Section 40740 - Federally Required Sanctions Against Food Vendors(a) Any Program violation included in this Section shall result in an adverse action including disqualification of a food vendor or imposition of a civil money penalty in lieu of disqualification. (1) The Program shall provide the food vendor with a fifteen (15) calendar day written notice of disqualification in advance of the effective date of any proposed adverse action, which states the cause(s) for and effective date(s) of the action except for a disqualification based on a violation of (c) of this Section which becomes effective on the date of receipt of the notice of disqualification.(2) A warning that violations are occurring or have occurred is not required prior to any adverse action taken against food vendors pursuant to this Section.(b) A food vendor that has received a final determination of disqualification from the Food Stamp Program and has failed to either exercise its appeal rights or has exhausted its appeal rights under the Food Stamp Program shall be disqualified from participation in the Program. (1) The disqualification shall be for the same length of time as the Food Stamp Program disqualification, beginning from the date as stated in the Program's notice of disqualification. This date may be a later date than the beginning date of the Food Stamp Program disqualification, depending on the Food Stamp Program notification to the Program.(2) If the disqualification of the food vendor would result in inadequate participant access as defined in (h) of this Section, a civil money penalty shall be assessed in lieu of disqualification.(3) Food vendor disqualification or an assessment of a civil money penalty based on disqualification from the Food Stamp Program shall not be subject to appeal or judicial or administrative review, pursuant to Title 7, Code of Federal Regulations, Section 246.18.(c) A food vendor shall be permanently disqualified from participation in the Program for a conviction of trafficking in food instruments or selling firearms, ammunition, explosives, or controlled substances, as defined in Section 102 of the Controlled Substances Act (21 USC 802), in exchange for food instruments. (1) A food vendor shall not be entitled to receive any compensation for revenues lost as a result of immediate implementation of this disqualification.(2) For purposes of this Article, trafficking is defined as buying, selling, or exchanging food instruments for cash.(d) A food vendor shall be disqualified for six (6) years for one incidence of trafficking in food instruments or selling firearms, ammunition, explosives, or controlled substances, as defined in Section 102 of the Controlled Substances Act (21 USC 802), in exchange for food instruments. For purposes of this Article, an incidence means one violation of a Program regulation based on a Program determination that there is evidence that this violation has occurred.(e) A food vendor shall be disqualified for three (3) years for any of the following violations: (1) One incidence of the sale of alcohol or alcoholic beverages or tobacco products in exchange for food instruments;(2) A pattern of claiming reimbursement for the sale of a volume of supplemental food which exceeds the food vendor's inventory purchase documentation for a specific period of time as identified in an audit;(A) For the purpose of this Article, "inventory purchase documentation" means invoices, checking account registers and bank statements, and sales and use tax forms.(B) Invoices shall: 1. Identify the food vendor making the purchase;2. Identify the date of purchase;3. Identify the quantities, package sizes, types or flavors, brand names, and cost to the food vendor of specific supplemental foods;4. Identify the wholesaler and be prepared entirely by that wholesaler from whom the food vendor made the purchase.(C) A pattern for this violation exists when the amount of food instrument reimbursement which exceeds the food vendor's inventory purchase documentation identified in a single audit is equal to or exceeds twenty (20) percent of the total food instrument reimbursement to the food vendor during the audit period.(3) A pattern of overcharging; (A) For purposes of this Article, overcharging means charging the Program a higher price than the non WIC customer or charging the Program a higher price than the posted price.(B) A pattern for this violation exists when either of the following occurs: 1. the percent of food instruments on which overcharges are found in a single monitoring visit is equal to or exceeds fifty (50) percent of the number of food instruments used during that visit, overcharges are found on two or more food instruments, and the cumulative overcharge amount to the Program is equal to or exceeds eight (8) dollars. The overcharge amount on any food instrument shall be at least one (1) dollar; or,2. on two or more monitoring visits within a twenty-four (24) month period the cumulative overcharge amount to the Program by the food vendor is equal to or exceeds four (4) dollars. The total overcharge amount for each monitoring visit shall be at least one (1) dollar.(4) A pattern of receiving, transacting, and/or redeeming food instruments outside of authorized channels; (A) A pattern for this violation exists when two food instruments within a twenty-four (24) month period, have been received, transacted and/or redeemed outside of authorized channels.(B) Food vendor activities described as those conducted outside of authorized channels do not include those activities described in (c) and (d) of this Section and do include the following:1. The use of another authorized food vendor to redeem food instruments, including exchanging food instruments for repayment of debt; and2. Redeeming food instruments not received by that food vendor in that food vendor's authorized store location, including redeeming food instruments accepted at an unauthorized store location owned by the food vendor.(5) A pattern of charging the Program for supplemental food not received by the participant, resulting in an overcharge to the Program. The overcharge amount shall be calculated by deducting the total of the food vendor's posted price(s) of the item(s) purchased and received by the participant on a food instrument from the total redeemed by the food vendor for that food instrument. The definition of pattern for this violation is the same definition as set forth in (e)(3)(B) of this Section; or(6) On two occasions providing credit or non-food items other than alcohol, alcoholic beverages, tobacco products, cash, firearms, ammunition, explosives, or controlled substances as defined in Section 102 of the Controlled Substances Act (21 USC 802), in exchange for food instruments within a twenty-four (24) month period.(f) A food vendor shall be disqualified for one (1) year for a pattern of providing food items not permitted by the food instrument in exchange for food instruments. (1) A pattern exists for this violation when any one of the following violations occurs within an eighteen (18) month period: (A) On any two monitoring visits, the food vendor provides food items not permitted by the food instrument in thirty-three (33) percent or more of the WIC food categories purchased during each visit; or(B) On any three monitoring visits, the food vendor provides food items not allowed by the food instrument:1. in thirty three (33) percent or more of the WIC food categories purchased in one visit; and2. in less than thirty-three (33) percent of the WIC food categories purchased during each of two other visits; or(C) On each of four monitoring visits, the food vendor provides food items not allowed by the food instrument in one or more of the WIC food categories purchased.(2) WIC food categories are those defined in Section 246.10, Title 7, Code of Federal Regulations, incorporated by reference herein. These food categories include: infant formula, infant cereal, milk, cheese, eggs, cereal, juice, peanut butter, beans, carrots and tuna.(g) A food vendor shall be disqualified for a one (1) year period for a pattern of charging for supplemental food items allowed by the food instrument but provided in excess of the maximum quantity listed on the food instrument. A pattern exists for this violation when on any two monitoring visits, within a twenty-four (24) month period, a food vendor charges for supplemental food items allowed by the food instrument but provided in excess of the maximum quantity listed on at least two food instruments.(h) Prior to disqualifying a food vendor for any of the violations listed in (b), (d), (e), (f), and (g) of this Section, the Program shall make a participant access determination. (1) For purposes of this Article, "adequate participant access" means the availability of another food vendor for the participant and shall be determined using the following criteria: (A) The presence of another food vendor in the same geographic area as either the violating food vendor or the local agency clinic site closest to the violating food vendor; and(B) The absence of geographic barriers that prevent participants from redeeming their food instruments at the other food vendor location described in (A), above.(2) For purposes of this Article "same geographic area" is defined as the following: (A) In a rural area, the area within a five mile radius of the violating food vendor or the local agency clinic closest to the violating food vendor. A rural area is defined as an area with a population of less than 10,000 persons according to the most recent United States Decennial Census; or(B) In an urban area, that area within a two mile radius of the violating food vendor or the local agency clinic closest to the violating food vendor. An urban area is defined as an area with a population of ten thousand (10,000) or more according to the most recent United States Decennial Census.(3) For purposes of this Article, geographic barriers means physical barriers or conditions which make ground travel to another food vendor impossible. Geographic barriers include: an unbridged river or canal; a freeway without an overpass or underpass in the same geographic area; an expressway without an overpass, underpass or crosswalk in the same geographic area; and train tracks without a railroad crossing in the same geographic area.(i) Program determinations regarding participant access are not subject to appeal by the disqualified food vendor or subject to administrative review pursuant to Title 7, Code of Federal Regulations, Section 246.18.(j) If disqualification of the food vendor for the violations listed in (b), (d), (e), (f) and (g) of this Section would result in inadequate participant access, the food vendor shall be subject to a civil money penalty in lieu of disqualification, unless the disqualification is for a third or subsequent violation pursuant to (l) of this Section.(k) When a food vendor who has previously been disqualified or received a civil money penalty in lieu of disqualification for any of the violations in (d) through (g) of this Section receives a second disqualification or civil money penalty for any of these violations, the disqualification or civil money penalty shall be doubled. Violations do not need to be identical in order to double the disqualification or civil money penalty. For the violations in (d) through (g) of this Section, civil money penalties may only be doubled up to the limits allowed under Title 7, Code of Federal Regulations, Section 246.12, incorporated by reference herein.(l) When a food vendor who has previously been disqualified or assessed a civil money penalty in lieu of disqualification for any of the violations listed in (d) through (g) of this Section receives a third or subsequent disqualification for any of these violations, the disqualification time period shall be doubled for the third or subsequent disqualification. Civil money penalties shall not be assessed in lieu of disqualification for a third or subsequent disqualification for any of the violations in (d) through (g) of this Section.(m) Voluntary withdrawal of the food vendor from the Program or non renewal of the Food Vendor Agreement shall not be used as alternatives to disqualification for the violations listed in (c) through (g) of this Section. The disqualification shall be entered into the food vendor's record.(n) When a civil money penalty is imposed on a food vendor in lieu of a disqualification due to violations of this Section or Section 40741, the formula set forth in Title 7, Code of Federal Regulations, Section 246.12, and incorporated by reference herein, shall be used to calculate the amount of a civil money penalty being imposed in lieu of disqualification.(o) When, during the course of a single investigation, the Program determines a food vendor has committed multiple violations, the food vendor shall be disqualified for all violations. The disqualification period shall be for the period corresponding to the most serious violation. The most serious violation is that which requires the longest time period of disqualification. A listing of all violations for which the food vendor was disqualified shall be included in the notice of administrative action.(p) Any administrative action against any food vendor either disqualified or subject to a civil money penalty in lieu of disqualification for any of the violations in (c) through (g) of this Section, shall result in a notice from the Program to the appropriate federal office as required in Section 246.12, Title 7, Code of Federal Regulations.(q) If the food vendor has been assessed a civil money penalty in lieu of disqualification, the food vendor shall pay the civil money penalty in full within thirty (30) days: (1) of the food vendor's receipt of the notification of disqualification and assessment of a civil money penalty in lieu of disqualification; or(2) of the Department's issuance of the final decision of the appeal action, if the food vendor has filed an appeal of the disqualification within the required time period pursuant to Section 40751; or(3) of the date of the execution of a settlement agreement, agreed upon by the food vendor and the Program during the appeal process, if the food vendor has filed an appeal within the required time period pursuant to Section 40751.(r) A food vendor may request to pay one half of the total civil money penalty amount in installments. The Program must receive the food vendor's written request for an installment plan and an initial payment of no less than fifty (50) percent of the total amount of the civil money penalty within the same time limits required for full payment stated in (q) of this Section. The food vendor shall pay the unpaid balance of the civil money penalty as stated in an installment plan agreement entered into by the Program and the food vendor. The installment plan agreement shall include: (1) An interest payment on the unpaid balance calculated at the rate allowed by the Pooled Money Investment Fund divided into twelve (12) consecutive monthly payments; and(2) The unpaid balance of the civil money penalty, after the initial payment has been deducted from the total civil money penalty amount, divided into twelve (12) consecutive monthly payments; and(3) The payment schedule, including the principal and interest amounts and the payment due dates. The first monthly payment shall be due no later than one month following the execution of the installment plan agreement.(s) If a food vendor fails to pay all of a civil money penalty within the time limit required in (q) of this Section, or fails to timely pay any installment of a civil money penalty as stated in the Program's installment plan agreement with the food vendor, the Program shall provide the food vendor with a fifteen (15) day notice of disqualification for failure to timely pay a civil money penalty. The notice shall be sent by first class mail to the address listed on the food vendor agreement. Disqualification of the food vendor shall be imposed effective on the disqualification date stated in the notice. The disqualification shall be for the entire length of time corresponding to the most serious violation for which the civil money penalty was assessed.Cal. Code Regs. Tit. 22, § 40740
1. New section filed 9-3-2002; operative 10-3-2002 (Register 2002, No. 36).
2. Governor Newsom issued Executive Order N-40-20 (2019 CA EO 40-20), dated March 30, 2020, which allowed the director of the State Department of Public Health to make temporary changes to certain regulations relating to the Women, Infants, and Children Program, due to the COVID-19 pandemic. Note: Authority cited: Sections 123280 and 123290, Health and Safety Code. Reference: Sections 123290, 123310, 123315, 123320, 123325, 123330, 123335 and 123340, Health and Safety Code.
1. New section filed 9-3-2002; operative 10-3-2002 (Register 2002, No. 36).