Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 05CS01621
OPINION ON REHEARING
RAYE, J.
The federal Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides supplemental nutritious foods to qualified low-income women, infants, and children under age five. Real party in interest Department of Health Services (Department) administers WIC in California and contracts with food vendors to provide food in exchange for food vouchers from WIC participants. State and federal law mandate a three-year disqualification for vendor overcharges. Plaintiff Keith Bracewell, the owner of a participating grocery store, ran afoul of this law.
Proceeding in propria persona, Bracewell appeals his three-year disqualification, arguing the trial court erred by refusing to consider whether separate violations could be combined to form a “pattern” of overcharging, the court erred by refusing to offset the overcharges and undercharges, and insufficient evidence supports the overcharge finding. We shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The Statutory Framework
WIC provides specific supplemental nutritious food to qualified low-income women, infants, and children under age five. The Department, in order to provide the supplemental food, contracts with retail food vendors. The vendors provide authorized food in exchange for WIC vouchers from participants. Vendors enter into vendor agreements by which they agree to participate in WIC and to abide by the federal and state regulations underpinning WIC. (42 U.S.C. § 1786; 7 C.F.R. § 246; Health & Saf. Code, § 123275 et seq.; Cal. Code Regs., tit. 22, § 40601 et seq.)
Federal law mandates a three-year disqualification for a pattern of vendor overcharging in the WIC program. Under federal law, the state agency shall disqualify a vendor for three years for “[a] pattern of charging participants more for supplemental food than non-WIC customers or charging participants more than the current shelf or contract price.” (7 C.F.R. § 246.12(l)(1)(iii)(C) (2000).)
Since 1989, state law authorizes a disqualification period of up to three years: “(a) The Department shall disqualify food vendors from the WIC Program for a period of not more than three years for the violations listed below or the violations of the food vendor agreement, statutes[, or] regulations.... [¶]... [¶] (3) Charging WIC Program participants more than other customers are charged for the same food item.” (Cal. Code Regs., tit. 22, § 40741, subd. (a)(3).)
In October 2002 the state added a new regulation entitled “Federally Required Sanctions Against Food Vendors,” which includes mandated sanctions ranging from permanent disqualification to six-year, three-year, and one-year disqualification periods. A pattern of overcharging requires a three-year disqualification. (Cal. Code Regs., tit. 22, § 40740, subd. (e)(3).)
The regulation provides a definition of “pattern”: “[O]vercharging means charging the Program a higher price than the non WIC customer or charging the Program a higher price than the posted price. [¶]... A pattern for this violation exists when either of the following occurs: [¶] 1. the percent of food instruments on which overcharges are found in a single monitoring visit is equal to or exceeds fifty (50) percent of the number of food instruments used during that visit, overcharges are found on two or more food instruments, and the cumulative overcharge amount to the Program is equal to or exceeds eight (8) dollars. The overcharge amount on any food instrument shall be at least one (1) dollar; or, [¶] 2. on two or more monitoring visits within a twenty-four (24) month period the cumulative overcharge amount to the Program by the food vendor is equal to or exceeds four (4) dollars. The total overcharge amount for each monitoring visit shall be at least one (1) dollar.” (Cal. Code Regs., tit.22, § 40740, subd. (e)(3)(A), (B).)
Federal law mandates vendor monitoring by the Department. (7 C.F.R. § 246.12(j) (2000).) Under federal law, vendors must be held accountable for all violations, whether deliberate or inadvertent, since “both ultimately result in increased food costs and fewer participants being served.” (65 Fed.Reg. 83260 (Dec. 29, 2000); 7 C.F.R. § 246.12(h)(3)(xiii) (2000).)
The Department is also required to include in a notice of disqualification all violations determined to have been committed during a single investigation. In addition, the Department must disqualify the vendor for the period corresponding to the most serious violation. (7 C.F.R. § 246.12(l)(1)(xii) (2001).)
The Current Violations
The Department made monitoring visits to Bracewell’s store on November 17, 2000; February 7, 2002; and April 16, 2003. Investigators found overcharge violations on each visit, and on June 20, 2003, the Department issued a notice of disqualification stating the store was disqualified for three years under federal regulations.
Bracewell appealed the three-year disqualification. Following an informal review, the hearing officer affirmed the disqualification.
Bracewell again appealed, requesting a formal hearing. Following the hearing, an administrative law judge (ALJ) upheld the disqualification under federal law and section 40741 of title 22 of the California Code of Regulations, based on multiple overcharging violations in each of the first two visits.
California Code of Regulations, title 22, sections 40740 and 40741 hereafter will be referred to as sections 40740 and 40741.
Bracewell filed a petition for writ of mandate under Code of Civil Procedure section 1094.5. The trial court granted a peremptory writ of mandate, requiring the administrative decision be set aside and ordering further proceedings regarding the three-year disqualification.
The trial court reasoned that section 40740, subdivision (e)(3)(B)(2), which did not become effective until October 2002, could not be applied to the first two monitoring visits unless the following principle stated in People v. Williams (2004) 118 Cal.App.4th 735, 747 applied: “If the course of conduct necessary to constitute the offense spans the period of time before and after the law’s enactment and the last act necessary to trigger the application of the law was committed after the law’s effective date, then the application of that law is not retroactive....”
Applying this principle, the court concluded the administrative findings as to the February 7, 2002, overcharges were supported by substantial evidence. Therefore, the validity of the three-year disqualification would rest on a further finding that overcharges of at least one dollar occurred during the April 2003 monitoring visit, the “last act” necessary to trigger application of section 40740. The administrative decision did not determine whether the April 2003 charges were supported by the evidence. Thus, a remand was necessary.
Following remand, an ALJ determined the April 2003 overcharges were supported by the evidence and sustained the three-year disqualification under section 40740.
Bracewell filed a second petition for writ of mandate, which the trial court denied following a hearing. The court rejected Bracewell’s argument that substantial evidence did not support the findings of overcharges during the April 16, 2003, monitoring visit. After reviewing the evidence, the court found “evidence of solid value” supporting the finding. In addition, the court found, contrary to Bracewell’s claim, that undercharges during the April 2003 visit could not be used to offset overcharges. The court noted section 40740, subdivision (e)(3)(B) contains no provision for such an offset. Finally, the court rejected Bracewell’s contention that the overcharges from February 2002 could not be combined with the overcharges in April 2003. After entry of judgment, Bracewell filed a timely notice of appeal.
DISCUSSION
STANDARD OF REVIEW
February 7, 2002, Violation
Bracewell argues the $7.39 overcharge on February 7, 2002, was not an overcharge violation (§ 40740, subd. (e)(3)), but a violation of section 40740, subdivision (e)(5), a pattern of charging WIC for supplemental food not received. Since the February 7, 2002, violation was in a different category, defendant argues a “pattern” could not exist of different types of violations.
The Department responds that the record reveals the $7.39 violation in February 2002 was found by the Department to be an overcharge to WIC under section 40740, subdivision (e)(3); was defended by Bracewell as such; and was found by the trial court to be a section 40740, subdivision (e)(3) overcharge. As the Department terms it, Bracewell’s “wish that it were classified differently does not provide a legal basis for challenging the validity of the overcharge finding.”
The Department’s Notice of Disqualification states: “On three separate occasions, the WIC program was charged more than the actual selling price of authorized and/or unauthorized items (please see Exhibit A enclosed).” Exhibit A specified that during the February 2002 monitoring visit, Bracewell charged WIC $19.09 for items costing $11.70, for an overcharge of $7.39 to WIC.
In appealing the notice of disqualification, Bracewell stated: “I dispute all the [sic] three claims that the WIC program was charged more than the actual selling price of authorized items.... I strongly dispute that Basic Foods #2 engaged in any pattern of overcharging.”
Following the initial informal hearing, the hearing officer found: “The overcharges that occurred in the investigations were the only violations significant enough to warrant a three-year disqualification from participation in the WIC Program.” After concluding the overcharges in November 2000 and February 2002 constituted a pattern of overcharges under section 40470, subdivision (e)(3)(B), the hearing officer upheld the three-year disqualification.
Bracewell contends the hearing officer actually ruled that the type of vendor overcharges from the investigations of November 2000 and February 2002 were overcharges for items not selected or received, not for overcharges as in charging more for items than agreed to. In support, Bracewell cites the hearing officer’s statement that: “Despite the debate over pricing mistakes... instances of vendor overcharges exist where WIC was charged for items that it did not select or receive. These overcharges occurred during the first two investigations conducted on November 17, 2000 and February 7, 2002....” However, this discussion follows a reiteration of the alleged overcharging by defendant in terms of charging too much per item during November 2000 and February 2002. The hearing officer’s subsequent discussion of charging for items not received did not magically transform or eradicate the earlier alleged overcharges.
Subsequently, during the formal administrative hearing, the investigator affirmed the overcharges. The ALJ set forth the overcharge allegations: “During three investigative visits on November 17, 2000, February 7, 2002, and April 16, 2003, the Department found that the Vendor had charged the WIC program more than the actual selling price of authorized and/or unauthorized items.” After reviewing the evidence, the ALJ concluded the vendor overcharged the WIC program during the February 2002 investigative visit.
Following remand by the trial court, the ALJ determined the February 2002 and April 2003 overcharges met the pattern standards under section 40740, subdivision (e)(3)(B)(2), sustaining the three-year disqualification.
The trial court, in denying Bracewell’s second petition, considered his argument concerning combining “apples and oranges”: overcharges for food not received and overcharges stemming from prices charged. The court noted: “Petitioners’ contention may have merit: section 40740(e)(3) does concern a pattern of overcharging that is separate and distinct from the pattern of charging for food not received under section 40740(e)(5).” However, the court found the issue had been previously settled in the trial court and could not be resolved on appeal. According to the court, it made two critical determinations: “(1) that substantial evidence in the administrative record supports respondents’ and real parties’ findings of overcharges on February 7, 2002, including overcharges for milk, and (2) that the total overcharges on February 7, 2002, if combined with an overcharge of at least one dollar on April 16, 2003, would meet the definition of a pattern of overcharges under... section 40740(e)(3)(B)(2), and provide a proper basis for a mandatory three-year disqualification....” The trial court concluded: “The unappealed determinations in the judgment precluded any subsequent challenge by petitioners, either in the administrative proceedings following the judgment or in this proceeding, to the $7.39 charge for milk as an overcharge on February 7, 2002, or as part of a pattern of overcharges under section 40740(e)(3)(B)(2).”
Bracewell strenuously disagrees with the trial court’s analysis. In reviewing the trial court’s ruling on a writ of mandate, we are ordinarily confined to an inquiry as to whether the findings and judgment are supported by substantial, credible, and competent evidence. On questions of law, however, we make our own determination as an exercise of independent judgment. (County of Los Angeles v. State Bd. of Equalization (2003) 105 Cal.App.4th 1, 12.)
According to Bracewell, the trial court was “mistaken” in its ruling, and “erroneously” believed the issue had already been decided in the trial court in ruling on the first petition for writ of mandate. At oral argument, counsel for Bracewell insisted that the trial court misconstrued generic references to “overcharges” in the earlier judgment to mean charging more than the posted price under section 40740, subdivision (e)(3), when the term “overcharge” could have referred to being charged for items not received under section 40740, subdivision (e)(5). In order to sustain the three-year disqualification, the 2002 violations must fall under section 40740, subdivision (e)(3).
The trial court conceded Bracewell’s challenge might have merit. Our review of the record reveals that Exhibit A, which documents the February 7, 2002, violation, states that the overcharges amounted to $7.97, consisting of charges for milk, cereal, and a combined milk/cheese/egg instrument. In the trial court and on appeal, Bracewell argues the milk/cheese/egg instrument overcharge includes an overcharge for milk, which was charged for but not received. This renders the overcharge on February 7, 2002, a combination of both types of overcharges and insufficient to support the violation.
The receipt for the February 7, 2002, investigator’s visit supports Bracewell’s claim. Exhibit A states that for the milk/cheese/egg instrument the price charged to WIC was $19.09 and the store’s price was $11.70, resulting in a $7.39 overcharge. The receipt from the transaction lists on gallon of milk at $3.50, one gallon of “FF Milk 2%” at $3.49, 16 ounces of Monterey Jack cheese at $8.40, and one dozen large eggs at $3.70. These add up to $19.09, the amount charged to WIC, which resulted in the $7.39 overcharge. Therefore, the milk that was not received according to the investigator who made the purchase is included in the overcharge amount supporting the disqualification.
The trial court, while noting the argument over which section the overcharges fell under might have merit, found Bracewell precluded from raising the issue on appeal. Bracewell argues the trial court “erroneously believed” the issue of whether sufficient evidence supported a finding of overcharge for February 7, 2002, had been decided by the trial court in ruling on the first petition.
However, in granting Bracewell’s first petition for writ of mandate, the trial court stated: “The court concludes that [respondent ALJ’s] findings concerning the February 7, 2002 overcharges are supported by substantial evidence.” Previously, following a hearing, the ALJ expressly found “that the Vendor overcharged the WIC Program during the second visit as alleged in the Notice of Disqualification.” The second visit refers to the February 7, 2002, visit.
The notice of disqualification states: “On three separate occasions, the WIC program was charged more than the actual selling price of authorized and/or unauthorized items.” The ALJ, and later the trial court in ruling on the first petition, found that the February 7, 2002, visit resulted in an overcharge as specified in the notice of disqualification -- the program was “charged more than the actual selling price.” The notice of disqualification makes no mention of any overcharge for food not received, a section 40740, subdivision (e)(5) violation.
As the trial court observed, Bracewell failed to appeal these determinations made by the trial court in ruling on the first petition, but instead participated in the administrative proceedings undertaken pursuant to the judgment. Accordingly, the judgment became final and binding on the parties and the trial court. The trial court concluded: “The unappealed determinations in the judgment precluded any subsequent challenge by petitioners, either in the administrative proceedings following the judgment or in this proceeding, to the $7.39 charge for milk as an overcharge on February 7, 2002, or as part of a pattern of overcharges under section 40740(e)(3)(B)(2).”
We agree with the trial court’s assessment. Bracewell argues the trial court “misread” the previous trial court’s judgment on the first petition. We disagree. In ruling on the first petition, the trial court explicitly found substantial evidence supported the Department’s finding of an overcharge, as described in the notice of disqualification, on February 7, 2002, which included the overcharge for milk.
On appeal, Bracewell seeks to challenge the determination that the February 7, 2002, violation can support an overcharge violation as part of a pattern of conduct sufficient to support his disqualification. To the extent Bracewell disagreed with the court’s finding in the first petition, he was obliged to appeal or seek other relief within the statutory time period for appeal. (Ostling v. Loring (1994) 27 Cal.App.4th 1731, 1749; Carroll v. Civil Service Commission (1970) 11 Cal.App.3d 727, 733.) At that time, if Bracewell believed the court was mistaken in its analysis of the February 7, 2002, violation as a section 40740, subdivision (e)(3) violation, as described in the notice of disqualification, he should have appealed the decision. Having failed to do so, Bracewell cannot now argue that substantial evidence does not support the trial court’s determination that the February 7, 2002, violation supports his disqualification. The trial court correctly found the issue finally decided in the prior proceeding, precluding further review of the issue.
Offsets
Bracewell contends the trial court erred in the calculation of cumulative charges, leading to an unwarranted finding of a pattern of overcharges. According to Bracewell, under section 40740, subdivision (e)(3), overcharges must be offset by undercharges. Therefore, the April 2003 overcharges would be reduced to under $1.00, eliminating the pattern of overcharges and his three-year disqualification.
Bracewell argues the plain meaning of section 40740, subdivision (e) requires that each monitoring visit must result in a “cumulative overcharge of at least $1.00.” He reads “cumulative overcharge” as requiring overcharges be offset by undercharges to arrive at the overcharge amount.
The Department points out that the regulations define an overcharge as “charging the Program a higher price.” (§ 40740, subd. (e)(3)(A).) The regulation does not define an overcharge as the net of overcharges and undercharges. Given this definition, the Department argues, “cumulative overcharges” refers to the sum of overcharges in a single investigative visit or during two or more visits within a 24-month period. (§ 40740, subd. (e)(3)(B)(1) & (2).)
Matters presenting questions of law, including the interpretation of a statute, we review de novo. (Boyer v. Jones (2001) 88 Cal.App.4th 220, 222.) In addition, in determining the proper interpretation of a statute and the validity of an administrative regulation, the administrative agency’s construction is entitled to great weight, and if there appears to be a reasonable basis for the interpretation, we will not substitute our judgment for that of the administrative body. (Family Planning Associates Medical Group, Inc. v. Belshé (1998) 62 Cal.App.4th 999, 1004.) Here, the Department’s interpretation is both reasonable and supported by the language of the statute.
Bracewell also argues: “Human error happens. There is no statutory directive to assume that only undercharges are mistaken but all overcharges are intentional. If the net result is that the WIC Program is cumulatively charged less than $1.00 for a shopping event, the statutory purpose (to prevent abuse by vendors) has been served. The sanctions are not ‘for inadvertent or unintentional errors.’” (Underlining omitted.)
The regulations themselves respond to this argument: “[V]endors should be held accountable for all violations, whether they are deliberate attempts to violate program requirements or inadvertent errors, because both ultimately result in increased food costs and fewer participants being served.” (65 Fed.Reg. 83260, supra.) As the Department notes, avoiding undercharges is in the best interests of the vendor; the regulations focus on overcharging as a danger to the integrity of the program.
April 2003 Overcharges
Finally, Bracewell challenges the evidence in support of the April 2003 overcharge violation. Bracewell contends the ALJ gave improper credence to the investigator’s evidence, the WIC investigator made mistakes in recording Bracewell’s prices, and Bracewell had no motive to overcharge the program.
Under the substantial evidence test, we determine whether there is reasonable, credible evidence of solid value such that a reasonable trier of fact could make the findings challenged. (In re Brian M. (2000) 82 Cal.App.4th 1398, 1401.)
Bracewell focuses on a footnote in the ALJ’s decision, which he contends misconstrues his testimony. He faults the ALJ for giving more credence to a photograph that appeared to show altered prices than to his testimony in which he denied the higher prices were in effect at the time of the April 2003 visit.
In effect, Bracewell quarrels with the ALJ’s analysis of the weight and sufficiency of the evidence. The photograph in question was just one piece of evidence considered by the ALJ. Under the substantial evidence standard of review, we accept as true all of the evidence most favorable to the prevailing party, and discard unfavorable evidence as not having sufficient verity to be accepted by the trier of fact. (Giles v. Horn (2002) 100 Cal.App.4th 206, 220.)
Bracewell also argues price surveys prior to the April 2003 investigation, and a sales receipt he testified came from his computer hard drive, should have been accorded greater evidentiary weight than the investigator’s evidence.
The ALJ found the proffered evidence unreliable. The price survey form was dated December 11, 2002, and the ALJ found it not reliable as to “prices four months later.” Bracewell also provided a photograph of posted prices. However, the photograph was taken after Bracewell received the notice of disqualification, leading the ALJ to determine it was not a reliable indicator of prices in effect during the April 2003 visit.
The ALJ also discounted a store employee’s testimony that “all prices on the posted list were the same from the day the store opened to the day the store closed following the April visit.” The ALJ noted the store employee had no personal knowledge of the April 2003 monitoring visit.
Finally, the ALJ found the computer-generated sales receipt both unreliable and contradicted by the investigator’s testimony. The ALJ found the investigator’s testimony and documentary evidence credible.
In reviewing the ALJ’s decision, the trial court rejected Bracewell’s argument faulting the sufficiency of the evidence regarding the April 2003 violation, noting the decision sets forth a detailed rationale for crediting the testimony and records of the investigator. The trial court observed: “Thus reasonably credited, the testimony and records of WIC program staff provide evidence of solid value that substantially supports the findings of overcharges on April 16, 2003.”
We agree with the trial court’s analysis of the evidence in support of the April 2003 violation. Under the substantial evidence test, we have no power to pass on the credibility of witnesses, to attempt to resolve conflicts in the evidence, or to determine where the weight of evidence lies. We accept as true the evidence most favorable to the prevailing party. The appellant bears the burden of showing there is no evidence of a sufficiently substantial nature to support the trial court’s findings. (In re Diamond H. (2000) 82 Cal.App.4th 1127, 1135.) Bracewell has failed to meet this burden.
DISPOSITION
The judgment is affirmed. The Department shall recover costs on appeal.
We concur: BLEASE, Acting P. J., MORRISON, J.
Retired Associate Justice of the Court of Appeal, Third Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.