Supreme Court: "Partial Omission of Prosecutor's Appeal Grounds is Illegal"… Second Trial Remanded

Supreme Court, Seocho-dong, Seoul.

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The Supreme Court has ruled that omitting judgment on part of the grounds for appeal stated in a legally submitted appeal brief by a prosecutor is illegal.

The ruling holds that if a prosecutor contests the acquittal on charges of aiding fraud and violating the National Health Insurance Act while asserting the defendant’s pharmacist license lending, then the acquittal on the charge of violating the Pharmacist Act due to license lending should naturally be considered contested as well.

According to the legal community on the 4th, the Supreme Court’s Second Division (Presiding Justice Min Yoo-sook) recently overturned the lower court’s ruling in the appeal trial of pharmacist A, who was charged with violating the Pharmacist Act, aiding fraud, and aiding violation of the National Health Insurance Act. The Supreme Court recognized guilt for aiding fraud and aiding violation of the National Health Insurance Act, sentencing A to six months imprisonment with a two-year probation, and remanded the case to the Cheongju District Court.

The court stated, "The lower court’s judgment contains an error in the legal principle regarding the scope of appeal review, which affected the verdict. The prosecutor’s claim pointing out this is valid."

Pharmacist A was registered as a salaried pharmacist (pay pharmacist) at a pharmacy located in the same building as an ophthalmology clinic where her husband was the director, but was accused of not actually working there while receiving a fixed monthly payment.

B, who operated the pharmacy, was indicted for fraud, violation of the Pharmacist Act, and violation of the National Health Insurance Act by deceiving the National Health Insurance Corporation into believing A was a salaried pharmacist at the pharmacy from February 4, 2015, to August 17, 2017, thereby fraudulently obtaining 94 million KRW in medical benefits over 59 occasions. A was charged with lending her pharmacist license (violation of the Pharmacist Act) and aiding B’s crimes (aiding fraud and aiding violation of the National Health Insurance Act).

According to the Ministry of Health and Welfare’s notice on "List of Health Insurance Covered and Non-Covered Services and Relative Value Scores," pharmacies receive dispensing fees differentially based on the number of prescriptions dispensed per pharmacist per day: 100% for up to 75 prescriptions, 90% for 76 to 100 prescriptions, etc.

The prosecutor argued that since the number of prescriptions per pharmacist is limited and exceeding that reduces insurance benefit payments, B registered A as a full-time pharmacist and falsely reported A’s dispensing numbers to receive a higher differential fee from the National Health Insurance Corporation. A was listed as working at the pharmacy only in name and received 500,000 KRW monthly as compensation. A was also aware of this and participated in the crime, leading to joint prosecution.

However, the first trial court found B guilty only of fraud and violation of the National Health Insurance Act and sentenced B to a fine of 8 million KRW.

The court acquitted B of violating the Pharmacist Act and acquitted A of all charges.

Regarding B’s violation of the Pharmacist Act, the court ruled that since the provision punishing those who borrow pharmacist licenses (Article 93, Paragraph 1, Subparagraph 1-2 of the Pharmacist Act) was newly enacted and enforced after the crime was committed, B could not be punished.

Regarding A, whom the prosecutor considered to have lent her pharmacist license, the court found insufficient evidence to prove the crime, citing that A had been employed at the pharmacy before B took over, performing dispensing and medication guidance; that the employment relationship was transferred when B acquired the pharmacy from C, so A appeared to continue working as a pharmacist; that there was no objective evidence that B offered A 500,000 KRW monthly to register as a salaried pharmacist; and that employee D testified B actually worked as a pharmacist and contacted A to perform pharmacist duties when needed, despite A’s limited working days.

However, the second trial court’s judgment differed. It accepted both the prosecutor’s appeal that B’s sentence was too light and that A’s acquittal was illegal.

The second trial court overturned the first trial’s ruling that acquitted A on three charges and fined B 8 million KRW, sentencing B to one year imprisonment with two years probation and A to six months imprisonment with two years probation.

The court concluded regarding A, "It can be sufficiently recognized that the defendant facilitated B’s fraud and violation of the National Health Insurance Act by allowing B to register her as a full-time pharmacist at the pharmacy and falsely reporting her dispensing numbers to claim medical benefits at a higher differential rate, knowing B’s intent."

This judgment was based on factors including A’s false statement during police investigation that she worked 5-6 times monthly despite only attending 3 to 7 times over about 31 months from January 2015 to July 2017; the discrepancy between the amounts B transferred monthly to A (4 to 4.6 million KRW) and the cash amounts A returned (250,000 KRW according to A, 350,000 KRW according to B); and the pharmacy’s location in the same building as the ophthalmology clinic where A’s husband was director, meaning the pharmacy’s sales were heavily influenced by prescriptions from the clinic, making it unlikely that A’s money transactions were merely at B’s request as an employee.

The court ultimately judged, "It is reasonable to view all or part of the money A received monthly from B not as normal salary but as economic compensation for helping B obtain illegal profits."

Although the second trial court recognized A’s guilt for aiding fraud and aiding violation of the National Health Insurance Act, the prosecutor appealed again to the Supreme Court.

The prosecutor argued that the second trial court’s failure to review the charge of violating the Pharmacist Act by lending a pharmacist license was erroneous.

Previously, the second trial court limited the scope of the prosecutor’s appeal to the charges of aiding fraud and aiding violation of the National Health Insurance Act and did not rule on the Pharmacist Act violation charge.

The prosecutor had written "all" in the "scope of appeal" section of the appeal brief and stated in the "grounds for appeal" section that the original acquittal was based on factual errors despite evidence that the defendant knowingly lent her pharmacist license and aided B’s fraud and National Health Insurance Corporation crimes.

However, in the subsequently submitted grounds for appeal, the prosecutor only cited the first trial’s acquittal on aiding fraud and aiding violation of the National Health Insurance Act and argued "there is a factual error," leading the second trial court to interpret that the prosecutor limited the grounds for appeal to these two charges and did not submit grounds for appeal on the acquittal of the Pharmacist Act violation.

The Supreme Court has held that a defendant acquitted in the first trial should be promptly freed from double jeopardy and should not be hindered in defending against the prosecutor’s appeal. Even if the prosecutor writes "factual error and legal misinterpretation" in the "grounds for appeal" section of the appeal brief, if no grounds for appeal are submitted within the submission period, it cannot be considered a valid ground for appeal.

Also, even if the prosecutor writes "all (including sentencing and acquittal parts, factual error, legal misinterpretation)" in the "scope of appeal" section of the appeal brief, if the grounds for appeal submitted only address the acquittal parts, the Supreme Court treats the unaddressed guilty parts as if no grounds for appeal were submitted within the legal period.

Based on this precedent, the second trial court treated the prosecutor’s failure to specifically mention the acquittal on the Pharmacist Act violation in the grounds for appeal as no valid submission of grounds for appeal on that part.

However, the Supreme Court’s judgment differed.

In this case, the prosecutor explicitly mentioned the Pharmacist Act violation in the grounds for appeal, and even if there was no specific mention, the situation was such that the prosecutor should naturally be considered to contest the Pharmacist Act violation.

The court stated, "The appeal brief submitted within the submission period states that considering the defendant’s attendance frequency, salary amount, and payment method, it is recognized that the defendant lent her pharmacist license to B, knowing B intended to register her as a salaried pharmacist to claim higher medical benefits, thereby aiding B’s fraud and violation of the National Health Insurance Act."

It added, "The defendant’s lawyer submitted a written opinion before the first trial’s first hearing specifically arguing that the defendant did not lend her pharmacist license."

The prosecutor had stated the license lending fact in the grounds for appeal, and the defendant contested the Pharmacist Act violation charge during the second trial.

The court explained, "The charges of aiding fraud and aiding violation of the National Health Insurance Act against the defendant are based on the fact that the defendant did not actually work at the pharmacy but allowed B to falsely register her as a salaried pharmacist, which logically and factually presupposes the act of lending the pharmacist license."

In other words, the prosecutor’s indictment and grounds for appeal on aiding B’s fraud and violation of the National Health Insurance Act inherently presuppose that A lent her pharmacist license to B.

The court pointed out, "The prosecutor wrote in the appeal brief that the entire acquittal in the first trial was within the scope of appeal, and explicitly stated in the grounds for appeal that not only aiding fraud and aiding violation of the National Health Insurance Act but also the act of lending the pharmacist license should be recognized as guilty. The prosecutor also specifically argued factual errors regarding the common main grounds for acquittal in the first trial. It is unusual that the prosecutor contests aiding fraud and aiding violation of the National Health Insurance Act while not contesting the Pharmacist Act violation, which is a prerequisite fact."

Finally, the court stated, "The prosecutor properly stated grounds for appeal regarding the Pharmacist Act violation in the appeal brief, so the lower court should have ruled on this part of the prosecutor’s appeal. However, the lower court maintained the first trial’s acquittal without any judgment on this part, which is an error in the legal principle regarding the scope of appeal review and affected the verdict, thus warranting reversal and remand."

A Supreme Court official said, "The Supreme Court did not definitively rule that the Pharmacist Act violation is guilty but found it wrong that the lower court did not make any judgment at all. The case will be re-examined and judged on the guilt or innocence of the Pharmacist Act violation in the retrial."

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