Wednesday, May 21, 2014

New Mexico Appeals Court holds medical marijuana expenses covered under state Workers' Comp law

 On Monday, a New Mexico appeals court upheld an order requiring an employer (and its insurance company) to pay for an employee's medical marijuana.  The decision involves a worker who was seriously injured on the job.  The employer did not dispute the employee's eligiblity for worker's compensation generally, but objected to coverage of medical marijuana.  In what, to my knowledge, is a first, the court held that medical marijuana is covered under the New Mexico Workers' Compensation Act.  

Here's an overview of the case, from the opinion's introduction (PDF):

We consider in this appeal whether, under the Workers' Compensation Act (theAct), NMSA 1978, §§ 52-1-1 to -70 (1929, as amended through 2013), an employer and insurer must reimburse an injured worker for medical marijuana used pursuant to the Lynn and Erin Compassionate Use Act (Compassionate Use Act), NMSA 1978, §§ 26-2B-1 to -7 (2007). The workers' compensation judge (WCJ) found that Worker Gregory Vialpando was qualified to participate in the State of New Mexico Department of Health Medical Cannabis Program authorized by the Compassionate Use Act and that such treatment would be reasonable and necessary medical care. The WCJ ordered Worker to pay for medical marijuana through the program and Employer and Insurer Ben's Automotive Services and Redwood Fire & Casualty (collectively, Employer) to reimburse Worker. Employer appeals, arguing that (1) the WCJ erred because his order is illegal and unenforceable under federal law and also thereby contrary to public policy, and (2) the Act and regulations promulgated pursuant thereto do not recognize reimbursement for medical marijuana. Because we agree with the WCJ that the Act authorizes reimbursement for medical marijuana, we affirm.

The outcome is a bit of a surprise since it seems the employer is being ordered to commit a federal crime.  The court's discussion on that point is perhaps the most interesting part of the opinion (though the whole thing is worth a read for those who follow marijuana law.)  It seems that sloppy lawyering on the part of the employer/insurer may have played a role in the outcome.  Though the employer raised the preemption issue generally, it apparently failed to cite to a specific federal statute it would be violating by paying for its employee's marijuana.  

Employer does not attempt to challenge the legality of the Compassionate Use Act. Instead, Employer asserts that, because marijuana remains a controlled substance under federal law, the order to reimburse Worker for money spent purchasing a course of medical marijuana “essentially requires” Employer to commit a federal crime. However, Employer does not cite to any federal statute it would be forced to violate, and we will not search for such a statute. See Headley v. Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137 N.M. 339, 110 P.3d 1076 (“We will not review unclear arguments, or guess at what [a party’s] arguments might be.”).

Also of note, the court's discussion of whether requiring an employer to pay for medical marijuana is at-odds with federal public policy:

Employer also argues that the order should be reversed because it is contrary to federal public policy as reflected in the CSA and Gonzales. Worker contends that federal public policy supports medical marijuana because the Department of Justice has announced a somewhat deferential enforcement policy. Although not dispositive, we note that the Department of Justice has recently offered what we view as equivocal statements about state laws allowing marijuana use for medical and even recreational purposes. On one hand, the Department of Justice affirmed that marijuana remains illegal under the CSA and that federal prosecutors will continue to aggressively enforce the statute. But, on the other hand, and in the same documents, the Department of Justice identified eight areas of enforcement priority and indicated that outside of those priorities it would generally defer to state and local authorities. In addition, the Department of Justice stated that it informed the Governors of Washington and Colorado, two states that voted to legalize possession of marijuana and regulate its production and distribution, that it would defer its right to challenge those laws. We also observe that New Mexico public policy is clear. Our State Legislature passed the Lynn and Erin Compassionate Use Act “to allow the beneficial use of medical cannabis in a regulated system for alleviating symptoms caused by debilitating medical conditions and their medical treatments.” Section 26-2B-2. We decline to reverse the order on the basis of federal law or public policy. 

I'm not sure how much precedential value the opinion has.  If the employer's attorneys were more thorough, I don't think they would have had much trouble pointing to a federal statute that they would be forced to violate by paying for marijuana (21 USC 844, as an accomplice, comes to mind.)  But, because the employer didn't highlight a specific statute, the Court of Appeal was able to side-step the issue.  I suspect attorneys for employers/insurers in future cases will be careful not to make this same mistake.

Court Rulings, Medical Marijuana State Laws and Reforms, State court rulings | Permalink


1)See this link [ ] for the results of a 12/12 survey of medical marijuana claims in comp. cases .
2) And a comment on California from an industry blog [:]
At this time, there has been no binding precedent workers’ compensation case related to the compensability of medical marijuana for treatment of a workplace injury. However, in September 2012, the California Workers’ Compensation Appeals Board (WCAB) issued a noteworthy and encouraging panel decision in Cockrell v. Farmers Insurance and Liberty Mutual Insurance Company, (ADJ504565, ADJ2584271). The panel reversed a workers’ compensation judge’s finding that an injured worker was entitled to reimbursement for self-procured medical marijuana. The WCAB cited Health and Safety Code § 11362.785(d), which states 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.”

Posted by: Rebecca Pressman | May 22, 2014 8:12:39 AM

Alex I agree – this is a bizarre case. But I sympathize for the employer’s attorneys because the preemption claim is more complicated than you suggest. What statute would the employer violate by being “forced to pay for [employee’s] marijuana”? It’s probably not 21 U.S.C. 844, even broadened by 18 USC 2 (the federal aiding and abetting statute). For one thing, the force applied by the state would probably vitiate any criminal liability, either because it raises a valid duress defense or because it eliminates the mens rea that is required of aiding and abetting liability under 18 U.S.C. 2. Recall that an abettor must want the principal to succeed in his crime, but the employer / insurer had no such desire.
But that doesn’t mean the employer’s end position is wrong. In fact, I think the employer is right – the worker’s compensation order is preempted – because the state itself (via its agents) is violating federal law. Suppose, for example, that Tony Soprano had walked up to the employer and told it “you’re going to pay for your employee’s drugs, or I’ll empty your cash register.” The employer probably escapes any federal criminal liability, but Soprano does not – like the state, he wants the employee to get his federally proscribed drugs, and he’s inducing action by another to make that happen. But I don’t expect a labor / employment lawyer or judge to be able to explain these complicated issues of federal criminal law and federalism in the course of a worker’s compensation hearing. And I think if the ruling is further appealed it could be corrected.

Posted by: Rob Mikos | May 22, 2014 4:26:32 PM

Thanks for the interesting links and info re: California, Rebecca!

And thanks for these great points re: accomplice liability, Rob! I agree completely that the argument re: 21 USC 844 is far from a slam dunk and looking back I realize I was a bit sloppy myself on that point. :) I meant only that it shouldn't have been difficult for the employer's lawyers to point to a specific statute that they claimed their clients would have had to violate. It's possible that they did, since I'm just going from the court's characterization of the employer's appeal. But, if the employer's attorneys truly relied on a generic "they'll be forced to violate federal law" argument without citing any specific statutes, it seems like a careless error that attorneys in future cases won't be likely to repeat.

Whether the employer would actually be forced to violate a particular statute is a much tougher question, of course. But since the employer's attorneys (apparently) didn’t point to a particular statute, the court didn’t have to reach the issue.

I do believe there is a decent argument on accomplice liability to 21 USC 844. Although I agree that we generally say intent (rather than knowledge) is required to be an accomplice, I feel like the Supreme Court's “advance knowledge” concept in Rosemond may have muddied the waters a little bit (though I have not looked back at that case since it was decided, so my memory of how it might relate here may be off.)

I also agree that there would be a good duress defense, but I’m not sure that should be enough. Duress is an affirmative defense, so I believe the employer would still be facing a federal trial even if they ultimately succeeded in a duress defense. (Since duress requires force, it may not be a given here. If the employer would just be facing money damages for failing to comply with the state court’s order—rather than incarceration—duress may not help them out.)

On a related note, I wonder whether a person should have to prove they are definitely being forced to violate federal law for preemption to kick in or whether it would be enough to show that there’s a strong (or decent) chance they would be violating federal law. I don’t recall off hand if any courts have addressed this issue (maybe so and I’m forgetting the cases or have not come across them.) But I can imagine a good argument that the employer in this case should only have to show they’d be in jeopardy of being forced to commit a federal crime (or, at least, face federal trial even if they have an affirmative defense.)

Of course, all of this is probably more theory than anything else, since the likelihood of a federal prosecution in these circumstances is zero (which may implicitly be driving the NM decision.)

Anyway, I could not resist getting a bit off track there with all of the interesting things to consider. I do agree with you, though, that there is a strong argument the employer wouldn’t be violating 21 USC 844 as an accomplice since they aren’t acting with an intent to aid in the marijuana possession. And your argument about preemption on the ground that the state is committing a crime strikes me as sound (though I wonder if the federal immunity statute could provide a shield here, a la the return of property cases.)

Last, I agree completely that I wouldn’t expect a labor/employment lawyer to present the ins and outs of these criminal law/ federalism issues—I know I certainly couldn’t present the ins and outs of an employment/labor issue! :) But, I do think a thorough labor/employment attorney should have at least cited a specific statute on appeal for the argument that their client would be violating federal law. If they’d done that, I wouldn’t think they’d been sloppy, even if they hadn’t gone into detail on the preemption issues. But just saying “this will be a violation of federal law” without pointing to a specific law does seem sloppy to me. (And, based only on the court’s opinion, it sounds like this is what the employer’s attorneys did.)

Posted by: Alex Kreit | May 22, 2014 8:26:19 PM

All good points Alex. Like you, I’m haven’t seen the lawyers briefs and motions, so I have to trust the court’s characterization. I am a bit troubled though by the court’s rather formalistic “you didn’t cite the precise statutory section of the CSA so you forfeit your claim” argument. For most types of claims, forfeiture is a just and sensible doctrine. But there are some types of claims (jurisdiction, for example) for which it doesn’t apply. And I wonder whether this might be one of those types of claims. I find it a bit troubling that a court can say “hey, because you didn’t cite the proper section number, we can force you to violate federal law (or violate federal law ourselves).” Imagine, for example, that A and B had a contract, pursuant to which A promised B 1,000 dollars if B would produce 10,000 dollars in counterfeit U.S. currency. A gives B the (real) money, but then B doesn’t deliver on the contract. A sues B demanding specific performance. B raises only one defense, a factual claim that A never actually paid him. B doesn’t raise the issue that the underlying activity is illegal under federal law (and probably state law too, though ignore that for now). Now suppose A has the better of the factual claim; e.g., he produces evidence of his payment to B. Should the court really go ahead and order B to produce the 10,000 in fake currency, just because B failed to cite the sections of the US code banning such counterfeiting? I would think not, because it involves not only B but the court itself in wrongdoing. In that way, it’s like a jurisdictional claim – if it was never proper for the court to hear a dispute, it can dismiss the claim at any time sua sponte, even if the parties failed to raise the issue.

Posted by: Rob Mikos | May 23, 2014 8:22:46 AM

Posted by: Mike Hemp | Dec 28, 2014 7:53:12 AM

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