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Grocery v. Deegan

United States District Court, E.D. Pennsylvania

May 31, 2017

TWIN GROCERY, Plaintiff,
v.
ROBERT T. DEEGAN, et al, Defendants.

          MEMORANDUM OPINION

          Goldberg, J.

         Plaintiff Alex M. Torres seeks review of an administrative decision disqualifying his business, Twin Grocery, from participating in the United States Department of Agriculture's Supplemental Nutrition Assistance Program for three years.[1] Plaintiff also contends that the process by which the disqualification decision was made violated his due process rights. Presently before me is Defendants' motion to dismiss in part and for summary judgment in part. Plaintiff failed to file a response to Defendants' motion. For the reasons that follow, the motion will be granted in its entirety.

         I. STATUTORY FRAMEWORK

         This action is brought under the Food and Nutrition Act of 2008, 7 U.S.C. § 2011 et seq., formerly referred to as the food stamp program and now known as the Supplemental Nutrition Assistance Program (“SNAP”). SNAP is intended to enable “low-income households to obtain a more nutritious diet through normal channels of trade by increasing food purchasing power for all eligible households who apply for participation.” 7 U.S.C. § 2011.

         The Supplemental Nutrition Assistance Program for Women, Infants and Children (“WIC”), an outgrowth of SNAP, was established to provide “supplemental foods and nutrition education” to “pregnant, postpartum, and breastfeeding women, infants, and young children from families with inadequate income.” 42 U.S.C. § 1786(a).

         The Food and Nutrition Service (“FNS”) is an agency of the USDA that administers WIC and SNAP through collaboration with state-level entities.

         Pursuant to this arrangement, the Pennsylvania Department of Health (“DOH”) is responsible for imposing sanctions on stores for violations of the WIC program's terms and conditions. Sanctions can range from a civil money penalty (“CMP”) to permanent disqualification from participating in the WIC program. 28 Pa. Code §§ 1107.1-1107.2.

         The FNS, however, is responsible for imposing sanctions on stores that violate SNAP's terms and conditions. 7 C.F.R. § 278.6(a). In some circumstances, the FNS is required to disqualify a store from participation in SNAP when the store has been disqualified from participation in WIC. For example, as is relevant to the case before me, reciprocal SNAP disqualification is required where a store has been disqualified from WIC based on a “pattern of claiming reimbursement for the sale of an amount of a specific food item which exceeds the store's documented inventory of that food item for a specified period of time.” 7 C.F.R. § 278.6(e)(8)(i)(A). This mandatory SNAP disqualification must be for the same duration as the WIC disqualification. 7 U.S.C. § 2021(g)(2)(A).

         However, the FNS has discretion to impose a CMP in lieu of this disqualification where “disqualification would cause hardship” to households receiving SNAP benefits. 7 C.F.R. § 278.6(f)(1). Such a hardship applies where a store “subject to a disqualification is selling a substantial variety of staple food items . . . and . . . there is no other authorized retail food store in the area selling as large a variety of staple food items at comparable prices.” 7 C.F.R. § 278.6(f)(1).

         II. FACTUAL BACKGROUND[2]

         Alex M. Torres owns and operates a neighborhood convenience store, Twin Grocery, in Chester, Pennsylvania. Twin Grocery has participated in SNAP for the past six (6) years. (Compl. ¶ 1.) In the Complaint, Torres alleges that a former employee made “an honest mistake for WIC over-payments in an amount totaling less than $30.” Torres states that, after he learned of the issue, he terminated the employee, reimbursed all moneys owed and took other steps to ensure that he was in full compliance. Torres further alleges that (1) he never knowingly violated the terms of the WIC or SNAP programs, (2) a WIC agent told him that he was in “full compliance” with all WIC requirements on December 10, 2015 and (3) he never received any written notice regarding his alleged non-compliance from the WIC office. (Id. at ¶¶ 4-9.)

         The administrative record discloses the following:

         During unannounced “compliance buys” conducted on July 8, 2015 and September 18, 2015, the DOH determined that Twin Grocery was overcharging for certain items. (Administrative Record 78-80.)

         The DOH sent Torres a letter dated May 6, 2016 setting forth the violations discovered during the compliance buys and notifying Torres that, as a result, Twin Grocery was disqualified from participating in the WIC program for three years. (A.R. 78-82; 28 Pa. Code § 1107.1a(c)(3) (DOH “will disqualify a WIC authorized store for 3 years for . . . [t]wo or more incidences of overcharges”)). The letter also informed Torres of his right to appeal the WIC disqualification through state-level administrative review as well as the possibility of a reciprocal SNAP disqualification. Torres did not appeal the WIC disqualification. (A.R. 81-82.)

         By letter dated July 1, 2016, the FNS notified Torres that, in light of the WIC disqualification, Twin Grocery was being reviewed for disqualification from SNAP or, alternatively, a CMP. The letter informed Torres that he may present information or evidence indicating that he had not been disqualified from WIC, that he had not been informed of the possibility of a reciprocal SNAP disqualification, or that an appeal of the WIC disqualification was ongoing. (A.R. 83-84.) Torres received this letter on July 5, 2016. (A.R. 85.)

         Torres responded by letter dated July 7, 2016 in which he claimed that he mailed a letter of appeal to DOH on an unspecified date and that DOH never informed him that he faced a reciprocal SNAP disqualification. Torres explained that he terminated the employee responsible for the overcharges, his customers relied on the SNAP benefits and he “wouldn't be able to keep his business” without SNAP. (A.R. 88-89.)

         The FNS reviewed Torres' submission as well as data on other SNAP participating stores in Twin Grocery's area. The FNS determined that a CMP in lieu of disqualification was not appropriate because there were thirteen SNAP participating stores selling as large a variety of staple food items at comparable prices within a one-mile radius of Twin Grocery.[3] As such, the FNS concluded that there would be no hardship to SNAP households if Twin Grocery was disqualified. (A.R. 90-93.)

         By letter dated September 12, 2016, Torres was advised of this determination and his right to appeal the denial of a CMP to the FNS Administrative Review Branch. (A.R. 94-95.) Torres timely requested such an appeal. In support of his appeal, he stated that approximately 70% of his customers use SNAP benefits and he reiterated that he terminated the employee who had made the overcharges, had taken additional steps to ensure compliance and that he feared he would lose his business without SNAP. (A.R. 98.)

         By letter dated September 22, 2016, Administrative Review Officer Robert Deegan acknowledged Torres' appeal and requested that Torres submit any information in support of his position within three weeks. ...


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