New Jersey Employers Can Be Required to Pay for Employees’ Medical Cannabis

A New Jersey construction company must foot the bill for an injured employee’s medical cannabis under a recent decision by the New Jersey Supreme Court...

A New Jersey construction company must foot the bill for an injured employee’s medical cannabis under a recent decision by the New Jersey Supreme Court. In Hager v. M&K Construction, the state’s highest court ruled that medical cannabis is a reimbursable as reasonable or necessary treatment under the New Jersey Workers’ Compensation Act (WCA). The court further found that the New Jersey Jake Honig Compassionate Use Medical Marijuana Act (Compassionate Use Act) is not preempted and that M&K Construction did not face a credible threat of federal criminal aiding-and-abetting or conspiracy liability.

Hager’s Workers’ Compensation Claim and Participation in New Jersey’s Medical Cannabis Program

In 2001, Vincent Hager (Hager), then 28 years old, was employed by M&K Construction (M&K) and working on a construction site, when a truck delivering concrete dumped its load onto him. Hagar underwent several surgeries; however, they were unsuccessful in alleviating his pain. After relying on opioids to treat his chronic pain, Hagar was prescribed medical cannabis under the Compassionate Use Act.

After M&K’s denied his workers’ compensation claim, Hager filed suit. After several days of trial, M&K reached an agreement with Hager regarding medical bills, reimbursement for out-of-pocket medical expenses, temporary disability benefits, and third-party lien credits.  The issues remaining for determination by the workers’ compensation judge were the award of permanent disability and future medical treatment. Ultimately, a workers’ compensation judge found that Hager exhibited permanent partial total disability of 65% and issued an order directing M&K to reimburse petitioner for the costs of medical cannabis and any related expenses (Order).

M&K appealed the Order and the New Jersey Appellate Division affirmed, finding that the use of medical cannabis was reasonable and necessary given Hager’s “attempts to unsuccessfully alleviate the pain with multiple surgeries and medical modalities, and the validated efficacy of the prescribed medical marijuana.” The court also found no legislative or legal barrier to an employer’s reimbursement of its employee’s expense for medical cannabis in a workers’ compensation setting.

“Because we conclude the [workers’ compensation] order does not require M&K to possess, manufacture or distribute marijuana, but only to reimburse petitioner for his purchase of medical marijuana, we discern no conflict between the CSA and MMA,” the panel said. “Furthermore, M&K’s compliance with the order does not establish the specific intent element of an aiding and abetting offense under federal law.”

NJ Supreme Court Rules Employer Must Cover Hager’s Medical Cannabis Costs

M&K appealed again, but the New Jersey Supreme Court unanimously affirmed the Appellate Division decision upholding the Order and directed M&K to reimburse costs for, and reasonably related to, Hager’s prescribed medical cannabis.

In reaching its decision, the court first addressed whether M&K is exempt from reimbursing Hager for his medical cannabis under the Compassionate Use Act. It concluded that the provision of the Compassionate Use Act stating that reimbursement for medical cannabis costs is not required of “a government medical assistance program or private health insurer” did not exempt M&K. In reaching its conclusion, the court read “or” as limiting the applicability of the exception to only those two kinds of entities, an interpretation it emphasized was supported by the definition of “Health insurance” in the Life and Health Insurance Code, which unambiguously states “[h]ealth insurance does not include workmen’s compensation coverages.”

“If the Legislature sought to depart from that general definition and treat workers’ compensation and private health coverage in the same manner under the Compassionate Use Act, it could have expressly included workers’ compensation insurance in its exhaustive list or broadened the exception more generally, as other states have explicitly done,” Justice Lee Solomon wrote.

The Supreme Court next turned to M&K’s argument that medical cannabis is not a “reasonable and necessary treatment” for which the WCA provides coverage. As the court explained, a mere showing that the injured worker would benefit from the treatment is not enough. Nevertheless, palliative care may be properly authorized under the WCA, and workers who are permanently disabled and beyond hope of being cured are still entitled to continued treatment and services.

“[M]arijuana’s ability to relieve pain has been expressly recognized by the Legislature in the Compassionate Use Act. N.J.S.A. 24:6I-2(a), -3,” Justice Solomon wrote. “Thus, competent evidence relating to medical marijuana’s ability to restore some of a worker’s function or, as in Hager’s case, relieve symptoms such as chronic pain and discomfort, is sufficient to find such a course of treatment appropriate.”

Finally, the Supreme Court considered whether the federal Controlled Substances Act (CSA) extinguished M&K’s obligations under state law. The court concluded that because the U.S Department of Justice is currently precluded from interfering with states’ medical cannabis programs, there was no “positive conflict” between the CSA and the Compassionate Use Act that would invalidate the court’s Order.

The Supreme Court also rejected M&K’s contention that its compliance with the Order would subject it to aiding-and-abetting and conspiracy liability under federal law on the theory that it would be assisting in Hager’s possession of cannabis, contrary to the CSA. As the court noted, M&K does not face a “credible” threat of federal criminal prosecution. “Reimbursing Hager under court mandate can hardly be interpreted as M&K ‘elect(ing)’ to aid in Hager’s possession of marijuana, contrary to federal law,” Justice Solomon wrote. “Rather, it is being compelled to do so by the Order.”

Key Takeaway

The New Jersey Supreme Court’s decision answers key questions regarding the Compassionate Use Act, confirming that medical cannabis can qualify as a “reasonable and necessary treatment” and that the Act is not preempted by the CSA. For both employers and employees, the decision gives much-needed clarity going forward. 

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, Lawrence Teijido, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

• With the CRC Operational, When Will Recreational Cannabis Licenses Be Available in New Jersey?
• Understanding How New Jersey’s Recreational Cannabis Law Impacts Employers
• Will New York Legalize Recreational Marijuana This Week?

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.