Two recent developments may lead to New Jersey employers being required to reimburse the cost of medical marijuana for workers’ compensation recipients. In a case of first impression, New Jersey’s Appellate Division, in Vincent Hager v. M&K Construction, affirmed a July 2018 order handed down by a workers’ compensation judge requiring an employer to reimburse the cost of medical marijuana used to treat pain resulting from a workplace injury. Following this decision, the New Jersey legislature introduced A1708 , which would require all workers’ compensation carriers (in addition to private passenger automobile insurance carriers) to cover the costs of medical marijuana.

The Appellate Division’s decision is particularly important as an in-depth analysis of the interplay between New Jersey and federal laws addressing marijuana. Employers can view the decision as a guidepost for how future courts might evaluate marijuana as a reasonable and necessary treatment in workers’ compensation cases. However, the proposed legislation could change this evaluation, as workers’ compensation patients seeking reimbursement for medical marijuana would be required to first try an alternative treatment method.

Vincent Hager v. M&K Construction

The petitioner, Vincent Hager, a construction worker who was employed by M&K Construction, suffered a spinal injury in 2001 when a concrete delivery truck inadvertently dumped its load on him. After 15 years of treatment, including multiple surgeries, Hager developed an addiction to opioids, which he had been prescribed for the chronic pain caused by his injuries. Then, in April 2016, a doctor prescribed him medical marijuana. At trial, Hager testified that the marijuana provided partial relief of his symptoms and allowed him to remain opioid free. Based in large part on this testimony, the workers’ compensation judge granted Hager's request to be reimbursed for his medical marijuana expenses. M&K Construction appealed the workers’ compensation judge’s order and made several arguments to overturn it.

The Controlled Substance Act (CSA) Does Not Preempt New Jersey’s Jake Honig Compassionate Use Medical Cannabis Act (the Compassionate Use Act)

First, the construction company argued that the CSA preempts the Compassionate Use Act and the workers’ compensation order. In analyzing this argument, the court considered whether the CSA preempts the Compassionate Use Act in the context of a workers’ compensation judge ordering an employer to reimburse the cost of medical marijuana. In doing so, the court noted that the CSA expressly states that it preempts state laws where there is a “positive conflict” between the CSA and the state law such that “the two cannot consistently stand together.”

The court recognized the tension between the CSA and the Compassionate Use Act, but nonetheless determined that the CSA did not preempt the workers’ compensation order because M&K Construction could lawfully comply with the CSA while still reimbursing Hager's medical marijuana expenses.

The CSA classifies marijuana as a Schedule I drug, and accordingly under federal law, marijuana is not recognized as having any accepted medical use. As a Schedule I drug, it is a felony to manufacture, distribute or possess marijuana. On the other hand, under New Jersey law, the Compassionate Use Act permits the use of medical marijuana to treat certain illnesses or conditions, so long as the patient is registered as a medical marijuana user with the state.

In accordance with the Compassionate Use Act, the workers’ compensation judge recognized that medical marijuana was a medical treatment for Hager’s injuries and ordered M&K Construction to reimburse its costs. This order, the court found, did not create a positive conflict with the CSA because it did not require M&K Construction to manufacture, distribute or possess marijuana. In other words, because “reimbursement” is not a violation of the CSA, M&K Construction could comply with the order without violating the CSA.

The court further found that the order did not require M&K Construction to aid and abet Hager in violating the CSA because, although it is a logical necessity that Hager has to possess marijuana to have a need for its reimbursement, M&K Construction would lack the specific intent required to establish liability for aiding and abetting.

There Is No Legitimate Risk of Federal Prosecution When an Employer Reimburses the Cost of Medical Marijuana

Second, M&K Construction argued that it should not be required to reimburse Hager’s medical marijuana costs because it would unfairly put it at risk of federal prosecution under the CSA. The court found that there was no significant risk of federal prosecution to M&K Construction because, although a majority of states have enacted medical marijuana laws, there have been no federal prosecutions against employers or insurance carriers for the reimbursement of state-authorized medical marijuana treatment.

Workers’ Compensation Is Not Treated the Same as a Private Insurer Under the Compassionate Use Act

Third, M&K Construction argued that it should be treated the same as a private insurance carrier under the Compassionate Use Act, which states, “[n]othing in this Act shall be construed to require a government medical assistance program or private health insurer to reimburse a person for costs associated with the medical use of cannabis.” M&K Construction reasoned that as a workers’ compensation payor, it was analogous to a private health insurer and should be granted similar protections. The Appellate Division, however, found that because New Jersey’s Life and Health Insurance Code states that “[h]ealth insurance does not include workmen's compensation coverages,” that the legislature understood workers’ compensation and health insurance as separate and distinct under the law. Thus, the court reasoned, when the legislature used the term “private health insurer,” it did not intend for it to encompass workers’ compensation.

Marijuana is a Reasonable and Necessary Treatment for Chronic Pain

Finally, M&K Construction argued that, in Hager's case, medical marijuana was not a reasonable and necessary treatment. The Appellate Division rejected this argument and accepted the workers’ compensation judges’ finding, which was based on medical testimony presented by both sides, and found that medical marijuana was “necessary ‘to cure and relieve [Petitioner] of the effects of the injury and to restore the functions of the injured member or organ,’” the standard under the Workers’ Compensation Act. Particularly, the court found that marijuana was a reasonable and necessary treatment in comparison to opioids, the only alternative treatment option for Hager’s chronic pain.

A1708 Legislation

A1708 was introduced in the legislature on February 13, 2020. If passed, the bill would require all workers’ compensation carriers to reimburse the costs of medical marijuana. Consistent with the Compassionate Use Act, A1708 would not affect government medical assistance programs or private health insurance carriers.

This legislation would memorialize the Appellate Division’s holding that workers’ compensation carriers should not be treated the same as private health insurance carriers under the Compassionate Use Act.

Additionally, A1708 would require patients seeking medical marijuana reimbursement to suffer from a “debilitating medical condition” and to have attempted at least one other medication or treatment that was unsuccessful in treating such condition. While this additional requirement is in line with the court’s reasoning in Hager, it goes one step further and places an added burden on individuals who are seeking medical marijuana reimbursement that other workers’ compensation patients do not face.

The bill does not address whether the reasonable and necessary standard will still apply to workers’ compensation carriers' challenges to requests for reimbursement.

Implications

The Appellate Division’s decision and introduction of A1708 reflect New Jersey’s continuing public shift in favor of acceptance of the use of medical marijuana. As we previously reported , the legislature amended the Compassionate Use Act in July 2019 to grant employees protection from adverse action from their use medical marijuana.

The decision does not mean that employers will be required to reimburse medically prescribed marijuana for work-related injuries or illnesses in every instance. Indeed, the court focused on whether marijuana was a reasonably necessary treatment for Hager’s chronic pain, in light of the fact that the only alternative was opioid use. Accordingly, in the future, employers may be able to challenge the reimbursement of medical marijuana when alternative treatments are available that are as effective as (or more effective than) marijuana and/or whose side effects are comparable to (or less serious than) the side effects associated with marijuana use.

Further, if A1708 becomes law, all workers’ compensation patients seeking reimbursement for medical marijuana use will also have to establish that they first tried another medical treatment and that the treatment was unsuccessful in aiding their debilitating medical condition.

We will continue to monitor and report on New Jersey’s treatment of medical marijuana.

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