Administrative Law

Healthcare Act (Medical Service Act) Regulatory Defense Lawyer

Healthcare Act (Medical Service Act) Regulatory Defense Lawyer | Understanding regulatory exposure before it becomes a license suspension

Summary

The Medical Service Act (의료법) governs who may open and operate a medical institution, how medical advertising may be conducted, and what conduct triggers administrative sanctions or criminal referral. A single inspection finding can lead to parallel tracks: an administrative disposition (license suspension, institution closure order) and a separate criminal investigation, sometimes alongside a National Health Insurance Service audit for reimbursement clawback. Because these tracks run on different timelines and different burdens of proof, an outcome favorable in one track does not automatically resolve the others.

Administrative · Healthcare Related law: Medical Service Act (의료법) License Suspension NHIS Audit

Healthcare Act (Medical Service Act) Regulatory Defense | License Suspension and Institution Closure Orders

The disposition that most concerns physicians and institution operators is the suspension of a medical license or the order to close a medical institution. These are separate powers held by different authorities and can be issued independently of any criminal case.

Who issues the disposition and on what grounds

The Minister of Health and Welfare may suspend a physician's license for up to one year for specified misconduct, including gross negligence causing serious harm to a patient or fraudulent conduct in the practice of medicine (의료법 제66조). Local governors and mayors, separately, may order the suspension of business or closure of a medical institution for operating in violation of licensing or facility standards (의료법 제64조).

Why the pre-disposition hearing matters

Before a disposition unfavorable to the licensee is finalized, the authority must generally provide an opportunity for a prior notice and statement of opinion under the Administrative Procedures Act, and in serious cases hold a hearing. This is often the last practical chance to submit evidence and legal argument before the sanction becomes formally effective, because once issued, the disposition itself must be challenged through an objection or administrative litigation rather than simply re-argued to the same official.

Suspension of execution as an interim remedy

If a disposition is issued and its immediate enforcement would cause practical difficulty to remedy later, an applicant may separately petition the court for a suspension of execution while the administrative litigation on the merits proceeds. This does not decide the underlying legality of the disposition but can prevent the institution from closing or the license from lapsing in the meantime.

Healthcare Act (Medical Service Act) Regulatory Defense | Non-Medical Persons Operating a Medical Institution (Illegal Joint Operation)

A recurring enforcement area is the so-called 'illegal joint operation' hospital, where someone who is not a licensed medical professional invests in, controls, or takes profits from a medical institution nominally opened by a licensed doctor.

The prohibition on non-medical establishment

Only a person qualified as a doctor, dentist, oriental medicine doctor, midwife, or certain non-profit entities listed in the statute may establish a medical institution (의료법 제33조 제2항). A structure where a non-medical investor funds the institution and takes the operating profit, while a licensed doctor serves only as a nominal opener, can be found to violate this provision regardless of how the internal contract is labeled.

Consequences beyond the disposition itself

A finding of illegal joint operation typically triggers not only license suspension for the nominal doctor but also an order to return all national health insurance benefits paid to the institution during the violation period, since payments to an unlawfully established institution are treated as improperly claimed. This NHIS clawback can be financially larger than the administrative sanction itself, so the two must be defended together rather than separately.

Healthcare Act (Medical Service Act) Regulatory Defense | Medical Advertising Restrictions

Medical advertising is one of the most frequently investigated areas because online promotion, patient reviews, and social media content are all treated as advertising under the statute if they promote a specific institution or procedure.

What counts as prohibited medical advertising

The Medical Service Act prohibits advertising that is false or exaggerated, that guarantees a specific treatment outcome, or that compares one's own institution unfavorably against another without objective basis (의료법 제56조). Content posted by patients but arranged, compensated, or directed by the institution can be treated as the institution's own advertisement.

Pre-review and after-the-fact sanctions

For certain advertisement types, prior review by an accredited review body before publication is required, and skipping this review can itself be a violation independent of whether the content is otherwise accurate. Sanctions for advertising violations range from an administrative fine to license suspension, and in some cases separate criminal liability, depending on the severity and repetition of the conduct.

Healthcare Act (Medical Service Act) Regulatory Defense | National Health Insurance Fraud and Reimbursement Audits

Where an institution is suspected of billing for services not actually provided, or billing under a different code than the service rendered, the National Health Insurance Service and Health Insurance Review & Assessment Service can conduct an on-site audit that runs parallel to any Medical Service Act investigation.

The distinction between overpayment and fraud

Not every billing audit finding is treated as fraud; some are resolved as simple overpayment subject to repayment. However, where the authority determines the claim was made by deceptive means, the institution can face both an order to return the benefit amount and an administrative fine of up to five times that amount (국민건강보험법 제57조 and 제99조), and the case can also be referred for criminal investigation.

Why the audit interview stage matters

Statements and documents provided during the initial on-site audit are frequently used as the primary basis for the later administrative disposition and any criminal referral. Reviewing what records exist and how billing codes were actually applied, before responding to the audit, is often more consequential than anything argued afterward.

Healthcare Act (Medical Service Act) Regulatory Defense | From on-site inspection to final resolution

Initial inspection or complaint intake
A case usually begins with an on-site inspection by the local health authority, an NHIS/HIRA audit notice, or a complaint referred to the police or prosecution. Reviewing the scope of the authority's request before responding narrows unnecessary exposure.

Prior notice and opportunity to state opinion
Before an unfavorable administrative disposition is finalized, the authority generally must give notice and a chance to submit a written opinion, and in serious cases hold a hearing. This is the practical window to submit evidence and legal argument.

Issuance of the disposition (or non-issuance)
The authority issues a written disposition specifying the sanction, its legal basis, and the period for filing an objection or lawsuit. If a criminal referral runs in parallel, a separate investigation timeline applies.

Objection, administrative appeal, or administrative litigation
A disposition can be challenged through an objection to the issuing authority, an administrative appeal, or a lawsuit before the administrative court, each with its own filing deadline that begins running from the date of notice.

Interim relief where the disposition takes immediate effect
Where the disposition would take effect before the litigation on the merits concludes, a separate petition for suspension of execution can be filed to preserve the status quo during the proceeding.

Resolution and follow-through
A case ends by final decision, settlement of the reimbursement amount, or expiration of the sanction period. Where a criminal referral is also pending, its outcome may still affect the license status even after the administrative case is closed.

Healthcare Act (Medical Service Act) Regulatory Defense | Fee structure for Medical Service Act matters

Retainer (착수금)
Set according to the stage at which representation begins (responding to an on-site inspection, opposing a proposed disposition, or filing administrative litigation) and the complexity of the factual record, including how many institutions or claim periods are involved.

Success fee (성공보수)
Where applicable, structured around the actual result achieved, such as a reduced suspension period, cancellation of the disposition, or a reduced reimbursement amount, rather than a guaranteed outcome.

Disbursements (실비)
Covers costs such as court filing fees for administrative litigation, expert opinion fees where a medical or accounting expert review is needed, and document acquisition costs.

Parallel-track cases
Where an administrative disposition, an NHIS audit, and a criminal referral proceed at the same time, fee arrangements are typically discussed separately for each track because the evidence and deadlines differ.

※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.

Healthcare Act (Medical Service Act) Regulatory Defense | Self-Check Before You Respond

1️⃣ For physicians facing a proposed license suspension

Have you received a written prior notice, and do you know the exact deadline to submit your opinion?
Does the notice specify which provision of the Medical Service Act you allegedly violated?
Would the proposed suspension period, if enforced immediately, force you to stop practicing before you can even file litigation?
Do you have documentation contradicting the factual basis cited by the authority?

2️⃣ For institution operators facing an illegal joint-operation allegation

Is there a written agreement describing your relationship with the non-medical investor, and what does it actually say about profit distribution?
Has the NHIS separately requested a return of insurance benefits for the same period under review?
Who is listed as the institution's opener of record, and does that match who actually made operating decisions?

3️⃣ For institutions responding to an advertising violation notice

Was the content in question submitted for prior review, if your advertisement type required it?
Did the institution pay, direct, or coordinate the patient reviews or social content now being cited?
Is this the first advertising-related notice the institution has received, or is there a prior record affecting severity?

4️⃣ For institutions under NHIS/HIRA billing audit

Do your medical records support the billing codes actually submitted for the audited period?
Has the auditor characterized any finding as intentional deception rather than simple overbilling?
Has a separate criminal referral or police inquiry been mentioned alongside the audit?

Frequently Asked Questions

Q. Can my license be suspended even if no criminal case is ever filed against me?

A. Yes. License suspension under the Medical Service Act (의료법 제66조) is an administrative disposition issued by the Ministry of Health and Welfare and does not require a criminal conviction. An administrative sanction and a criminal case are legally independent, even though they often arise from the same underlying facts.

Q. What is 'illegal joint operation' and why is it treated so seriously?

A. It refers to a non-medical person funding, controlling, or taking profit from a medical institution while a licensed doctor serves only as the nominal opener, which violates the requirement that only qualified professionals may establish a medical institution (의료법 제33조 제2항). Because it is treated as an unlawfully established institution, insurance benefits paid to it during the violation period are also subject to full recovery, not just an administrative fine.

Q. How long do I have to challenge a suspension or closure disposition?

A. The specific filing deadline is stated on the written disposition notice itself and differs depending on whether you file an objection, an administrative appeal, or an administrative lawsuit, so the exact number of days should be confirmed from your own notice rather than assumed. Missing that deadline generally forecloses challenging the disposition on the merits.

Q. If the disposition takes effect immediately, is there any way to stay in practice while I fight it in court?

A. A separate application for suspension of execution can be filed alongside or before the administrative litigation, asking the court to pause enforcement of the disposition while the case is pending. Whether it is granted depends on factors such as the irreparability of harm to the applicant and the public interest in immediate enforcement.

Q. Are patient reviews on my clinic's own website considered my advertisement?

A. They can be, if the institution arranged, compensated, or directed the content, even if it is formatted as a patient testimonial (의료법 제56조). Whether a specific post crosses that line is a factual question that depends on the institution's actual involvement.

Q. What is the difference between an NHIS overpayment finding and a fraud finding?

A. A simple overpayment is generally resolved through repayment of the excess amount, while a finding that the claim was submitted by deceptive means can additionally trigger an administrative fine of up to five times the amount and a possible criminal referral (국민건강보험법 제57조, 제99조). The distinction usually turns on whether intent to deceive can be shown, not just whether the billing was technically incorrect.

Q. Can the same set of facts lead to both an administrative disposition and a criminal prosecution?

A. Yes, and each proceeds on its own timeline and its own standard of proof, so resolving one does not automatically resolve the other. It is common for the administrative case to conclude well before the criminal investigation does, or vice versa.

Q. Do I need to respond to an on-site NHIS audit request immediately?

A. You are generally expected to cooperate with the audit request, but what you say and which documents you produce at that stage often become the primary evidence used later in any disposition or referral. Reviewing your own records and understanding the scope of the request before the interview is generally more useful than responding without preparation.

Q. Does a hearing before the disposition guarantee the sanction will be reduced?

A. No. A hearing or opportunity to submit an opinion is a procedural right, not a guarantee of a particular outcome, and the authority can still issue the originally proposed disposition after considering your response. Its practical value lies in creating a documented record for any later objection or litigation.

Q. Should I use a healthcare-focused lawyer or a general administrative litigation lawyer for this kind of case?

A. Because Medical Service Act cases often involve parallel administrative, insurance, and criminal tracks with different deadlines and evidentiary standards, working with a Seoul healthcare-act lawyer familiar with all three tracks can help avoid a step taken in one track that inadvertently weakens your position in another.

Official References

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