When a Clinic Becomes a Criminal Case in Korea: Four Routes, Four Penalties

In Korea a clinic rarely becomes a criminal case by accident. It happens through one of four well-defined routes under the Medical Service Act, each with its own provision, its own penalty and its own evidence. A medical accident is a fifth and separate route, under the Criminal Act.

This guide sets out the four routes and the accident route together, because in practice they arrive at the same moment. An on-site inspection notice is commonly followed by an administrative sanction, a recovery of insurance payments, a civil claim and a criminal complaint, and a statement made in one proceeding is used in the others.

The five routes and their statutory penalties

1. Establishment through a person who is not permitted

Article 33(2) allows a clinic to be established only by a physician, dentist, traditional Korean medicine doctor or midwife, by the State or a local authority, by a medical corporation, or by a non-profit corporation. Establishing or operating a clinic in breach of that provision carries up to ten years' imprisonment or a fine up to 100 million won under article 87, which is among the heaviest penalties in the Act.

The Supreme Court has made the test for a so-called nominal-owner clinic a demanding one. In its decision of 18 August 2023 (2020Do6492) it held that, to find that a non-medical person in substance established and operated a clinic opened in the name of a medical corporation, it is not enough that the person provided funding and took part in management. There must also be a finding that a corporation existing only on paper was used as an unlawful device to disguise an establishment and operation that was not lawful. That circumstance can be found where the medical corporation had no substance because no property was actually contributed, or where its assets were improperly diverted so that it departed from its public and non-profit character.

The employed doctor is exposed as well. Article 66(1)2 makes it a ground for suspension of licence to have performed medical acts while employed by a person who is not permitted to establish a clinic. These files also commonly bring a recovery of payments by the National Health Insurance Service and a parallel fraud allegation, so criminal, administrative and civil proceedings run at once.

2. Unlicensed medical practice

Article 27(1) provides that a person who is not a medical professional may not perform medical acts, and that a medical professional may not perform acts outside the scope of their licence. Breach carries up to five years' imprisonment or a fine up to 50 million won (art. 87-2(2)).

The penalty escalates sharply with the result. Where the act causes a person injury, article 87-2(1) provides up to seven years or a fine between 10 and 70 million won; serious injury carries three to ten years; and where death results, life imprisonment or five years or more. Cases in which a nursing assistant or an unqualified employee performed part of a procedure fall here.

3. Prohibited medical advertising

Article 56(2) lists the advertisements that are prohibited. They include advertising an unproven new medical technology; advertising that is likely to mislead about treatment effects, such as patient testimonials; false advertising; advertising that compares with or disparages another medical professional; advertising that shows a procedure directly, such as an operating scene; advertising that omits material information such as side effects; advertising that exaggerates objective fact; advertising a qualification or title without a legal basis; advertising presented as a news item or an expert opinion; advertising without required review, or different from what was reviewed; and advertising that relies on awards, commendations, certifications or guarantees.

Breach of article 56(1) to (3) carries up to one year's imprisonment or a fine up to 10 million won (art. 89(1)). In consultations the recurring question is whether a patient's review video or blog post counts as advertising by the clinic. The starting point is who planned it and whether anything was paid for it.

4. Rebates and other improper economic benefits

Article 23-5 prohibits a medical professional, a clinic owner or staff from receiving money, goods, convenience, labour or entertainment from a supplier of medicines or medical devices, where the purpose is to promote sales by securing adoption, inducing prescriptions or maintaining a trading relationship. Samples, support for academic conferences, support for clinical trials and product briefings within the scope set by ministerial ordinance are excluded.

Breach carries up to three years' imprisonment or a fine up to 30 million won (art. 88(2)), and the benefit obtained is confiscated, with the equivalent value collected where confiscation is not possible. An amendment effective 23 January 2024 also prohibited demanding or obtaining an economic benefit from a pharmacy owner in return for arranging prescriptions.

5. The medical accident route

Where a patient is injured or dies in the course of treatment, the charge is professional negligence causing injury or death under article 268 of the Criminal Act, carrying up to five years' imprisonment without labour or a fine up to 20 million won.

What is contested in the criminal case is not the size of the loss but whether the duty of care was breached and whether that breach led to the result. The clinical record, the consent form, the progress notes and the standard of care expected in the same circumstances are therefore the working material, not the invoice.

Why the order of response matters

Because the four routes and the accident route overlap, the same conduct can be examined by the licensing authority, by the insurer and by the police at the same time. A statement given to an inspector becomes part of the criminal file; a submission made in the civil claim becomes the framework for the administrative one.

If you have received an investigation notice or advance notice of an on-site inspection, the sequence of documents and statements should be settled before anything is produced. Contact Taeshin Law Firm for a confidential consultation in English.