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Mammotome Lawsuit... Court Rules "Insurer's Claim Unjust"

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[Asia Economy Reporter Oh Hyung-gil] Kim Sook-ja (48, pseudonym) underwent breast tumor excision surgery using the medical device 'Mammotome' at Hospital A last year after discovering a small tumor suspected to be breast cancer. She was informed that the Mammotome procedure was non-reimbursable but could be claimed through actual expense insurance, so she filed an insurance claim and received payment. In response, Insurance Company B filed a lawsuit against Hospital A, arguing that the Mammotome procedure was not covered under the insurance contract terms. However, the court dismissed the lawsuit, ruling that the insurer's claim was unjustified.

Insurance companies have recently been losing lawsuits related to Mammotome procedures one after another. Additionally, the Supreme Court has ruled that insurers bear greater responsibility for their duty to explain than consumers do for their duty to disclose. This is expected to impact other lawsuits as well, raising concerns about insurers’ poor performance amid a worsening business environment.

According to the insurance industry on the 14th, the 15th Civil Division of the Seoul Central District Court (Presiding Judge Yoo Seok-dong) dismissed a lawsuit filed by Insurance Company B against a medical corporation on the 9th, seeking the return of unjust enrichment amounting to approximately 397.8 million KRW.

The insurer argued that under the insurance contract terms, the new medical technology Mammotome is a discretionary non-reimbursable procedure and thus not subject to insurance payment. It also claimed that Hospital A’s collection of medical fees from patients violated regulations under the National Health Insurance Act and was therefore invalid. The insurer demanded the return of the medical fees collected as unjust enrichment from the patients and asserted that it could exercise the right to claim the return of unjust enrichment on behalf of the patients.

However, the court found it difficult to view the insurer’s exercise of patients’ rights by subrogation as necessary to effectively and appropriately secure the actual fulfillment of the claim. Furthermore, even if the insurer suffered losses by paying insurance benefits for the Mammotome procedure to patients, the court pointed out that there was no significant causal relationship between the hospital’s receipt of medical fees from patients and the damages incurred by Insurance Company A.

This court decision is expected to have a significant impact on the ongoing litigation between the insurance industry and the medical community concerning over 100 Mammotome-related cases. Last year, a similar dismissal was issued in a lawsuit filed by Samsung Fire & Marine Insurance against Mokpo Christian Hospital, seeking the return of unjust enrichment amounting to 140 million KRW related to Mammotome. At that time, the court ruled that Samsung Fire & Marine Insurance did not meet the requirements to sue on behalf of the patient and could not exercise the right of claim without the patient’s consent or power of attorney.

In addition, the Supreme Court recently ruled that the insurer’s duty to explain is more important than the consumer’s duty to disclose. On the 9th, the Supreme Court upheld the lower court’s ruling in favor of the plaintiff in the appeal case where D, the father of C who died in a motorcycle accident, sued Meritz Fire & Marine Insurance for insurance benefits.

D had enrolled his son C as the insured in two insurance products, including disease insurance, sold by Meritz Fire & Marine Insurance in 2015. At the time of the contract, C was working part-time delivering chicken by motorcycle, and D was aware of this but falsely informed the insurer that his son did not drive a motorcycle.

When C died in a motorcycle traffic accident in March 2016, D filed a claim for insurance benefits. However, Meritz Fire & Marine Insurance denied payment, citing failure to disclose the fact that C regularly operated a motorcycle at the time of the contract. D then filed a lawsuit claiming 550 million KRW.

The first and second trial courts ruled in favor of D, stating, "Even if the plaintiff violated the duty to disclose the deceased’s regular motorcycle operation, the insurer cannot terminate the insurance contract on the grounds of the plaintiff’s breach of disclosure duty because the insurance agent failed to fulfill the duty to explicitly explain matters related to motorcycle operation." The Supreme Court also found no error in the lower courts’ application of the law regarding the ‘important contents of the insurance contract’ subject to the duty to explain, nor any violation of Supreme Court precedents, affirming the lower courts’ judgment.

An insurance industry official explained, "It is important to keep in mind that the general public does not fully understand the contents and effects of insurance contracts," adding, "This means that insurers must specify and explain the details of insurance contracts to consumers more concretely and thoroughly."

This content was produced with the assistance of AI translation services.