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Revised Final Draft

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Benefit Accuracy Measurement
Employer Response Review

The Unemployment Insurance (UI) Benefit Accuracy Measurement (BAM) system provides the
basis for assessing the accuracy of UI payments. It is a diagnostic tool for the use of Federal and
State Workforce Agency (SWA) staff in identifying errors and their causes and in correcting and
tracking solutions to these problems. Representative samples of UI payments, and disqualifying
and ineligibility determinations, are drawn and examined intensively to determine whether they
were properly administered to claimants and whether these claimants were paid the proper
amounts, or appropriately denied. Based on the errors identified and information gathered, states
develop plans and implement corrective actions to ensure accurate administration of state law,
rules, and procedures.

Issue:

The BAM program, as part of its audit process, verifies employer provided information for
separation, base period wages, and other remuneration that may affect benefit payments or the
facts used for other determinations. Five factors contribute to the inaccuracy of employer
provided information: 1) state law variability for eligibility requirements (a difficulty for multi-
state employers), 2) the UI program requirement to make timely determinations of “payment
when due,” 3) the state law differences in response timeliness in order to preserve interested
party status, 4) the state law finality provisions involving determinations, and 5) the involvement
of third party agents, which includes their need to capture the evidentiary facts from the
employer they represent and their presentation of that information to the SWA for a payment
determination. The BAM audit process faces challenges in the recapture of employer information
needed to verify the accuracy of the information originally provided to SWA.

In order to gauge challenges that BAM faces in gathering employer audit information and
measure third party agent activities in the scheme of all employer responses, the National Office
plans to have SWAs (in nine pilot states) record information about each employer information
request. Within this framework, one of the third party agents (TALX, Inc.) has offered to pilot a
new audit request methodology and response strategy to help resolve the BAM challenge.

Background:

Many state laws allow an employer to designate a third party as their representative or agent
when dealing with the UI system. Because of this, a great number of claims have a third party
agent (TPA) involved in providing critical information on which payment decisions are made.
Estimates suggest as much as 35- 40 percent of all initial claims filed now involve TPAs. BAM
contacts TPAs as part of its audit process to verify base period wages, separation information,
special payment information such as separation pay, wages in lieu of notice, pension, vacation,
and identify other types of remuneration that may influence payment decisions. Federal
guidelines specify that each State shall develop forms (exhibit 1) necessary to verify the
information previously submitted by employers.

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Discussion:

One of the principal TPAs that BAM encounters in its audit process is TALX, Inc. Historically,
individual state BAM units expressed concern and frustrations about getting timely, complete,
and accurate TPA responses to audit questions. Often, this has caused BAM units to bypass the
TPA and go directly to the employer, which often causes problems for all entities involved.
Working with DOL Regional and National Offices (NO), TALX has offered to pilot an
interactive response strategy to solve many common issues. TALX will provide a dedicated fax
number to receive BAM audit requests, a specialist to complete those responses, and
management support to monitor outcomes (for further information on the pilot planning, see
Attachment A).

A BAM audit may often request information from multiple employers to confirm the base period
wages; in CY 2006 approximately 26% of BAM cases involve 2 base year employers and 24%
involve 3 or more. The number of employers that need be contacted for separation information
varies based on individual state law. Some states only adjudicate the separation from the last
employing unit. Other states may adjudicate the most recent employer where certain financial or
work attachment criteria are met. These employers may be different from the base period
employers. Finally, some states adjudicate the separations from all base period employers. In
some instances, TALX or another TPA may represent all the employers involved in the audit, but
in many others, TALX or another TPA may represent one of the employers or not be involved
with at all.

In order to evaluate TALX’s new strategy against all employer responses and judge the pilot
outcomes, the NO plans to have pilot states record information about each request. BAM
proposes the following methodology and question response strategy.

Proposed information gathering:

Identification Series:
The pilot response survey will use the BAM standard identification process for reference. These
are the batch, claim sample type, and sequence identifiers or numbers. Because these are normal
and customary to the audit process, users are familiar with the nomenclature and application.

Typical entry for a batch number will be a six-digit number that indicates calendar year and week
that file was created (YYYYWW for example 200713). Each week of the year is assigned a
unique number beginning with 01 for the week, which includes the first Saturday in January.).

Typical entry for claim sample type will be a single-digit number that is associated with the audit
type. These are normal BAM codes and are 1 for a paid claim, 2 for a monetary denial, 3 for a
separation denial, and 4 for a nonseparation denial review.

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Typical entry for the sequence number will be a one or two digit number that is provided as output
from the computer program that selects all BAM sample cases. This number indicates the sequence
of case(s) selected within each batch. It is used to control access to a particular case.

Because this information may be shared with other entities, BAM auditors will substitute a
sequence number for the employers name or account number. This will protect the employer
confidentiality and their competitive practices. Auditors will track these numbers on their forms
and on the survey document.

Example entries follow.

Must be completed
for each employer
Audit Response Survey within a single audit
Batch number? 200713

Claim sample type (1=paid claim, 2=monetary denial,


1
3=separation denial, 4=nonseparation denial)

BAM sequence number? 3

Employer sequence number for audit? (i.e. 1, 2, 3, 4, 5, 6, …) 1

Third party agent or other entity and responsiveness to request series:


The next series of questions are designed to identify whether TALX or another TPA is involved
with the audited case and measure the essential attentiveness to the request for information. Two
basic assumptions led to this pilot; TPAs responded less often and less accurately than other
employers. This is an attempt to evaluate TALX’s new strategy against all employer responses.
Many of the items that will be captured in this series are elements already recorded or noted as
part of the normal BAM business process

Example entries follow.

Must be completed
for each employer
Audit Response Survey within a single audit
TALX represented employer?
Yes
Yes or No

Other third party employer representative/agent? Yes or No No

Date request sent? 3/17/2007

Additional requests necessary to get a response?


Yes
Yes or No

Date response received? 4/2/2007

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Must be completed
for each employer
Audit Response Survey within a single audit
Form completed? Formatted Table
No
Yes or No
If Audit Closed without response from this employer or third
party agent, enter the date that audit was closed (leave blank if
response received).

The question series allow states to record the timeliness and completeness of the response while
identifying whether a TPA represented the employer.

BAM has expectations for completeness, accuracy, and timeliness of information. Typically,
BAM programs escalate their request for information as time increases. In a recent State
sponsored survey, many states summarized their procedures and experiences. Two of these
follow:

“We call first to get info or a fax number if the employer prefers a faxed form to report
on, or provides info to contact TALX or another agent. If unable to reach by phone, we
mail our requests, regular mail. (We used to use certified mail, but stopped because we
found that a lot of claimants would refuse to accept the letters, so we have better luck
with regular mail.) We have had a lot of trouble getting wage/separation info from
TALX, so we document our efforts and move on. If region or national office can't/won't
help, we don't worry about it. We have used subpoenas, but rarely.”

Similarly, another state suggested:

“When the cases are assigned, the auditor contacts the employer to secure a contact
person and a fax number. The BAM 15 is faxed and the employer is advised that the
completed form is due in 7 days. If no response by the 7th day, the employer is contacted
to request the status of the form. Another 7 day due date is set. If unable to secure a fax
number, the form is mailed (regular). If no response by the 7th day, a 2nd form is mailed.
If no response is received from the employer, a subpoena, which must be delivered in
person, can be used if the employer is in the immediate area of an auditor. Subpoenas are
rarely used. Currently many employers are using TALX UC Express for Unemployment
information.” Our state “…has an account with TALX to secure info.”

Securing employer information is a challenging requirement of the BAM program. TALX, as


the largest TPA, must assist the BAM units as the employer representative. However, as the
largest they may be the most well known offender and therefore easily cited as an example.
Anecdotal statements may or may not be supported by the results. Again, the question series
above are to evaluate TPAs within the field of all employer responses and review TALX’s
potential solution to this BAM challenge.

Integrity Measure influence series:

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In the normal UI business process, States have suggested that TPAs trigger a high percentage of
separation issues. However, after triggering the separation issue, TPAs are accused of not fully
documenting the objection to the claim at the initial determination. Three issues contribute to
this situation; they are 1) the requirement to make timely determinations of “payment when due,”
2) the need of a TPA to go to the employer they represent to get the evidentiary facts necessary
for a proper determination, and 3) the variability found in state laws for response timeliness to
preserve interested party status. Subsequently, the adjudicator may allow payment, within these
constraints, and these payments become the focus of the BAM audit. The BAM audit goal is to
evaluate whether the initial separation determination was based on appropriate evidentiary facts,
thereby determining if the payment was proper or improper. The BAM has the audit “luxury of
staffing, time, and effort” to thoroughly review the case, when compared to the production UI
system, because the decision to pay has already been made.

The same standard holds for the other types of employer related concerns that BAM audits.
Employers may change the base period wages reported or report a deductible type of income.

One of the unknown factors in this pilot is that BAM may actually underreport payment
inaccuracies. In other words, that TPAs’ historic failure to respond or provide valid information
to the BAM audit process may have actually suppressed errors. The next series of questions
attempt to detect underreporting at the earliest point in the pilot process.

Must be completed for


each employer within a
Audit Response Survey single audit
New information provided on form raising issues? Yes or No Yes

Additional fact-finding necessary?


Yes
Yes or No

If TPA, was direct employer contact required to get required


No
information? Yes or No

Comment?

Survey process
The NO will assemble these questions into an Excel® spreadsheet (attached directly below and
found in Attachment B).

S:\OWS\DPM\BAM\
TALX_third party repr

Each auditor in each participating pilot state will complete the question sets for all employer
requests. These requests will be made for each case according to normal BAM standards. States
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participating in the pilot may expect minimal workload change, because of the potential
beneficiary aspect of the pilot goals. Auditors will continue to move to the right on the Excel
spreadsheet making entries for all employer requests.

Proposed report elements


In order to evaluate TALX’s activities against all employer responses and judge whether the pilot
is a success, pilot states will record information about each employer request. The NO will
translate the elements captured from the employer response review into numbers and perhaps
percents.

The tables below demonstrate how the NO may tally the initial results and observations.

Survey field counts

Total number of audits


1,053
13 weeks x 9 audits/state x 9 states in the pilot
Total number of employer requests
3,159
1,053 audits x 3 employers/audit
Total number of employers represented by TALX
790
3,159 employer requests x 25% involving TALX (Their estimate of market penetration)
Total number of employers represented by another TPA
158
3,159 employer request x 5% (including other TPAs and accounting firms - estimated)
Total number of employers not represented by a TPA
2,211
3,159 – 790 TALX employers – 158 other TPA employers

Total number of request where additional contact was necessary to get response

Total number of TALX request where additional contact was necessary to get response 0

Total number of other TPA request where addition contact was necessary to get response

Total number of responses received

Total number of responses received from employer without TPA

Total number of TALX responses received 790

Total number of other TPA responses received

Total number of complete responses received

Total number of complete responses received from employer without TPA

Total number of complete TALX responses received

Total number of other TPA complete responses received

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Survey field counts

Total number of complete responses presenting new issues

Total number of complete responses presenting new issues from employer without TPA

Total number of complete TALX responses presenting new issues

Total number of complete other TPA responses presenting new issues

Total number of responses requiring additional fact-finding

Total number of responses requiring additional fact-finding from employer without TPA

Total number of TALX responses requiring additional fact-finding

Total number of other TPA responses requiring additional fact-finding

Total number where TALX and direct employer contact required to get the required information

Total number where other TPA and direct employer contact required to get the required information

Summary of significant observations or comments

1. x

2. xx

3. xxx

4. xxxx

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Attachment A:

Pilot planning
The following represents the discussions held over the phone and by email with TALX

From: Miller, Ross - ETA [mailto:Miller.Ross@dol.gov]


Sent: Wednesday, March 14, 2007 9:53 AM
To: Bill Lee
Cc: Dan Tienes; Jill Bentrup; Coyne, William - ETA; Hoff, Dianne - ETA
Subject: Pilot -State Agency Response Center and BAM audits

Re: State Agency Response Center and BAM audits

Bill, Dan, and Jill

It was a pleasure talking with you yesterday. I hope that we can resolve this communication process to
all our satisfactions.

During our phone call, you provided some statistics on TALX’s Unemployment Insurance penetration
rates and operational procedures. I wanted to confirm what I thought I heard (and if I am wrong please
correct me!).
1) TALX is involved in 30% of all claims filed in the United States.
2) TALX has separation information in its database for roughly 30% of the claims for which the
company is involved.
3) TALX has payroll information in its database for roughly 30% of the claims for which the
company is involved, but this may not be at the payment cycle level.
4) TALX continues to operate many of the companies that it has acquired under that entities name
and the relationship between the acquired entity and employer is maintained.
5) TALX entity platform issues hinder an integrated response strategy.
6) The State Agency Response Center currently handles 5,500 claim calls per week and 2,400 of
those calls are requests for additional information.
7) Current State Agency Response Center procedure has the CSR referring States to the specific
TALX entity involved with the employer/claim.
8) There may be some confusion on BAM audit requests because the TALX CSR perceives that
they have already responded to the state’s request for information dealing with the claim under
consideration.
9) BAM needs to identify clearly that the information request is for audit purposes.
10) TALX routinely monitors response rates and response quality as part of its normal business/call
center operation process.

During our phone call, we provided you some information:


1) States audit approximately 25,100 claims annually.
2) Each claim may have several employers attached to the claim and BAM needs to confirm all
relevant employer information.
3) BAM units are required to gather the base period wage information and separation information
on each claim.
4) Assuming a 30% TALX claim penetration rate and an average of two employers per claim, the
State Agency Response Center may receive a maximum of 250 request per week from all BAM
units.
5) The forms that BAM units send to TALX contain confidential information including name and
social security number combinations and employer and employer account combinations.

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Because of this confidential information presentation, many States require the BAM units to fax
these forms.

During our call we discussed these potential solutions:


1) All state BAM units could use the State Agency Response Center as central referral point or
response point unless the employer did not respond to TALX.
2) Pilot the option that BAM units (only) would have a specific fax number to send in requests and
the State Agency Response Center CSR responsible would respond or request additional
information from the employer, after a certain period respond that no additional information is
available when the employer fails to respond to TALX, forward the request to the appropriate
TALX entity and notify the State BAM unit that the request has been forwarded.
3) Expand pilot based on success and workload.

Finally, not discussed but sure would be appreciated, can we get a list of entity names and business
locations under which TALX is currently operating.

From: Bill Lee [Bill.Lee@talx.com]


Sent: Tuesday, March 20, 2007 9:38 AM
To: Miller, Ross - ETA
Cc: Dan Tienes; Jill Bentrup; Coyne, William - ETA; Hoff, Dianne - ETA
Subject: RE: Pilot -State Agency Response Center and BAM audits
Ross, I wanted to get back to you regarding your note of March 14, 2007.

The information we covered on March 13, 2007 was to aid the discussion and not intended to be
statistically accurate. For example the first point below regarding percent of total claims processed in the
US. TALX counts claims differently than DOL or state agencies; as a result our approximation of claims
handled is around 25% for all TALX UC companies.

The purpose of our call was to determine how TALX could assist the state BAM auditors gain information
needed to complete their audit. I would like to offer the following procedure:

1. TALX wants to be sure we have the proper resources in place, for that reason, we would like to
start with a pilot group of 5 to 10 states to determine how well the process works and make
adjustments before opening it to a larger number. To accomplish this, we will provide a dedicated
fax number to be used by BAM auditors only. A word of caution, if other state agency employees
start to use the dedicated BAM fax number, we will not be able to support this approach.

2. When an audit form is received, we will obtain the requested information from the employer and
return the audit form to the auditor within the requested time frame. If we are able to get most of
the information and the employer does not have additional information we will indicate that to the
auditor when the form is returned. If the employer does not respond to our request, we will return
the form to the auditor along with a contact at the employer for the auditor to use. Because these
forms need to be routed to others within our organizations we are requesting a response time of
four or more days.

3. If an auditor encounters a problem getting the requested information they should contact Mike
Meyer the Manager, State Response Center at mmeyer@talx.com. Mike will investigate and
resolve the issue.

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4. Once we are comfortable with the process we can add additional states in groups of 10 to 20
based on the experience we have with the first group. The plan would be to add them as quickly
as possible while meeting the requirements of the auditors.

5. We would leave it up to DOL to identify the states for the pilot group and inform them of the
procedure. We would like to be given a list of the states you select for our tracking purpose. We
would also request an individual to contact, for each state, should it be necessary to discuss
items that may develop.

6. The individual we have selected to receive the faxed audits from BAM auditors is Kim Bieri. Her
fax number is 314-983-3765 and phone number is 314-684-2766

.
7. We would like to start the pilot on or after March 26, 2007.

8. As I will be out of the office for the next 10 business days, additional coordination should be with
Jill Bentrup, Director of our claims operations. She can be reached at 314-684-2520 or
jbentrup@talx.com.

You had asked which unemployment companies TALX currently has. Below is list of the companies and
when they were acquired.

Original Name Current Name or DBA Acquired


The Frick Company (UC eXpress) Spring 2002
GatesMcDonald UI Division (UC eXpress) Spring 2002
Johnson and Associates (UC eXpress) Summer 2002
TBT (UC eXpress) Fall 2004
Sheakley UI Division (TALX Employment Services) Spring 2004
Jon-Jay Associates (Jon-Jay Associates) Spring 2005
Employers Unity UI Division (TALX Unemployment Services) Fall 2005

We look forward to the pilot on the BAM audits and appreciate everyone’s involvement. If you have
additional questions, please let me know. Thanks.

Bill Lee
Director Government Relations
TALX Corporation
Email - blee@talx.com
Phone - 314 684-2820
Cell - 314-249-3061
Fax - 314-687-1450

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Attachment B
Audit Response Survey Must be completed for Must be completed for Must be completed for Must be completed for
each employer within a each employer within a each employer within a each employer within a
single audit single audit single audit single audit
Batch number? 200711 200712 200712 200712

Claim Sample Type 1=paid, 1 1 1 3


2=monetary denial, 3=separation denial,
4=nonsep denial
BAM sequence number? 8 3 3 5

Employer sequence number for audit? 1 1 2 1


(ie. 1, 2, 3, 4, 5, 6)
TALX represented employer? no yes no yes
Yes or No
Other third party employer Yes no no no
representative? Yes or No
Date request sent? 3/29/2007 3/29/2007 3/29/2007 3/29/2007

Additional requests necessary? yes no no no


Yes or No
Date response received? 4/9/2007 4/5/2007 4/4/2007 4/4/2007

Form completed? no no yes yes


Yes or No
New information provided on form no no yes yes
Yes or No
Additional fact-finding necessary? yes yes yes yes
Yes or No
If TPA, was direct employer contact N/A yes N/A Yes
required?
Yes or No or N/A
Comment? Says their accountants TPA said employer would Employer responded with Needed to contact the
keep all those records. not give them the additional info not employer directly to
information provided at the sep additional sep
determination. information.

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TEXAS WORKFORCE COMMISSION

Exhibit 1

Date

Attention: XXXXXXX
«LEUname»
«LEUADD» RE: «Name»
SS#: «SSN»
Employer Acct # «LEUAccnt»
THIS IS AN AUDIT
Of an Unemployment Insurance Claim
Random Audits on claims for unemployment benefits are conducted by the Texas Workforce Commission’s (TWC) Benefit Accuracy
Measurement (BAM) Program. Audits are used to determine if Unemployment Insurance payments correspond to State and Federal
laws, regulations and rules. As part of this process we are asking for information on the above-named individual who was selected for
a random audit of his/her Unemployment Compensation benefit claim.

Both State and Federal law require employers to furnish this data when requested by a representative of this
agency and is, therefore, not a violation of the Privacy Act. Subchapter F, Section 301.081 of the Texas
Unemployment Compensation Act requires all employers to maintain and furnish employment and
payroll records to an authorized representative of this Commission. Furthermore, Subchapter E, Section
301.072 provides for the enforcement and penalties of subpoenas issued for the administration of this Act.
Copies of the law are available upon your request.

As part of this random audit, “Base Period” wages need to be verified by pay-period-ending date and date
paid for each time the individual was paid, even if the pay was by contract, commission or any other form
of remuneration. The “Base Period” in effect for this individual’s claim is «BPbegin» through «BPend».
In some cases, additional information may be needed to verify claimant is reporting earnings correctly.
We may also require detailed job separation information to ensure benefits are being paid or denied
properly, but without the cooperation of the employer, this cannot be accomplished.

Please return the form by fax or mail no later than «respondby». If the information requested is not
received within seven (7) calendar days of the date this form was sent, an auditor will contact you to discuss
the possibility of an in-person audit. If you have no record of this person being paid, please indicate this on the
form.

PLEASE NOTE: Third party entities such as outsource unemployment cost management service providers, typically do not
have the necessary information needed to complete a successful audit of this nature.

Your assistance in this matter is appreciated. If you have any questions, please call me at the number listed
below or call the program supervisor, David Leandro at 512-475-1732.

Sincerely,

BAM Auditor
Batch # «batchno» «seqno»

QC -6
TEXAS WORKFORCE COMMISSION

Benefit Accuracy Measurement


SEPARATION STATEMENT
Claimant Name: «Name» SSN: «SSN»
Employer: «LEUname» Acct #: «LEUAccnt» Contact Person:
Address: «LEUADD» City: State: Zip code:

Phone: «LEUphone» Fax:

Hired on: Separated on: Last Day Worked: STATE[s] worked in: SSN used:

Payroll is: Pay Period begins on: DAY OF WEEK? Pay Day is: Day?
FREQUENCY? And ends on
Recall: YES NO Rate of pay $_______ For re-qualification:
when? Per: total earnings since __N/A__ = $

===============================================================================
Reason for separation: Explain below all separations except lack of work. Give
recall date for temporary lay off.

If wages were paid after last day worked or for any time period after last day worked, please complete the
following:
TYPE OF PAY $ AMOUNT # OF WEEKS DATES COVERED
Accrued Vacation
Holiday \ Sick
Last Pay Period
Commission \ Bonus
Wages in Lieu of Notice
Severance
Pension
Other
Did you report this hire on New Hire Registry? Yes No . If yes, when and to what state
. If no, explain. .

I certify that the above information is correct to the best of my knowledge and belief.
Employer’s signature: Title: Date:

Auditor’s signature: Phone: 512 936-3628 Fax: 512 475- Date Received:
1182
Form completed: BY FAX Employer is: IC LEU Batch # «batchno»
«seqno»

QC -6
TEXAS WORKFORCE COMMISSION
Benefit Accuracy Measurement
WAGE VERIFICATION
Claimant Name: «Name» SSN: «SSN» Base Period Year: From: «BPbegin»To:«BPend»
Employer Name: «LEUname» Contact Person: Account #: «LEUAccnt»
Phone: «LEUphone» Fax:
Employer is: IC LEU Information obtained by: FAX
∗∗∗∗∗ BASE PERIOD YEAR: From: «BPbegin» TO «BPend»
Year/Quarter «ICLEUQTR1» Year/Quarter «ICLEUQTR2»
week pay period payday \ gross pay pay period payday \ check gross pay
end date check date end date date
1
2
3
4
5
6
7
8
9
10
11
12
13

total
audited
reported «ICleuwage1» «ICleuwage2»
amount
∗∗∗∗∗ BASE PERIOD YEAR: From: «BPbegin» TO «BPend»
Year/Quarter «ICLEUQTR3» Year/Quarter «ICLEUQTR4»
week pay period payday \ gross pay pay period end payday \ check gross pay
end date check date date date
1
2
3
4
5
6
7
8
9
10
11
12
13

total
audited
reported «ICleuwage3» «ICleuwage4»
amount
Employer Signature: Date: Auditor: Date Received:
Phone: 512 936-3628 Fax: 512 475-1182

QC - 12

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