Pennsylvania 2025-2026 Regular Session

Pennsylvania House Bill HB1460 Latest Draft

Bill / Introduced Version

                             
PRINTER'S NO. 1696 
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL 
No.1460 
Session of 
2025 
INTRODUCED BY BOROWSKI, TAKAC, KHAN, BOYD, O'MARA, KRUEGER, 
CURRY, KAZEEM, DELLOSO, YOUNG, HILL-EVANS, GIRAL, FIEDLER, 
SANCHEZ, FREEMAN, PROBST, HOHENSTEIN, DONAHUE, SCHLOSSBERG, 
PROKOPIAK, CEPEDA-FREYTIZ, CERRATO, WAXMAN, DALEY, CIRESI, 
KENYATTA, FRANKEL AND GREEN, MAY 13, 2025 
REFERRED TO COMMITTEE ON HEALTH, MAY 13, 2025 
AN ACT
Providing for approval from the Department of Health and the 
Office of Attorney General before certain transactions 
involving health care entities within this Commonwealth.
TABLE OF CONTENTS
Chapter 1.  Preliminary Provisions
Section 101.  Short title.
Section 102.  Definitions.
Chapter 3.  Covered Health Care Transactions
Section 301.  Transaction against public interest.
Section 302.  Filing of transactions.
Section 303.  Public input.
Section 304.  Determination and restraining prohibited 
transactions.
Section 305.  Compliance and power of court.
Section 306.  Powers and duties of Attorney General.
Section 307.  Powers and duties of department.
Section 308.  Confidential treatment.
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17 Chapter 10.  Miscellaneous Provisions
Section 1001.  Construction.
Section 1002.  Effective date.
The General Assembly of the Commonwealth of Pennsylvania 
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101.  Short title.
This act shall be known and may be cited as the Health System 
Protection Act.
Section 102.  Definitions.
The following words and phrases when used in this act shall 
have the meanings given to them in this section unless the 
context clearly indicates otherwise:
"Affected community."  A county within this Commonwealth 
where an existing health care facility is physically located or 
a county whose residents are regularly served by the existing 
health care facility.
"Affiliate."  A person that directly or indirectly, through 
one or more intermediaries, controls or is controlled by, or is 
under common control with, the person specified.
"Against the public interest."  A covered transaction that, 
as determined by the Attorney General, results in any of the 
following:
(1)  A significant reduction in competition or a 
significant increase in costs for health care payers, 
purchasers or consumers.
(2)  An unfair method of competition in or affecting 
health care commerce or an unfair or deceptive act or 
practice in or affecting health care commerce.
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30 (3)  A significant reduction in the quality of care.
(4)  A significant reduction in access to or availability 
of health care services for payers, purchasers or consumers.
(5)  A significant reduction in access to care in a 
rural, low-income or disadvantaged community.
(6)  A health care leaseback agreement.
"Attorney General."  The Office of Attorney General of the 
Commonwealth.
"Capital distribution."  A payment made, liability incurred 
or other consideration given by a health care entity to a person 
for the purchase, acquisition, redemption, repurchase, payment 
or retirement of capital stock or other equity interest of the 
health care entity or as a dividend, return of capital or other 
distribution in respect of the health care entity's capital 
stock or other equity interest.
"Control," "controlled by" or "under common control with." 
As follows:
(1)  The possession, direct or indirect, of the power to 
direct or cause the direction of the management and policies 
of a person, whether through the ownership of voting 
securities, by contract other than a commercial contract for 
goods or nonmanagement services or otherwise, unless the 
power is the result of an official position with or corporate 
office held by the person. Control shall be presumed to exist 
if a person, directly or indirectly:
(i)  owns more than 10% of a person; or
(ii)  controls, holds with the power to vote or holds 
proxies representing 10% or more of the votes that all 
shareholders or members would be entitled to cast in the 
election of directors or managers.
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30 (2)  The presumption under paragraph (1) may be rebutted 
by a showing that control does not exist in fact. The 
Attorney General may determine, after furnishing all persons 
in interest notice and opportunity to be heard and making 
specific findings of fact to support the determination, that 
control exists in fact, notwithstanding the absence of a 
presumption to that effect or that another person has 
control.
"Covered entity."  Includes:
(1)  A for-profit entity or an affiliate of a for-profit 
entity that owns, operates or controls or seeks to own, 
operate or control a health care entity.
(2)  An investor or group of investors who primarily 
engage in the raising or returning of capital and who invest, 
develop or dispose of specified assets, a private equity 
company, a private equity fund or a real estate investment 
trust or affiliate.
"Covered transaction."  A transaction or a series of 
transactions involving at least one health care entity and one 
covered entity, and includes any of the following:
(1)  The sale, transfer, lease or other encumbrance of a 
material amount of a health care entity's assets, including 
real property, employment groups, emergency departments or 
other units.
(2)  A change in control of a health care entity.
(3)  A capital distribution or similar reduction of a 
health care entity's equity capital by a material amount or 
the incursion of an obligation that commits the health care 
entity to making a capital distribution or similar reduction 
of equity by a material amount.
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30 "Department."  The Department of Health of the Commonwealth.
"Health care entity."  The term includes:
(1)  A person that directs, or through an affiliate 
directs, control of one or more health care facilities.
(2)  A practitioner organization, representing eight or 
more health care practitioners, valued at or above a material 
amount.
"Health care facility."  The term shall have the same meaning 
as in section 802.1 of the act of July 1, 1979 (P.L.130, No.48), 
known as the Health Care Facilities Act.
"Health care leaseback agreement."  A transaction whereby a 
person sells, transfers, leases or otherwise encumbers a 
material amount of the assets or real property of a health care 
entity and enters into an agreement with another person to lease 
back the same assets or real property.
"Health care practitioner."  The term shall have the same 
meaning as in section 103 of the Health Care Facilities Act.
"Material amount."  An amount equal to $5,000,000 or more.
"Practitioner organization."  A person, other than a health 
care facility, which is in the business of health care delivery 
or management and that represents health care practitioners in 
contracting with carriers or third-party administrators for the 
payment of health care services.
"Private equity company."  A nonpublicly traded entity that 
collects capital investments from individuals or entities.
"Private equity fund."  An entity that directly, or through 
an affiliate, acts as a control person and is any of the 
following:
(1)  A person considered an investment company under 15 
U.S.C. § 80a-3 (relating to definition of investment 
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30 company), except for the application of 15 U.S.C. § 80a-3(c)
(1) and (7).
(2)  A venture capital fund as defined in 17 CFR 
275.203(l)-1 (relating to venture capital fund defined).
(3)  A sovereign wealth fund.
"Professional licensing board."  A professional licensing 
board within the Bureau of Professional and Occupational Affairs 
of the Department of State.
"Real estate investment trust."  The term shall have the same 
meaning as in 26 U.S.C. § 856 (relating to definition of real 
estate investment trust).
CHAPTER 3
COVERED HEALTH CARE TRANSACTIONS
Section 301.  Transactions against public interest.
(a)  General rule.--Except as provided under subsection (b), 
a person may not enter into a covered transaction that is 
against the public interest.
(b)  Exception.--An action prohibited under subsection (a) 
may be permitted when, as determined by the Attorney General, 
there is no feasible alternative to prevent a health care 
entity's closure or a greater loss of health care services.
Section 302.  Filing of transactions.
(a)  Duties of health care entity.--Prior to entering into a 
covered transaction, a health care entity shall complete one of 
the following:
(1)  file a notification in accordance with subsection 
(b) and observe the waiting period under subsection (c); or
(2)  obtain a written determination from the Attorney 
General that the covered transaction is not against the 
public interest.
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30 (b)  Notice.--Notification of a covered transaction shall be 
submitted to the Attorney General and the department on a form 
and in a manner developed by the Attorney General. The 
notification shall include all of the following, as applicable:
(1)  All organic documents, including articles of 
incorporation, bylaws, operating agreements and other 
documents related to governance and ownership of each party.
(2)  All complete transaction documents with attachments, 
including collateral or ancillary agreements involving 
officers, directors or employees.
(3)  All documents signed by the principals, or the 
principal's agents, that are necessary to determine the 
proposed transaction's effect, if any, on affiliates, whether 
nonprofit or for profit.
(4)  Any of the following that comprise part or all of 
the transaction:
(i)  Asset contribution agreements.
(ii)  Operating agreements.
(iii)  Management contracts.
(5)  All information necessary to evaluate the effects of 
the transaction on each component of an integrated delivery 
system if that transaction involves a hospital, including any 
changes in contracts between the integrated delivery system 
entities and related physician groups.
(6)  All financial documents of the transaction parties 
and related entities, if applicable, including audited 
financial statements, ownership records, business projection 
data, current capital asset valuation data and any records 
upon which future earnings, existing asset values and fair 
market value analysis can be based.
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30 (7)  All fairness opinions and independent valuation 
reports of the assets and liabilities of the parties, 
prepared on the parties' behalf.
(8)  A list of all donor restricted assets, together with 
origination documents and current fund balances.
(9)  All relevant contracts that may affect value, 
including business contracts and employee contracts, such as 
buy-out provisions, profit-sharing agreements and severance 
packages.
(10)  All information and representations disclosing 
related party transactions that are necessary to assess 
whether the transaction is at arm's length or involves self-
dealing.
(11)  All documents relating to noncash elements of the 
transaction, including pertinent valuations of security for 
loans and stock restrictions.
(12)  All tax-related information, including the 
existence of tax-free debt subject to redemption and 
disqualified person transactions yielding tax liability.
(13)  A list of ongoing litigation, including full court 
captions, involving the transaction parties or the 
transaction parties' related entities, that may affect the 
interests of the parties.
(14)  All information in the possession of the 
transacting parties relative to the perspective of the health 
care entity's patient base and communities served, or their 
representatives.
(15)  All information, including internal and external 
reports and studies, bearing on the effect of the proposed 
transaction on the availability or accessibility of health 
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30 care in the affected community.
(16)  A complete list of all insurance plans under 
contract and the policies' expiration dates.
(17)  Organizational charts of the parties to the 
transaction, as they exist both preconsummation and 
postconsummation of the transaction, detailing the 
relationship between the principal parties, including any 
subsidiary.
(18)  All additional documents that the Attorney General 
deems necessary for review purposes.
(c)  Waiting period.--Prior to entering into a covered 
transaction, a health care entity shall undergo a 90-day waiting 
period, which shall begin on the date the Attorney General 
receives the notification required under subsection (b). Within 
two business days, the Attorney General shall confirm receipt of 
the notification with the health care entity that submitted the 
notification. Upon the expiration of the waiting period provided 
for under this subsection, and any extension of a waiting period 
under subsection (d), the covered transaction may proceed unless 
the Attorney General determines the covered transaction is 
against the public interest.
(d)  Additional information and waiting period extensions.--
(1)  The Attorney General may, no later than 30 days 
prior to the expiration of the waiting period under 
subsection (c), require the submission of additional 
information or documentary material from a person who is a 
party to the proposed covered transaction for which a 
notification was filed under subsection (b) or from any 
officer, director, partner, agent or employee of the person.
(2)  The Attorney General may, in its discretion, extend 
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30 the waiting period under subsection (c) for an additional 30 
days for a covered transaction after the date on which the 
Attorney General receives either of the following from a 
person to whom a request is made under paragraph (1):
(i)  all of the additional information and 
documentary material requested; or
(ii)  if the request is not fully complied with, the 
information and documentary material submitted and a 
statement of the reasons for the noncompliance.
(3)  Additional extensions of the waiting period beyond 
what is required under subsection (b) must be granted by a 
court in accordance with section 305.
Section 303.  Public input.
(a)  Public hearing.--Prior to the expiration of the 
respective waiting period under section 302(c), along with any 
extension granted under section 302(d), the Attorney General may 
conduct one or more public hearings on the proposed covered 
transaction.
(b)  Accessibility.--
(1)  A public hearing required under subsection (a) shall 
be live-streamed on the Attorney General's publicly 
accessible Internet website.
(2)  A video recording of the public hearing shall be 
posted on the Attorney General's publicly accessible Internet 
website.
(c)  Specific entities.--If a covered transaction involves 
the acquisition of a health care facility, the Attorney General 
may hold a public hearing in any county in which the acquired 
entity is located to hear comments from interested parties. 
Interested parties shall include employees of the health care 
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30 entity, legal aid organizations, public officials and health 
advocacy organizations within a county in which the health care 
facility is located. The Attorney General may request testimony 
at a hearing from State agencies subject to section 306(d).
(d)  Notice.--At least 14 days before the date of the public 
hearing, the Attorney General shall provide written notice of 
the date, time and place of the public hearing:
(1)  On the Attorney General's publicly accessible 
Internet website.
(2)  Through social and broadcast media.
(3)  Through publication in one or more newspapers of 
general circulation in the affected community.
(4)  To the governing body of each county in which the 
health care entity is located.
(e)  Substantive changes to proposal.--If a substantive 
change in the covered transaction is submitted to the Attorney 
General after the initial public hearing, the Attorney General 
may conduct an additional public hearing to hear comments from 
interested parties with respect to the change.
Section 304.  Determination and restraining prohibited 
transactions.
(a)  Determination.--No later than the final date of 
expiration of the respective waiting period under section 
302(c), along with any extension granted under section 302(d), 
the Attorney General shall determine whether the covered 
transaction is likely to have an impact that is against the 
public interest.
(b)  Department review.--Prior to making a determination 
whether a covered transaction is against the public interest, 
the Attorney General shall consult and request feedback from the 
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30 department regarding the covered transaction's potential impact 
on the existing patient base and affected community.
(c)  Action.--If the Attorney General, in consultation with 
the department, determines that the proposed covered transaction 
is against the public interest under subsection (a), the 
Attorney General, on behalf of the Commonwealth, may:
(1)  commence an action in a court of competent 
jurisdiction to enjoin the covered transaction; or
(2)  enter into a voluntary agreement with the covered 
entity and the health care entity, which shall be filed with 
Commonwealth Court, that imposes conditions or otherwise 
mitigates the aspects that make the covered transaction 
against the public interest.
(d)  Monitoring.--
(1)  A voluntary agreement entered into under subsection 
(c) shall include an initial monitoring period of not more 
than five years. The monitoring period may be extended for 
additional periods of not more than five years at the 
discretion of the Attorney General.
(2)  The Attorney General shall consult with the 
department prior to setting the length of the initial 
monitoring period and any extension.
(3)  During the monitoring period, the Attorney General 
and the department shall monitor, evaluate and assess the 
covered entity and health care entity's compliance with the 
terms and conditions of the voluntary agreement.
(e)  Costs of monitoring.--
(1)  The covered entity shall pay for the costs of the 
Attorney General and the department's monitoring, evaluation 
and assessment of the covered entity and health care entity's 
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30 compliance with the terms and conditions of the voluntary 
agreement during a monitoring period established under 
subsection (d).
(2)  The Attorney General, in consultation with the 
department, shall determine the amount of the compliance 
monitoring cost under this subsection, which shall be paid by 
the covered entity and placed in an escrow account during the 
monitoring period.
(f)  Licensing.--A health care facility's license may not be 
revoked, denied, impeded or cited for noncompliance due solely 
to a filing or review under this chapter.
Section 305.  Compliance and power of court.
If a person substantially fails to comply with the 
notification requirement under section 302(a) or any request for 
the submission of additional information or documentary material 
under section 302(b) within the respective waiting period under 
302(c), along with any extension granted under section 302(d), 
the court may, in its discretion, do any or all of the 
following:
(1)  Order compliance.
(2)  Extend the waiting period until there has been 
substantial compliance.
(3)  Grant other equitable relief as the court determines 
necessary or appropriate.
Section 306.  Powers and duties of Attorney General.
(a)  Rules and regulations.--The Attorney General, in 
coordination with the department, shall issue rules and 
promulgate regulations as may be necessary to carry out and 
enforce this chapter. The department and the Attorney General 
shall ensure that the rules and regulations of the department 
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30 and the Attorney General are not in conflict.
(b)  Contracts.--
(1)  The Attorney General may do any of the following:
(i)  Contract with, share information with and 
consult and receive advice from any Federal agency or 
Commonwealth agency as the Attorney General deems 
appropriate to implement this chapter.
(ii)  At the Attorney General's sole discretion, 
contract with experts or consultants to assist in 
reviewing the proposed covered transaction.
(2)  The cost of a contract entered into under paragraph 
(1) must be an amount that is reasonable and necessary to 
conduct the review and evaluation and in accordance with the 
following:
(i)  A contract may be on a noncompetitive bid basis.
(ii)  Upon request, the Attorney General shall be 
paid promptly for all contract costs by the entities 
seeking approval or the covered transaction.
(3)  The Attorney General shall be entitled to 
reimbursement from the entities seeking consent for the 
covered transaction for all actual, reasonable and direct 
costs incurred in reviewing, evaluating and making a 
determination under section 304(a), including administrative 
costs. The entities seeking consent shall promptly pay the 
Attorney General, upon request, for the costs.
(4)  Notwithstanding the other provisions of this act, a 
covered transaction may not be completed unless an agreement 
has been executed between the Attorney General and the 
covered entity, the health care entity or both for the 
payment of costs in accordance with this subsection.
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30 (c)  Compliance.--If a covered entity or health care entity 
enters into a voluntary agreement with the Commonwealth under 
section 304(c)(2):
(1)  The Attorney General shall monitor, assess and 
evaluate a covered entity and health care entity to ensure 
compliance with the terms and conditions of the voluntary 
agreement for the duration of the monitoring period 
established under section 304(d).
(2)  The Attorney General may request documents and other 
information from a covered entity or a health care entity, or 
both, to monitor compliance with the terms of the voluntary 
agreement under section 304(c). Upon receiving a request from 
the department, a covered entity or health care entity shall 
comply with the request within 30 days.
(3)  If the Attorney General determines that the health 
care entity or covered entity has failed to comply with terms 
of the voluntary agreement, the Attorney General may seek 
immediate relief in Commonwealth Court to enforce the 
conditions of the voluntary agreement and may impose any 
penalties authorized by law or the terms of the voluntary 
agreement.
(d)  Agency cooperation.--
(1)  The department, the Department of Aging, the 
Department of Human Services and the Insurance Department 
shall assist the Attorney General in reviewing the proposed 
agreement and transaction, if requested, and shall comply 
with any request for testimony or information as may be 
necessary and appropriate for the Attorney General to review 
a proposed covered transaction.
(2)  The Attorney General shall comply with any request 
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30 for information from the Insurance Department as may be 
necessary and appropriate for the Insurance Department to 
concurrently review a proposed transaction under Article XIV 
of the act of May 17, 1921 (P.L.682, No.284), known as The 
Insurance Company Law of 1921. Documents provided by the 
Attorney General to the Insurance Department under this 
paragraph shall be treated as confidential and are exempt 
from public access under the act of February 14, 2008 (P.L. 
6, No.3), known as the Right-to-Know Law.
(3)  The Attorney General shall comply with any request 
for information from the department as may be necessary and 
appropriate to concurrently review a proposed transaction 
under the act of July 19, 1979 (P.L.140, No.48), known as the 
Health Care Facilities Act. Documents provided by the 
Attorney General to the department under this paragraph shall 
be treated as confidential and are exempt from public access 
under the Right-to-Know Law.
Section 307.  Powers and duties of department.
(a)  Rules and regulations.--The department, in coordination 
with the Attorney General, shall issues rules and promulgate 
regulations as may be necessary to carry out and enforce this 
chapter. The department and the Attorney General shall ensure 
that the rules and regulations of the department and the 
Attorney General are not in conflict.
(b)  Compliance.--If a health care facility or covered entity 
enters into a voluntary agreement with the Commonwealth under 
section 304(c):
(1)  The department shall monitor, assess and evaluate a 
health care facility and covered entity to ensure compliance 
with the terms and conditions of the voluntary agreement. If 
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30 the department determines the health care facility or covered 
entity has failed to comply with terms of the voluntary 
agreement, the department shall immediately notify the 
Attorney General of its findings.
(2)  The department may request documents and other 
information from a covered entity, a health care facility or 
both to monitor compliance with the terms of the voluntary 
agreement under section 304(c). Upon receiving a request from 
the department, a covered entity or health care facility 
shall comply with the request within 30 days.
(3)  The department shall be reimbursed from an escrow 
account established under section 304(e) for costs related to 
the ongoing monitoring, assessment and evaluation of a health 
care facility and covered entity's compliance with the terms 
and conditions of the voluntary agreement during the 
monitoring period.
Section 308.  Confidential treatment.
(a)  Confidentiality.--All information, documents, materials 
and copies thereof in the possession or control of the Attorney 
General or the department that are produced for, obtained by or 
disclosed to the Attorney General or the department in the 
course of a covered entity or health care entity complying with 
the requirements of section 302(b), 306(c) or (d) or 307(b) 
shall be privileged and given confidential treatment and shall 
not be:
(1)  Subject to discovery or admissible in evidence in a 
private civil action.
(2)  Subject to subpoena.
(3)  Subject to the act of February 14, 2008 (P.L.6, 
No.3), known as the Right-to-Know Law.
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30 (4)  Made public by the Attorney General, the department 
or any other person, except to regulatory or law enforcement 
officials of this Commonwealth or other jurisdictions or 
experts or consultants under contract with the Attorney 
General under section 306(b), without the prior written 
consent of the health care entity or covered entity to which 
it pertains, unless the Attorney General, after giving the 
health entity or covered entity that would be affected notice 
and opportunity to be heard, determines that the interest of 
the public is served by the publication, in which event it 
may publish all or any part in such manner as it may deem 
appropriate.
(b)  Testifying in a civil action.--The Attorney General, the 
department, any other Commonwealth agency or any individual or 
person, who receives documents, materials or other information, 
while acting under the authority of the Attorney General or the 
department, or with whom the documents, materials or other 
information are shared under this chapter, shall not be 
permitted or required to testify in any private civil action 
concerning any confidential documents, materials or information 
covered under this section.
CHAPTER 10
MISCELLANEOUS PROVISIONS
Section 1001.  Construction.
This act shall not be construed to:
(1)  Narrow, abrogate or otherwise alter the authority of 
the Attorney General to maintain competitive markets and 
prosecute or enforce violations of antitrust and unfair trade 
practices laws.
(2)  Narrow, abrogate or otherwise alter the authority of 
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change of ownership of or regulate a health care facility 
under the act of July 1, 1979 (P.L.130, No.48), known as the 
Health Care Facilities Act.
(3)  Narrow, abrogate or otherwise alter the authority of 
a professional licensing board to issue, suspend or revoke a 
health care practitioners license or regulate the practice of 
the health arts in this Commonwealth.
(4)  Prohibit a Federal agency, Commonwealth agency or 
other state agency from regulating a covered transaction or 
joining as party in an action seeking to enjoin a covered 
transaction, including the Insurance Department's 
jurisdiction to review an exposed transaction under Article 
XIV of the act of May 17, 1921 (P.L.682, No.284), known as 
The Insurance Company Law of 1921.
Section 1002.  Effective date.
This act shall take effect in 60 days.
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