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Signs point to cannabis catching on in comp

cannabis sign

Recent litigation and proposed legislation in some eastern states may have opened the door to more widespread use of cannabis to treat injured workers. 

Cases heard in courts in New York, Massachusetts, Maine, New Jersey and New Hampshire have helped progress cannabis as medical treatment in the eyes of the law and insurance, experts say.

“For a long time, workers compensation did not consider medical marijuana a treatment option. But in the last few years, we’ve seen a lot of litigation, and the interesting thing about these cases is they all come back to the issue of federal preemption,” said Jeremy Buchalski, a New York-based partner at Wilson Elser Moskowitz Edelman & Dicker LLP, speaking at the Business Insurance 2021 Virtual Cannabis & Hemp Conference last month.

With public attitudes toward the use of cannabis consumption shifting, 36 states and the District of Columbia have now approved laws that make cannabis available to consumers with qualifying medical conditions.

Cannabis, however, remains regulated federally as a Schedule 1 substance, which means it is determined to have no medical value, and state courts where cannabis is legal have been deciding whether it can be reimbursed as medical treatment in workers compensation cases. 

A September report from the National Council on Compensation Insurance examined the trend and how each state is handling reimbursement by workers compensation insurance.

The report found only six of the states expressly allow workers comp reimbursement for cannabis, six expressly prohibit it, 14 do not require reimbursement, and 10 states and the District of Columbia are silent on the issue.

Since the report was published, the number of states expressly allowing reimbursement has fallen by one, with Minnesota reversing course on the issue. On Oct. 13, the state’s supreme court ruled in the case of Musta v. Mendota Heights Dental Center et al., determining employees cannot be financially reimbursed for their use of medical cannabis to recover from a workplace injury on the basis that cannabis remains classified as a Schedule I controlled substance under federal law, and that it would be “inappropriate” to require employers to “finance” an employee’s acquisition of an illicit substance.

Some eastern states have taken the opposite stance. 

“New York in particular has been extremely proactive with regard to implementing medical marijuana into the workers compensation arena,” said Ronald Mazariegos, vice president of claims and vendor management at Arrowood Indemnity Co. in Charlotte, North Carolina.

In April, a New York appellate court ruled in Matter of Quigley v. Village of East Aurora that a workers comp insurer must reimburse a disabled police officer for the cost of his medical marijuana. 

New York has continued with cannabis reform this year, announcing an updated drug formulary and the proposed launch of a web-based claims portal, OnBoard. 

“As part of that drug formulary and their new web portal, New York is actually making the request for medical marijuana to be a prior authorization medication, so that it’s not exactly codified into the drug formulary, but they are making carriers and physicians treat medical marijuana as a prior authorization medication,” said Mr. Mazariegos.

“This legitimizes cannabis as medicine, because what the New York workers comp board is saying is that it needs to go through the same preauthorization process as spinal surgery, as oxycontin, as physical therapy, treating it like any other kind of medicine,” said Mark Pew, principal of The RxProfessor LLC, based in Norcross, Georgia. “It’s the only state that has gone that far, and I think this is going to be a model that other states are going to look at.” 

New York may be joined by New Jersey and Maryland, where legislation is pending in state courts that would mandate workers compensation insurers treat medical marijuana as a prescription and reimburse the injured worker. 

“From our perspective it’s hard to measure or to gain information with regard to what medication is being filled,” Mr. Mazariegos said. “Hopefully, one day we’ll see a better bridge of understanding between the payer and the physician in order to get the recommended and sought-after treatment that we all want.”

At the federal level, Mr. Buchalski noted, there are two bills pending in Congress to address issues faced by cannabis producers operating legally within their states: the Safe Banking Act and the MORE Act of 2020.

“The Safe Banking Act I think has a better shot of passing than the MORE Act, which was introduced to take marijuana off the schedule for the Controlled Substances Act,” he said.

“That would lead the way to legalization in a lot of different places, and I don’t see that passing anytime soon.”

The Safe Banking Act would prohibit federal banking regulators from penalizing banks and other depository institutions for providing banking services to cannabis businesses. 

This year also saw the effect of recent federal legislation come to fruition, Mr. Buchalski said. The 2018 Farm Bill “essentially” legalized hemp, allowing the CBD market to explode onto the shelves. 

CBD is also gaining traction as an alternative therapy in pain management, said Dr. Carlos Giron, founder of the Pain Institute of Georgia in Macon, who primarily treats injured workers.

“I was of the mindset that it did not have real medicinal purpose for many years,” Dr. Giron said. “What I ended up seeing more than anything was the fact that it may provide benefit in a number of ways, but the most common was that it improved their sense of well-being and their sleep patterns, which is incredibly important when you’re treating someone with pain, whether it be acute, chronic or in between.”

Patients were resting better, saw improvements in their pain and function and were reducing their medications, he said.

CBD has been “a perfect fit” in managing pain and reducing opioid consumption, he said.

“It became part of my toolkit to reduce opioids, so much so that in the past seven to eight years now, we’re over 65% opioid reduction in my practice,” Dr. Giron said. 

CBD is not covered by workers compensation insurance.

“Nonetheless, patients have come out of pocket to be able to do that for themselves and the workers comp system, to the benefit of society and improving their functional status.”

“It’s interesting to see how the opioid epidemic has led doctors, individuals and systems to understand how this can be used in conjunction,” Mr. Buchalski said.

Looking ahead to 2022 and beyond, Mr. Buchalski shared his predictions for what’s next in workers comp and cannabis, citing findings from the National Bureau of Economic Research, which studied the effect of state recreational marijuana laws and workers compensation and found that post-legalization, workers compensation propensity declined 0.18 percentage point, corresponding to a 20% reduction in workers comp income. 

As states continue to legalize recreational marijuana, they will see a reduction in workers comp costs, Mr. Buchalski said.

“That reduction comes from alternative pain treatment methods — and it sort of flies in the face of that trite statement that ‘marijuana makes you lazy and you know you’re not going to want to go to work.’ This is the opposite,” he said.

Injured workers who use recreational marijuana may not need expensive pain management treatment, he said. 

Legal disputes, though, will likely continue for several years, Mr. Buchalski said.

Where litigation has already happened in states authorizing reimbursement, the focus will be increasingly on documenting “the positive effects” cannabis can have on workers comp