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Appellate Division Holds New Jersey Employer Must Reimburse Injured Worker for Cost of Medical Marijuana

By on January 15, 2020 in Other with 0 Comments

This week the New Jersey Appellate Division decided Hager v. M&K Construction, A-0102-18T3 (App. Div. January 13, 2020).  The issues of whether an employer must reimburse an injured worker for the costs of medical marijuana and whether such a court order would violate federal law have been the source of much controversy in the Division.  Hager is the first published opinion in our state to address these issues.

The facts can be briefly summarized as follows:  petitioner, then 28-years-old, was injured in 2001 working on a construction site for M&K Construction when a truck delivering concrete dumped its load onto him.  M&K denied the claim and stated that it was investigating the matter.  For reasons not made clear in the reported decision, the trial did not begin in workers’ compensation until 15 years later in November 2016.   During the course of the trial M&K stipulated that petitioner had sustained a compensable accident. However, the employer opposed petitioner’s claim for total and permanent disability and opposed petitioner’s request to reimburse him for the cost of marijuana under the New Jersey Compassionate Use Medical Marijuana Act (MMA).

During the many years since the date of injury, Mr. Hager endured chronic disabling pain and underwent multiple unsuccessful lumbar surgeries.  At trial he described his pain as starting in his lower back and radiating down his entire left leg to his toes.  He said that the pain affected every activity of his daily life and that he could only stand for a half hour to an hour at a time.  Lying down lessened the pain only marginally. He became dependent on the use of opiates.  He sought care with a chiropractor.  At various points over the years he was prescribed Oxycontin, Oxycodone, Valium, Lyrica and other pain medications. 

Petitioner saw Dr. Joseph Liotta in April 2016, who diagnosed him with post-laminectomy syndrome with chronic pain from a spinal nerve injury.  Petitioner was also experiencing side effects from his use of Oxycodone.  Dr. Liotta provided the required documentation for petitioner’s enrollment into the New Jersey MMA, providing him with a prescription for medical marijuana.  He opined at trial that petitioner will need marijuana to manage his pain for the rest of his life.  He also said that chemical addiction to marijuana is very weak compared to the more potent addiction to opioids, which can lead to death and many other severe side effects.

At trial petitioner testified that as a result of the use of medical marijuana, he was able to stop taking Oxycodone.  He felt that it provided some relief from incessant pain, and it helped him sleep better. He paid $616 per month out-of-pocket for the prescription of two ounces of medical marijuana.  During trial, petitioner sought a court order requiring M&K to reimburse him for the costs of the medical marijuana.  M&K argued that such an order would violate federal law.

Three other medical experts testified at trial besides Dr. Liotta.  Dr. Cary Skolnick testified for petitioner and opined that petitioner was 100% totally and permanently disabled as a functioning unit with a 65% permanent partial disability for the lumbar spine.  Dr. Gregory Gallick testified for respondent stating that petitioner, who was then in his 40s, could perform light duty work or drive a car and was not totally disabled.  He opined that petitioner had a 12.5% permanent partial disability.  

Dr. Brady, a pain medicine doctor, also testified for respondent.  He is certified to prescribe medical marijuana in New Jersey but has never done so thus far for any patient.  He testified that users of medical marijuana can experience “cognitive difficulties, problem solving cognition, short term memory loss, . . . hallucinations,” as well as an increased risk of lung cancer.  He testified that users of opioids could experience “addiction, tolerance, overdose, death, constipation, depression and sexual dysfunction.”  He said that marijuana is less addictive than opioids, and he felt petitioner was addicted to opioids and may be addicted to marijuana.  He felt that the use of marijuana had not been shown in the literature to be helpful to people with non-malignant back pain.  In his opinion, the only measure petitioner could take for his back pain was physical therapy.

The Judge of Compensation ruled that petitioner was disabled to the extent of 65% of partial total with 50% attributed to his orthopedic condition and 15% attributed to the effects of medical marijuana.  The judge ordered M&K to reimburse petitioner for the costs of medical marijuana and related expenses.  The judge was not persuaded by Dr. Brady’s position that petitioner should “simply deal with his pain.”  The Judge commented that this position was “unacceptable as inhumane and contrary to the law concerning an employer’s obligation to treat.”  The judge further noted that the only treatment choices outlined by the experts were opioids and/or marijuana.  “This Court concludes that, if the only choice for petitioner is between opioids and marijuana, then marijuana is the clearly indicated option.  Both modalities present significant downsides in terms of adverse consequences and risks, but a comparison leads inescapably to a conclusion that marijuana is the appropriate option.”

Both sides appealed aspects of the decision.  Regarding the issues raised by M&K, the Appellate Division addressed five separate arguments:

1) Does the Controlled Substance Act (CSA) which makes it a crime to manufacture, possess or distribute marijuana, preempt the New Jersey MMA?

The Appellate Division disagreed with the employer’s argument that it was impossible to comply with the MMA without violating the CSA.   The Court began by observing that the MMA decriminalized the possession of a certain amount of marijuana for medical use.  One of the Act’s purposes was to protect from arrest and criminal penalties those patients who use cannabis to alleviate suffering.  The Court noted that the MMA shields qualifying users of medical marijuana from civil penalties and provides an affirmative defense to patients who are properly registered under the statute but are nevertheless arrested and charged with possession of marijuana.

The Court reviewed two state decisions in New Mexico and Maine dealing with the question of whether their medical marijuana legislation was preempted by the CSA.  New Mexico held it was not preempted, but Maine held that it was preempted.  The Appellate Division found that the CSA only preempts a state law that requires the performance of an action specifically forbidden by the federal statute.  The CSA makes the possession, manufacture, and distribution of marijuana a criminal offense, “But an employer’s reimbursement of a registered MMA patient’s use of medical marijuana does not require the employer to commit those offenses.”  The Court added:

The MMA does not require an employer to possess, manufacture or distribute marijuana – the actions proscribed by the CSA.  Because it is not physically impossible to comply with the CSA and the MMA, there is no positive conflict between the laws.

2) Does the MMA violate the CSA by aiding and abetting in the commission of a crime?

The Court considered the argument that the MMA puts M&K in the position of aiding and abetting a crime.  The Appellate Division gave this argument short shrift:

Under the circumstances presented here, M&K is not an active participant in the commission of a crime.  The employer would be complying with an order requiring it to reimburse a person for the legal use of medical marijuana under this state’s law. M&K has not established the requisite intent and active participation necessary for an aiding and abetting charge.

The Court also said that “one cannot aid and abet a completed crime.” Petitioner would have already obtained the medical marijuana before M&K would reimburse him.

3) Does compliance with the court order expose M&K to the threat of federal prosecution?

The Court addressed this argument by observing that there has been tolerance from the federal government of state medical marijuana laws.  Since December 2014, “congressional appropriations riders have prohibited the use of any Department of Justice funds that prevent states with medical marijuana programs . . . from implementing their state medical marijuana laws.”  The Court said:  “Despite the enactment of medical marijuana legislation by the majority of states, M&K could not apprise this court of any federal prosecution against an employer or insurance carrier for its reimbursement of authorized medical marijuana treatment.”

4) Should a workers’ compensation insurer be treated the same under the MMA as a private health insurer?

N.J.S.A. 24:6I-14 states, “Nothing in the MMA 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, …” The Appellate Division noted that under Title 17, in defining “health insurance,” the Legislature expressly stated that “health insurance does not include workers’ compensation coverage.” N.J.S.A. 17B: 17-4.  The Court said that only two categories of entities may not be required to reimburse the costs of medical marijuana:  a government medical assistance program or private health insurer.   In essence, the Court held that this argument failed because workers’ compensation is not considered under the law to be equivalent to a private health insurer.

5) Can medical marijuana be considered reasonable and necessary under the New Jersey Workers’ Compensation Act?

The Appellate Division considered a number of precedential cases that have liberally construed medical treatment that has helped patients cope with chronic pain.  In this case the Court observed that Dr. Liotta felt petitioner’s pain was irreversible and that he would need to manage pain for the rest of his life.  The Court concluded that the use of medical marijuana was reasonable and necessary for the treatment of petitioner’s chronic pain under the circumstances of this case.

The Hager case is now the leading case in the State of New Jersey on the issue of whether the MMA is preempted by the CSA and must be followed by judges in the Division of Workers’ Compensation.  If the employer seeks certification from the Supreme Court, it is highly likely that the Court will grant certification.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, a shareholder and co-chair of Capehart Scatchard's Workers' Compensation department, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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