Insurance Companies Powerless Only in Court... Consecutive Losses in Mammotome Lawsuits (Comprehensive)

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[Asia Economy Reporter Oh Hyung-gil] Kim Sook-ja (48, pseudonym) underwent a health checkup last year and discovered a small tumor suspected to be breast cancer. She immediately visited Hospital A and underwent breast tumor excision using the medical device called 'Mammotome.' She was informed that the Mammotome procedure was non-reimbursable and that she could claim the medical expenses through indemnity insurance, so she filed a claim with the insurance company and received payment. However, the insurer filed a lawsuit against Hospital A, arguing that the Mammotome procedure was not covered under the insurance contract terms. The court dismissed the lawsuit, ruling the insurer's claim was unjust.

Insurance companies have recently been losing consecutive lawsuits related to Mammotome procedures. Additionally, the Supreme Court has ruled that insurers bear greater responsibility for explanation obligations than consumers do for disclosure obligations.

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 an insurer against a medical corporation demanding the return of unjust enrichment amounting to approximately 397.8 million KRW on the 9th.

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 payouts. They also claimed that Hospital B’s collection of medical fees from patients violated the National Health Insurance Act and was therefore invalid.

Furthermore, the insurer stated that the hospital must return the medical fees obtained as unjust enrichment and that the insurer could exercise the right to claim unjust enrichment on behalf of the patients.

They asserted that the hospital committed an illegal act by performing breast tumor excision using Mammotome and receiving payment for it, causing the insurer to suffer damages by paying insurance benefits that were not owed to the insured, and demanded compensation.

However, the court did not accept these claims. The court found it difficult to consider that the insurer’s exercise of rights on behalf of patients was necessary to effectively secure the actual fulfillment of the claim.

Moreover, even if the insurer suffered damages by paying insurance benefits for Mammotome, the court pointed out that there was no significant causal relationship between the hospital’s fault in collecting medical fees from patients and the damages incurred by Insurance Company A.

Regarding the claim that the hospital charged non-reimbursable medical fees without complying with the Health Insurance Act, the court explained, "The provisions in the Health Insurance Act that prohibit medical institutions from charging patients or their guardians for reimbursable medical fees are not intended to protect insurers like the plaintiff who have insurance contracts with patients."

The court’s judgment was that there is no recognized necessity for insurers to exercise claims on behalf of patients, and that subrogation claims by indemnity insurers could constitute undue interference with patients’ free property management.

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, the court also dismissed a similar unjust enrichment claim lawsuit filed by Samsung Fire & Marine Insurance against Mokpo Christian Hospital related to Mammotome.

Samsung Fire & Marine Insurance sought the return of approximately 140 million KRW for 96 patients who received Mammotome procedures and 53 patients who underwent Pain Scrambler therapy at Mokpo Christian Hospital. However, the court ruled that Samsung Fire & Marine Insurance did not meet the requirements to sue on behalf of the patients and could not exercise claim representation without the patients’ consent or power of attorney.

Meanwhile, on the 9th, the Supreme Court upheld the lower court’s ruling in favor of plaintiff B, the father of A, who died in a motorcycle accident, in a final appeal against Meritz Fire & Marine Insurance regarding an insurance claim lawsuit.

B subscribed to two insurance products, including disease insurance, from Meritz Fire & Marine Insurance in 2015 with his son A as the insured. At the time of contract, A was working part-time delivering chicken by motorcycle, and B was aware of this but falsely informed the insurer that his son did not ride a motorcycle.

After A died in a motorcycle traffic accident in March 2016, B filed an insurance claim, but Meritz Fire & Marine Insurance denied payment, citing nondisclosure of the fact that A regularly rode a motorcycle at the time of contract.

B then filed a lawsuit claiming 550 million KRW, arguing that the insurance agent failed to explain the necessity of subscribing to a special clause excluding coverage for accidents caused by regular motorcycle use and the consequences of failing to disclose this information before contract conclusion, which could lead to contract termination and loss of insurance benefits.

The first and second trial courts ruled in favor of B, stating that even if B violated the duty of disclosure regarding A’s regular motorcycle use, the insurer could not terminate the contract because the insurance agent failed to fulfill the duty of explicit explanation regarding matters related to motorcycle use.

The Supreme Court also found no error in the lower courts’ rulings, stating there was no misapplication of law or violation of precedent concerning the insurer’s duty to explain important contract terms.

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

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