In a case where a non-medical person’s act of establishing and operating a medical institution by continuously controlling and managing the operation of a medical institution under the former name by acquiring medical facilities and medical personnel already established by a non-medical person, whether such act constitutes an act of establishing a medical institution by non-medical persons prohibited under Article 33(2) of the Medical Service Act (affirmative)

If a non-medical person is deemed to have committed an act of opening and operating a medical institution under the former founder by continuously controlling and managing the operation of a medical institution under his/her name without changing the former founder, it shall be deemed that such act constitutes an act of opening and operating a medical institution under Article 33(2) of the Medical Service Act.

Article 33(2) of the Medical Service Act

Plaintiff (Law Firm Samyang, Attorneys Noh Jeong-soo et al., Counsel for the plaintiff-appellant)

Defendant 1 and 2 others (Law Firm Busan, Attorneys Ban-san et al., Counsel for the defendant-appellant)

Busan High Court Decision 201Na1736 decided June 28, 2012

The judgment below is reversed, and the case is remanded to Busan High Court.

The grounds of appeal are examined.

Article 33(2) of the Medical Service Act prohibits a person, other than a medical person or a medical corporation, from establishing and operating a medical institution; Article 87(1)2 of the same Act provides that such person shall be punished by imprisonment with labor for not more than five years or by a fine not exceeding 20,000 won. The legislative purpose of the Medical Service Act is to ensure the proper operation of medical treatment and enhance national health, and thus, it appears that the establishment and operation of a medical institution is to establish sound medical order and prevent risks to national health by strictly restricting persons with medical expertise or persons with public nature from establishing and operating a medical institution for profit-making purposes; the establishment and operation of a medical institution by a person, other than a medical person or a medical corporation, constitutes criminal acts subject to criminal punishment; the establishment and operation of a medical institution by a person, other than a medical person or a medical corporation, constitutes an act of establishing and operating a new medical institution under the name of 30-year medical person and the establishment and operation of a new medical institution without any change in the name of 20-year medical institution.

According to the reasoning of the judgment below and the records, the plaintiff concluded a contract for the transfer and acquisition of this case with Defendant 1, 2, and Defendant 3, a non-medical person, to transfer the hospital of this case to KRW 300 million. The main contents of the contract are to operate the hospital of this case in the name of the plaintiff from the date of transfer and acquisition to the date of establishment of the medical corporation of this case. The plaintiff shall continue to work under the employment contract for at least 24 months. The rights of all hospitals arising from the date of transfer and acquisition are the defendants. The medical insurance premium from September 1, 2008 after the date of transfer and acquisition is to be paid by the defendants. The medical insurance premium from September 1, 2008 after the date of transfer and acquisition is to be paid by the defendants. The plaintiff cannot assert the operation, management, or any other authority of the hospital of this case except after the date of transfer and acquisition, and the time of establishment of the medical corporation under the transfer and acquisition contract of this case is to be determined by the defendant 1 and the transferee of this case.

Examining these circumstances in light of the legal principles as seen earlier, it is reasonable to view the instant transfer agreement as null and void in violation of Article 33(2) of the Medical Service Act, which is a mandatory law, since it was concluded by a person who is not qualified to establish a medical institution.

Nevertheless, without sufficiently examining this point, the court below rejected the Plaintiff’s assertion that the transfer and acquisition contract of this case is invalid because the Defendants did not have the intent or ability to establish a medical corporation. Thus, the court below erred by misapprehending the legal principles on Article 33(2) of the Medical Service Act, which affected the conclusion of the judgment.

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae (Presiding Justice)