RPTS FROM BOTH THE RADAR AND ASSOCIATE CTLRS DESCRIBE OPERROR AND OPDEV AT FL350 WHEN BOTH FAILED TO HEAR INCORRECT ALT READBACK.

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ACR X LEVEL AT FL330 REQUESTING FL350. ACR X WAS CLBED TO FL340; THE TOP ALT OF THE SECTOR. ACR X READ BACK FL350; WHICH WAS MISSED. ACR X WAS SWITCHED TO THE NEXT FREQ BUT DID NOT GO OVER. INSTEAD; ASKED ABOUT TFC AND RESPONDED TO AN RA. ACR X WAS REISSUED FL340. SEPARATION WAS LOST BTWN ACR X AND ACR Y WHO REMAINED LEVEL AT FL350. CONFLICT ALERT ACTIVATED AFTER LOSS OF SEPARATION. SUPPLEMENTAL INFO FROM ACN 674158: I WAS WORKING RADAR ASSOCIATE POS. RADAR PERSON GAVE ACFT #1 CLRNC TO CLB TO FL340. THE PLT READ BACK FL350 AND NEITHER RADAR CTLR NOR I CAUGHT THE READBACK. I WAS ON THE LANDLINE AT THE TIME OF THE CLRNC SO I DIDN'T HEAR IT. AS ACR X PASSED THROUGH FL340 (WE WERE SHOWING THAT HE HAD JUST LEVELED); THE PLT SAID; 'WE ARE RESPONDING TO OUR TCASII.' THE CTLR TOLD HIM TO VERIFY LEVEL AT FL340 BUT THE PLT INSISTED HE WAS ASSIGNED FL350. HIS TFC WAS AT FL350; WHICH BELONGED TO THE SECTOR ABOVE US SO WE DIDN'T HAVE A FULL DATA BLOCK ON HIM. THE RADAR PERSON DSNDED ACR X BACK TO FL340 BUT THEY HAD ALREADY LOST SEPARATION.