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BQ24010: PG#/STAT1/STAT2 behavior when OUT is not tied directly to BAT

Part Number: BQ24010

I would like to use the BAT sense input to boost the OUT voltage by approximately 50mV to account for cable losses in a charging application.  I am using a 10K/1M voltage divider between OUT and BAT.  The values are intentionally high to minimize battery drain at charge complete.  This seems to work well when I am charging a battery and I end up with the desired charge complete voltage of 4.2V.  However the LED behavior is not as expected when there is no battery present.  The PG# LED is off and the STAT1 and STAT2 LEDs alternate on/off at about a 0.5 to 1Hz rate. The datasheet states that PG# turns on when a valid VCC is detected. My VCC is stable at 5V.  If I start with a 6V supply I do not see the weird LED behavior but if I slowly increase VCC from 5V to 6V, the problem persists.  Do you have an explanation for the strange LED behavior?