"Half Put in Patients, Full Price Claimed": Ruling Overturned in 'Halved Achilles Tendon' Case

In January, SBS reported on the police decision not to refer the halved Achilles tendon case for prosecution. The core of the case at the time was this: Human tissue import companies illegally imported and supplied these halved Achilles tendons without obtaining formal import approval from the Ministry of Food and Drug Safety (MFDS). They deceived the National Health Insurance Service (NHIS) into believing that intact, whole Achilles tendons had been imported, pocketing 10 billion won in insurance benefits, prompting a police investigation. At the time, the police even held an extensive press briefing for reporters, signaling their intent to forward the case with a recommendation for indictment.

[Park Myeong-un / Then Head of International Crime Investigation Section 2, Seoul Metropolitan Police Agency: When a cruciate ligament ruptures, an Achilles tendon is needed to connect that part, but they cut it in half and transplanted it into patients' bodies.]

However, the competent authority, the MFDS, issued a stance stating that Achilles tendons do not require separate approval based on size or standard, and that the companies' unauthorized importation of halved Achilles tendons did not constitute a violation of the Human Tissue Safety and Management Act. Because of this single-line position from the MFDS, the police investigation anticlimactically concluded with a non-referral decision clearing the suspects of charges. Furthermore, the first-instance damages lawsuit filed by the NHIS against the companies to recover the improperly paid insurance benefits also ended in defeat for the NHIS. SBS subsequently reported that the NHIS appealed. Nearly eight months have passed since then. In contrast to the first-instance court's assessment—which held that whole and halved tendons were virtually the same since there was no need to seek separate import approval from the MFDS—the appellate court viewed the two as clearly separate and distinct materials.

The grounds were that cases existed where halved Achilles tendons were registered separately under health insurance, with precedents of receiving distinct product codes and upper price limits from the Health Insurance Review and Assessment Service (HIRA). Therefore, if companies wished to import and supply halved Achilles tendons, they should have separately verified with the Ministry of Health and Welfare whether the items were eligible for health insurance coverage and obtained appropriate codes; bypassing all these procedures and bringing in halved Achilles tendons under codes for intact ones was deemed illegal. The court did not stop there. The appellate panel determined that importing these halved Achilles tendons and receiving insurance benefits from the NHIS under whole-tendon codes—as if importing intact ones—virtually constituted fraudulent receipt of insurance benefits. While not entirely identical, expressions addressed as fraud or misappropriation in civil litigation are often regarded in criminal cases as deceit and fraud accompanied by intent. The court also recognized willful negligence (dolus eventualis) on the part of the companies, noting that given the long industry experience of their representatives, they were sufficiently aware that halved tendons needed to be registered under a separate code. In its ruling, the court wrote: "Considering the purpose of the National Health Insurance system, which aims to efficiently utilize limited financial resources so that as many citizens as possible can receive maximum benefits, the conduct of these companies warrants significant reproach."

The appellate court also drew a clear line regarding the stance of the MFDS, which had decisively influenced the first-instance verdict and the police investigation. First, the court noted that because the MFDS and the NHIS are institutions with distinctly different functions and purposes, whether the MFDS granted import approval cannot directly dictate the administrative affairs of managing insurance fraud overseen by the NHIS. To explain this more clearly, the reason the MFDS exists is to verify the safety of food and pharmaceuticals. In other words, its most vital role is determining whether a therapeutic material poses a danger to the human body. In contrast, the NHIS is an agency whose purpose is not safety assessment, but managing and efficiently operating the national health insurance fund with limited financial resources so that welfare benefits are evenly distributed to as many citizens as possible. The MFDS merely expressed its position strictly from the perspective of safety, reasoning that "since using a halved Achilles tendon has never been reported as dangerous to the human body, using it halved does not require separate verification from us," and such a stance from the MFDS has no bearing on the perspective of the NHIS, which must manage limited fiscal resources efficiently. Consequently, in a case involving suspicions that certain companies defrauded health insurance finances operated by taxpayers' money, the court held that companies could not be cleared of wrongdoing merely based on that single-line stance from the MFDS. Recognizing that the MFDS stance was irrelevant to the matter, the court declared the illegality of the halved Achilles tendon case recognized.

It is worth examining the significance of the appellate court's ruling. According to the first-instance ruling that directly cited the stance of the MFDS, whenever medical materials—not just Achilles tendons—are imported, cutting them not only in half but into quarters or eighths would mean there is no problem importing them as long as physical harm has not yet been proven. By drawing a clear line between the position of the MFDS and that of the NHIS, the appellate court set a precedent recognizing that unauthorized importation of medical materials with different prices and codes for personal gain can be unlawful, even before a therapeutic material is confirmed to pose a danger to the human body.

However, limitations remain. Due to the nature of civil litigation, it amounts to little more than forcing the return of ill-gotten gains rather than serving a punitive function. Patients unknowingly underwent transplant surgeries using halved rather than whole tendons, and although risks have simply not been reported yet rather than non-existent, the outcome was merely the disgorgement of unjust profits rather than compensation for victim damages. Furthermore, it risks giving other companies the impression of "nothing to lose," since even if caught, they would only have to surrender the profits they made. In addition, as some companies have appealed to the Supreme Court, the possibility of the case proceeding all the way to the final instance has not completely vanished. For these reasons, stronger criminal and punitive sanctions and investigations must follow.

[Choi Jung-gyu / Attorney for the Whistleblower: The police investigation ended in an anticlimax, and I believe criminal punishment must be carried out so that such attempts—attempts that jeopardize the health of our citizens—will disappear once and for all.]

Immediately after the police decided not to forward the case, the NHIS filed an objection and requested a reinvestigation in February, but even now, eight months later, the police investigation remains sluggish with no notable progress. With this appellate court ruling delivered, close attention must be paid to how the police investigation unfolds moving forward.

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