South Korea: COMWEL Subrogation Prior Payments

1. What Is the Legal Issue in This South Korea Supreme Court Ruling?

The Supreme Court of South Korea’s ruling of 12 February 2026 (Case No. 2023Da274933, subrogation claim) addresses a question that arises constantly in South Korean insurance litigation: when COMWEL (Korea Workers’ Compensation & Welfare Service) seeks reimbursement from a liability insurer after paying workers’ compensation benefits, can the insurer reduce its exposure by pointing to amounts it already paid directly to the injured worker?

The ruling builds on a line of cases including the Supreme Court’s 11 July 2024 decision (Case No. 2021Da305437, National Health Insurance Service subrogation) and the 16 July 2025 decision (Case No. 2025Da211133), applying the same analytical framework to industrial accident subrogation disputes. For foreign-invested companies, insurers, and employers operating in South Korea, understanding this framework is essential to managing litigation risk.

Two Key Legal Propositions Confirmed

This ruling confirms two propositions that pull in opposite directions. First, if the insurer pays the injured worker for a loss that is complementary to COMWEL’s benefits — after COMWEL has already acquired subrogation rights — the insurer cannot use that payment to defeat COMWEL’s claim. Second, if the insurer’s payment to the injured worker covers a loss that is not complementary to COMWEL’s benefits (such as future medical costs or emotional distress), that payment must be deducted from the liability insurance proceeds owed to COMWEL. The pivot point in both propositions is always the same: the existence or absence of a complementary relationship between the benefit paid and the damages category at issue.

2. How Does Workers’ Compensation Subrogation Work in South Korea?

Article 87(1) of South Korea’s Industrial Accident Compensation Insurance Act (IACIA) provides as follows (unofficial translation):

“Where the Corporation pays insurance benefits due to an occupational accident caused by a third party’s act, it shall subrogate, within the limits of the benefits paid, the rights of the benefit recipient to claim damages against the third party.”

Once COMWEL pays benefits to an injured worker, it acquires by operation of law the injured worker’s tort damages claim against the negligent third party (or that party’s liability insurer), up to the amount of benefits paid.

Two Judicial Limits on the Subrogation Scope

Korean courts have imposed two important restrictions on this statutory subrogation. The first concerns contributory negligence. Under the Supreme Court’s en banc decision of 24 March 2022 (Case No. 2021Da241618), COMWEL can only subrogate to the portion of benefits corresponding to the third party’s share of fault. The portion of benefits attributable to the injured worker’s own contributory negligence is borne by COMWEL as a final matter and cannot be recouped from the third party or its insurer. In this case, the injured worker A was found 30% contributorily negligent, so COMWEL’s subrogable amount was capped at 70% of each benefit category paid.

The second restriction is the focus of this ruling. Since the Supreme Court’s 12 April 2002 decision (Case No. 2000Da45419), COMWEL’s subrogated damages claim is limited to claims that are complementary to the specific benefit paid — that is, claims addressing the same category of loss that the benefit was designed to remedy.

3. What Were the Facts of the Case?

Worker A, a sole proprietor in the courier business and an industrial accident insurance subscriber, was riding a motorcycle when struck by a vehicle driven and owned by B. The collision occurred on 8 May 2018, causing A to suffer fractures to the right humerus and right ankle and damage to the right radial nerve, among other injuries.

Benefits and Medical Payments: A Chronological Overview

COMWEL paid the following workers’ compensation benefits to A between July 2018 and September 2019, totalling KRW 25,766,340:

Separately, the liability insurer — as the insurer of B’s commercial vehicle under a mandatory automobile liability insurance policy — made the following direct medical payments to hospitals:

Critically, the insurer’s medical payments covered treatment periods and treatment items that did not overlap — or only partially overlapped — with the medical care benefits paid by COMWEL. This distinction became the crux of the Supreme Court’s analysis.

What the Appellate Court Got Wrong

The Daejeon District Court (appellate division, 22 August 2023, Case No. 2021Na129624) deducted the insurer’s KRW 7,125,620 in medical payments from A’s total damages at the outset of its calculation, before determining what remained within the liability cap. After that deduction, the court found COMWEL was owed KRW 8,210,045. The Supreme Court found this approach legally flawed: the appellate court had applied the deduction without first examining whether the insurer’s payments were complementary to COMWEL’s medical care benefits. That examination, the Supreme Court held, is mandatory.

4. What Is the “Complementary Relationship” Test Under South Korean Law?

A complementary relationship exists when the insurance benefit and the tort damages claim both remedy the same category of loss, such that payment of the benefit extinguishes the corresponding damages claim. Korean courts apply this test on a benefit-by-benefit, item-by-item basis.

Why Future Medical Costs and Emotional Distress Fall Outside the Test

The Supreme Court established in its 24 September 2015 decision (Case No. 2014Da233626) that even though COMWEL’s medical care benefits and future medical costs both relate to treatment, they address different losses: past treatment already incurred versus treatment not yet received. There is no complementary relationship between them. Similarly, emotional distress (위자료) is a category of loss that workers’ compensation benefits do not cover at all — COMWEL therefore cannot subrogate to an emotional distress damages claim under any circumstances.

The Cap Problem: When Liability Insurance Is Insufficient

When the injured worker’s total damages exceed the liability insurance cap — so that the insurer’s maximum payout is less than the victim’s full loss — both COMWEL (as subrogee) and the injured worker (for unrecovered loss) have competing claims against the same limited pool of insurance proceeds. In this scenario, the insurer may have already paid some of those proceeds to the injured worker before COMWEL filed its claim. The question of how to allocate responsibility for those prior payments is precisely what this ruling resolves: allocation depends on the complementarity of those prior payments, not on the sequence of payment.

5. How Did the Supreme Court of South Korea Rule?

The Supreme Court vacated the appellate court’s judgment and remanded, confirming two distinct propositions.

Proposition 1: Complementary Prior Payments Cannot Defeat COMWEL’s Claim

Once COMWEL acquires subrogation rights by paying benefits, a subsequent insurer payment to the injured worker covering the same complementary loss category cannot be used to reduce what the insurer owes COMWEL. The insurer cannot escape its obligation to COMWEL simply by rushing to settle the complementary portion with the injured worker first. This reaffirms the Supreme Court’s 11 July 2024 ruling (Case No. 2021Da305437).

Proposition 2: Non-Complementary Prior Payments Must Be Deducted from What the Insurer Owes COMWEL

Where the insurer has paid the injured worker for a loss that is not complementary to COMWEL’s benefits — and the liability cap applies — that prior payment must be deducted from the liability insurance proceeds otherwise owed to COMWEL. In this case, the Supreme Court noted the following with respect to the disputed KRW 7,125,620:

The insurer’s payment of KRW 6,767,040 to Hospital H (covering treatment from 8 to 28 May 2018 as inpatient) appeared to differ in both treatment period and treatment category from the medical care benefits COMWEL paid for periods after 28 May 2018. The outpatient payments of KRW 211,320 and KRW 147,260 overlapped in period with COMWEL’s benefits but potentially differed in treatment category. Where either the treatment period or treatment category differs, complementarity is absent — and those payments must therefore be deducted from what the insurer owes COMWEL.

Subrogation Calculation Structure: The Appellate Court’s Framework (Before Reversal)

To illustrate how COMWEL’s subrogable amount is computed, the table below reflects the appellate court’s calculation structure (before the Supreme Court’s reversal on the deduction issue). COMWEL’s recoverable amount per benefit category equals the lesser of: (i) benefits paid minus the injured worker’s contributory negligence share (×0.7); and (ii) the corresponding damages item, subject to the applicable liability cap.

The Supreme Court accepted this calculation structure in principle but remanded on the question of whether the insurer’s KRW 7,125,620 in medical payments was complementary to COMWEL’s medical care benefits — a factual determination that had not been made below.

6. What Are the Practical Implications for Insurers and Employers in South Korea?

This ruling has direct operational consequences for anyone involved in workplace accident litigation in South Korea.

For Liability Insurers: How to Reduce Exposure on COMWEL Subrogation Claims in South Korea

When the liability cap applies and you have already made direct medical payments to the injured worker, do not assume those payments automatically reduce your exposure to COMWEL. You must demonstrate, through detailed medical records and loss adjustment reports, that each payment you made covers a treatment period or treatment category that differs from what COMWEL reimbursed. Non-complementary items — future medical costs, emotional distress, disability consolation money, and nursing costs during hospitalisation — are your strongest basis for deduction. Payments covering the same past medical expenses as COMWEL’s medical care benefits, however, cannot be used defensively against COMWEL’s claim.

For Employers and Risk Managers Operating in South Korea

Where an industrial accident also involves a third-party tortfeasor, the interaction between workers’ compensation and liability insurance creates significant complexity. The injured worker, COMWEL, and the liability insurer all have concurrent or successive claims against a shared pool of insurance proceeds. Employers and risk managers should ensure that their insurers are conducting item-by-item complementarity analyses rather than relying on a simple temporal priority argument. An insurer that pays the injured worker first — hoping to exhaust the cap before COMWEL files — may find that strategy fails entirely if its payments were complementary to COMWEL’s benefits.

Cross-Application: National Health Insurance Subrogation in South Korea

This framework applies with equal force to subrogation claims by the National Health Insurance Service (NHIS) under Article 58 of the National Health Insurance Act. The Supreme Court confirmed this in its 15 January 2026 ruling (Case No. 2023Da239718) and its 11 July 2024 ruling (Case No. 2021Da305437). Foreign-invested companies and insurers active in South Korea should therefore treat both COMWEL and NHIS subrogation claims with the same analytical discipline: a line-by-line complementarity review of every payment made against every benefit category paid.

7. FAQ

Atlas Legal advises insurers, employers, and foreign-invested companies on workers’ compensation subrogation disputes and insurance litigation in South Korea. Our team’s hands-on experience handling complex multi-party insurance claims across Incheon Songdo and the broader Korean market means we can provide practical, jurisdiction-specific guidance from the outset.

* The information in this article is provided for general informational purposes only and does not constitute legal advice. The applicable law and outcome may vary depending on the specific facts of each case. Please consult a qualified attorney before taking any action.