Death Benefit Denied for Medical Malpractice... Court Reaches Different Verdict

FSS Issues Precautions on Medical Malpractice and Disclosure Obligations on the 6th
Omissions in Medical Malpractice Also Recognized as External Causes... Insurers Must Pay Claims
If Agents Interfere with Disclosure Obligations, Policy Cancellation Is Not Allowed

The Financial Supervisory Service issued a notice on the 6th, highlighting precautions as disputes frequently arise when insurance companies refuse to pay insurance claims due to reasons such as medical malpractice incidents and violations of disclosure obligations.

Mr. A underwent surgery for a urological condition at a primary hospital and was discharged. However, he was later admitted to a university hospital due to decreased consciousness and died during treatment. The primary hospital acknowledged medical malpractice due to inappropriate surgery and reached a settlement with the bereaved family. The family filed a claim for accidental death insurance with the insurance company, but it was denied on the grounds that the death was caused by a foreseeable surgical complication.

However, the Supreme Court's decision differed. The court ruled that medical malpractice constitutes an accidental and unforeseen event from an external cause, rather than an inherent disease, and thus qualifies as an accident as defined in the insurance policy, requiring the insurer to pay the claim. Even if the insured consented to the surgery, this cannot be interpreted as consenting to the injury resulting from medical malpractice.

Mr. B received outpatient treatment for back pain at a university hospital but suddenly became unable to move. He subsequently underwent emergency surgery but suffered permanent paralysis of the lower limbs. The hospital acknowledged medical malpractice due to misdiagnosis. However, the insurance company refused to pay the claim, arguing that the act was one of omission-failure to provide timely medical intervention rather than a direct medical act-and therefore did not meet the requirement of externality for an accident.

Nevertheless, the Supreme Court ruled that the insurance company must pay the claim. The court determined that the requirement of externality for an accident refers to causes originating outside the body, not internal diseases. If an omission in medical practice leads to bodily harm, it cannot be distinguished from an act of commission in medical malpractice, and thus externality is also recognized.

Ms. C purchased insurance through a telemarketing (TM) channel. During the process, she was either not asked certain questions regarding disclosure obligations or was immediately asked the next question without an opportunity to answer, leaving her with no chance to disclose. However, the insurance company canceled the policy, claiming a violation of the disclosure obligation.

This action is contrary to the standard terms and conditions for illness and accident insurance. According to Article 16, Paragraph 2 of the standard terms, if an agent or similar party fails to provide the policyholder or insured with an opportunity to disclose, or interferes with the disclosure process, the insurer cannot cancel the contract. The same applies if the policyholder or insured is discouraged from making a truthful disclosure or is encouraged to provide incomplete information. Accordingly, the Financial Supervisory Service instructed the insurer to reinstate Ms. C's policy.

An official from the Financial Supervisory Service stated, "Because judgments may vary depending on the insurance policy and specific facts, it is essential to check the terms and conditions of your own insurance policy."