12VAC5-195 Virginia WIC Program

REGULATIONS

Vol. 29 Iss. 12 - February 11, 2013

TITLE 12. HEALTH

STATE BOARD OF HEALTH

Chapter 195

Final Regulation

REGISTRAR'S NOTICE: The State Board of Health is claiming an exemption from the Administrative Process Act pursuant to Item 295 B of Chapter 3 of Special Session I of the 2012 Acts of Assembly, which exempts the Special Supplemental Nutrition Program for Women, Infants, and Children from the requirements of the Administrative Process Act.

Title of Regulation: 12VAC5-195. Virginia WIC Program (amending 12VAC5-195-10, 12VAC5-195-20, 12VAC5-195-30, 12VAC5-195-70, 12VAC5-195-110, 12VAC5-195-140, 12VAC5-195-150, 12VAC5-195-200, 12VAC5-195-210, 12VAC5-195-230, 12VAC5-195-280 through 12VAC5-195-370, 12VAC5-195-390 through 12VAC5-195-670; adding 12VAC5-195-680).

Statutory Authority: § 32.1-12 of the Code of Virginia; 7 CFR Part 246.

Effective Date: March 13, 2013.

Agency Contact: Anne Massey, Policy Analyst, Department of Health, 109 Governor Street, Richmond, VA 23219, telephone [phone], or email [e-mail].

Summary:

Amendments were made to the Virginia WIC Program state regulations, the majority of which were made to Part III pertaining to vendor requirements. Many of the amendments reflect the Virginia WIC Program's change in the retailer peer group structure, which was the result of an independent analysis of the existing peer group structure conducted by Mikelson and Associates. The analysis included a recommendation to change the structure to define geographic areas based on a rural or urban designation according to the Isserman model instead of Business Economic Areas, the criteria in use at the time of the report. The Isserman model includes a definition of rural and urban that integrates the 2000 census tract population into the U.S. Office of Management and Budget (OMB) county based definition and the census rural/urban continuum codes.

In addition, the retailer slotting system, which had been the basis for retailer selection decisions and was tied into the peer group structure, was eliminated. The Virginia WIC Program had committed to this change during discussions with the Joint Commission on Administrative Rules. The following sections were amended due to these changes in the peer group structure and retailer slotting system: 12VAC5-195-330, Adequate Participant Access; 12VAC5-195-340, Competitive Pricing; 12VAC5-195-360, Selection Decisions; and 12VAC5-195-370, Authorization Exception Decisions.

A new section, 12VAC5-195-680, Food Application Process, was added to formalize the process used by the Virginia WIC Program to solicit, evaluate, and select products for inclusion in the WIC Approved Food List. The content of this section details the application process in which prospective manufacturers, distributors, and suppliers participate to have their products considered for the WIC Approved Food List as well as the process to implement any changes to the list.

Additional amendments were made to remain consistent with current WIC Program policies including:

1. 12VAC5-195-30, Definitions. Removes terms that were no longer used such as "Business Economic Areas," adds terms from new sections including "formula flyer," and adds terms that had been in use but needed clarification including "WIC sales" and "relative." The term "vendor" was removed and replaced solely with "retailer" for consistency.

2. 12VAC5-195-110, Caretaker. Reflects policy changes that make the caretaker option more accessible to those caring for WIC eligible infants and children in the absence of a parent or legal guardian.

3. 12VAC5-195-150, Alternative office hours. Adds the requirement of local agencies to offer a minimum of 16 alternative office hours a month.

4. 12VAC5-195-350, Price verification. Reduces the number of retailers negatively affected by rejected food instruments due to noncompetitive prices; the variance of the peer group pricing average was increased by 10%.

5. 12VAC5-195-460, Conflict of interest. Adds clarification regarding conflict of interest requirements for WIC authorized retail management and employees.

6. 12VAC5-195-600, Sanctions and administrative actions. Updated to reflect the most current sanction descriptions and related administrative actions.

General language and wording changes were also made for consistency and clarity.

Part I
General Provisions

12VAC5-195-10. General authority.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) was authorized as part of the Child Nutrition Act of 1966, Section 17 (42 USC § 1786), to provide supplemental foods and nutrition education to pregnant, postpartum and breastfeeding women, infants and young children from families with inadequate income. The Virginia WIC Program is regulated by federal regulations published in the Code of Federal Regulations, 7 CFR Part 246, Special Supplemental Nutrition Program for Women, Infants and Children. The state regulations shall serve as a supplement to 7 CFR Part 246.

The WIC Farmers' Market Nutrition Program was established in 1992 as P. L. 102-314 to provide resources in the form of fresh, nutritious, unprepared foods (fruits, vegetables and cut herbs) from farmers' markets to WIC participants and to expand the awareness, use of and sales at farmers' markets. The Virginia WIC Farmers' Market Nutrition Program is regulated by federal regulations published in the Code of Federal Regulations, 7 CFR Part 248.

12VAC5-195-20. Purpose.

A. The Virginia WIC Program serves women who are breastfeeding, pregnant, or have just given birth; infants less than one year old; and children less than five years old. WIC participants must be Virginia residents and meet the financial and nutritional requirements.

B. The Virginia WIC Program provides special supplemental foods to eligible participants through a retailer delivery system (7 CFR 246.12). Food benefits are issued by local agencies to eligible participants using food instruments (7 CFR 246.10). Participants redeem their food instruments at any authorized retailer or entity. The state agency enters into an agreement with authorized stores retailers (7 CFR 246.12). This agreement identifies the obligations, rights and responsibilities of both the authorized retail store retailers and the state agency. Retailers deposit these food instruments into their bank account. The state agency pays authorized retailers a reasonable dollar amount for the foods purchased, as listed on the deposited food instruments (7 CFR 246.12).

C. The state agency shall promulgate policies, guidelines, manuals and training resources to facilitate operations of the Virginia WIC Program in accordance with its contractual agreement with Food Nutrition Service (FNS) (7 CFR 246.3); the guidelines and instructions issued by FNS in policy letters; and management evaluations and audits and the WIC Program State Plan of Operations.

12VAC5-195-30. Definitions.

The following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:

"Administrative appeal review" means the procedure through which applicants and/or retail stores retailers may appeal a state agency's administrative action, including program disqualification, denied authorization and other termination reasons adverse actions.

"Agency representative" means staff from the state agency, a local agency, a contractor, or other designated individuals trained to conduct WIC functions and monitor retailers.

"Approved food list" means a brochure or method used by the WIC Program to communicate to eligible participants, retailers, local agencies and other interested parties which authorized supplemental foods may be purchased using WIC food instruments. The approved food list is a guide and must be used with the printed food instrument, which may identify specific brands or additional products not stated on the approved food list that may be purchased by participants.

"Authorization" means the process by which the state agency assesses, selects and enters into an agreement with stores retailers that apply or subsequently reapply to be authorized.

"Automated clearinghouse" or "ACH credit" or "direct deposit" means a method used to reimburse stores for certain types of processed food instruments (i.e., "Over FI Max."). A credit is made to the store's designated bank account and routing number using the automated clearinghouse process.

"Business economic areas" or "BEAs" mean a categorization method established by the United States Department of Commerce – Bureau of Economic Analysis and used by the state agency to identify geographically similar trade and economic communities. Some more populated BEAs are further broken down into smaller subsets or peer groupings, based upon number of unique participants served by authorized stores.

"Caretaker" means a person 18 years of age or older, unless approved at the discretion of a competent professional authority, designated by a parent or legal guardian to certify an infant/child, obtain and redeem food instruments and attend nutrition education. A caretaker may be any person who has detailed knowledge of the nutritional needs and eating habits of the infant/child. A parent or legal guardian may designate one caretaker per family ID number.

"Caseload" means the number of WIC participants assigned to a local agency by the state agency.

"Cash value food benefits" means a special food instrument that has been issued to eligible participants for a specific dollar amount that must be used to purchase fruits and vegetables. Unless stated otherwise, all references to food instruments include cash value food benefits, as well as food and formula food instruments.

"Civil monetary penalty" or "CMP" means an administrative fine offered to a retailer in lieu of disqualification if inadequate participant access exists as determined by the state agency.

"Direct deposit ACH" means a method used to reimburse retailers for certain types of processed food instruments (i.e., "Over FI Max"). A credit is made to the retailer's designated bank account and routing number using the automated clearinghouse process.

"Enrollment" means the process all applicants and authorized stores retailers must complete in order for a store retailer to be eligible to accept WIC food instruments.

"Food instrument" means a voucher, check, electronic benefits transfer card (EBT), coupon, or other document that is used by a participant to obtain supplemental foods.

"Formula flyer" means a handout or method used by the state agency to communicate to eligible participants, retailers, local agencies, and other interested parties that formulas may be purchased at authorized retailers.

"Image replacement document" or "IRD" means a legal copy of a deposited food instrument that is created and transmitted by a store's retailer's depository bank to the WIC Program's backend processor for payment consideration.

"Informal settlement meeting" means a meeting held with an authorized store retailer or applicant representative and the state WIC director whose purpose is to review and clarify outstanding WIC Program administrative issues.

"Legal guardian" means an individual who has been appointed by a court of law or the Department of Social Services, or other legal means, to have primary, physical custody of a minor. A legal guardian shall be authorized to provide eligibility information for an applicant, consent to medical treatment of the applicant, and shall be held legally bound if sanctions are imposed.

"Peer group" means a classification of applicants and authorized stores retailers into groups based on common characteristics or criteria that affect food prices for the purpose of applying appropriate competitive price criteria to stores retailers at authorization and limiting payments for foods at competitive pricing levels. A retailer's peer group is used to determine competitive pricing levels at initial authorization and establish the reimbursement maximums paid by the state agency.

"Postpayment review" means an analysis of paid food instruments redeemed by authorized retailers in order to determine if pricing and redemption discrepancies exist. Based upon this analysis, a vendor retailer claim against the retail store retailer may be established by the state agency.

"Prepayment edit" means a price adjustment made to the reimbursement level given to retailers. This editing process can be either automated or a manual screening of deposited food instruments done by an independent banking contractor, prior to releasing payment to authorized retail stores retailers.

"Relatives" means spouses, parents, children, brothers, sisters, aunts, uncles, nephews, nieces, grandparents, and grandchildren.

"Retailer" means a vendor, retail store, commissary, or entity authorized by the Virginia WIC Program to accept WIC food instruments for the various types of foods listed on food instruments. The term "retailer" is equivalent to the term "vendor" used in federal regulations (7 CFR 246.12).

"Retailer agreement" means a written agreement that establishes the respective roles and responsibilities of the program state agency and authorized retailers in complying with federal and state requirements.

"Retailer claim" means the state agency has determined an authorized retailer committed a violation of the retailer agreement that affects the payment status of one or several food instruments.

"Retailer manual" means a series of written documents that communicate administrative procedures for the Virginia WIC Program that regulate both authorized retailers and applicants. The Retailer Manual is part of the WIC Program State Plan that must be submitted and approved by USDA.

"Sanctions" mean a penalty imposed by the state agency upon an authorized retailer for a specific violation outlined in the vendor retailer manual or retailer agreement.

"State agency" means the Virginia Department of Health and the delegated authority to the Division of WIC and Community Nutrition Services that Community Nutrition, which has the administrative responsibility for managing the Virginia WIC Program.

"Termination" means the act of ending a retail store's retailer's WIC Program authorization for administrative reasons that include but are not limited to a change of ownership, closed store retailer location, voluntary withdrawal, and noncompetitive prices.

"Unique participant" means the number of unduplicated individuals who have redeemed one or more food instruments at a retail store during a specific period.

"United States Department of Agriculture" or "USDA" means the federal agency that provides funding for the WIC Program on behalf of Congress.

"Vendor claim" means the state agency has determined an authorized store committed a violation of the retailer agreement that affects the payment status of one or several food instruments. The state agency may delay payment or establish a claim in the amount of the full purchase price of each food instrument that contained the overcharge or other error. The state agency will bill and recoup the funds paid against these improperly redeemed food instruments.

"Vendor manual" means a series of written documents that communicate administrative policies and procedures for the Virginia WIC Program that affect both authorized retailers and applicants. The Vendor Manual is part of the WIC Program State Plan that must be submitted and approved by USDA.

"Virginia Department of Health" or "VDH" means the state agency that oversees the Virginia WIC Program.

"Waiting list" means a list implemented by the state agency for individual participants when the maximum caseload is reached.

"Warning" means one or more incidents of noncompliance with program requirements were documented. The state agency sends a written warning letter to the owner or store manager to advise him of any documented violations. A warning letter is not sent to the owner or store manager for selective documented violations that affect the integrity of the investigative process, including but not limited to overcharges, fraud, and forgery.

"WIC sales" means annual sales based on WIC redemption paid by the state agency to an authorized retailer.

Part II
Participant Requirements

12VAC5-195-70. Eligibility requirements.

A. Adjunctive financial eligibility requirements. Adjunctive, or automatic income financial eligibility is determined pursuant to 7 CFR 246.7. Documentation is required as proof of participation in programs that qualify an applicant for adjunctive financial eligibility. The state agency also allows the following state-administered programs Family Access to Medical Insurance Security Plan (FAMIS) and a $2.00 co-pay level to be used in determining adjunctive income financial eligibility:.

1. Family Access to Medical Insurance Security Plan (FAMIS) and a $2.00 co-pay level; and.

2. FAMIS MOMS program.

B. Local agencies shall serve institutionalized applicants if they meet all eligibility requirements.

C. For determining income eligibility, local agency personnel shall use the applicant's current or annualized income, whichever is the best indication of circumstances.

D. In determining income eligibility, the state agency utilizes shall utilize all income exclusions listed in 7 CFR 246.7.

E. Applicants who are not adjunctively financially eligible shall have financial eligibility determined using income guidelines equaling the income guidelines established under § 9 of the National School Lunch Act for reduced price school meals per 7 CFR 246.7.

F. An applicant claiming multiple fetuses shall have the stated number used at the time of certification, but is required to shall be required to provide written verification by a physician or nurse practitioner working under the supervision of a physician within 90 days of certification.

12VAC5-195-110. Caretaker.

A. A parent or legal guardian may have the privilege, but not the right, to designate one caretaker per family ID number to certify an infant or child, to who may obtain and redeem food instruments, and to attend nutrition education. The caretaker assumes all of the rights and responsibilities of the parent or legal guardian who designates them him. A caretaker shall be designated only when the local agency cannot accommodate the needs of the parent to attend the local agency to obtain WIC benefits. In the absence of a parent or legal guardian, a caregiver shall provide reasonable documentation of his status as a primary caregiver. Reasons supporting the designation of a caretaker shall be documented and become part of the participant's record. The authority to implement the caretaker policy will be granted individually to local agencies by the state WIC director. The parent is always encouraged to be the primary recipient of all WIC benefits.

B. A caretaker may be designated in two situations:

1. A parent or legal guardian's declaration of hardship or

2. The caretaker providing reasonable documentation of his role in the absence of a parent or legal guardian.

B. C. Local agency personnel shall only discuss the option of designating a caretaker if the participant, parent, or legal guardian indicates one of the following situations declares hardship that prevents him from coming to the local agency during established regular and alternative hours due to:

1. The participant, parent or legal guardian expresses difficulty with attending the local agency for nutrition education WIC benefits Conflict of schedules due to work, school, or some other valid reason;

2. The local agency determines difficulty with the participant, parent or legal guardian attending the local agency through objective methods such as the no show reports, missed appointments, or frequently rescheduled appointments Lack of transportation; or

3. The local agency determines difficulty with the participant, parent or legal guardian attending the local agency during established alternative hours An infant or child residing with a family member or caretaker.

D. The caretaker shall provide reasonable documentation to substantiate his relationship with the infant or child and his role as primary caretaker. Reasonable documentation may include:

1. Signed caretaker designation form, WIC-311, indicating the designation of caretaker that may be obtained prior to the first local agency visit;

2. Signed and witnessed letter from the legal guardian or parent designating a caretaker and reason for the legal guardian's or parent's inability to certify an infant or child, obtain and redeem food instruments, and attend nutrition education; and

3. Documentation of the parent or legal guardian's enrollment, residence, or confinement in a hospital treatment program, shelter, penal institution, or other institution.

12VAC5-195-140. Food instruments.

A. Food instrument issuance. All food instruments shall be issued through the automated system only after eligibility has been documented and only when the participant, parent or legal guardian, caretaker, or proxy is physically present at the local agency to pick up their the food instrument. Failure by the participant, parent, legal guardian, caretaker, or proxy to attend the initial nutrition education appointment may result in reduced WIC benefits for that month.

B. Lost food instruments. Replacement of lost, valid, not redeemed food instruments shall only occur once within the entire duration of the participant, parent, caretaker, or legal guardian's receipt of WIC services, unless approval is obtained from the state agency. Lost food instruments shall only be replaced for one of the following situations:

1. A participant leaving home because of family domestic violence;

2. A change in full legal custody, including when infants/children are removed from home and placed in foster care or parental custody is changed; or

3. An event out of the control of participant, such as a fire or natural disaster that is publicly documented.

C. Stolen food instruments. Food instruments reported as stolen shall only be replaced when a police report is provided that states that the valid, not redeemed, WIC food instruments were the stolen items. Stolen food instruments shall not be replaced without a police report, unless costs are associated with the police report and a waiver is granted by the state agency. Stolen food instruments shall only be replaced once within the entire duration of the participant, parent, caretaker, or legal guardian's receipt of WIC services, unless approval is obtained from the state agency.

D. Mailing WIC food instruments. Food instruments shall only be mailed with prior approval from the competent professional authority for individual participants if the participant has already received the required secondary nutrition education contact or if the participant will be able to receive nutrition education at the next visit within the certification period. Justification for mailing food instruments to individuals, families and groups includes:

1. Illness or disability resulting in the participant being physically unable to be present as documented by medical records and meeting the Americans with Disabilities Act criteria (28 CFR Part 35) for physically unable to be present;

2. Imminent childbirth as documented by medical records;

3. Distance to travel, especially in rural areas with a minimum 60-mile roundtrip travel distance between home and the local WIC clinic, as approved confirmed by the local WIC coordinator;

4. Other travel distance for participants with unique transportation challenges;

5. Computer failure at the local agency site;

6. Natural disasters;

7. Complete systemwide failure of automated system; and

8. Difficulty obtaining complete prescription for a special formula as that has been approved by a local WIC coordinator.

Food instruments shall only be mailed for a one-month three-month period. Requests beyond the one-month three-month period shall require approval by the state agency.

12VAC5-195-150. Alternative office hours.

Alternative office hours shall be offered outside of the regular operating hours of Monday through Friday, between 8 a.m. and 5 4:30 p.m. to address barriers in accessing WIC services for current and potential applicants and participants. The local agency shall offer a minimum of 16 alternative office hours per month and provide documentation to the state agency that the alternative hours accommodate the needs of the current client caseload.

12VAC5-195-200. Program abuse and sanctions.

A. The state agency determines program abuse and sanctions that may be issued to applicants and participants. When more than one abuse is involved at a time, the sanction shall be based on the more serious abuse.

B. If an abuse occurs more than 12 months after the last abuse, the local agency shall process the abuse as a first offense.

C. When more than three abuses in a 12-month period occur, the local agency shall issue a three-month temporary disqualification.

D. Program abuses and assigned sanctions are as follows:

Abuse	Number of Offenses	Sanction
Class I
Any deliberate misrepresentation of income, name, residence, family size, medical data, or date of birth to obtain WIC benefits	All	Three-month disqualification
Dual participation – redeeming food instruments from two programs/agencies in same month	All	One-year disqualification
Assessed claim for $100 or more	All	One-year disqualification
Assessed second or subsequent claim for any amount	2nd or subsequent	One-year disqualification
Attempting to steal or actually stealing food instruments from the local agency or another participant, if under $100	All	Three-month disqualification
Selling, exchanging or giving away food instruments, food, or formula	All	Three-month disqualification
Redeeming WIC food instruments reported as lost or stolen, if under $100	All	Three-month disqualification
Attempting to redeem or redeeming WIC food instruments for nonfood items (i.e., diapers, wine, cigarettes)	All	Three-month disqualification
Physically abusing the WIC or store retailer staff (An incidence of physical abuse of WIC or store retailer staff/property should be reported to the police)	All	Three-month disqualification
Accepting cash or credit from a store retailer in connection with a WIC transaction	1st	One-month disqualification
	2nd	Two-month disqualification
	3rd	Three-month disqualification
Alteration of WIC food instruments (includes date, quantities, types of food)	1st	One-month disqualification
	2nd	Two-month disqualification
	3rd	Three-month disqualification
Class II
Creating a public nuisance at the local agency or the store retailer (i.e., verbally abusing, harassing, or threatening WIC or store retailer staff, destroying store retailer merchandise, or disrupting normal local agency or store retailer activities)	1st	Warning letter
	2nd	Two-month disqualification
	3rd	Three-month disqualification
Attempting to redeem or redeeming WIC food instruments for unauthorized food, formula or food amounts	1st	Warning letter
	2nd	Two-month disqualification
	3rd	Three-month disqualification
Allowing unauthorized person(s) to use the WIC ID Folder to pick-up and/or redeem WIC food instruments	1st	Warning letter
	2nd	Two-month disqualification
	3rd	Three-month disqualification
Deliberately damaging or destroying WIC food instruments	1st	Warning letter
	2nd	Two-month disqualification
	3rd	Three-month disqualification
Redeeming WIC food instruments before or after valid spend dates	1st	Warning letter
	2nd	One-month disqualification
	3rd	Two-month disqualification
Attempting to redeem or redeeming food instruments at unauthorized stores retailers	1st	Warning letter
	2nd	One-month disqualification
	3rd	Two-month disqualification

12VAC5-195-210. Collection of improperly issued instruments/claims against participants.

The state agency may shall establish a claim against a participant for the full value of benefits improperly obtained or disposed of and any fees or additional expenses incurred as a result of a participant violation. These improper acts include, but are not limited to: Participant violations include:

1. Inaccurate certification information;

2. Dual participation violations;

3. Proxy abuses Violation of the WIC guidelines or rules by the proxy or caretaker; or

4. Retention of future food instruments after disqualification.

12VAC5-195-230. Conflict of interest.

A. Individuals involved in administering the WIC Program may not, without prior written approval from the WIC Director or his designee or the director of the local health district:

1. Act as a proxy for a participant; or

2. Have a direct financial interest in an authorized WIC retail store. retailer; or

3. Complete an onsite stocking visit of an authorized retailer at which they or a relative is employed.

B. Individuals involved in administering the WIC Program shall not certify or issue food instruments to themselves or relatives. Relatives include spouses, parents, children, brothers, sisters, aunts, uncles, nephews, nieces, grandparents and grandchildren.

C. Additional conflict of interest regulation may be found in 12VAC5-195-460.

D. This section is not meant to replace or abrogate the Virginia State and Local Government Conflict of Interests Act, Chapter 31 (§ 2.2-3100 et seq.) of Title 2.2 of the Code of Virginia.

Part III
Vendor Retailer Requirements

12VAC5-195-280. Enrollment procedures.

A. The state agency accepts shall accept applications from new store retailer applicants year round.

B. Stores Retailers seeking authorization shall comply with 7 CFR 246.12 and sell a range and variety of staple foods and WIC-approved formulas at a permanent fixed location, as specified in the retailer agreement and application package. Only one authorization approval will be granted by the state agency to each eligible location selected for program authorization. Stand-alone pharmacies and any other types of entities that cannot meet all of the general requirements outlined in this section will shall be denied WIC Program authorization.

C. Store Retailer applicants shall complete the following requirements to become authorized for WIC Program participation:

1. Submit all applications, including pricing updates, using an electronic, Internet-based method that has been approved by the WIC Program;

2. Submit prices for all mandatory food and formula items, a signed retailer agreement, supplemental informational form, direct deposit ACH form, and other required forms as deemed necessary to evaluate a retailer's or an applicant's qualifications;

3. Pass a competitiveness price assessment completed by the WIC Program. The state agency shall determine that whether the prices submitted as part of the new store retailer application process are price competitive when compared to other stores retailers located in the store's retailer's assigned peer group;

4. Provide documentation to the state agency, upon request, that a satisfactory business integrity record exists. None of the store's retailer's current owners, officers, or managers shall have been convicted of or had a civil judgment entered against them for conduct demonstrating a lack of business integrity, within the past six years;

5. Pass an unannounced onsite visit to determine if the store retailer has met the minimum stocking requirement, has available for sale the variety and selection of foods as stated on the supplemental informational form, and has posted prices that are not higher than prices submitted as part of the application process. The visit shall also verify that the store's retailer's hours of operation and number of cash registers were accurately reported;

6. Pass an onsite visit to determine if the type and variety of foods sold would qualify the store retailer to earn more than 50% of its annual sales solely from the WIC Program. If the store retailer is likely to be an above 50% vendor retailer, then it shall be denied authorization;

7. Attend a mandatory new store retailer training session conducted by either state agency staff or a certified corporate trainer within 30 calendar days after the retail store retailer passes a an unannounced stocking and price verification visit. Provide documentation to the state agency that this mandatory training has been completed. Store applicants shall provide to the state agency this documentation within 30 calendar days after meeting all other enrollment requirements that this mandatory training has been completed;

8. Provide training to store retailer personnel and cashiers on proper WIC food instrument handling procedures;

9. Return to the state agency all required paperwork within 14 days after receipt including, but not limited to, a signed retailer agreement, if applicable; supplemental informational form; direct deposit ACH form; and other information deemed necessary to evaluate a retailer's or applicant's qualifications; and

10. Receive from the state agency a packet containing an authorization acknowledgement letter granting WIC Program authorization, a Vendor Retailer Manual for the Virginia WIC Program, a WIC window decal, and an authorization stamp.

D. Newly authorized stores retailers shall begin accepting WIC food instruments within 15 calendar days after receiving their program authorization stamp and final acknowledgment letter. Authorized stores retailers are required to contact the state agency in writing if the store will be retailer is unable to meet this program requirement. Failure to begin accepting WIC food instruments within the established time frame may lead to the state agency withdrawing its authorization decision.

E. Store Retailer applicants that fail to meet any of the enrollment requirements outlined in this section will shall be denied authorization unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

12VAC5-195-290. Communications.

A. Authorized stores retailers shall contact the state agency or their assigned agency representative rather than local WIC agency staff for all questions related to WIC Program participation including, but not limited to, retail store retailer selection and authorization requirements and decisions, reimbursement questions, participant's food instrument prescriptions, and complaints.

B. Authorized stores retailers shall provide at least 15 calendar days written notice if the retailer desires decides to terminate its participation in the WIC Program or when if the retailer ceases operation, changes ownership, or for any other circumstances that impacts service delivery including, but not limited to, relocations, renovations, permanent or temporary closures.

C. The state agency shall regularly communicates communicate policy and procedural changes, training issues, WIC food instrument processing tips, cashier reminders and alerts affecting retail stores retailers in an informational newsletter. Annually, a A newsletter is shall be published annually and sent to all authorized retail stores retailers to update store retailer personnel on major program changes. The program posts, if applicable, state agency shall post approved policy changes, if applicable, on its external webpage. Authorized stores retailers shall be held accountable for complying comply with all policy changes communicated in writing by the state agency.

D. Written correspondence retained in the state agency's centralized files located in Richmond, Virginia, pertaining to, but not limited to, a store's retailer's authorization status, application documentation, or WIC and food stamps Supplemental Nutrition Assistance Program compliance history is confidential and is protected under by federal regulations (7 CFR 246.26). The state agency shall maintain stores' retailers' compliance history and background information for at least a three-year period or the contract period, whichever is longer. For civil judgments and food stamp Supplemental Nutrition Assistance Program administrative documentation issued against a specific authorized retailer, the state agency will shall retain this documentation for six years.

E. In order to utilize the WIC-approved, Internet-based application for submission of prices, stores retailers shall give consent to be monitored by the state agency Virginia Department of Health or its information technology agency to ensure that this application is being used for its intended purpose. If such monitoring reveals possible evidence of unauthorized or criminal activity, this evidence may be provided to appropriate local, state, or federal authorities for disciplinary action and prosecution to the fullest extent permitted by law.

12VAC5-195-300. General requirements and conditions for authorization.

A. Once enrolled, a store retailer or applicant shall obtain authorization from the state agency to operate as a WIC-authorized store from the state agency retailer before accepting or redeeming food instruments.

B. To obtain and retain authorization and remain authorized, retailers shall:

1. Be food stamp Supplemental Nutrition Assistance Program authorized at the time of application or reauthorization and remain in good standing;

2. Be currently WIC-authorized or eligible for authorization after meeting a If applicable, fulfill the WIC disqualification requirement, if applicable;

3. Be in operation as a business at the time of application or within 45 calendar days of application;

4. Meet Comply with all local, state and federal requirements statutes, regulations, and rules, including sanitation and building code regulations;

5. Be necessary as determined by the state agency to ensure adequate participant access;

6. 5. Submit prices to the WIC Program using an electronic, Internet-based method at least twice a year or as and when requested by the state agency;

7. 6. Remain price competitive when compared to other authorized stores retailers that are located in the same peer group;

8. 7. Meet the mandatory minimum stocking requirement at all times and keep such stock immediately available in the customer shopping area or immediately available onsite;

9. 8. Be located Operate at the store retailer address indicated in the state agency's application or authorization record; this address shall be the sole location at which WIC customers purchase supplemental foods and formulas;

10. 9. Be open for business at least 50 hours per week;

11. 10. Meet all business integrity criteria as defined in 7 CFR 246.12;

12. 11. Provide supporting documentation to the state agency including, but not limited to, annual food sales information or tax records that will be used to ensure that not no more than 50% of the store's retailer's total food sales were derived from WIC sales;

13. 12. Comply with all financial and corrective actions identified from during prior WIC authorization authorizations and pay all civil monetary penalties, if applicable;

14. 13. Purchase contract and special formula from a distributor, supplier, wholesaler, or retail store whose name retailer who is listed approved by the Virginia WIC Program as approved to sell formula; and

15. 14. Participate in the WIC Program's direct deposit (ACH) ACH process used for reimbursement purposes.

C. Stores Retailers shall not offer drive-through window or home delivery services for making WIC purchases. The participant must take physical possession of purchased food and formula items at the time of transaction when the WIC food instrument is signed.

12VAC5-195-310. Above 50% vendor retailer screening.

A. The state agency shall not authorize any applicant or retail store retailer that is likely to derive 50% or more of its annual food sales from the sale of supplemental foods to WIC participants. Stores Retailers already authorized by the program whose annual WIC food sales rise to 50% or more of their total food sales will have their authorization status terminated. Stores Retailers must submit documentation that permits the state agency to complete its evaluation and identification of above 50% vendors retailers. Failure to submit the requested documentation may lead to the store's retailer's authorization being terminated.

B. Newly authorized stores retailers with six months of redemption history shall have their status reviewed to determine if they qualify as an above 50% vendor retailer (7 CFR 246.12). If the state agency's assessment determines the store retailer qualifies as an above 50% vendor retailer, the store's retailer's WIC Program authorization status shall be terminated.

12VAC5-195-320. Retailer agreement.

A. The retailer agreement does not constitute a license or a property right. If an authorized store retailer wishes to continue to be authorized beyond the current agreement period, the store retailer must reapply for authorization. All stores retailers must be selected under the current selection and authorization criteria being used by the state agency (7 CFR 246.12).

B. Authorized retail stores and military commissaries retailers shall use a single uniform retailer agreement. The maximum duration of the retailer agreement shall not exceed three years. The duration of the retailer agreement may be for a period that is less than three years, depending upon when whether a county or location is selected to undergo the regional authorization and selection process.

C. A fully executed retailer agreement shall must be signed by both an the authorized store retailer representative and state agency a WIC program management representative to be enforceable. The state agency shall provide the store retailer or its designated contact person a copy of its the signed retailer agreement or authorization acknowledgement letter once after all selection and authorization requirements have been met.

D. A An authorized retailer must have a signed copy of the retailer agreement must be on file for any store retailer to be paid for a redeemed WIC food instrument.

E. Revisions, amendments, or modifications to the provisions of the retailer agreement shall be made in writing. The retailer agreement shall be automatically amended upon written notice from the state agency should if federal, or state laws, or regulations require amendments.

F. Authorized stores retailers shall keep a copy of the updated Vendor Retailer Manual, including a copy of the WIC Approved Food food list, formula flyer, and Cashier Training Guide, at the store authorized retailer location authorized to accept WIC food instruments.

G. The state agency reserves the right to extend the current retailer agreement up to six months during the reauthorization evaluation process. If the state agency uses this option, it shall provide written notice to authorized stores affected by this administrative decision.

H. G. If the state agency takes retailer appeals an administrative action by the state agency against a retailer and the retailer appeals and the retailer agreement would otherwise expire during the appeal process, then the state agency shall grant an extension of that store's retailer's retailer agreement during the pendency of the appeal process if the retailer agreement would otherwise expire during that time. Once an appeal decision has been made, the state agency will proceed with either terminating the existing agreement or issuing a new agreement.

12VAC5-195-330. Adequate participant access.

A. The state agency shall ensure that adequate participant access exists so that eligible participants may redeem the food instruments issued to them. The state agency uses a retailer limiting criteria to determine adequate participant access (7 CFR 246.12). The state agency has the sole authority to define establish adequate participant access criteria, which are described in 12VAC5-195-370.

B. The number of authorized stores or retailer slots available is based on two factors:

1. Number of WIC participants living in a specific city or county in which the retail store is physically located; and

2. Population density of the community where the store is physically located.

C. Population density is calculated by identifying the population that resides in a specific city or county. Population density serves as a proxy indicator used by the program to project how close together retailers and participants are located next to each other. Thus densely populated areas where stores are located closer together require fewer stores to provide adequate participant access.

D. In sparsely populated areas, both population and stores are dispersed over a wider geographical area that directly impacts participant access. More sparsely populated areas require more authorized stores to adequately serve eligible participants.

E. Participation is managed and monitored by the WIC Program on a monthly basis. For this reason the number of available slots for authorized stores may change frequently. This change will not impact stores already authorized, but may impact a new store applying for authorization in a given area.

F. The number of authorized retailers or retailer slots available is calculated by a store to participant ratio, which is higher for densely populated communities, and lower for sparsely populated counties. Population density data is updated annually by the state agency and is obtained from the United States Census Bureau. The WIC Program uses a single population density indicator to identify which communities have the higher retailer to participant ratio.

G. A specific number of retailer slots will be allocated to each city/county. A listing of retailer slots available and allocated to each city and county will not be published and distributed to authorized stores, since this figure may change frequently.

12VAC5-195-340. Competitive pricing.

A. Authorized stores retailers and applicants shall submit pricing information to the state agency. Item pricing data is obtained from authorized stores retailers and applicants from using prices that have been entered into a WIC-approved Internet-based application.

B. The state agency collects shall collect pricing information for specific food items at least twice a year (7 CFR 246.12). Prices may be collected more frequently from authorized stores including, but not limited to, the following retailers for reasons including:

1. A store's retailer's prices are determined to be noncompetitive;

2. A store retailer is designated a high risk retailer;

3. A competitive pricing analysis is needed in order to consider an applicant's qualifications;

4. 3. An administrative review is being conducted as part of a compliance investigation, onsite monitoring visit, participant access analysis, inventory audit, or post payment analysis; or

5. 4. Other operational considerations that may occur including, but not limited to, a change in of contract formula company, a change in of infant food company, food industry price fluctuations, and manufacturer's price increases for selected WIC-approved products, such as baby foods, contract formula, and infant cereal.

C. Stores Retailers and applicants must submit the highest shelf price for all mandatory foods and formula brands, unless stated otherwise, that are available and eligible to be sold to participants. For milk items only, stores retailers must submit the price for their store WIC designated brand or least expensive brand available. Prices for optional foods approved for purchase submitted via the Internet-based application All prices submitted via the Internet-based application shall be used for calculating the reimbursement maximums. Retailers must use the approved food list and the minimum stocking requirement to identify all eligible brands and foods.

D. Stores Retailers failing to submit their prices within 14 days of the stated due date stated in the Vendor Retailer Manual will shall receive one warning letter. After receiving this letter, stores retailers that fail to respond within the time period stated in the letter may have their WIC Program authorization terminated unless the state agency determines that inadequate participant access would exist if the retailer's authorization were terminated.

E. Applicants whose prices are determined to be noncompetitive when compared with other authorized stores assigned to retailers in the same peer group shall be denied WIC Program authorization. These applicants shall not be given a second opportunity to resubmit their prices, unless the state agency determines that inadequate participant access would exist if the application was not considered.

F. Authorized stores retailers whose prices are determined to be noncompetitive when compared with other stores retailers assigned to the same peer group shall be given one opportunity to resubmit their prices. After analyzing the prices submitted from this second submission, the state agency shall determine if the store retailer qualifies to remain authorized. The state agency shall terminate the store's retailer's authorization if its prices are noncompetitive unless the state agency determines that inadequate participant access would exist if the retailer's authorization were terminated.

G. The state agency uses nine business economic areas (BEAs) to initially define peer groups based on location and economic variations. For more densely populated BEAs, a second criterion used to further define peer groups is the number of unique participants served (7 CFR 246.12). Each authorized store or applicant is assigned to a single peer group. The applicant's physical retailer address shall be classified as being located either in an urban or rural location based on the county or city where the retailer is located. Retailer applicants located outside of Virginia shall be assigned to the rural category.

Business Economic Areas (ID) (# of Unique Participants Served, if applicable)		Peer Group	Cities & Counties Located in each BEA
49		10	Accomack & Northampton Counties
66		11	Cities: Danville, Galax City, & Martinsville and Counties: Carroll, Grayson, Henry, Patrick & Pittsylvania
71		12	Cities: Buena Vista, Harrisonburg, Lexington, Staunton & Waynesboro and Counties: Augusta, Bath, Highland, Page, Rockbridge & Rockingham
81		13	Cities: Bristol & Norton and Counties: Buchanan, Dickerson, Lee, Russell, Scott, Smyth, Tazewell, Washington & Wise
133		14	Halifax County
137 (0 – 100 participants)		15	Cities: Charlottesville, Colonial Heights, Emporia, Hopewell, Petersburg, & Richmond and Counties: Albemarle, Amelia, Brunswick, Buckingham, Caroline, Charles City, Charlotte, Chesterfield, Cumberland, Dinwiddie, Essex, Fluvanna, Goochland, Greene, Greensville, Hanover, Henrico, King and Queen, King William, Lancaster, Louisa, Lunenburg, Mecklenburg, Middlesex, Nelson, New Kent, Northumberland, Nottoway, Powhatan, Prince Edward, Prince George, Richmond & Sussex
137 (101 – 250 participants)		16
137 (251 and up participants)		17
138 (0 – 100 participants)		25	Cities: Bedford, Clifton Forge, Covington, Lynchburg, Radford, Roanoke & Salem and Counties: Alleghany, Amherst, Appomattox, Bedford, Bland, Botetourt, Campbell, Craig, Floyd, Franklin, Giles, Montgomery, Pulaski, Roanoke & Wythe
138 (101 – 250 participants)		26
138 (251 and up participants)		27
173 (0 – 100 participants)		35	Cities: Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach & Williamsburg and Counties: Gloucester, Isle of Wight, James City, Mathews, Southampton, Surry & York
173 (101 – 250 participants)		36
173 (251 and up participants)		37
174 (0 – 100 participants)		45	Cities: Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Manassas Park & Winchester and Counties: Arlington, Clarke, Culpeper, Fairfax, Fauquier, Frederick, King George, Loudoun, Madison, Orange, Prince William, Rappahannock, Shenandoah, Spotsylvania, Stafford, Warren & Westmoreland
174 (101 – 250 participants)		46
174 (251 and up participants)		47
Rural Areas1	Cities: Norton, Suffolk Counties: Accomack, Albemarle, Alleghany, Amelia, Amherst, Appomattox, Augusta, Bath, Bedford, Bland, Botetourt, Brunswick, Buchanan, Buckingham, Campbell, Caroline, Carroll, Charles City, Charlotte, Clarke, Craig, Culpeper, Cumberland, Dickenson, Dinwiddie, Essex, Fauquier, Floyd, Fluvanna, Franklin, Frederick, Giles, Gloucester, Goochland, Grayson, Greene, Greensville, Halifax, Hanover, Henry, Highland, Isle of Wight, King and Queen, King George, King William, Lancaster, Lee, Louisa, Lunenburg, Madison, Mathews, Mecklenburg, Middlesex, Montgomery, Nelson, New Kent, Northampton, Northumberland, Nottoway, Orange, Page, Patrick, Powhatan, Pittsylvania, Prince Edward, Prince George, Pulaski, Rappahannock, Richmond, Rockbridge, Rockingham, Russell, Scott, Shenandoah, Smyth, Southampton, Spotsylvania, Surry, Sussex, Tazewell, Warren, Washington, Westmoreland, Wise, Wythe
Urban Areas1	Cities: Alexandria, Bedford, Bristol, Buena Vista, Charlottesville, Chesapeake, Clifton Forge, Colonial Heights, Covington, Danville, Emporia, Fairfax, Falls Church, Franklin, Fredericksburg, Galax, Hampton, Harrisonburg, Hopewell, Lexington, Lynchburg, Manassas, Manassas Park, Martinsville, Newport News, Norfolk, Petersburg, Poquoson, Portsmouth, Radford, Richmond, Roanoke, Salem, Staunton, Virginia Beach, Waynesboro, Williamsburg, Winchester Counties: Arlington, Chesterfield, Fairfax, Henrico, James City, Loudoun, Prince William, Roanoke, Stafford, York
1The state agency uses the Isserman model for determining what cities and counties are considered urban and rural settings. This model was created for the United States Department of Agriculture and was published in "In the National Interest: Defining Rural and Urban Correctly in Public Policy" (International Regional Science Review, 28, 4:465 - 499 (2005))

Authorized retailers are assigned to a peer group based on their designation of rural or urban and the number of cash registers located in the retailer. Peer groups are defined as follows:

Peer Group	Description	Location
06	Special formula contractor	Other
50	One to four cash registers	Rural
51	Five to nine cash registers	Rural and under $100,000 in annual WIC sales
52	Five to nine cash registers	Rural and over $100,000 in annual WIC sales
53	10 and above cash registers	Rural
60	One to four cash registers	Urban
61	Five to nine cash registers	Urban and under $100,000 in annual WIC sales
62	Five to nine cash registers	Urban and over $100,000 in annual WIC sales
63	10 and above cash registers	Urban

H. For newly authorized stores retailers and applicants the peer group designation assigned during the first three months is shall be determined by the first criterion only; specifically the store's BEA default location retailer's location and number of cash registers. This default location, if applicable, is the peer group that services 0-100 unique participants. Authorized stores' peer group designation may change, based upon increases or decreases in the monthly average number of unique WIC participants being served by the store. For the peer group designation of newly authorized retailers that have five to nine cash registers, the state agency shall assume the retailer had less than $100,000 in annual WIC sales.

I. All retailers that have five to nine cash registers shall have their WIC sales data calculated by the state agency every six months to determine if the retailer's annual WIC sales are projected to be under or over $100,000. If the retailer's WIC sales have changed, then the retailer's assigned peer group shall change to reflect its redemption status.

J. Retailers that increase or decrease their number of cash registers must notify the state agency in writing within 15 calendar days. An onsite visit may be conducted by the state agency to confirm the number of operational cash registers. Retailers that knowingly misrepresent their number of cash registers may have their authorization status terminated unless the state agency determines that inadequate participant access would exist if the retailer's authorization were terminated.

12VAC5-195-350. Price verification.

A. Authorized stores retailers and applicants must submit prices for all mandatory foods and formulas as defined by the state agency. Once prices have been submitted to the WIC Program, they must remain valid in effect for at least a 30-day period and are subject to random onsite verification by the state agency. Posted prices that are significantly above what was higher than the prices submitted to the state agency may affect the store's retailer's or applicant's authorization selection status.

B. A store retailer or applicant's submitted price shall be compared by the state agency to other authorized stores assigned to retailer in the same peer group in order to determine if the prices submitted are competitive. Prices shall be submitted and validated as competitive for specific food items and formulas eligible for payment to the authorized store location as specified in the Retailer Manual.

C. Authorized stores retailers and applicants shall have a pricing point value that is 40 or higher in order to remain eligible for program authorization.

Description	Price Comparison Range	Pricing Point Value
Best Pricing	Peer Group Average, minus 10% or more	100
Highly Competitive	Peer Group Average, minus 5.1 - 9.9%	80
More Competitive Pricing	Peer Group Pricing Average, plus or minus 5.0%	60
Competitive	Peer Group Pricing Average, plus 5.1 – 9.9% 19.9%	40
Noncompetitive	Peer Group Pricing Average, plus 10.0 20% or higher	20

D. Authorized stores retailers whose prices are identified as noncompetitive when compared with other authorized stores assigned to retailers in the same peer group within a BEA may have their WIC Program authorization terminated, unless the state agency determines that inadequate participant access would exist if the retailer's authorization were terminated.

E. Authorized stores retailers that fail to submit a price for optional food and formula items may have redeemed food instruments selected as ineligible for payment as part of the postpayment review process. These improperly redeemed food instruments may be identified as a vendor retailer claim and be subject to repayment of the full amount paid for all of the items prescribed on the food instrument.

12VAC5-195-360. Selection decisions.

A. All retailers and applicants will compete equally for available slots located within a specific city/county or zip code, if applicable. The state agency reviews the qualifications of authorized stores and applicants located in a specific BEA or city/county within a BEA to make authorization selection decisions. Retail stores' and applicants' mandatory women and infant food and formula items used for pricing analysis purposes must qualify under the price competitive category of 40 or higher in order to be selected for authorization (7 CFR 246.12).

The state agency shall rank all stores that have a pricing point value of 40 or higher in ascending order, or lowest price to highest price. The stores that have the lowest total prices are considered the best qualified stores. Applicant's and store's ranking will be used to select applicants and stores for all available slots located within a specific BEA or city/county within a BEA.

Every three years, currently authorized retailers shall reapply for WIC program authorization. Retailers must meet all general requirements for authorization as established in 12VAC5-195-300.

B. When multiple stores have equal rankings and there are not enough slots to authorize all such stores, rankings will be further differentiated based on the following criteria in order of their application:

1. When equal rankings occur, stores with the lowest prices for selective special formulas that are eligible to be sold to WIC participants will be offered any available slots.

2. If rankings continue to be equal, the state agency shall offer available slots to the authorized store or applicant with the highest number of unique participants who reside in the zip code where the store is located.

3. If rankings continue to be equal, the state agency shall offer available slots to the authorized store or applicant with the highest square footage, excluding storage space, to determine which stores will be offered available slots.

4. If rankings continue to be equal and the stores or applicants are owned by the same corporate entity, then the corporate representative will be allowed to decide which corporate-sponsored store shall be offered the available slot.

5. If rankings continue to be equal and the stores or applicants are not owned by the same corporate entity, then the store or applicant that has the highest food stamp sales for the previous six months will be offered the available slot.

The state agency shall review the qualifications of retailer applicants before making authorization selection decisions. Mandatory women and infant food and formula items sold at authorized retailers and retailer applicants shall be used for pricing analysis purposes. Authorized retailers and applicants must qualify under the price competitive category of 40 or higher in order to be selected for authorization.

C. If a retail store retailer or applicant is not competitively selected for program authorization, then the store retailer may not apply again no sooner than during the six months after being denied authorization. Any exception to the six-month requirement shall be determined at the discretion of the state WIC director. The state WIC director or designee may grant exceptions to the six month requirement if inadequate participation would exist if the retailer's authorization was not considered.

D. If a newly opened store is considered to be a best qualified store and is offered a slot, then the previously authorized store in that slot will be offered an extension to its retailer agreement to remain authorized for one year from the start of the new authorization period.

E. D. The state agency shall send all authorized stores retailers and applicants a written notice pertaining to of their selection status. All stores retailers and applicants being denied WIC Program authorization shall also receive information that explains their right to appeal the state agency's administrative decision.

F. E. The state agency does shall not maintain an applicant waiting list.

12VAC5-195-370. Authorization exception decisions.

The state agency may adjust the number of retail stores authorized to ensure that adequate participant access exists. Only the state agency shall determine what constitutes adequate participant access. The state agency may make authorization exceptions to ensure that adequate access exists based on one or several of at least one of the following criteria:

1. Provide reasonable access;

2. Provide safe access due to a physical barrier or impediment including, but not limited to, a multilane highway, river, bridge; physical terrain (i.e., mountains);

3. Provide a best pricing or highly competitive alternative store retailer location to eligible participants to purchase WIC-approved food foods, when compared to other available stores retailers located within a given city and/or county;

4. Promote competition in a trade area previously identified as not having a price competitive authorized retail store retailer location available;

5. Improve customer service or remove an existing service barrier, i.e., language, cultural;

6. Improve WIC customer access due to the fact that because the store retailer is within a safe and reasonable walking distance and is located in close proximity to one or several low income housing units where WIC participants reside;

7. Provide supporting documentation that the store's The retailer's draw area is broader than the store's retailer's immediate trade area. The store's retailer's draw area includes cities and counties that cross geographical boundaries; or

8. Provide supporting documentation that the specific BEA or city/county within a BEA in which the store is located is experiencing, or based on recognized projected economic indicators, is likely to experience disproportionate economic hardship. Expand access to WIC eligible foods that are purchased by a specific ethnic population.

12VAC5-195-390. Approved food list.

A. A copy of the current Virginia WIC Program's Approved Food List (effective January 1, 2007) and formula flyer must be stored at each cash register where WIC transactions are handled. A copy of the approved food list and formula flyer must also be stored in the Vendor Retailer Manual that shall be kept onsite at the authorized store retailer location.

B. The approved food list is shall be used in conjunction with the WIC food instrument to identify foods that are eligible for purchase by WIC participants using WIC food instruments. The food instrument may state specific manufacturers or brands that must be purchased by program participants that are not covered by the general description used in the approved food list that must be purchased by program participants.

C. The formula flyer shall be used in conjunction with the WIC food instrument to identify formula and medical foods that are eligible for purchase using WIC food instruments. The food instrument shall state the specific manufacturer, type, and quantity of formula that must be purchased by program participants.

C. D. Authorized retailers shall sell WIC-designated brands for food categories identified in the approved food list. Authorized retailers shall use shelf labels approved by the state agency to identify the WIC-designated brands that they select and declare are declared using the state agency's Internet-based application.

12VAC5-195-400. Authorization stamp – assignment and usage.

A. The state agency assigns shall assign a unique stamp number to stores that are authorized and eligible to receive reimbursement for deposited food instruments each authorized retailer. The store's retailer's authorization number is shall be imprinted on a rubber stamp, which shall be used on every food instrument deposited by the authorized store retailer location. Failure by the retail store retailer to use the issued authorization stamp may result in denied payment being denied for redeemed WIC food instruments or a store's disqualification, if a pattern of noncompliance is documented, the termination of a retailer's authorization unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

B. Authorized stores retailers must obtain any needed replacement stamps from the stamp supplier approved by the state agency. The state agency will shall provide a maximum of three stamps to an authorized store retailer per contract period at no charge. Failure to purchase an approved stamp from the designated stamp supplier may lead to deposited food instruments being rejected and returned unpaid by the state agency.

C. If a stamp overlay process is requested by an authorized retailer, the state agency may waive the requirement to use a rubber stamp on deposited food instruments. The stamp overlay process shall result in the assignment of a unique identification number that must be tested and approved by all affected parties. Retailers must submit a written request to the state agency at least 60 days prior to implementing the stamp overlay. If the request is approved, the state agency shall send written approval to the corporate office of the retailer requesting the stamp overlay. Failure to obtain written approval may lead to food instruments being returned unpaid by the banking contractor.

12VAC5-195-410. Change of ownership.

A. Authorized retail stores retailers shall provide the state agency with advance written notice of at least 15 calendar days prior to any change of ownership as outlined in 7 CFR 246.12.

B. A change of ownership occurs for reasons including, but not limited to, when the principal owner, or owners, or corporate officers of the business or corporation have are legally or permanently changed.

C. A store's retailer's authorization will become null and void shall be terminated by the state agency upon a change of ownership. The rights and obligations established under a signed retailer's agreement with the WIC Program may not be transferred or assigned by the retail store retailer or corporate owner to any other third party.

D. The new owner or store retailer manager of the business/corporation business or corporation shall apply for WIC Program authorization and submit their his qualifications and a new application for evaluation based on the most current retailer selection and authorization criteria.

E. The state agency shall terminate the authorization status of any store retailer that has undergone a change of ownership and failed to notify the state agency in accordance with the requirements outlined in the signed Retailer Agreement, effective July 1, 2008.

12VAC5-195-420. Change of location.

A. Authorized WIC retail stores retailers shall provide the state agency with written notice of a store's retailer's relocation plans within 15 calendar days prior to scheduled move date. Failure to notify the state agency in writing of such actions may result in the state agency taking administrative action, including terminating for cause the store's retailer's program authorization, unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

B. Relocation of a retail store retailer is defined as:

1. The store's retailer's physical location changes within the same geographical area or county/city and there is no change in ownership or pricing structure. The store meets retailer must meet one of the following criteria:

a. New store retailer location is two miles or less from the former location; or

b. Majority of management and store retailer personnel will move to the new location. If the new location is greater than two miles, the WIC Program will evaluate on a case-by-case basis to determine whether the new location is an alternative location and qualifies as a relocation versus a new store retailer authorization;

2. The store will retailer shall be open for business within 15 calendar days or less after moving to a different physical location; and

3. The former store retailer location will under the existing owner shall be permanently closed for business.

C. The state agency shall ensure that the new location still meets the selection criteria as outlined in 12VAC5-195-340 and 12VAC5-195-360 including being price competitive. Failure to meet all selection criteria may lead to the store's retailer's authorization being terminated, unless the state agency determines that inadequate participant access exists would exist if the authorization were terminated. Authorized stores retailers that meet all selection criteria will be permitted by the state agency to continue their authorization without experiencing any disruption in their authorization status. The state agency must assign a new WIC authorization ID to the new store retailer location if a new food stamp Supplemental Nutrition Assistance Program ID has been issued to the store retailer.

12VAC5-195-430. Change due to closure.

A. Authorized retail stores retailers shall give the state agency written notice of a store's retailer's permanent or temporary closure within 15 calendar days before the actual closing date. A temporary closure is defined as a store retailer location being closed to the public for more than 15 consecutive calendar days. Stores Retailers closed to the public for any reason greater than 30 consecutive calendar days will have their WIC Program authorization terminated.

B. Failure to notify the state agency in writing of either permanent or temporary closure may result in the state agency taking administrative action, including terminating for cause the store's retailer's WIC authorization status.

12VAC5-195-440. Voluntary withdrawal.

Authorized retail stores retailers shall give the state agency at least 15 calendar days written notice if the store retailer owner or manager decides to discontinue participation in the Virginia WIC Program.

12VAC5-195-450. Complaints.

A. The state agency shall maintain a system of receiving, documenting and investigating all complaints submitted by retail stores retailers, participants, proxies, caretakers, parents, and the general public. From submitted complaints, the On the basis of a written complaint, the state agency may issue a written warning to take action against participants and retail stores retailers that abuse or misuse program benefits as outlined in the State Plan and Vendor Retailer Manual (effective August 1, 2008).

B. The state agency shall forward complaints of both alleged discrimination and civil rights violations to the Secretary of Agriculture as required by federal regulations.

12VAC5-195-460. Conflict of interest.

A. Authorized retail store retailer management shall seek to ensure that no conflict of interest exists between any store retailer personnel employed by the retailer and any local, state, or federal WIC agency. This includes, but may not be limited to, store The prohibition against conflict of interest applies to retailer employees or spouses of store owners, retailer owners, or relatives of retail employees or owners who are also employees of a local, state, or federal WIC agency.

B. Retail stores shall identify and report any member of the store's ownership, management, or operations staff who are directly associated with the WIC Program to the state agency. To ensure that all potential conflicts of interest are identified and reported, the retail store must complete and submit a potential conflict of interest reporting form to the state agency upon request or as deemed necessary by the state agency. Failure by the store to submit this form in the time frame designated by the state agency may result in the store's authorization status being terminated unless inadequate participant access would exist.

C. B. WIC participants, caretakers, or proxies who are employed at an authorized retail store may retailer shall not accept or transact food instruments issued to themselves or a member of their immediate family relatives as a function of their duties at the retail location. Authorized retail store retailer management shall ensure all store retailer employees adhere to this integrity requirement.

C. Authorized retailer management shall notify the state agency in writing when a conflict of interest exists.

D. When an employee of an authorized retailer or an employee's relative is employed by a local, state, or federal WIC agency, the employee shall:

1. Notify retailer ownership or management of his or his relative's employment; and

2. Not show favoritism towards any authorized retailer including the retailer where he is employed.

E. Employees of an authorized retailer shall not in their professional capacity provide any gratuities, including cash, food, coupons, or gift cards, to employees of local, state, or federal WIC agencies.

F. Authorized retailer management shall seek to ensure its employees comply with the conflict of interest requirements listed in this section and review them with retailer personnel annually.

G. Additional conflict of interest regulations may be found in 12VAC5-195-230.

H. This section is not meant to replace or abrogate the Virginia State and Local Government Conflict of Interests Act, Chapter 31 (§ 2.2-3100 et seq.) of Title 2.2 of the Code of Virginia.

12VAC5-195-470. Incentives.

Authorized stores retailers may not provide incentives to local agency staff or participants to entice or promote shopping at a specific store retailer location, unless approved in writing by the state agency.

12VAC5-195-480. Participant confidentiality.

A. Participant information shall remain confidential to ensure compliance with federal regulations and to protect the right to privacy of WIC participants (7 CFR 246.26).

B. Confidentiality requirements apply to information provided by a participant and that is based on direct observation by store retailer personnel. Confidentiality requirements include, but are not limited to:

1. The prohibition of retailers from collecting personal information from WIC participants;

2. Making personal contacts with WIC participants after the WIC transaction has occurred; or

3. Sharing information on participant identification with third parties. Third parties do not include WIC Program state, local and federal agency representatives who have a legitimate business interest in the services provided to participants.

12VAC5-195-490. Retailer confidentiality.

A. Background and pricing information collected by the state agency related to evaluating the authorization status of a store retailer or collected from food instruments redeemed by an authorized store is retailer are confidential (7 CFR 246.26) and can may be released only to: as provided in 7 CFR 246.26.

1. The store retailer itself;

2. The parent corporation; or

3. Other governmental agencies responsible for ensuring program integrity, i.e., Food Stamp SNAP Program, Office of Inspector General, United States Department of Agriculture.

B. In accordance with federal regulations, 7 CFR 246.26, confidential vendor retailer information is any information about a vendor retailer, whether it is obtained from the vendor retailer or another source, that individually identifies the vendor retailer, except for the following: store retailer name, physical mailing address, telephone number, website, email address, store retailer type, or and authorization status. All other vendor retailer specific information is restricted from disclosure to the public by the state agency.

C. Upon receiving a written request from a store retailer or their its parent corporation, the state agency shall only release background and pricing information that has been provided by or that pertains to the requestor. Under no circumstances will may the state agency release confidential information about the redemption revenue paid to stores retailers owned by other corporations.

D. Authorized stores' retailers' peer group designation is confidential and is restricted from disclosure to persons and entities not directly associated with the authorized store retailer location.

E. The state agency's inadequate participant access results completed for administrative purposes are considered confidential and not subject to review by the retail store retailer or its agent, since this profile contains information protected by WIC Program regulations. Upon request, a copy of this work document can may be released with any all confidential information removed. This document in its entirety will shall be made available to appropriate governmental bodies that are responsible to ensure that the state agency has fully complied with any mandated WIC Program requirements.

12VAC5-195-500. Sales tax and coupons.

A. Authorized retail stores retailers shall ensure that no sales tax is charged to the WIC Program. Store Retailer coupons, manufacturer coupons and loyalty card discounts may be used for WIC-approved purchases. When a WIC participant uses a coupon or discount card in conjunction with a food instrument and an item is provided free, then sales tax shall be collected directly from the participant.

B. No sales tax can be applied to the printed value of cash value food benefits. Any tax associated with the dollar amount purchased above the printed value of the cash value food benefit must be collected directly from the participant.

12VAC5-195-510. Solicitation.

A. Authorized stores retailers shall not:

1. Initiate behavior that may be deemed aggressive or intimidating by a reasonable person in approaching potential WIC participants in order to promote that participant's shop at a specific store retailer location; or

2. Use any state or local agency facilities and property to post or distribute materials advertising their store retailer location.

B. If the state agency documents that an authorized store retailer violates either of these prohibitions, then the store's retailer's authorization may be subject to termination by the program.

C. Authorized stores retailers shall not use any advertisement practices or procedures that may give the public or participants the impression that a special or exclusive business relationship exists between the state agency and any authorized store retailer.

D. It is the store retailer owner's or designated agent's responsibility to ensure all employees understand and adhere to all prohibitions and restrictions related to solicitation.

12VAC5-195-520. Training and education.

A. Training of applicants or authorized stores retailers may be conducted by state agency staff. The state agency may also delegate full authority to trained individuals who have been certified as corporate trainers. Certified corporate trainers shall attend at least one mandatory WIC training class annually in order to remain certified.

B. The state agency shall provide mandatory annual training for previously authorized stores retailers. The annual training requirement may be met by the previously authorized retailers:

1. Submitting a newsletter training acknowledgement form;

2. Successfully completing an agency-sponsored Internet training course offered by the WIC Program; or

3. Attending an approved instructor-led, interactive training class.

C. Reauthorization training shall be required for previously authorized stores retailers that have been selected under a new contract period.

D. Authorized stores can retailers may request remedial training at any time by contacting the state agency.

E. All authorized stores retailers are required to have at least one store representative participate in annual training provided by either the state agency or a certified corporate trainer (7 CFR 246.12).

F. Failure of an authorized store retailer to meet any the mandatory training requirement requirements shall result in sanctions being imposed and the possible termination of the store's retailer's program authorization, unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

12VAC5-195-530. Use of acronym and logo.

A. Authorized stores retailers shall post a state-issued "WIC Accepted Here" window decal in the store's retailer's front entrance or in a conspicuously visible location that identifies to the general public that the store retailer location participates in the WIC Program. Authorized stores retailers may use alternative signage if approved by the state agency prior to being used.

B. Retail stores Retailers, food manufacturers, distributors and suppliers shall receive written approval from the state agency prior to producing or distributing window decals, channel strips, shelf talkers, or other promotional items that use either the WIC acronym or logo. Stores Retailers that elect to use point-of-sale channel strips, shelf labels, or other promotional materials for a specific food category must ensure that all eligible items are consistently promoted as WIC approved. Stores Retailers are prohibited from promoting a specific manufacturer's product over another eligible WIC-approved product within the same food category (USDA Memo SFP 09-020).

C. Retail stores Retailers or applicants shall not use either the acronym "WIC," "W.I.C." or the WIC logo, including close facsimiles thereof, in total or in part, either in their official name in which the store retailer is registered or in the name under which it does business, if different (USDA Memo SFP 09-020).

D. Retail stores Retailers, food manufacturers, distributors and suppliers shall not use the WIC acronym or logo in the packaging of their products. Retail stores Retailers, food manufacturers, distributors and suppliers shall receive written approval from the state agency before using either the WIC acronym or logo for any business or public relations purpose (USDA Memo SFP 09-020).

12VAC5-195-540. Vendor Retailer manual for the Virginia WIC Program.

All authorized stores must keep a current copy of the Vendor Manual for the Virginia WIC Program, Cashier Training Guide, and an Approved Food List at the store location authorized to participate in the program. A current copy of the Virginia Approved Food List must be kept at each cash register used to process WIC transactions. Periodically, individual sections of the Vendor Retailer Manual may be updated to reflect federally mandated regulatory changes and other WIC Program requirements. The most current version of the Vendor Retailer Manual is located on the state agency's website, which stores retailers must access to obtain updated copies of procedures and forms.

12VAC5-195-550. High risk stores retailers.

A. The state agency classifies shall classify each authorized store retailer as either high risk, probationary, or nonhigh risk. In accordance with federal regulations (7 CFR 246.12), high risk stores retailers have demonstrated from prior authorization history a pattern of noncompliance with documented vendor retailer management policies or violations documented from covert, undercover buys. The state agency may also change a store's retailer's designation to high risk based upon noncompliance documented from onsite monitoring visits or inventory audits. All of these overt and covert visits shall be conducted during hours the retailer is open to the general public, including weekdays, weekends, and holidays.

The state agency may select stores retailers for compliance monitoring based on statistical trends documented from a retail store's retailers' redemption pattern patterns. A store's retailer's designation being will only be changed to high risk will only occur as result of documented violations identified from by compliance investigations or other types of objective monitoring practices used by the state agency. Stores Retailers shall also be changed to high risk if:

1. The store retailer has been the subject of a compliance investigation by the state agency and has been cited for five or more chargeable violations within 12 consecutive months;

2. The store retailer has received a Food Stamp Program Supplemental Nutrition Assistance Program civil monetary penalty or WIC program civil monetary penalty and is being retained in lieu of disqualification; or

3. The store's retailer's authorization status is under consideration for possible disqualification during the administrative review or appeal process.; or

4. The retailer has been the subject of an inventory audit and the documented results identify a significant discrepancy between the retailer's inventory, purchasing records, and WIC redemption sales.

All stores retailers classified as high risk will shall receive written notification from the state WIC Program to advise them of the store's retailer's status change prior to the change becoming effective. Stores Retailers shall be designated high risk for a minimum one-year period and will have their status periodically evaluated by the state agency.

B. If a retailer is retained in lieu of disqualification or its status is changed to high risk, a written assurance letter must be submitted to the state agency within 30 calendar days after being notified of this requirement. The retailer's assurance letter must identify specific steps detailing detail the actions the store retailer will take to improve its performance.

C. Authorized stores retailers designated as high risk will shall be selected for more frequent onsite and covert monitoring investigations.

12VAC5-195-560. Nonhigh risk stores retailers.

Authorized stores retailers that have participated in the WIC Program for more than one continuous year and have demonstrated an acceptable level of compliance in meeting program requirements are considered nonhigh risk stores retailers.

12VAC5-195-570. Probationary stores retailers.

Newly authorized stores retailers with less than one year of continuous program authorization shall be designated a probationary retailer. During a probationary store's retailer's first year it will be more frequently monitored through both unannounced and onsite monitoring visits, as well as being selected for at least one compliance investigation.

12VAC5-195-580. Performance and administrative monitoring.

A. All applicants must successfully pass an unannounced stocking visit prior to being authorized. Applicants will shall receive a written letter from the state agency advising them the store that their retailer has been selected for further authorization consideration. The applicant will shall receive a copy of the minimum stocking requirement and the letter sent to the store will retailer shall identify the consequences associated with of failing to meet this program standard.

B. The state agency monitors shall monitor authorized store's retailers' performance throughout the contract period in order to ensure the best qualified stores retailers are authorized. The type and level of monitoring conducted by the state agency depends shall depend upon the store's retailer's authorization status. Trained local agency staff, state agency staff, and other specially trained contractors may conduct onsite visits to ensure compliance with basic stocking requirements and administrative program requirements. Stores Retailers designated as high volume retailers, high risk retailers, and probationary stores retailers are more likely to be selected for unannounced monitoring visits by the WIC Program.

C. Authorized stores retailers that fail to consistently meet comply with any of the general requirements and conditions for authorization may be terminated. Specific areas the The state agency monitors include, but are not limited to shall monitor:

1. Number of paid and rejected food instruments;

2. Prices charged for WIC-approved foods and formula;

3. Level of compliance in following with program requirements; and

4. Use of approved wholesalers and suppliers in for purchasing WIC-approved foods and formulas.; and

5. Compliance with retaining purchasing records for WIC-approved foods and formulas.

D. The state agency shall establish and communicate the minimum stocking requirement to all authorized stores retailers and applicants the minimum stocking requirement.

E. Each federal fiscal year, a sample of authorized stores retailers shall be selected for one or more unannounced onsite monitoring visits.

F. State agency personnel Agency representatives may conduct an unannounced monitoring visit to ensure that authorized stores retailers or applicants meet all program requirements. Authorized stores retailers and applicants shall have available onsite the minimum stocking requirement available onsite at all times as established by the state agency. The required specific foods, contract formulas, and administrative procedures associated with meeting this requirement are outlined in the Minimum Stocking Requirement, which is included in the Vendor Retailer Manual.

G. Agency representatives shall conduct unannounced monitoring visits during hours the retailer is open to the public. Authorized retailers must submit any changes to their normal hours of operation to the state agency in writing.

G. H. Authorized stores retailers with more than one year of continuous participation in the program may request in writing to the state agency that a waiver be granted for one or more items that are part of the minimum stocking requirement. The state agency shall provide a written decision to regarding the store's retailer's waiver request within 30 calendar days after receipt. The waiver to the minimum stocking requirement for a required item shall expire upon the presentation to the store retailer, on behalf of a participant, of a WIC food instrument for the purchase of that required food item. The authorized store retailer shall provide the food item within 48 hours, excluding weekends and holidays, after presentation of the WIC food instrument.

H. I. The state agency may conduct other types of unannounced onsite monitoring visits to a retail store's retailer's location including, but not limited to, random, price verification, high volume, formula audits, purchased formula records review, and high risk.

I. J. During the an unannounced onsite monitoring visit, the state agency representative may perform, but not be limited, to the following:

1. Observe and document the level of compliance with general program requirements;

2. Validate if the minimum stocking requirement has been met;

3. Collect and confirm prices submitted by retail stores retailers;

4. Confirm prices are posted on or in close proximity to WIC-approved foods;

5. Review purchase or invoice records;

6. Conduct formula inventory analysis;

7. Educate the retailer about program changes;

8. Provide educational materials and supplies;

9. Provide technical consultation; and

10. Confirm WIC-approved shelf labels are being used correctly to correctly identify WIC-designated brands; and

11. Confirm the number of reported cash registers.

J. K. During the unannounced onsite monitoring visits, store retailer management may receive the following:

1. Answers to technical or procedural questions;

2. Updated program information;

3. Additional training materials and supplies;

4. Opportunity to correct documented deficiencies, if needed;

5. Opportunity to provide shelf prices of WIC-approved items, if applicable; and

6. Opportunity to confirm results documented by the state agency representative during the monitoring visit.

K. L. The results from these onsite visits are documented and kept on file at the Richmond, Virginia, state agency office in Richmond, Virginia.

L. M. Each federal fiscal year, a sample of authorized stores retailers shall be selected for one or more announced onsite formula monitoring visits. The state agency shall ensure that authorized stores retailers sell formulas that have been purchased from a WIC-approved supplier, distributor, wholesaler, or an authorized resource. A listing of WIC-approved suppliers, distributors, wholesalers, and authorized resources is located on the state agency's website. This outcome is accomplished by state State agency personnel reviewing shall review formula purchasing records and invoices, comparing compare formula redemption data from WIC sales, and completing complete a pre- prephysical and postphysical inventory of formula available at the store retailer location during a specific analysis period. Stores Retailers whose purchase records do not support the quantity of WIC sales volume for a selective formula item based upon redeemed food instruments may be issued sanctions, fined, or disqualified from the WIC Program. The results from a formula monitoring visit are shall be documented and a written assessment is shall be sent to the store retailer once the state agency has completed its analysis.

M. N. Authorized stores retailers that do not remain price competitive, fail to maintain the minimum stocking requirement, or fail to adhere to the retailer agreement may be fined or have their authorization terminated unless the state agency determines that inadequate participant access exists would exist if the authorization were terminated. Depending upon the service delivery impact, the state agency may temporarily waive terminating a store retailer that fails to comply with any of these requirements until an alternative store retailer located in the same area can be authorized. The state agency will evaluate and shall document the reasons for making any authorization exception decisions.

12VAC5-195-590. Reimbursement and payments.

A. The state agency shall use a prepayment edit process to screen all deposited food instruments. For each processed food instrument, the state agency shall either:

1. Pay as submitted;

2. Make a price adjustment, if applicable; or

3. Deny payment of the deposited food instrument.

B. The state agency's reimbursement responsibilities in making payments against deposited and undeposited food instruments include, but are not limited to:

1. Ensuring payments are made to authorized stores retailers that have a signed retailer agreement with the Virginia WIC Program. Unauthorized stores retailers will not be paid for any mistakenly accepted and deposited food instruments;

2. Ensuring the maximum reimbursement levels used by its banking contractor, based upon peer groups, are reasonable for the food and formula items prescribed for purchase by participants;

3. Reconsidering for payment WIC food instruments not paid or partially paid provided the food instruments are submitted to the state agency within 50 calendar days of the first date printed on the food instrument;

4. Making price adjustments to the reimbursement amount paid to retail stores retailers in order to ensure individual store's retailer's reimbursement levels remain eligible for authorization, based upon competitive prices charged by similar stores retailers;

5. Collecting bank account and routing numbers from applicants and authorized stores retailers in order to process direct deposit ACH payments using an Automated Clearinghouse (ACH);

6. Ensuring prompt ACH credits are made to the retailer's bank account when appropriate;

7. Collecting retailer's prices using an electronic, Internet-based application;

8. Identifying retailers whose prices are noncompetitive and take administrative actions including possible termination of the retailer's authorization;

9. Complying with all federal regulations and guidelines that require administrative approval by USDA prior to making payments, as applicable;

10. Providing written communications to all authorized stores retailers containing the procedures used by the program to pay or deny payments for all deposited food instruments; and

11. Recouping overpayments due to banking or procedural errors, if applicable, from authorized stores retailers.

C. Authorized stores retailers must deposit food instruments within 14 calendar days of the last date printed on the food instrument.

D. Food instruments or image replacement documents (IRDs) rejected for payment due to "unreadable vendor authorization stamp" or "no vendor authorization stamp" error messages must be corrected and redeposited within 30 calendar days of the last date printed on the food instrument.

E. All food instruments or IRDs rejected for payment or undeposited food instruments require WIC Program review for exception payment consideration and must be submitted by the authorized store retailer to the state agency. The state agency reserves the right to deny a submitted request for payment depending on the explanation provided by the store retailer or bank of first deposit. Approved exception payments will only be made to an authorized retail store retailer.

1. Stores Retailers must submit their undeposited or rejected food instruments or IRDs and justifications to the state agency within 30 calendar days of the last date printed on the food instrument. A store retailer must also simultaneously submit a written request and justification for payments on undeposited or rejected food instruments or IRDs.

2. Undeposited or rejected food instruments or IRDs sent to the state agency that are greater than 30 calendar days from the last date printed on the food instrument may not be eligible for payment and may require USDA approval.

3. Food instruments or IRDs rejected for payment due to a processing error that originates either at the federal reserve or bank of first deposit may be considered for an exception payment. The food instruments or IRDs must be submitted to the state agency within 120 calendar days from the first date to spend printed on the food instrument. A bank representative must submit a written request with the unpaid food instruments or IRDs.

F. A maximum allowable reimbursement amount for each peer group and food item combination is established using pricing data (7 CFR 246.12). Each food item combination is identified by a unique food instrument type identifier. More than 4,000 unique food combinations exist with different reimbursement maximum amounts. Authorized stores retailers that submit prices determined to be noncompetitive will not have their prices used when the state agency computes the maximum allowable reimbursement amount used for making price adjustments.

G. Stores Retailers may only get reimbursed for mandatory and optional foods and formula products they have submitted prices for prior to redeeming food instruments for those products. Redeemed food instruments may be subject to repayment as a vendor retailer claim if they include optional items for which a store retailer has failed to submit prices. Stores Retailers must ensure that the most current shelf prices have been submitted to the WIC Program for all mandatory items. Failure to submit prices or providing inaccurate prices for any mandatory food items may lead to a store's retailer's authorization being terminated unless inadequate participant access would exist.

H. Contract and special formulas where pricing information is collected via the Internet-based application by the state agency are eligible for payment to authorized stores. Prices are purposely not collected by the state agency for formulas that should not be redeemed at retail stores retailers. Food instruments redeemed for these types of special formulas are subject to repayment by the store retailer.

I. A maximum reimbursement amount will be established for cash value food benefits used by participants to purchase fruits and vegetables. The amount written on the food instrument must not exceed the maximum reimbursement amount printed on it. For cash value food benefits only, the store retailer must offer one of the following options to the participant if the total dollar amount being purchased exceeds the printed cash value:

1. The participant shall be allowed to pay the amount over the printed cash value; or

2. The participant shall be allowed to reduce the quantity of eligible fruits and vegetables being purchased.

Stores Retailers must notify the state agency in writing which of these options they provide to WIC participants.

J. The food instrument type/peer group pricing maximum amount may be adjusted monthly by the state agency, depending upon external factors including, but not limited to, wholesale price increases. The reimbursement maximum used for the various food instrument types peer group combinations are not distributed to authorized stores retailers prior to being used by the banking contractor.

K. Food instruments or IRDs that are ineligible for payment and are rejected will be returned to the store's retailer's depository bank by the state agency's banking contractor. These returned food instruments will be stamped with a descriptive error message.

L. The state agency may make payment exceptions for food instruments that would normally be denied payment by its banking services contractor. The authorized store retailer shall submit all such requests in writing, including a justification, within 30 calendar days from the last date printed on the food instrument. The state agency will send a payment disposition decision to the requestor within 30 calendar days, after receipt.

M. The state agency shall use a postpayment review process to prospectively evaluate the reimbursement amount paid against redeemed food instruments in order to identify excessive or improperly redeemed food instruments in accordance with federal regulations (7 CFR 246.12). From the postpayment review process, the state agency may determine that one or more payments already made to a retail store retailer were ineligible for payment as a result of a store retailer failing to submit pricing data for the purchased item or items. The state agency reserves the right to bill and recoup payments of these ineligible payments, which will be referred to as a vendor retailer claim (7 CFR 246.12). The state agency shall not bill an authorized store retailer if the vendor retailer claim amount is less than $10.

N. A retail store retailer that is not authorized to participate in the Virginia WIC Program that accepts a food instrument will not be reimbursed for any food instruments redeemed by a WIC participant.

O. A store retailer must submit a direct deposit ACH form to the state agency that identifies any bank changes to its routing or account number. A direct deposit ACH form must be submitted at least 14 days prior to the change effective date. If the state agency's banking contractor identifies that the store's retailer's bank account or routing number is not valid, then the store retailer will receive one written notice from the state agency. Failure by the store retailer to resolve any reported discrepancies within 30 days after a written notice has been sent by the state agency may lead to the store retailer being ineligible to receive payments for rejected FIs food instruments.

P. Retail stores Retailers are responsible for all bank handling fees and charges associated with doing business with the WIC Program.

12VAC5-195-600. Sanctions and administrative actions.

A. Each federal fiscal year, the state agency shall conduct compliance investigations on a minimum of 5.0% of authorized stores retailers (7 CFR 246.12), including completing investigations of all high risk stores retailers, all probationary stores retailers, and selective nonhigh risk stores retailers. The state agency will conduct at least two compliance buys at each store retailer selected for an investigation.

B. The state agency will shall provide written notification to the authorized store retailer of the investigation results, including the store's retailer's violation of any statutes or regulations governing its participation in the WIC Program unless fraudulent activities have been documented. Once an investigation has been closed, stores retailers with documented violations will shall receive a final written report of the agency's findings. The final report will identify what administrative action will shall be taken by the state agency against the authorized store retailer.

C. Violations are shall be categorized as either state agency or federally mandated. For federally mandated violations, a pattern consisting of four documented incidents of the same violation must occur during a single investigation unless a pattern requirement is not required by federal regulations.

D. For federally mandated violations that include, but are not limited to, including overcharge, fraud, trafficking in food instruments, selling firearms, ammunition, explosives, controlled substances, sale of alcohol or alcoholic beverages, or tobacco products, the state agency will may not provide the store retailer with prior written notice that a violation or violations were documented before imposing administrative sanctions. This notification decision will be made on a case-by-case basis, depending on the type of federally mandated violation documented and if it is determined that notification would compromise the investigation.

E. For selective state agency violations, the state agency shall not provide prior written notice that the violation has occurred, in order to ensure the integrity of the investigative process.

F. E. The type of documented violation dictates the administrative action taken including, but not limited to:

1. Provision of a written warning;

2. Imposition of a technical penalty fine;

3. Assessment of a civil monetary penalty (CMP) in lieu of disqualification; or

4. Disqualification of an authorized store retailer.

The total period of disqualification imposed for state agency violations identified as part of a single investigation may not exceed one year. The state agency reserves the right to waive a disqualification requirement if the state agency determines that inadequate participant access would exist if the authorization were terminated.

G. F. The state agency uses shall use a multitier sanction schedule that consists of:

Class:	Description:	Description:	Administrative Actions:
A	Technical program violations	Represents procedural and food instrument handling errors.	$100 fine assessed per documented incident, as outlined in the Sanction/Violation schedule (effective March 9, 2009), including repeat incidents of the same violation, plus a written warning sent to the store retailer.
B	Serious program violations	Represents noncompliance errors documented either from by compliance investigations, inventory audits, or noncompliance with provisions outlined in the retailer agreement.	Eight One-year disqualification for eight or more technical program violations, as outlined in the Sanction/Violation schedule, within a consecutive 12-month period of time; or One-year disqualification, if a pattern of noncompliance is required and met exists, as outlined in the Sanction/Violation schedule; or. One-year disqualification if a pattern of noncompliance is not required and the violation has been documented as outlined in the Sanction/Violation schedule.
C	Critical program violations	Represents mandatory federal sanctions that require a pattern of noncompliance, i.e., overcharging.	Four documented incidents during a single investigation as outlined in the Sanction/Violation schedule – Three-year disqualification; or One documented incident as outlined in the Sanction/Violation schedule during a single investigation if a pattern is not required – Three year disqualification.
D	Major program violations	Represents mandatory federal sanctions, i.e., administrative finding of trafficking	Six-year disqualification – only one documented incident is required as outlined in the Sanction/Violation schedule; or Permanent disqualification – only one documented incident is required, as outlined in the Sanction/Violation schedule.
E	Warning	Represents a documented violation, but does not warrant points being assessed and/or a fine being charged.	Written warning sent to the retail store retailer.

The date on which violations become effective is determined by the documented date indicated on the final compliance investigation letter. Class A, B, and E violations have an active life of one year, a Class C violation has an active life of three years, and a Class D violation has an active life of six years or permanent disqualification.

H. G. If, within a 12-month period, a retailer has a pattern of three documented incidents within a 12-month period of failure to meet the minimum stocking requirement or failure to properly stamp 50 or more deposited food instruments, then the store will retailer shall be disqualified for a one-year period unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

I. H. All documented overcharges or payments for ineligible food items identified during a compliance investigation will shall be considered a vendor retailer claim and be subject to repayment.

J. I. Copies of any investigative evidence collected by the state agency from an open during a compliance investigation will shall be available to the authorized store retailer, upon request, once after the investigation has been closed and the store retailer is notified in writing of the final compliance investigation results.

K. J. A retailer may apply for WIC authorization after the store retailer has met any finished the disqualification period imposed upon it. There is no automatic reinstatement of a retailer once the disqualification period has been met ended.

L. K. The state agency shall not issue sanctions solely as a result of complaints submitted by participants.

12VAC5-195-610. Participant access.

A. Prior to taking disqualification actions against an authorized store retailer, the state agency shall complete a participant access assessment (7 CFR 246.12). This type of assessment is completed for denied authorizations if an informal settlement meeting or full administrative review is requested by a store retailer applicant. Participant convenience is not a valid consideration for the state agencies in making any adequate access decisions.

B. Participant access will be a factor considered by the state agency in deciding if a store retailer shall be assessed a civil monetary penalty in lieu of disqualification or when a store retailer applicant is eligible as an authorization exception.

C. The state agency shall use the same criteria established for making authorization exceptions in deciding if adequate participant access exists.

D. The participant access analysis completed by the state agency contains confidential information. A copy of this internal work document shall not be given to retail stores retailers or their representatives.

12VAC5-195-620. Participant impact.

Participant impact may be an additional factor considered by the state agency in deciding if a store retailer shall be assessed a civil monetary penalty in lieu of disqualification. For stores retailers whose average number of unique participants is deemed high may be retained in lieu of disqualification. The state agency will take into consideration customer service impact and competitive pricing issues in making any administrative exception decisions.

12VAC5-195-630. Retained in lieu of disqualification.

A. An authorized store retailer with documented administrative findings that warrant WIC Program disqualification actions may be retained in lieu of disqualification if the state agency determines that inadequate participant access would exist. The state agency will evaluate the impact on participants and the preventive procedures the store retailer intends to take in order to decide if the store retailer will be allowed to pay a civil monetary penalty fine rather than being disqualified.

B. The state agency shall notify the authorized store retailer in writing if it will be retained in lieu of disqualification and the civil monetary penalty fine that has been assessed (7 CFR 246.12).

C. If a retailer fails to pay a civil monetary penalty that has been assessed, then the state agency shall disqualify the retailer for a period equal to the sanction for which the civil monetary penalty was originally assessed.

12VAC5-195-640. Civil monetary penalty (CMP) fines penalties.

A. A civil monetary penalty (CMP) fine CMP may be assessed for documented state agency and federally mandated violations (7 CFR 246.12).

B. The state agency uses a federally mandated formula to calculate both state and federally mandated CMPs that are assessed. The maximum civil monetary penalty assessed shall comply with federal requirements as outlined in 7 CFR 246.12. The state agency is unable to cannot make any reductions in to the maximum CMP amount due since for federally mandated violations because this formula is defined in federal regulations.

C. The same formula is shall be used to calculate the civil monetary penalty fine for stores retailers retained in lieu of disqualification due to documented state agency sanctions. The state agency For state agency violations only, the state WIC director of his designee has the authority to reduce or waive the fine penalty amount being assessed against the store by no more than 50% retailer. The state agency must document in its records the specific factors supporting this administrative decision.

D. A CMP shall may be paid in full a lump sum or based upon through an agreed installment plan. Failure of the authorized store retailer to pay any scheduled installments in a timely manner will shall lead to the store's retailer's disqualification for the original disqualification period.

E. Payments shall be made by certified check, cashier check, or money order. Payments shall be made out to the Virginia WIC Program and mailed to the address identified on the penalty fine statement.

F. The state agency will shall process all past due obligations for any of the following including penalty administrative fines, vendor retailer claims, civil monetary penalty fines penalties, or overcharges overcharge repayments assessed against authorized stores retailers in accordance with the Office of the Comptroller's Policies and Procedures, Section Number 205000 (Accounts Receivable), dated June 2004. The state agency will shall also process all past due financial obligations in accordance with the Virginia Debt Collection Act (§ 2.2-4800 et seq. of the Code of Virginia).

G. The state agency shall notify the Food Stamp Program Supplemental Nutrition Assistance Program in writing within 15 calendar days after assessing a CMP against an authorized store retailer being retained in lieu of disqualification.

12VAC5-195-650. Disqualification administrative actions.

A. Voluntary withdrawal or nonrenewal in lieu of disqualification is not permitted for documented mandatory federal violations. The state agency may use only allow voluntary withdrawal or nonrenewal for state agency sanctions only.

B. The state agency shall disqualify an authorized store retailer for any of the following reasons:

1. Failure to comply with general requirements and conditions as established in the retailer agreement;

2. Failure to meet program requirements as documented from during the compliance investigation process;

3. Reciprocal administrative action due to the store retailer being disqualified from the Food Stamp Program (FSP) Supplemental Nutrition Assistance Program;

4. Failure to pay a CMP or vendor retailer claim within 30 20 calendar days after being assessed it is due or failure to pay an installment plan payment when due;

5. Provision of false, incomplete, inaccurate, or misleading information that affects the store's retailer's selection status;

6. Repeated failure to maintain the minimum stocking requirement; or

7. Failure to take documented remedial corrective actions.

C. The state agency shall notify the food stamp Supplemental Nutrition Assistance Program office of any WIC Program disqualifications and termination actions taken against an authorized store retailer location.

D. Authorized stores that are being If an authorized retailer is disqualified primarily due primarily to documented overcharges, that have participated participates in a full administrative review, and the adjudication officer's findings confirm that the disqualification actions being taken by the state agency are appropriate, then a fine will shall be assessed. A maximum administrative fine of $999 shall be assessed for two or more documented overcharges during a single investigation. If only one overcharge incident was documented during a single investigation, then a maximum fine of $500 shall be assessed. If the disqualification action does not involve any documented overcharges, then no fine will shall be assessed.

12VAC5-195-660. Informal settlement meetings.

A. If an authorized store retailer is being considered for possible adverse action, including but not limited to authorization denial and program disqualification, the state agency shall offer an optional informal settlement meeting with store retailer management prior to taking administrative action. The state WIC director or designee shall be in attendance. The purpose of the informal settlement meeting is to:

1. Identify areas of noncompliance;

2. Provide a forum for the store retailer to submit information about the impact of the adverse action on WIC participants;

3. Review criteria for authorization exception decisions pursuant to 12VAC5-195-370;

4. Review the inadequate participant access results, if applicable;

5. Review the civil monetary penalty fine for stores retailers being retained in lieu of disqualification, if applicable; and

6. Provide information to the store retailer regarding its appeal rights, if applicable.

B. The retail store retailer or applicant has 15 calendar days from the date of receipt of the state agency correspondence to postmark a written request for an informal settlement meeting.

C. The request for the informal settlement meeting can be hand delivered, mailed by US mail, UPS, or FedEx, sent by facsimile transmission or sent via email to the vendor manager state agency.

D. Upon receipt of the retail store's retailer's or applicant's request for an informal settlement meeting, the state agency will confirm a date, time, place and method for the informal settlement meeting.

E. All requests to reschedule the meeting must be submitted in writing at least 24 hours before the scheduled meeting date, unless an emergency occurs, as determined at the discretion of the state WIC director or designee.

F. If the retail store retailer representative is more than 45 minutes late from the agreed upon meeting start time, then this will be considered a "no show" unless he can provide documentation that the state WIC director or designee determines justifies his tardiness or failure to appear. The state agency will proceed with administrative decisions without the input of the retail store retailer should the representative either fail to schedule, fail to appear, or fail to reschedule the informal settlement meeting.

G. Informal settlement meetings are either conducted through face-to-face meetings in Richmond, Virginia, or via video conference. For informal settlement meetings that are held via video conference, the authorized store retailer or applicant would be required to travel to a local agency that has videoconferencing equipment available.

H. After the informal settlement meeting is held and all supporting documentation is received by the state agency, the state agency shall send within 15 days a written summary of the meeting's results to a designated store retailer representative. If the resolution offered from the informal settlement meeting is unacceptable to the retail store retailer, then the retail store retailer or applicant may request a full administrative review in writing. This written request must be submitted to the vendor manager state agency and postmarked within 15 calendar days from the date of receipt of the informal settlement meeting summary. The vendor manager state agency will identify if the store's retailer's request qualifies under federal regulations for a full administrative review. If the store's retailer's request is not eligible, then the store retailer will receive a written response from the vendor manager state agency of this decision.

12VAC5-195-670. Full administrative review.

A. Authorized retail stores retailers and applicants shall be offered an opportunity to request a full administrative review only for only the adverse action cited in subsection O of this section.

B. The retail store retailer or applicant has 15 calendar days from the date of receipt of the denial notice, either by letter or an electronic format, or the disqualification letter, either by letter or an electronic format, to request a full administrative review.

C. The request for the full administrative review can may be mailed by US mail, sent by facsimile transmission or sent via email to the vendor manager state agency. If the request is mailed, it must be postmarked within 15 calendar days from the date of receipt of letter or electronic notification from the state agency, whichever comes first.

D. The retail store retailer or applicant must should indicate whether or not he will intends to be represented by an attorney when the full administrative review request is made. The retail store This does not preclude the retailer or applicant from seeking legal counsel at any time. At least five days prior to the scheduled full administrative review, the retailer or applicant must also provide the state agency with copies of any written information to be used that it wishes to use during the review and names of witnesses that will be called at least five days prior to the scheduled full administrative review it will call. Failure to notify provide the state agency of with these items may result in a rescheduled date and time for rescheduling the full administrative review or the exclusion of documents and witnesses from the full administrative review.

E. Upon Within 30 days of receipt of the retail store's retailer's or applicant's request for a full administrative review, after consulting with the retailer or applicant and the adjudication officer, the state agency will shall confirm a date, time, and place for the review within 30 days. For authorized stores retailers and applicants, the review must shall be scheduled to take place within 60 calendar days after the written request is received by the state agency, unless otherwise agreed to by the parties involved.

F. Failure to attend the scheduled review on the agreed upon date and time will shall lead to the retail store retailer forfeiting its rights to any further administrative reviews.

G. The retail store retailer or applicant will have one opportunity to reschedule the full administrative review's date or time. All requests to reschedule the review date or time must be submitted in writing at least 24 hours before the scheduled review date, unless an emergency occurs, as determined at the discretion of the state WIC director or designee good cause can be shown as determined by the adjudication officer. Rescheduled reviews shall take place within four weeks of the originally scheduled date unless the parties mutually agree on a later date otherwise agreed to by the parties.

H. If the retail store retailer representative is more than 45 minutes late from the agreed upon to the review, start time, then this will shall be considered a "no show" unless he can provide documentation that the WIC director or designee determines justifies his tardiness or failure to appear show good cause as determined by the adjudication officer. This outcome means that the retail store has forfeited its rights to a full administrative review.

I. A full administrative review is shall be conducted by an adjudication officer who is employed by the Virginia Department of Health. The adjudication officer shall ensure that administrative actions taken by the WIC Program are consistently and fairly applied and that those administrative actions comply with established policies, procedures, and federal and state statutes and regulations. A representative from the state agency will shall present its case to the adjudication officer and retail store retailer or applicant representative. Conversely, the storeowner retailer owner or designated representative, which may include legal counsel, will shall present its case to the adjudication officer.

J. All full administrative reviews are shall be held in Richmond, Virginia.

K. After a full administrative review is held, the state WIC director shall provide written notification of the adjudication officer's decision, including the basis for the decision, to the applicant or authorized retailer within 90 calendar days of the date of receipt of the full administrative appeal review request, unless otherwise agreed to by the parties involved. This notification will also be sent to the appropriate USDA Food and Nutrition Services office.

L. Authorized retail stores retailers being disqualified may continue to deposit WIC food instruments until a decision has been rendered from the full administrative review by the adjudication officer. The adverse action effective date shall be postponed by the state agency pending the outcome of the review.

M. In accordance with 7 CFR 246.18, if an authorized store retailer does not request a full administrative review, then disqualification becomes effective 15 calendar days after the retailer receives the state agency's written disqualification letter.

N. An authorized retailer being retained in lieu of disqualification for a state agency violation may elect to voluntarily withdraw from the WIC Program rather than pay a mandated civil monetary penalty fine. If the retailer voluntarily withdraws and does not pay a the civil monetary penalty fine that previously had been imposed by the program, then a disqualification status will shall be documented in the state agency's records. The disqualification period may range from one to six years, depending on the type of sanctions and violations documented by the state agency.

O. The state agency shall provide a full administrative review to retail stores retailers or applicants, upon request, for the following adverse actions pursuant to 7 CFR 246.18:

1. Denial of authorization based on the vendor application of the retailer selection criteria for competitive price or for minimum variety and quantity of authorized supplemental foods or on a determination that the vendor retailer is attempting to circumvent a sanction (7 CFR 246.12);

2. Denial of authorization based upon the vendor retailer selection criteria for business integrity or for a current Food Stamp Supplemental Nutrition Assistance Program disqualification or civil money penalty for hardship (7 CFR 246.12);

3. Denial of authorization based on a state agency established vendor retailer selection criteria if the basis of the denial is a vendor WIC retailer sanction or a Food Stamp Supplemental Nutrition Assistance Program withdrawal of authorization or disqualification;

4. Denial of authorization based on the state agency's retailer limiting criteria (7 CFR 246.12);

5. Denial of authorization because a vendor retailer submitted its application outside the timeframes during which applications are accepted or processed as established by the state agency under (7 CFR 246.12) 7 CFR 246.12;

6. Termination of a retailer agreement because of a change in ownership, or location, or cessation of operations (7 CFR 246.12);

7. Termination of a retailer agreement for cause;

8. Disqualification based on documented WIC Program violations;

9. 8. Disqualification based on a trafficking conviction (7 CFR 246.12);

10. 9. Disqualification based on the imposition of a Food Stamp Supplemental Nutrition Assistance Program civil monetary penalty for hardship (7 CFR 246.12);

11. 10. Disqualification or civil monetary penalty imposed in lieu of disqualification based on a mandatory sanction imposed by another WIC state agency (7 CFR 246.12); or

12. 11. Imposition of a fine or a civil monetary penalty in lieu of disqualification;

12. Denial of authorization based on the application of the retailer selection criteria for competitive price;

13. The application of the state agency's retailer peer group criteria and the criteria used to identify retailers that are above 50% retailers or comparable to above 50% retailers;

14. Denial of an application based on a determination of whether an applicant retailer is currently authorized by the Supplemental Nutrition Assistance Program;

15. A civil monetary penalty imposed in lieu of disqualification based on a Supplemental Nutrition Assistance Program disqualification under 7 CFR 246.12; and

16. Disqualification unless listed in subsection P of this section.

P. The state agency shall not provide a full administrative review to retail stores retailers that appeal the following actions, pursuant to 7 CFR 246.18:

1. The validity or appropriateness of the state agency's vendor retailer limiting or selection criteria or retailer selection criteria for minimum variety and quantity of supplemental foods, business integrity, and current Supplemental Nutrition Assistance Program disqualification or civil monetary penalty for hardship (7 CFR 246.12);

2. The validity or appropriateness of the state agency's vendor peer group criteria and the criteria for competitive price, including peer group criteria and the criteria used to identify vendors retailers that are above 50% vendors retailers or comparable to above 50% vendors retailers;

3. The validity or appropriateness of the state agency's participant access criteria and the state agency's participant access determinations;

4. The state agency's determination whether a vendor retailer had an effective policy and program in effect to prevent trafficking and that the ownership of the vendor retailer was not aware of, did not approve of, and was not involved in the conduct of the violation (7 CFR 246.12);

5. Denial of authorization if the state agency's vendor retailer authorization is subject to the procurement procedures applicable to the state agency;

6. The expiration of the retailer's agreement;

7. Disputes regarding food instrument payments and vendor retailer claims other than the opportunity to justify or correct a vendor retailer overcharge or other error as permitted by (7 CFR 246.12);

8. Disqualification of a vendor retailer as a result of disqualification from the Food Stamp Supplemental Nutrition Assistance Program (7 CFR 246.12);

9. The state agency's determination to include or exclude an infant formula source from the state agency's list of state-licensed wholesalers, distributors, and retailers and infant formula manufacturers registered with the Food and Drug Administration manufacturer, wholesaler, distributor, or retailer from the list required pursuant to 7 CFR 246.12; and

10. The state agency's determination whether to notify a vendor retailer in writing when an investigation reveals an initial violation for which a pattern of violations must be established in order to impose a sanction.; and

11. The validity or appropriateness of the state agency's prohibition of incentive items and the state agency's denial of an above 50% retailer's request to provide an incentive item to customers pursuant to 7 CFR 246.12.

Q. A full administrative review request shall not be denied or dismissed unless:

1. The request to the state agency is not postmarked or received within 15 calendar days of the applicant or authorized store's retailer's receipt of the notice of disqualification or adverse action;

2. The request to the state agency was is submitted by an individual who does not have the legal or delegated authority to represent the owner applicant or authorized retailer;

3. The retailer or authorized representative withdraws the request in writing;

4. The retailer or authorized representative fails without good cause to appear at the scheduled review date and time without good cause as determined by the adjudication officer; or

5. The request for a full administrative review is not eligible for this consideration based on the specific exclusion criteria outlined in subsection P of this section.

12VAC5-195-680. Food application process.

A. Food items that are approved for purchase by eligible WIC participants must have a food application submitted and approved by the state agency. The food application process does not apply to WIC approved formulas.

B. The state agency shall conduct a review of the approved foods every two years. Food applications shall be accepted and processed during a two-month period.

C. The state agency shall notify prospective manufacturers, suppliers, and distributors when food applications will be accepted by sending them an announcement letter. The state agency shall also post the food application announcement letter on the state agency website.

D. The state agency shall maintain a database with the contact names and companies who previously submitted food applications or expressed an interest in having their products considered for WIC approval. Individuals may request to be added to the database on behalf of manufacturers by completing a food application contact form, which is an online form located on the state agency's website at http://www.vahealth.org/DCN/Publications/pubswic.htm.

E. Incomplete food applications shall not be eligible for selection and inclusion on the WIC approved food list.

F. The state agency is responsible for evaluating all completed food applications to ensure each product meets both federal and state nutritional and administrative guidelines.

G. After the food application evaluation and selection process has been completed, a new food list will be printed and distributed to local agencies, WIC participants, and retailers by the state agency. The state agency shall pay all costs associated with producing, printing, and distributing the WIC approved food list. Funds from manufacturers, suppliers, distributors, or other sources shall not be used to reprint the approved food list.

H. If a manufacturer, supplier, or distributor changes the name of an approved product whose trade name appears on the approved food list, the new product shall not be automatically eligible for purchase under the current food list. The manufacturer, supplier, or distributor must submit a written request to the state agency, a sample nutritional label for the new product, and documentation outlining the product availability at authorized retailers to have the new product considered for approval. Once this information is received, the state agency shall decide on a case-by-case basis if the new product can be transitioned under the current food list or must wait for the next food list submission cycle. A new product shall not be approved prior to it being available at retailer locations. If the new product is not eligible for inclusion under the current food list, the manufacturer, supplier, or distributor may submit a new food application using the new product name when food applications are being accepted.

I. If a manufacturer, supplier, or distributor changes the nutritional formulation of an approved product, the new product shall not be eligible for purchase under the current food list. The manufacturer, supplier, or distributor must submit a new food application for the new product when food applications are being accepted.

J. Manufacturers, suppliers, or distributors shall not send product samples to the state agency at any time.

K. Changes to the approved food list made during the scheduled two-year period may be made on a case-by-case basis as determined by the state agency based on federal guidance if applicable.

NOTICE: The following form used in administering the regulation was filed by the agency. The form is an online form and is not being published. The form may be found at the web address listed after the form. A copy of the form is available from the agency contact or may be viewed at the Office of the Registrar of Regulations, General Assembly Building, 2nd Floor, Richmond, Virginia 23219.

FORMS (12VAC5-195)

Food application contact form, an online form available at http://www.vahealth.org/DCN/Publications/pubswic.htm.

DOCUMENTS INCORPORATED BY REFERENCE (12VAC5-195)

Vendor Manual for the Virginia WIC Program, August 2008, Virginia Department of Health.

Virginia WIC Program Approved Food List, effective January 1, 2007, Virginia Department of Health.

Retailer Agreement, effective July 1, 2008, Virginia Department of Health.

Volume No. 1 – Policies & Procedures, Function No. 20000 – General Accounting, Section No. 20500 – Accounts Receivable, dated June 2004, Office of the Comptroller, Commonwealth of Virginia.

Virginia WIC Program Sanction Violation Schedule, March 2009, Virginia Department of Health.

USDA Memo – SFP 09-020 Clarification on the use of the WIC acronym and logo, January 2009, United States Department of Agriculture, Food and Nutrition Service.

Vendor Manual for the Virginia WIC Program, January 2011, Virginia Department of Health.

WIC Approved Food List, April 2012, Virginia Department of Health.

Virginia WIC Program's Retailer Agreement, effective November 2011(dated August 2011), Virginia Department of Health.

CAPP Manual, Volume No. 1 - Policies & Procedures, Function No. 2000 - General Accounting, Section 20500 - Accounts Receivable, June 2004, Office of the Comptroller, Commonwealth of Virginia.

Virginia WIC Program - Sanction Violation Schedule, December 1, 2011, Virginia Department of Health.

USDA Memo – SFP 09-020 Clarification on Use of the WIC Acronym and Logo, January 9, 2009, United States Department of Agriculture, Food and Nutrition Service.

Virginia WIC Program, Infant Formula Flyer, effective April 1, 2012 (dated January 1, 2012), Virginia Department of Health.

VA.R. Doc. No. R13-2983; Filed January 17, 2013, 12:13 p.m.