[ Court Ruling ] Additional Penalty Surcharge Not Permitted Even If Initial Amount Is Deemed Too Low

[Court Ruling]

A court has ruled that even if the initial imposition of a penalty surcharge is deemed too lenient, it is not permissible to impose an additional increased penalty.

On June 19, the 14th Administrative Division of the Seoul Administrative Court (Presiding Judge Lee Sangdeok) ruled in favor of the plaintiff in a lawsuit (2024GuHap58159) filed by dentist A against the Songpa District Public Health Center, seeking to cancel the imposition of a penalty surcharge.

Court image. Photo by Asia Economy DB

[Facts of the Case]

In December 2019, A commissioned an advertising agency to conduct an online advertising campaign consisting of two parts: recruiting about 10 participants for a teeth and gum whitening treatment trial, each worth 300,000 won, who would post reviews on their personal blogs; and recruiting about 30 reporters who would receive 10,000 won in cash for posting their treatment experiences on their personal blogs. The advertising agency carried out this campaign between January and April 2020.

In September 2021, a whistleblower submitted a report to the Anti-Corruption and Civil Rights Commission, requesting that A be punished for violating the Medical Service Act.

Article 56, Paragraph 2 of the Medical Service Act stipulates that "medical professionals, etc., shall not engage in any of the following types of medical advertisements." Subparagraph 2 specifies "advertisements that may mislead consumers regarding the effectiveness of treatment, such as patient testimonials." The Anti-Corruption and Civil Rights Commission forwarded the whistleblower report and related materials to the Seoul Metropolitan Police Agency and the Songpa District Office.

In May 2023, the Seoul Eastern District Court issued a summary order, recognizing A's violation of the Medical Service Act and imposing a fine of 1 million won. Since A did not request a formal trial, the summary order was finalized. Upon receiving the results of the criminal case, the Songpa District Public Health Center imposed a penalty surcharge of 15 million won in September 2023, in lieu of a one-month suspension of business. A paid the penalty surcharge. The public health center is authorized to sanction local hospitals on behalf of the mayor, county governor, or district head.

However, the whistleblower filed another complaint, arguing that the revised Enforcement Decree of the Medical Service Act's penalty surcharge calculation standards should be applied to A. The revised Enforcement Decree, which took effect on February 28, 2020, raised the maximum penalty surcharge under the Medical Service Act from 50 million won to 1 billion won.

The Songpa District Public Health Center accepted the whistleblower's argument and, after deducting the previously paid 15 million won, imposed an additional penalty surcharge of 199.23 million won on A in December 2023. A filed an administrative lawsuit in response.

[Court's Decision]

The court accepted A's argument, stating, "Once a sanction has been imposed, it is necessary to protect the trust and legal stability of the party subject to the initial decision, so unless there are exceptional circumstances, it is not permissible to increase the severity of the sanction to the disadvantage of the party."

The court further explained, "A committed the violations of the Medical Service Act at similar times and using the same methods through the same advertising agency. If the entire series of violations is regarded as a single offense under criminal law, it is reasonable to treat it as a 'single violation' under administrative law as well, and to impose a single sanction."

However, the court also noted, "It would have been correct to impose the penalty surcharge in accordance with the revised Enforcement Decree of the Medical Service Act," and acknowledged that "the administrative authority made an error in underestimating the penalty amount due to a misunderstanding of the law." This was because the blog posts containing treatment testimonials, which began before the revised Enforcement Decree took effect, remained online and were not deleted even at the time of the whistleblower report.

Nevertheless, the court concluded, "If the administrative authority is aware of multiple legal violations by the party subject to the sanction, the principle is to impose a single penalty surcharge for all violations at once, within the legal maximum. Imposing a penalty surcharge for only some violations first and then imposing additional sanctions for others later is not permissible unless there are exceptional circumstances."

Lee Sangwoo, Legal Times Reporter

※This article is based on content supplied by Law Times.

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