Sponsor Company Name Sponsor Company Name

Garden State’s Marijuana Problem

Will New Jersey employers have to cover reimbursement?

July 19, 2020 Photo

On January 13, 2020, in a case of first impression, the New Jersey Appellate Division issued its opinion in Vincent Hager v. M&K Construction, which determined that an employer must reimburse a worker for his purchase of medical marijuana.

In 2001, then 28-year-old construction worker Vincent Hager, suffered a spinal injury when a work truck dumped a load of concrete on him. Over the course of 15 years, Hager underwent multiple treatment modalities and failed surgeries to his low back. Due to permanent nerve damage and chronic pain caused by his injuries, Hager became addicted to opiates, a fate all-to-familiar for so many individuals who suffer debilitating injuries causing daily, immense pain for the rest of their lives.

By 2016, after five years of living daily with both his pain and the side effects of opiates, Hager was enrolled in New Jersey’s medical marijuana program by a qualified pain management physician, a program for which he paid $619 per month out his own pocket. In 2018, Hager’s workers’ compensation claim was brought to trial to determine his disability, and he also sought reimbursement of payments he made for medical marijuana. At trial, Hager testified that medical marijuana helped to abate his pain and remain opiate-free. The workers’ compensation judge granted Hager’s request to be reimbursed for his medical marijuana expenses.

The employer, M&K Construction, refused to reimburse Hager for his medical marijuana prescription and raised a number of defenses at trial and on appeal, two of which intertwined and formed a unique question of law. First, whether the Federal Controlled Substances Act (CSA)—which bans the manufacture, possession, or distribution of marijuana—conflicts with New Jersey’s Compassionate Use Medical Marijuana Act (MMA), which allows patients to acquire medical marijuana when it is prescribed by vetted professionals. Second, whether an order of a court requiring an employer to reimburse an injured employee for medical marijuana would constitute aiding and abetting in the commission of a violation of the CSA.

 The court noted the issue of possible conflict between the federal CSA and New Jersey MMA, stating that marijuana is a federal Schedule I drug under the CSA, and thus the manufacture, possession, and distribution of marijuana is a federal criminal offense. The question presented was whether the MMA is preempted by the CSA.

The court determined that any potential conflict would be hypothetical, and that reimbursement to the employee would not require the employer to possess, manufacture, or distribute marijuana and, thus, there would be no conflict of law. Further, the court found that the employer was under no threat of prosecution for such a violation, as no such prosecution was known to the court to have been brought in any jurisdiction. Neither was the court persuaded by the employer’s argument that the Judge of Compensation’s order mandating reimbursement constituted aiding and abetting in the commission of a crime.

New Jersey’s decisions largely paralleled a similar matter decided by the Appellate Division of New Mexico in Vialpando v. Ben's Auto. Servs. Conversely, one other state has taken the opposite stance to New Jersey on the issue of reimbursement of medical marijuana expenditures in the workers’ compensation context, specifically on the issue of whether an order forcing an employer to reimburse for medical marijuana in compliance with their state’s medical marijuana provisions conflicts with the CSA.

In Bourgoin v. Twin Rivers Paper Co. LLC, the Supreme Judicial Court of Maine vacated and remanded the decision of the Workers’ Compensation Appellate Division for denial of the petition for payment of medical expenses and services, specifically medical marijuana. The court found that subsidizing the employee’s use of medical marijuana as authorized by the Medical Use of Marijuana Act, (MUMA), would meet the elements of aiding and abetting of a crime as defined by 18 USCS 2(a), and that due to this conflict the federal CSA preempted the MUMA.

Like the Appellate Division in Hager, and unlike the court in Vialpando, the Supreme Judicial Court of Maine looked to the language of the CSA that makes it a crime to knowingly or intentionally manufacture, distribute, or dispense marijuana. Further, the court here took an opposing view on the stance of the federal government on marijuana enforcement, citing denials of all challenges to reclassify marijuana as less than a Schedule I drug.

While the New Jersey Appellate Division noted that compliance with the medical marijuana law would only hypothetically expose the employer to federal prosecution, the Supreme Judicial Court of Maine found that if the employer reimbursed medical marijuana expenses, it would necessarily have engaged in conduct made criminal by the CSA by aiding and abetting the worker in his purchase, possession, and use of marijuana, and acting with knowledge of such use.

These differences represent stark contrasts with the ruling in Hager. The New Jersey Appellate Division upheld the compensation judge’s findings in their entirety. That decision has been appealed and the Supreme Court of New Jersey granted certification on May 8, 2020. How will the court rule? The Appellate Division’s decision reflects New Jersey’s continuing public shift in favor of acceptance of the use of medical marijuana, although recreational use is still not allowed. The MMA, which was enacted in 2010, was later amended in 2019 as the “Jake Honig Compassionate Use Medical Cannabis Act,” and dramatically expanded patient access.

Additionally, after the Hager decision was published, Bill A1708 was introduced in the legislature on Jan. 14, 2020 and referred to the Assembly Appropriations Committee on Feb. 13, 2020. If passed, the bill would require all workers’ compensation carriers to reimburse the costs of medical marijuana and would memorialize the Appellate Division’s holding that workers’ compensation carriers are not to be treated the same as private health insurance carriers under the Act. We look forward to the New Jersey legislature’s and Supreme Court’s considerations of these issues.

About The Authors
Multiple Contributors
Michele G. Haas

Michele G. Haas is partner at Hoagland Longo Moran Dunst and Doukas LLP, a New Jersey-based defense firm. mhaas@hoaglandlongo.com

James Rice

James Rice is associate at Hoagland Longo Moran Dunst and Doukas LLP, a New Jersey-based defense firm.  jrice@hoaglandlongo.com

Sponsored Content
Daily Claims News
  Powered by Claims Pages
About The Community

CLM’s Cannabis Committee promotes claims and litigation management education relative to all aspects of the cannabis industry, including current legal and regulatory compliance, claims handling, and litigation management best practices that are unique to this highly regulated industry.

Community Events
No community events
Sponsor Company Name Sponsor Company Name