New Jersey Supreme Court: Medical Marijuana Costs Are Covered By Workers Compensation

Posted on Wednesday, April 14th, 2021.

On April 13, 2021, the New Jersey Supreme Court issued a unanimous decision in Hagar v. M & K Construction. The Court held that under New Jersey workers’ compensation law, an employer can be required to reimburse the cost of medical marijuana for an injured employee, affirming both a workers compensation court order directing reimbursement and a Superior Court, Appellate Division decision that had affirmed the workers compensation court order. In summary, the Supreme Court reasoned as follows:

  • New Jersey’s Compassionate Use Medical Marijuana Act (CUMMA) does not require “a government medical assistance program or private health insurer” to reimburse medical marijuana costs. The Supreme Court held that this exclusion does not apply to workers compensation insurers.
  • The employee had presented sufficient credible medical evidence that medical marijuana would be a “reasonable and necessary treatment” for him and therefore compensable under workers compensation law. He had presented credible medical evidence that medical marijuana would ameliorate his chronic back pain and aid in his overcoming the addiction he had developed to opioid painkillers.
  • Congress has, for the past seven fiscal years and continuing, prohibited the use of federal funds to prosecute medical marijuana programs under federal criminal laws in those states that have authorized the medical use of marijuana. The Court therefore determined that the federal Controlled Substances Act has effectively been “suspended” with respect to medical marijuana in those states, meaning that there currently exists no conflict between federal and state law in this area. The Court warned, however, that this “suspension” was of “limited lifespan and may be repealed, removed or changed” by Congress at any time.
  • Even if the federal Controlled Substances Act had not been “suspended” in this way, the employer could not be guilty of aiding and abetting or conspiring in a federal drug law violation. The Court interpreted each of these federal crimes as requiring evidence of willing, voluntary participation. But in this case, the employer did not “elect” to reimburse the cost of marijuana. The employer had objected to paying the cost of marijuana and would be making payment only under the compulsion occasioned by the order issued by the workers compensation court.

Based on the Supreme Court decision, employers should expect to be called upon the reimburse the costs of medical marijuana in workers compensation cases if the injured employee can persuade the workers compensation court that medical marijuana would be a “reasonable and necessary treatment.” Employers should nonetheless consider resisting paying medical marijuana costs and insisting on being ordered to make payment, to take advantage of the defense suggested by the Court to possible aiding and abetting/conspiracy charges.

The Hagar decision applies only to workers compensation coverage, not to employer-provided health insurance generally. Private health insurance remains exempt from mandatory reimbursement of medical marijuana costs.

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