Hot air coming out all the time when gas engine is on

This is per the dealer invoice as I brought it in and paid $200 for their diagnostics:

" Found codes B1441 & B1448. Cleared codes, performed A/C initialization. Codes came back. Inspected servo motors for mechanical damage. Was unable to find damage. Require tear down to further inspect. Rec replace A/C heater box. Part# 87050-47400. "

My further findings about the hot air coming out of the vents is that when the car is in EV mode, the AC works properly, cold air comes out. As I slowly cranked up the temp, warmer air comes out of vents. When the car has used up the battery in EV mode and the engine kicks in, that's when only hot air comes out of vents regardless of AC/temp setting. I also noticed there is no air comes out on the front passenger vent even when the driver-only vent mode is turned off (this is an Econ mode in Prius Prime where hot/cold air comes out of the driver side vent ONLY to save energy).

Also, all ventilation settings are gone after the car is turned off for an hour or so. When I turn the engine back on, I have to set up the temperature, how much air flow, air vent mode (top, middle, bottom to the feet), Econ mode, etc. The settings are kept if I turn off the engine then back on after a few minutes. If I turn on the engine an hour or two later, the previous settings are gone.