In this case new facts are added to the OBSERVATION_FACT table regardless of whether or not the fact's encounter exists. This involves overwriting any matching fields. i.e. if the incoming fact matches a particular stored fact and its update date is greater than the update of the matching fact, then the new fact will overwrite the old fact.
Example:
<observation update_date="2008-05-04T18:13:51.498-04:00" sourcesystem_cd="PFT">
<event_id source="HIVE">100</event_id>
<patient_id source="HIVE">100</patient_id>
<concept_cd>FC30.00620</concept_cd>
<nval_num>10.9</nval_num>
</observation>
<observation update_date="2008-05-04T18:13:51.498-04:00" sourcesystem_cd="PFT">
<event_id source="HIVE">100</event_id>
<patient_id source="HIVE">100</patient_id>
<concept_cd>FC30.00621</concept_cd>
<nval_num>20.2</nval_num>
</observation>
<observation update_date="2008-10-04T18:13:51.498-04:00" sourcesystem_cd="PFT">
<event_id source="HIVE">100</event_id>
<patient_id source="HIVE">100</patient_id>
<concept_cd>FC30.00622</concept_cd>
<nval_num>76.0</nval_num>
</observation>

The rows in the OBSERVATION_FACT table before the update:

The rows in the OBSERVATION_FACT table after the update:

Assumption: the record(s) in the update file (new record) has the same primary key as a record(s) in the associated table (existing record).
Primary Key includes:

Append Flag = True
The following conditions will result in the new record replacing the existing record:

The following conditions will result in ignoring the new record and not updating the existing record: