[Contribution] Legal risks in case of closure of medical institutions before and after field investigation by Ministry of Health and Welfare

The Supreme Court ruled that if a medical institution that made the insurer bear the cost of medical care benefits through deception or other unfair methods goes out of business, not only is the relevant medical institution no longer able to carry out its business, but the object of the disposition itself has disappeared, so a business suspension cannot be imposed on the medical institution and a new medical institution opened by the same person after the closure (see Supreme Court ruling 2020du39365, pronounced on January 27, 2022).

However, even in the above case, if substantial identity is recognized between the two health care institutions, such as the opening location of the newly opened health care institution being the same or located nearby the previous health care institution and using a similar name, the patient demand base formed during the operation of the previous health care institution being the same or similar, or the transfer of human and material resources as is, there is a possibility that business suspension may still be considered possible for the newly opened health care institution by the operator who closed down the wrongful billing health care institution.

Therefore, based solely on the conclusion of the above Supreme Court decision, considerable caution is required in cases where the business closes after an on-site investigation and before the suspension of business, and then opens a practice nearby under the same or similar name, or maintains an operating form to the extent that it is misunderstood as a medical institution that is virtually identical in appearance.

Meanwhile, if the Ministry of Health and Welfare's on-site investigation confirms unfair claims and a medical institution that is at risk of being subject to a business suspension closes its business and no longer operates the institution, the business suspension becomes ineffective as a means of sanction. It should be noted that in such cases, a fine may be imposed instead of a business suspension. Ultimately, if unfair claims are confirmed as a result of the Ministry of Health and Welfare's on-site investigation, it is difficult to avoid administrative action in any form, whether it is a business suspension or a fine.

So, what if the business closes before the investigation after selecting the target for the field investigation? In this regard, the Ministry of Health and Welfare's notice regulations, revised on June 30, 2022, stipulate that if business suspension is judged to be ineffective as a sanction because a medical institution has closed down before the administrative disposition is finalized or the institution subject to the disposition does not exist due to a change in the personality of the representative in a medical institution opened by a corporation, a fine may be imposed in lieu of a business suspension ('a fine in lieu of a business suspension') ‘Applicability Standards’ Article 2, Paragraph 2 (c).

Accordingly, according to the above revised notice, even before the administrative disposition is confirmed, for example, before the on-site investigation by the Ministry of Health and Welfare is conducted, if unfair claims are confirmed through on-site confirmation by the National Health Insurance Corporation and the medical institution is selected as a target for on-site investigation, the risk of fine imposition still exists even if the relevant medical institution closes its business and avoids business suspension. However, if a specific administrative investigation, such as an on-site confirmation by the National Health Insurance Corporation, has not been conducted on a nursing facility that closed before the Ministry of Health and Welfare conducted an on-site investigation, there are still significant questions as to what standards and grounds can be used to impose fines.

[View full article]
[Contribution] Legal risks of closing nursing homes before and after the Ministry of Health and Welfare's on-site investigation (link)