The Impact of Marijuana

WC Payers More Likely To Face Reimbursement Requirements for Pot

A New Mexico appeals court decision ordering an employer and insurer to reimburse an injured worker for his medical marijuana is believed to be the first such court ruling in the nation.
By: | July 8, 2014

Peter D. White is compiling receipts and other financial transactions to determine how much his client has spent on medical marijuana since a state workers’ comp judge OK’d reimbursement last year. Once done, the New Mexico attorney will submit the information for payment of past and ongoing use of the drug to the employer and insurer — with the backing of the New Mexico Court of Appeals.

The case has drawn a plethora of comments and reactions from workers’ comp practitioners. While the case may not generate major changes in the near future, the issue is not going away anytime soon.

“To be honest, it’s a matter of timing as much as anything,” White said of the ruling. “It’s the tide in this country.”

White noted that the U.S. House of Representatives recently voted to restrict the Drug Enforcement Administration from using funds to enforce the federal ban on the drug against state-licensed medical marijuana patients and providers.

“I think this [case] would certainly serve as a model,” he said. “I would hope that would be the trend.”

The case, Gregory Vialpando v. Ben’s Automotive Services and Redwood Fire & Casualty, involved a worker whose lower back injury in 2000 resulted in multiple surgical procedures. All parties to the case ultimately agreed he had a 99 percent permanent partial disability.

Last year, a New Mexico workers’ compensation judge found that Vialpando was qualified to participate in New Mexico’s Medical Cannabis Program authorized by the state’s Compassionate Use Act. The WCJ also ordered his employer and the insurer to reimburse the worker for the medical marijuana. The appeals court upheld the decision.

Several factors likely contributed to the ruling, White and others said. One of the factors is that another client of White’s has been getting medical marijuana for the past four years. In that case, the workers’ comp judge ordered the employer — the state of New Mexico — to reimburse the injured worker for the drug rather than pay for it outright.

“We used the order from his case and think it mattered that there had not been any issues that had arisen,” White said.

A unique aspect of the case is that there was no divergence of medical opinion as to whether the claimant would benefit from the use of medical marijuana.

The court also considered medical marijuana more of a service than a medication. “In New Mexico, workers’ comp physicians do recommend a lot of things that are not medications such as therapy and acupuncture,” White said. “The idea being that this is part of the overall picture of reasonable and necessary medicine.”

In its appeal, the employer said the WCJ’s order was illegal and unenforceable under federal law, and that the state act and regulations promulgated pursuant to it do not recognize reimbursement for medical marijuana. But the appeals court disagreed (see box).

“I kind of felt it gave a little short shrift to the issue,” said Albert B. Randall Jr., a Baltimore-based attorney with Franklin & Prokopik PC. “Rather than the court trying to find out what was the correct answer, it pointed to the attorney saying ‘if you didn’t raise the issue or supply enough information, we’re going to rule the way we are going to rule.”

Looking Into the Future

If the same scenario were presented again, Randall does not necessarily believe there would be a different outcome. “I find it hard to believe that the Court of Appeals will rule on the constitutionality of the Compassionate Use Act within the context of a workers’ compensation claim; rather, I think that would have to be a separate challenge addressed by the court.”

Other attorneys were not so sure. “The employer apparently did an inadequate job of making the argument because the appellate court could not identify any federal law that was being violated,” said Colorado attorney Ronda K. Cordova of Ritsema & Lyon PC. “This seems like an argument that could be explored further.”

Another workers’ comp attorney concurs that a more definitive defense could have been mounted. James Pocius, a shareholder with Marshall Dennehey Warner Coleman & Goggin in Philadephia, believes a criminal attorney or workers’ comp attorney with a more extensive background in other areas of the law could determine that requiring reimbursement would make the employer an accomplice by violating a federal law.

“If the federal argument is not made more clearly, you could have another state make the same decision,” Pocius said. “I think it will be incumbent on the person with the next case to argue it correctly.”

As to whether the ruling will prompt similar litigation, Randall believes it will open the flood gates. “There is no question any savvy claimant’s attorney will use this in support of his argument,” he said. “I think this is going to be a groundbreaking case and likely will be cited throughout the country in support of the use of medical marijuana in workers’ compensation claims.”

This is the first of a two-part series exploring the potential legal and practical ramifications of the order. In part two, experts weigh in on the likelihood the case may spur more requests for medical marijuana in the workers’ comp system and issues surrounding reimbursement.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]