1717 Illegal Institutions Detected from 2009 to 2023
Recovery Target Amount 3.3762 Trillion Won, Recovery Rate Only 6.92%
When the National Health Insurance Service announced that it would eradicate office-based hospitals by obtaining special judicial police authority, the medical community and the police opposed the plan, calling for its withdrawal.
A view of the National Health Insurance Service headquarters in Wonju, Gangwon Province. [Image source: National Health Insurance Service]
Office-based hospitals are illegally operated by non-medical personnel borrowing the names of medical professionals. Since their purpose is profit-seeking, the quality of medical services is low, and there is a high possibility of excessive treatment. Despite the fact that opening a medical institution itself is illegal, these hospitals are known to be one of the causes of deteriorating health insurance finances through fraudulent claims for medical fees.
According to the National Health Insurance Service on the 28th, a total of 1,717 illegally established institutions were detected from 2009 to last year. Illegally established institutions collectively refer to office-based hospitals and pharmacies with license lending. The amount subject to recovery reaches a staggering 3.3762 trillion KRW, but the recovery rate is only 6.92% (233.5 billion KRW). In just last year, 252 billion KRW of health insurance funds were spent on 64 illegally established institutions.
The Service plans to eradicate illegally established institutions through the introduction of the special judicial police (special judicial police officer) system. Special judicial police officers can initiate investigations and send cases to prosecutors when there is suspicion of a crime regarding the suspect, facts, and evidence. If the special judicial police system is introduced, the Service's position is that investigations can be quickly initiated through various experts and big data analysis, shortening the investigation period to within three months, and early seizure can prevent leakage of health insurance finances. They argue that if investigations are prolonged, those who committed illegal acts hide assets through gifts or false sales, making recovery practically difficult. According to the Service, the average period from investigation request to securing investigation results was 345 days, or 11.5 months, from 2014 to 2022. In his New Year's address this year, Director General Jeong Gi-seok emphasized, "The introduction of the special judicial police system is necessary to eradicate illegally established institutions. We will strengthen communication with stakeholders and do our best to see results in the newly formed National Assembly this year."
The National Assembly also saw lawmakers Jeong Chun-sook, Seo Young-seok, Kim Jong-min, and Lee Jong-bae each introduce a bill to grant special judicial police authority to NHIS employees only for illegally established institutions, titled the "Act on Persons Performing the Duties of Judicial Police Officers and Their Scope of Duties." However, the bill is currently pending in the 1st Subcommittee of the Legislation and Judiciary Committee amid criticism that "the grounds are weak and only expected effects are repeated."
The medical community strongly opposes this. The Korean Medical Association stated in a press release on the 10th, "Granting special judicial police rights to NHIS employees is highly likely to distort the relationship between the insurer and the provider, which should be equal," and added, "(Even now) medical institutions continue to suffer from power harassment or coercive investigations during NHIS investigations, leading to incidents such as suicides." They further said, "The medical community's determination to eradicate office-based hospitals is firm," and "We request the government and others to improve the system by mandating notification to local medical associations when opening medical institutions so that the medical community can autonomously regulate to eradicate office-based hospitals."
Woo Bong-sik, Director of Medical Policy Research at the Korean Medical Association, said, "Eradicating office-based hospitals is absolutely necessary. However, considering the contractual relationship between the NHIS and hospitals, unilaterally granting special judicial police authority will ultimately harm patients," adding, "It would be much more efficient for the NHIS and local medical associations to jointly form investigative committees to eradicate these hospitals, utilizing the medical community's information capabilities."
The police also expressed opposition. They stated that granting special judicial police authority to non-public officials requires careful consideration. Cases where non-public officials have special judicial police authority are limited to the Financial Supervisory Service (unfair trade practices), private prisons (prison crimes), Korea National Park Service (minor offenses in national parks), and captains or shipmasters (crimes on board). Another reason for opposition is that comprehensive investigations are needed for violations of criminal law such as embezzlement and breach of trust. The police also argue that it is difficult to recognize the NHIS's expertise and representativeness in investigations related to illegal lending of medical licenses.
Professor Kwak Dae-kyung of Dongguk University's Department of Police Administration said, "Matters involving the exercise of public authority must be considered carefully. Knowing a specific field well does not mean one understands legal aspects and investigative ethics," adding, "It is also difficult to supplement this with short-term training."
Professor Lee Yun-ho, Chair Professor of Police Science at Korea Cyber University, said, "If special judicial police authority is recognized in specific fields, demands for such authority will arise in all other fields," and added, "Instead of insisting solely on special judicial police officers, it is necessary to explore whether supplementary measures can be prepared through sufficient consultation with the police and others." He continued, "It is true that crimes are becoming more diverse and specialized, and the police cannot build expertise in all fields," and suggested, "It is worth considering establishing a system that grants less authority than usual special judicial police officers, allowing initiation of investigations and detection, and then transferring the investigation to the police."
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