Kahlon, S. v. Lehigh Valley Health Net.

• Court: Superior Court of Pennsylvania
• Decided: August 30, 2023
• Docket: 1537 EDA 2022
• Status: Unpublished

Opinion

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37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 -