[Column] Samsung Life, KIKO, DLF... Controversy Over FSS's Arbitrary Disciplinary Actions

Financial Supervisory Service: "Samsung Life Did Not Properly Pay Cancer Insurance Benefits"
FSS Reaches Conclusion Opposite to Supreme Court Ruling
Samsung Life and Subsidiary Samsung Card Face New Business Entry Restrictions

[Asia Economy Reporter Oh Hyung-gil] Samsung Life Insurance, which refused to pay nursing hospital inpatient fees claimed by cancer patients on the grounds that they were not for the purpose of 'direct treatment,' is expected to receive a severe disciplinary action as anticipated. Summarizing the results of the two Financial Supervisory Service (FSS) disciplinary committee meetings, Samsung Life Insurance's refusal to pay nursing hospital inpatient fees to many cancer patients is concluded to be an unjust underpayment of insurance benefits.

This conclusion is completely opposite to the earlier court rulings. In September, the Supreme Court ruled in favor of Samsung Life Insurance in an insurance claim lawsuit filed by Mr. Lee, co-representative of the Cancer Patients' Association Against Insurance Companies (Boammo).

The court's position is that it is difficult to consider cases aimed at alleviating aftereffects or treating complications occurring after cancer or cancer treatment as being included in the direct treatment purpose of cancer. In 2008, 2010, and 2013, the Supreme Court also ruled that hospitalization for alleviating aftereffects is not for the direct purpose of cancer treatment.

However, there is also a Supreme Court precedent stating that if a patient who has not completed chemotherapy receives treatment to heal aftereffects caused by previous chemotherapy and to restore physical functions such as immunity, which is indispensable for future chemotherapy, it falls under the direct treatment purpose of cancer.

The problem is that the FSS unilaterally concluded that the non-payment of nursing hospital inpatient fees, which has sharply divided court rulings depending on the lawsuit, is an unjust underpayment.

This reminds one of the KIKO (Knock-In Knock-Out) incident, where excessive standards were applied to an issue that should be approached based on legal grounds. Last year, the FSS Dispute Mediation Committee recognized the banks' responsibility for incomplete sales to four companies affected by KIKO and recommended compensation totaling 25.6 billion KRW, directly overturning the Supreme Court's conclusion in 2013.

Yoon Seok-heon, the FSS Governor who has continuously raised issues about KIKO since his academic days, was criticized for his 'lone wolf' approach after pushing for a reinvestigation of KIKO following his appointment.

Moreover, the court even intervened in Governor Yoon's actions. During this year's Derivative Linked Fund (DLF) incident, the FSS imposed a severe disciplinary warning on Sohn Tae-seung, Chairman of Woori Financial Group, but the Seoul Administrative Court accepted Sohn's injunction request to suspend the effectiveness of the FSS's disciplinary action.

Governor Yoon's intention to wipe away the tears of financial consumers is fully understandable. However, a biased perspective that ignores even the court's judgment cannot protect the financial industry's ecosystem. It is a matter that requires deep consideration regarding the extent of the FSS's supervisory authority.