Recent Developments in Medical Marijuana Use in the Workplace – Part III

By David F.E. Banks
This article is the third of a three-part series reviewing recent legal developments in Hawaiʻi and across the country regarding the use of medical marijuana in the workplace. The first article reviewed the history of medical marijuana in Hawaiʻi and the applicability of federal and state disability discrimination laws to employees who are medical marijuana patients. The second article reviewed the implications of medical marijuana laws on drug testing in the workplace. This article will review the developing law regarding whether an employer will be required to cover the costs of medical marijuana for the purposes of workers’ compensation treatment.

Sixty-six applicants met the January 29th deadline to submit applications for the eight medical marijuana licenses in the State of Hawaiʻi. A number of celebrities (including Woody Harrelson), politicians and prominent attorneys are vying to “get in on the ground floor of an industry forecast to be worth millions.” Honolulu Star Advertiser (02/06/16).

The next important deadline is April 15, 2016, which is the date set for the Department of Health to issue the eight licenses. Hawaiʻi could have its first medical marijuana retail centers open as early as July 15, 2016; but more likely the end of the year, due to the production facility location approval process and marijuana’s three-month crop cycle.

Hawaiʻi legalized medical marijuana in 2000 but did not provide a legal way for patients to obtain the drug — except to grow it themselves or use caregivers to do so. The number of current marijuana card holders is 13,000, but state health officials project the number of cardholders to jump to 26,000 in short order. The industry is expected to create as many as 800 jobs and generate more than $68 million in sales in Hawaiʻi within the next few years. By comparison, the farm value for Hawaiʻi’s macadamia nut crop in 2014-2015 was $40 million, and coffee was $50 million.

Medical marijuana is not cheap. An eighth of an ounce, which produces three to seven joints (considered by many to be about a week’s supply), costs between $25 and $60 in mainland dispensaries. According to Mike Liszewski, policy director for Americans for Safe Access, such an amount may not last long for patients who use the drug regularly to control pain, sleep or stimulate appetite during chemotherapy. Those patients might spend $1,000 a month or more.

Health insurance hasn’t been a major focus for medical marijuana advocates so far. But it will be in the near future (Canada recently moved to allow insurance coverage for medical marijuana).

With medical marijuana being readily widely available within the next year, employers in Hawaiʻi are asking whether they will be required to cover the costs of medical marijuana for the purposes of prepaid healthcare and/or workers’ compensation treatment?

Use of Medical Marijuana in the Prepaid Health Insurance Area

Currently, Hawai`i Revised Statutes, Section 329-124, of the Medical Use of Marijuana Act (MUMA) provides that “[t]his part shall not be construed to require insurance coverage for the medical use of marijuana.” Similar to mainland health insurers, to date no prepaid health insurance provider in Hawai`i offers a policy that covers medical marijuana use.

The generally stated reason for this situation is the same reason Medicare and Medicaid do not include medical marijuana as part of their coverage: the U.S. Food and Drug Administration (FDA) has not approved any drug containing or derived from botanical marijuana. Health insurance companies do not cover drugs not approved by the FDA.

Use of Medical Marijuana in the Workers Comp Area

Section 386-21.7 of Hawaiʻi’s Workers Compensation Law provides that “notwithstanding any other provision to the contrary, immediately after a work injury is sustained by an employee and so long as reasonably needed, the employer shall furnish to the employee all prescription drugs as the nature of the injury requires.” The Act does not define the words “prescription” or “prescription drugs.”

MUMA provides that a physician can provide a “written certification” for a patient’s use of medical marijuana. “Written certification” means a statement signed by a qualifying patient’s physician, stating that in the physician’s professional opinion, the qualifying patient has a debilitating medical condition and the potential benefits of the medical use of marijuana would likely outweigh the health risks for the qualifying patient.

Currently, a written certification is not considered a “prescription,” and nothing in MUMA gives marijuana the same status as any legal “prescription drug.” Under federal law, it is currently illegal for a physician to write a prescription for medical marijuana, he or she can only recommend it for treatment.

The use of medical marijuana to treat difficult and unrelieved pain will almost inevitably become more widespread in the workers’ comp arena. If treating healthcare providers are willing to certify that a worker may use marijuana as part of a treatment plan under the MUMA, there will be increasing pressure to find that such treatment plans are both reasonable and necessary. If a treatment plan is reasonable and necessary, the argument will be that the employer and its workers compensation insurer are responsible for providing the treatment, even if it involves a controlled substance such as marijuana.

Recent Court Decisions in the Worker Comp Arena

As of the date of this article, there are no published cases or administrative rulings in Hawaiʻi on the subject of workers compensation coverage for medical marijuana. However, a few such cases working their way through the judicial systems of New Mexico and California.

In January 2015, the New Mexico Court of Appeals held that marijuana may be a “reasonable and necessary” medical treatment for a workplace injury; and that if a treatment is reasonable and necessary, the employer and its insurer are responsible for footing the bill. The employee’s treating physician did not recommend or advocate the use of medical marijuana in any way, but the court of appeals nevertheless found that the use of medical marijuana was “reasonable and necessary” because it had been certified by the physician for use under the state’s medical marijuana law. The court concluded that medical marijuana is reasonable and necessary, an employee must be reimbursed for the cost of the drug even though it is illegal under federal law. Maez v. Riley Industrial (Jan. 13, 2015).

The California case dealing with this issue is Cockrell v. Farmers Insurance, a lawsuit that got started in 2012 and is still pending. In Cockrell, the plaintiff requested compensation for his use of medical marijuana to help with chronic pain caused by a workplace accident. In 2012, the workers’ comp judge (WCJ) found that medical marijuana was reasonable and necessary under the state workers compensation law and that California’s Compassionate Use Act of 1996, which made medical marijuana legal in California, did not bar reimbursement. The WCJ ordered the employer’s workers comp carrier to reimburse Cockrell for the marijuana.

The workers comp carrier appealed to the California Workers’ Compensation Appeals Board (WCAB), arguing that the relevant sections of the California Code excused “health insurance providers” and “health care service plans” from having to pay for medical marijuana. The Board sent the case back to the WCJ to analyze whether a workers’ comp insurer was a “health insurance provider” but did rule that a workers’ comp carrier is not a “health care service plan.” According to the WCAB’s ruling , the judge will need to analyze whether or not there is any rational basis to treat occupational and non-occupational insurers differently with regard to reimbursement for medical marijuana held that California’s medical marijuana law.

Experts believe this case will make its way back to the WCAB, then to the Court of Appeal, and finally to the Supreme Court of California. No one can predict the Supreme Court’s verdict.

Minnesota Department of Labor Recognizes Marijuana an alternative to opioids

In Minnesota, the Department of Labor and Industry (DLI) oversees the administration of workers’ comp law. As part of its authority, the agency sets out rules addressing the criteria for treatment of the most common work-related injuries. The regulations, predictably, 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 removed medical marijuana prescribed under state law from the definition. In other words, medical marijuana is now a permissible and reimbursable form of medical treatment for workers’ comp claims in Minnesota.

Supporters of the law and the DLI’s new rule argue that marijuana can be a safe alternative to opioid painkillers. Opioid-based medication is one of the most common treatments for employees suffering from workplace injuries. Its use has been a longtime concern for employers and physicians based on the risk of addiction and abuse. Minnesota’s recently adopted rule approved the use of medical marijuana in recognition of the fact that it could allow workers to manage pain without a high risk of addiction or abuse.

Bottom Line for Employers. The use of medical marijuana to treat difficult and unrelieved pain will almost inevitably become more widespread in the workers’ comp arena. If treating healthcare providers are willing to certify that a worker may use marijuana as part of a treatment plan under MUMA, Hawai`i’s Department of Labor and Industrial Relations could follow Minnesota’s DLI’s lead and find that medical marijuana is a reimbursable form of medical treatment for workers’ comp claims in Hawai`i.

David F.E. Banks is a partner with Cades Schutte LLP. He is currently chair of both the Corporate Department and the Employment Law and Labor Relations Group. His employment law practice focuses on preventative counseling, strategic planning, legal compliance, labor and employment issues in M&A transactions, reductions in force, and assisting clients with drafting employment-related agreements, manuals, policies and procedures.