CONTENTS
- 1. Case Concerning a Dispute over the Suspension of Payment of Medical Care Benefit Costs
- - The Lower Court's Determination
- 2. The Supreme Court's Determination on the Effect of the Decision of Nonconformity with the Constitution and on Parallel Cases
- - Whether a Court May Itself Determine That a Statute Is Unconstitutional
- - The Portion That Continues to Apply Even After the Decision of Nonconformity with the Constitution
- - Whether Retroactive Effect Is Recognized for Parallel Cases
- 3. Implications of the Judgment
- - Legal Risks That Businesses Should Review
- 4. Assistance from Daeryun's Corporate Attorneys
- - Assistance from Corporate Attorneys
1. Case Concerning a Dispute over the Suspension of Payment of Medical Care Benefit Costs
This case is a dispute that arose over the lawfulness of a suspension of payment of medical care benefit costs after the founder of a medical institution received such a suspension on the ground that it had violated the so-called prohibition on broker-operated hospitals under the Medical Service Act.
The plaintiff was a medical corporation that established and operated medical institutions, and the defendant was notified of the results of an investigation by an investigative agency to the effect that the plaintiff's founder and operator had violated Article 33(2) of the Medical Service Act.
Accordingly, the defendant, relying on Article 11-5(1) of the former Medical Care Assistance Act, issued a suspension of payment of medical care benefit costs against the plaintiff, and the plaintiff filed a revocation lawsuit, arguing that the disposition was unlawful.
In this case, the principal issues addressed were not only the lawfulness of the suspension disposition itself, but also which statute should be applied to a pending lawsuit after a decision of nonconformity with the Constitution had been rendered regarding the statutory provision that served as the basis for the disposition.
The Lower Court's Determination
The lower court found that Article 11-5(1) of the former Medical Care Assistance Act, which served as the basis for the suspension disposition in this case, violated the Constitution, and accordingly revoked the disposition.
At the time of the lower court's judgment, no decision of the Constitutional Court existed regarding the provision at issue itself, and a decision of nonconformity with the Constitution had been rendered only with respect to a similar provision of the National Health Insurance Act.
Nevertheless, the lower court denied the validity of the suspension disposition on the premise that the statutory provision was unconstitutional, and as the defendant appealed, the case came before the Supreme Court for its determination.
2. The Supreme Court's Determination on the Effect of the Decision of Nonconformity with the Constitution and on Parallel Cases
The Supreme Court ruled not only on the lawfulness of the suspension disposition itself, but also on how a court should apply a statutory provision that has been the subject of a decision of nonconformity with the Constitution.
The lower court had, in effect, revoked the disposition on the premise that the statutory provision was unconstitutional; the Supreme Court, however, examined the matter by distinguishing between a court's authority to review constitutionality and the scope of effect of a decision of nonconformity with the Constitution.
In particular, the Court focused on confirming whether part of the statutory provision subject to the decision of nonconformity with the Constitution was in a state of suspended application, and which statute should be applied to parallel cases pending at the time of the decision of nonconformity with the Constitution.
Whether a Court May Itself Determine That a Statute Is Unconstitutional
Article 107(1) of the Constitution
When the constitutionality of a statute is at issue as a premise for a trial, the court shall request a decision of the Constitutional Court and shall render its judgment in accordance with that decision.
From Supreme Court, Judgment of May 29, 2026, 2023 Du 57913
"Where a court finds that there is a reasonable doubt that a statutory provision to be applied in the case at hand is unconstitutional, it may only request the Constitutional Court to adjudicate on the constitutionality of the statute; it may not itself render judgment on the premise that the statutory provision is unconstitutional."
The Supreme Court held that the authority to adjudicate the constitutionality of statutes is, under the Constitution, vested in the Constitutional Court.
Accordingly, even where a court doubts the constitutionality of the applicable statute, it cannot immediately render judgment by treating the statute as unconstitutional, but must go through the procedure of requesting an adjudication on constitutionality.
In the end, the Court found that there was a legal flaw in the portion of the lower court's reasoning that revoked the disposition on the premise that the statutory provision was unconstitutional, without a decision of the Constitutional Court.
The Portion That Continues to Apply Even After the Decision of Nonconformity with the Constitution
Constitutional Court, Decision of June 27, 2024, 2021 Heonga 19
The portion of Article 11-5(1) of the former Medical Care Assistance Act relating to Article 33(2) of the Medical Service Act does not conform to the Constitution. However, it shall continue to apply until the legislature amends it, with a deadline of June 30, 2025.
The Supreme Court paid attention to the purport of the Constitutional Court's order that the provision continue to apply for a certain period, even while rendering a decision of nonconformity with the Constitution regarding the former Medical Care Assistance Act provision.
This is because the system for suspending payment of medical care benefit costs is itself a system intended to secure the fiscal soundness of the medical care assistance fund, so that immediately depriving even the provision underlying the system of its effect could make it difficult to achieve the legislative purpose.
Accordingly, the Supreme Court held that the underlying provision itself, which allows payment of medical care benefit costs to be suspended where it has been confirmed through the results of an investigative agency's inquiry that a medical institution violated Article 33(2) of the Medical Service Act, continues to apply.
By contrast, the Court determined that the portions failing to provide standards for handling cases in which a suspension disposition is revoked, or a compensation system such as interest and delay damages to mitigate the infringement of property rights caused by the suspension, were in a state of suspended application.
Whether Retroactive Effect Is Recognized for Parallel Cases
From Supreme Court, Judgment of May 29, 2026, 2023 Du 57913
"With respect to a case in which the constitutionality of a provision of the former statute became an issue and which was pending before a court at the time of the relevant decision of nonconformity with the Constitution, the retroactive effect of that decision of nonconformity must be deemed to extend to it."
The Supreme Court also ruled on the scope of application of the Medical Care Assistance Act as amended following the decision of nonconformity with the Constitution.
As a general matter, the scope of retroactive application of remedial legislation enacted following a decision of nonconformity with the Constitution falls within the discretion of the legislature.
The Supreme Court, however, considering the need to ensure the effectiveness of constitutional review, held that the retroactive effect of the decision must be recognized at least for parallel cases that were pending before the courts at the time of the decision of nonconformity with the Constitution.
Accordingly, the Court determined that, for cases pending at the time of the decision of nonconformity with the Constitution, such as this case, the current Medical Care Assistance Act, from which the unconstitutionality has been removed, must be applied.
However, finding that the underlying provision itself, which allows payment of medical care benefit costs to be suspended where a medical care institution has violated Article 33(2) of the Medical Service Act, continues to apply, the Court remanded the case to the lower court so that the lawfulness of the disposition could be re-examined on this premise.
3. Implications of the Judgment
This judgment demonstrated that, where a decision of nonconformity with the Constitution has been rendered, the entire statutory provision is not uniformly suspended in its application or deprived of its effect.
It is also significant in that it set out a standard under which, even where an amended statute has taken effect following a decision of nonconformity with the Constitution, the applicable statute may differ depending on the type of pending case and on whether it is still pending.
In particular, it can be regarded as a judgment showing that, from the standpoint of medical institutions, businesses, corporations, and other operators in regulated industries, one should not merely confirm the outcome of a Constitutional Court decision, but should also review the scope of effect of that decision and whether it applies to parallel cases.
Legal Risks That Businesses Should Review
This judgment made clear that the mere fact that a decision of nonconformity with the Constitution has been rendered does not mean that all bases for an existing administrative disposition have disappeared.
By contrast, with respect to the area in which the Constitutional Court recognized unconstitutionality, continued application may be limited, and in pending lawsuits there is also the possibility that the amended statute will apply.
Accordingly, not only medical institutions but also businesses subject to various permits, licenses, and administrative regulations need to separately review, when a decision of nonconformity with the Constitution has been rendered, whether the statutory provision applies in full or only in part, and which statute applies to currently pending cases.
This judgment also shows that, where a loss has arisen from an administrative disposition, one should review not only the possibility of revoking the disposition, but also subsequent matters of property-right recovery, such as compensation for losses, interest, and delay damages.
4. Assistance from Daeryun's Corporate Attorneys
Where a medical institution or business receives an administrative disposition and a decision of nonconformity with the Constitution is subsequently rendered regarding the relevant statutory provision, separate legal review may be required as to how that decision affects a pending case.
In particular, for administrative sanctions that directly affect property rights and business activities, such as suspension-of-payment dispositions, business-suspension dispositions, and penalty surcharge impositions, the applicable statute, whether an amended statute has taken effect, and the scope of effect of the decision of nonconformity with the Constitution must be reviewed comprehensively.
Assistance from Corporate Attorneys
The administrative sanctions imposed on medical institutions and businesses are not matters that can be resolved by reviewing only the lawfulness of the disposition.
Various legal issues must be reviewed together, including the question of the constitutionality of the applicable statute, the scope of effect of the decision of nonconformity with the Constitution, and whether the amended statute applies, and the governing legal principles may differ depending on the stage of the pending lawsuit.
Daeryun, ranked as the ninth-largest law firm in Korea (based on 2025 value-added tax filings with the National Tax Service), draws on extensive experience handling matters in the fields of corporate legal affairs, healthcare, administrative regulation, and compliance, and provides comprehensive legal services to medical institutions and businesses, including responding to administrative dispositions, managing regulatory risk, and conducting administrative litigation.
If you need legal review in connection with the suspension of payment of medical care benefit costs, regulation relating to broker-operated hospitals, or responding to lawsuits pending after a decision of nonconformity with the Constitution, you are welcome to review your response strategy through a 🔗legal consultation reservation with a corporate attorney.
