In the Missouri Court of Appeals
Eastern District
DIVISION FOUR
SEDZIDA DOLIC, ) No. ED103726
)
Petitioner/Appellant, ) Appeal from the Circuit Court
) of St. Louis County
v. )
)
MISSOURI DEPARTMENT OF SOCIAL ) Honorable Gloria Clark Reno
SERVICES, FAMILY SUPPORT )
DIVISION, )
)
Respondent/Respondent. ) Filed: June 21, 2016
Introduction
Sedzida Dolic (Appellant) appeals from the decision of the St. Louis County
Circuit Court affirming the decision of the Director (Director) of Missouri Department of
Social Services, Family Support Division (Division) establishing a claim for
overpayment of MO HealthNet for Families (MHF or Medicaid) benefits in the amount
of $8,367.66. We dismiss in part, affirm in part, reverse in part, and remand with
directions.
Factual and Procedural Background
On March 15, 2011, Appellant applied for MHF benefits for her infant daughter,
Edna Dolic (Edna). Appellant supplied the Division’s eligibility specialist with her 2010
federal income tax return. The Division worker advised Appellant that based on her
income, her daughter, Appellant, and her husband, Asmir, all qualified for coverage.
Relying upon the representation of the Division’s eligibility specialist, Appellant applied
for coverage for herself, her daughter, and her husband.
On March 16, 2011, the Division sent Appellant a MO HealthNet Action Notice,
indicating her family had been approved for MHF coverage. Approximately one year
later, during an annual review, the Division discovered its representative had incorrectly
used Appellant’s adjusted gross income instead of gross income in determining Edna’s
eligibility for benefits and informing Appellant her entire family was eligible for benefits.
On April 23, 2012, the Division mailed Appellant a notice stating the Dolics’ MHF
coverage was discontinued effective April 20, 2012.
On August 22, 2012, the Division mailed Appellant an Adverse Action Notice
seeking to establish a claim of $8,367.66 for public assistance the Dolics received from
March 2011 through April 2012. Appellant requested an administrative hearing.
On November 26, 2013, a hearing was held before the Director, at which
Appellant represented herself. At the hearing, the Division was represented by Jim
Dieckmeyer (Dieckmeyer), a Program Integrity Unit employee, who offered twelve
exhibits to support the Division’s action. Appellant initially objected to the admission of
the Division’s exhibits but upon being told by the Director that Appellant would be able
to testify and ask questions about the exhibits after they were entered into evidence,
Appellant ceased objecting to the admission of the Division’s exhibits.
Dieckmeyer did not present any testimony regarding how the Division determined
the amount of the alleged claim. Instead, he offered into evidence Exhibit 11, a computer
printout with additional handwritten entries, which he described as follows: “It’s a five
page exhibit. This is a report from state office giving the total amount of medical
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overpayment that occurred in the period of March 2011 through April 2012 of
$8,367.66.”
Appellant presented the following testimony at the hearing:
[Director]: Okay. [Appellant], tell me why you disagree with the
decision of the Agency to establish a claim?
[Appellant]: Because, first of all, I feel like I haven’t done
anything wrong. All I’ve done is applied and don’t know what are the
guidelines that they go by, so they – all they requested from [me] was a
copy of my taxes in order to qualify. And I only applied for my child, my
daughter, and they said based on looking at the income being so low that
we both qualified, so she said we should just both – have you both
applying because you qualify, so I don’t know what they did and how they
counted it to come up with this and why they didn’t check this sooner that
I’m not this far into debt. And another issue I have, once I went back and
they told me what my actual income was taken in consideration, every
time I spoke to a person at South County, everybody told me a different
thing as far as what is allowed on my self-employed taxes and what is not.
So, I don’t – I don’t even have no clue what they allow and what they
don’t allow because one of the items on my taxes that they said that don’t
– are not allowed, our actual business. It’s my husband is a truck driver –
[Director]: uh-huh.
[Appellant;] (indiscernible) a truck and we have trailer; that’s the
whole business. Without the trailer, you don’t have a business. So, they
said that that was not allowed because the way – where it was put in the
line of the taxes. So, once – how they explained it to me up at the South
County was it’s all what Missouri allows. And he said that it’s possible
you went back and checked your taxes and see if there’s different ways
that they can legally do them and see if it is allowed because it sounds – it
all depends how tax person does them. He said there’s different ways that
they do them and he might have just put your business cost at the spot
where Missouri doesn’t allow it. So, (indiscernible) list of which lines of
the taxes aren’t allowed for me, I could at least talked to my tax person
and see if my taxes are properly done or it could be (indiscernible) check
and see if my actual business equipment is allowed to be claimed.
Following the hearing, the Director prepared a “Decision and Order” concluding
“the [Division’s] proposed establishment of a claim of overpayment of MHF benefits to
[Appellant] in the amount of $8,367.66 is AFFIRMED” and ordering the Division “shall
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undertake whatever actions are necessary to implement the above Decision in a timely
manner.”
Appellant appealed the Director’s decision to the St. Louis County Circuit Court.
At the court’s request, the Division filed a document setting forth additional information
detailing the expenditures purportedly made by the State on behalf of the Dolic family.
The circuit court entered a judgment affirming the Division’s establishment of a claim for
recoupment against Appellant but modifying the amount of the claim to account for the
Division’s admission that Edna was, in fact, eligible for benefits during the applicable
time period. The circuit court ordered the Director to set the claim amount to $7,377.66
for recoupment of expenditures made on behalf of Appellant and Asmir Dolic. This
appeal follows.
Points Relied On
In her first point on appeal, Appellant argues the Division erred in collecting the
MHF overpayment through a means other than decreasing, suspending, or entirely
withdrawing future Medicaid benefits.
In her second point on appeal, Appellant contends the Division erred in collecting
a MHF overpayment when the benefits were not received through misrepresentation or
nondisclosure of material facts or a failure to report any changes in status or correct
information with respect to property or income.
In her third point on appeal, Appellant argues the Division violated the due
process requirements of the Medicaid Act and the Fourteenth Amendment to the United
States Constitution by issuing legally insufficient notice of the MHF overpayment claim
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and misleading Appellant regarding her eligibility and the circumstances in which she
would have to repay the Division for overpaid benefits.
Standard of Review
Article V, Section 18 of the Missouri Constitution establishes the standard of
judicial review of administrative actions. When reviewing an administrative action, this
Court reviews the determination of the agency, not the circuit court. Albanna v. State Bd.
of Registration for Healing Arts, 293 S.W.3d 423, 428 (Mo. banc 2009). This Court
reviews the agency action to determine whether the agency’s findings are supported by
competent and substantial evidence on the record as a whole; the decision is arbitrary,
capricious, unreasonable, or involves an abuse of discretion; or the decision is
unauthorized by law. M.A.H. v. Missouri Dept. of Soc. Services, 447 S.W.3d 694, 696-
97 (Mo. App. E.D. 2014). On review, we defer to the Commission’s findings of fact and
determinations of credibility. George v. Civil Serv. Comm’n of City of St. Louis, 318
S.W.3d 266, 269 (Mo. App. E.D. 2010). Questions of law are reviewed de novo.
Albanna, 293 S.W.3d at 428.
Discussion
Point I – Method of Collection Not Ripe for Review
In her first point, Appellant challenges the Division’s method of collection on the
alleged overpayment of Medicaid benefits. Appellant contends the Division is only
authorized to collect Medicaid overpayments through decreasing, suspending, or entirely
withdrawing future Medicaid benefits pursuant to Section 208.010 RSMo Supp. 2010,
and the Division may not seek restitution or recovery of the overpayment in any other
manner.
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Section 208.010.2(3) RSMo Supp. 2010 provides in relevant part:
2. Benefits shall not be payable to any claimant who:
…
(3) Has received, or whose spouse with whom he or she is living has received,
benefits to which he or she was not entitled through misrepresentation or
nondisclosure or material facts or failure to report any change in status or correct
information with respect to property or income as required by Section 208.210. A
claimant ineligible pursuant to this subsection shall be ineligible for such period
of time from the date of discovery as the division of family services may deem
proper; or in the case of overpayment of benefits, future benefits may be
decreased, suspended or entirely withdrawn for such period of time as the division
may deem proper[.]
The Division correctly asserts, however, that Appellant’s Point I is not ripe for
review. It is clear from Appellant’s point she is not appealing the establishment of the
claim, but only the method of collection. At this point, the Division has only sought to
establish a claim for overpayment and has not yet attempted to execute on that claim in
any manner. Because the Division has not taken any action to collect on the claim, this
Court cannot review the propriety of the Division’s not-yet-determined method of
collection.1 Hassan v Division of Employment Sec., 389 S.W.3d 290, 293-94 (Mo. App.
W.D. 2013)(appeal dismissed because appellant was not appealing the commission’s
finding of an overpayment of benefits but the potential future method of collection).
Appellant’s Point I is dismissed.
Point II – Authority to Collect the Overpayment
In her second point, Appellant contends the Division erred in collecting a
Medicaid overpayment when the benefits were not received due to any misrepresentation,
1
This Court’s resolution of the collection issue on the basis of ripeness is not a bar to Appellant’s ability to
challenge any collection attempt by the Division in the future. See Prince v. Division of Family Services,
886 S.W.2d 68, 73 (Mo. App. W.D. 1994) (raising the defense of estoppel in the State’s collection action
for overpayment of public assistance benefits).
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nondisclosure, or failure to report a change in status or correct information with respect to
property or income on her part. Although Appellant’s point on appeal suggests she is
challenging the “collection” of the overpayment similar to her first point, in substance
Appellant’s Point II challenges the Division’s authority to establish a claim of
overpayment of benefits when the overpayment was the result of the agency’s error.
Appellant contends Section 208.010.2(3) authorizes the Division to collect overpayment
of Medicaid benefits only from someone who received benefits he or she was not entitled
to “through misrepresentation or nondisclosure of material facts or failure to report any
changes in status or correct information with respect to property or income[.]” Appellant
maintains because the overpayment was a result of agency error and not due to a
misrepresentation or failure to disclose on her part, the Division has no statutory authority
to collect the overpayment from her.
Section 207.020.1 RSMo Supp. 1993, sets forth the powers and duties of the
Division to administer public assistance programs. 13 C.S.R. 40-2.190, promulgated
pursuant to Section 207.020 and titled “Procedure for Collection of Overpayments”,
states “Restitution and recovery may be required if at any time it is determined that a
recipient has received benefits to which s/he was not entitled because of a state or federal
statutory or regulatory requirement.”
Section 205.967.1 RSMo 1981 provides in relevant part:
1. As used in this section:
(1) “Public assistance benefits, programs and services” means anything of
value, including…drugs and medicine, and any service, including medical
care…provided pursuant to chapters 198, 207, 208, 209 and 660, or
benefits, programs, and services provided or administered by the
department of social services;
(2) The term “person” means any individual…who received any form of
public assistance benefit in any manner for any reason.
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…
5. If during the life or on the death of any person… it is found that the recipient
was possessed of income or property in excess of the amount reported or
ascertained at the time of granting assistance, and if it be shown that such
assistance was obtained by an ineligible recipient, the total amount of the
assistance may be recoverable by the director of the department of social services
as a seventh class claim from the estate of the recipient or in an action brought
against the recipient while living.
Furthermore, Section 208.210.2, titled “Undeclared income or property – benefits
may be recovered by department of social services, when” states:
Any benefits paid when the recipient or the recipient’s spouse is in
possession of such undeclared property or income shall be recoverable by
the department of social services as a debt due to the state. If during the
life, or upon the death, of any person who is receiving or has received
benefits, it is found that the recipient or the recipient’s spouse was
possessed of any property or income in excess of the amount reported that
would affect his or her needs or right to receive benefits, or if it be shown
such benefits were obtained through misrepresentation, nondisclosure of
material facts, or through mistake of fact, the amount of benefits, without
interest, may be recovered from him or her or his or her estate by the
department of social services as a debt due the state.
(Emphasis added.)
Although there is no dispute the overpayment of benefits in this case was solely
the result of the Division’s actions, these statutes do not require the Division to prove
misconduct by the recipient for it to collect in the event of an overpayment of benefits.
Section 208.210.2 specifically states the amount of benefits may be recovered from any
person who received benefits due to a mistake of fact. The agency’s miscalculation of
Appellant’s income was a mistake of fact. Even though the agency’s actions, which
included encouraging Appellant to apply for benefits she was not seeking, resulted in the
agency’s extension of Medicaid benefits to Mr. and Mrs. Dolic despite their ineligibility,
Appellant has received an overpayment of benefits, which the State may recover. The
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agency may establish a claim for the overpayment of benefits even though the benefits
were not received due to Appellant’s misrepresentation, nondisclosure, or failure to
report a change in status or correct information with respect to property or income.
Appellant’s Point II is denied.
Point III – Due Process
In her third point, Appellant argues the agency violated her due process rights
because the Adverse Action Notice dated August 22, 2012, purporting to establish a
claim of $8,367.66 fails to comply with procedural due process, in that it does not fully
inform Appellant of the case against her in order for her to adequately contest the
Division’s action. Appellant argues neither the notice nor the record contains
information explaining how the Division determined the amount of the claim.
“‘The due process clauses under the United States and Missouri constitutions
prohibit the taking of life, liberty, or property without due process of law.’” State ex rel.
Missouri Pipeline Co. v. Missouri Pub. Serv. Comm’n, 307 S.W.3d 162, 174 (Mo. App.
W.D. 2009), as modified (Feb. 2, 2010), quoting Colyer v. State Bd. of Registration for
the Healing Arts, 257 S.W.3d 139, 144 (Mo. App. W.D. 2008). “Due process requires
notice and a hearing; moreover, the adequacy of the notice and the hearing must be
evaluated in the context of the specific procedure at issue, in this case, an administrative
proceeding.” State ex rel. Missouri Pipeline Co., 307 S.W.3d at 174.
“In an administrative proceeding, due process is provided by
affording parties the opportunity to be heard in a meaningful manner. The
parties must have knowledge of the claims of his or her opponent, [and]
have a full opportunity to be heard, and to defend, enforce and protect his
or her rights.” [Citation omitted] “A party to an administrative hearing
must be given the opportunity to hear evidence submitted against him, to
confront and cross-examine witnesses, and to rebut testimony of such
witnesses by evidence on his own behalf.”
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Id. (internal citations omitted).
The Division must maintain a hearing system that meets the due process standards
set forth in Goldberg v. Kelly, 397 U.S. 254, 267-68, 90 S. Ct. 1011, 1020, 25 L.Ed.2d
287 (1970). 42 C.F.R. § 431.205(d). “‘The fundamental requisite of due process of law
is the opportunity to be heard.’” Goldberg, 397 U.S. at 267 (requiring hearing prior to
termination of some types of public assistance benefits), quoting Grannis v. Ordean, 234
U.S. 385, 394, 34 S.Ct. 779, 783, 58 L.Ed. 1363 (1914).
The hearing must be ‘at a meaningful time and in a meaningful
manner.’ Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191,
14 L.Ed.2d 62 (1965). In the present context these principles require that
a recipient have timely and adequate notice detailing the reasons for a
proposed termination, and an effective opportunity to defend by
confronting any adverse witnesses and by presenting his own arguments
and evidence orally. These rights are important in cases such as those
before us, where recipients have challenged proposed terminations as
resting on incorrect or misleading factual premises or on misapplication of
rules or policies to the facts of particular cases.
Goldberg, 397 U.S. at 267-68.
Goldberg further dictates the judgment must rest solely upon the legal rules and
evidence adduced at the hearing and states “where governmental action seriously injures
an individual, and the reasonableness of the action depends on fact findings, the evidence
used to prove the Government’s case must be disclosed to the individual so that he has an
opportunity to show that it is untrue.” Id. at 270-71.
In addition to the constitutional requirements for a fair hearing outlined in
Goldberg, 397 U.S. 254, and its progeny, federal regulation 42 C.F.R. § 431.205
prescribes further procedural safeguards. 42 C.F.R. § 431.205(d) specifically requires the
hearing system to satisfy any additional standards specified by the federal regulations.
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Featherston v. Stanton, 626 F.2d 591, 593 (7th Cir. 1980). The requirements for “Fair
Hearings for Applicants and Beneficiaries” are outlined in 42 C.F.R §§ 431.200 to
431.250.
The agency’s notice must be written and contain a statement of what action the
agency intends to take, the reasons for the intended action, the specific regulations that
support the action, and an explanation of the recipient’s right to request an administrative
hearing. 42 C.F.R. § 431.210. In this case, the Adverse Action Notice dated August 22,
2012, stated Appellant was required to repay pursuant to 13 C.S.R. 40-2.190(1),
$8,367.66 in MHF benefits she incorrectly received from March 2011 through April 2012
due to “an income budgeting error.” The Adverse Action Notice advised Appellant she
had the right to a hearing if she disagreed with the agency’s decision. This notice
satisfied the bare minimum requirements of due process as set forth in 42 C.F.R. §
431.210. However, the minimal notice combined with the subsequent actions of the
agency amounted to a denial of Appellant’s right to procedural due process.
42 C.F.R. § 431.242, titled “Procedural rights of the applicant or beneficiary”
provides:
The applicant or beneficiary, or his representative, must be given an
opportunity to—
(a) Examine at a reasonable time before the date of the hearing and during
the hearing:
(1) The content of the applicant’s or beneficiary’s case file; and
(2) All documents and records to be used by the State or local
agency or the skilled nursing facility or nursing facility at the
hearing;
(b) Bring witnesses;
(c) Establish all pertinent facts and circumstances;
(d) Present an argument without undue interference; and
(e) Question or refute any testimony or evidence, including opportunity to
confront and cross-examine adverse witnesses.
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42 C.F.R. § 431.242.
On December 5, 2012, the agency sent Appellant a Notice of Administrative
Hearing advising Appellant of the time and place of her telephone hearing. Contrary to
the Division’s assertion at oral argument, the Notice of Administrative Hearing did not
notify Appellant that she could obtain copies of the pertinent documents prior to her
hearing. Instead, it advised Appellant she must arrive at the hearing “at least 30 minutes”
prior to the time of her scheduled hearing if she wanted to “review the proposed exhibits
prior to the hearing[.]”
At the hearing, when the Division began offering its exhibits into the record,
Appellant initially objected to their admission. When Appellant objected to the
admission of Exhibit 1 because it contained incorrect income information, the Director
told Appellant, “Okay. And I’ll have you testify about that when it comes your turn to
testify.” When Appellant then objected to the admission of Exhibit 2 due to possible
inaccuracies because Appellant received conflicting information from agency employees
about the business income information contained therein, the Director again told
Appellant: “Okay. And you’ll be allowed to ask questions once these are entered [into
evidence.]” Following these exchanges Appellant ceased objecting to the admission of
the Division’s exhibits.
On appeal, Appellant argues neither the notice nor the record explains how the
amount of the Division’s claim was determined because the Division presented no
testimony regarding its determination and the Division’s exhibit purporting to support its
determination, Exhibit 11, contains no explanation of the figures used in computing the
claim nor the Division’s rationale for including any of the figures in its computation of
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the claim. Appellant contends she does not know how the Division determined the sum
she allegedly owes, including whether the Division factored in Edna’s eligibility.
Exhibit 11 is best described as a computer printout of an incomprehensible list of
dates and numbers. It contains no provider names and no service details other than
“Drug,” “Medical,” “Outpatient,” and “Capitation Payment.” It contains an unexplained
column of numbers under the heading “ICN” for which this Court cannot decipher any
sort of pattern or meaning. The printout appears to be solely for Appellant and contains
what appears to be a specific “DCN” number for Appellant. However, a great deal of the
exhibit appears to include charges for a different “DCN” number. The Division
attempted to rectify this deficiency by penciling in Asmir’s name next to this “DCN”
number on the first page of the exhibit. The exhibit also shows amounts not included on
the original printout penciled in by an unknown party.
While the Division contends its judgment withstands scrutiny because Exhibit 11
contains dates and figures under a column marked “PAIDAMT,” when all of the figures
under the “PAIDAMT” column are added together it amounts to $7,377.66. The Director
concluded, however, that the Division had established a claim for $8,367.66. This
amount is reached only if one adds an additional $990, an amount presumably divined
from the unexplained calculations scribbled on the first page of the exhibit under the
handwritten heading “3 phh CHIP74.” The Division takes the position that this Court can
simply ignore the additional sums and modify the amount of the claim similar to the
circuit court. We disagree.
This Court reviews the determination of the agency, not the circuit court, and
reviews the agency’s action to determine whether the agency’s findings are supported by
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competent and substantial evidence on the record as a whole. Albanna, 293 S.W.3d at
428; M.A.H., 447 S.W.3d at 696-97. In modifying the Director’s determination, the
circuit court relied on additional information submitted by the Division that was neither
before the agency nor properly before this Court. This includes documentary evidence
purporting to detail the expenditures made by the State on behalf of the Dolic family as
well as the Division’s admission that Edna was, in fact, eligible for coverage and it had
erred in adding an additional $990 to its claim. Federal constitutional due process
requires the judgment to rest solely upon the evidence adduced at the administrative
hearing. Goldberg, 397 U.S. at 270-71.
When viewed in full, the sequence of events in this case demonstrates
Appellant’s due process rights were violated. While the Adverse Action Notice meets the
bare minimum requirements, the notice combined with the lack of adequate hearing
procedures violated Appellant’s due process rights. The notice provided by the Division
simply stated Appellant was required to repay $8,367.66 for the overpayment of benefits.
The Division did not provide Appellant with any information advising her how it
determined this amount. As noted by Appellant’s counsel during oral argument,
Appellant did not receive a cash benefit and there is no evidence suggesting Appellant
possessed any independent knowledge of the amounts allegedly paid on her behalf. It
appears the Division is seeking the repayment of funds the State paid to third-party
providers. The sole piece of evidence presented against Appellant at the hearing
purporting to support the amount of the agency’s claim lacks necessary information to
enable Appellant to contest the agency’s allegations. Without information regarding the
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providers allegedly paid or the services allegedly rendered, it is impossible for Appellant
to effectively dispute the agency’s evidence.
Appellant was not afforded a reasonable time prior to the date of the hearing to
examine the documents the State intended to use as evidence against her, the Director
actively discouraged Appellant from objecting to the evidence presented against her, and
the Division failed to present evidence in support of its claim that contained the basic
information necessary for Appellant to refute the Division’s evidence. The agency’s
actions violated Appellant’s federal statutory due process rights as set forth in 42 C.F.R.
§ 431.242, including her rights to establish all pertinent facts and circumstances; present
an argument without undue interference; and question or refute the Division’s evidence
against her. Appellant is entitled to a new hearing that comports with state and federal
due process requirements.
As an aside, the Division has acknowledged there is no federal or state mandate
requiring it to collect the overpayment of Medicaid benefits occasioned by governmental
error. Conferred with such discretion, the Division should exercise it in a way that
comports with common sense, equity, and fairness. In circumstances such as these,
where the state agency encouraged Appellant to apply for and collect Medicaid benefits;
Appellant was forthright, honest, and fair; and the State admits it was the impetus for the
overpayment, perhaps the State should consider whether collection against an individual
whose income is of such a nature that her daughter is, nevertheless, entitled to receive
medical benefits from the State, is the optimal use of its resources. The State might be
better served if those resources were allotted to efforts to improve the system which
caused this unnecessary error and expense.
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For the reasons discussed herein, we reverse and remand to the Director for a
rehearing to establish the amount of the alleged overpayment of benefits to Appellant.
Appellant’s Point III is granted.
Conclusion
The judgment of the trial court is dismissed in part, affirmed in part, reversed in
part, and remanded with directions.
SHERRI B. SULLIVAN, P.J.
Kurt S. Odenwald, J., and
Lisa P. Page, J., concur.
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