Can a Non-Doctor Legally Invest in a Hospital?

In South Korea, the Medical Service Act strictly limits who can establish and operate medical institutions to licensed medical professionals or specific non-profit corporations. A common dispute arises when a non-medical person provides funds to a doctor under an 'Investment Agreement'.

Loan vs. Investment: How the Court Decides

When a dispute occurs, courts look beyond the title of the document. Even if you call it a 'Money Investment Agreement,' the court examines the actual nature of the transaction:

  • Investment: Sharing profits and losses, lack of collateral, and participating in the business risk.
  • Loan: A fixed obligation to repay the principal with interest, regardless of business success.
Important: If the agreement includes terms like 'profit distribution' and the 'investor' takes on business risks without securing collateral (like a mortgage), it is likely to be viewed as an investment agreement rather than a simple loan.

Why Such Agreements are Void

Under Article 33, Paragraph 2 of the Medical Service Act, non-doctors are prohibited from opening medical institutions. The Supreme Court has ruled that:

  • This is a mandatory law (prohibitory statute) designed to protect public health from profit-driven medical practices.
  • Any contract where a non-doctor shares in the profits of a medical practice in exchange for funding is null and void.

How to Get Your Money Back

If the contract is void, you cannot sue for 'breach of contract' or 'return of investment.' However, there is a legal solution:

  1. Unjust Enrichment: Since the contract is invalid, the doctor has no legal right to keep your money.
  2. Restitution: The doctor must return the original amount received (Unjust Enrichment Return).
  3. Deduction: Any 'profits' or 'dividends' you already received will likely be deducted from the principal amount you are owed.

This information is for general guidance only. Legal outcomes vary by case. If you have a dispute regarding medical investments, consult with a qualified legal professional in Korea.