Why the Verdict Overturned in KRW 10 Billion Fraud Involving Half-Achilles Tendons

00:00 It was deemed "not guilty" in a KRW 10 billion fraud involving half-Achilles tendons

01:47 Why was the first-instance verdict overturned?

03:13 Why the court drew the line at the Ministry of Food and Drug Safety's judgment

04:49 Significance of the second-instance ruling

1. It was deemed "not guilty" in a KRW 10 billion fraud involving half-Achilles tendons

I am Kim Minjun, a reporter for the SBS Social Desk. Last January, we reported on the non-prosecution case involving half-Achilles tendons. The core of the case at the time was this: human tissue importers illegally imported these half-Achilles tendons without official import approval from the Ministry of Food and Drug Safety (MFDS) and supplied them, while deceiving the National Health Insurance Service (NHIS) into believing they had imported whole Achilles tendons, thereby collecting KRW 10 billion in health insurance benefits, which led the police to launch an investigation. At the time, the police even held a major press briefing for reporters. The intent was to forward the case with a recommendation for indictment.

[Park Myung-woon / Former Head of International Crime Investigation Division 2, Seoul Metropolitan Police Agency: When the (cruciate ligament) is ruptured, this Achilles tendon is needed to bridge the part, and they cut it in half and transplanted it into the patient's body.]

However, the MFDS, the competent authority, took the position that Achilles tendons do not require separate approval from the MFDS depending on size or specifications, and that the actions of companies importing these half-Achilles tendons without approval did not violate the Human Tissues Act. Because of this single line of position from the MFDS, the police investigation ended futilely with non-prosecution and no charges, and the first-instance lawsuit filed by the NHIS against the companies to return wrongfully disbursed health insurance benefits also ended in defeat for the NHIS. Afterward, we at SBS reported that the corporation had appealed. Nearly eight months have passed since then. Unlike the first-instance judgment—which held that there was no need to apply separately for import approval to the MFDS, meaning one side and half a side were the same—the second-instance court viewed the two as clearly distinct and separate materials.

2. Why was the first-instance verdict overturned?

The basis for this was that there were cases where half-Achilles tendons were separately registered for insurance, and precedents where the Health Insurance Review and Assessment Service (HIRA) assigned them different codes and upper limit prices. Therefore, if the companies wanted to import and supply half-Achilles tendons, they should have separately checked with the Ministry of Health and Welfare to see if they were eligible for health insurance applications and been assigned a code; omitting all these procedures and bringing in half-Achilles tendons under the code of a whole tendon was illegal, according to the court. It did not stop there. The second-instance court judged that receiving health insurance benefits from the NHIS using the code for whole tendons while importing half-Achilles tendons as if they were whole was effectively fraud regarding health insurance benefits. Although not completely identical, expressions handled as fraud in civil lawsuits are often regarded in criminal cases as deceit and fraud accompanied by intent. The companies' eventual intent was also recognized; because the company representatives had long careers, the court acknowledged that they could have sufficiently known the fact that the half-size should be registered with a separate code. The court wrote the following in its judgment: Considering the purpose of the National Health Insurance system, which aims to efficiently utilize limited finances so that as many citizens as possible can receive maximum benefits, the actions of the companies are highly blameworthy.

3. Why the court drew the line at the Ministry of Food and Drug Safety's judgment

The court also clearly drew a line regarding the judgment of the MFDS, which had a decisive influence on the first-instance judgment and the police investigation. First, since the MFDS and the NHIS are organizations with clearly different functions and purposes, whether the MFDS approves imports cannot directly affect the NHIS's health benefit fraud management affairs. To put it a bit more simply, the reason the MFDS exists is to verify the safety of food and pharmaceuticals. In other words, its most important function is to determine whether a therapeutic material is dangerous to our bodies or not. On the other hand, the purpose of the NHIS is not safety, but to efficiently operate the national health insurance with limited financial resources so that welfare benefits can be evenly distributed to as many citizens as possible. The MFDS merely took the stance from a purely safety perspective—that since it has never been reported that using half of an Achilles tendon is harmful to the human body, there is no need for them to receive separate confirmation for using it in half—and this stance of the MFDS has nothing to do with the perspective of the NHIS, which must efficiently manage limited financial resources. Therefore, in a case where it is suspected that some companies embezzled health insurance finances operated with public taxes, the court's position was that the companies cannot be said to be without fault based solely on that brief line of the MFDS's stance. Consequently, the court acknowledged that the MFDS's stance was irrelevant to this case, stating that the illegality of this half-Achilles tendon case is recognized.

4. Significance of the second-instance ruling

I would like to examine the significance of the second-instance ruling. If we follow the first-instance judgment, which directly quoted the MFDS's stance, it would mean that when bringing in any medical material, not just Achilles tendons, cutting it not in half, but into quarters or eighths, would be completely fine to import as long as no risk of harm to the body has been confirmed. By drawing a line and stating that the stances of the MFDS and the NHIS are clearly different, the second-instance court has the significance of leaving a precedent recognizing that even before it is confirmed that a therapeutic material is hazardous to the human body, the unauthorized bringing in of medical materials with different prices and codes for someone's private profit-seeking can be illegal. However, there are also limitations. Due to the nature of this civil lawsuit, it is actually little more than a process of coughing up only the profits someone enjoyed, rather than having a punitive meaning. Patients underwent transplant surgery with half-size ones instead of whole ones without even knowing it, and while risks simply have not been reported yet, they probably do not mean they do not exist; yet it amounted only to coughing up unjust profits someone enjoyed rather than compensating for damages. To other companies, it may give the perception that even if they get caught, it is a no-loss game because they just have to cough up the profits they took. Also, as some companies appeal to the third instance, the possibility of having to go all the way to the final trial has not completely disappeared. Therefore, more powerful criminal and punitive sanctions or investigations must accompany it.

[Choi Jung-gyu / Attorney for the Public Whistleblower: The (police) investigation ended in a fizzle, but (I think) such attempts—attempts that pose risks to public health—will not disappear unless criminal punishment is carried out.]

Immediately after the police's previous decision of non-prosecution, the NHIS promptly filed an objection and a request for reinvestigation last February, but 8 months have passed since then, and the police investigation remains sluggish without any significant progress. Now that this second-instance ruling has been issued, we must closely monitor how future police investigations will proceed.

(Photo: Yonhap News) (Note: The above parenthetical photo caption corresponds to the original text format if applicable, otherwise omitted to match exact text)

(Reported by Kim Minjun | Produced by Shin Hee-suk | Video by Bae Moon-san | Video Editing by Hong Jin-young | Design by Yang Hye-min | Produced by SBS Digital News)

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