#In Jan. 2018, the fire disaster at Sejong Hospital in Miryang, South Gyeongsang Province, laid bare the true face of illegal medical institutions. The hospital, which had converted operating rooms and physical therapy rooms into beds to run in an overcrowded manner, was revealed to be an administrator-run hospital, and the hospital's chairperson received a finalized sentence of eight years in prison on charges of violating the Medical Service Act, fraud and embezzlement. But the punishment did not prevent the tragedy. Forty-seven people died and 112 were injured.
The government has reignited the debate over the National Health Insurance Service's special judicial police powers. The president personally elevated a matter that had failed to pass the National Assembly for years.
President Lee Jae-myung on the 16th, during a Health and Welfare Ministry work briefing, noted the leakage of health insurance funds caused by illegal establishments such as administrator-run hospitals and ordered a plan to grant special judicial police authority to the NHIS.
There was also a remark that "the Financial Supervisory Service is also a private institution but has special judicial police authority." The president said regarding the designation of a special judicial police force of about 40 to 50 personnel requested by the NHIS, "Have the presidential office take care of it and resolve it."
◇The illegality is clear, but who will investigate?
The current Medical Service Act and Pharmaceutical Affairs Act prohibit the establishment of medical institutions and pharmacies by non-medical personnel. So-called administrator-run hospitals, where non-medical personnel front with licensed medical professionals to operate, are illegal from the establishment stage. These institutions strongly tend to prioritize maximizing revenue over treating patients, fueling overtreatment and misuse of pharmaceuticals, and, due to inadequate fire and safety facilities, have threatened the public's right to life and health.
According to the NHIS, as of Oct. this year, the amount illegally pocketed by illegally established institutions under the name of long-term care benefit payments totals about 2.9183 trillion won. However, the actual collection rate is only 8.67%.
The NHIS cites structural limitations. It is the first to review nationwide medical institutions' claims data, but, lacking coercive investigative powers, it has no choice but to rely on the police. It takes months to initiate an investigation, and the investigation period averages 11 months. In the meantime, hospitals close and funds are siphoned off.
The NHIS believes that if special judicial police are introduced, it can shorten investigation periods to three months and block annual fiscal leakage of about 200 billion won. It said, "We already have personnel with medical, legal and investigative experience, and we will investigate only specific crimes under the direction of prosecutors."
The medical community flatly rebuts this logic. The Korean Medical Association Organization takes issue first with the example of the "FSS special judicial police" mentioned by the president.
The association said, "The Financial Supervisory Service (FSS) is a neutral body that supervises the financial market, but the NHIS is a party that contracts fees with medical institutions and pays and reduces claims," arguing that "it is a dangerous idea to grant coercive investigative powers to a contracting counterparty." It said this is no different from giving a civil creditor the authority to search and seize a debtor's house.
Constitutional issues are also raised. The NHIS already holds nationwide medical institutions' treatment data and is an organization that conducts on-site inspections on a standing basis. If investigative powers are added to this, critics say the line between administrative inspections and criminal investigations could blur, undermining the warrant principle and the principle of proportionality. There are concerns that the issue could escalate into criminal matters beyond cracking down on administrator-run hospitals to even simple mistaken claims.
As alternatives, the association proposes a review system in which local medical societies participate at the stage of opening medical institutions, a reduction program for self-reporters of name lending, and the establishment of an independent licensing management body, arguing that "the solution is prevention, not post-facto crackdowns."
◇Will the National Assembly, long at a standstill, move again?
The National Assembly has long stood still on this issue. Bills granting special judicial police powers to the NHIS were discarded in both the 20th and 21st National Assemblies and remain pending in The National Assembly's Legislation and Judiciary Committee in the 22nd.
There is, however, speculation that the mood is different this time. The designation as a state agenda item followed by the president's direct order, repeated incidents involving illegally established institutions, and public discontent over health insurance fund leakage are converging. At the same time, a fundamental question is being raised: "Is it acceptable to allow a structure in which the insurer, investigator and prosecutor become one body?"
Jeong Gyeong-sil, director general for health care policy at the Health and Welfare Ministry, said at a briefing after the work report on the 16th, "We are fully aware of the medical community's concerns," and added, "We will manage this to ensure that special judicial police powers are not exercised excessively, in accordance with laws and procedures, with a focus on illegal administrator-run hospitals."
Some argue that the very legal liability framework surrounding administrator-run hospitals should first be examined to see if it properly reflects realities on the ground. A representative example is a ruling last year by the Seoul High Court that, in a case involving an administrator-run hospital, limited the responsibility for recovery of benefit payments imposed on the de facto founder (administrator) by linking it to the scope of responsibility of the name lender (physician or medical corporation).
The panel held, based on the "joint collection" provision in Article 57, Paragraph 2 of the National Health Insurance Act, that if the name lender received a reduction, the amount to be recovered from the de facto founder could not exceed that scope. Regardless of whether the person led the illegal establishment, it regarded the upper limit of liability as the same.
Kim Jung-kwon, a professor at the Chung-Ang University School of Law, said of this ruling, "Consideration (reduction) for the side that formally lent its name is a structure that is transferred as is to the de facto founder who actually took the benefits," pointing out the issue. He said, "In this case, the magnitude of legal liability and the potential for social blame diverge," and added, "It could send the wrong signal that even if one operates an administrator-run hospital, a certain level of revenue can still be left."
Kim said, "In light of the legislative intent to eradicate illegal name lending, the collection disposition structure of Article 57 of the current National Health Insurance Act needs to be readjusted."