CONTENTS
- 1. Establishment of a Non-Medical Owner Hospital | Concept
- 2. Establishment of a Non-Medical Owner Hospital | Illegality and Establishment Qualifications
- - Restrictions on Qualifications to Establish a Medical Institution
- - Illegality of Establishing a Non-Medical Owner Hospital
- 3. Establishment of a Non-Medical Owner Hospital | Punishment
- - Subject to Punishment
- - Penalty Levels
- 4. Establishment of a Non-Medical Owner Hospital | Recovery of Medical Care Benefit Costs
- - Targets for Recovery of Medical Care Benefit Costs
- - Scope of Recovery and Statute of Limitations
- 5. Establishment of a Non-Medical Owner Hospital | How to Respond When Detected
- - Responding to Inquiries and Investigations
- - Preparing for Administrative Dispositions and Criminal Punishment
- - Consultation with a Legal Professional
- 6. Establishment of a Non-Medical Owner Hospital | Legal Support
1. Establishment of a Non-Medical Owner Hospital | Concept
The establishment of a non-practitioner-operated hospital means a person without legal qualification actually establishing or operating a medical institution.
A medical institution may be established only by a person who holds the qualifications prescribed by the Medical Service Act, and a case in which an unqualified person substantively takes part in the management of a hospital in breach of this is called a ‘non-practitioner-operated hospital.’
2. Establishment of a Non-Medical Owner Hospital | Illegality and Establishment Qualifications
Article 33(2) of the Medical Service Act strictly defines who is qualified to establish a medical institution.
Under this provision, only persons falling under any of the following may establish a medical institution.
Restrictions on Qualifications to Establish a Medical Institution
A medical institution may be established only by the following.
• The State and local governments
• Medical corporations and nonprofit corporations
• Nonprofit corporations established under the Civil Act or special acts
• Quasi-governmental institutions under the Act on the Management of Public Institutions
• Regional medical centers under the Act on the Establishment and Operation of Regional Medical Centers
• The Korea Veterans Health Service under the Korea Veterans Health Service Act
Illegality of Establishing a Non-Medical Owner Hospital
Where a person who does not meet these qualification requirements establishes or in substance operates a medical institution, this is referred to as the establishment of a “seolladdang (office manager) hospital,” and it is a clear unlawful act.
An office manager hospital can cause social problems such as a decline in the quality of medical services, threats to patient safety, and improper claims for insurance benefits, and it is subject to criminal punishment and administrative sanctions.
3. Establishment of a Non-Medical Owner Hospital | Punishment
Establishing an office-manager hospital constitutes a serious criminal offense in violation of the Medical Service Act, and severe criminal punishment and administrative dispositions are imposed on all parties involved.
Subject to Punishment
▪ The operator of an unlicensed hospital (the office manager)
A person who establishes and operates a medical institution without qualification, exercising actual management control as an unqualified individual.
▪ The medical professional who lent the name
A medical professional, such as a physician, dentist, or oriental medicine doctor, who conspired with the office manager and unlawfully lent the name of his or her medical institution.
▪ A medical professional employed by an unlicensed hospital
A medical professional employed at an unlicensed hospital, whether or not aware that it was an unlicensed hospital, may also be subject to punishment.
Penalty Levels
The levels of punishment related to the establishment of an office manager hospital are as follows.
Office manager who operated the office manager hospital | Imprisonment for up to 10 years or a fine of up to 100 million won |
Medical practitioner who conspired with the office manager and lent his or her name | Imprisonment for up to 5 years or a fine of up to 50 million won, with a concurrent suspension of qualification |
Medical practitioner employed by and working at the office manager hospital | A fine of up to 5 million won, with a concurrent suspension of qualification for up to one year |
However, a medical practitioner who was employed without knowing that it was an office manager hospital may avoid criminal punishment, but it is difficult to avoid administrative dispositions such as recovery of health insurance benefits.
Punishment related to office manager hospitals is very strict, so where there is a related suspicion, it is important to promptly consult with and respond through a legal professional.
4. Establishment of a Non-Medical Owner Hospital | Recovery of Medical Care Benefit Costs
Health insurance medical care benefit costs improperly paid to a so-called office-manager hospital are subject to recovery under the law.
Accordingly, both the person who lent the name for establishing the medical institution and the office manager may bear responsibility for returning the medical care benefit costs.
Targets for Recovery of Medical Care Benefit Costs
Before May 2013, a recovery disposition could be issued only against the medical practitioner who lent the name, and there was no separate legal basis for recovery against the unlicensed operator.
However, with the establishment of Article 57(2) of the National Health Insurance Act in May 2013, the unlicensed operator and the medical practitioner became jointly obligated to return the medical care benefit costs that were improperly received.
This provision applies only to unlicensed operators who lack the qualification to establish a medical institution, and where a medical practitioner has established multiple medical institutions, the practitioner is not included among those subject to recovery.
Scope of Recovery and Statute of Limitations
The extinctive prescription for unjust enrichment is set at 10 years, so even if you are not currently operating an unlicensed proprietor-run hospital, the medical care benefit costs received over the past 10 years may be subject to recovery.
Even if you were unaware that it was an unlicensed proprietor-run hospital, it can be difficult to avoid a recovery disposition, so prompt response and legal consultation are important.
5. Establishment of a Non-Medical Owner Hospital | How to Respond When Detected
When one is suspected of operating a non-practitioner-operated hospital or such a case is detected, a prompt and systematic response is very important.
Responding to Inquiries and Investigations
When a suspicion of an office manager hospital is raised, investigations by investigative agencies and administrative agencies proceed promptly.
Cooperating sincerely with the investigation is important, but you should answer carefully to avoid making unfavorable statements.
You should respond attentively so that infringement of rights or improper demands do not occur during the investigation.
Preparing for Administrative Dispositions and Criminal Punishment
For an unjust administrative disposition, you should actively review response measures such as an objection or administrative litigation through lawful procedures.
If a criminal accusation or indictment is made, it is important to closely examine the facts of the case and to prepare a systematic response strategy.
Through these procedures, legal disadvantages can be minimized and an appropriate response can be made.
Consultation with a Legal Professional
Administrative and investigative procedures related to the Medical Service Act are complex and require specialized understanding.
It is important to accurately understand each agency's investigative procedures and to systematically prepare the materials to be submitted, which can enable a smooth and prompt response.
Sufficient legal advice and preparation can help prevent unnecessary mistakes and can be of great assistance in resolving the case.
6. Establishment of a Non-Medical Owner Hospital | Legal Support
Because the establishment of a so-called administrator-run hospital (where a non-medical person operates a hospital under a medical professional's name) entails complex legal issues such as criminal punishment and administrative sanctions, professional legal support is very important.
From the initial response through the investigation and disposition stages, systematic legal assistance can help minimize unnecessary legal risk and establish the most suitable response strategy for the situation.
Depending on the situation the client faces, this firm forms a team of medical attorneys together with administrative and criminal attorneys to examine the case closely and establish an appropriate response strategy.
In addition, this firm conducts mock investigation simulations that assume an actual investigation setting, so that disadvantageous statements during police questioning can be prevented and thorough preparation can be made.
If you are involved in a case concerning the establishment of an administrator-run hospital and are experiencing difficulty, 🔗an attorney specializing in medical matters can provide prompt and systematic legal support.
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