"Insurance Companies Cannot Claim Unfair Indemnity from Doctors"... Concerns Over Mass Lawsuits from Patients

Supreme Court

[Asia Economy Reporter Changhwan Lee] The Supreme Court has ruled that insurance companies cannot directly claim the return of insurance payments from doctors on behalf of patients regarding fraudulent claims of indemnity insurance payments related to discretionary non-reimbursable procedures.

On the 25th, the Supreme Court's full bench overturned the lower court's partial ruling in favor of plaintiff A Insurance Company in a lawsuit demanding the return of indemnity insurance payments from doctor B, who administered the discretionary non-reimbursable 'Triamcinolone' injection treatment, and dismissed the case.

Discretionary non-reimbursable procedures refer to medical treatments whose safety and efficacy have not been verified by the government. Under current laws, medical fees cannot be charged to patients for such treatments, and indemnity insurance payments do not have to be made. However, some medical institutions have been disguising discretionary non-reimbursable treatments as legally non-reimbursable items and allowing patients to claim indemnity insurance payments, causing conflicts with the insurance industry.

Triamcinolone is a drug used to treat inflammatory diseases of the skin and oral cavity or rhinitis, and it has not yet been designated as non-reimbursable. Doctor B reportedly administered Triamcinolone injections to patients to improve rhinitis and received treatment fees.

After learning that Triamcinolone is a discretionary non-reimbursable procedure not covered by indemnity medical insurance, A Insurance Company filed a lawsuit claiming that the doctor must directly return the insurance payments on behalf of the patients. The first and second trials partially accepted A Company's claim, ruling that doctor B must return some insurance payments to the insurer.

However, the Supreme Court's judgment differed. The Court ruled that if the patient has the capacity to act, the insurer generally has no reason to receive the unjust enrichment claim against the hospital on behalf of the patient without special circumstances.

The Supreme Court stated, "The insurer exercising the insured's rights against the medical institution due to the illegality of the discretionary non-reimbursable treatment is an undue interference with the insured's free property management."

There were also opinions that the insurer erred by paying indemnity insurance to patients despite the procedure being discretionary non-reimbursable. The Supreme Court judged, "The unjust enrichment claim acquired by the insurer against the insured in this case is to recover damages caused by the insurer's erroneous payment of insurance money to the insured, despite the insurance event not being stipulated in the policy."

Possibility of Insurance Companies Filing Lawsuits Directly Against Individuals Emerges

Following this Supreme Court ruling, the likelihood of hospitals winning lawsuits related to another discretionary non-reimbursable procedure, 'Mammotome excision,' has increased.

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 proving safety and efficacy, but Insurance Company C filed lawsuits against multiple medical institutions demanding the return of indemnity insurance payments made for Mammotome procedures performed before the designation. The final Supreme Court ruling on this case is also pending.

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

Since the Supreme Court ruled that hospitals seeking unjust insurance payment returns must sue patients directly, insurers are expected to face increased challenges. If lawsuits are filed against individuals, the number of cases could reach thousands, potentially causing significant repercussions.

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

If the exercise of subrogation rights is not permitted, Insurance Company C would have to file 682 lawsuits against individual patients to reclaim insurance payments, and those 682 patients would each have to file lawsuits against the medical institution for treatment fee returns, resulting in a total of 1,364 lawsuits (682×2).

These patients are also customers of the insurance company, so insurers would face the burden of suing their own clients.

An insurance industry official said, "Today’s Supreme Court ruling is expected to deepen insurers' concerns regarding lawsuits for the return of unjust insurance payments related to discretionary non-reimbursable procedures."

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