Plaintiff (Law Firm Sejong, Attorneys Cho Jong-soo et al., Counsel for the plaintiff-appellant)

National Health Insurance Corporation (Attorney Kim Han-soo, Counsel for defendant-appellant)

May 30, 2014

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of refusal to pay medical expenses to the Plaintiff on January 29, 2014 is revoked.

1. Details of the disposition;

A. The Plaintiff is a person who establishes and operates the “Yansan Hospital” located in Ansan-si ( Address omitted) (hereinafter referred to as the “instant hospital”). The establishment report of the instant hospital was respectively under the joint name of Nonparty 1 and Nonparty 2 from June 24, 2008 to October 16, 201, the joint name of Nonparty 1 and Nonparty 2 from October 17, 201 to August 20, 2012, and was respectively under the name of Nonparty 1 and the Plaintiff’s joint name from August 21, 201 to August 23, 2012, respectively.

B. On January 29, 2014, the Defendant was notified by the Seogu District Prosecutors’ Office that “The instant hospital violated Article 33(8) of the Medical Service Act, which provides for the prohibition of double establishment and operation.” Accordingly, on the ground that “The instant hospital cannot be deemed a medical institution established under the Medical Service Act, and thus, the Defendant rendered a refusal to pay medical expenses (the medical expenses from December 27, 2013, hereinafter referred to as “instant disposition”) to the Plaintiff on the ground that “The instant hospital cannot be deemed a medical institution established under the Medical Service Act.”

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 and 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Article 33(8) of the Medical Service Act (amended by Act No. 11252, Feb. 1, 2012; hereinafter “Amended by Act No. 11252, Feb. 1, 2012”) newly established a provision that “it is impossible to establish and operate two or more medical institutions under any name,” was newly established, taking into account that there is room for infringing on the freedom of occupation and property rights of medical personnel, and that it is contrary to the principle of clarity, the instant disposition cannot be taken on the ground that two or more medical institutions were established and operated.”

(2) In the first place, the Plaintiff established the instant hospital on August 24, 2012 and operated it solely until January 23, 2014; the founder of the instant hospital changed to Nonparty 6; Nonparty 1 was partially involved in the operation of the instant hospital; however, the Plaintiff determined all matters necessary for the hospital operation, such as the determination of medical practice, employment of employees, and purchase of goods; pursuant to Article 33(8) of the amended Medical Service Act, Article 33(8) of the amended Medical Service Act, the provision that only “it is impossible to operate “for any reason,” other than the establishment of two or more medical institutions,” and its meaning is unclear because the Enforcement Decree or the Enforcement Rule does not provide for the meaning of the operation, the instant disposition was unlawful, based on the premise that Nonparty 1 operated the instant hospital.

Preliminary, Nonparty 1 established the Medical Corporation ○○ Medical Foundation on October 17, 2013 and contributed all shares, Nonparty 1 was bound by a violation of the Medical Service Act on October 23, 2013 and was unable to intervene in the operation of the instant hospital. Nonparty 1 entered into a contract for supporting the management of the instant hospital with a limited-liability company (msO), which is a hospital management support company (msO), on November 8, 2013, provided the instant hospital with management services, such as joint purchase of medical appliances on behalf of the Plaintiff, and the Plaintiff was in exclusive charge of medical practice, and the criminal judgment on the duplicate establishment and operation of the medical institution by Nonparty 1 was not finalized prior to the instant disposition, the instant disposition was unlawful on the premise that multiple operations continue.

(3) Since the instant hospital was established by a medical person, it shall not be treated the same as that of Article 33(2) of the Medical Service Act, which was prohibited from being established by a non-medical person (so-called office-based hospital). In the event that multiple medical persons operate a medical institution, any punishment has not been imposed until August 2012, which was prior to the enforcement of the amended Medical Service Act, and the establishment of a medical institution is for the purpose of protecting and improving the health of the people. The pertinent hospital’s operation of the instant hospital did not cause any harm to the health or health order of the people. Nonparty 1 agreed to pay the amount to be recovered to the Plaintiff or the instant hospital. Nonparty 1 agreed to pay the amount to be recovered from the instant hospital. Nonparty 1 received 5,437 patients as of a month, and Nonparty 293 patients as to the instant hospital’s claim, and Defendant’s failure to pay large-scale medical expenses exceeds KRW 1,300,000,000,000 from the instant hospital.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) On April 15, 2014, Nonparty 1 was sentenced to a suspended sentence of KRW 2 years and a surcharge of KRW 1280,000,00 from the Seo-gu District Court Branch of the Daegu District Court (2013dan1402, 1435) to a violation of the Medical Service Act, etc.

From February 11, 2008 to November 8, 2013, ○○ Hospital is a medical person who establishes and operates the instant hospital in succession to the area of Ansan-si, Mansan-do, Daejeon, Ansan-do, Gangwon-do, and Suwon-dong. Under any pretext, at least two medical institutions can not be established and operated. Nevertheless, during the period from August 24, 2012 to November 20, 2013, Nonparty 1 was employed at the instant hospital with a monthly salary of KRW 30 million from the date of employment, and the instant hospital was established in the name of the Plaintiff. From June 14, 2013 to November 20, 2013, Nonparty 1: (a) opened the instant hospital under the name of the Plaintiff; (b) opened the instant hospital with a monthly salary of KRW 30 million from November 20, 2013 to the date of operation; (c) opened the hospital under the name of Nonparty 1 under the name of each of the instant hospitals; and (d) opened the instant hospital.

(2) On October 23, 2013, Nonparty 1 stated at the west District Office of the Daegu District Prosecutors’ Office as follows.

Along with the amendment of the Medical Service Act, an investment was made to open another hospital at least 90% of the ○○○ Hospital included in the main text. Along with the amendment of the Medical Service Act, an investment was made in order to open another hospital. In addition, there was little error in opening another hospital. Around August 2012, the Plaintiff, the head of the instant hospital, who was the head of the instant hospital, was operating at the time of opening the ○○○ Hospital, including Suwonwon, Ansan, and Ansan. Around August 2012, the Plaintiff was seated with the head of the instant hospital, who was the head of the instant hospital. Even after the enforcement of the ○○ Medical Service Act, the Plaintiff was the founder and operator of the instant hospital, while operating another ○○○ Hospital, the instant hospital was re-established and operated under the name of the Plaintiff on August 24, 2012, and Nonparty 7, who actively violated the relevant laws and regulations, including opening the ○○ Hospital and operating it as the head of the relevant hospital.

② On October 28, 2013, Nonparty 1 made the following statements at the administrative office of the Daegu District Prosecutors’ Office:

From August 24, 2012, which was included in the main text, the instant hospital was established and operated in the name of the Plaintiff, and from June 14, 2013 to June 14, 2013, the ○○ Hospital was established and operated in the name of Nonparty 7 in the name of the doctor. Both the Plaintiff and Nonparty 7 loaned the name of the establishment. The intention of both the Plaintiff and Nonparty 7 is that both the Plaintiff and Nonparty 7 provide the performance-based bonus. The ○○ Hospital’s income is also the acquisition of the ○○ Hospital. The ○○ Hospital operated by the principal is all seven.

(3) On October 30, 2013, the Plaintiff stated at the west District Office of the Daegu District Prosecutors’ Office as follows.

The lease contract of the instant hospital included in the main text was leased in the name of Nonparty 1 before the principal works, and thereafter the contract was renewed in the name of Nonparty 1. Even after the medical corporation was lost, it was wrong that the instant hospital continued to be in the name of himself/herself and operated in the name of himself/herself. The Medical Service Act was aware that ○○ medical person was unable to establish or operate a medical institution under the name of another person. If ○○ Hospital’s personnel management and administrative affairs are not decided solely by himself/herself, and the necessary part is reported to Nonparty 1, the head of the instant hospital. Nonparty 1 is the hospital that has invested in all of the instant hospital. Nonparty 1’s salary, including the doctor, is paid to Nonparty 1. The doctor or the annual salary is determined by Nonparty 1 to the president after having an interview. Nonparty 1’s decision on the annual salary is also determined by Nonparty 1’s wage. Nonparty 1’s decision on the cost of the instant hospital’s health care benefit as well as the cost of the instant medical corporation’s operation.

(4) On October 10, 2013, Nonparty 8, who offered rebates to Nonparty 1, stated at the Seo-gu District Prosecutors’ Office as follows.

The head of ○○○○○ Hospital and the instant hospital are actually operating each of the instant hospitals. Nonparty 1 owns all of ○○ Hospital in one’s own department or operates it in the form of joint ownership with other heads. Nonparty 1 and Nonparty 2 operate a large number of ○○ Hospital is certain.

(5) The content of the investigation report prepared by the administrative office in the Daegu District Prosecutors' Office is as follows.

On October 11, 2013, which was included in the main text, ○○○ Hospital’s ○○○○ Hospital’s ○○○○○ Hospital’s website 5: (a) confirmed that Nonparty 1’s ○○ Hospital’s ○○ Hospital’s ○○ Hospital’s ○○○ Hospital’s ○○ Hospital’s ○○○ Hospital’s ○○○○ Hospital’s 5% shares were linked to the instant hospital. On October 18, 2013, the instant hospital’s ○○○ Hospital’s 5% shares were 7% shares in the instant hospital’s ○○○ Hospital’s 5% shares in the ○○○ Hospital’s 5% shares in the ○○○ Hospital’s 5% shares, and (b) confirmed that Nonparty 1’s ○○ Hospital’s 5% shares were 10% shares in the instant hospital’s 9% shares in the 5% shares in the instant hospital’s 9% shares in the 19% shares.

(6) On April 11, 2011, the instant hospital entered into a contract for the exclusive supply of goods with Mescar and Mescar Co., Ltd., and the representative of the instant hospital was written as Mescar and 1.

(7) On July 30, 2012, Nonparty 1 entered into a contract with a medical corporation (tentative name) to contribute shares of the instant hospital to ○○ Foundation. However, Nonparty 1 failed to obtain a medical corporation establishment permit for the instant hospital from Ansan-si, and the medical corporation established at Jeju-si on October 17, 2013, to include the instant hospital in the property of the medical corporation ○○ Medical Foundation.

(8) On November 8, 2013, the instant hospital entered into a hospital management support agreement with the Patom, “Personnel Management, Financial and Accounting Management, pharmaceutical and medical device purchase management, public relations and marketing, computer support management, personnel and organizational management, and consulting services,” under the name of the Plaintiff.

(9) On January 29, 2014, Nonparty 1 drafted a letter of payment that “Around January 29, 2014, Nonparty 1 promised to assume and pay to Nonparty 1 all civil and criminal charges and administrative disadvantages (recollections) incurred during the period of being the president of the instant hospital, and imposed under the name of the Plaintiff.”

[Ground of recognition] Facts without dispute, Gap evidence Nos. 8, 9, 10, 15, 25, Eul evidence Nos. 6 through 29 (including additional numbers), the purport of the whole pleadings

D. Determination

(1) As to the interpretation of the establishment and operation of medical institutions

(A) According to Article 42(1)1 of the National Health Insurance Act, “Medical Care Benefits shall be provided to a medical institution established under the Medical Service Act.” Thus, in order to claim medical care benefits, it shall be a medical institution established under the Medical Service Act.

On the other hand, with regard to the provision of Article 33(8) of the Medical Service Act prior to the amendment, “a medical person may establish only one medical institution.” Since the purpose of preventing in advance a person who is not a doctor by permitting the establishment of a medical institution only to the extent at which he/she can directly perform the act of medical care is permitted, a doctor who establishes a medical institution under his/her own name and directly employs another medical institution and pays wages to his/her employees, and takes part in the management of a newly established medical institution such as taking profits from the business, it cannot be deemed that another doctor’s license is practically leased to establish a separate medical institution (see Supreme Court Decision 2003Do256, Oct. 23, 2003).

However, Article 4(2) of the amended Medical Service Act provides that “a medical person shall not establish or operate a medical institution under the name of another medical person,” and Article 33(8) of the amended Medical Service Act provides that “a medical person shall not establish or operate two or more medical institutions under any pretext.” Therefore, it is reasonable to deem that the establishment of a medical institution was prohibited by the amended Medical Service Act from being established in the name of another medical person beyond the scope of the place.

(B) Since the contents of the regulations that form the basis of the disposition are excessively abstract and unclear may cause arbitrary interpretation and enforcement of the disposition authority, the provisions of the law or the orders and regulations following the delegation thereof shall be meaningful and clear. However, since the legal regulations have generality and abstractness, their meaning can be embodied and clear through the interpretation as a supplementary action of the judge, it cannot be said that the provision on administrative sanctions is unconstitutional even if its meaning can be clearly stated in light of the legislative purport, overall structure, contents, etc. of the relevant statutes.

Article 33(8) of the amended Medical Service Act provides that “No more than one medical institution shall be established and operated under any pretext,” and there is room for somewhat broad interpretation. However, since the establishment or operation of a medical institution is diversely established, it is difficult to uniformly determine it; Article 33 through 47 of the Medical Service Act; Article 35(2) of the Medical Service Act provides that matters necessary for the establishment and operation of a medical institution shall be prescribed by Ordinance of the Ministry of Health and Welfare; Article 25 (Report on Establishment of Medical Institutions); Article 34 (Report on Establishment and Operation of Medical Institutions); Article 37 (Establishment and Operation of Medical Facilities) and Article 38 (Medical Personnel, etc.) of the Enforcement Rule of the Medical Service Act provide that the establishment and operation of a medical institution shall meet the requirements prescribed by the Medical Service Act and subordinate statutes; it is reasonable to deem that the establishment and operation of a medical institution is an operation of a medical institution meeting such requirements; and it is not clear as it lacks clarity even if it is a general person with sound common sense and ordinary legal sentiment.

(2) As to the existence of a disposition reason

(A) In light of the following circumstances, it is reasonable to deem that Nonparty 1 opened and operated the instant hospital in the name of the Plaintiff.

① Nonparty 1, in succession to the Plaintiff, established the ○○ Hospital in the area of Ansan, U.S., Daejeon, Ansan, Jeju, Dong, and Suwon. Of these, Nonparty 1 stated that “the Plaintiff was at the monthly salary of KRW 30 million and borrowed the name, and he acquired the profits.” Nonparty 1 also made a final decision on the personnel management and administrative affairs of the hospital, Nonparty 1 did not have any equity investment in the instant hospital, and Nonparty 1 invested both in the instant hospital, and Nonparty 1 also managed the passbook in the name of the Plaintiff.”

② Major contracts, such as the instant hospital’s lease contract and the goods supply contract, were concluded in the name of Nonparty 1. Each hospital operated by Nonparty 1 is linked to the Internet homepage, and Nonparty 1 managed the medical performance of the doctor, including the Plaintiff.

③ On April 15, 2014, Nonparty 1 was sentenced to punishment for a violation of the Medical Service Act from the branch court of the Daegu District Court.

(B) In light of the following circumstances, the operator of the instant hospital still remains Nonparty 1 and the operator of the instant hospital cannot be deemed to have resolved multiple operational situations prior to the instant disposition due to the change of the operator.

① On July 30, 2012, Nonparty 1 entered into a contract to contribute equity interest to a medical corporation (tentative name) medical corporation ○○ Foundation, and did not establish a medical corporation as the instant hospital. Accordingly, Nonparty 1 claimed medical care benefit costs of the instant hospital in the name of the Plaintiff, other than the medical corporation, in the name of the Plaintiff.

② Violation of the Medical Service Act, which was recognized in a criminal judgment, is up to November 20, 2013, the date of prosecution, and the person having management right cannot be deemed to have changed to the Plaintiff due to Nonparty 1’s detention. Moreover, the medical care benefit cost requested to the Defendant was from December 27, 2013, and Nonparty 1 promised on January 29, 2014 to be held liable for all civil, criminal and administrative disadvantages (resume amount) to the Plaintiff. Therefore, it is reasonable to deem that the operator of the instant hospital still remains Nonparty 1 until the time of disposition.

③ Even if the instant hospital entered into a hospital service support agreement with the Plaintiff’s name that received support for hospital management from the Patom, the Plaintiff cannot be deemed the operator of the instant hospital with at least one Nonparty 1.

(3) As to deviation from and abuse of discretionary power

In light of the following circumstances, even when considering various circumstances asserted by the Plaintiff, the instant disposition rejecting the payment of medical care benefit costs is excessively excessive to the Plaintiff, and cannot be deemed to constitute deviation or abuse of discretionary power against the proportionality and the excessive prohibition doctrine.

① The purport of the health insurance system is to achieve legitimate national objectives (see Constitutional Court Decision 2010Hun-Ba375, Jun. 30, 201). Accordingly, the national health insurance system, which is operated with the national insurance premiums, should be strictly operated in a manner that prevents unnecessary health care benefits and provides maximum benefits to the public with limited finance by preventing unnecessary health care benefits and ensuring the rationality of health care benefits and expenses and ensuring the maximum benefit of limited finance, regardless of income level or disease risk, by allowing the State, in principle, to provide health care to all citizens, regardless of the risk of health care (see Supreme Court Decision 2010Hun-Ba375, Jun. 30, 201).

② Handling of dual establishment and operation hospitals: Articles 4(2) and 33(8) of the amended Medical Service Act prohibit lending of a doctor’s license, which provides that “No one may establish and operate two or more medical institutions under any pretext.” This provision prohibited the operation of multiple medical institutions by a medical person according to “the principle of one medical institution per person per medical person,” thereby setting the boundary of a place to concentrate on medical practice conducted at a medical institution established based on one’s license. As such, Article 42(1)1 of the National Health Insurance Act provides for the purpose of simple management by establishing and operating a medical institution with another doctor’s license in many places, such as having a certain medical person induce patients through the business organization of a medical institution, or having him/her receive excessive medical treatment and delegated medical treatment. Therefore, the purpose of Article 42(1)1 of the National Health Insurance Act to the same effect is to maintain the propriety of medical treatment, and protect and promote national health, and thus, it does not constitute “medical care benefits to be lawfully established at a medical institution” established under the Medical Service Act.

In addition, in order to maintain life and health, patients have the right to receive appropriate medical treatment from the medical institution lawfully established and operated, and cannot be deemed to have had the intention to bear medical expenses from the lawful medical institution.

③ The proportionality principle: The public interest needed to strictly control and manage medical care benefit costs in order to promote the soundness of national health insurance finance and to secure transparency in its operation; the public interest needed to strictly control and manage medical care benefit costs; when a medical institution is established and operated with another medical doctor's license in multiple places, there may be concerns over adverse effects, such as unreasonable attraction of patients; distortion of long-term demand and supply of medical resources due to excessive medical treatment; distortion of unreasonable opening of business; and receipt of illegal rebates, etc.; thus, there is a need to prevent harm to public health in advance; the instant disposition is merely refusing the payment of medical care benefit costs that will be unfairly paid; and it cannot be deemed that there is a violation of the proportionality principle (the principle of excessive prohibition) by refusing the payment of medical care benefit costs.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment]

Judges Cho Han-chul (Presiding Judge)