Appellate Division Requires Employer To Reimburse Employee’s Medical Marijuana Costs

The New Jersey Appellate Division recently held that a workers’ compensation judge can order an employer to reimburse its employees for their use of prescribed medical marijuana…

In Vincent Hager v. M&K Construction, the New Jersey Appellate Division held that a workers’ compensation judge can order an employer to reimburse its employee for the employee’s use of medical marijuana prescribed for chronic pain following a work-related accident.

Workers’ Compensation Dispute Over Medical Cannabis

In 2001, Vincent Hager (Hager), then 28 years old, was employed by M&K Construction (M&K).  While working on a construction site, a truck delivering concrete dumped its load onto him. Hagar underwent several surgeries and suffered from chronic injury-related pain. After relying on opioids for pain relief, Hagar and his treating physician determined that medical cannabis represented a viable alternative.  Hagar subsequently enrolled as a patient in the New Jersey medical cannabis program and began a course of treatment.

After M&K’s denied Hagar’s workers’ compensation claim, Hager filed suit. After several days of trial, later reached an agreement by which M&K was required to provide certain reimbursements and benefits.  However, the issues of whether Hagar was eligible for a recovery based on permanent disability and reimbursement of future medical treatment were left unresolved. The worker’s compensation judge ultimately found that Hager exhibited permanent partial disability and ordered M&K to reimburse Hagar for the costs of medical marijuana and any related expenses. In determining that M&K must reimburse Hager for his continued treatment with medical cannabis, the workers’ compensation judge rejected the testimony of M&K’s expert that Hager should “simply deal with his pain.” According to the judge, this position was “unacceptable as inhumane and contrary to the law concerning an employer’s obligation to treat.” The judge further noted that “if the only choice for the 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.”

Appellate Division Decision in Hager v. M&K Construction

M&K appealed and the Appellate Division affirmed, finding the use of medical marijuana 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 Appellate Division also found no legislative or legal barrier to an employer’s reimbursement of its employee’s expense for medical marijuana in a workers’ compensation setting.

The Appellate Division first rejected M&K’s argument that the federal Controlled Substances Act (CSA) preempts the MMA because it is impossible to comply with both statutes. In reaching its decision, the panel emphasized that “Congress has expressed its intent in the plain language of the CSA that it only preempts a state law that requires the performance of an action specifically forbidden by the federal statute…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…Because it is not physically impossible to comply with the CSA and the MMA, there is no positive conflict between these laws.”

The Appellate Division also rejected M&K’s argument that the order violates the CSA because it requires the employer to aid and abet the petitioner’s possession of an illegal substance. As described by the court, to obtain a conviction on an aiding and abetting theory, the government must prove a defendant associated himself with the venture, that he participated in it as in something that he wished to bring about, and that he sought by his action to make it succeed. According to the Appellate Division, M&K failed to establish the requisite intent and active participation necessary for an aiding and abetting charge. “The MMA does not require an employer to possess, manufacture or distribute marijuana – the actions proscribed by the CSA… Under the circumstances presented here, M&K is not an active participant in the commission of a crime,” the court wrote. “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.”

The Appellate Division also noted that M&K cannot abet a completed crime. “Here, M&K is not purchasing or distributing the medical marijuana on behalf of petitioner; it is only reimbursing him for his legal use of the substance,” the court wrote. “In addition, petitioner has obtained the medical marijuana before M&K reimburses him. M&K is never in possession of marijuana. Therefore, the federal offense of purchasing, possessing or distributing has already occurred.”

In response to M&K’s argument that compliance with the order exposes it to the threat of federal prosecution for aiding and abetting Hager in the possession of marijuana, the appeals court emphasized that M&K presented no evidence that it faces a credible threat of prosecution. “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,” the court wrote.

Key Takeaway

The Appellate Division’s decision in Hager v. M&K Construction is significant given that the issue of whether the MMA is preempted by the CSA in the context of a workers’ compensation case had not previously been addressed by any New Jersey state court. For both employers and employees, the decision gives much-needed clarity regarding the interplay between federal and state cannabis regulations.

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, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.

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:

• Five Key Cannabis Industry Legal Updates
• Federal Marijuana Legalization Bill, MORE Act, Advancing in US House
• Will Cannabis Legalization Be Decided by New Jersey Voters?

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.