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Topic: The Employment Law Group, P.C.

Department of Labor’s Administrative Review Board Reverses Administrative Law Judge’s Ruling in Favor of Nuclear Whistleblower and Client of The Employment Law Group®

The U.S. Department of Labor’s Administrative Review Board (ARB) recently issued a decision in favor of William Smith, a client of The Employment Law Group® law firm and whistleblower at a nuclear power facility in South Carolina.  In the case, Smith v. Duke Energy Carolinas, LLC & Atlantic Group, d/b/a DZ Atlantic, Mr. Smith claimed that Duke Energy had terminated his employment because he reported a coworker’s alleged failure to comply with workplace safety regulations mandated by the Energy Reorganization Act (ERA).

The ARB’s decision reverses an earlier decision by an administrative law judge (ALJ) that held that Smith’s protective activity of bringing safety concerns in a nuclear plant to the attention of his supervisors was not the reason for his termination.  In its recent decision, the ARB reversed the ALJ’s decision and remanded the case for further proceedings.

Background

In early 2007, Mr. Smith began working for DZ Atlantic – a contractor to Duke Energy – as a security office at the Catawba nuclear power plant.  As part of his duties, Smith performed routine fire inspections in the power plant and recorded his signed observations in a company log.  In February 2008, Smith arrived to work approximately 1 hour prior to the beginning of his shift and saw that a co-worker, Chris Borders, had already signed the inspection sheet for an inspection that had not yet occurred.

Smith told Borders that if she would not alter the inspection log entry he would report the ostensibly falsified log entry to their supervisors.  Borders responded to Smith by saying that if Smith reporter her, she would then file a sexual harassment complaint against him.  Later that week, Borders filed a sexual harassment complaint against Smith and, during an investigative meeting with HR following the complaint, Smith reported Borders’ incorrect entry in the inspection log.  While the company found no evidence backing Borders’ sexual harassment claims, Duke Energy eventually terminated both Smith and Borders, citing Borders falsification of the inspection log and Smith’s failure to report the false entry in a timely fashion after learning of it.

The ALJ previously held that while Smith had engaged in protected activity by reporting his coworker’s failure to follow ERA guidelines, his employer, Duke Energy, had demonstrated that the decision to terminate his employment had been motivated by the company’s wanting to punish a lack of trustworthiness by employees and not because of Smith’s whistleblowing.  Accordingly, the ALJ held that Smith’s protected activity had not been a contributing factor in Duke Energy’s decision to terminate his employment.

The Administrative Review Board’s (ARB) Reversal and Remand

The central issue on appeal to the ARB was “whether Smith’s protected activity was a contributing factor in [Duke Energy’s] decision” to fire him.  The ARB reversed the ALJ’s decision, citing Marano v. Dep’t of Justice, an appellate case involving a Drug Enforcement Agency (DEA) agent who reported misconduct his workplace which led the DEA to undergo a reorganization of his office.  While the DEA agent was not found to have engaged in any wrongdoing, as a result of the office reorganization, he ultimately lost his job.  The Federal Circuit held that but for the agent’s reporting of the misconduct he would not have been terminated and, therefore, the Court held that the agent’s protected activity was indeed a contributing factor in his termination.

In this case, the ARB found the Marano case to be analogous to Smith, holding that Smith’s blowing the whistle on the inspection log entry was a contributing factor to his termination because Duke Energy would never have fired Smith had it not known that Smith failed to make his report in a timely manner.  The ARB held that Smith’s report was “inextricably intertwined” with the investigatory process that led to his termination and that his protected activity was a contributing factor in his termination.  With this reversal of the ALJ’s decision, the ARB remanded the case for further proceedings and held that the burden of proof will now fall on Duke Energy to prove that it would still have terminated Smith even in the absence of Smith’s protected activity.

Significance for Whistleblowers

The ARB’s decision in Smith is important for whistleblowers because its holding supports the proposition that when an employer admits that the reason it took action against an employee is that individual’s protected activity, this is sufficient to demonstrate causation without further analysis.

The ARB’s decision should also put employers on notice that when management decides to make a so-called ‘clean sweep’ – terminating all employees who might be tainted with wrongdoing – that it cannot terminate the employee who disclosed the wrongdoing, as this would constitute terminating the employee because of his or her protected disclosure.

The Employment Law Group® law firm has substantial experience representing employees and whistleblowers in the nuclear industry in proceedings before the Department of Labor (DOL) and Nuclear Regulatory Commission (NRC).

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R. Scott Oswald and David Scher, Principals of The Employment Law Group®, Publish Article on Expanded False Claims Act Liability for Improper Healthcare Kickbacks under The Patient Protection and Affordable Care Act (PPACA)

R. Scott Oswald and David Scher, principal attorneys of The Employment Law Group® law firm, recently published an article in Westlaw’s Health Care Fraud Journal entitled “Health care law expands False Claims Act liability under Anti-Kickback Statute”.

In the article Oswald and Scher provide an outline of the various provisions of the Anti-Kickback Statute and illustrate how violations of the law can subject violators of the statute to liability under the False Claims Act (FCA).

Expansion of Liability

The Patient Protection and Affordable Care Act (PPACA), passed in 2010, has given the Anti-Kickback Statute “more teeth than ever before,” according to Oswald and Scher.  “Now violations of the statute are per se violations of the False Claims Act. This means that even unintentional violations of the statute can be grounds for fraud liability.”

Additionally, even unwitting and non-benefiting parties who are within the stream of a reimbursement claim to Medicaid or Medicare may now have liability for fraud if unlawful kickbacks are part of the claim.  As a means of enforcing this shift in the law, as of January 1, 2011, all drug, medical device, and medical supply manufacturers covered under the various federal health care programs have been required to keep records of “all transfers of value.” Failure on the part of these entities to keep record of these transfers of value now opens up the possibility of fraud litigation.

Measure of Damages

In such situations, the measure of damages for fraud claims under the Anti-Kickback Statute is, “the full value of the services provided,” even if the patients in question receive the medical benefits claimed.  Any funds received from the federal government will now be forfeited in the presence of any unlawful kickback as the inappropriate kickback now renders physicians and other healthcare providers ineligible under federal programs. Notably, physicians who submit claims for reimbursement tainted by kickbacks may now be individually liable for violations of the FCA.

Implied False Certification Theory Now Obsolete

Prior to the passage of PPACA, the primary theory underpinning the interpretation of the False Claims Act as meaning that claims submitted as a result of Anti-Kickback Statute violations were false claims rested on the so-called ‘implied false certification theory’. Under this doctrine, a claim for payment is considered false when based on a false representation of compliance with a relevant federal law and such false certifications can be either express or implied.

In order to obtain reimbursements from Medicare and Medicaid, healthcare providers must certify that they are in compliance with all applicable laws, including the Anti-Kickback Statute.  According to Oswald and Scher, “PPACA renders moot any reliance on a false certification theory for an Anti-Kickback Statute False Claims Act claim.  In effect, the PPACA codifies as law more than 17 years of federal court decisions affirming fraud liability for Anti-Kickback Statute violations.”

Summary

Oswald and Scher summarize the effect of PPACA’s amendments to Anti-Kickback Statute as providing:

  • Criminal penalties for physicians and other healthcare providers who engage in improper financial relationships involving kickbacks;
  • A viable basis for False Claims Act liability for both parties that does not rely upon the controversial ‘implied-certification’ theory and the elimination of the requirement to demonstrate intent to defraud;
  • That violations of the Anti-Kickback Statute are per se violations of the False Claims Act.

Finally, the authors note that while physicians have largely “stayed under the radar in terms of False Claims Act liability” this may “[have] less to do with legal hurdles” and is “more likely the effect of the government’s desire to prosecute only big, asset-rich violators”.  This trend “may soon change”, Oswald and Scher surmise, with the PPACA amendments to the Anti-Kickback Statute eliminating the requirements to demonstrate intent for False Claims Act liability.

The Employment Law Group® law firm focuses in the areas of employment law and whistleblower protection law, has helped many clients file suit against employers that fraudulently billed the U.S. government, and has established favorable precedents under the retaliation provision of the False Claims Act.

 

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Law360 Interviews R. Scott Oswald, Managing Principal of The Employment Law Group®, on the Significance of OSHA’s Recent Call to Establish a Whistleblower Protection Advisory Committee

R. Scott Oswald, managing principal of The Employment Law Group® law firm was recently interviewed by Law360 regarding the Department of Labor’s Occupational Safety and Health Administration’s (OSHA) announcement last week that it plans to establish an a Whistleblower Protection Advisory Committee dedicated to improving OSHA’s whistleblower protection efforts.

The proposed committee would fulfill and advisory role and make recommendations to the Secretary of Labor on ways to improve the effectiveness and transparency of OSHA’s administration of whistleblower protection laws.  The committee would advise on the development and implementation of “improved customer service models” for both whistleblowers and employers, as well as recommend changes to investigator training, and regulations governing OSHA investigations.  The move, according to commentators, highlights the government’s reinvigorated focus on protecting employees who report unsafe working conditions, violations of financial and securities law, or other violations.

The proposed committee would likely be comprised of a cross-section of stakeholders representing both employee and management perspectives and would function as a public forum to discuss the whistleblower program.

According to Mr. Oswald, “a committee that includes a broad range of perspectives would also serve to continue the discussions that OSHA had with stakeholders in its efforts to develop the changes it has made so far to improve the process for whistleblowers and corporations.”

Last year OSHA, which enforces the whistleblower provisions of 21 statutes that protect employees who blow the whistle on violations, completed an exhaustive internal review of its whistleblower program and subsequently announced a restructuring of the program, as well as new updates to OSHA’s investigator manuals.

Furthermore, Oswald commented that OSHA’s establishment of an advisory committee “is a continuation of that process meant to ensure that the pragmatic changes that OSHA has established do not in any way erode over time because there will be a group of individuals that have a vested interest in whistleblower programs’ success.”

The article, entitled “OSHA Steps Up Efforts To Revamp Whistleblower Program”, appeared in the May 21, 2012 edition of the web-based legal news service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

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Law360 Interviews R. Scott Oswald, Managing Principal of The Employment Law Group®, on the Potential Impact of the Senate-Approved Whistleblower Protection Enhancement Act (WPEA)

R. Scott Oswald, managing principal of The Employment Law Group® law firm, was recently interviewed by Law360 regarding the Whistleblower Protection Enhancement Act (WPEA), which the U.S. Senate unanimously passed last week.

If also passed by the U.S. House of Representatives, the WPEA would expand whistleblower protections against retaliation by making it easier for whistleblowers to claim protected status, by eliminating the Federal Circuit’s exclusive appellate jurisdiction over certain whistleblower cases for a period of five years, and by allowing jury trials under certain circumstances for employees who sue agencies that retaliate against whistleblowers.  Additionally, if enacted, the WPEA would extend whistleblower rights to approximately 40,000 airport baggage screeners.

Since 1994, whistleblowers have only prevailed in 3 out of 220 retaliation lawsuits heard by the Federal Circuit.  According to Mr. Oswald, “The Whistleblower Protection Enhancement Act takes direct aim at the Federal Circuit precedents by [extending] protection to several new classes of employees, including employees of the Transportation Security Administration and intelligence agencies”.

“This is a critical reform,” Oswald stated, “Whistleblowers will know their disclosures won’t be held against them if they come forward with that information in good faith.”

Oswald also emphasized that the WPEA would “restore protections intended by the original Whistleblower Protection Act by protecting communications related to an employee’s official duties and communication with supervisors.”  This, according to Oswald, “[could] help agencies deal with fraud or other problems internally”.

“We want individuals to make disclosures at the lowest possible level and not feel like they have to file a complaint with the inspector general in every instance,” Oswald said.

Finally, Oswald noted, the law would also “expressly prohibit relocation or revoking an employee’s security clearance as retaliation for blowing the whistle, which can amount to retaliatory firing by other means for some employees.”

The article, entitled “Senate Bill Would Boost Whistleblowers’ Chances In Court”, appeared in the May 15, 2012 edition of the web-based legal news service, Law360.

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The Employment Law Group® Principals, Adam Augustine Carter and Nicholas Woodfield, Selected as 2012 Washington, D.C. Super Lawyers

The Employment Law Group® law firm is proud to announce that two of its principal attorneys – Adam Augustine Carter and Nicholas Woodfield – have been selected as 2012 Washington, D.C. Super Lawyers.

Adam Augustine Carter has spent most of his 20 year career as a litigator representing employees and whistleblowers.  Mr. Carter has been praised by clients, counsel, and courts for his effective advocacy and his tremendous problem solving abilities.  Mr. Carter is very experienced representing employees who bring claims against their employers involving wrongful termination, retaliation, contract disputes, employment discrimination, Sarbanes-Oxley (SOX), for violations of USERRA, FMLA, and for violations of other federal and/or state civil rights laws

Nicholas Woodfield is a veteran trial attorney who concentrates his practice on Fair Labor Standards Act wage non-payment and misclassification claims, state law wage non-payment claims, Sarbanes-Oxley whistleblower complaints, False Claims Act (qui tam) claims, and discrimination and retaliation cases. Mr. Woodfield has recovered millions of dollars in unpaid overtime and wages for his clients and currently serves as President of the Virginia Employment Lawyer’s Association

Super Lawyers is a rating service of attorneys who have obtained a high degree of professional achievement and peer recognition.  Super Lawyers selects attorneys using a multiphase, rigorous rating process that includes peer nominations, peer evaluations, as well as independent research.

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Law360 Quotes R. Scott Oswald, Managing Principal of The Employment Law Group® on Recent Pro-Whistleblower Decision from the Department of Labor’s Administrative Review Board (ARB)

R. Scott Oswald, managing principal of The Employment Law Group® law firm was recently interviewed by Law360 on a recent Department of Labor Administrative Review Board (ARB) decision establishing a lighter burden of proof for whistleblowers under the Sarbanes-Oxley Act (SOX).

The decision, Zinn v. American Commercial Lines Inc., ARB No. 10-029, ALJ No. 2009-SOX-25 (ARB Mar. 28, 2012), involved an in-house attorney, Angela Zinn, who blew the whistle on allegedly unsafe maritime transport practices while employed by the shipping company American Commercial Lines Inc.  The ARB’s decision held that whistleblowers need not establish that their employer’s allegedly legitimate reason for taking action against them was pretextual.

According to Oswald, who represents employees and whistleblowers, “management-side lawyers have fought to graft this tougher burden-shifting standard onto SOX cases, but the decision demonstrates that the DOL is not having it.”

In the decision the ARB “rejected emphatically the notion that an employee has a burden to demonstrate that the employer’s proffered reason is pretextual,” Oswald noted.

Regarding the effect of the ARB’s decision, Oswald stated: “I think this makes it clear that there will be fewer and fewer of these kinds of cases that can and should be adjudicated before an evidentiary hearing.”

According to the rationale underlying the ARB’s recent decision, DOL Administrative Law Judges should now let cases proceed “unless the employer meets its burden to show through clear and convincing evidence that the same adverse action would have been taken regardless of the alleged protected activity at issue, and that,” according to Oswald, “[was] what Congress intended.”

The article, entitled “DOL Ruling Makes SOX Whistleblower Cases Harder To Beat”, appeared in the May 1, 2012 edition of the web-based legal news service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

 

 

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Law360 Interviews The Employment Law Group® Managing Principal, R. Scott Oswald, on Potential Effects of Report Claiming that the SEC Inadvertently Disclosed a Whistleblower’s Identity

R. Scott Oswald, managing principal of The Employment Law Group® law firm, was recently interviewed by Law360 and provided commentary on a report that the U.S. Securities and Exchange Commission (SEC) may have inadvertently exposed the identity of a corporate whistleblower.  Last week the Wall Street Journal reported that the SEC had unintentionally revealed the identity of a whistleblower during the course of the agency’s investigation of Pipeline Trading Systems LLC.

Some commentators have predicted that because of the SEC’s purported slipup, whistleblowers may be less likely to come forward, fearing that their anonymity may be compromised.  However, in his interview on the subject with Law360, Oswald, who represents employees and whistleblowers, noted that the reason that many whistleblowers decide to file a complaint with the SEC is because the whistleblowers have already complained to their employers to no avail.

Specifically, according to Oswald, “once [whistleblowers] have made the decision that the company is not going to act responsibly, they’re going to go to the SEC.”

“If anything”, Oswald said “the SEC’s goof would persuade potential whistleblowers to file anonymous complaints through counsel, rather than going directly to the commission”.

The article, entitled “SEC Whistleblower Reveal Won’t Sink Program, Attys Say”, appeared in the April 25, 2012 edition of the online legal news and commentary service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

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Sarbanes-Oxley Compliance Journal Publishes Article by The Employment Law Group® Managing Principal, R. Scott Oswald

According to The Employment Law Group® law firm’s managing principal, R. Scott Oswald, “2011 marked a sea change for whistleblowers at the Department of Labor’s Administrative Review Board (ARB).”  The Sarbanes-Oxley Compliance Journal recently published an article by Mr. Oswald which discusses the impact of recent ARB decisions on whistleblower protection and describes why “2011 was an important year for whistleblowers.”

In the article, Oswald highlighted 2011’s significant developments in whistleblower law, noting that “the ARB changed the standard of proving protected activity, embraced the concept of corporate knowledge, established the most generous standard for an adverse action in employment law, and established the fact that most Sarbanes-Oxley cases should proceed to an evidentiary hearing.”

Specifically, Oswald discussed the significance of the following 2011 ARB decisions:

  • In Sylvester v. Parexel International LLC, ARB No. 07-123, ALJ Nos. 2007-SOX-039, 042 (May 25, 2011), the ARB affirmed that whistleblowers are protected under SOX even when mistaken and held that an employer’s disclosure of the whistleblower’s identity constitutes an adverse employment action, and, finally, found that whistleblowers can establish causation by showing that their whistleblowing activity was merely a contributing factor in the employer’s decision to take the adverse employment action.
  • In Funke v. Federal Express Corporation, ARB No. 09-004, ALJ No. 2007-SOX 043 (ARB July 8, 2011), the ARB expanded whistleblower protections by confirming that an employee’s disclosure that a FedEx customer was using FedEx services to engage in mail fraud was protected activity under SOX, as was the whistleblower’s reporting of the customer’s conduct to local law enforcement.
  • In Vannoy v. Celanese, ARB No. 09-118, ALJ No. 2008-SOX-064 (ARB September 28, 2011) the ARB “relieved whistleblowers from the heavy burden of proving their claims without using any of the employer’s confidential information,” whereas previously, Oswald noted, “whistleblowers could be subject to serious penalties for doing so.”
  • In Menendez v. Halliburton, ARB Nos. 09-002, 09-003, ALJ No. 2007-SOX-005 (ARB September 13, 2011) the “ARB affirmed that whistleblowers are protected under SOX even when they are mistaken about the nature of their complaints” and held that an employer’s disclosure of the whistleblower’s identity constitutes an adverse employment action.
  • In Johnson v. Siemens Bldg. Techs, Inc., ARB No. 08-032, ALJ No. 2005-SOX-015 (ARB March 31, 2011) the ARB “declared that whistleblowers may seek SOX’s protections from non-publically traded subsidiaries of publically traded companies.”
  • Finally, in Villanueva v. Core Laboratories, ARB No. 09-108, ALJ No. 2009-SOX-006 (ARB December 22, 2011) the ARB “found that SOX can protect disclosures of violations of United States law by foreign whistleblowers who work for foreign branches or subsidiaries of United States companies”.  In the article, Mr. Oswald noted that, “as a result” of this decision, “even complaints to foreign compliance offices should be taken seriously and investigated when the violation claimed refers to U.S. law” because “foreign offices or subsidiaries can still violate U.S.s securities laws and resolutions.”

In addition to ARB decisions expanding whistleblower protections, 2011 also saw “the Consumer Financial Protection Bureau extend whistleblower protections to new industries pursuant to the Dodd Frank Act of 2010 – most recently payday lenders, student loan companies and mortgage finance companies”.

With this expansion of whistleblower protection, according to Oswald, “the ARB’s influence over the scope and contours of whistleblower protection, articulated in its precedents in 2011, will be felt for years to come by employers in areas of the US economy that may have had few, if any, whistleblower protections before.”

The article, entitled “More Protection for Whistleblowers”, was published in the April 25, 2012 edition of the Sarbanes-Oxley Compliance Journal and was also syndicated in Compliance Daily, as well as Governance, Risk Management & Compliance Daily.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

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R. Scott Oswald, Managing Principal of The Employment Law Group®, Serves as Panelist in D.C. Bar Sponsored Whistleblower Law Seminar

R. Scott Oswald, managing principal of The Employment Law Group® law firm will serve as a panelist in an upcoming presentation to the District of Columbia Bar on April 18, 2012.

In the seminar – “Recent Developments in Whistleblower Rules: Opportunities and Risks” – Mr. Oswald will speak as part of a panel comprised of government whistleblower enforcement officials and private practitioners including:

  • Carolyn Hahn, Consumer Financial Protection Bureau (CFPB)
  • Vincent Martinez, U.S. Commodity Futures Trading Commission (CFTC)
  • Larry Ellsworth, Jenner & Block
  • Thomas Willcox, Law Offices of Thomas C. Willcox
  • Michael G. McLellan, Finkelstein Thompson LLP (Moderator)

The seminar will focus on recent developments in federal whistleblower law and regulations in the areas of whistleblower protection, enforcement actions, and monetary awards for whistleblowers.  Additionally, the panelists will discuss the opportunities and risks provided by these developments and will provide guidance to practitioners in the field of whistleblower law.

The program is being held at Weil, Gotshal & Manges LLP in Washington, D.C. from 6:00 to 8:00pm.  The D.C. Bar’s Antitrust and Consumer Law Section is sponsoring the event, in conjunction with the Administrative Law and Agency Practice Section, the Corporation, Finance and Securities Law Section, the Litigation Section, the Taxation Section, and the Tort Law Section.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation.

 

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Managing Principal of The Employment Law Group®, R. Scott Oswald, Discusses the Importance of “Robust and Responsive Internal Compliance Programs” with Workforce Management Magazine

R. Scott Oswald, managing principal of The Employment Law Group®, was recently interviewed and quoted by Workforce Management Magazine on the subject of expanded whistleblower protection under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In 2010, Dodd-Frank amended the Sarbanes-Oxley Act (SOX) and expanded whistleblower protections to include “nationally recognized statistical rating organizations” which include credit rating agencies.  Additionally, the new laws provide various financial incentives for whistleblowers who report fraud and provide protection for whistleblowers against employer retaliation.

Commenting on these expanded protections for whistleblowers, Mr. Oswald told Workforce Management Magazine, that it is necessary for employers to have a “robust and responsive internal compliance program” to ensure that employers do not violate the laws designed to protect workers who report fraudulent or illegal practices.

Additionally, Mr. Oswald notes that “employees don’t want to become whistleblowers,” rather they typically “have families to support and careers to maintain” but come forward in order to protect themselves from retaliation by their employers.

The article, “Whistling While You Work”, appeared in the April 1, 2012 edition of Workforce Management Magazine.

The Employment Law Group® law firm has a nationwide whistleblower practice representing employees who have been the victims of retaliation.

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