The Financial Supervisory Service urged non-life insurers to file a complaint against Jaseng Hospital of Korean Medicine, which faces allegations of improperly receiving insurance payouts. The Financial Supervisory Service also recently compiled materials related to convalescent hospitals at the center of a "payback (returning money)" controversy and asked police to investigate. Since the start of this year, President Lee Jae-myung and Governor Lee Chan-jin of the Financial Supervisory Service (FSS) have emphasized strengthening responses to insurance fraud, and the Financial Supervisory Service appears to be making all-out efforts to uncover cases.
According to the financial industry on the 19th, the Financial Supervisory Service proposed early this year that four non-life insurers (삼성화재·Hyundai Marine & Fire Insurance(001450)·KB Insurance·DB Insurance(005830)) file a complaint against Jaseng Hospital of Korean Medicine. The Financial Supervisory Service identified indications that some branches of Jaseng Hospital of Korean Medicine inappropriately filed insurance claims and is said to have conveyed the situation to the insurers.
Some non-life insurers had previously requested an investigation into Jaseng Hospital of Korean Medicine, but progress was reportedly slow due to a lack of materials. Taking that into account, the Financial Supervisory Service asked the four insurers to compile materials and make a simultaneous request.
This month, the Seoul Metropolitan Police Agency's Financial Crimes Investigation Unit said it conducted searches and seizures at five locations, including Jaseng Medical Foundation and Jaseng Hospital of Korean Medicine, on suspicion of violating the Special Act on the Prevention of Insurance Fraud, based on complaints filed in April by four non-life insurers against Jaseng Hospital of Korean Medicine. The insurers claim that Jaseng Hospital of Korean Medicine indiscriminately prescribed expensive herbal medicine to traffic accident patients that did not match the severity of their symptoms, improperly receiving insurance payouts worth tens of billions of won. Police secured prescription records through the raids and are analyzing whether there were organized attempts to defraud insurance payouts.
The Financial Supervisory Service is also checking whether payback cases involving non-covered medical expenses at some convalescent hospitals constitute insurance fraud, and, together with insurers, is continuing to request investigations by police. Recently, some convalescent hospitals reportedly provided high-cost, non-covered treatments tailored to the limits of cancer patients' indemnity coverage and gave patients part of the insurance payouts from insurers in cash.
From the early days of Governor Lee Chan-jin's tenure, the Financial Supervisory Service made detecting insurance fraud a key task. At a National Assembly audit in Oct. last year, Lee said, "I agree that penalties for insurance fraud are too lenient. We plan to reorganize the relevant departments and reinforce dedicated personnel."
Last month, the president shared a media report on payback at convalescent hospitals on social media (SNS), instructing, "It seems illegal, yet this behavior continues. We need to take corrective action." On the 15th, while receiving a work report, the president also mentioned news about alleged fraud at Korean medicine hospitals to Financial Supervisory Service (FSS) Governor Lee Chan-jin.
An industry official said, "The Financial Supervisory Service is currently requesting investigations into various insurance fraud cases and actively asking for investigative cooperation. I understand police are also taking a more proactive stance on investigations than before."