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Tuesday, April 13, 2021

NJ Supreme Holds Employers Responsible for Workers' Compensation Medical Marijuana Costs

The NJ Supreme has recognized that the workers’ compensation system has a legislative mandate to provide the safest medical care to cure and relieve occupational injuries. The Court acknowledged both state and Federal trends to provide non-addictive and non-fatal pain relief in place of the dangerous opioids. 


The intent that embraced the creation and development of the social insurance system has given the Court a rational and logical basis, consistent with public policy, to order medical marijuana for palliative care.

The syllabus prepared by the Office of Clerk is as follows:

In this appeal the Court considers the challenges brought by defendant M&K Construction (M&K) with regard to a workers’ compensation court’s order (the Order) that M&K reimburse plaintiff Vincent Hager for the ongoing costs of the medical marijuana he was prescribed after sustaining a work-related injury while employed by M&K. Specifically, M&K contends that New Jersey’s Jake Honig Compassionate Use Medical Cannabis Act (Compassionate Use Act or the Act) is preempted as applied to the Order by the federal Controlled Substances Act (CSA). Compliance with the Order, M&K claims, would subject it to potential federal criminal liability for aiding-and- abetting or conspiracy. M&K also asserts that medical marijuana is not reimbursable as reasonable or necessary treatment under the New Jersey Workers’ Compensation Act (WCA). Finally, M&K argues that it fits within an exception to the Compassionate Use Act and is therefore not required to reimburse Hager for his marijuana costs.
Hager suffered a back injury while working for M&K in 2001. He underwent surgery, but his pain persisted and he continued to take prescribed opioid medication. In April 2016, Hager began treating with a hospice and palliative care physician, who enrolled Hager in New Jersey’s medical marijuana program both as an alternative pain treatment and as a means to wean him off of opioids. Hager’s marijuana prescription cost him more than six hundred dollars each month.At a worker’s compensation trial, Hager testified personally, and both he and M&K presented testimony by medical experts. Identifying medical marijuana and opioids as the only two choices for pain management, the court concluded that “marijuana is the clearly indicated option” and ordered M&K to reimburse the costs of Hager’s medical marijuana and reasonably related expenses. The compensation court rejected M&K’s claim that, like a private health insurer or government medical benefit program, M&K could not be required to reimburse the cost of medical marijuana.
The Appellate Division affirmed, 462 N.J. Super. 146, 153 (App. Div. 2020), and the Court granted M&K’s petition for certification, 241 N.J. 484 (2020).

HELD: M&K does not fit within the Compassionate Use Act’s limited reimbursement exception, and Hager presented sufficient credible evidence to the compensation court to establish that the prescribed medical marijuana represents, as to him, reasonable and necessary treatment under the WCA. Finally, the Court interprets Congress’s appropriations actions of recent years as suspending application of the CSA to conduct that complies with the Compassionate Use Act. As applied to the Order, the Court thus finds that the Act is not preempted and that M&K does not face a credible threat of federal criminal aiding-and-abetting or conspiracy liability. M&K is ordered to reimburse costs for, and reasonably related to, Hager’s prescribed medical marijuana.

1. The Court first considers whether M&K is exempt from reimbursing Hager for his medical marijuana under N.J.S.A. 34:6I-14. The Compassionate Use Act, N.J.S.A. 24:6I-1 to -30, was enacted by the New Jersey Legislature in 2010 in recognition of the beneficial uses of marijuana and to protect authorized individuals from criminal and civil penalties. Of relevance to the present matter, the Act provides that reimbursement for medical marijuana costs is not required of “a government medical assistance program or private health insurer.” N.J.S.A. 24:6I-14 (emphasis added). (pp. 13-15)

2. Based that plain language, the Court agrees with the compensation court’s determination, affirmed by the Appellate Division, that N.J.S.A. 24:6I-14 does not apply to M&K. The Court reads “or” as limiting the applicability of the exception to only the two kinds of entities named, in accordance with general principles of statutory interpretation and the Act’s recognition of the potential health benefits of medical marijuana. See N.J.S.A. 24:6I-2(e). That reading, further, is 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.” N.J.S.A. 17B:17-4. In the Court’s view, 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. The Court concludes that the Legislature clearly did not intend for workers’ compensation insurers to be treated as private health insurers or government medical assistance programs under the Compassionate Use Act. M&K is therefore not exempt from its reimbursement obligation. (pp. 15-18)

3. The Court next considers M&K’s argument that medical marijuana is not a “reasonable and necessary treatment” for which the WCA provides coverage. The Court reviews the legislative history of the WCA, which requires employers to provide “such medical, surgical and other treatment . . . as shall be necessary to cure and relieve the worker of the effects of the injury” incurred in the course of employment, and specifies that all fees for the “treatment shall be reasonable.” N.J.S.A. 34:15-15. Under interpretive case law, it must be shown that the chosen treatment is “reasonable” and “necessary” to cure or relieve the injury of the worker. 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. Competent medical testimony that a particular treatment or service will reduce symptoms or restore function is sufficient to satisfy the requirement of reasonable and necessary care. (pp. 18-20)

4. Like the compensation court and the Appellate Division, the Court concludes that medical marijuana may be found, subject to competent medical testimony, to constitute reasonable and necessary care under New Jersey’s workers’ compensation scheme. The Court reviews Squeo v. Comfort Control Corp., 99 N.J. 588 (1985), which instructs its analysis here. In this appeal, the doctors who testified on behalf of Hager convinced the compensation court that Hager remains in chronic pain and that ongoing treatment is necessary. Identifying medical marijuana and opioids as the two treatment options available, the court concluded, after thoughtful consideration of the medical testimony discussing the risks and benefits of each, that marijuana was “the clearly indicated option.” Reimbursement payments for the cost of Hager’s prescribed medical marijuana -- the treatment ordered here -- may not yet be common, but they are certainly less unique than the construction of a self-contained apartment, which the Court found appropriate in Squeo. Indeed, marijuana’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. 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. As in Squeo, the Court recognizes the potential harm that may be inflicted on Hager by the alternative available treatment; here, that would mean opioid treatment and a “likely path . . . [of] worsening addiction and ultimately death.” Sufficient credible evidence in the compensation court record -- medical records and hearing testimony -- supported the Order. (pp. 21-23)

5. The Court next considers whether the federal CSA extinguishes M&K’s obligations under state law. New Jersey law diverges from federal law not just as to medical marijuana but as to its recreational use as well, given New Jersey’s recent legalization of recreational marijuana. Notwithstanding New Jersey’s legalization of the medical and recreational use of marijuana, the CSA must be considered. The principles of federal preemption are rooted in the Supremacy Clause of the United States Constitution, U.S. Const. art. VI, cl. 2, which unambiguously provides that if there is any conflict between federal and state law, federal law shall prevail. Because the CSA explicitly leaves room for state law to operate, see 21 U.S.C. § 903, the Court focuses on conflict preemption, which occurs in two scenarios: where it is impossible for a private party to comply with both state and federal requirements, and when state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. The Court explains that preemption is not to be lightly presumed and that deciphering congressional intent is central to preemption analysis. (pp. 24-29)

6. Enacted by Congress in 1970, the CSA replaced a network of drug laws with a comprehensive regime, separating controlled substances into five schedules based on their accepted medical uses, risk of abuse, and physical and psychological effects. Marijuana was placed in the strictest schedule -- Schedule I -- at the time of the CSA’s enactment. Substances on Schedule I must be found to have a high potential for abuse, no currently accepted use for medical treatment, and a lack of accepted safety measures for use under medical supervision. 21 U.S.C. § 812(b)(1). Marijuana remains a Schedule I drug today, despite repeated efforts to petition for its rescheduling. Except as otherwise authorized, the CSA makes it unlawful to knowingly or intentionally “possess with intent to manufacture, distribute, or dispense, a controlled substance.” Id. § 841(a)(1). The CSA also makes unlawful, subject to exceptions, the knowing or intentional possession of a controlled substance “unless such substance was obtained directly, or pursuant to a valid prescription or order, from a practitioner, while acting in the course of his professional practice.” Id. § 844(a). (pp. 30-31)

7. The “valid prescription” language contained in § 844(a) cannot, however, apply to marijuana because the CSA prevents marijuana from being validly prescribed. On the enforcement front, guidance from senior personnel in the Department of Justice (DOJ) to the offices of the United States Attorneys issued over the past decade or so has, at times, deprioritized -- but not prohibited -- federal prosecution of marijuana activities that are legal under state law. More importantly, Congress has also deprioritized prosecution for possession of medical marijuana while leaving the CSA otherwise unchanged. In the relevant rider to the most recent federal Appropriations Act, Congress prohibited the DOJ from using allocated funds to prevent states, including New Jersey, from implementing their medical marijuana laws. Similar language has been included in appropriations riders dating back to the 2015 federal budget. (pp. 32-35)

8. The tension between Congress’s appropriations riders and the CSA’s classification and criminalization of marijuana is manifest. Mindful that preemption analysis turns on legislative intent, the Court reviews case law examining whether and under what circumstances appropriations acts -- reflecting a shift in intent with respect to earlier legislation -- are deemed to impliedly suspend or supplant the earlier law. “[A]lthough repeals by implication are especially disfavored in the appropriations context, Congress nonetheless may amend substantive law in an appropriations statute, as long as it does so clearly.” Robertson v. Seattle Audubon Soc’y, 503 U.S. 429, 440 (1992). The Court observes that the federal decisions it has reviewed mirror the Court’s own reading of appropriations acts as signifiers of legislative intent to suspend earlier statutory enactments in City of Camden v. Byrne, 82 N.J. 133 (1980). The Court noted in Byrne, as did the Ninth Circuit in United States v. McIntosh, 833 F.3d 1163 (9th Cir. 2016), the limited applicability of appropriations laws -- confined to a particular fiscal year -- and concluded that their effect on the previously enacted statutes was best expressed as implied suspension as opposed to implied repeal. (pp. 36-41)

9. Here, the CSA expressly contemplates a role for state law absent a “positive conflict” with the CSA. See 21 U.S.C. § 903; see also Gonzales v. Oregon, 546 U.S. 243, 251 (2006). The Compassionate Use Act seeks to operate in the space afforded to it by federal law and federal priorities. Congress has, for seven consecutive fiscal years, prohibited the DOJ from using funds to interfere with state medical marijuana laws through appropriations riders. Congress is empowered to amend the CSA via an appropriations action provided “it does so clearly,” see Robertson, 503 U.S. at 440, and the most recent appropriations rider, in the Court’s view, “clearly is intended as a substitute” to the CSA as applied to the Compassionate Use Act, see Miccosukee Tribe of Indians of Fla. v. U.S. Army Corps of Eng’rs, 619 F.3d 1289, 1299 (11th Cir. 2010). Therefore, the Court finds that Congress has spoken through the most recent appropriations rider and gives it the final say. (pp. 41-44)

10. The Court concludes that the CSA, as applied to the Compassionate Use Act and the Order at issue, is effectively suspended by the most recent appropriations rider for at least the duration of the federal fiscal year. Because DOJ enforcement of the CSA may not, by congressional action, interfere with activities compliant with the Compassionate Use Act, the Court finds that there is no “positive conflict” and that the CSA and the Act may coexist as applied to the Order. See 21 U.S.C. § 903. Qualified patients may continue to possess and use medical marijuana, and related compensation orders may be entered while federal authorities continue to enforce the CSA to the extent Congress permits.

The federal and state acts can thus consistently stand together, and it is possible for M&K to comply with both. The Compassionate Use Act does not currently present an obstacle to Congress’s objectives as articulated in the recent appropriations riders, and so the CSA does not preempt the Compassionate Use Act as applied to the Order. The Court underscores the “temporal nature” of the issue and its dependence on the future acts of Congress. See McIntosh, 833 F.3d at 1179. (pp. 44-47)

11. The Court is unpersuaded by 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 marijuana, contrary to the CSA. M&K’s payments would not satisfy the specific intent requirement for aiding-and- abetting liability when the facts so clearly indicate that it will be reimbursing Hager against its will and at the behest of the Court. Likewise, to the extent that the Order requiring reimbursement payments creates a conspiracy between Hager and M&K, M&K’s membership cannot be said to be intentional. Rather, its participation is being compelled by the courts. (pp. 47-51)