Appeals Court Rules that New Jersey Company Must Cover Employee’s Medical Cannabis Costs

With worker’s compensation ordered to cover medical cannabis, will private insurers follow suit in New Jersey and beyond?

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An appeals court in New Jersey has ruled that an employer must reimburse a former employee for the cost of medical cannabis in a move that could have far-reaching effects for the industry.

In a ruling released Jan. 13, Superior Court Judge Heidi Willis Currier sided with Vincent Hagar, who was injured on the job in 2001 when a truck dumped concrete on him and left him unable to work.

Hagar was prescribed opioid painkillers as part of his recovery, which resulted in struggles with addiction, but Hagar was able to wean himself off the painkillers through the use of medical cannabis.

The costs associated with medical cannabis are generally not covered by insurance, however, due to federal prohibition, so Hagar was forced to cover the cost of his medication himself.

Hagar’s former employer, M&K Construction, denied his worker’s compensation claim for 15 years, according to court documents.

A worker’s compensation judge ruled in 2018 that Hagar had been injured on the job, and ordered M&K to reimburse him for the cost of medical cannabis and any related expenses, according to The Philadelphia Inquirer, but the company appealed, arguing that the federal Controlled Substances Act took precedence over New Jersey’s medical cannabis laws. The company also argued that it would be helping Hagar commit a crime if it covered his costs for cannabis, which is a Schedule I substance under the Controlled Substances Act.

These arguments did not persuade the appellate court, however; the court wrote that M&K was not purchasing or distributing the medical cannabis for Hagar, only reimbursing him for his legal use of it as a treatment for his injuries.

Courts in other states, such as Connecticut, New Hampshire and New Mexico, have also ruled that injured employees must be reimbursed for their medical cannabis costs, according to The Philadelphia Inquirer, but this marks the first ruling that dismisses employer’s arguments about running afoul of federal law.

Steve Schain, senior attorney at Hoban Law Group, views the New Jersey ruling as a monumental moment for the medical cannabis industry and its patients for other reasons, too; namely, that it may encourage private insurance companies—and perhaps even government insurance—to also cover medical cannabis.

“It’s not the first state to do it—I think there are six states that do it—but I can’t overstate the importance of all this,” he told Cannabis Business Times. “With Jersey accepting this, it’s yet one more state reimbursing for worker’s compensation, and it adds many more grains of sand to the scale to shift private health insurers and, ultimately, government health insurance to begin covering treatment with medical marijuana.”

Schain added that New Jersey is, in many ways, a bellwether state. “I think they’re a big influencer on law across the nation.”

Another major implication of this case, he said, is that it could help bolster medical cannabis programs across the country that have started to decline since the legalization of adult-use sales.

“Once you get adult-use, it tends to cross the medical market,” Schain said. “It’s just easier to go to adult-use. You can just show up—you don’t have to have a [medical] card, you don’t have to have a qualifying condition [and] you don’t have to see a doctor. On the medical side, it’s much more restrictive. With this development with reimbursement for medical coverage, it’s going to help out the medical programs."

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