In a case where Gap, who operates a convalescent hospital with permission to establish a medical institution with respect to the 6th floor and the 1st floor above the ground and the 2nd floor above the building, filed an application for change of the matters requiring permission to establish a funeral hall with respect to the above hospital facilities, but the head of the competent public health center notified the head of the competent public health center that the above application is non-permission on the ground that there are three or more funeral halls in the vicinity and the occurrence of traffic accidents, etc., the case holding that the above disposition is unlawful on the ground that the grounds presented

A person who operates a convalescent hospital with permission to establish a medical institution with respect to the 6th and upper floors above the ground and the 2nd and upper floors above the building, filed an application for modification of the permission to establish a funeral hall with respect to the establishment of the above hospital facility. However, the head of the competent public health center notified the nonpermission of the above application on the ground that the funeral hall is in the vicinity or in operation, and the occurrence of traffic accidents, etc. occurs due to traffic congestion, and

Since the nature of permission to establish a medical institution or permission to change matters permitted to establish a medical institution basically has the nature of general prohibition, if an application for permission to establish a medical institution or for permission to change matters permitted to establish a medical institution satisfies the facility standards under Article 36 of the Medical Service Act, in principle, the competent administrative agency should grant permission if the application for permission to establish a medical institution or permission to change matters permitted to establish a medical institution meets the standards under Article 36 of the Medical Service Act. However, since three funeral halls are being operated near a hospital, there is no need to install a funeral hall additionally, or civil petitions such as traffic congestion and traffic accident occurrence risk due to the operation of a funeral hall have occurred, or there is a civil petition that is contrary to the purpose of a medical institution such as pursuing profit-making, it is illegal that the above disposition is made on the ground that the above disposition is not related to facility standards under Article 36 of the Medical Service Act. However, if it is recognized that the change of matters permitted to establish a medical institution or the permission to establish a medical institution clearly seriously

Article 33(4) and (5) and Article 36 subparag. 1 of the Medical Service Act, Article 28(1) and Article 34 [Attachment Table 3] subparag. 20 and [Attachment Table 4] subparag. 20 of the Enforcement Rule of the Medical Service Act

Plaintiff (Attorney Cho Young-young et al., Counsel for the plaintiff-appellant)

Gangnam-gu Public Health Center Head (Law Firm Geon, Attorney Ha Sung-won, Counsel for the defendant-appellant)

September 19, 2019

1. The Defendant’s disposition of non-permission on December 18, 2018 to file an application for change of the matters permitted to establish a medical institution with the Plaintiff is revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On March 19, 2018, the Plaintiff, from the Defendant on March 19, 2018, operated the “○○○ Hospital” (hereinafter “instant hospital”) by obtaining permission to establish a medical institution with respect to the 2,276.28 square meters of the ground floor, the 6th ground floor, the 4,285.24 square meters of the total floor area, and the 4,285.24 square meters of the building (hereinafter “instant building”) located in Dongdaemun-gu, Seoul.

B. On December 11, 2018, the Plaintiff filed an application for change of the matters requiring permission to establish a medical institution (hereinafter “instant application”) with a view to installing a funeral hall in the instant hospital’s facilities on the underground floor and 770.15 square meters of the second floor of the instant building (i.e., 336.9 square meters of the underground 1st floor + 433.25 square meters of the ground 2nd floor) with the Defendant.

C. On December 18, 2018, the Defendant notified the Plaintiff that the instant application was rejected on the following grounds (hereinafter “instant disposition”).

There is no need for a funeral hall to be installed in the vicinity of the attached table ○ located in the main text. Civil petitions such as traffic congestion and the increase in the risk of traffic accidents occur. Civil petitions are filed in the name of a third party, other than the founder of a medical institution. Civil petitions are filed by the Plaintiff that are contrary to the purpose of the medical institution, such as pursuing profits.

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 3, Eul evidence 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Defendant’s permission to change the establishment of a medical institution constitutes a binding act. Since the Plaintiff filed the instant application by meeting all the requirements under the Medical Service Act and subordinate statutes, the Defendant is obligated to obtain permission to change the establishment of a medical institution upon the instant application. Nevertheless, the Defendant’s disposition of this case is unlawful. In addition, the Plaintiff erred by misapprehending the fact that the Plaintiff filed the instant application after completing all the preparation, such as entering into a lease agreement to operate a funeral hall in the instant building, and the third party filed the instant application for the purpose of operating a funeral hall in the name of the Plaintiff.

Even if the Defendant’s instant disposition constitutes discretionary act, the instant disposition is unlawful as it violates the principle of proportionality and the principle of equality, in light of the following: (a) the existence of three funeral halls around the instant hospital; (b) traffic problems arising from the operation of the funeral hall were insignificant; and (c) the inconvenience of the bereaved family members due to the absence of a funeral hall due to the death of a large number of patients in the instant hospital; and (b)

B. Relevant statutes

[Attachment] The entry of the relevant statutes is as follows.

C. Determination

(i) the existence of the reasons for the measure

A) Relevant regulations and legal principles

(1) Article 33(4) of the Medical Service Act provides that a medical doctor, etc. who intends to establish a general hospital, hospital, dental hospital, oriental medical hospital, or convalescent hospital shall obtain permission from the competent administrative agency; however, the competent administrative agency may not obtain permission for establishment if a medical institution that intends to establish fails to meet the facility standards under Article 36 of the Medical Service Act; and Article 33(5) of the Medical Service Act provides that permission for modification shall be obtained when a medical institution intends to alter important matters prescribed by the Ordinance of the Ministry of Health and Welfare among the matters subject to permission for establishment. Article 28 of the Enforcement Rule of the Medical Service Act as delegated by the authority provides that a person who has obtained permission for establishment of a medical institution shall submit to the Mayor/Do Governor an application for modification of the prescribed permission for establishment, such as increase or decrease of the type of a medical institution, (2) change of facilities following the change of the principal facilities, (5) change of the name of a medical institution, and (4) number of medical personnel of a medical institution.

(2) Examining the structure or language of each of the above provisions that served as the basis of the instant disposition, given that an application for permission to establish a medical institution or permission to change matters to establish a medical institution has the nature of the general prohibition, in principle, a competent administrative agency should grant permission if the application for permission to establish a medical institution or permission to change matters to establish a medical institution satisfies the facility standards under Article 36 of the Medical Service Act. However, in light of the legislative purpose of the Medical Service Act to protect and promote the health of the people by prescribing necessary matters for the public’s fee so that all citizens can benefit from high-quality medical care, the competent administrative agency should exceptionally refuse such permission in cases where it is deemed that the change to matters

B) Facts of recognition

(1) On October 25, 2017, the Plaintiff entered into a contract with Nonparty 1, the owner of the instant building, to lease the lease deposit of KRW 350 million with respect to KRW 2,276.28 square meters among the instant building, including the first floor and the third floor and six floors, for seven years. Nonparty 2, who is the spouse, entered into a contract with Nonparty 1 to lease the first floor and the second floor of the instant building with KRW 650 million with the right to lease deposit for the purpose of operating the funeral hall in the said part of the instant building. Nonparty 2, in the name of Nonparty 3, the spouse, entered into a contract with Nonparty 1 to lease the first floor and the second floor of the instant building with KRW 25 million with the right to lease deposit for the same day, was preparing for internal construction to operate the funeral hall in the instant building.

(2) On March 27, 2018, with the Plaintiff’s consent, Nonparty 2 reported the funeral home business related to the instant building to the head of Gangnambuk-gu under the Plaintiff’s name pursuant to Article 29(1) of the Act on Funeral Services, Etc.. The head of Gangnam-gu notified the Plaintiff on April 11, 2018 that the instant building was limited to the installation and operation of the funeral home in the Class III general area.

(3) On April 23, 2018, upon the Plaintiff’s consent again, Nonparty 2 filed an application for change of the matters requiring permission to establish a funeral hall with respect to the 1st floor and 2nd floor above the ground (i.e., 802.04 square meters below the ground level 802.04 square meters above the ground level 802.04 square meters above the ground level 629 square meters) under the name of the Plaintiff. On June 5, 2018, the Defendant notified the Plaintiff of non-permission on the ground that “traffic accidents are likely to occur, funeral cars are likely to run, and a civil petition arises.” On the request of Nonparty 2, the Plaintiff filed a lawsuit with the Seoul Administrative Court seeking the revocation of the said non-permission disposition (i.e., the nominal owner of the said matters requiring permission to establish the medical institution, and the other party to the said non-permission disposition).

(4) On August 20, 2018, the Plaintiff and Nonparty 2 acquired the right to operate the funeral hall in the first floor and the second floor of the instant building that was scheduled to open from Nonparty 2 and the internal facilities, etc. that Nonparty 2 carried out construction with approximately KRW 350 million (the construction cost claimed by Nonparty 2). The Plaintiff shall be the first floor and the second floor of the instant building that Nonparty 2 first leased from Nonparty 1, and the remainder after deducting the unpaid rent and overdue interest of Nonparty 2 from the lease deposit that Nonparty 2 paid to Nonparty 1, shall be the Plaintiff’s lease deposit, and when the Plaintiff obtained permission to establish a medical institution necessary for the operation of the funeral hall in the instant case, the Plaintiff concluded a contract with Nonparty 2 to pay the remaining lease deposit to Nonparty 2 (hereinafter “instant contract”). After consultation with Nonparty 2, the Plaintiff voluntarily withdrawn the Seoul Administrative Court on July 28, 2018 (hereinafter “Seoul Administrative Court”).

(5) On November 23, 2018, the Plaintiff and Nonparty 2 set the lease deposit amount to be paid by the Plaintiff to Nonparty 2 as KRW 450 million. On the same day, the Plaintiff and Nonparty 1 drafted a contract under which the Plaintiff leased the entire building of this case from Nonparty 1 to KRW 1 billion for the purpose of operating the convalescent hospital and funeral cultural center (excluding value-added tax). In fact, without paying the additional lease deposit to Nonparty 1, the Plaintiff paid KRW 700,000,000 (350,000) which was already paid by Nonparty 2 and KRW 250,000,000,000,000,000,000,0000,000,000,000,000,000,000,000,000,000,000,000,000,000.

(6) The Plaintiff paid to Nonparty 1 the monthly rent of the instant building; from October 2017 to November 2018, according to the previous lease agreement, KRW 30 million (including value-added tax at a monthly rent of KRW 30 million); from the end of December 2018, the Plaintiff paid KRW 62.7 million each month (including value-added tax at a monthly rent of KRW 57 million) pursuant to the lease agreement entered into with respect to the entire building of the instant building. In addition, Nonparty 2 paid Nonparty 1 the monthly rent of the instant building from February 2018 to April 2018, Nonparty 2 paid KRW 27.5 million each month (including value-added tax at a monthly rent of KRW 25 million) to Nonparty 1 by means of credit transfer from May 2, 2018.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 5, 6, 10, 12, 13, Eul evidence Nos. 1, 3 through 5, 7-1, 7-2, testimony of non-party 2, and the purport of the whole pleadings

C) Specific determination

(1) As to the grounds for disposition that a third party (non-party 2) who is not a medical institution founder (non-party 2) intends to substantially operate a funeral hall

In order for Nonparty 2 to operate a funeral hall on the first floor and second floor of the instant building, the Plaintiff completed the preparation of the interior construction works, and refused to report to the head of Gangseo-gu Office on March 27, 2018, and again, on April 23, 2018, the fact that Nonparty 2 filed an application for change of the medical institution establishment permission in the name of the Plaintiff on April 23, 2018 was rejected. However, it is insufficient to recognize that a third party (Nonindicted 2) who is not a medical institution founder has filed the instant application to operate a funeral hall in the name of the Plaintiff. Rather, in light of the above recognized facts and the following circumstances known, it is recognized that the Plaintiff filed the instant application to substantially operate the funeral hall. This part of the grounds for disposition is unlawful by mistake of facts.

(A) On August 20, 2018, prior to the instant application, the Plaintiff entered into the instant contract with Nonparty 2 to acquire the internal facilities and the right of operation of the funeral hall, which was being developed on the first and second floors underground of the instant building, from Nonparty 2.

(B) In light of the following circumstances as to the developments and motive leading up to the instant contract, the content of the instant contract and the process of its implementation, etc., Nonparty 2 was an entity of the instant contract, and Nonparty 2 was not pretended to conceal the intent of opening and operating a funeral hall under the Plaintiff’s name through the instant application procedure.

① Under the instant contract, Nonparty 2 agreed that “the amount calculated by deducting the amount equivalent to the unpaid rent and overdue interest from the Plaintiff out of KRW 650 million paid by Nonparty 2 to Nonparty 1.” From May 2018, Nonparty 2 did not pay the unpaid rent to Nonparty 1. From around November 23, 2018, Nonparty 2 reached KRW 192.5 million in unpaid rent, and on the same day, the Plaintiff and Nonparty 2 agreed that “the amount of KRW 450 million determined as the lease deposit to be paid by the Plaintiff to Nonparty 2” is the amount calculated by deducting the amount equivalent to the overdue interest from Nonparty 2’s lease deposit to the above unpaid rent.

② Nonparty 2 transferred the pertinent part to the Plaintiff without receiving any consideration, even though Nonparty 2 paid a considerable amount of internal construction work in the instant contract. Nonparty 2, at the time of entering into the instant contract, assumed that Nonparty 2 was a car of KRW 27.5 million per month without completing administrative procedures necessary for the establishment and operation of a funeral hall, and had a duty to continuously bear the said car every month during the period of lease in a situation where it is difficult to lawfully complete the relevant procedures in its own name. Nonparty 2 had been in arrears from May 2018, and Nonparty 2 had an internal construction work at the time of termination of the instant contract. Nonparty 2’s wife, even if Nonparty 2 renounced the internal construction cost already paid, it was necessary to compensate the Plaintiff for part of its lease deposit claims even if it was incurred by Nonparty 2 by entering into the instant contract with the Plaintiff. Nonparty 2’s exemption from payment by entering into the instant contract without receiving any consideration from December 28, 2018 to December 28, 2019.

③ On November 23, 2018, according to the terms and conditions of the instant contract, the Plaintiff concluded a lease agreement with Nonparty 1 on the entire building of this case, and paid KRW 62.7 million, a rent for the entire building of this case, from the following month.

(2) As to the remaining grounds for disposition

According to the relevant provisions and legal principles as seen earlier, if the application of this case clearly violates the facility standards under Article 36 of the Medical Service Act, the Defendant should, in principle, permit the application of this case. Since there are three funeral parlors near the instant hospital, there are no need to install a funeral hall additionally, or there are civil petitions such as traffic congestion and traffic accident risk caused by the operation of a funeral hall, or civil petitions that violate the purpose of a medical institution, such as pursuing profit-making, etc., the disposition of this case is unlawful on the ground that it is not related to facility standards under Article 36 of the Medical Service Act. However, in a case where it is recognized that the change of permitted matters of the instant hospital clearly violates the purpose of a medical institution due to the foregoing circumstances, the permission may be exceptionally refused, but the exception may not be acknowledged solely on the ground that the aforementioned change of permitted matters of

(3) Sub-determination

Therefore, inasmuch as the grounds for disposition presented by the Defendant at the time of the instant disposition are not recognized, the instant disposition is unlawful without having to examine the remainder of the Plaintiff’s remaining arguments.

2) As to the Defendant’s assertion on the size of the funeral hall

A) In the instant lawsuit, the Defendant asserts that “the funeral hall area intended to be operated by the Plaintiff through the instant application exceeds 1/5 of the area of medical institution,” which is the area permitted by the medical law,” and that the instant disposition cause is pertaining to “the occurrence of civil petitions, such as traffic congestion and the increase of risk of traffic accidents,” among the original disposition cause. However, the Defendant is entirely different from the content that “the funeral hall area exceeds the area permitted by the medical law and regulations,” and that “the occurrence of traffic accidents” is “the occurrence of traffic congestion and the occurrence of traffic accidents.” It can be understood to the purport that the aforementioned disposition cause is not clearly or concretely acknowledged, and that it is intended to add the grounds for disposition.

B) However, in an appeal litigation, a disposition agency may add or modify other reasons only to the extent that the original reason and basic factual relations are recognized to be identical to that of the original disposition. The existence of basic factual relations here shall be determined based on whether it is identical in basic social facts in light of the specific facts before the legal evaluation of the grounds for disposition (see Supreme Court Decisions 91Nu3895, Feb. 14, 1992; 2009Du19021, Nov. 24, 201, etc.).

C) Since the foregoing additional disposition grounds cannot be deemed identical in basic terms to social factual relations, which serve as the basis of the original disposition grounds, the addition of the disposition grounds cannot be allowed. Therefore, regarding the foregoing additional disposition grounds, the determination of legality of the instant disposition cannot be considered.

3. Conclusion

The claim of this case is reasonable, and it is so accepted as per Disposition.

[Attachment] Relevant Statutes: omitted

Judges Kim Jong-ho (Presiding Judge)