10 Billion Won Embezzlement Over 'Half Achilles Tendon': Appellate Court Reverses Verdict and Orders Repayment

1. Dismissed as 'No Charges' for 10 Billion Won Embezzlement, Now Reversed
Back in January, we reported on the case involving the non-prosecution of the half Achilles tendon imports. The core of the case at the time was this: human tissue import companies illegally imported half Achilles tendons without formal import approval from the Ministry of Food and Drug Safety (MFDS). They then deceived the National Health Insurance Service (NHIS) into believing they had imported whole Achilles tendons, collecting 10 billion won in health insurance benefits. This led to a police investigation, and the police even held a massive press briefing targeting reporters at the time, indicating their intent to forward the case with a recommendation for indictment.

[Park Myeong-woon, former head of the International Crime Investigation Division 2 at the Seoul Metropolitan Police Agency: "When the (cruciate ligament) is ruptured, this Achilles tendon is needed to connect the torn parts, but they cut it in half and transplanted it into the patient's body."]

However, the competent authority, the MFDS, took the stance that Achilles tendons do not require separate approval from the MFDS based on size or specifications, and that the companies' import of these half Achilles tendons without approval did not violate the Human Tissues Safety Act. Because of this single line of position from the MFDS, the police investigation ended futilely with a decision not to prosecute due to lack of charges. Furthermore, the first-instance civil lawsuit filed by the NHIS against the companies to reclaim the wrongfully disbursed health insurance benefits also ended in defeat for the NHIS. Afterward, we at SBS reported that the health insurance service had appealed. Nearly eight months have passed since then. Unlike the first-instance ruling—which judged that there was no need to apply separately for import approval from the MFDS, meaning one side or half was all the same—the second-instance court viewed the two as clearly distinct and separate materials.

2. Why Was the First-Instance Ruling Overturned?
The basis for this was that there are precedents where half Achilles tendons were separately registered for insurance and assigned different codes and upper limits by the Health Insurance Review and Assessment Service (HIRA). Therefore, the court ruled that if the companies wanted to import and supply half Achilles tendons, they should have separately verified with the Ministry of Health and Welfare whether they were eligible for health insurance benefits and obtained a separate code. Bringing in half Achilles tendons under the code of a whole tendon while skipping all these procedures was illegal. It did not stop there. Receiving health insurance benefits from the NHIS using the code for whole tendons, as if whole ones were imported, was judged by the second-instance panel to be effectively the embezzlement of health insurance benefits. Although not perfectly identical, expressions treated as embezzlement in civil lawsuits are sometimes regarded in criminal cases as deceit or fraud carrying intent. The panel also recognized the willful negligence of the companies, stating that given the long careers of the company representatives, they could have sufficiently known that half tendons needed to be registered under a separate code. The court wrote in its ruling, "Considering the purpose of the National Health Insurance system, which aims to efficiently utilize limited finances to provide maximum benefits to as many citizens as possible, the companies' actions are highly blameworthy."

3. Why the Court Drew the Line on the MFDS's Judgment
The court also drew a clear line regarding the MFDS's judgment, which had exerted a decisive influence on the first-instance ruling and the police investigation. First, because the MFDS and the NHIS are agencies with distinct functions and purposes, whether or not the MFDS grants import approval cannot directly affect the NHIS's administration of health insurance embezzlement management. To put it simply, the reason the MFDS exists is to verify the safety of food and pharmaceuticals—meaning its most important function is to determine whether certain therapeutic materials are hazardous to our bodies. On the other hand, the purpose of the NHIS is not to evaluate safety, but to efficiently operate national health insurance with limited financial resources so that welfare benefits are evenly distributed to as many citizens as possible. The MFDS merely took the stance from the perspective of safety alone—that since using an Achilles tendon in half has never been reported as dangerous to the human body, there is no need for separate approval from them—and this position of the MFDS has nothing to do with the perspective of the NHIS, which must efficiently manage limited financial resources. Therefore, the court's position was that in a case where certain companies are suspected of embezzling health insurance funds operated with public taxes, the companies cannot be deemed free of wrongdoing based solely on that brief line of position from the MFDS. Consequently, acknowledging that the MFDS's stance was irrelevant to this case, the court stated that the illegality of the half Achilles tendon case is established.

4. Significance of the Second-Instance Ruling
According to the first-instance ruling, which literally quoted the MFDS's stance, it would mean that not only with Achilles tendons, but when bringing in any medical material, cutting it not in half, but into quarters or eighths, would be completely permissible to import as long as no risk of harm to the body has been confirmed. By drawing a clear line that the positions of the MFDS and the NHIS are distinct, the second-instance court left a precedent recognizing that even before it is confirmed that a therapeutic material is hazardous to the human body, the unauthorized importation of medical materials with different prices and codes for someone's private gain can be illegal. However, there are also limitations. Given the nature of this civil lawsuit, it is essentially little more than a process of forcing someone to spit out the profits they enjoyed, rather than carrying punitive significance. Patients received transplant surgery using half-size instead of full-size tendons without their knowledge, and while risks may not have been reported yet, it does not mean they do not exist. Yet the remedy amounted to no more than disgorging the wrongful profits someone enjoyed rather than providing true compensation for damages. Moreover, it could give other companies the perception that even if they get caught, they only have to spit out the profits they reaped, making it a heads-I-win, tails-you-lose gamble. In addition, as some companies have appealed to the third instance, the possibility of the case going all the way to the final trial has not been completely eliminated. Therefore, stronger criminal and punitive regulatory measures or investigations must accompany this.

[The Attorney: "The (police) investigation ended in a whimpering fizzle. I think unless criminal punishment is meted out, such attempts—attempts that pose risks to public health—will not disappear."]

Immediately after the police's previous decision not to prosecute was issued, the NHIS filed an objection and a request for reinvestigation last February. Eight months later, the police investigation remains sluggish with no notable progress. Now that this second-instance ruling has been issued, we must closely monitor how the subsequent police investigation will proceed.

(Photo: Yonhap News)
Reported by Kim Minjun | Produced by Shin Hee-suk | Video by Bae Moon-san | Video Editing by Hong Jin-young | Graphics by Yang Hye-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.