A Vehicle Accident That Escalated Into a Search and Seizure... What Insurance-Fraud Risks Should Large Hospitals Check?

—Legal column by Attorney Kim Kyung-hwan of the law firm (LLC) Daeryun

Recently, a large medical institution was subjected to a police search and seizure over allegations that it wrongfully claimed auto-insurance treatment costs for a traffic-accident patient. Although this is a matter still under investigation, with the specific facts and legal responsibility yet to be confirmed, the case reaffirmed that auto-insurance treatment can escalate beyond a mere insurance-claim issue into a criminal case. In particular, since medical institutions are an area to which not only the Medical Service Act but also the Special Act on the Prevention of Insurance Fraud, the Guarantee of Automobile Accident Compensation Act, and the Standards for Automobile Insurance Treatment Fees apply simultaneously, hospital directors and insurance-claim staff need to accurately understand the relevant legal standards.

Article 8 of the Special Act on the Prevention of Insurance Fraud defines as insurance fraud the act of deceiving the insurer as to the occurrence, cause, or content of an insured event to obtain insurance proceeds or to have a third party obtain insurance proceeds, and institutions are no exception to this. However, an insurance-fraud investigation of a medical institution is not established merely on the grounds that "the prescription volume was large." In addition, while auto-insurance treatment costs are borne by the insurance company under Article 15 of the Guarantee of Automobile Accident Compensation Act, this does not mean that a medical practitioner's treatment discretion is recognized without limit. The Ministry of Land, Infrastructure and Transport's "Standards for Automobile Insurance Treatment Fees" also presuppose that a medical practitioner must provide the necessary treatment and prescription according to the patient's symptoms and condition.

In particular, herbal medicine prescriptions, pharmacopuncture, and chuna therapy performed on traffic-accident patients are areas where a medical practitioner's professional judgment is respected, but that judgment, too, must be capable of being proven with medical records and medical grounds. If uniform prescriptions are repeated despite identical symptoms, or if the reason for the prescription is not specifically stated in the medical record, the very appropriateness of the insurance claim can become a subject of investigation.

In actual insurance-fraud cases, the material investigative agencies secure first is likewise the medical records. Article 22 of the Medical Service Act imposes on medical practitioners the duty to prepare and preserve medical records truthfully, and in criminal proceedings, these medical records become key evidence proving the legality and medical necessity of the prescriptions. When a search and seizure proceeds, it is not uncommon for the EMR, prescriptions, nursing records, imaging materials, auto-insurance claim details, and electronic medical record log data to be analyzed together. In particular, whether a specific prescription was repeated in the same pattern for all patients, whether the medical records and insurance-claim content match, and whether there are circumstances of prescriptions or claims being uniformly managed or directed within the hospital become major investigation targets.

A point large-hospital officials should especially heed is that responsibility in insurance-fraud cases is not limited to the individual medical practitioner. If the same claim method is repeated over a long period in a particular department or the insurance-claim division, and circumstances are confirmed that the hospital managed or condoned this at the hospital level, it is difficult to rule out the possibility that the scope of investigation will expand to the medical institution's management. On top of this, a medical institution with a high proportion of auto-insurance patients must build a compliance system, including △regular education on the standards for automobile insurance treatment fees, △internal inspection of prescription appropriateness, △a pre-review procedure before insurance claims, and △standardization of medical record preparation standards.

Treatment and prescription related to vehicle accidents are an area where a medical practitioner's professional discretion is broadly recognized. However, that discretion is protected only on the premise of objective medical necessity and faithful medical records. The most effective way for a medical institution to prevent insurance-fraud risk is not a response after the investigation, but building, on an everyday basis, a prescription system and internal control system that conform to statutes and treatment standards. One should recognize that the recent investigation is both a warning to medical institutions to re-examine the legality of their insurance claims and an occasion to awaken the importance of a compliance system encompassing the Medical Service Act and insurance-related statutes.

Reporter Lee Dong-oh (canon35@mt.co.kr)

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