The meaning of “dual establishment” and “dual operation” of a medical institution among acts contrary to the principle of “one-person establishment and operation” under the main sentence of Article 33(8) of the Medical Service Act, and whether one person violates the principle of establishment and operation even if it does not constitute duplicate establishment (affirmative)

Article 4(2) of the Medical Service Act provides, “A medical person shall not establish or operate a medical institution under the name of another medical person,” and the main text of Article 33(8) of the Medical Service Act provides, “A medical person shall not establish or operate two or more medical institutions under any pretext.” (hereinafter “the prohibition provision of the main sentence of Article 33(8) of the Medical Service Act shall be referred to as “the principle of establishment and operation per person.”

In light of the provisions of the Medical Service Act, among acts contrary to the principle of establishment and operation of a medical institution, overlapping establishment of a medical institution means that “a medical person who has established a medical institution under his/her name and has another person without qualification perform medical practice directly at a medical institution established in the name of another medical person, etc., or has another person without qualification perform medical practice under his/her own jurisdiction.” Separate operation of a medical institution means that “a medical person performs or has another person perform the relevant affairs while having the authority to decide on his/her intention to manage matters, such as respect and transfer of the medical institution, whether the medical act is performed, whether the medical person has provided, whether to raise funds, supplement and manage human resources, facilities and equipment, and reversion and distribution of operational performance,” and it violates the principle of establishment and operation of a medical institution.

Furthermore, determination as to whether a medical institution constitutes duplicate operation in violation of the principle of establishment and operation should take into account the following circumstances: (a) whether the institution is an operator of two or more medical institutions; (b) the process of establishing the institution; (c) the relationship with other medical persons who are considered involved in the role and management of the founder; (d) the method of raising funds; (e) the structure of determining the intent to conduct management; (e) the entity exercising the right to direct and supervise the practitioners; (e) the type of operating performance; and (g) the scale of expenses and details of transactions disbursed to the business entity providing management support if there are other medical persons. Based on the foregoing, it is necessary to examine whether two or more medical institutions maintain their own identity without depending on the specific medical personnel’s decision, operation, and ownership; or (e) whether a specific medical person actually controls and manages the operation of two or more medical

Article 33(8) of the former Medical Service Act (Amended by Act No. 11252, Feb. 1, 2012); Article 87(1)2 of the former Medical Service Act (Amended by Act No. 13658, Dec. 29, 2015); Articles 4(2), 33(2)1 and (8), and 87(1)2 of the Medical Service Act

Supreme Court Decision 2003Do256 Decided October 23, 2003 (Gong2003Ha, 2279) Supreme Court Decision 2006Do4652 Decided September 25, 2008 (Gong2008Ha, 1492) Supreme Court Decision 201Do636 Decided January 23, 2014

Defendant

Defendant

Law Firm Kangn Law, Attorneys Kang Jae-soo et al.

Seoul Central District Court Decision 2017No9 decided February 6, 2018

The appeal is dismissed.

The grounds of appeal are examined.

1. As to the invalidity of fraud and indication in the line of duty

As in the first instance court, the lower court found all of the charges guilty. Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court’s determination is justifiable. In so determining, contrary to what is alleged in the grounds of appeal, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine

2. As to the violation of the Medical Service Act

A. Article 4(2) of the Medical Service Act provides, “A medical person shall not establish or operate a medical institution under the name of another medical person.” The main text of Article 33(8) of the Medical Service Act provides, “A medical person shall not establish or operate two or more medical institutions under any pretext.” (hereinafter “the principle of prohibition under the main sentence of Article 33(8) of the Medical Service Act”)

In light of the provisions of the Medical Service Act, among acts contrary to the principle of establishment and operation of a medical institution, overlapping establishment of a medical institution means that “a medical person who has established a medical institution under his/her name and has another medical person perform the medical act directly at a medical institution established in the name of another medical person, etc. or has an unqualified person perform the medical act under his/her own jurisdiction.” Separate operation of a medical institution means that “a medical person performs or has another person perform the relevant duties while having the authority to decide on his/her intention with respect to the matters of management, such as respect to the establishment and transfer of the medical institution, whether the medical act is performed, whether the medical person performs the medical act, whether the person has raised funds, personnel, facilities, and equipment, and reversion and distribution of operational performance, etc.” The overlapping operation of a medical

Furthermore, determination as to whether a medical institution constitutes duplicate operation in violation of the principle of establishment and operation should take into account the following circumstances: (a) whether the institution is an operator of two or more medical institutions; (b) the process of establishing the institution; (c) the relationship with other medical persons who are considered involved in the role and management of the founder; (d) the method of raising funds; (e) the structure of determining the intent to conduct management; (e) the entity exercising the right to direct and supervise the practitioners; (e) the type of operating performance; and (g) the scale of expenses and details of transactions disbursed to the business entity providing management support if there are other medical persons. Based on the foregoing, it is necessary to examine whether two or more medical institutions maintain their own identity without depending on the specific medical personnel’s decision, operation, and ownership; or (e) whether a specific medical person actually controls and manages the operation of two or more medical

B. According to the reasoning of the judgment below, the court below found the Defendant guilty of violating the principle of establishment and operation of one person among the facts charged of this case, on the ground that the Defendant established and operated the “○○○ dental clinic” in his name, and opened and operated the “△△△△△△ Department” separately from the Defendant’s establishment and operation of the “○○○○ dental clinic”, and the “○○ dental clinic” by lending the name of Nonindicted Party 2, and that the Defendant actually controlled and managed the facilities and human resources management, medical operation, necessary funds raising, and the ownership of the operation

C. Examining the aforementioned legal principles and evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on Article 33(8) of the Medical Service Act.

3. Conclusion

Therefore, the appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ko Young-han (Presiding Justice)