Medical Institution's Filing of Information on Patients' Medical Expenses for Income Tax Deduction Case

[20-2(A) KCCR 1115, 2006Hun-Ma1401·1409 (consolidated), October 30, 2008]

The Constitutional Court upheld the Income Tax Act and the Enforcement Decree provisions which obligate medical institutions to file the details of medical expenses of its patients to the National Tax Service to simplify year-end tax adjustments.

Background of the Case

The Income Tax Act and the Enforcement Decree of the Income Tax Act state that medical institutions shall provide information on the patients' medical expenses to the National Tax Service for the purposes of simplifying the process of year-end tax adjustments (hereinafter the "Provisions"). However, the petitioners (patients of hospitals or Korean medicine clinics, or healthcare providers such as doctors, dentists, or Korean medicine physicians) filed constitutional complaints on the ground that the Provisions infringe the doctors' freedom of conscience, freedom of occupation, and the right to equality as well as the patients' right to control personal information as guaranteed under the Constitution.

Summary of Decision

The Constitutional Court, in an 8 to 1 opinion, upheld the Provisions for the following reasons.

1. Majority Opinion

A.Conscience, as protected under Article 19 of the Constitution, is a moral and value judgment of the mind that distinguishes right from wrong. Among the protected consciences are not only one's views on the world, life, ideology, and belief, but also his or her moral judgment due to the innate nature of one's personality. In addition, "decision according to conscience" includes all serious moral decisions

involving standards of good and bad; in real situations, this is taken as cases in which an individual perceives such decisions as something that restricts one's freedom but must obey, and that one cannot act against it without experiencing serious moral conflicts.

It is universally accepted that keeping mental and physical secrets of the patient and respecting his or her privacy are the essential ethics and morality for doctors, and also an implied agreement with the patient. If a doctor is obliged to inform other parties about the illnesses of patients against his or her will, it is natural that the doctor will go through serious conflicts in his or her conscience as it is against the ethics and morality for doctors. However, if doctors do not provide such taxation materials on their patients, they may feel pressure that they may be subjected to administrative disadvantage from the National Tax Service, or be forced to go through tax investigation, as they have the duty to provide materials for income tax deduction. Therefore, the Provisions in question involve indirect and real compulsory measures for failure to carry out the duty; and regardless of whether or not legal measures exist on enforcing the Provisions, it limits the freedom of conscience for doctors.

However, the Provisions are intended to simplify the year-end tax filing of workers by requiring the institutions to provide the medical expenses to the National Tax Service, and therefore the purpose and means to achieve the purpose are legitimate. In addition, the information provided to the Tax Service is not sensitive information of the patients, but minimum content required to calculate income tax deductions. In this view, the public benefit such as the expected convenience for the taxpayers and the reduction of social cost therefrom is greater than the doctors' freedom of conscience. Therefore, it can be said to satisfy the principle of least-restrictive means and balancing of equities. Thus, the Provisions do not violate the Constitution.

B.The medical expense information to be provided to the National Tax Service, such as name, resident number, amount of payment and date of payment, may not be considered as having independent economic value, or being technical or business-related information acquired through considerable efforts. Moreover, information regarding

medical expenses is not being provided to the public or another competing medical institution, and the duty to file information on patients' medical expenses does not burden the complainants in carrying out their profession. Therefore, the Provisions do not infringe the doctor or medical institution's freedom of occupation.

C.Whether to provide income tax deductions for the worker, what items to provide deductions for, and what documentation to use are under the discretion of the legislature. The legislation enacted by the legislature has imposed on the medical institutions the duty to file medical expenses information for fair and just reason. Therefore the Provisions do not discriminate the complainants without reasonable grounds, and as such, not in violation of the principle of equality under the Constitution.

D.Transmitting petitioners' diagnosis information to the National Tax Service without the complainants' consent restricts the complainants' right to control personal information, but the Provisions are designed to lessen inconvenience of workers who should file proof for income tax deduction for medical expenses for year-end tax adjustments purpose, and to reduce social and economic cost of submitting such information which is incurred by the employer and employee. The Provisions also purport to prevent illegal deduction of income tax. For this purpose, the Provisions require medical institutions to file materials only necessary for year-end tax adjustments, and thus they constitute reasonable means to achieve the end. In addition, the person receiving medical expense documents may refuse to have his or her information transmitted to the National Tax Service until the medical institutions provides information on his or her medical expenses with the National Tax Service. Also, the Provisions allow only the worker or dependant family members to view and print the information. In this regard, the Provisions minimize restriction on the right to control personal information and therefore satisfies the least restrictive means test. The public interests from the Provisions overweigh the restriction on the petitioners' right to control personal information and thus the balancing of interests test is satisfied. In light of all this, the Provisions do not infringe upon the constitutional right of the

petitioners in violation of the principle of prohibition of excessive restriction.

2. Separate Opinion of 3 Justices

Conscience is an ethical and moral issue of the human mind, and what the Constitution seeks to protect is a serious and powerful driving force in the mind of a person that dictates that unless he or she acts in such a way in deciding right and wrong, his or her value of existence itself will be compromised. Thus, conscience specified in the Constitution is not a vague and abstract definition of conscience.

The Provisions in this case requires the complainants to provide the government with only objective facts, i.e., the medical expenses of the patients, and does not require specific diagnostic information such as the name of the disease. It is difficult to expect that in deciding to provide such information, an individual doctor's view on the world, life, ideology and belief and his or her ethical and moral judgment would intervene. Moreover, even if it does impinge on the doctor's mind to a certain extent, it is not plausible to see this as a crucial decision concerning the shaping of an individual's personality, within the property of freedom of conscience protected in the Constitution. In other words, such decision does not constitute a "serious and powerful driving force in the mind of a person that dictates that unless he or she acts in such a way in deciding right and wrong, his or her value of existence itself will be compromised".

Therefore, the complainants' sending the income tax deduction documents to the National Tax Service according to the Provisions does not fall within the protection of conscience as guaranteed under Article 19 of the Constitution; thus, the Provisions do not have the possibility to violate the doctors' freedom of conscience.

3. Dissenting Opinion of One Justice (Dismissal)

A.According to Article 68 Section 1 of the Constitutional Court Act, only those individuals whose basic rights have been directly infringed by the exercise or non-exercise of governmental power can raise a constitutional complaint. As for constitutional complaints

against a statute, the alleged violation must be caused by the statute itself and not by an action to enforce the statute. In a case where the statute is scheduled to have sub-regulations for actually enforcing the statute, the statute then lacks directness, and therefore becomes an unjusticiale constitutional complaint.

B.The Provisions only state the income tax deduction documents to be submitted by the medical institutions should be about medical expenses; it does not state exactly what contents the tax deduction documents must include. Therefore, it is impossible to say that the Provision by themselves infringe the petitioners' privacy and freedom, personal rights and right to pursue happiness, or the doctors' freedom of conscience and freedom of business. It is only through the "Guideline to Submitting Medical Expense Documents for Simplification of Year-End Income Tax Reduction" where it states, "the business registration number and the name, resident number, date and amount of payment" to be submitted, that the possibility of infringing complainants basic rights is materialized.

C.Then, any contents of the Provisions do not by themselves restrict the complainants' freedom, impose any duty on them, or deprive them of rights or legally protected rights which may lead to violation of basic rights. Therefore, basic rights of the complainants' are not directly infringed upon by the Provisions. Thus, the complainants' constitutional complaints are nonjusticiable.