Legislature(1993 - 1994)
03/16/1994 01:15 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
March 16, 1994
1:15 p.m.
MEMBERS PRESENT
Rep. Brian Porter, Chairman
Rep. Jeannette James, Co-Chair
Rep. Pete Kott
Rep. Joe Green
Rep. Gail Phillips
Rep. Cliff Davidson
Rep. Jim Nordlund
MEMBERS ABSENT
None
COMMITTEE CALENDAR
HB 376: "An Act relating to services for and protection of
vulnerable adults; and providing for an effective
date."
HEARD AND HELD IN COMMITTEE
*HB 517: "An Act relating to innocent misrepresentations by
agents in real property transfers."
CS MOVED OUT OF COMMITTEE
HB 472: "An Act relating to referrals involving dental
services."
NOT HEARD
*HB 314: "An Act relating to the jurisdiction of the
ombudsman; and providing for an effective date."
NOT HEARD
(* First public hearing.)
WITNESS REGISTER
CONNIE SIPE, Executive Director
Division of Senior Services
Department of Administration
P.O. Box 110209
Juneau, AK 99811-0209
465-3250
Position Statement: Testified in support of HB 376
PATRICIA DENNY, Executive Director
Older Alaskans Commission
Department of Administration
P.O. Box 110208
Juneau, AK 99811-0208
465-3250
Position Statement: Testified in support of HB 376
JUDY MATHIS, Legislative Assistant
Representative Ron Larson
Alaska State Legislature
State Capitol
Juneau, AK 99801-1182
465-3878
Position Statement: Testified in support of HB 517
GORDON SCHADT
Attorney at Law
3201 C Street
Anchorage, AK 99503
561-2022
Position Statement: Testified in support of HB 517
DAVE FEEKEN
100 Trading Bay Dr., Suite 6
Kenai, AK 99611
283-5888
Position Statement: Supported HB 516
(Spoke via teleconference)
CRAIG JOHNSON
Kodiak Board of Realtors
218 Center St., Suite 200
Kodiak, AK 99615
486-2000
Position Statement: Testified in support of HB 517
(Spoke via teleconference)
FRANK MICHEL
4901 E. Parks Highway
Wasilla, AK 99654
376-3842
Position Statement: Testified in support of HB 517
(Spoke via teleconference)
GREG ERIKINS
address not provided
562-3383
Position Statement: Supported HB 517
(Spoke via offnet)
GLEN RYERSON
Ryerson Realty
1901 Renshaw Way
Juneau, AK 99801
789-6712
Position Statement: Testified in support of HB 517
PREVIOUS ACTION
BILL: HB 376
SHORT TITLE: ASSIST & PROTECT VULNERABLE ADULTS
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
01/14/94 2066 (H) READ THE FIRST TIME/REFERRAL(S)
01/14/94 2066 (H) HES, JUDICIARY, FINANCE
01/14/94 2067 (H) -4 FNS (3-DHSS, ADM)
1/14/94
01/14/94 2067 (H) -ZERO FISCAL NOTE (ADM)
1/14/94
01/14/94 2067 (H) GOVERNOR'S TRANSMITTAL LETTER
02/09/94 (H) HES AT 03:00 PM CAPITOL 106
02/09/94 (H) MINUTE(HES)
02/09/94 (H) MINUTE(HES)
02/11/94 2341 (H) HES RPT 4DP 3NR 1AM
02/11/94 2341 (H) DP: BUNDE, TOOHEY, B.DAVIS,
NICHOLIA
02/11/94 2341 (H) NR: KOTT, G.DAVIS, OLBERG
02/11/94 2341 (H) AM: VEZEY
02/11/94 2342 (H) -ZERO FISCAL NOTE (DPS)
2/11/94
02/11/94 2342 (H) -4 PREVIOUS FNS (ADM, 3-DHSS)
1/14/94
02/11/94 2342 (H) -PREVIOUS ZERO FISCAL NOTE
(ADM) 1/14/94
03/11/94 (H) JUD AT 01:00 PM CAPITOL 120
03/11/94 (H) MINUTE(JUD)
03/14/94 (H) MINUTE(JUD)
BILL: HB 517
SHORT TITLE: REAL PROPERTY TRANSFERS
SPONSOR(S): FINANCE
JRN-DATE JRN-PG ACTION
03/04/94 2608 (H) READ THE FIRST TIME/REFERRAL(S)
03/04/94 2608 (H) JUDICIARY
03/16/94 (H) JUD AT 01:15 PM CAPITOL 120
BILL: HB 472
SHORT TITLE: REFERRALS INVOLVING DENTAL SERVICES
SPONSOR(S): REPRESENTATIVE(S) G.DAVIS BY REQUEST
JRN-DATE JRN-PG ACTION
02/14/94 2375 (H) READ THE FIRST TIME/REFERRAL(S)
02/14/94 2375 (H) HES, JUDICIARY
03/01/94 (H) HES AT 03:00 PM CAPITOL 106
03/01/94 (H) MINUTE(HES)
03/02/94 2575 (H) HES RPT 3DP 3NR
03/02/94 2576 (H) DP: KOTT, VEZEY, TOOHEY
03/02/94 2576 (H) NR: NICHOLIA, BUNDE, OLBERG
03/02/94 2576 (H) -ZERO FISCAL NOTE (DCED)
3/2/94
03/16/94 (H) JUD AT 01:15 PM CAPITOL 120
BILL: HB 314
SHORT TITLE: OMBUDSMAN'S JURISDICTION: AGENCY ACTIONS
SPONSOR(S): REPRESENTATIVE(S) PHILLIPS,BARNES,Sanders
JRN-DATE JRN-PG ACTION
01/03/94 2009 (H) PREFILE RELEASED
01/10/94 2009 (H) READ THE FIRST TIME/REFERRAL(S)
01/10/94 2009 (H) JUDICIARY
01/12/94 2042 (H) COSPONSOR(S): SANDERS
03/16/94 (H) JUD AT 01:15 PM CAPITOL 120
ACTION NARRATIVE
TAPE 94-43, SIDE A
Number 000
The House Judiciary Standing Committee was called to order
at 1.25 p.m. on Wednesday, March 16, 1994. A quorum was
present. Chairman Porter announced that the committee would
be hearing HB 376, HB 472, and HB 517.
HB 376 - ASSIST & PROTECT VULNERABLE ADULTS
CONNIE SIPE, Executive Director of the Division of Senior
Services, Department of Administration, testified that this
legislation is a bill that has been worked through
inter-agency as part of the Governor's package of reform
bills. Currently, we have an elder abuse reporting law and
a mandatory reporting requirement for abuse of adults.
House Bill 376 essentially combines them into one statutory
section as an act protecting vulnerable adults. She further
stated that the bill would allow the department to make more
of a distinction between those who can take care of
themselves and those who need the intervention of the state.
It would also streamline abuse reporting and reduce the
duplication of state agencies who have had the jurisdiction
to investigate abuse, especially in the nursing home, or a
facility situation where we would have Family and Youth
Services, the Nursing Home Certification Licensing people,
and the long-term care ombudsman all having jurisdiction and
all investigating the same incident of abuse. Ms. Sipe
indicated that 38 percent of the reports of abuse are
actually requests for services from someone and this
legislation would consolidate those requests. This
legislation would allow the department to handle a case to
criminal authorities for prosecution despite a request to
have the case dropped by a relative or nonvulnerable adult.
MS. SIPE stated that amendments to the state's
confidentiality law incorporated in the bill would allow
agencies to share certain information, on a need to know
basis, with the reporter of the abuse. Also, this bill adds
a section on surrogate decision makers. This would allow
for a circumstance where a person appears to be incapable of
making decisions, which would qualify them eventually for a
guardianship, or they're temporarily unable to consent,
temporarily, to protective services. This would allow a
decision to be made for them, especially in an emergency
situation. She stated that it was only meant to be used for
certain limited situations.
MS. SIPE further stated HB 376 incorporated provisions that
would spell out how the division could petition the court to
carry out adult protective services when the case may arise.
She indicated that major changes in HB 376 are in the
definition section. The definition of abuse was redefined
to focus on intentional or reckless abuse. Next, the
definition of neglect was now defined to focus on
intentional failure to provide care. It can't be
interpreted as just an inability to provide care.
Additionally, a new definition of "exploitation" is created
which includes exploitation against a person as well as
resources.
PATRICIA DENNY, Executive Director of the Older Alaskans
Commission, Department of Administration, testified in
support of HB 376. She further testified that the Older
Alaskans Commission has been in support of this type of
legislation for several years and she felt this was a new
opportunity for services not covered in existing or previous
law.
REP. GREEN asked to explain the fiscal notes.
MS. SIPE responded that the Division of Family and Youth
Services was handling the caseload now and the function has
never been funded, thus the fiscal notes would address this
issue. Further, Ms. Sipe indicated that training would be
provided with funds in the fiscal note. What the fiscal
note shows is that all the resources in Family and Youth
Services for adult protective services are going to be
transferred to the Division of Senior Services. So there is
no new funding.
REP. JAMES responded that the fiscal notes do not reflect
that there are no increases or decreases in funding.
MS. SIPE responded that what she has in her packet was a
fiscal note from the Division of Senior Services which shows
a total fiscal note cost in FY 95 of $559,600 and five
full-time positions. Then, there should be a zero fiscal
note from the Pioneer Homes section which shows they are
going to transfer empty positions. There should be a fiscal
note from Family and Youth Services showing a deletion of
$559,600 from their budget to come over.
CHAIRMAN PORTER inquired whether on page 5, line 18, the
vulnerable adult who is 60 years of age or older was to be
left as is or did she want to cover all of them again?
MS. SIPE responded that this was the section they struggled
with to reduce the number of state agencies that go in. She
elaborated that by federal law and state statute that
follows it, a long-term care ombudsman who has jurisdiction
to look into any complaints that occur in our out of home
care facilities such as a Nursing Home, a Pioneer Home, etc.
But his jurisdiction only starts at age 60 by federal and
state law. So for people over 60 there are two, a long-term
ombudsman and the medical and certification licensing for
that nursing home who have authority. For people under 60
they have a licensing authority.
CHAIRMAN PORTER inquired on page 6, line 28, the sentence
which begins with "the department or its designee shall
conduct a face-to-face interview with the subject of the
report unless that person is unconscious or the department
or its designee has determined that a face-to-face interview
could further endanger the vulnerable adult." He asked, do
you mean the subject to be the same person as the vulnerable
adult in that sentence?
MS. SIPE responded yes.
CHAIRMAN PORTER referred to page 7, line 20, where it says
"upon request a person who has made a report to the
department under the reporting requirement regarding a
vulnerable shall be notified of the status of the
investigation," and asked if we are to presume that this
status information is only going to go to these people who
are listed who are required to report, or is this any person
who happens to file such a report?
MS. SIPE responded that if they are the required reporters
under AS 47.24.010(a), yes, but under AS 47.24.010(d) allows
any other person from reporting cases of abandonment,
neglect, abuse, harm, etc. It is going to come to the
attention of that person anyway, whether in their
professional duty or because they are a neighbor or they are
a family member, so this applies to everyone under 010.
Required reporters and voluntary reporters can get the
status of the investigation or the status of the case. The
statute, though, does allow the division discretion to not
necessarily give out all the confidential facts of this
person's life. Status means telling if the person is now
safe. But the term covers any reporter.
CHAIRMAN PORTER then asked whether the division was
interpreting this to change any existing confidentiality
requirements.
MS. SIPE responded that this was a slight change because
previously it was not mandatory that they be given this
information before this status report. It has been the
practice of the division to usually do it but it has not
been stated in law.
CHAIRMAN PORTER inquired as to whether the division would
object to changing the language to make sure this is not a
requirement to otherwise disclose confidential information.
MS. SIPE responded yes.
CHAIRMAN PORTER referred to page 9, line 10, where it says
"notwithstanding (a) of this section, if the department
determines that an emergency situation exists that
necessitates provision of the protective services to a
vulnerable adult, the department may provide the necessary
protective services in a manner determined..." and stated,
these would be temporary protective services, would they
not?
MS. SIPE responded yes.
CHAIRMAN PORTER remarked that it may very well be that this
would turn out to be sustained protective service, but there
would be a commitment order.
MS. SIPE responded yes. Or there may consent obtained after
the emergency situation passes.
CHAIRMAN PORTER asked if the division would object to
"temporary protective services" on line 11.
MS. SIPE responded that would be fine.
CHAIRMAN PORTER inquired if page 11, line 9, "An employer or
supervisor who makes a good faith report..." was a standard
whistle blower provision and if it was really necessary.
MS. SIPE responded that each whistle blower statute is
usually tied to something and there was no general whistle
blower statute that covers everything.
CHAIRMAN PORTER then asked whether there was some case law
on defining "good faith report" from other statutes.
MS. SIPE responded that there was a body of law out there.
CHAIRMAN PORTER referred to page 11, line 13, where it says
"the person making the report may bring a civil action for
compensatory and punitive damages against an employer or
supervisor who violates this subsection." He asked why are
we saying so and are we asking them to do that?
MS. SIPE responded that you can have different rights under
a statute. Usually the statute will define whether you have
a right to actually be compensated for a loss. The law will
also say whether you have a right to punitive damages, for
instance, in a bad faith situation where an employee blows a
whistle on a nursing home or something. So unless the law
says the level you have, the only alternative would be to
ask the courts for an injunction reinstating me to my job
and I couldn't get compensation for the lost wages, nor can
I get any punitive damages.
REP. GREEN stated on page 2 of the fiscal note analysis of
the senior services administration it says "purchase
protective services, adult/residential" and asked if that
was home.
MS. SIPE responded that it's not a home that's purchased.
Adult protective services now, if it finds a person who
can't live safely at home, and they have been the victim of
abuse or neglect, and if they don't have the money to buy
their own placement, we'll pay for them to be placed in an
adult foster home or an adult foster care center. They chip
in their own monthly resources or income and then family and
youth services makes up the difference, which maxes out now
at $43.00 per day. So this is the contract money currently
used which is being transferred.
CHAIRMAN PORTER tabled discussion on HB 376 for a later date
and brought HB 517 before the committee for discussion.
HB 517 - REAL PROPERTY TRANSFERS
JUDY MATHIS, Legislative Assistant to Representative Ron
Larson, Prime Sponsor of HB 517, testified that HB 517 would
remove real estate professionals from liability for innocent
misrepresentation in real estate property transactions.
This bill was introduced as a result of a 1989 Supreme Court
decision, in Bivins vs. Ballard, that brokers who make an
innocent misrepresentation to a purchaser of real property
are liable for the misrepresentation. This ruling puts an
unjustified liability on real estate professionals. She
further stated that allowing innocent misrepresentation
action against a broker in such circumstances is like posing
strict liability and there was no reason for making the
broker liable for the seller's misrepresentation. She
concluded by saving that HB 517 would overturn the Supreme
Court's decision by removing real estate brokers' liability
for innocent misrepresentations.
GORDON SCHADT, Attorney representing the Alaska Association
of Realtors, testified that innocent misrepresentation is a
situation where an individual does not have a reason to
know, or does not know, there is a problem in their house,
and they are a conduit. So, if the seller fills out a form
which says there are no problems in the basement and you, as
a real estate agent, pass that on to the buyer, you have
liability even though you had no reason, you were not
negligent, you didn't intentionally do anything wrong, by
being that conduit. The Bivins case was a narrow decision
and the court basically said that they think the broker
should have the liability.
TAPE 94-43, SIDE B
Number 000
MR. SCHADT continued his testimony by further stating that
there is a required form that needs to be filled out from
the seller to the buyer so that the buyer can then evaluate
the situation relating to the property to make an informed
decision. The real estate broker, as a conduit, just passes
on the information, and as a result, is liable. Mr. Schadt
concluded that HB 517 would simply take away the innocent
misrepresentation aspect of the real estate transaction.
Also, part of the spin-off that he sees as detrimental is
that the problem typically is between the seller and the
buyer and that is where the problem essentially lies.
DAVE FEEKEN testified via teleconference in support of HB
517. He sighted an example of an innocent misrepresentation
a buyer, who after closing on a home, sent a letter to him
revealing a leak in the shower and that he wanted it
repaired. Upon investigation it was discovered that the
buyer began a remodeling of the shower and broke a seal,
which caused the leak.
REP. NORDLUND inquired into how this bill would solve the
problem of an unreasonable buyer.
MR. FEEKEN responded that if there wasn't a chance of using
innocent misrepresentation as a claim, problems of
unreasonable buyers wouldn't exist.
CRAIG JOHNSON, Member of the Kodiak Board of Realtors,
testified via teleconference in support of HB 517 and
remarked that there are limited opportunities for obtaining
errors and omissions insurance coverage to protect real
estate agents against innocent misrepresentations.
FRANK MICHEL, past chair of the Alaska Board of Realtors
Legislative Committee, testified via teleconference that
this legislation was meant to be part of a comprehensive
packet which included agency and property disclosure, both
of which became law. He further testified on the difficulty
of obtaining insurance if you are not part of a national
chain. He said AS 34.55.030 contains innocent
misrepresentation protection and the passage of HB 517 would
extend that testimony to realtors.
GREG ERIKINS testified via teleconference in support of HB
517. He felt it was not too much to ask the state of Alaska
to protect a licensed real estate practitioner from innocent
misrepresentations.
GLEN RYERSON, President of Southeast Board of Realtors,
testified in support of HB 517. He further testified that
he sold a home which, as it turned out, during the
transaction the seller disclosed that there were no
easements affecting the property and that the septic system
was in good working order. The records office substantiated
that there were no easements and the septic system was
checked out by an engineer and it was passed and received
approval by the Department of Environmental Conservation. A
year later, the new owner decided to refinance the house and
during this process had to have the septic system
re-certified. During the inspection, problems were noted
and it was revealed that there was no drainage field, as
well as other problems.
REP. NORDLUND inquired as to what sort of obligations agents
have to make sure that the representations they make about a
property are correct.
MR. SCHADT responded that that fits into the area of
negligence and negligence is decided in a standard that has
not always been satisfactory and it is what a reasonable
agent in this case would have done in that situation. Thus
it is not as specific as it should be and that is a problem
with that area of the law; i.e., tort liabilities. An
example would be if a reasonable agent would have seen
something that would put them on notice then they would need
to proceed to investigate further.
REP. NORDLUND then inquired about a situation in which a
seller says the furnace works fine and when winter comes and
the buyer turns on the furnace and discovers it is
inoperable. He asked, what about a situation like that.
MR. SCHADT responded that if there is an inquiry such as a
buyer asking "what is the furnace like or does the furnace
work?", one of the ways you can have liability is if you are
asked a question and you do not undertake initiative to find
out the accuracy of your answer. He further remarked that
the agent should undertake the responsibility, to avoid
negligence, to follow-up on any indication that there might
be a problem.
CHAIRMAN PORTER inquired if an agent sees that there are
water marks on the ceiling and he asked the seller, who
responds that yes there was, and I had it fixed, here is a
receipt and as far as he was concerned the leak was fixed.
Under the current situation, as Chairman Porter understood
the law, he asked if that agent was liable.
MR. SCHADT responded, yes, that is correct.
CHAIRMAN PORTER then asked if HB 517 would rectify that
situation.
MR. SCHADT responded yes.
REP. GREEN inquired how many times, in the number of
transactions that are conducted, how many of those would
result in a situation where the realtor would be brought in
rather than the buyer and seller dealing directly with each
other.
MR. SCHADT responded that over half innocent
misrepresentation litigation involves the realtor.
REP. GREEN then restated the question to be of one hundred
transactions, how many of those would end up with the seller
going after the realtor because of a bad negotiation?
MR. SCHADT responded that he didn't know the percentage. He
then remarked that this type of litigation is one of the
most common forms of real estate litigation that may well
account for half or more of the lawsuits that relate to real
estate.
REP. GREEN then asked for clarification whether he meant
seller and broker or buyer and broker because the buyer has
been stuck with the property.
MR. SCHADT responded that it is typically the buyer coming
after the seller and bringing in the agents, often after
consulting an attorney.
REP. GREEN inquired if the property disclosure statement has
less than the number of these things because the seller has
to disclose things that might not have otherwise done,
because of fraudulent misrepresentation.
MR. SCHADT responded that it probably is, but it only
officially went into effect last July, so there isn't a
great deal of history to go with it. He further remarked
that the disclosure statement should reduce the amount of
litigation overall.
REP. GREEN stated that without HB 517, the real estate sales
persons are at more risk than they would be with this bill.
He inquired if there are some situations that really do
involve negligence or something on the realtor's behalf.
Mr. SCHADT responded that there are and if you get into a
leaky roof you are looking at ten or twenty thousand
dollars. He further responded that there are several other
factors which exacerbate the situation and that there are a
lot of situations that result in costly litigation.
REP. GREEN inquired if there is a perceived conflict because
the sales commission comes from the seller to the broker and
is there any potential, that by now giving the broker a
waiver, what is my recourse, innocent fraud, by going
through the broker?
MR. SCHADT responded that fraud is one extreme that would be
there. Negligence is still there and that's the one that is
going to be. There has been for a long time, fraud on the
agent's part, in his experience, is fairly well. Negligence
does come up in situations, such as, you should have seen
those water marks, etc., and that will remain there. He
didn't think the passage of the money influences things that
much.
REP. GREEN stated that perhaps there is an innocent
representation because he has less (inaudible) as a broker
now than he did yesterday before this thing became law. He
has a duty, but there are shades of gray. He asked if this
bill would cause the broker to fall into a little darker
shade of gray on their duty to look into the water spots, or
something maybe a little more subtle than that?
MR. SCHADT responded that he didn't think so because we are
not doing away with the negligence part of it.
REP. GREEN remarked that he was not talking about
negligence, he was talking about the innocent part, where he
thought was the gray area, and he wanted to know if HB 517
would cause him as a real estate agent to relax my duty.
MR. SCHADT responded that the thing that keeps the agents
from relaxing their duty is the fact that they have to be
diligent in what they do because if they don't they are back
into negligence.
CHAIRMAN PORTER inquired if he knew of any situation in
which the court has caused someone by definition who is
innocent to be guilty.
MR. SCHADT responded that he was not aware of any. He
further added that HB 517 does not change the fact that
under state case law a seller is liable for an innocent
misrepresentation.
TAPE 94-44, SIDE A
Number 000
REP. NORDLUND remarked that a buyer could make an innocent
misrepresentation, I have had personal experience, and I
find it difficult to believe that a real estate agent could
not have some knowledge as to the workmanship of a
structure.
MR. SCHADT commented that as the real estate profession is
evolving they are becoming clearer with their buyers as to
what their role is. He thought that helps to a certain
extent. He agreed that the public comes to a real estate
agent with a higher expectation and they should.
REP. JAMES commented that she feels that if a person has a
problem that somebody is at fault and that is not
necessarily true. Even in criminal cases, intent is very
important and she agreed that real estate people are
expected to know more, but they are not engineers or
surveys, they are sales people and they are there to pass on
the information from the seller. Therefore, she felt that
the law needed to be changed.
CHAIRMAN PORTER commented that he was going to support this
bill because we have created the requirement to fill out a
property disclosure form that is passed on to the buyer.
This then increases the vulnerability of the broker because
he has to pass the form on.
REP. JAMES moved that HB 517 be moved from committee with
individual recommendations.
REP. NORDLUND objected and stated that he would like to be
able to offer a couple of amendments. One along the lines
of there should be some protection afforded the potential
buyers that real estate agents are not necessarily experts
in terms of the structural, mechanical, wood aspects of the
house but they are primarily agents for the financial
aspects of the transactions. The other amendment would be
defining innocent misrepresentation.
CHAIRMAN PORTER asked Mr. Schadt whether the court would
have difficulty with the term innocent misrepresentation.
MR. SCHADT responded no because they specifically adopted
that term in the Bivins case and the statute attempts to
give some definition where it talks about not having
personal knowledge of the error, inaccuracy or omissions.
The court would find that their case clearly defined that.
REP. GREEN remarked that he was opposed to HB 517, but he
would pass it on because he doesn't see any duty in here
that says that it's a duty that might be a negligent case.
It just says if the agent doesn't know, it's okay.
CHAIRMAN PORTER asked the committee for a motion to adopt
the CS; and hearing no objection, the CS was adopted.
CHAIRMAN PORTER then declared the CS for HB 517 moved from
committee with individual recommendations.
The House Judiciary Committee was adjourned at 3:07 p.m.
HB 472 - NOT HEARD TODAY
HB 314 - NOT HEARD TODAY
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