South Korea's Supreme Court has ruled that when an insurer's medical payments to accident victims differ in treatment items or periods from workers' compensation benefits, those payments must be deducted from liability insurance owed to the Korea Workers' Compensation and Welfare Service.
According to legal circles on the 23rd, the Supreme Court's First Division (Justice Ma Yong-ju presiding) recently overturned a lower court ruling that partially favored the welfare service in its subrogation suit against Hyundai Marine & Fire Insurance, remanding the case to Daejeon District Court.
In May 2018, quick-service courier A was riding a motorcycle in Daejeon when he was struck from behind by a vehicle while changing lanes, sustaining fractures and other injuries. The welfare service paid A 25.76 million won in workers' compensation benefits under the Industrial Accident Compensation Insurance Act, including 8.41 million won in medical treatment benefits. Hyundai Marine & Fire Insurance, the insurer for the commercial auto policy held by the driver who hit A, also paid approximately 7.12 million won in medical expenses to hospitals and other providers.
The welfare service filed a subrogation claim against Hyundai Marine & Fire Insurance. The key issue was whether the insurer could deduct medical costs it had already paid from the liability insurance owed to the welfare service. Hyundai Marine & Fire Insurance argued that approximately 7.1 million won in medical expenses paid to hospitals treating A from June 2018 to January 2019 should be deducted from its liability payment to the welfare service.
Both the first and second instance courts ruled partially in favor of the plaintiff. The appellate court calculated damages at approximately 8.21 million won after deducting Hyundai Marine & Fire Insurance's medical payments, but ordered the full amount paid since it fell within the 10 million won bodily injury liability limit.
However, the Supreme Court overturned the appellate decision, citing errors in applying uniform deductions. The court held that it must first be determined whether the insurer's medical payments covered the same treatments as the insurance benefits. "If the insurer's medical costs differ in treatment period or items from the welfare service's insurance benefits, they are not in a mutually complementary relationship and thus should largely be deducted from the liability insurance payable to the welfare service," the Supreme Court explained.
The Supreme Court noted that "the lower court should have examined whether the medical costs were in a mutually complementary relationship with the insurance benefits, and deducted from the liability insurance any medical costs found not to be in such a relationship."
The welfare service claimed 10.54 million won, a portion of combined bodily injury and disability liability insurance. The Supreme Court stated that because the appellate court granted the full amount, making it difficult to determine the bodily injury liability portion, the entire judgment must be overturned.
