Kahlon, S. v. Lehigh Valley Health Net. ( 2023 )

J-A14019-23
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37
STEVEN KAHLON : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
LEHIGH VALLEY HEALTH NETWORK, : No. 1537 EDA 2022
INC. AND LEHIGH VALLEY HOSPITAL, :
INC. :
v. :
:
:
JOHNNY SHEA-YUAN CHUNG, M.D., :
JOHNNY CHUNG, M.D., P.C., AND :
AESTHETIC SURGERY ASSOCIATES, :
LLP :
Appeal from the Order Entered June 8, 2022
In the Court of Common Pleas of Lehigh County Civil Division at No(s):
2018-C-0125
BEFORE: PANELLA, P.J., DUBOW, J., and SULLIVAN, J.
MEMORANDUM BY DUBOW, J.: FILED AUGUST 30, 2023
Appellant, Steven Kahlon, appeals from the June 8, 2022 Order entered
in the Lehigh County Court of Common Pleas which rendered final and
appealable the court’s May 13, 2023 order granting the motion for summary
judgment filed by Lehigh Valley Health Network, Inc. and Lehigh Valley
J-A14019-23
Hospital, Inc. (collectively, “LVHN”).1 Appellant challenges the entry of
summary judgment in favor of LVHN. After careful review, we affirm.
This appeal pertains to allegations made by Appellant that LVHN
permitted one of Appellant’s former business partners, Dr. Johnny Chung
(“Chung”), who was a doctor affiliated with LVHN, to access and disseminate
Appellant’s private medical records to other parties with whom Appellant had
actual and prospective business dealings. Appellant claimed that Chung’s
actions caused Appellant to suffer financial losses. The relevant facts and
procedural history are as follows.
Chung, Thomas Bartolacci (“Bartolacci”), and Appellant were equal
partners in Diamond Luxury Motors, LLC. Appellant was the managing
member of the partnership; Chung and Bartolacci were silent partners. In
2013 or 2014, Diamond Luxury Motors, LLC purchased a Toyota dealership
from Frederick Laurenzo (“Laurenzo”). In early 2016, Appellant’s business
relationship with Chung and Bartolacci soured, resulting in Chung and
Bartolacci suing Appellant for fraud and mismanagement and Appellant
resigning as managing partner.
____________________________________________
1 The May 13, 2023 Order also addressed the motion for summary judgment
filed by Johnny Shea-Yuan Chung, M.D., Johnny Chung, M.D., and Aesthetic
Surgery Associates, LLP (collectively “Additional Defendants’’) by dismissing
it in part as moot and denying it in part.
-2-
J-A14019-23
The 2016 Agreement
In mid-2016, prior to his resignation of as managing partner of Diamond
Luxury Motors, LLC, Appellant and Laurenzo began separately negotiating
Appellant’s purchase of another of Laurenzo’s car dealerships, Frederick
Chevrolet, and certain real estate related thereto. On July 22, 2016, Appellant
and Laurenzo signed a Stock and Real Estate Purchase Agreement for
Frederick Chevrolet and its associated real estate (the “2016 Agreement”).
The 2016 Agreement set a closing date of July 29, 2016, and expressly stated
that it “cannot be amended orally but only by a writing executed by the
parties.” 2016 Agreement, 7/22/16, at ¶¶ 6, 14(e). The 2016 Agreement
also contained an integration clause providing that the 2016 Agreement
“contain[s] the entire Agreement of the parties and supersede[s] and
replace[s] all prior agreements of understandings of the parties, whether
written or oral, relating to the subject matter of this Agreement.” Id. at 14(f).
Appellant sought, but was unable to obtain, financing to complete the
purchase by the July 29, 2016 closing date. On August 23, 2016, counsel for
Laurenzo informed Appellant’s counsel in writing that the original closing date
had passed and warned that “if closing does not occur on or before August 31,
2016, we will consider your client to have breached the Agreement and will
proceed accordingly.” Letter, 8/23/16. Closing did not occur on or before
August 31, 2016.
On September 7, 2016, counsel for Laurenzo sent a second letter to
Appellant’s counsel again extending the deadline for closing on the
-3-
J-A14019-23
Agreement. Counsel explained that, in exchange for Appellant’s payment of
$200,000, Laurenzo would extend the closing date to September 23, 2016.
Appellant paid Laurenzo $200,000 to extend the closing deadline but was still
unable to secure financing to close on the 2016 Agreement to purchase
Frederick Chevrolet by September 23, 2016.2 In fact, Appellant never closed
as expected.
Appellant’s Health Problems and Disclosure of his Private Health
Information
In mid-2016, while negotiating the 2016 Agreement, Appellant began
experiencing health problems, which resulted in periodic, short
hospitalizations and travel to see specialists. Appellant’s symptoms worsened
throughout the year and, on September 15, 2016, Chung—who had previously
treated Appellant, was an affiliated provider of LVHN, and had hospital
privileges at Lehigh Valley Hospital-Cedar Crest and Lehigh Valley Hospital-
Muhlenberg—admitted Appellant with complaints of, among other things,
severe abdominal pain. Ultimately, Appellant spent from December 7, 2016,
to April 1, 2017, hospitalized, first at Lehigh Valley Hospital-Muhlenberg and
then at Lehigh Valley Hospital-Cedar Crest. On December 16, December 20,
____________________________________________
2 Subsequently, Laurenzo filed a breach of contract action against Appellant
for Appellant’s breach of the 2016 Agreement and obtained an $8.4 million
default judgment against Appellant.
-4-
J-A14019-23
and December 26, 2016, Appellant designated Chung and Bartolacci as
individuals not permitted to visit him during his hospitalizations.
Through his affiliation with LVHN, Chung had access to LVHN’s electronic
medical records (“EMR”) system. On February 2, February 7, and February 9,
2017, Chung, who was not treating Appellant, accessed Appellant’s EMR.
On February 9, 2017, Chung entered Appellant’s hospital room, verbally
threatened him regarding their business dealings, and attempted to force
Appellant to sign documents transferring his ownership interests in Diamond
Luxury Motors, LLC to Chung. When Appellant’s then-girlfriend and father
asked nursing staff to call security to remove Chung from Appellant’s room,
staff refused. That same day, Appellant notified LVHN that Chung had
unlawfully accessed his EMR.
Chung further accessed Appellant’s EMR 14 times between April and July
2017, viewing more than 300 records. During that same period, Appellant’s
then-girlfriend and his father contacted LVHN employees at least 30 times
regarding Chung’s improper review of Appellant’s EMR. On September 19,
2017, LVHN’s privacy officer wrote Appellant a letter confirming that Chung
had inappropriately accessed Appellant’s EMR and private health information
(“PHI”) on 12 occasions between February and June 2017. LVHN later
confirmed four additional instances of Chung’s inappropriate access to
Appellant’s EMR.
The 2018 Agreements
-5-
J-A14019-23
In early 2018, Appellant entered into two different contracts with
Laurenzo: an Asset Purchase agreement to acquire the assets of Frederick
Chevrolet and a Real Estate Purchase Agreement (the “2018 Agreements”).
The 2018 Agreements were new and materially different from the 2016
Agreement in terms of structure, purchase price, and parties. The 2018
Agreements set a closing date of April 2, 2018, contained an integration
clause, and required any changes to it be made in writing. Appellant was
again unable to secure financing and the closing date passed.3
Appellant Commenced the Instant Litigation
On March 16, 2018, Appellant filed a Complaint against LVHN asserting
claims of Breach of Patient Confidentiality, Negligence, Negligence Per Se,
Negligent Entrustment, and Violation of the Unfair Trade Practices and
Consumer Protection Law (“UTPCPL”). In essence, Appellant claimed that, as
a result of LVHN’s failure to stop Chung’s unauthorized access to Appellant’s
electronic medical records, Chung and Bartolacci engaged in a plan to, and in
fact did, spread false information about Appellant’s health to potential lenders
to discourage them from financially backing Appellant’s purchase of Frederick
Chevrolet and the associated real estate. Appellant also alleged that he lost
other business opportunities, including the ability to purchase three
motorcycle dealerships over which negotiations began in 2016. Appellant
____________________________________________
3 Laurenzo sold Frederick Chevrolet and its related real estate to unrelated
third parties in 2019.
-6-
J-A14019-23
claimed that LVHN’s negligence resulted in $20 to $30 million in business
losses.
On April 24, 2018, LVHN filed an Answer with New Matter. Three weeks
later, LVHN filed a Complaint to Join Additional Defendants against Johnny
Shea-Yuan Chung, M.D., Johnny Chung, M.D., and Aesthetic Surgery
Associates, LLP asserting claims of Breach of Patient Confidentiality, Assault,
Breach of Contract, Indemnification and Contribution, and Contractual
Indemnification. On May 15, 2018, LVHN filed an Amended Answer with New
Matter to Appellant’s complaint.
On May 31, 2018, Appellant filed Preliminary Objections to LVHN’s
Amended Answer and, on August 6, 2018, Appellant filed a Reply to LVHN’s
New Matter.
On February 7, 2019, Additional Defendants filed an answer with new
matter to LVHN’s joinder complaint and a counterclaim for contribution and
indemnification against LVHN.
On April 8, 2019, Appellant filed an amended complaint against LVHN
reasserting the five claims he pleaded in his initial complaint and adding claims
for Tortious Interference with Contractual Relations and Tortious Interference
with Prospective Contractual Relations. Appellant did not assert any claims
against Additional Defendants.
The next day, LVHN filed preliminary objections to the tortious
interference claims in the amended complaint. Following briefing and
argument of the parties, the trial court sustained the preliminary objections
-7-
J-A14019-23
and struck Appellant’s Tortious Interference with Contractual Relations and
Tortious Interference with Prospective Contractual Relations claims. On
September 5, 2019, LVHN filed an Answer with New Matter to the Amended
Complaint.
On September 11, 2019, LVHN filed its Second Amended Complaint to
Join Additional Defendants and asserted causes of action for Breach of Patient
Confidentiality, Assault, Breach of Contract, Indemnification and Contribution,
and Contractual Indemnification against Additional Defendants. On
September 23, 2019, Additional Defendants filed an answer with new matter
and again asserted a counterclaim against LVHN for contribution and
indemnification.
On September 25, 2019, Appellant filed his answer to LVHN’s new
matter.
LVHN’s Motion for Summary Judgment
The parties engaged in extensive discovery, following which the LVHN
and the Additional Defendants filed motions for summary judgment.4
Relevant to the instant appeal, LVHN asserted in its motion that Appellant
could not meet his burden to establish causation because the alleged
negligence and misconduct of LVHN and Additional Defendants did not
____________________________________________
4 On March 24, 2021, prior to the parties’ filing motions for summary
judgment, the trial court dismissed with prejudice Appellant’s claim for
violation of the UTPCPL. Thus, only his Breach of Patient Confidentiality,
Negligence, Negligence Per Se, Negligent Entrustment claims remained before
the trial court. Appellant has not appealed the dismissal of these claims.
-8-
J-A14019-23
proximately cause his financial loss. LVHN also argued that summary
judgment was appropriate because Appellant’s causes of action for Breach of
Patient Confidentiality, Negligent Entrustment, and Negligence Per Se fail as
a matter of law.
On September 21, 2021, the court held a hearing on the parties’ motions
for summary judgment. After considering the evidence and arguments
submitted at the hearing, as well as the complete deposition testimony of 12
witnesses, on May 13, 2022, the trial court granted LVNH’s motion for
summary judgment and dismissed Additional Defendants motion for summary
judgment as moot.5 The trial court determined, inter alia, that, as a matter
of law, LVHN’s alleged negligent acts did not cause the damages allegedly
incurred by Appellant because the 2016 Agreement expired on July 26, 2016,
prior to Chung’s alleged inappropriate access to Appellant’s EMR and LVHN’s
knowledge of the inappropriate access. As a result, Appellant’s right to
purchase Frederick Chevrolet expired on July 26, 2016, and the unauthorized
access to Appellant’s medical records in February 2017, could not have
affected Appellant’s right to purchase Frederick Chevrolet.
The trial court also found that Appellant’s claims failed as a matter of
law because: (1) Pennsylvania has not extended the cause of action for breach
of physician-patient confidentiality to impose liability on a hospital or health
____________________________________________
5 On June 8, 2022, the trial court entered an order approving of a proposed
stipulation of the parties to dismiss LVHN’s second amended complaint to join
Additional Defendants. This order resolved all outstanding claims against all
parties, thus, rendering the court’s May 13, 2022 Order final and appealable.
-9-
J-A14019-23
care network arising from a physician’s accessing an EMR without
authorization; (2) Appellant failed to plead with the requisite specificity facts
regarding the 2018 Agreements and how LVHN’s purported negligence
prevented those agreements from being finalized; and (3) Appellant failed to
produce evidence sufficient to support and prove the factual averments
pertaining to the lost opportunity to purchase the motorcycle businesses.
This timely appeal followed. Appellant complied with the trial court’s
order to file a Pa.R.A.P. 1925 statement. The trial court filed a Rule 1925(a)
opinion directing this court to its May 13, 2022 Memorandum Opinion.
Appellant raises the following issues on appeal:
1. Can a contract of sale—which has a date set for closing and
which provides that it can only be amended in writing signed
by both parties—be amended for extensions by letters from
one party’s attorney and orally by both parties such that the
contract remains extant when closing does not take place by
the written closing date?
2. Does Pennsylvania recognize a common law claim for breach
of patient confidentiality and may such a claim be brought
against a health care facility, as opposed to only a physician?
Appellant’s Brief at 5.
A.
Our Supreme Court has clarified our role as the appellate court as follows:
On appellate review [ ], an appellate court may reverse a grant of
summary judgment if there has been an error of law or an abuse
of discretion. But the issue as to whether there are no genuine
issues as to any material fact presents a question of law, and
therefore, on that question our standard of review is de novo. This
means we need not defer to the determinations made by the lower
tribunals. To the extent that this Court must resolve a question of
- 10 -
J-A14019-23
law, we shall review the grant of summary judgment in the
context of the entire record.
Summers v. Certainteed Corp., 997 A.2d 1152, 1159 (Pa. 2010) (citations
omitted).
A trial court may grant summary judgment “only in those cases where
the record clearly demonstrates that there is no genuine issue of material fact
and that the moving party is entitled to judgment as a matter of law.” Id.(citation omitted); see also Pa.R.C.P. 1035.2(1). “When considering a motion
for summary judgment, the trial court must take all facts of record and
reasonable inferences therefrom in a light most favorable to the non-moving
party.” Summers, 997 A.2d at 1159. “In so doing, the trial court must
resolve all doubts as to the existence of a genuine issue of material fact
against the moving party, and, thus, may only grant summary judgment
where the right to such judgment is clear and free from all doubt.” Id.
(citation and internal quotation marks omitted).
B.
Appellant avers that the trial court first erred in determining that the
2016 Agreement had expired by its terms prior to Chung’s unauthorized
access to and alleged dissemination of Appellant’s PHI to potential financing
partners. Appellant’s Brief at 28-43. Appellant then argues that the trial court
erred in concluding that LVHN’s purported negligence in 2017 did not cause
Appellant to lose the right to purchase Frederick Chevrolet when the 2016
Agreement failed. Id. Appellant argues that, in fact, Laurenzo and Appellant
- 11 -
J-A14019-23
had extended the closing date of the 2016 Agreement twice when Laurenzo’s
attorney sent two letters to Appellant’s attorney with two specific closing dates
and, ultimately, indefinitely by way of an alleged oral agreement whereby
Laurenzo gave Appellant an unlimited extension until he could get financing.
Id. at 29-30. This argument is unavailing.
Appellant’s issue requires us to consider and interpret the terms of the
2016 Agreement. Because contract interpretation is a question of law, our
standard of review is de novo, and the scope of review is plenary. Ragnar
Benson Inc. v. Hempfield Twp. Mun. Auth., 916 A.2d 1183, 1188 (Pa.
Super. 2007). Our Supreme Court has set forth the principles governing
contract interpretation as follows:
The fundamental rule in contract interpretation is to ascertain the
intent of the contracting parties. In cases of a written contract,
the intent of the parties is the writing itself. Under ordinary
principles of contract interpretation, the agreement is to be
construed against its drafter. When the terms of a contract are
clear and unambiguous, the intent of the parties is to be
ascertained from the document itself. . . . While unambiguous
contracts are interpreted by the court as a matter of law,
ambiguous writings are interpreted by the finder of fact.
Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 905 A.2d 462, 468-69
(Pa. 2006) (citations omitted).
Here, the 2016 Agreement clearly and unambiguously required that
closing must take place on or before July 29, 2016. 2016 Agreement at ¶ 6.
Closing on the 2016 Agreement indisputably did not take place on or before
July 29, 2016. Moreover, the 2016 Agreement also clearly and unambiguously
- 12 -
J-A14019-23
provided that it “cannot be amended orally but only by a writing executed by
both parties.” 2016 Agreement at ¶ 14(e).
Appellant has provided no evidence demonstrating that both he and
Laurenzo agreed in writing to extend the closing date beyond the date set in
the 2016 Agreement as required to amend the 2016 Agreement. Thus,
because the 2016 Agreement required any amendments to be in writing and
signed by both parties, and expressly prohibited oral amendments, neither
the letters sent by Laurenzo’s counsel to Appellant purporting to extend the
closing date, nor the alleged oral agreement between Appellant and Laurenzo
to do the same, had any legal effect. The 2016 Agreement, thus, expired on
July 29, 2016.
Since the 2016 Agreement expired on July 29, 2016, when Appellant
failed to obtain financing, we conclude the trial court properly found that
Appellant could not prove a causal relationship between any alleged
negligence by LVHN with respect to Chung’s 2017 unauthorized access to
Appellant’s EMR and Appellant’s claim that the unauthorized disclosure caused
him to lose the legal right to purchase Frederick Chevrolet granted to him by
the 2016 Agreement. Thus, the court correctly entered summary judgment
in favor of LVHN on Appellant’s negligence claim and Appellant is not entitled
to relief.6
____________________________________________
6 Appellant has not raised any challenge to the trial court’s conclusions
regarding the 2018 Agreements and Appellant’s alleged lost business
opportunities with respect to the motorcycle dealerships. We, thus, need not
address them.
- 13 -
J-A14019-23
C.
In his second issue, Appellant claims that the trial court erred in entering
summary judgment on his breach of patient confidentiality claim after the
court concluded that Pennsylvania permits a plaintiff to bring such a tort claim
only against a physician and not against a health care facility like LVHN.
Appellant’s Brief at 44-57. In light of our disposition of Appellant’s first issue—
that Appellant failed to demonstrate the existence of a causal relationship
between LVHN’s alleged negligence and Appellant’s damages—we need not
address the merits of this claim because, even if Pennsylvania law permitted
Appellant to assert this cause of action against LVHN, he would still be unable
to prove causation, i.e., that the unauthorized disclosure of Appellant’s
medical information caused him to lose the right to purchase Frederick
Chevrolet.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/30/2023
- 14 -