“You’re fired!” Health Minister Horne Sacks the AHS Board

Last week Health Minister Horne out-trumped Donald Trump by firing not one but all 10 members of the Alberta Health Services Board—the board his government created in 2008 to deliver healthcare under a centralized delivery model.

One expects such theatrics from Donald Trump, after all he’s a showboat;  but not from Mr Horne, the cabinet minister entrusted with the stewardship of Alberta’s $16.6 billion healthcare system; $13.4 billion of which goes directly into Alberta Health Services.

What happened?

On June 12, 2013 Mr Horne issued a press release berating the AHS Board for ignoring his directive to rescind pay-at-risk compensation for AHS senior staff.  He’d “informed” the AHS Board Chair and members that he was terminating their appointments, effective immediately, and thanked them for their service.  Apparently the “informing” took place by email.  Ouch!  He appointed Ms Janet Davidson to take over as Official Administrator.

Now here’s where it gets sticky.  I don’t believe that Mr Horne has the power to fire the Board under these circumstances.

Minister Horne’s source of power

Unlike Donald Trump who gets his power from his uncanny ability to raise money, Health Minister Horne gets his power from legislation, primarily the Government Organization Act and the Regional Health Authorities Act (RHA).

The RHA gives Mr Horne the power to provide health services to Albertans by appointing a board to administer health services.  The Alberta Health Services Board is the only such board in Alberta.  It is responsible for promoting good health for Albertans, assessing their health needs, setting priorities, ensuring reasonable access and being responsive.  AHS Board delivers on these responsibilities through the organization known as Alberta Health Services.  Most importantly, the AHS is the “final authority” with respect to all of these matters (section 5).  Hold that thought.

“Strategic” versus “operational” decisions

Mr Horne has gone to great lengths to explain to anyone who will listen that Alberta Health (the government department run by Mr Horne) is the “strategic” arm of health service delivery and Alberta Health Services (the organization chaired by the now defunct Mr Lockwood) is the “operational” arm of health service delivery.

By happy coincidence this distinction was recently confirmed by the Health System Governance Review Task Force in a Governance Report submitted to Minister Horne in February 2013.**

Stephen Lockwood

Minister Horne buried the Governance Report so deep that no one knew it existed until ousted AHS Chairman Mr Lockwood criticized Minister Horne’s plan to conduct yet another governance review, suggesting that the Minister could save taxpayers’ dollars by simply referring to the Governance Report already in hand.  What a novel idea!

The distinction between strategic and operational decisions is critical because decisions relating to compensation are operational not strategic and therefore fall within the purview of the AHS Board, not the Minister.

That’s why the Terms of Reference for the AHS Compensation Committee give the Committee the power to recommend compensation payouts to the Board.  The Board in turn had the power to decide whether it would make the pay-at-risk payments or not.  And as noted above, Section 5 of the RHA gives the Board “final authority” over matters within its purview.

Does Mr Horne have the power to fire the AHS Board?

The RHA gives Mr Horne the power to dismiss the AHS Board and appoint an “official administrator” in its place under two scenarios:  (1) if the Minister considers the Board is not properly exercising its powers or carrying out its duties under the Act (we just agreed that the AHS Board was properly exercising its powers and duties because compensation matters are solely within the AHS Board’s purview) or (2) if for some other reason the Minister considers it is in the public interest to dismiss the Board.*** 

Would Minister Horne care to explain how it is in the public interest to fire the entire AHS Board because the Board refused to breach 99 employment contracts?

If the AHS Board bent to Minister Horne’s will and ripped up those contracts the message the government would be sending the public is this:  the government is not bound by contract law in tough economic times. 

If this were the case, there’s nothing to stop the AHS from refusing to pay construction companies building new hospitals or laundry service companies washing hospital linens or catering companies bringing in hospital food.  Indeed, all of the government agencies and government departments could easily meet their new budget targets by simply ripping up their existing contracts and starting over again.  It’s lunacy.

Power and control

Minister Horne’s beef with the AHS Board may have started with pay-at-risk but it escalated into a battle for power and control.  The AHS Board was under the illusion that it had a modicum of autonomy and it could moderate political influence on decision making.  Clearly it was wrong.

The Governance Report states that it is a “failure in governance…when the government disagrees with a decision of the AHS Board and imposes its will on the agency.” (p 24)

Fred Horne

Given Minister Horne’s rout of the AHS Board I’d go even further.  The question now is not whether Mr Horne’s imposition of his will on Alberta Health Services is a failure in governance; it’s whether Mr Horne, a cabinet minister in Alison Redford’s government, violated the Regional Health Authorities Act by dismissing the AHS Board without having the legislative authority to do so.

“You’re fired” is entertaining when it’s uttered by Donald Trump on a reality TV show.  It’s downright scary when it’s uttered by a government minister to remind government-appointed boards and agencies that when the boss says jump, the correct response is how high.

*News Release, June 12, 2013 

**Working Together to Build a High Performance Health System, February 2013

***Regional Health Authorities Act, Section 11
 

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41 Responses to “You’re fired!” Health Minister Horne Sacks the AHS Board

  1. Ian Holloway says:

    Dear Susan,

    A great post! I’m actually going to suggest to colleagues that it could form the basis of an exam question in Admin Law!

    Thanks for all your postings. I look for them each Sunday evening.

    All the best,

    Ian

    Dr Ian Holloway QC
    Professor and Dean of Law
    The University of Calgary

    1 (403) 220 5447

    Sent from my iPhone

  2. jillbrowne says:

    Thanks for a new angle on this, Susan, the authority of the minister (or lack of authority).

    Why did the Minister fire the board? The presence or absence of the board has no effect on whether or not the province has to pay the bonuses to the employees under their employment contracts.

    • Agreed, but I don’t think this was about the bonuses. The Minister said in March the $3.2 million had to be paid. So make the payment, ignore the grousing and move on. This was about power. The Governance Report says “the government needs to provide AHS with the degree of autonomy that AHS requires to execute its mandate, as constituted under the RHA” (p 59). The task force made 10 recommendations to improve governance including asking the Minister to confirm his commitment to deliver health services through AHS and give AHS the necessary autonomy to carry out its delegated authority—in other words comply with the legislation! No wonder the Minister deep-sixed the Report. The Board asserted its power. The Minister didn’t like it and used the excuse of the bonus payments to get rid of the lot.

      • Jill Browne says:

        I am sifting through unfamiliar (to me) bits of the Internet, looking for what the Minister’s stated reasons for firing the board were.
        In this clip:
        http://www.edmontonjournal.com/health/Health+Minister+Fred+Horne+fires+board/8514910/story.html
        the Minister says, among other things, that some of the people entitled to receive part of the compensation offered to forego it but the board declined to accept that offer from them. That seems odd, why spend money if you don’t have to? And who are these people, and where are those offers? Why were they turned down?
        I don’t want to take sides in a Board vs Minister showdown. At this point I first need to understand the facts.
        I am going to poke around some more.
        Is there a problem with the concept of what the governance model for AHS is supposed to be? Is it not clear how much autonomy the board should have; who is accountable for what and so on?
        It is unsettling to think that something as fundamental as setting the ground rules should be an issue in this province, at this time. After all, the government has been in the business of governing for a long time, and governing includes running a civil service and providing services to the citizens. Why on earth has health care become so awkward, so politicized, so poorly done?
        Underneath it all I have this nagging feeling that our health care system is a never-ending experiment when it should be a stable institution.
        Thanks as ever for your insights, Susan.

      • Jill, here’s the link to the Governance Report. It’s illuminating. I’d be interested in your views once you’ve read it.
        http://www.health.alberta.ca/documents/High-Performance-Health-System-2013.pdf
        The Liberals found it. They say that it was “quietly posted deep inside the ministry website just as the AHS Board firing story broke”. They also say it was modified as late as June 12, 2013 at 9:15 a.m.—just 15 minutes prior to the release of Minister Horne’s statement. Wonder what they did to it.

  3. Glenn Taylor says:

    Thanks for this post Susan. More interesting and intriguing by the day. Of as one of my favorite fictional characters would say ‘curiouser and curiouser…”

    • What an apt comment Glenn. Minister Horne fell down the rabbit hole on this one and dragged the Premier and the rest of Cabinet with him when he said: “Regrettably, the Premier, my cabinet colleagues and I were forced to consider whether Albertans can continue to have confidence in their ongoing ability to direct change in our health system”. Apparently it was a joint decision. So if one goes down they all go down. Could be interesting.

  4. Glenn Taylor says:

    *Or*

  5. Noleftandright says:

    I had the same opinion as you on this question. Concerning operational issues in AHS read this report:

    http://www.converge-group.net/wp-content/uploads/2011/07/Health-Services-in-Alberta.pdf

  6. This gov’t of Alison just continues on with there staged theatrics, I would think most albertans have seen thru this long ago. These persons on the health board are pc supporters and they will get there severance come hell or high water and anything and anybody associatted with Alison are bomb proof just as the wall street bankers came out unscathed. Law type people should never be involved in carrying out gov’t business.

    • Tom you’ve identified an interesting irony here. Most of us have the feeling that the PCs use these board positions as a way to reward their supporters. Imagine the government’s surprise when this board refused to do exactly what the government wanted it to do, not once but at least 5 times.

  7. Sad day when people in authority do not see clearly their petty behaviors. Projecting power and control over others is clearly “bullying” at its worst. As passive by-standers – it may be time to pick up the phone and suggest the same.

  8. Carlos Beca says:

    This is probably the same as reality TV. Everything is already pre arranged and they will get their packages anyway and Fred Horne just looks like the Testosterone minister ready for a show of NeoCon theatrics. These people are getting better than the old communist leaders that were mumified and had posts behind them keeping them standing during the May Day parades.

  9. very good read Carlos, I was groping for the comparison but you hit it right on with the old communist leaders. Alison will still get her country votes as they are carrying out these blitzes to all the country points and they have fooled them for 40 years and I am sure it will continue on.

  10. Jason says:

    As much as I agree with the idea that this was a failure of governance on the part of the minister, I’m not liking the analysis much. So far as I can tell, the fuzzy line between strategy and execution isn’t in the Act anywhere. It’s just ministerial powers delegated to the board, regardless of their type. But even if this were something analogous to the Municipal Governance Act, where the delegation of certain things was legislated, I think the word “properly” in section 11 probably doesn’t mean just doing stuff they’re supposed to do. I think it probably means doing stuff in a way the minister finds, you know, proper. Now, we can ask whether the Minister thinks that the actions are improper, or the Minister things that the actions are politically unhelpful. I would argue the latter is more likely. But I don’t know how far that gets you. First, he can also think it’s in the public interest. If you want to make a legal case out of it, you’re going to be looking for judicial review. There’s not a lot of procedural fairness imposed on Ministers of the Crown. He doesn’t have to issue reasons for his decisions that require only his opinion. And that’s not even pointing to the fact that the legislation gives the Minister no alternative measures (there is no term specified for the members, nothing about their being at the pleasure of the Minister), or the general administrative principle that the person with the power to appoint also holds the power to remove.

    Did the Minister do something stupid by removing the entire board over an issue on which the board was probably correct? Yes. He has caused far more problems for Albertans than he has solved.

    Did he break the law in doing so? Highly doubtful.

    If we want good ministers to have the power to correct the mistakes of their delegates, then we also want bad ones to have the power to force their delegates to make mistakes.

    • Great counterpoint Jason. You’re correct when you say the RHA doesn’t make a distinction between “strategic” or “operational” decisions. This distinction flows from the Minister’s statement that Alberta Health is the strategic arm of health delivery and AHS is the operational arm. But perhaps we don’t need to go there. The Terms of Reference (blessed by the government incidentally) that govern the Comp Committee of the AHS Board give the Comp Committee the authority to make compensation recommendations to the Board. The Board, in turn, has the authority to accept or reject these recommendations. In this case the Board either accepted the recommendations to pay pay-at-risk or decided of its own volition that it would make the payments. I’d argue that by acting in accordance with the Terms of Reference the Board ”properly” exercised its powers and duties pursuant to the first test under Section 11. I’d also rely on the Governance Report which states that just because the Minister doesn’t like the Board’s decision doesn’t mean that the Minister can impose his own decision or worse yet, fire the entire Board—that’s bad governance, not Ministerial prerogative. Turning to the second test, the language used in the RHA is “if for some other reason the Minister considers it is in the public interest to dismiss the members of the regional health authority…”. This is where the Minister has some wiggle room. I’d argue that it’s not in the public interest to dismiss the Board for making bonus payments pursuant to employment contracts because it’s contrary to public policy for a government to declare that it is not bound by the laws of contract. The counterargument would be the one the Minister made in his news release, namely that it’s a government priority to reduce costs, the government asked all public employees to take pay cuts and the AHS 99 have to fall into line. The problem with this argument is that those other public employees were subject to collective agreements which had expired, but the AHS 99 were entitled to their bonuses under a binding employment contract that is still in force. In any event, it’s here that the issue would be thrashed out.

      Between you and me I think we’ve just provided Dr Holloway’s students with some ideas on how to answer this question if it appears on the admin law exam. Welcome to the Soapbox Jason.

  11. Susan…you are “On Fire” !! Great Blog!

  12. Ted says:

    The firing over a measly few million dollars is a smoke screen. When I first heard to the AHS firing, I was in Victoria and the thought that entered my mind was that the firing was deployed because of the contracts that the AHS signed with some investor driven senior care companies out of Toronto. If that was the case, the firings would have been legitimate in the sense that the AHS betrayed the public trust by allowing pubic tax dollars to be diverted onto the pockets of investors rather than to authentic competent and public senior care. Three million dollars is a lot of money but set against the 16 billion dollar budget it does not create much of a ripple. The bigger question that should be pursued vigorously is the privatization of senior care and the downloading of debt onto the most vulnerable people in the province and their families. Why did the AHS sign those private contracts without public notice or discussion? Why did Horne not intervene when this occurred? Furthermore, the investor driven senior care facilities don’t want to pay living wages that include benefits and pensions plans to non unionized workers so thy can have more for themselves. Looking after seniors in failing health is hard, difficult and challenging work. With low pay, high turnover rates can be expected and that will lead to poor care, more trips to hospitals for seniors, and more pressure on an already crowded health care system. Horne, Redford and their government need to think beyond low taxes and govern this province with intelligence and integrity.

    • Carlos Beca says:

      I fully agree with Ted and I had not thought of this. Usually I am bad enough to find all that stinks behind these events.
      This contract with Toronto companies is going to be the final nail in their coffin. It is obvious that what Ted suggests is going to happen in the name of profit. Those jobs are hard and are already low pay. They want even lower pay!!! I doubt this is going to go well and it will for sure be a big lesson for all of us. Seeing our parents getting the lowest possible quality of care is a disgrace and we are all responsible for it.

    • Great points Ted and Carlos. With respect to Ted’s question: why didn’t the Health Minister intervene when the AHS signed the private seniors care contracts with the eastern companies, my guess is that he didn’t intervene because he supports privatization. He likely thinks it will reduce the budget. But as Ted points out, the privatization “fix” is only temporary. I too would like to see Horne and Redford govern this province with intelligence and integrity, but I don’t hold out much hope that that’s possible. They have to go.

  13. Carlos Beca says:

    My goodness AHS is already reversing decisions made just last month. This is the most ridiculous government management I have seen in my entire life. This is to say the least PATHETIC. Can these people actually think before they make a major policy change?
    The Home care decision is bad and now they are trying to make it tastier!
    Here is a good policy – cancel the darn for profit contracts with the coming Predators from Toronto. Afterwards whoever in the government who has half a brain working sits down with doctors and with the not for profit companies providing the services and come up with something that makes sense and does not treat our seniors as chicken in big corp industrial production.
    One suggestion is cancelling all the bonuses from contracts, reduce these out of this planet salaries, get rid of silly trips aboard that cost half million dollars a shot and start working as if people matter. Whether these pseudo politicians believe it or not, it is people and how they are treated that build this province. When are these people going to wake up and smell reality?

    • Carlos, the question in my mind is what prompted this abrupt reversal? Horne is quoted in the Edmonton Journal as saying: “the reversals came, in part, as a result of hiring Janet Davidson as AHS’s new official administrator”. Dr Eagle said: ““After consulting with Ms. Davidson, we agree on the need to tackle both the policy change and how we arrived at that policy…It’s the right time to reflect on whether the changes we’re making are what’s best for residents and how we can more effectively engage the community in general, and seniors in particular”. Horne and Eagle went pretty far down the path of execution before Ms Davidson convinced them to revisit how they got there in the first place. I say we dump Horne and Eagle and replace them with Ms Davidson. She’s Wonder Woman and has achieved more in one day than these guys have in 6 months!

      • Carol Wodak says:

        Hold the celebration. This is a PR damage-control initiative. Those 3 care co-ops weren’t the only community initiatives that were demolished – what about the home care provided by the Strathcona County FCSS, the Calgary Family Services, the Chinese Christian Wing Kei Nursing Home Association, and who know how many others? We haven’t seen any effort to protect workers’ pay, travel time or expensed, or workloads in the new for-profit contracts. Or, for that matter, to ensure facility staff pay, benefits and working conditions in the publicly-funded contractual arrangements . Or to provide enough staff to actually give 1 bath a week, let alone 2, in care facilities. Or to ensure enough LTC beds so folks have a choice between the hospital and a bed 100 km away. LTC bed closures continue – in Strathmore, for instance – and staff gets cut, in Banff’s St. Martha’s Place, for instance. Or stop the trend to expand the designated supportive living range to allow even more opportunities for alternatives to comprehenive, integrated care.
        Clearly Ms. Davidson has brought some PR skills with her – and that may not turn out to be such a good thing, if all it does is make the propaganda more effective. Certainly these first efforts are superficial to say the least.

      • Carol and Carlos: You nailed it. Dr Chris Eagle’s comments to the Calgary Herald about these decisions demonstrates that steps were undertaken with very little thought and are simply an attempt to appease the angry horde congregating on the steps of the Legislature. Eagle was “vague” on whether the laid-off palliative care nurses would be rehired, whether the rejected non-profit home care organizations would get new contracts, what the new maximum distance for LTC placements would be now that the 100-km radius was scrapped or even how much the AHS will have to pay in break fees for breaching the for-profit contracts it just signed. Nevertheless Fred Horne said this was “a really good day for healthcare in Alberta”. It’s a gong show and Ms Davidson is being set up to be the saviour of AHS. I wish her luck!

  14. Carlos Beca says:

    Carol you have my agreement. Until this government proves otherwise, I am not expecting anything other than more confusion. So far everything they have touched turned to crap.
    The premier talks about caring for the elderly and support education and then cuts more than any other premier at least in my lifetime. This is even worse than the Klein disastrous cuts in the 1990s.
    I do not trust anything they say until I see it on the ground.

  15. Wendy A. says:

    Great conversation. Thanks for getting it started Susan.

    I confess that I’m far less enthusiastic about protecting the “independence” of government delegated authorities/organizations such as the AHS, despite the genuinely seductive nature of the idea. I also think that the shift from legislation to “contracts” and contract law as a method of regulation has its pitfalls.

    Most of my learning and insight has come from two decades of being affiliated with various consumer and public interest organizations (provincial and national) dealing with these changes both on the ground – i.e. how it affects peoples lives and choices, and in various “stakeholder” consultations.

    The devolution of historic government responsibilities and authority during the 1990s through delegation to new arm’s length and/or industry entities was part of a global fad of privatization of control as well as outright privatization of entire sectors and/or delivery of services that started in the late 1980s. It was promoted as a way of eliminating the need for government, unfettering markets and shifting liability.

    This also entailed a deliberate shift from legislative regulation to administrative regulation and the use of inscrutable contracts to replace regulation along with the recasting of citizens as “sovereign” consumers in their relationship with public service providers and government as well as private markets.

    Both the federal government and Alberta were enthusiastic adopters of this new model of “governance” in relation to both public services and oversight of private markets – which including gutting of any internal policy expertise and turning to large and often conflicted global consulting firms for advice.

    It just hasn’t worked out all that well – here or elsewhere. Think the global financial collapse.

    The problem is that many delegated organizations don’t just operate independent of government; they also operate independent of the public.

    In 1994 Alberta passed the Government Organization Act (GOA) which led to many of the delegated administrative organizations we have today. Some of the drivers are described in a 1997 presentation by Sue Olson available on the web at http://www.revparl.ca/english/issue.asp?art=66&param=64 An original companion piece to this Act (called the Delegated Administration Act) would have allowed for the outright transfer or sale of government services to the private sector. But it died after effective criticism from the Opposition. With the GOA there is still a requirement for some level of control by government.

    But what should that level of control be ? And what mechanisms do we have – or want to have – to reign in either governments or delegated organizations if they go rogue or aren’t responsive? While we can (at least in theory) fire a government or threaten them with same, we – the people – can’t fire an independent board that has been delegated administrative or statutory powers historically the responsibility of governments – or often get them to answer our letters or questions.

    No easy answers, but I personally think the issue of “governance” (not just government) is the biggest challenge we face today in relation to both public services and the private marketplace which are becoming increasingly intertwined – so let’s all keep having these conversations on and off the Soapbox.

    I also don’t think the stated reason for firing was the real reason. Instead it was perhaps the most viable legal or public relations reason.

    • Jill Browne says:

      Amen! The issue of governance is huge, and to that I would add the question of the role of the civil service and indeed the role of government.

    • Wendy: excellent analysis! I share your concern about the incompatibility of the “corporate” governance model when it comes to the government’s obligation to serve the public interest. That’s the bigger issue that swamps the smaller issue I was exploring in this post, namely: did the Minister exceed his statutory jurisdiction? I’m convinced that he did. If he gets away with it the government will have a new precedent for how to achieve its goals without being answerable to the public: create legislation that allows the government to set up an “independent” board and then trample the board’s independence whenever it suits the government to do so. If this is where the government is heading (and I fear it is) then let’s scrap “independent boards” altogether, move the delivery of public service back into the government where it should be and hold the government directly accountable. In fact, let’s just scrap this government and start over!

      Jill: I join you in that “Amen!”

  16. Carlos Beca says:

    Susan I could not agree more – scrap this government and any in the same lines.
    Years ago when they started this idea that governments are like businesses blah blah blah… they thought very little about the consequences as usual. The next one to come is the P3P or whatever they call them. Sounds like a high energy drink to me anyway.
    Of course it was done intentionally because the objective is to have governments closer to business and then a take over and that would be the end of public interest, unions and all those undesirables that elites and big corps are so hard trying to eliminate so that we have more and more bank accounts in tax free havens and more bribes and more of all those traits we see everywhere and that only serve the half dozen that have a seat in the special clubs like Bilderberg and others that I am sure exist.
    Well they will have a surprise very soon. Just look at history and it is not hard to predict.
    Brazil is already on and there will be more and soon int he industrial world. We are just too asleep because still comfortable. They have spin doctors working for them 24 hours a day but that will not do it when the ‘paste’ hits the fan.

  17. Carlos Beca says:

    Here is serious thought and a real brain talking. The interesting point about this issue is that it is Judges and Lawyers that are taking away democracy from us. Those same people that are supposed to uphold the law.
    I wished we had her instead of useless Alison Redford.

    http://www.truthdig.com/avbooth/item/sen_elizabeth_warrens_supreme_court_warning_20130619/

    • Thank you for this link Carlos…it’s deeply disturbing to hear Sen. Elizabeth Warren (a very smart woman indeed) say that she’s concerned the Supreme Court is being captured by corporate special interest groups. The statistics she quotes showing that the Chamber of Commerce going from a win rate of 43% under Justice Berger to a win rate of 70% under Justice Roberts proves her point that big money lobbying is very effective. Devastating.

  18. Glenn Taylor says:

    This has been a very interesting thread to read – and reflect on. I fear that this is just the beginning of a more focussed attack on various Provincial boards and committees. I await with unease and trepidation to see what happens with the new Alberta Energy Regulator Board and its ability to be independant and to represent Albertans in the regulation of this important and impactful industry.

    • Glenn you read my mind. The “independence” of the new Alberta Energy Regulator is the topic of this Sunday’s blog (assuming I can finish it without throwing my laptop out the window!) Hint: there’s a reason why I’ve put the word “independence” in quotes.

  19. Carlos Beca says:

    Glenn this is an attack on us from a government completely blind by an ideology that serves no one but themselves and the powerful corps who are in absolute command here. I mean Alison Redford is basically begging the US to build the pipleine because that is what the oil people want. They do not care about our independence or our resources or our well being and much less with any strategy to refine the oil here. As long as they make money moving the oil with as less regulation as possible DO IT. Furthermore we do not know why Alison Redford is so ferocious on selling this, at least for now. One thing I know for sure, she is certainly not doing it for us.

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  21. Pingback: “…what Alison Redford taketh away….. Alison Redford giveth back?” | Chris LaBossiere

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