February 2025
Dispute over Advance Payment of Medical Fees: Taiwan Constitutional Court Deems It Constitutional
February 2025
Oli Wong and Andrew Huang
On October 28, 2024, the Taiwan Constitutional Court rendered TCC Judgment 113-Hsien-Pan-1 (Judgment No. 10 of the year 2024) regarding the standards for the collection of medical expenses, ruling that Article 21 of the Medical Care Act (“Contested Provision 1”), Article 22, Paragraph 2 (“Contested Provision 2”), and Article 11, Paragraph 3 of its Enforcement Rules (“Contested Provision 3”) are constitutional.
I. Case Background
The petitioner, a private medical institution, was fined NT$50,000 by the Department of Health, Taipei City Government. The fine was imposed because the institution adopted a prepayment model where patients were charged a lump sum for medical services before completing the treatment in stages. The health authority deemed this practice an “unauthorized charge” since the fee standards had not been approved by the Department of Health. Dissatisfied with the penalty, the petitioner filed an administrative appeal and pursued administrative litigation. After the Taipei High Administrative Court dismissed the appeal,[1] the petitioner sought a constitutional review.
According to the health competent authority’s interpretations,[2] the petitioner argued that prepayment for medical services is considered illegal, and already-approved medical procedures are treated as unauthorized if the payment method differs. However, the petitioner claimed that the contested provision does not explicitly prohibit prepayments, and the health competent authority’s broad interpretation via administrative guidance exceeds its legal authority, violating the principle of legal clarity.
Furthermore, the petitioner contended that restricting medical institutions from collecting prepayments interferes with their freedom to conduct business and the freedom of contract between medical providers and patients, thus violating Articles 15 and 22 of the Constitution. The petitioner also argued that requiring re-approval solely due to differences in payment methods imposes an undue burden on medical institutions. Lastly, the petitioner asserted that the Taipei High Administrative Court’s judgment, based on the above allegedly unconstitutional Contested Provisions, is itself unconstitutional.
II. Issues in Dispute
A. Whether Contested Provision 1 and Contested Provision 2 violate the principle of legal clarity.
B. Whether the above provisions, along with Contested Provision 3, contravene the intent of Article 15 of Taiwan’s Constitution, which protects the freedom of medical institutions to operate, and Article 22, which safeguards freedom of contract.
III. The Reasoning of the Judgment
A. Contested Provision 1 and Contested Provision 2, when considered together regarding “medical fee standards” and “items subject to fees,” do not violate the principle of legal clarity.
1. The legislature enacted these provisions to prevent medical institutions from overcharging, protect patient rights, and promote the sound development of medical services.[3] Contested Provision 1 requires medical institutions to submit their fee standards for approval by the local competent authority. Contested Provision 2 prohibits charging more than approved amounts or charging for items without authorization, with penalties for violations. This framework addresses issues such as inconsistencies in medical fees and urban-rural disparities, safeguarding patients’ rights to medical services.
2. The Constitutional Court held that the term “medical fee standards” under Contested Provision 1 encompasses costs related to medical services, including consultation fees, medication expenses, facility usage, and operational costs. This scope is clear and foreseeable. Given that medical treatments may involve multiple sessions due to patient-specific or environmental factors, the required number of treatments and associated costs should be determined during the initial consultation and approved by the competent authority. Furthermore, “excessive or unauthorized fees” under Contested Provision 2 include not only individual overcharges but also unauthorized charges for entire treatment plans. Overall, Contested Provision 1 and Contested Provision 2 meet the requirements of legal clarity, and medical institutions can understand and comply with these provisions based on professional norms and legal interpretations.
B. Contested Provisions 1 through 3 do not violate the principle of proportionality under Article 23 of the Constitution, nor do they infringe on the freedom to conduct business protected by Article 15 or the freedom of contract safeguarded by Article 22.
1. These three provisions empower the local competent authority to approve medical fee standards and restrict medical institutions from charging excessive or unauthorized fees. While these measures impose certain limitations on the freedom to conduct business and contract, their purpose is to protect the public interest and patient rights, aligning with the proportionality principle under Article 23, and do not violate the constitutional protections of professional freedom under Article 15 or contract freedom under Article 22.
2. Given the specialized nature of the medical field and the information asymmetry between medical institutions and patients, the preapproval system ensures fee reasonableness and protects patients from bearing unreasonable costs. This system also considers the legitimate interests of medical institutions through review by professional medical authorities or committees. Therefore, the restrictions imposed by Contested Provisions 1 through 3 are reasonably related to their legitimate objectives and are not unconstitutional.
[1] Taipei High Administrative Court 110-Jian-Shang-Zi No. 37 Judgment.
[2] Former Department of Health of the Executive Yuan (currently known as the Ministry of Health and Welfare) Letter No. 0990211896, dated October 6, 2010, and Ministry of Health and Welfare Letter No. 1041661402, dated February 25, 2015.
[3] When Taiwan’s Medical Care Act was enacted and promulgated on November 24, 1986, the current Article 21 and Article 22 were stipulated as Article 17 and Article 18 in the 1986 version of the Medical Care Act, respectively.
The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners. All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.
Oli Wong and Andrew Huang
On October 28, 2024, the Taiwan Constitutional Court rendered TCC Judgment 113-Hsien-Pan-1 (Judgment No. 10 of the year 2024) regarding the standards for the collection of medical expenses, ruling that Article 21 of the Medical Care Act (“Contested Provision 1”), Article 22, Paragraph 2 (“Contested Provision 2”), and Article 11, Paragraph 3 of its Enforcement Rules (“Contested Provision 3”) are constitutional.
I. Case Background
The petitioner, a private medical institution, was fined NT$50,000 by the Department of Health, Taipei City Government. The fine was imposed because the institution adopted a prepayment model where patients were charged a lump sum for medical services before completing the treatment in stages. The health authority deemed this practice an “unauthorized charge” since the fee standards had not been approved by the Department of Health. Dissatisfied with the penalty, the petitioner filed an administrative appeal and pursued administrative litigation. After the Taipei High Administrative Court dismissed the appeal,[1] the petitioner sought a constitutional review.
According to the health competent authority’s interpretations,[2] the petitioner argued that prepayment for medical services is considered illegal, and already-approved medical procedures are treated as unauthorized if the payment method differs. However, the petitioner claimed that the contested provision does not explicitly prohibit prepayments, and the health competent authority’s broad interpretation via administrative guidance exceeds its legal authority, violating the principle of legal clarity.
Furthermore, the petitioner contended that restricting medical institutions from collecting prepayments interferes with their freedom to conduct business and the freedom of contract between medical providers and patients, thus violating Articles 15 and 22 of the Constitution. The petitioner also argued that requiring re-approval solely due to differences in payment methods imposes an undue burden on medical institutions. Lastly, the petitioner asserted that the Taipei High Administrative Court’s judgment, based on the above allegedly unconstitutional Contested Provisions, is itself unconstitutional.
II. Issues in Dispute
A. Whether Contested Provision 1 and Contested Provision 2 violate the principle of legal clarity.
B. Whether the above provisions, along with Contested Provision 3, contravene the intent of Article 15 of Taiwan’s Constitution, which protects the freedom of medical institutions to operate, and Article 22, which safeguards freedom of contract.
III. The Reasoning of the Judgment
A. Contested Provision 1 and Contested Provision 2, when considered together regarding “medical fee standards” and “items subject to fees,” do not violate the principle of legal clarity.
1. The legislature enacted these provisions to prevent medical institutions from overcharging, protect patient rights, and promote the sound development of medical services.[3] Contested Provision 1 requires medical institutions to submit their fee standards for approval by the local competent authority. Contested Provision 2 prohibits charging more than approved amounts or charging for items without authorization, with penalties for violations. This framework addresses issues such as inconsistencies in medical fees and urban-rural disparities, safeguarding patients’ rights to medical services.
2. The Constitutional Court held that the term “medical fee standards” under Contested Provision 1 encompasses costs related to medical services, including consultation fees, medication expenses, facility usage, and operational costs. This scope is clear and foreseeable. Given that medical treatments may involve multiple sessions due to patient-specific or environmental factors, the required number of treatments and associated costs should be determined during the initial consultation and approved by the competent authority. Furthermore, “excessive or unauthorized fees” under Contested Provision 2 include not only individual overcharges but also unauthorized charges for entire treatment plans. Overall, Contested Provision 1 and Contested Provision 2 meet the requirements of legal clarity, and medical institutions can understand and comply with these provisions based on professional norms and legal interpretations.
B. Contested Provisions 1 through 3 do not violate the principle of proportionality under Article 23 of the Constitution, nor do they infringe on the freedom to conduct business protected by Article 15 or the freedom of contract safeguarded by Article 22.
1. These three provisions empower the local competent authority to approve medical fee standards and restrict medical institutions from charging excessive or unauthorized fees. While these measures impose certain limitations on the freedom to conduct business and contract, their purpose is to protect the public interest and patient rights, aligning with the proportionality principle under Article 23, and do not violate the constitutional protections of professional freedom under Article 15 or contract freedom under Article 22.
2. Given the specialized nature of the medical field and the information asymmetry between medical institutions and patients, the preapproval system ensures fee reasonableness and protects patients from bearing unreasonable costs. This system also considers the legitimate interests of medical institutions through review by professional medical authorities or committees. Therefore, the restrictions imposed by Contested Provisions 1 through 3 are reasonably related to their legitimate objectives and are not unconstitutional.
[1] Taipei High Administrative Court 110-Jian-Shang-Zi No. 37 Judgment.
[2] Former Department of Health of the Executive Yuan (currently known as the Ministry of Health and Welfare) Letter No. 0990211896, dated October 6, 2010, and Ministry of Health and Welfare Letter No. 1041661402, dated February 25, 2015.
[3] When Taiwan’s Medical Care Act was enacted and promulgated on November 24, 1986, the current Article 21 and Article 22 were stipulated as Article 17 and Article 18 in the 1986 version of the Medical Care Act, respectively.
The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners. All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.
