A court has ruled that an insurance contract is void for a policyholder who received over 3 billion KRW from five insurance companies, claiming to treat calluses. According to a report titled “Review of Precedents on Fraudulent Acquisition of Surgical Insurance for Callus Treatment,” released by Yang Seung-hyun, a researcher at the Insurance Research Institute, the policyholder signed up for 18 insurance policies and received more than 3 billion KRW in surgical insurance payments. Insurance companies, suspecting the large payouts, filed lawsuits, and eight lawsuits have been ongoing since 2017. The insurance companies lost the initial four cases, but since May last year, rulings have favored them.
The policyholder had purchased fixed-sum insurance plans that offered 300,000 to 400,000 KRW per surgery for ailments from 2013 to 2017. From 2016, they claimed insurance payments after receiving 3,933 cryotherapy sessions, aimed at treating plantar calluses, from roughly 20 hospitals. Cryotherapy involves freezing tissue, causing necrosis and allowing new tissue to regenerate, and has been a subject of dispute over its qualification for surgical insurance over recent years.
The deciding factor in the lawsuits was whether the policyholder signed up for insurance with the intent to fraudulently acquire payouts, thereby rendering the insurance contracts void under Article 103 of the Civil Code, which pertains to actions against public order. Initially, the court found no sufficient grounds to affirm fraudulent intent, citing the ease of callus recurrence. However, in the 2023 May ruling, factors such as the disproportionate insurance premiums relative to income, lack of a justifiable reason for multiple short-term insurance contracts, excessive treatment frequency and duration compared to the diagnosis and treatment records, and excessively large insurance payments led the court to acknowledge fraudulent intent. The fact that the policyholder visited more than 20 hospitals in different regions and received treatments on various days, coupled with the fact that the policyholder’s father also claimed substantial insurance payments for similar procedures, supported the fraudulent acquisition claim.
Yang Seung-hyun stated, “Recognizing the aim of fraudulent acquisition of insurance payments and voiding the contract is a reasonable conclusion when considering the facts, the good faith of the insurance contract, and the interests of all members of the insurance group. These indirect facts listed as a basis for acknowledging fraudulent intent could serve as standards in future multiple insurance contract disputes, so insurance companies should closely monitor the progress of lawsuits and thoroughly review the relevant matters.”