Pennsylvania Commonwealth Court orders Work Comp insurer to reimburse an injured worker for out-of-pocket expense for medical marijuana

In two recent decisions, the Pennsylvania Commonwealth Court reversed the Workers Compensation Judge decision and ordered the workers compensation insurer to reimburse out-of-pocket expenses, incurred by an injured worker, as reasonable and necessary medical expenses. See:

Teresa L. Fegley, as Executrix : of the Estate of Paul Sheetz v. Firestone Tire & Rubber (WCAB), No. 680 C.D. 2021 opinion filed March 17, 2023

And

Edward Appel v. GWC Warranty Corporation (WCAB), No. 824 C.D. 2021 opinion filed March 17, 2023

Issues Presented in Appeal to the Commonwealth Court

The Appel appeal argued one issue, that the WCAB erred:

1. by concluding that a workers compensation insurer or employer cannot be required to pay for the lawful use of medical marijuana based on the plain language of the Medical Marijuana Act (MMA) section 2102.

The Fegley appeal argued several issues, that the WCAB erred:

1. as Employer did not raise and therefore waived, Section 2102 of the Medical Marijuana Act as a defense;

2. by concluding Section 2102 of the MMA applies to WC carriers and overrides the WC Act requirements that insurers pay for reasonable, necessary medical treatment that is related to an accepted work injury;

3.by concluding that Section 2102 of the MMA precludes reimbursement for medical marijuana to a claimant such treatment was determined to be reasonable, necessary and related to an accepted work injury;

4. by failing to address and reverse the WCJ’s sole basis for denying the Penalty Petition – that reimbursement of Claimant’s medical marijuana treatment would cause the WC carrier to violate federal law.

NOTE: As the Fegley opinion and reasoning is cited and relied upon in the Appel decision, we will utilize the Fegley opinion as the starting point for analysis of these Medical Marijuana issues.

Fegley Opinion  - Commonwealth Court Conclusions 

Employer did preserve the defense that Section 2102 of the MMA prevented the WCAB from compelling Employer to reimburse Claimant for his lawful use of medical marijuana.

Section 2102 of the MMA applies to WC carriers. The plain language of Section 2102 is limited to not requiring insurers to provide coverage for medical marijuana. The Court resolved that the term “coverage” is different and distinct from the term “reimbursement” …

Such that … there is no statutory language which prohibits insurers from reimbursing claimants who lawfully use medical marijuana to treat a work injury when such treatment is medically reasonable and necessary.

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The Commonwealth Court reasoning and resolution is based upon several factors.  Given:

-        the WC Act’s “humanitarian objectives” ;

-        reimbursing Claimant for his out-of-pocket expenses for his lawful use of medical marijuana as a reasonable and necessary treatment for his work injury would not require Employer’s WC carrier to violate the Federal Drug Act, or be at risk of facing federal prosecution by doing so;

-        the General Assembly’s express intent to provide Commonwealth citizens who are patients “access to medical marijuana,” 35 P.S. §10231.102(3)(i) (emphasis added);

-        the MMA’s containment of an immunity provision protecting patients from government sanctions;

-         and the MMA statement that “no individual ‘shall be . . . denied any right or privilege, . . . for lawful use of medical marijuana . . .”.

…  the Commonwealth Court concluded that the Board erred, and the Court ruled that Employer’s failure to reimburse Claimant’s out-of-pocket costs for medical marijuana to treat his work-related injury is a violation of the WC Act.

The Fegley WCAB Order denying Claimant’s Penalty Petition is reversed and the matter is remanded to the WCAB to remand to the WCJ to determine whether a penalty should be imposed.

The Appel WCAB Order partially denying Claimant's Review Medical Petition was reversed. 

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For a more detailed review of the analysis of the Commonwealth Court Opinions, we will review the background facts, procedural status and the reasoning provided:

Fegley Background and Procedural History 

Claimant sustained a 1977 work-related injury. Medical treatment included back surgeries, opiates and narcotics prescribed for severe back and leg pain. Claimant began using medical marijuana in 2019 at his doctor’s recommendation. Medical marijuana afforded Claimant pain relief and reduced his need for opiates and narcotics. A 2019 UR determination determined Claimant’s medical marijuana use was reasonable and necessary.

Claimant filed a Penalty Petition that Employer’s failure to pay for his medical marijuana, despite the UR Determination, was a violation the WC Act. The WCJ 2020 Decision denied the Penalty Petition, concluding that Claimant failed to prove that Employer’s refusal to pay for medical marijuana treatment violated the WC Act. The WCJ decision granted Employer’s Petition for Review of Utilization Review Determination. The WCAB Affirmed.

Appel Background and Procedural History 

Appel sustained cervical and lumber injuries in 2006, which were accepted as compensable via a Stipulation approved in a 2015 WCJ Decision.

Appel received extensive medical treatment, including surgeries. His physician prescribed opioids for chronic low back pain and leg symptoms. In April 2018, he received a medical marijuana card and used medical marijuana for withdrawal symptoms while weaning off of opioids. He testified medical marijuana was more effective than any other medication, as opioids became less effective over time.

A Review Medical Petition sought a determination that his medical marijuana was causally related to his work injury and an order directing Employer to reimburse him for the cost. A 2020 WCJ decision concluded claimant proved his medical marijuana use was related to the accepted work injury, however claimant failed to prove that Employer must reimburse him for his out-of-pocket medical marijuana expenses pursuant to Section 2102 of the MMA, which does not require an insurer or health plan to provide “coverage” for medical marijuana. WCAB affirmed.

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Commonwealth Court Analysis

The Fegley and Appel decisions utilized the same analysis and reasoning to address and resolve the Medical Marijuana issues.

The analysis of the majority opinion began with the ubiquitous statement that the Pennsylvania Workers Compensation Act (WCA) is remedial in nature and intended to benefit the worker, and, therefore, the Act must be liberally construed to effectuate its humanitarian objectives.

Responsibility for work-related medical expenses

Pursuant to Section 301(c) of the WCA, an employer is only liable to pay for a claimant’s medical expenses that arise from and are caused by a work-related injury.

A claimant has the initial burden to establish an injury is work-related Once employer is established, the claimant is not required to continually establish that medical treatment is causally related.  Thereafter the employer has the burden to prove that a medical expense is unreasonable, unnecessary, or is not related to the accepted work injury.

Review of the Pertinent Medical Marijuana Act Provisions

 The Commonwealth Court reviewed Section 102 of the MMA, which provides, in part: 1) Scientific evidence suggests that medical marijuana is one potential therapy that may mitigate suffering in some patients and also enhance quality of life… (3) It is the intent of the General Assembly to: (i) Provide a program of access to medical marijuana which balances the need of patients to have access to the latest treatments with the need to promote patient safety. (ii) Provide a safe and effective method of delivery of medical marijuana to patients… 35 P.S. § 10231.102).

Under the MMA, use or possession of medical marijuana as set forth in the MMA is lawful within this Commonwealth.” Section 303(a) of the MMA, 35 P.S. § 10231.303(a).

The Court assigned relevance to the MMA immunity provision protecting patients from government sanctions. Per the statute, no such individual “shall be subject to arrest, prosecution or penalty in any manner, or denied any right or privilege, . . . solely for lawful use of medical marijuana . . .”. See Section 2103(a) of the MMA.

Arguments – Application of MMA to WC Insurers

Claimant argued the MMA did not apply to work comp insurers.

Employer argues a WC carrier is an insurer, as defined by the WCA and Insurance law. As WC carriers are insurers under the law, the Court held that they are “insurers” for purposes of the MMA.

Section 2102 of the MMA – “Coverage” Arguments

Claimant argued that Section 2102 of the MMA only prohibits an insurer or health plan from being compelled “to provide coverage for medical marijuana.” 35 P.S. § 10231.2102. Claimant maintains that coverage refers to the insurer paying the provider directly for a medical service, while reimbursement signifies the insurer paying the patient for the costs of medical treatment already incurred and paid.

Employer asserts that the MMA’s plain language exempts employers/insurers from being required to cover medical marijuana.

The Court resolved this issue by reviewing the statutory language. While the MMA provides that an insurer is not required to include medical marijuana as a risk under its insurance policy, there is no language in the MMA precluding a WC carrier from repaying a claimant for his out-of-pocket medical treatment cost which has been found to be reasonable and necessary for his work-related injury.

Because the plain language of Section 2102 of the MMA is limited to not requiring insurers to provide coverage for medical marijuana, and the WC Act mandates WC carriers to reimburse claimants for out-of-pocket costs of medical treatment, which has been found to be reasonable and necessary for their work-related injury, the MMA does not command otherwise.

If the PA General Assembly intended for medical marijuana expenses not to be reimbursable, it would have expressly included the word reimbursement, as other states have explicitly done, but it did not. 

Section 301 Section 306(f.1)(1)(i) of the WC Act requires: “The employer shall provide payment in accordance with this section for reasonable surgical and medical services, . . . medicines and supplies, as and when needed.” 77 P.S. § 531(1)(i).

The Court rejected the Employer’s arguments. The MMA specifically mandates that no medical marijuana patients be denied any rights for lawful use of medical marijuana and the WC Act provides employees a statutory right to WC medical expenses that are reasonable and necessary to treat a work injury; therefore, if this Court was to agree with Employer, it would be removing those express protections from the MMA and the WC Act.

The Commonwealth court rejected Employer’s argument that the MMA to prohibits WC carriers from reimbursing claimants who lawfully use medical marijuana to treat their work-related injuries – noting this interpretation  would undermine the General Assembly’s express intent to provide patients “access to medical marijuana…”.

In summary the Court ruled that “coverage” is different and distinct from “reimbursement” and while the plain language of Section 2102 of the MMA states that insurers cannot be required to provide coverage for medical marijuana, there is no statutory language which prohibits insurers from reimbursing claimants who lawfully use medical marijuana to treat an accepted work injury when such treatment is medically reasonable and necessary.

Claimant Federal Law Argument

Claimant argued the Board erred by failing to address, and reverse, the WCJ’s sole basis for denying the Penalty Petition - that reimbursement would cause the WC carrier to violate federal law. As the Board was able to resolve the issue based on Pennsylvania law, albeit erroneously, it is of no moment that the Board did not decide the federal law issue.

Note Section 2103 of the MMA mandates: “Nothing in the MMA shall require an employer to commit any act that would put the employer or any person acting on its behalf, i.e., WC carriers, in violation of federal law.” 35 P.S. §10231.2103.

Because reimbursing Claimant for his out-of-pocket expenses for his lawful use of medical marijuana as a reasonable and necessary treatment for his work injury would not require Employer’s WC carrier “to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance,” 21 U.S.C. § 841(a), Employer’s WC carrier would not violate the Federal Drug Act, or be at risk of facing federal prosecution by doing so.

 As the employer is not prescribing marijuana, but rather reimbursing the claimant for his lawful use, the employer is not in violation of the Federal Drug Act. The fact that dispensing marijuana is illegal under federal law does not transform a medically reasonable and necessary treatment under the WC Act for a work injury to a medically unreasonable and unnecessary treatment. Such a determination would eviscerate the entire MMA. 

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CONCURRING AND DISSENTING OPINION

In the workers’ compensation context, and under the current state and federal laws, I cannot conclude that the MMA requires a WC insurance carrier to pay a claimant’s costs incurred in purchasing medical marijuana. Therefore, for the following reasons, I respectfully disagree with the majority’s conclusion -

I.               The MMA Does Not Require an Insurer to Pay for Medical Marijuana

Section 102 of the MMA, 35 P.S. § 10231.102 seeks to advance medical research and enhance quality of life, but it also reflects caution in enacting “a temporary measure” regarding access to medical marijuana, as well as “balancing the need of patients to have access to the latest treatments with the need to promote patient safety” .

Section 2102 of the MMA, relating to insurers, provides: “Nothing in this act shall be construed to require an insurer or a health plan … to provide coverage for medical marijuana.” 35 P.S. § 10231.2102. The WCAB correctly concluded that the plain language of Section 2102 does not require reimbursement for medical marijuana prescribed to a claimant to treat a work injury.

Section 2102 does not expressly address “reimbursement” of medical marijuana costs, but rather provides that the MMA cannot be construed to require an insurer to provide “coverage” of such costs. 35 P.S. § 10231.2102. However, “coverage” is not defined in the MMA. Further, the Board did not address whether “coverage” and “reimbursement” are synonymous under the MMA.

The majority echoes Claimant’s argument that “coverage” is not the same as “reimbursement,” The MMA does not require “coverage” for medical marijuana expenses but it requires Employer to reimburse Claimant for those expenses. I respectfully disagree.

Insurance reimbursement is when one is reimbursed in accord with an insurance policy, for expenses that have been incurred and are covered under the policy . . . . Some types of insurance reimbursement are paid to the insured person. Other types of reimbursements are paid directly to the provider after the provider has submitted an assignment of benefits document to the insurance company. Each insurance policy has specific items for which expenses are covered, not covered or covered in part. In other words, “coverage” is the extent of the insurer’s potential liability under an insurance policy; “reimbursement” is repayment of claims for which there is “coverage” under the policy. “Coverage” and “reimbursement” are two sides of the same coin: if there is coverage for a claim, the insurer must provide reimbursement.

Thus, it makes no sense for Claimant to argue that reimbursement may be required where coverage may not. Nonetheless, Claimant argues that because the WC Act is to be liberally construed, the MMA should not be interpreted to preclude reimbursement that is otherwise required by the WC Act. The most obvious flaw in this argument is that prior to the enactment of the MMA, there was no legal medical marijuana in Pennsylvania, and therefore, no reimbursement was required for it under the WC Act.

The MMA legalized medical marijuana for the first time and in a limited manner; in doing so, it made clear that it was not to be construed to require insurance coverage of medical marijuana. This makes sense, inasmuch as medical marijuana has not yet been approved by the FDA as safe and effective for use in medical treatment, and its use is not legal under federal law. In any event, the legislature, not the courts, must effect any change in the MMA’s stated policy and the balance struck regarding insurance coverage. Therefore, I believe this Court is constrained to agree with the Board that the MMA cannot be read to mandate reimbursement for prescribed medical marijuana provided to WC claimants.

II. Alleged Waiver of Employer’s MMA Defense

I concur in the majority’s conclusion that Employer did not waive its ability to assert a defense of illegality. In addition, I believe the defense is not subject to waiver as a matter of law.

An employer that unilaterally stops paying a claimant’s medical bills is subject to penalties under the WC Act, at the discretion of a WCJ, if the WCJ finds that the medical bills are causally related to the employee’s work injury.A claimant who files a penalty petition must first meet his initial burden of proving a violation of the WC Act occurred. The burden then shifts to the employer to prove the violation did not occur.

Here, the Utilization Review (UR) Determination found that medical marijuana was reasonable and necessary to treat Claimant’s pain and Employer did not appeal that determination. Thus, without more, it might be argued that Claimant met his burden of showing a violation of the WC Act in Employer’s refusal to pay for Claimant’s medical marijuana.

However, the WCJ found that requiring Employer to pay for Claimant’s medical marijuana would improperly force Employer to commit a crime under federal law. The issue is whether Employer could waive its illegality defense, as it failed to appeal the UR Determination. Both this Court and our Supreme Court have found the defense of illegality cannot be deemed waived in other contexts, such as employment and contract actions.

III. Current State of Federal Law on Marijuana

As the majority correctly observes, Section 2103 of the MMA specifies that nothing in the MMA requires an employer to commit any act that would violate federal law. Claimant argues that the Board erred in not addressing and reversing the WCJ’s sole basis for denying the Penalty Petition, that reimbursement would cause the WC carrier to violate federal law. This Court need not reach this issue because, as discussed above, the MMA expressly does not require insurance reimbursement of medical marijuana costs. In any event, however, Claimant’s argument lacks merit.

At first blush, Claimant’s argument appears somewhat persuasive. The federal Controlled Substances Act does not expressly forbid reimbursement for prescribed medical marijuana. Therefore, it appears an insurer reimbursing for medical marijuana costs under state law could be subject to federal prosecution only on a secondary basis as either an aider/abettor or an accessory after the fact.

However, both parties’ arguments relate solely to the legality of a WC insurer’s conduct in reimbursing costs of medical marijuana. Both parties, as well as the Board, ignore the fact that, unlike the insurer, the provider necessarily distributes or dispenses medical marijuana. Thus, the provider necessarily violates federal criminal law by doing so. Case law is sparse on this issue, but in other contexts, this Court has held that where a provider cannot provide treatment legally, that treatment cannot be deemed reasonable and necessary, and the provider cannot obtain reimbursement.

As discussed above, although the MMA legalizes the use of medical marijuana in Pennsylvania, a provider still cannot legally dispense medical marijuana under federal law. Therefore, because it is illegal, such treatment cannot be reasonable and necessary under the WC Act; accordingly, the dispenser cannot obtain reimbursement from a WC insurer.

IV. Dissenting Opinion Conclusion

Based on the foregoing discussion, I do not believe the MMA can be read as requiring a WC insurer to pay the costs of medical marijuana. Although it does not expressly forbid requiring such reimbursement under a separate statute such as the WC Act, the MMA effects no change in the preexisting reimbursement requirements, because it expressly cannot be read to create a reimbursement requirement where, as here, one did not exist before.

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RECOMMENDATIONS

1. When assessing liability for medical marijuana reimbursement expenses -                 is the medical marijuana expense in addition to ongoing medications or is it a   replacement for more expensive treatment options?

2. Is an Independent Medical Expert Evaluation necessary to address questions of the causal relationship and/or the reasonableness and necessity of the medical marijuana expense to the accepted work injury?

3. Is a Utilization Review necessary to address questions of the reasonableness and necessity of the medical marijuana expense to the accepted work injury?

4. A this time, this intermediate appellate court decision approves the reimbursement of out-of-pocket expenses to an injured worker for medical marijuana expense that has been determined to be reasonableness and necessity treatment of an the accepted work injury. These are specific requirements for reimbursement.

... This intermediate appellate court decision did not approve the reimbursement of medical marijuana expense to a provider.