Defense Litigation Insider Helping you navigate a clear path through complex litigation.

Medical Marijuana and Workers’ Compensation Coverage

Posted in Employment Litigation

This article is Part Four of our Medical Marijuana and the Workplace: Recent Decisions from New England Courts Provide Significant Protections to Medical Marijuana Patient Employees Five-Part Series. See Parts One, Two, and Three for reference.

As the qualified use of medical marijuana to treat illnesses becomes more common and courts become more willing to extend legal protections to medical marijuana patient/employees, workers’ compensation is likely to become another focus of litigation.  One potential argument would be that if an employees’ healthcare provider certifies, recommends, or prescribes (depending on the character of the medical marijuana act at issue) the use of medical marijuana as part of a course of treatment, the treatment is reasonable and necessary, and employers and their respective workers’ compensation insurer are therefore responsible for providing it.

Few courts have addressed this issue, but those opinions that exist have tended to require employers to reimburse employees who have incurred workplace injuries and seek reimbursement for medical marijuana that is purchased to treat the underlying injury (as long as they are qualified patients and a workers’ compensation court determines that the treatment is reasonable and necessary).  In one of the few cases on the subject, the New Mexico Court of Appeals held that marijuana may be a “reasonable and necessary” medical treatment for a workplace injury, and if a treatment is reasonable and necessary, the employer and its insurer are responsible for paying the bill.  See Vialpando v. Ben’s Automotive Services, 2014-NMCA-084, 331 P.3d 975 (N.M. Ct. App.), cert. denied331 P.3d 924 (N.M. 2014); see also Lewis v. American Gen. Media, 355 P.3d 850, 856-58 (N.M. App. 2015) (rejecting challenge to reimbursement for medical marijuana under Workers’ Compensation Act based on federal preemption); cf. Maez v. Riley Indus., 347 P.3d 732, 735-37 (N.M. App. 2015) (finding sufficient evidence that medical marijuana was medically necessary).

In Vialpando, the claimant, George Vialpando, injured his back in a work-related accident in 2000 while employed by Ben’s Automotive Services (“Ben’s Automotive”), and was not able to find relief through traditional drugs and treatment. His doctor opined that Mr. Vialpando had “some of the most extremely high intensity, frequency and duration of pain, out of all of the thousands of patients I’ve treated within my seven years practicing medicine.”  Thereafter, in 2013, Vialpando was certified by his healthcare providers to become a patient in the New Mexico medical marijuana program. The program allows a qualifying patient to purchase marijuana after having secured a certification from a New Mexico licensed health practitioner that the subject individual is suffering from a debilitating medical condition and that the potential health benefits of the medical use of marijuana would likely outweigh the health risks posed by its use.

Vialpando then applied for approval from the workers’ compensation court to have the medical marijuana paid for by his former employer.  The Court approved his application, determined that the treatment was, in fact, reasonable and necessary, and ordered Ben’s Automotive to pay for the marijuana.  Ben’s Automotive appealed the Workers’ Compensation Court decision to the New Mexico Court of Appeals.

In its appeal, Ben’s Automotive argued that New Mexico’s Workers’ Compensation Act did not expressly authorize reimbursement for the cost of purchasing medical marijuana.  The appellant also contended that the Workers’ Compensation Judge’s determination violated federal law (due to marijuana’s classification as a Schedule I controlled substance).  The Court was not persuaded by either argument.

First, the Court of Appeals found that New Mexico’s Workers’ Compensation Act does not prohibit a healthcare provider from certifying that an injured worker should receive medical marijuana in the course of the treatment for his workplace injury. As long as the treatment is “reasonable and necessary” and approved by a workers’ compensation judge, the employer is responsible for paying for it under the Act.

Second, the Court found that federal law does not preclude repayment for medical marijuana under New Mexico’s Workers’ Compensation Act.  Ben’s Automotive had argued that in requiring a former employer to reimburse Mr. Vialpando for the purchase of his medical marijuana, the Worker’s Compensation Court’s order was forcing Ben’s Automotive to violate federal law, which (respondent argued) should preempt New Mexico law.  The Court of Appeals disagreed and determined that there was no direct conflict between federal law and New Mexico’s medical marijuana act.

Outside of New Mexico, administrative actions taken in California and Minnesota have also facilitated reimbursement for medical marijuana under workers’ compensation law.  First, in Cockrell v. Farmers Insurance and Liberty Mutual Insurance Company2012 Cal. Wrk. Comp. P.D. LEXIS 456, a California workers’ compensation court held that the use of medical marijuana was reasonable and necessary under the state workers’ comp law, and that the Compassionate Use Act of 1996, which legalized medical marijuana in California, did not bar reimbursement.  In 2015, the workers’ compensation insurance carrier appealed this decision to the California Workers’ Compensation Appeals Board, contending that certain sections of California Code excused “health insurance providers” and “health care service plans” from having to pay for medical marijuana. The Appeals Board ruled that a workers’ compensation insurance carrier is not a “health care service plan” but sent the case back to the court below to analyze whether a workers’ compensation carrier insurer is a “health insurance provider.”   According to the Appeals Board, the workers’ compensation court will need to analyze whether there is any rational basis to treat occupational and non-occupational insurers differently with regard to reimbursement for medical marijuana under California’s medical marijuana law.  The case has yet to return to the Appeals Board; however, it is likely that this case will end up in the California Court of Appeal, and eventually the Supreme Court of California.

In Minnesota, regulations promulgated by the Department of Labor and Industry (“DLI”) address the criteria for treatment of the most common work-related injuries, and do not permit the use of “illegal substances” as part of workplace injury treatment.  In July 2015, the DLI issued new rules that redefine “illegal substance” and specifically exclude from the definition medical marijuana prescribed under state law.  Thus, medical marijuana is now a permissible and reimbursable form of medical treatment for workers’ comp claims in Minnesota.

In Rhode Island and Massachusetts, state legislatures or administrative agencies may address whether medical marijuana is reimbursable under workers’ compensation, as the DLI did in Minnesota.  Regardless, we expect to see the issue litigated.  Based on the Massachusetts Supreme Judicial Court’s opinion in Barbuto, see Parts 1 and 2, and the Rhode Island Superior Court’s decision in Callaghan, see Part 3, it is hard to imagine that workers compensation courts in either of these jurisdictions would deviate materially from the opinion of the New Mexico Court of Appeals in Vialpando.  In other words, if a licensed physician certifies that the treatment is reasonable and necessary; employers may be required to reimburse employees for the expense of medical marijuana.  Again, employers will want to consult with counsel on how to adapt their practices to this changing environment.

Interestingly, the medical marijuana industry is facing a different workers’ compensation-related challenge in Hawaii.  Hawaiian Employers Mutual Insurance Co., the largest workers’ compensation insurer in Hawaii, announced in June that on the advice of counsel, it would soon be canceling its workers’ compensation insurance policies with marijuana growers.  The Company explained that “a strict interpretation of the conflicting state and federal laws would expose companies doing business with medical marijuana dispensaries to criminal prosecution under federal law.”  Hawaiian Employers Mutual initially wrote workers’ compensation policies to the dispensaries in 2016, after the state began approving licenses for medical marijuana dispensaries, apparently because of what the insurer characterized as a lack of clarity in federal and state law concerning the legality of medical marijuana. Hawaii first legalized the use of medical marijuana in 2000, but no marijuana dispensary has presently commenced operations in Hawaii.  Because Hawaii state law requires employers to provide minimum levels of workers’ compensation coverage for all employees, cancellation of workers’ compensation policies could significantly impair the ability of medical marijuana dispensaries to begin operations.  Similar actions in other states could effectively neuter the medical marijuana industry, regardless of whether state law favors reimbursing prescribed marijuana as a reasonable and necessary expense.