Case 5:19-cv-00784-FJS-TWD Document 1 Filed 06/28/19 Page 1 of 14

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF NEW YORK
SYRACUSE DIVISION

HERBERT KUNKLE, JR., M.D. and

HERBERT KUNKLE, JR., M.D., P.C.,

Plaintiffs, COMPLAINT

vs. Civil Action No.:

5:19-CV-784 [FJS/TWD]
AUBURN COMMUNITY HOSPITAL,
AUBURN MEMORIAL MEDICAL SERVICES, P.C.,
SCOTT BERLUCCHI, JOHN RICCIO and
SHERRI CLARK,

Defendants.

Plaintiffs, Herbert Kunkle, Jr., M.D. (“Dr. Kunkle”) and Herbert Kunkle, Jr., M.D., P.C.

(the “P.C.”), collectively (the “Plaintiffs”) by their attorneys, Woods Oviatt Gilman LLP, for

their complaint against the Defendants, allege as follows:

PRELIMINARY STATEMENT

1. This is an action by Dr. Kunkle for breach of contract, breach of the duty of good

faith and fair dealing inherent in every contract, tortious interference with contractual relations

and defamation, arising out of the Defendants’ improper conduct. This conduct included the

non-renewal of the various agreements between the Plaintiffs and Auburn Memorial Medical

Services, P.C. (“AMMS”), as amended (collectively referred to as the “Agreement”). The

Plaintiffs contend that, because the Agreement was terminated prior to the renewal date in

violation of the Agreement’s terms, they sustained damages. In addition, Dr. Kunkle,

individually, claims that he was defamed as a result of a false representation made by Defendant,

Sherri Clark, to law enforcement, after she improperly attempted to countermand Dr. Kunkle’s

medically indicated discharge of a patient.

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JURISDICTION AND VENUE

2. The basis for this Court’s jurisdiction is diversity of citizenship pursuant to

28 U.S.C. § 1332 in that (1) the Plaintiff is domiciled in Pennsylvania and the Defendants are all

domiciled in New York, and (2) the amount in controversy exceeds seventy-five thousand

dollars ($75,000.00).

3. Venue is set in the United States District Court for the Northern District of New

York pursuant to 28 U.S.C. § 1391(c)(1) and (2).

PARTIES

4. Dr. Kunkle resides at 276 Hawksworth Drive, Oxford, Pennsylvania. That

address also serves as the address of the P.C., as well.

5. Upon information and belief, Defendant, Auburn Community Hospital (the

“Hospital”) is located at 17 Lansing Street, Auburn, New York, and is a hospital in Cayuga

County that operates as a not-for-profit public trust with a Board of Trustees as its governing

body.

6. Defendant, Auburn Memorial Medical Services, P.C. is a privately owned New

York professional services corporation, also located at 17 Lansing Street, Auburn, New York

13021. Upon information and belief, AMMS is affiliated with the Hospital, is governed by the

Hospital’s Board of Trustees and shares personnel.

7. Defendant, Scott Berlucchi (“Mr. Berlucchi”) is the Chief Executive Officer and

President of the Hospital and was responsible for recruiting the Plaintiff, negotiating

Dr. Kunkle’s original Employment Agreement and all amendments thereto.

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8. Defendant, John Riccio (“Dr. Riccio”) is the Chief Medical Officer of the

Hospital and, as both a physician and an officer of the Hospital, was the physician to whom

Dr. Kunkle ultimately reported during his tenure there.

9. Defendant, Sherri Clark (“Ms. Clark”) is, upon information and belief, an

employee of the Hospital assigned to its AOS office.

BACKGROUND

10. Plaintiff, Dr. Kunkle, is a board certified orthopedic surgeon. At the invitation of

Mr. Berlucchi approximately six years ago, he began to work at the Hospital on a locum tenens

(non-employee) per diem basis due to a shortage of experienced orthopedic surgeons there.

11. Originally, he was covering long weekends for 4-5 days at a time but, as he

became busier, he (Dr. Kunkle) was asked by Mr. Berlucchi to go full time.

12. Plaintiff had known Mr. Berlucchi before he was invited to join the medical staff

at the Hospital and, upon information and belief, Mr. Berlucchi knew of Plaintiff’s abiding

professional interest in quality assurance and quality of care.

13. In that regard, Mr. Berlucchi assured Plaintiff that the Hospital took quality of

care issues seriously and encouraged him to participate in the quality assurance process at the

Hospital and, to that end, bring any concerns that may arise to Mr. Berlucchi’s attention. This

emphasis on quality of care is manifest in the Medical Staff By-Laws of the Hospital and in the

Agreement.

A. The Initial Professional Services Agreement.

14. The first contract which Dr. Kunkle signed as an employee was in July of 2013.

This contract was between Dr. Kunkle and AMMS, the Hospital’s professional services

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corporation, and set forth the terms and conditions under which he first became an employed

physician (“the Initial Professional Services Agreement”).

15. By July of 2013, Dr. Kunkle was medically credentialed and maintained full and

active medical staff privileges at the Hospital as required by the Medical Staff By-laws.

However, he was not yet fully credentialed by the HMO’s, insurance companies and other third-

party payors whom the Hospital billed for its medical, surgical and hospital services.

16. The Initial Professional Services Agreement contained a provision entitled “Term

and Termination” (Section 8). In pertinent part, that provision reads as follows:

(a) The Term of this Agreement shall commence upon the date
Physician begins providing professional medical services
for the PC which shall be after the Physician is credentialed
by the PC’s payers, anticipated to be ninety (90) days after
this Agreement is executed (the “Commencement Date”)
and shall continue thereafter for an initial term of two (2)
years. Thereafter, the Agreement shall automatically renew
for additional one (1) year periods unless either party
provides the other party with written notice ninety (90)
days prior to the end of the initial or any renewal term of its
intention no (sic) to renew.

***

(f) This Agreement may be terminated by either the PC or

Physician, without cause, on one-hundred twenty (120)
days prior written notice.

Thus, it was contemplated that the “commencement date” would be ninety (90) days after

July 14, 2013, or October 14, 2013, and that, thereafter, the agreement would automatically

renew for additional one-year periods on that date.

B. The Employment Agreement.

17. In October of 2013, Dr. Kunkle entered into an employment agreement with

AMMS (“the Employment Agreement”). The Employment Agreement referenced the Initial

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Professional Services Agreement. In paragraph 1(c) of the Employment Agreement, it is noted

that: “[t]he Professional Services Agreement will terminate as of the Effective Date and will be

replaced and superseded by this Agreement.”

18. The Employment Agreement also contained a provision entitled “Term and

Termination” (Section 8). In pertinent part, that provision reads as follows:

(a) This Agreement shall commence on the Effective Date and

shall continue thereafter for an initial term of three (3)
years from the Commencement Date (“Initial Term”).
Thereafter, the Agreement will automatically renew for
additional terms of one (1) year, unless either party gives
the other sixty (60) days written notice prior to the end of
the Initial Term or renewal term that such party does not
wish to renew the Agreement.

19. Thus, it was contemplated that, should either party elect not to renew the

employment agreement, that party was required to give the other party sixty (60) days written

notice prior to the end of the renewal term, a term that ended at the earliest on October 1, 2018.

Even if a party elected not to renew the employment agreement, notice of an intent not to renew

could not serve to shorten the term or end the employment prior to the end of the one-year

renewal term.

C. The First Amendment to the Professional Services Agreement.

20. On November 1, 2013, the Initial Professional Services Agreement was

purportedly amended (“the First Amended PSA”). This amendment to the professional services

agreement made certain modifications to the Initial Professional Services Agreement, including

modifications to the compensation to be paid Dr. Kunkle, the on-call requirements, the exercise

of professional judgment, and other aspects of the relationship not in dispute. One modification,

however, is noteworthy. The First Amended PSA introduced the term “Effective Date,” a term

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that had not been used in the Initial Professional Services Agreement. The “Effective Date” of

the First Amended PSA was November 1, 2013.

21. The First Amended PSA also noted, in paragraph 8 thereof, that: “[t]he

Professional Services Agreement to the extent not expressly modified herein remains in full

force and effect as written.”

D. The Second Amendment to the Professional Services Agreement.

22. On January 1, 2014, the initial professional services agreement was purportedly

amended a second time (“the Second Amended PSA”). Further modifications were made to the

compensation to be paid, the calculation of bonuses and other aspects of the relationship not in

dispute.

23. One modification, however, is noteworthy. The Second Amended PSA also

notes, in paragraph 2 thereof, that:

The parties agree that as of the Effective Date, Herb Kunkle, Jr.,
M.D. will provide services under the Professional Services
Agreement through the Herbert Kunkle, Jr., M.D., P.C. and, as of
the Effective Date, the references in the Professional Services
Agreement dated July 14, 2013, as amended, to “Physician” are
hereby deleted in their entirety and replaced with the “P.C.”.

24. Thus, it was contemplated that the “Effective Date” of the Agreement between

AMMS and Herbert Kunkle, Jr., P.C. would be January 1, 2014, and that, thereafter, the

Agreement would automatically renew for additional one-year periods on that date.

25. Plaintiff, Herbert Kunkle, M.D., was and is an intended third-party beneficiary of

the second amendment to the initial professional services agreement.

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E. The Third Amendment to the Professional Services Agreement.

26. The Initial Professional Services Agreement was purportedly amended a third

time, with a new Effective Date of May 1, 2014 (“the Third Amended PSA”). The Base Annual

Compensation provision was revised.

F. The Purported Notice of Non-renewal.

27. By letter dated April 2, 2018, Mr. Berlucchi purported to give notice to

Dr. Kunkle and the P.C. that AMMS did not intend to renew the Agreement in accordance with

Paragraph 8(a) of the Initial Professional Services Agreement. In his letter, Mr. Berlucchi

asserts that “[t]he Commencement Date of your Agreement was August 2, 2013.” According to

Mr. Berlucchi’s letter, so long as AMMS provided ninety (90) days’ notice of its intent not to

renew the Agreement in advance of August 2, 2018, it complied with the Agreement and was

within its right to terminate the Agreement as of August 2, 2018, ninety days after the date of the

letter.

28. The precise Commencement Date of the Initial Professional Services Agreement

is not found anywhere on the contract itself. There is no day in July inserted into the

introductory paragraph of the Initial Professional Services Agreement and the actual

Commencement Date is not a specific date but, instead, is a date that is “anticipated to be ninety

(90) days after this Agreement is executed…” Assuming the date the Initial Professional

Services Agreement was executed was, as Mr. Berlucchi contends, July 14, 2013, an additional

ninety days would bring the Commencement Date to October 12, 2018.

29. At no time prior to their receipt of Mr. Berlucchi’s April 2, 2018 letter had

Dr. Kunkle or the P.C. been provided any documentation by the Hospital or AMMS indicating

that the Commencement Date in the Initial Professional Services Agreement was any other date

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than October 12, 2018, ninety days after the Initial Professional Services Agreement was

executed. Moreover, no documentation was ever provided advising Dr. Kunkle or the P.C. that

the Commencement Date was August 2, 2018.

30. During their tenure, the Plaintiffs adhered to the terms of the each and every

iteration and/or amendment of the Agreement, fulfilled their professional responsibilities under

state and federal law and provided exemplary medical care and treatment to the Hospital’s

patients

31. A fair reading of the many contracts comprising the Agreement, particularly the

Second Amended PSA, required AMMS and/or the Hospital to allow the Plaintiffs to continue to

provide orthopedic services up to and including January 1, 2019. At a minimum, the annual

renewal date would have been October 14, 2018, not August 2, 2018, as the letter from

Mr. Berlucchi demanded. At best, the collection of contracts which comprise the Agreement is

ambiguous with respect to the renewal date; as such, the Agreement should be construed against

the Defendants who drafted each and every one of the contracts.

FIRST CAUSE OF ACTION

Breach of Contract

32. Plaintiffs repeat and re-allege the allegations contained in paragraphs “1” through

“31” as if more fully set forth herein.

33. As a result of the foregoing, the Hospital and AMMS breached the Agreement

and, in so doing, deprived the Plaintiffs of, at a minimum, two months of base compensation and

a pro rata allocation of the otherwise applicable bonus; as well as reimbursement of expenses to

which he was entitled.

34. As a result of the foregoing, the Plaintiffs have been damaged in an amount to be

determined by the trier of fact.

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SECOND CAUSE OF ACTION

Breach of the Duty of Good Faith and Fair Dealing

35. Plaintiffs repeat and re-allege the allegations of paragraph “1” through “34” as if

more fully set forth herein.

36. As a result of the foregoing, the Hospital and AMMS breached the duty of good

faith and fair dealing inherent in every contract.

37. The Hospital and AMMS, through their designated agents, Mr. Berlucchi and

Dr. Riccio, refused to co-operate with Dr. Kunkle in facilitating a smooth and seamless transfer

of Dr. Kunkle’s patients, including those patients whose surgery was imminent. Despite

Dr. Kunkle’s entreaties to identify, and arrange continuity-of-care meetings with, the physicians

the Hospital had chosen to assume the care and treatment of Dr. Kunkle’s patients, he was

rebuffed and the vast majority of Dr. Kunkle’s patients were not notified by the Hospital of his

departure until after his tenure at the Hospital ended.

38. As a result of the foregoing, the Plaintiffs have been damaged in an amount to be

determined by the trier of fact.

THIRD CAUSE OF ACTION

Tortious Interference with Contractual Relations

39. Plaintiffs repeat and re-allege the allegations of paragraph “1” through “38” as if

more fully set forth herein.

40. As noted above (¶ 13), Plaintiff, Dr. Kunkle, was given assurances by

Mr. Berlucchi, both before and after he joined the Medical Staff at the Hospital, that Hospital

management took quality assurance and quality of care issues seriously and encouraged any

concerns in that regard to be communicated to Mr. Berlucchi or other designated personnel,

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including the Chief Medical Officer. Dr. Kunkle assumed that Mr. Berlucchi was sincere in his

support for quality assurance and his invitation to Plaintiff to participate in such activities.

41. However, when Dr. Kunkle began to disclose to Mr. Berlucchi his legitimate

professional concerns about particular practitioners, procedures and other troubling practices at

the Hospital, Mr. Berlucchi and Dr. Riccio were not receptive and, in fact, took little or no action

in response. Rather, Mr. Berlucchi and Dr. Riccio gave Plaintiff the impression that he was

“rocking the boat,” “not being a team player” or was otherwise causing trouble for the Hospital.

42. One of the issues that Dr. Kunkle expressed concern about on more than one

occasion was the way in which the treatment of hip fractures in elderly patients was being

handled at the Hospital. Dr. Kunkle was troubled by what appeared to me to be a pattern of

cardiologists and intensive care doctors cancelling or delaying hip repair surgeries for this

population or transferring the patients out to other institutions. A hip fracture in an elderly

patient, if not addressed promptly and on an urgent or emergent basis, can be a very serious and

sometimes life-threatening trauma. Dr. Kunkle observed cases at the Hospital in which the

necessary treatment of patients with a probable diagnosis of a hip fracture was needlessly

delayed despite the risks to the patient.

43. In one case in February of 2018, Dr. Kunkle was called to the ER to evaluate an

elderly man (Patient GB) who had fallen and could not bear any weight on his left side. His

history, clinical presentation and recent x-rays confirmed the diagnosis of an impacted left hip

subcapital fracture. Properly performed, a hip pinning CRPP is a minimally invasive procedure

with little or no blood loss. While there is always a risk with such an operation, it was indicated

for this patient.

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44. Dr. Kunkle advised the Hospitalist that he would operate on the patient the

following day. For some reason, a cardiologist was asked to consult and he cancelled the case.

According to the cardiologist, the imaging was equivocal and he advised the patient’s family that

there was no fracture. An MRI done three days later confirmed the fracture. As a result of the

delay in the surgery, the patient developed complications he otherwise would not have had.

45. Dr. Kunkle brought this to the attention of Mr. Berlucchi and Dr. Riccio in late

February of 2018. He also drafted a proposed protocol for addressing this patient population and

assumed it would be given a thorough assessment.

46. Little more than a month later, the Plaintiffs received a notice of non-renewal.

47. Upon information and belief, Mr. Berlucchi and Dr. Riccio failed to investigate

the concerns which the Plaintiff had raised regarding the management of elderly hip fracture

patients and, in fact, retaliated against the Plaintiff and other physicians at the Hospital who

expressed the same or similar concerns about quality of care issues.

48. In fact, according to the New York State Department of Health, the Hospital

received thirty-three incident reports about a single intensive care physician during a single year

and, despite assurances by Mr. Berlucchi that an investigation would be undertaken into the

physician in question, no substantive action was ever taken and there was no monitoring of the

physician’s behavior.

49. Since Plaintiffs received their notice of non-renewal, other physicians who

practiced at the Hospital have sued the Hospital, Mr. Berlucchi and Dr. Riccio for ignoring

complaints about professional misconduct, poor quality of care and disruptive behavior by

members of the medical staff and for retaliating against the professionals who made these

complaints to Hospital management.

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50. Before Plaintiffs received their notice of non-renewal, Dr. Kunkle had never been

the subject of corrective or disciplinary action nor had his clinical privileges ever been

suspended, revoked or otherwise restricted. He was highly regarded by his patients and

respected by his colleagues. During his tenure at the Hospital, Plaintiff was a major revenue

generator for the Hospital and handled many cases that no other orthopedic surgeon there would

accept.

51. Both Mr. Berlucchi and Dr. Riccio knew that there was a valid and operative

contract between the Plaintiff and AMMS.

52. As alleged above (¶¶ 32-34), AMMS breached the Agreement with the Plaintiff.

53. Defendants Berlucchi and Riccio intentionally and without justification procured

the breach by AMMS of the Agreement with Plaintiff.

54. As a result of the foregoing, the Plaintiff has been damaged in an amount to be

determined by the trier of fact.

FOURTH CAUSE OF ACTION

Defamation

55. Plaintiffs repeat and re-allege the allegations of paragraph “1” through “54” as if

more fully set forth herein.

56. On June 20, 2018, Dr. Kunkle sought to transfer a patient from the Finger Lakes

Center for Living (FLCL), a long term care facility managed by the Hospital. An appointment

was scheduled for the patient to be taken for x-rays; the patient required assistance for the

transfer.

57. The orders which Dr. Kunkle had prepared one week prior to the appointment

called for a two-person physical assist on and off of a wheelchair. Based upon his assessment,

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the patient would have 50% weight bearing on the left lower leg and full weight bearing on the

right lower leg.

58. Despite Dr. Kunkle’s status as the treating physician and a board certified

orthopedic specialist, Dr. Kunkle’s order was questioned by an administrator of the Department

of Orthopedics at the Hospital, Sherri Clark. Ms. Clark questioned the safety of the transfer even

though the LPN’s assigned to the task tried to assure her that the transfer could be accomplished

as ordered by Dr. Kunkle. Ms. Clark apparently insisted that a Hoyer Lift be used or that the

transfer not be attempted.

59. When Dr. Kunkle, the patient’s physician, arrived to direct the imaging, he

expressed his dissatisfaction that his order was being countermanded by a non-medical staff

person. He was assured by the nursing professionals assigned to manage the transfer, including

the Director of Nursing at FLCL, that his order could be safely and successfully be executed.

60. In the course of the disagreement over the transfer of the patient, Ms. Clark

alleged that Dr. Kunkle had harassed her.

61. Sometime in July of 2018, Ms. Clark filed a formal report of this alleged incident

to law enforcement and specifically alleged that Dr. Kunkle had touched her without her consent.

62. The allegations made by Ms. Clark to law enforcement personnel were false and

defamatory.

63. The allegations impugned Dr. Kunkle and implied that he was unfit to practice his

profession.

64. As a result of the foregoing, Dr. Kunkle has been damaged in an amount to be

determined by the trier of fact.

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TRIAL BY JURY DEMANDED

Plaintiff demands a trial by jury on all issues so triable.

WHEREFORE, the Plaintiffs, Herbert Kunkle, Jr., M.D. and Herbert Kunkle, Jr., M.D.,

P.C., demand judgment as follows:

A. On their first cause of action, damages in an amount to be determined by the trier

of fact;

B. On their second cause of action, damages in an amount to be determined by the

trier of fact;

C. On their third cause of action, damages in an amount to be determined by the trier

of fact;

D. On their fourth cause of action, damages in an amount to be determined by the

trier of fact;

E. The costs and disbursements of this action;

F. Reasonable attorneys’ fees as allowed by law; and

G. Such other and further relief as, to this Court, may seem just and proper.

DATED: June 28, 2018

Rochester, New York WOODS OVIATT GILMAN LLP

By:
Donald W. O’Brien, Jr., Esq.
Attorneys for Plaintiff
1900 Bausch & Lomb Place
Rochester, New York 14604

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