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FREQUENTLY ASKED QUESTIONS |
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ACTIVE ORPHAN PRENEED CONTRACTS
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ORPHAN CONTRACTS
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OVERVIEW
The Receivership Court issued an Order on June 1, 2010 addressing the handling of NPS Preneed contracts which are not associated with or backed by a Lincoln or Memorial Service annuity or insurance policy. These contracts are often referred to as “Orphan Contracts.” The application addressed in particular the handling of contract payments received since the date of liquidation, September 22, 2008. A copy of the Application and Order are posted to the estate website under the "Legal Docs" tab.
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CURRENT STATUS
There are approximately 5400 orphan contracts, the majority of which are paid in full. However, approximately 600 are currently in a paying status. All orphan contract payments made to NPS or the receivership estate since the Liquidation Date of September 22, 2008 have been secured in a separate bank account and are not used in the administration of the receivership estates.
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SUMMARY
The approved application provides:That Orphan Contract holders will be deemed to have timely filed a POC in the NPS receivership estate, That all contract payments made on or after Liquidation date of 9/22/2008 will be deemed secured claims,Authorizes the SDR to use the secured funds to pay funeral service providers the lesser of the contract benefits or the amount paid post liquidation upon the death of a orphan contract holder, Affords an orphan contract owner the option to request a return of payments made post liquidation in lieu of receiving contract benefit payments at death and apply interest earned by the secured funds to each orphan contract. All refund requests would require review/approval by the office of the SDR prior to issuing a refund. Any refund approved by the SDR would include payments made from 9/22/2008 forward plus interest accrued thru end of the month preceding the date of refund request.
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Q. How do I know if I have an “orphan contract”?
Contact the SDR office at 1-800-334-3851 to verify contract status.
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Q. What has happened to the money I have paid since NPS went into receivership?
All orphan contract payments received post receivership (9/22/2008 and after) are segregated in a separate bank account.
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Q. What happens to the money I paid in if I get coverage by the insurance guaranty association of my state?
If the affected IGA affords coverage, the funds paid from 9/22/2008 forward will be transferred to the IGA.
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Q. What happens to my money if I never get IGA coverage?
The application affords the orphan contract holder two options. The consumer may take no action and all payments made after 9/22/2008 plus interest accrued on those funds will be paid to the funeral service provider in accordance with the terms of the contract at the time of need. (see application section 4.1.4(b)) Alternatively, the consumer may request a refund of payments made post liquidation (9/22/2008) and upon approval of the SDR and receivership court the consumer will receive all payments made since 9/22/2008 plus interest that has accrued on those funds. Upon payment, the preneed contract would be terminated and no further benefits available from the estate or IGA.
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Q. What do I need to do to get a refund?
Orphan contract holders have been provided forms and instructions on how to request a refund of post liquidation payments and interest. Contact the SDR's office for any additional forms or to check the status of a refund request.
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Q. What happens to my contract if I elect to receive a refund?
Your preneed funeral contract is terminated and there is no further obligation to any funeral service provider upon the death of the contract owner.
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Q. Most of my contract was paid for before receivership or my contract was paid in full before receivership (9/22/2008). How do I get my money back?
NPS is insolvent and there are no funds available to refund pre liquidation payments. This application provides that you will automatically have a timely filed POC in the NPS receivership estate. Claims for pre liquidation payments are Class 5 claims. It is not known at this time if there will be sufficient assets to make a distribution to any particular class of claimants.
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Q. What about death claims for orphan contract owners?
For death claims that occur prior to liquidation date of 9/22/2008, the funeral service providers, next of kin or contract assignees may file a claim against the NPS estate for any preneed funeral contract benefits. Such claims will be treated as Class 5 creditor claims. A funeral service provider must file a POC to protect any rights they have relating to orphan contracts. For claims that occur after the liquidation date of 9/22/2008, the SDR is authorized to use the secured funds to pay funeral service providers the lesser of the contract benefits or the amount paid post liquidation.
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GENERAL
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Q. What Companies are involved in the Liquidation?
Lincoln Memorial Life Insurance Company ("Lincoln Memorial") is a Texas domiciled life insurance company licensed in 44 states.Memorial Service Life Insurance Company ("Memorial Service") is a stipulated premium life insurance company licensed only in Texas.National Prearranged Services, Inc. ("NPS") is a Missouri corporation affiliated with Memorial Service and Lincoln Memorial. NPS sold preneed funeral contracts.
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Q. What is the current Status of the Companies?
The Texas Department of Insurance (“TDI”) placed Lincoln Memorial Life Insurance Company (“Lincoln Memorial”), Memorial Service Life Insurance Company (“Memorial Service”), and National Prearranged Services, Inc. ("NPS") (collectively, the "Companies") into receivership for rehabilitation under Chapter 443 of the Texas Insurance Code. The Travis County District Court issued an Agreed Order Appointing Rehabilitator and Permanent Injunction ("Agreed Order") on May 14, 2008. Representatives of the Companies consented to the receivership and signed the Agreed Order. On September 22, 2008, the companies were determined to be insolvent and the court signed an Order Appointing Liquidator, Order Approving Liquidation Plan and Permanent Injunction (“Liquidation Order”), placing the Companies in Liquidation and approving a Liquidation Plan (“Liquidation Plan”) between the SDR and the National Organization of Life and Health Insurance Guaranty Associations (“NOLHGA”). On October 23, 2008, the Liquidation Order became final and the Liquidation Plan went into effect and the respective state guaranty associations began paying covered obligations of Lincoln and Memorial Service. There is no guaranty association coverage for NPS.On July 1, 2011, Investors Heritage Life Insurance Company assumed the Texas Guaranty Association's remaining Memorial Service Life covered obligations. The NPS preneed contracts associated with the Memorial polices were assigned to Investors Heritage Life. All premium collection and claims on or after 7/1/2011 are the responsibility of Investors Heritage. Contact Information is available on the “Home” page of this website. This web page will be updated as new information becomes available.
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Q. Who is in charge of Lincoln, Memorial and NPS?
On May 14, 2008, Memorial, Lincoln and NPS consented to be placed in receivership by a Texas court by signing an Agreed Order for Rehabilitation ("Agreed Order"). The Commissioner of Insurance for the State of Texas was named Rehabilitator ("Rehabilitator") for the companies, and has now been named as Liquidator (“Liquidator”) for the Companies. The Liquidator has taken over all the powers of the Companies' directors, officers and managers.Donna J. Garrett was appointed as the Special Deputy Receiver ("SDR") to administer all three Companies. On December 1, 2011, Ms. Garrett retired, and Jo Ann Howard & Associates, P.C. was appointed as SDR.
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Q. Can Lincoln or Memorial accept Applications for New Insurance Policies?
No. The Companies are not accepting applications. The Companies stopped issuing new policies effective March 17, 2008. The SDR has authority to collect payments due on existing business.
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Q. What is the effect of the Order Appointing Liquidator, Order Approving Liquidation Plan and Permanent Injunction (“Liquidation Order”)?
The Liquidation Order states that the Companies are insolvent, and appoints the Commissioner of Insurance as Liquidator for the Companies. This means that all assets of the Companies will be liquidated under a Plan approved by the court, and used to pay liabilities according to the priorities set out in Tex. Ins. Code § 443.301. Under the court approved Liquidation Plan, individual state guaranty associations will pay the original death benefit for life insurance policies issued by Memorial or Lincoln, ignoring any policy loans, assignments, conversions, and other insurance policy transactions not authorized by the consumer that may have taken place. Payment will be to the funeral home or other burial service providers when burial services are provided. Effective 7/1/2011 the covered obligations of Memorial Service were assumed by Investors Heritage Life Insurance Company.Obligations in preneed contracts that are not funded by an insurance policy (such as cost of living or inflation growth adjustments) will not be paid under the Plan because insurance guaranty associations are prevented by their laws from paying non-insurance obligations.
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Q. What is the best way to receive continuing updates or to find out more information?
Consumers and funeral homes monitoring the situation should do so through the appropriate regulatory entities, since information from other sources may be unreliable or inaccurate.Information and copies of relevant Texas court documents are available on this website. Inquires may be sent by email to info@LincolnMemorialLife.com.The SDR may be contacted by phone at 1-800-334-3851.
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Q. What kind of action will the SDR take against individuals who contributed to this situation?
The SDR, in conjunction with NOLHGA (the National Organization of Life Health Guaranty Associations) filed a Racketeering lawsuit in federal district court in St. Louis Missouri against a number of individuals and entities responsible for the insolvency of the companies. In addition, the SDR has cooperated with and responded to requests for information and documents from state and federal investigators. A federal grand jury in St. Louis indicted Doug and Brent Cassity, along with others, for violations of federal statutes relating to mail, wire and insurance fraud. A link to the SDR’s federal court lawsuit and the federal indictments is available under the “Legal Document” tab.
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Q. How to file a Fraud Report or Complaint?
Contact information for each state insurance department is provided under the “Links” section of this website.Texas Insurance Fraud Toll-Free Hotline - 1-800-252-3439Online Fraud Reporting for Insurance Companies - http://www.tdi.texas.gov/fraud/frsiufrrpt.htmlOnline Fraud Reporting for Consumers - http://www.tdi.texas.gov/fraud/onlinereport.htmlYou may e-mail, mail, or fax your complaint along with copies of your supporting documents toTexas Department of InsuranceConsumer Protection Program (MC 111-1A)P.O. Box 149091Austin, TX 78714-9091Fax: 512-475-1771E-mail: ConsumerProtection@tdi.texas.gov
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HOW TO CONTACT US
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Q. Mailing Address for General Correspondence of Lincoln or NPS
Please send mail to:Jo Ann Howard & Associates, P.C., Special Deputy ReceiverP.O. Box 160050Austin, TX 78716
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Q. Mailing Address for Coupon, Premium or Contract Payments
Lincoln Memorial Life Insurance Company, P.O. Box 660548, Dallas, TX 75266.National Prearranged Services, Inc., P.O. Box 660767, Dallas, TX 75266.Memorial Service Life Insurance Company – covered obligations were assumed 7/1/2011 by Investors Heritage. Please direct all questions about a Memorial Service Life policy or the related NPS prepaid funeral benefit contract to: Investors Heritage Life Insurance CompanyPO Box 717Frankfort, Kentucky 40602Phone: (800) 422-2011Fax: (502) 875-7084
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Q. Fax for Lincoln and NPS
(512) 328-0072(512) 329-7167(512) 329-7165(512) 329-7174
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Q. Email for Lincoln and NPS
You may send email inquires to info@lincolnmemoriallife.com
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Q. Phone for Lincoln and NPS
Toll Free at 1-800-334-3851 or (512) 328-0075Please note that call volume is frequently very high. We appreciate your patience. Please know that our staff is working diligently to assist you with your questions.
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Q. Missouri Insurance Guaranty Association
Phone: 1-800-769-6320 or visit their website at http://www.mo-iga.org
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CONTRACT / INSURANCE POLICYHOLDERS
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Q. What effect does the Liquidation Order and Liquidation Plan have on preneed contracts, insurance policies and claims?
Consumers with preneed contractual obligations should continue to honor their obligations under the agreement. This means that if a consumer has an NPS contract or a Lincoln or Memorial Service insurance policy that requires periodic payments, the consumer should continue to make those payments in order to keep the contract or insurance policy in force and to ensure that any insurance policy is covered under the Plan. Consumers with paid-up NPS contracts or policies do not need to do anything. Funeral providers should not expect to receive additional non-insurance policy compensation in the form of contract growth payment from NPS under preneed contracts or other arrangements. Effective 7/1/2011 the covered obligations of Memorial Service were assumed by Investors Heritage Life Insurance Company. Contact information is available on the "Home" page.
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Q. If Lincoln Memorial or Memorial Service provides insurance coverage that secures preneed funeral contracts, is the coverage in jeopardy?
No, that insurance coverage is not in jeopardy. Under the Plan, the individual state guaranty associations will pay for policy obligations, according to the terms of the Plan, provided that the insurance policy is still in effect.If the preneed contract or insurance policy requires continuing payments, then consumers should continue making these payments (and bring any late payments current), otherwise their insurance coverage could be cancelled. Effective 7/1/2011 the Memorial Service covered obligations were assumed by Investors Heritage. Refer to the “Home” page for contact information.
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Q. Is a Funeral Provider still required to honor the preneed contract?
Yes. Neither the Agreed Order placing these companies into receivership nor the Liquidation Order alters the obligations that funeral homes have to consumers. Although inflation or growth payments under the NPS contracts will not be paid under the liquidation plan, funeral homes are still obligated to honor the preneed burial contracts at the time of need. In Texas, the funeral home still has a contractual liability to honor the preneed funeral contract by furnishing the described benefits specified in the contract, or provide their equivalent in quality, for the contract price as promised.
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Q. What should I do if a Funeral Provider is refusing to honor a preneed contract?
If a funeral provider is refusing to honor a preneed contract, you should contact the SDR and the preneed regulator in your state. In Texas, contact the Texas Department of Banking at (512) 475-1285 or toll-free at (877) 276-555.
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Q. What if I need policyholder services such as:
Change of addressChange beneficiaryChange funeral providerPaid in Full CertificateChange billing date or change bank.Copy of prearranged funeral agreement or preneed contract.All requests must be in writing. Please send request to:Lincoln/NPSAttn: Claims DepartmentP.O. Box 160050Austin, Texas 78716 Effective 7/1/2011 the Memorial Service covered obligations were assumed by Investors Heritage. Refer to the “Home” page for contact information.
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Q. What if I want to cancel my insurance policy or preneed contract?
Requests to cancel your policy or contract must be received in writing. Whether you receive a return of monies will be subject to the coverage provided by the Insurance Guaranty Association, the terms of your policy or contract and in accordance with the Liquidation Plan.Please mail your request to:Lincoln/NPSAttn: Claims DepartmentP.O. Box 160050Austin, Texas 78716 Effective 7/1/2011 the Memorial Service covered obligations were assumed by Investors Heritage. Refer to the “Home” page for contact information.
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Q. Do I need to continue making my premium payments?
The Insurance Guaranty Associations have assumed the responsibilities for the in-force policies of the insolvent life insurance companies. In order to receive benefits from the Insurance Guaranty Associations, premiums must continue to be paid to keep the coverage in-force. Effective 7/1/2011 the Memorial Service covered obligations were assumed by Investors Heritage. Refer to the “Home” page for contact information.
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FUNERAL PROVIDERS
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Q. Is a Funeral Provider still required to honor the Preneed Contract?
Yes. Neither the Agreed Order placing these companies into receivership nor the Liquidation Order alters the obligations that funeral homes have to consumers. Although inflation or growth payments under the NPS contracts will not be paid under the liquidation plan, funeral homes are still obligated to honor the preneed burial contracts at the time of need. In Texas, the funeral home still has a contractual liability to honor the preneed funeral contract by furnishing the described benefits specified in the contract, or provide their equivalent in quality, for the contract price as promised.
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Q. What if I need a Funeral Home Report?
Due to the insolvency of the companies, we are not able to provide this data.
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Q. What is the death claims approval process?
This is a multistep claims approval process required by the Order Approving the Liquidation Plan. Payment is also, to some extent, dependent on the response time from the Funeral Home. In summary, the steps for claims processing are:1) Claims are submitted to the Special Deputy Receiver, the servicing agent for the guaranty associations, verified as complete and processed by the claims staff in compliance withthe Liquidation Plan.2) The processed claims are then submitted to the applicable Insurance Guaranty Association for approval.3) The Insurance Guaranty Association notifies the servicing agent that the claim is approved.4) The servicing agent then sends notice of the claim approval and forms to the Funeral Home either by fax, email or mail. 5) Upon receipt of the fully executed and completed forms from a funeral home, the servicing agent sends a funding request to the applicable state Insurance Guaranty Association.6) The applicable state Insurance Guaranty Association funds payment of the claim by transferring money to the servicing agent's Claims Account.7) The servicing agent will then issue a check and mail it out.
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Q. Do Funeral Homes have to submit a W-9 with each death claim filed?
No, only one W-9 per Payee per Calendar Year is required. The Special Deputy Receiver will track receipt of the W-9 and not require additional forms with each claim. However, it is possible that a Funeral Home with multiple claims may receive a duplicate request. In that event, the Funeral Home can fill it out again or simply refer to the previously submitted form.
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Q. Can electronic payments be made directly to the Funeral Home’s bank account?
We are unable to make electronic payments. Electronic transfer is not available at this time.
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INSURANCE POLICY / PREMIUM PAYMENTS
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Q. Is there any change to the process for making regular payments due on a contract or insurance policy?
There is no change to automatic electronic funds transfer (EFT) or bank draft payments through your bank. Mail coupon and premium payments to:Lincoln Memorial Life Insurance Company, P.O. Box 660548, Dallas, TX 75266National Prearranged Services, Inc., P.O. Box 660767, Dallas, TX 75266Memorial Service Life - Effective 7/1/2011 the covered obligations of Memorial Service were assumed by Investors Heritage Life Insurance Company. Mail Memorial Service coupon payments to: Investor Heritage Life Insurance Co. P. O. Box 2013 200 Capital Ave Frankfort, KY 40602
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Q. What if I need assistance with billing?
For assistance with Lincoln or NPS billing questions or change request please contact our billing department toll free at 1-800-334-3851 or (512) 328-0075 during business hours of 8:30 am to 5:00 pm central time.
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DEATH CLAIMS
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Q. Is there any change to the process for submission of death claims?
Yes. In general, Lincoln claims should still be submitted to the SDR, with the documents required. Please note the filing requirements and new fax number below. Memorial Service claims on or after 7/1/2011 should be submitted to the assuming carrier Investors Heritage Life Insurance Company. Contact information is available on the “Home" page.For Lincoln claims the state insurance guaranty associations require the following documents to complete your submission: • Copy of the Death Certificate • Verified Statement of Performance • Itemized Funeral Home Bill for merchandise and services• “Next of Kin/Personal Representative Release, Subrogation and Assignment Form” (signed by the next of kin or personalrepresentative of the decedent when the funeral arrangements are made)• Seller’s Affidavit of Contract Performance (AR only) In addition to the above documents, assignment forms will need to be completed by the provider of services in order for claims to be paid. If the provider of services assigned its rights to a third party (for example a “funding” company), the third party must also sign an assignment form. You will receive the assignment forms and instructions to complete them after the claim is approved for payment.
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Q. Where should Death Claims be filed?
Lincoln claims may be submittedBY MAIL : Claims DepartmentP O Box 160050Austin, TX 78716BY FAX : Claims Department (512) 328-0072(512) 329-7165(512) 329-7179(512) 329-7167BY EMAIL: Claims@lincolnmemoriallife.comMemorial Service claims on or after 7/1/2011 should be submitted to the assuming carrier: Investor Heritage Life Insurance Co.P. O. Box 717 200 Capital AveFrankfort, KY 40602
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PROOF OF CLAIMS
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What is a Proof of Claim?
A Proof of Claim (POC) is a form for submitting a claim against the assets of a receivership estate. There are three estates, Lincoln Memorial Life, Memorial Service Life and National Prearranged Services. Each company is a separate and distinct entity. A POC may be filed against any one or more of the three companies by checking the appropriate box on the POC form.
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What is the status of my Proof of Claim?
Proof of Claim forms received by this office are logged and assigned a POC number. Once it has been determined that there are sufficient assets with which to make a distribution, the SDR will adjudicate your Proof of Claim and determine the approved amount. If additional information is needed to process the claim, our office will contact the claimant to request the information. After all Proof of Claims have been processed and an approved claim amount is established, the SDR will calculate the anticipated pro-rata distribution. After the distribution is calculated the SDR will seek court approval to distribute assets to approved claimants. Notice of the application for approval to pay claims will be posted on the estates' website. A POC is deemed to have been filed in the receivership estates for orphan contracts and CA Insurance Guarantee Association deductible claims.It cannot yet be predicted when or how much money will be available to pay estate claims. Claimants will receive written notice of the final disposition of their Proof of Claim.
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