"Insurers Should Be Allowed to Sue Hospitals for Fraudulent Claims Instead of Patients"

[Asia Economy Reporter Changhwan Lee] A legal battle over whether insurance companies can directly file lawsuits against hospitals on behalf of patients regarding fraudulent claims of indemnity insurance payments for discretionary non-reimbursable procedures is expected to conclude soon.

Civic groups have argued that insurance companies should be allowed to directly sue hospitals on behalf of consumers to prevent individuals from being caught up in numerous lawsuits.

On the 25th, the civic group "Consumers Together" stated in a press release, "Regarding the creditor subrogation lawsuits related to discretionary non-reimbursable procedures, which the Supreme Court is expected to rule on soon, the dispute should be resolved between the insurance and medical industries without involving the relatively weaker general insurance consumers in litigation."

Discretionary non-reimbursable procedures refer to medical treatments whose safety and efficacy have not been verified by the government. Under current laws, patients cannot claim medical expenses for such treatments, and insurers are not obligated to pay indemnity insurance benefits.

However, some medical institutions perform discretionary non-reimbursable treatments but present them as legally non-reimbursable items, allowing patients to claim indemnity insurance payments, leading to conflicts with the insurance industry.

Source: Korea Insurance Research Institute

The most controversial discretionary non-reimbursable procedures currently are the "Mammotome excision" and "Triamcinolone injection."

Mammotome excision is a procedure using Mammotome (vacuum-assisted) equipment to remove breast masses without general anesthesia or large skin incisions. It was designated as non-reimbursable in 2019 after its safety and efficacy were proven. However, Insurance Company A has filed lawsuits against multiple medical institutions seeking reimbursement of indemnity insurance payments made for Mammotome procedures performed before the non-reimbursable designation.

Triamcinolone is a medication used to treat inflammatory diseases of the skin and oral cavity and has not yet been designated as non-reimbursable. Other representative discretionary non-reimbursable procedures include blood vessel pharmacopuncture (wild ginseng pharmacopuncture) and non-invasive painless signal therapy.

The insurance industry estimates that the total amount of lawsuits filed by insurers against hospitals due to discretionary non-reimbursable procedures currently reaches 100 billion KRW.

The problem arises when courts consider the patient as the litigation party and require insurers to sue patients directly instead of hospitals. This would exponentially increase the number of lawsuits, placing a heavy burden on individuals.

For example, in the Mammotome excision case, Insurance Company A has currently filed a lawsuit against Medical Institution B on behalf of 682 patients who received treatment there.

If creditor subrogation rights are not permitted, Insurance Company A would have to file reimbursement lawsuits against 682 patients, and those 682 patients would each have to file medical expense reimbursement lawsuits against the medical institution, resulting in a total of 1,364 lawsuits (682×2).

According to the Insurance Research Institute, there are currently 823 ongoing lawsuits for recovering indemnity insurance payments related to discretionary non-reimbursable procedures conducted by five non-life insurance companies. If the Supreme Court rules against allowing creditor subrogation rights, the number of lawsuits is expected to increase exponentially.

Hwang Hyun-ah, a research fellow at the Insurance Research Institute, explained, "If creditor subrogation rights for discretionary non-reimbursable medical procedures are not permitted, the litigation burden will increase not only for insurance companies but also for patients and medical institutions. It will also be difficult to expect a reduction in renewal insurance premiums due to insurance payment recoveries, which could significantly impact the operation of indemnity medical insurance. Therefore, it is important to pay close attention to the court's ruling."

Jung Gil-ho, representative of Consumers Together, said, "It is difficult for general insurance consumers to accurately understand medical and insurance-related legal matters from their perspective. Consumers have the right to receive safe and effective medical care within a legal framework, which entirely depends on medical ethics. Therefore, there is a need to establish mechanisms to monitor the legality of medical practices."

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