[Insurance Fraud Acquittal Defense Case] Client Wrongfully Sentenced to Imprisonment for Medical Insurance Fraud, Case Resolved with an Acquittal on Appeal

The client who came to Daeryun on an insurance fraud charge was a physician by profession, and the client was sued on allegations of improperly defrauding the National Health Insurance Service and private insurance companies of insurance proceeds, and was sentenced by the court to 6 months of imprisonment.

The allegation was that, by issuing certificates that inflated the patients’ admission and discharge times, the client improperly defrauded the National Health Insurance Service of medical care benefits,

and enabled the patients to claim substantial medical expenses from private insurance companies.

In reality, however, this was a misapprehension of facts that arose due to an error by the National Health Insurance Service, which had initiated the investigation.

Seeking to clear the wrongful accusation and avoid the custodial sentence imposed by the lower court, the client came to a Daeryun attorney and requested assistance with the appeal.

■ Statutes Related to Insurance Fraud

◎ Special Act on Prevention of Insurance Fraud

▶ Article 1 (Purpose)
The purpose of this Act is to protect the rights and interests of policyholders, the insured, and other interested parties, and to contribute to the sound development of the insurance business and to the improvement of public welfare, by prescribing matters concerning the investigation, prevention, and punishment of insurance fraud.

▶Article 2 (Definitions)
The terms used in this Act are defined as follows.

1. “Insurance fraud” means the act of claiming insurance proceeds by deceiving the insurer with respect to the occurrence, cause, or content of an insured event.

2. “Insurance company” means a person who operates the insurance business after obtaining authorization under Article 4 of the 「Insurance Business Act」.

▶Article 4 (Reporting of Insurance Fraud, etc.)

Where there are reasonable grounds to suspect that the act of a policyholder, the insured, a person entitled to receive insurance proceeds, or any other person having an interest in the insurance contract or the payment of insurance proceeds (hereinafter referred to as “policyholders, etc.”) constitutes insurance fraud, an insurance company may report it to the Financial Services Commission.

▶Article 5-2 (Prohibition of Arranging, Soliciting, etc. Insurance Fraud)
No person shall arrange, induce, solicit, or advertise insurance fraud.

▶Article 8 (Insurance Fraud)
(1) A person who falls under any of the following shall be punished by imprisonment for not more than 10 years or by a fine not exceeding 50 million won.

1. A person who obtains insurance proceeds through insurance fraud or has a third party obtain insurance proceeds

2. A person who, in violation of Article 5-2, arranges, induces, solicits, or advertises insurance fraud

(2) In the case of paragraph (1) 1, imprisonment and a fine may be imposed concurrently.

The damages found by the lower court to be guilty consisted of the medical care benefits received from the National Health Insurance Service and the insurance proceeds that each patient received from private insurers,

and the defense argued that this amount was by no means large in light of the scale of the hospital operated by the defendant and the number of patients served.

Above all, the defense argued that the medical care benefits the client received were not unlawfully obtained but merely a recovery of treatment costs that had actually been incurred.

Examining the process by which the client was referred to the court on a fraud charge, the defense argued that the cause of the case originated in an error by the National Health Insurance Service, which conducted its on-site inspection without distinguishing between the concepts of a ‘day-admission ward’ and a ‘1-day admission.’

The defense argued that the matter was ultimately judged to be a suspected false admission and referred to an investigation by the Financial Supervisory Service, and that the insurance investigation conducted by the Financial Supervisory Service likewise produced the erroneous finding of excess hospital beds due to an error in the statistical survey.

The defense argued that the analysis of medical records by a private medical analysis institute, which the prosecution and police used in indicting the client, was found, upon a request for an appraisal by the Korean Medical Association, to be inconsistent with medical expertise and at odds with medical practice.

Moreover, the defense argued that this analysis of medical records had not gone through lawful investigative procedures.

The case above is one in which the client was wrongfully sentenced to imprisonment for insurance fraud due to a misapprehension of facts and an error by the Service that conducted the investigation into the client’s fraud, and obtained an acquittal through the appeal.

According to the 2022 status of detected insurance fraud announced by the Financial Supervisory Service, the amount reached 1,081.9 billion won, showing that the scale and frequency are considerable.

In practice, insurance fraud may constitute a violation not only of the Special Act on Prevention of Insurance Fraud but also of the Criminal Act, the Medical Service Act, and the National Health Insurance Act, and if a medical practitioner falsely prepares a medical certificate or the like, the crime of preparing a false medical certificate under the Criminal Act may be established, so caution is required.

However, if you become wrongfully involved in insurance fraud as in the case above, you should promptly retain legal counsel so that you can clear the false accusation.

If you need assistance regarding insurance fraud, you may turn to Daeryun Law Firm at any time.