Can South Korea Care Facilities Self-Wash Laundry? Supreme Court 2024Du55723
Contents
- 1. What Does “Full Outsourcing” of Laundry Mean Under South Korean Law?
- 2. What Were the Facts — and Why Did the Facility Think It Was Compliant?
- 3. Why Did the Supreme Court Reject the Good-Faith Defense?
- 4. Is the Recovery Order Discretionary or Mandatory in South Korea?
- 5. What Should Care Facility Operators in South Korea Do Now?
- 6. FAQ
Case background: Operators A and B ran a 48-bed nursing home in South Korea. They outsourced bedding and linens to a laundry contractor but washed all residents’ personal clothing — shirts, underwear, socks — on-site using three designated care workers. Thirty-eight months later, the National Health Insurance Service issued a recovery order for KRW 616,733,800. The Seoul High Court sided with the operators. South Korea’s Supreme Court did not.
A KRW 617 Million Dispute Over How Laundry Gets Done
Note: This post is based on Supreme Court Case 2024Du55723 (March 12, 2026) and the Seoul High Court’s underlying judgment (2023Nu55469). Individual names and the facility name have been anonymized.
Under South Korean long-term care law, nursing homes with 30 or more residents must employ a hygiene worker — unless they outsource their laundry entirely. Operators A and B believed they had found a workable middle ground: keep the outsourcing contract for heavy items, but handle residents’ personal garments in-house to prevent the damage and loss complaints that had been coming in. They relied on a 2017 Ministry of Health guidance letter and paid three care workers a small supplement to take on the extra task. What followed was three and a half years of clean laundry — and a compliance exposure that reached nine figures. The question courts had to answer: does “full outsourcing” permit any in-house washing at all?
1. What Does “Full Outsourcing” of Laundry Mean Under South Korean Law?
South Korean nursing homes with 30 or more residents are required to employ a hygiene worker (위생원). The sole statutory exception is set out in Remark 7 of the Staffing Standards under the Enforcement Rules of the Welfare of the Aged Act: a facility may forgo the hygiene worker if it outsources its laundry in full.
Staffing Standards for Medical Welfare Facilities for the Aged — Remark 7
7. Where laundry is outsourced in its entirety, the facility need not employ a hygiene worker.
※ Remark 1 of the same Table (Facility Standards) provides separately: “Where laundry is outsourced in its entirety, the facility need not maintain a laundry room or laundry drying area.”
How the Two Courts Interpreted “In Its Entirety”
The Seoul High Court took a substantive approach, reasoning that “entirely” could not mean a rigid 100% where nursing-home practicalities make some in-house handling unavoidable. If a facility maintains an outsourcing contract and only handles the minimum necessary items itself, the spirit of the rule is satisfied.
The Supreme Court disagreed. The plain text of the rule requires that laundry generated by the facility be processed by an outside contractor in full. The Court further noted that the facility in question was not handling only urgent one-off items — it had structured its operations so that all residents’ personal clothing (outerwear, underwear, socks) was systematically self-washed by three designated care workers under formal employment contract terms, while bedding and linens went to the contractor.
| Issue | Seoul High Court | Supreme Court (reversal) |
|---|---|---|
| Meaning of “entirely” | Substantive/purposive — minimum necessary in-house washing permitted | Plain text — 100% outsourcing required |
| Self-washing of personal clothing | Permissible given residents’ welfare needs | Not permissible absent special circumstances |
| Outcome | Recovery order quashed | Case remanded (recovery order likely to stand) |
2. What Were the Facts — and Why Did the Facility Think It Was Compliant?
Understanding the operators’ reasoning matters, because their good-faith argument was the second major ground on which the High Court had sided with them — and the second ground the Supreme Court rejected.
The Sequence of Events
The facility had originally employed a hygiene worker. When that person resigned in September 2018, the operators signed a full-outsourcing contract with a commercial laundry service. Problems emerged quickly: garments were being damaged by the high-temperature, high-pressure industrial process, items were going missing, and several residents with dementia were distressed by their personal clothes leaving the premises. The operators searched for a solution and found a 2017 Ministry of Health response on the national civil inquiry portal stating, in relevant part:
“While full outsourcing of laundry is the principle, it is our view that the facility may, at its own discretion, handle some laundry items (such as underwear) for residents’ hygiene management purposes. Any care worker taking on additional laundry duties should do so with the agreement of the facility director.”
Reading this as permission to self-wash personal garments, the operators designated three of their 21 care workers to handle residents’ personal clothing, paid them a supplement of approximately KRW 250,000–300,000 per month in total, and formally recorded the arrangement in their employment contracts. The outsourcing contract — and its monthly fee — remained in place unchanged.
The Scale of the Self-Washing Operation
According to the care workers’ own written statements, the additional daily workload was modest: roughly 15 minutes per day for clothing belonging to three or four residents. The items were machine-washed and machine-dried. No hand-washing was involved. Nevertheless, the arrangement ran from October 2018 through November 2021 — 38 months — during which the facility claimed and received long-term care benefit payments as if it had satisfied the staffing standard.
3. Why Did the Supreme Court Reject the Good-Faith Defense in South Korea?
Even where a regulatory violation is established, South Korean administrative law recognizes a “justifiable reason” (정당한 사유) defense: if the operator could not reasonably have known the conduct was unlawful, or compliance could not fairly have been expected, the sanction may not apply. The High Court accepted this defense. The Supreme Court identified four reasons for rejecting it.
- The rule has been clear since 2008. The full-outsourcing exception has been in the Enforcement Rules since the Long-Term Care Insurance system launched. There is no evidence of interpretive confusion over this period.
- The guidance letter was read too broadly. The Ministry’s 2017 response addressed the permissibility of excluding highly personal items (such as underwear) from the scope of outsourced laundry — not the wholesale self-washing of all personal garments due to contractor quality issues. The two situations are meaningfully different.
- The guidance was not addressed to this facility. The operators never sought a ruling from the Ministry or the NHIS about their own planned arrangement. General guidance issued to an unrelated inquirer is not a reliable basis for assuming compliance.
- Other remedies were available. The Court noted that the operators could have switched to a different outsourcing contractor, rehired a hygiene worker, or engaged a specialist personal-garment laundry service. There is no evidence they considered any of these options.
The Supreme Court also cast doubt on the High Court’s observation that the operators must have been acting purely for residents’ benefit because the cost savings were small. The Court pointed out that even accounting for the care-worker supplement, total laundry expenditure was lower than when a hygiene worker had been employed — which is at least consistent with a cost-saving motive.
4. Is the Recovery Order Discretionary or Mandatory in South Korea?
The third ground on which the High Court had ruled for the operators was that the recovery order was a discretionary act — and that the NHIS had abused its discretion by applying the order mechanically without weighing the specific circumstances. The Supreme Court addressed this directly.
Article 43(1) — Recovery of Unjust Enrichment
① Where a person who has received long-term care benefits, long-term care benefit costs, or physician’s statement issuance costs falls under any of the following subparagraphs, the Corporation shall collect an amount equivalent to those benefits, costs, or fees.
1. Where it is confirmed through a care-needs assessment under Article 15(5) that the person falls under any subparagraph of Article 15(4)
2. Where long-term care benefits have been received in excess of the monthly limit under Article 28
3. Where a person subject to benefit restrictions under Article 29 or 30 has received long-term care benefits
4. Where residential or facility benefit costs have been claimed and received through false or other improper means ← provision applied in this case
5. Where long-term care benefits or benefit costs have been received from the Corporation without a lawful basis
※ This is the former law text applicable to this case. Under the current Act (Act No. 21257, December 30, 2025), Subparagraph 4 reads: “Where residential or facility benefit costs have been claimed and received through false or other improper means under Article 37(1)(4),” with the cross-reference to Article 37(1)(4) added.
Bound Act (기속행위) vs. Discretionary Act (재량행위)
The Supreme Court held that a recovery order under Article 43(1)(4) of the former Long-Term Care Insurance Act is a bound act: the NHIS has no discretion to reduce or waive the amount. Four reasons were given.
- Statutory language: The provision states the Corporation “shall collect” (징수한다) the equivalent amount — not “may collect all or part.” This is the language of obligation, not discretion.
- Legislative purpose: The provision is designed to deter fraudulent billing and protect the fiscal soundness of a public insurance system funded by citizen premiums and government subsidies. Granting discretion to reduce recovery would undermine this purpose.
- Weight of public interest: Long-term care insurance is a compulsory public scheme; its financial integrity is a significant public interest.
- Proportionality of scope: Only the amount improperly received — not total benefit payments — is subject to recovery. The restriction is therefore not disproportionate.
Contrast with the National Health Insurance Act
This outcome contrasts with the position under the National Health Insurance Act, where the Supreme Court has held that recovery orders are discretionary because the statute expressly allows recovery of “all or part” (전부 또는 일부). The Long-Term Care Insurance Act contains no such qualifier — and the Supreme Court has now confirmed that this difference is legally significant.
| Statute | Legal Character of Recovery Order | Key Authority |
|---|---|---|
| Long-Term Care Insurance Act, Art. 43(1)(4) | Bound act — full recovery mandatory | Supreme Court 2024Du55723 (Mar. 12, 2026) |
| National Health Insurance Act, Art. 57(1) (pre-2023) | Discretionary act — partial recovery possible | Supreme Court 2015Du39996 (Jun. 4, 2020) |
5. What Should Care Facility Operators in South Korea Do Now?
This ruling has immediate practical implications for any operator running a long-term care facility in South Korea without a hygiene worker on staff. Here are the steps to take.
① Audit Your Laundry Arrangements Today
If your facility has an outsourcing contract but any category of laundry — personal clothing, therapy towels, incontinence pads — is being handled on-site, you are at risk. The operative question after this ruling is simple: does every item of laundry leave the premises? If the answer is no, you are not in compliance.
② Check Employment Contracts for Laundry Duties
In this case, the care workers’ employment contracts explicitly recorded their laundry responsibilities. This documentation became key evidence against the operators. Review all employment contracts and ensure that no laundry duties are assigned to care workers or other staff.
③ If Residents Complain About Contractor Quality, Change the Contractor
The Supreme Court specifically noted that switching to a specialist personal-garment laundry service was an available option the operators never considered. Resident welfare concerns about clothing damage are legitimate — but the answer is a better contractor, not in-house washing.
④ Prepare Documentation for On-Site Inspections
The NHIS conducts on-site inspections (현지조사). Maintain all outsourcing contracts, invoices, delivery records, and laundry manifests. If an inspection occurs, you will need to demonstrate that full outsourcing was in place for the entire period under review.
⑤ Note the 2026 Change to Bonus Clawback Rules
Under the pre-2024 rules applied in this case, a violation in any one staffing category triggered clawback of the additional-staffing bonus for all categories. The current rules (effective January 1, 2026) limit the clawback to the specific category that was in violation. This is a significant reduction in exposure for violations arising after the new rules took effect — but it offers no relief for the period at issue in this case.
Article 54 — General Principles for Benefit Cost Addition Calculation, Paragraphs 1 and 3
① A long-term care institution wishing to receive the additional-staffing bonus under Article 55 or the visiting care social worker placement bonus under Article 57 must satisfy the staffing standards under Article 48. However, where the institution fails to satisfy the staffing standard for some job categories, the additional-staffing bonus for job categories that do satisfy the standard shall still be recognized.
③ A facility care institution, day/night care institution, or short-term care institution to which the staffing-standard violation reduction under Article 66 applies shall not apply the additional-staffing bonus under Article 55 for the month in question with respect to the job category or categories in violation; provided that where three or more job categories are in violation, the additional-staffing bonus shall not apply to any category. However, where a nursing home has both a general ward and a dementia-specialist ward, or a day/night care institution has a dementia-specialist ward, a staffing-standard violation reduction in one ward shall not affect the additional-staffing bonus for care workers in the other ward.
※ Under the prior rules (Notice No. 2018-130) applicable to this case, a staffing violation in any one category caused the additional-staffing bonus for all categories to be withheld for that month — not just the category in violation. The current rules above represent a significant relaxation, but they do not apply retroactively to this case.
6. FAQ
The legal landscape for long-term care facility compliance in South Korea continues to evolve through Supreme Court rulings like this one. Atlas Legal advises nursing home operators, welfare corporations, and healthcare investors on regulatory compliance, administrative dispute resolution, and recovery order defense across South Korea’s long-term care sector.
※ The information in this post is provided for general informational purposes only and does not constitute legal advice. The applicable rules may vary depending on the specific facts of your situation. Please consult a qualified attorney before taking any action.