Medical Management | A Case Responding to an Unjust Termination Notice and Claim for Damages

A Management Service Organization (MSO) is a company that, when a medical professional establishes and operates a hospital, performs on the hospital's behalf the various management tasks other than medical care.

It is a structure in which the doctor and medical staff focus on patient care, while the MSO handles the non-medical aspects of the hospital, such as human resources, labor affairs, accounting, marketing, and facility management.

Recently, a growing number of medical institutions are adopting an MSO for efficient hospital operation and for tax and tax-saving purposes.

An MSO provides nearly all of a hospital's management support services other than medical practice. Representative examples are as follows.

-Human resources and labor management

Employee recruitment, management of employment contracts, attendance management, and the like

-Tax and accounting work

Hospital accounting, tax filing, financial analysis

-Marketing and promotion

Advertising planning, production of promotional materials, operation of online marketing

-Facility management

Management of hospital buildings, equipment, and lease contracts

-Medical device and supplies management

Purchase and lease of equipment, procurement of supplies on behalf of the hospital

Even though the client had requested billing for the fee first, the firm delayed sending the invoice, and upon receiving the invoice the client paid immediately.

This was not an intentional default but a result of the delay by the MSO firm in sending the invoice.

To prove that no fault lay with the client, the attorney in charge submitted as evidence the relevant text messages, the record of deposits and withdrawals, and the like.

The MSO firm claims that the client's hospital used the domain without authorization and asserts termination of the contract and damages for breach of contractual obligations.

The attorney in charge emphasized that the use of the domain in question resulted from the MSO firm's recommendation that the hospital operate it independently, citing a shortage of technical personnel and delays in production.

At the MSO firm's request, the client produced and operated the website at its own expense.

The attorney in charge submitted as evidence the text messages and email exchanges between the client and the MSO firm.

Under the contract, inspection of accounting materials is permitted only ‘within the scope of tax-processing purposes.’

A demand for unlimited inspection or for the provision of an ID and password exceeds the scope of the contract, and this raises concerns about violations of the Medical Service Act and the Personal Information Protection Act.

The attorney in charge emphasized the above points and also emphasized that, because the client had already terminated the engagement due to quality issues with the services of the tax firm connected by that company, the purpose of providing the accounting materials no longer existed.