Agenda: Employment Law Workers’ Comp and Pot: A Toke Too Many?

Some states’ legalization of medical marijuana can muddle claims.

By David Tobenkin Jul 1, 2013
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As more states sanction the use of marijuana to make medical treatment more bearable, the debate about how medical marijuana should be recognized in workers' compensation systems continues. Some answers appear to be, well, hazy. And given rapidly evolving case law in many states, they may become hazier still.

So far, 18 states and the District of Columbia have statutes that allow the use of medical marijuana. Maryland enacted a very narrow medical marijuana statute in May, and 10 additional states currently have pending initiatives to legalize medical marijuana. Two other states, Colorado and Washington, have legalized the drug for recreational purposes. However, such statutes conflict with federal law that defines possession or use of marijuana as a crime.

Workers' compensation benefit systems vary by state. Similarly, many of the general employment and drug enforcement laws arise under state statutes. The intersection of state statutes that decriminalize medically prescribed marijuana and the workers' compensation systems in such states can complicate employers' efforts to implement appropriate loss-control measures.

Who Pays?

Still, for the moment—and subject to change in a given state—experts' general consensus is that an injured worker's use of medical marijuana in most states, including those with medical marijuana statutes, will not be a compensable benefit.

"Our members have asked, 'Do states allow medical use of marijuana in workers' compensation cases, and, if so, who is required to pay for medical marijuana use?' " says Jennifer Wolf Horejsh, executive director of the Madison, Wis.-based International Association of Industrial Accident Boards and Commissions.

Colorado, Michigan, Montana and Vermont have statutes or regulations clarifying that insurers don't have to pay for it. "For those that don't have explicit denials, it will play out in the case law," she says.

No appellate court or appellate workers' compensation board decision has yet upheld a worker's right to be reimbursed for the cost of medically prescribed marijuana. Such decisions would bind lower courts and workers' compensation boards.

Still, some workers' compensation administrative decisions have allowed reimbursement. In June 2012, in Cockrell v. Farmers Insurance Co., a California workers' compensation judge awarded a worker reimbursement for medically recommended marijuana that he had acquired to relieve pain after spinal surgery. Marijuana was prescribed as an alternative to OxyContin because of alleged complications arising from the employee's use of that drug.

But in September 2012, a workers' compensation appeals board panel granted a request for reconsideration of that decision, rescinding the judge's finding and ordering the judge to consider a state law provision stating that "Nothing in this article shall require a governmental, private, or any other health insurance provider or health care service plan to be liable for any claim for reimbursement for the medical use of marijuana."

And, in 2002, in McKinney v. Labor Ready and Reliance Insurance Co., a deputy workers' compensation commissioner in Iowa allowed an employee who was living in Oregon to recover for an Iowa workers' compensation claim for medical marijuana, notes Lee Hook, a partner at Peddicord, Wharton, Spencer, Hook, Barron & Wegman LLP in Des Moines, Iowa. Oregon has a medical marijuana statute.

It is conceivable that an injured worker with an accepted workers' compensation claim who has a prescription for medical marijuana connected to treating the compensable condition may be entitled to reimbursement for the cost of the prescribed drug, says George Goodman, a shareholder at Cummins, Goodman, Denley & Vickers PC in Newberg, Ore. "For example, a worker with an accepted cancer claim whose doctor prescribes marijuana to stimulate the appetite during chemotherapy would have a good chance of that being found a compensable medical benefit in many states.

"However, tension among competing statutes arises because most states allow employers to implement and enforce zero-tolerance drug policies. Therefore, if that same cancer patient was attempting to work while on chemotherapy, utilizing medical marijuana could result in termination of employment even though the use was payable under the workers' compensation system."

Zero-Tolerance Policies

A variety of factors, most notably the federal illegality of marijuana, remain a bulwark against the penetration of medical marijuana into the workers' compensation arena. A number of recent decisions in states that have legalized medical marijuana have buttressed the strong hand of employers with zero-tolerance drug policies seeking to terminate employees for marijuana use, even medical reasons.

In April, the Colorado Court of Appeals in Coats v. Dish Network LLC held that an employer would not be liable under the state's statute on lawful off-duty conduct for discharging an employee for his off-the-job use of medical marijuana, given the drug's illegality under federal law. The employee contended that the state's legalization of medical marijuana made it a statute-protected "lawful activity."

"You could be fired for smoking marijuana because it's a violation of federal law, even though it's legal per Colorado law," explains Cliff Eley, an attorney at Eley Law Firm, a Denver-based workers' compensation law firm representing employees.

However, another Denver-based employee attorney, Kimberlie Ryan at Ryan Law Firm LLC, contends that the decision was a narrow one and that Dish Network's termination of Coats might have been successfully challenged on state constitutional and other state statutory grounds.

In general, most states’ workers’ compensation systems won’t pay for medical marijuana—but that could change.

Employee terminations under zero-tolerance drug policies that conflict with authorized medical marijuana use have been upheld in court decisions in many states, some at the highest state appeals courts. Those cases at least imply, if not openly hold, that an employee seeking to use medical marijuana due to a workers' compensation injury, and who tested positive for that drug while on the job, likely would face termination for doing so if the employer had a zero-tolerance policy.

"Under Oregon law, filing a claim for workers' compensation constitutes a waiver of privacy for medical records relevant to the claimed injury," Goodman says. "In addition, the occurrence of an alleged work-related injury constitutes a valid trigger to require a drug test of the worker. If the worker tests positive for a controlled substance, including marijuana, and the employer has a zero-tolerance drug policy, the worker can be terminated for cause even if the underlying workers' comp claim ends up being accepted."

For their part, marijuana advocates say such policies unfairly punish employees. "Our workers' compensation laws should be utilized to compensate those injured on the job, not to enforce the federal anti-marijuana policies," says R. Keith Stroup, legal counsel to NORML, a nonprofit lobbying organization working to legalize the drug. "Using these laws to identify and eliminate workers who smoke marijuana while away from work is unfair to those workers and is an inappropriate exception from the underlying purpose of providing workers' compensation coverage."

Employers need to be aware of nuances in their states' statutes.

"The laws in Arizona, Connecticut, Delaware, Massachusetts, Montana and Rhode Island require additional consideration because each of these laws has specific restrictive language with workplace impact," says Josephine Elizabeth Kenney, senior vice president of compliance and senior compliance counsel at St. Petersburg, Fla.-based HR consulting firm First Advantage. "For example, Rhode Island prohibits an employer from penalizing registered qualified patients in any way for their use of medical marijuana."
And in New Mexico, under a recently enacted statute, it appears that the language of the state's medical marijuana statute might increase the chances of a workers' compensation recovery under state law. "Since the marijuana would be prescribed by a licensed practitioner under the statute, one would assume then that any injuries as a result of medicinal marijuana would be covered workers' compensation claims," says Albert B. Randall Jr., a principal in the Baltimore office of Franklin & Prokopik PC and president of the National Workers' Compensation Defense Network, an association of 42 law firms.

Injuries and Usage

Use of medical marijuana that causes workplace injuries appears generally to be a clear bar to recovery as either illegal or indicative of impairment, says Eugene Ryu, a shareholder in the San Francisco office of Littler.

A related question is what happens if an injured worker who otherwise would have a compensable workers' compensation injury tests positive for marijuana but the drug did not cause the injury. The answer to this question often turns on the precise language of a state's statute. At least one court found that the mere presence of marijuana in an employee's system will not necessarily bar a workers' compensation claim. In 2012, in Hogg v. Oklahoma County Juvenile Bureau, the Supreme Court of Oklahoma held that the state's workers' compensation statute allowed employees who tested positive for medicinal marijuana to demonstrate that such use was not the cause of the injury. If they could do so, obtaining benefits for an otherwise compensable injury would be allowed.

With respect to recovery in workers' compensation systems for the costs of medical marijuana itself, a number of attorneys and HR consultants say this does not appear to be happening—yet.

"Medical treatment under workers' compensation is like going to an HMO," Ryu says. "You have to go through an approved doctor, and, like HMO services, the care provided is contracted out at a particular rate. I am not aware in California or in other states of medical marijuana being an approved substance for workers' compensation purposes. I don't think that will change until you see the federal laws against marijuana reversed." Numerous other workers' compensation attorneys interviewed for this article likewise had heard of no cases.

So what should an HR manager do if presented with a workers' compensation claim for medical marijuana use?

"I would advise them not to acknowledge to the employee that the claim will ever be paid," says Margaret Spence, president and chief executive of Boca Raton, Fla.-based Douglas Claims & Risk Consultants Inc. "I'd explain that under current state workers' compensation law, it is probably not covered, and send the claim to the insurance company so that the claim can be formally denied. … You should tell them that the insurance company will get back to them, and make sure that the insurance company issues a denial. The HR person should not make these decisions."

All of the above analyses, however, could change rapidly. In particular, at the federal level, the Department of Justice has advised prosecutors not to enforce the federal crime of use or possession of marijuana for medical use. With several recent U.S. presidents conceding or not denying marijuana use, Bob Dylan may have said it best: "The times, they are a-changin'."

David Tobenkin is an attorney and freelance writer in Chevy Chase, Md.

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