[Legal Focus] ⑫ Broker-Owned Hospitals, Administrative Dispositions More Fearsome Than Clawbacks... Early Response Is the Key

Beyond name-lending to joint openings and MSOs
"Early response important... Impact on criminal punishment and licenses too"

As crackdowns on broker-owned hospitals expand beyond simply checking for name-lending toward examining actual hospital operating structures, caution is required from medical institutions and medical personnel. In particular, in operating forms utilizing joint openings or hospital management support organizations (MSOs), if the roles in the contract differ from the actual management, it may be judged a broker-owned hospital, so advance review is needed, it is pointed out.

Attorney Jang Se-chang of Daeryun Law Firm advised on the 20th, "A broker-owned hospital case is not a matter that ends with the National Health Insurance Service's clawback disposition," adding, "It can affect not only administrative sanctions such as criminal punishment and business suspension but also the medical personnel's license, so the facts must be accurately organized from the early stage of the investigation."

The number of broker-owned hospitals caught by the National Health Insurance Service from 2009 through last year is 1,805, with clawback decisions approaching about 3 trillion won. Recently, moving away from the traditional method in which a non-medical person borrows a doctor's name, operations take various forms such as joint openings, network hospitals, and hospital management support organizations, making the distinction between lawful management support and illegal operation a major issue.

Attorney Jang explained, "Whether a hospital is a broker-owned hospital depends not on the name in the contract but on who actually operated and controlled the hospital." He said one must comprehensively examine the hospital's key decision-making, fund procurement, staff hiring and salary decisions, and the attribution of profits.

Recently, the Supreme Court also ruled, in a case where a non-medical person put forward a medical corporation to substantively operate a nursing hospital, to the effect that the actual operator can bear responsibility separate from the nominal opener. Attorney Jang said, "It is a judgment showing that who exercised the actual decision-making and management authority is important, rather than the external nominal title."

If judged to be a broker-owned hospital, it can lead not only to clawback of unjust health insurance gains but also to administrative dispositions such as criminal punishment and business suspension. Depending on the matter, it can also affect the medical personnel's license.

In particular, an early response to the investigation is important. This is because the National Health Insurance Service's clawback procedure, police and prosecution investigation, and administrative agency dispositions may proceed simultaneously or sequentially, and confirmation statements or submitted materials prepared in an earlier investigation may be used as grounds for judgment in later procedures.

Attorney Jang said, "Just because you have been notified of an administrative investigation, you must not sign a confirmation statement or submit accounting materials without sufficiently verifying the facts," and "Since early statements and materials can affect later administrative dispositions or administrative litigation, you must respond carefully."

Administrative and investigative agencies chiefly check the party who concluded the hospital lease contract, who bore the cost of purchasing or leasing medical equipment, the authority over staff hiring and salary decisions, and the source of operating funds and attribution of profits. To prove that the medical personnel was the actual operator, it is important to have objective materials such as financial transaction records and salary payment data prepared.

Medical institutions that have contracted with MSOs must likewise check whether the management support work was carried out within a lawful scope. If the management support company is involved in the hospital's core decision-making such as personnel and finance, or has a structure taking excessive profits, it can lead to a broker-owned hospital controversy.

Attorney Jang advised, "The scope of management support work and the basis for cost calculation should be clearly stated in the contract, and the actual operation should be managed to match the contract's contents."

He added, "A broker-owned hospital case does not stop at the clawback of health insurance finances but can affect the very existence of the medical institution and the medical personnel's license," emphasizing, "One should routinely check the medical personnel's independent decision-making structure and fund flows, and if an investigation begins, respond from the outset with the help of a legal expert, comprehensively considering the clawback, criminal procedures, and administrative dispositions."

Reporter Jeong Ye-jin yejin0311@inews24.com

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[Legal Focus] ⑫ Broker-Owned Hospitals, Administrative Dispositions More Fearsome Than Clawbacks... Early Response Is the Key (Go to)