence. On appeal plaintiff argues: (1) the Department's procedure violated due process and Federal law, and (2) the sanctions imposed were extraordinarily harsh and contrary to law.

BACKGROUND

Plaintiff is a food vendor in the Federal Special Supplemental Program for Woman, Infants, and Children (WIC), a program authorized by the Child Nutrition Act of 1966 (42 U.S.C.A. § 1786 (West 1994 and Supp. 1995). The WIC program was enacted to provide food supplements to eligible low-income pregnant women, breast-feeding mothers, infants, and children under five years old. The program is federally-funded and administered by the States.

In Illinois, the WIC program is administered by the Department pursuant to the Illinois WIC Vendor Management Act (Act) (410 ILCS 255/1 et seq. (West 1992)). Families eligible under the program are issued vouchers, which are redeemable at approved vendor stores for the specific food items printed on the face of the vouchers. The vouchers are given to the vendors in exchange for the listed items, and in turn the vendors present them to their banks for payment.

When Congress provided the cash grants to assist WIC program participants, it also authorized the Food and Nutrition Service of the Department of Agriculture to promulgate regulations regarding the administration of the program by the States. (See 7 C.F.R. § 246.1 (1995).) The Illinois WIC Vendor Management Act (410 ILCS 255/1 et seq. (West 1992)), established the authority for the Department to authorize, limit, educate and review the compliance of WIC program retail vendors. Section 6 of the Act provides:

"(a) The Department shall develop a system for monitoring the operations of all WIC retail food vendors to ensure compliance with federal and State laws and rules governing the WIC program.

(b) The Department shall investigate all alleged violations of the federal and State laws and the rules promulgated thereunder.

(c) The Department shall develop, by rule, a system of monetary penalties and other sanctions for WIC retail vendors determined to be in violation of program regulations. The level and severity of the sanctions shall be consistent with the type and frequency of violations, and may include, but shall not be limited to, suspension or termination from the program as well as monetary penalties." (410 ILCS 255/6 (West 1992).)

The Act also directs the Department to "promulgate such rules as it deems necessary to carry out its responsibilities under this Act and under relevant federal law and regulations." 410 ILCS 255/8(a) (West 1993).

The Department issued a notice of violation against plaintiff on May 7, 1992, for violating the Special Supplemental Food Program for Women, Infants, and Children (42 U.S.C.A. § 1786 (West 1994 and Supp. 1995)), the WIC Vendor Management Act, (410 ILCS 255/1-9 (West 1992)), and the Department's regulations promulgated pursuant to its statutory authority to monitor the WIC program. The notice stated that on three instances an investigator had purchased food using a WIC voucher at plaintiff's store, and on each occasion plaintiff submitted and was paid amounts in excess of the price of the actual food sold. These instances constituted three Class A violations under the Department regulations. (77 Ill. Adm. Code §§ 672.505(a)(5), (a)(6) (Supp. 1993).) The notice of violation terminated plaintiff from the WIC program for three years, imposed a fine of $7,500, and demanded reimbursement of $13.15 for the violations. The notice also advised plaintiff of the right to request a hearing within 15 days, pursuant to 77 Ill. Adm. Code § 672.615(a) (Supp. 1993).

Plaintiff requested a hearing and the following evidence was presented before the hearing officer. Clarence Jordan testified for the Department. He stated that he was a private investigator for Howard Consultants, Inc., a private detective agency. Jordan was assigned by Howard Consultants to do WIC investigations, and he investigated plaintiff's store in January 1992.

On January 8 and 10, Jordan entered plaintiff's store, posing as a WIC participant, with a voucher that authorized him to purchase one gallon of milk and either one 46-ounce can of juice or one 12-ounce can of frozen juice concentrate. On both dates he purchased one 46-ounce can of Bluebird brand grapefruit juice with a posted shelf price of $2.19. According to Jordan's report, on January 11, at 11:56 p.m., he made a third visit to plaintiff's store. On that date he possessed a food voucher that authorized him to purchase two gallons of milk, juice, eggs, and cereal. He purchased one 46-ounce can of orange juice, one dozen eggs, and two boxes of breakfast cereal. The shelf prices for these items totalled $9.46. Jordan testified that on each occasion he left plaintiff's store without any milk.

The Department determined that plaintiff submitted the vouchers without indicating that the milk was not received by Jordan and collected payments in amounts greater than the shelf prices of the items that Jordan actually did receive. Plaintiff stipulated that it submitted and received payment of $4.78 each for both the June 8 and June 10 vouchers. This amount was $2.59 higher than the posted shelf price for the juice received by Jordan on those dates. Plaintiff also stipulated that it submitted and received $17.43 for the January 11 voucher. This amount was $7.97 greater than the total posted shelf prices for the items received.

Jordan explained his procedure for investigating plaintiff's store. After each purchase he took the food items to his automobile and tagged and marked each item with the location, time, and date of purchase. He later photographed each food item with a camera provided by the Department and prepared a report along with the photograph, which he submitted to the Department.

Marianne Denby, a public health specialist for the Department, also testified. She confirmed that Jordan was a WIC investigator employed by Howard Consultants and that Howard Consultants was hired by the Department to conduct investigations of WIC vendors. Denby compared Jordan's reports to the vouchers submitted by plaintiff for payment and found discrepancies between them regarding the items ...


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