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Clarity in Massachusetts for Insurers on Medical Marijuana Reimbursement

Posted: 11/09/2020
Industries: Cannabis Law | Insurance


On October 27, 2020, the Massachusetts Supreme Judicial Court ruled that insurance companies could not be compelled to reimburse employees for medical marijuana expenses pursuant to the worker’s compensation scheme that requires reimbursement of necessary and reasonable medical expenses.  Daniel Wright’s Case, - - Mass. - -; 2020 WL 6293431 (Oct. 27, 2020). The Court analyzed the interplay between the state medical marijuana law, the state worker’s compensation insurance scheme, and the federal Controlled Substances Act, 18 U.S.C. §841 (“CSA”), which criminalizes the possession and use of marijuana as well as the aiding and abetting of a violation of the CSA. In doing so, the Court recognized that the “legal landscape of medical marijuana law may, at best, be described as a hazy thicket,” with marijuana being illegal at the federal level, but Massachusetts, as well as a majority of other states, having legalized medical marijuana and created a regulatory scheme for its administration and usage.  With regard to insurance companies’ obligation to reimburse employees for medical marijuana, the Court reasoned that “[i]t is one thing for a State statute to authorize those who want to use medical marijuana . . . and to assume the potential risk of Federal prosecution, it is quite another for it to require third parties to pay for such use and risk such prosecution.”

The case was initiated by a claimant, Daniel Wright, who sought reimbursement under the state’s worker’s compensation statute for medical marijuana expenses incurred to treat chronic, work-related injuries that he sustained in 2010 and 2012.  An administrative judge and the Department of Industrial Accidents (“DIA”) found that Mr. Wright’s underlying claim, and the benefits he received from his medical marijuana prescription, were “credible,” necessary, and reasonable.  However, the administrative judge and DIA ultimately determined they could not legally require the employer’s insurers to reimburse for medical marijuana expenses.  Mr. Wright then appealed.

In affirming the underlying ruling, the Court recognized that the Massachusetts Legislature, in enacting the medical marijuana statute, sought to avoid direct conflict with the CSA, including by providing that “nothing in this law requires any health insurance provider, or any government agency or authority, to reimburse any person for the expense of the medical use of marijuana.” Mass. Gen. L. c. 94I, §6(i).  The Court further noted that this provision of the Massachusetts medical marijuana statute was substantially similar to reimbursement restrictions found in at least twenty-two (22) other states with medical marijuana programs.

The Court also focused on the inability of the state legislature to alter the scope of federal law because the “Supremacy Clause unambiguously provides that if there is any conflict between federal and state law, federal law shall prevail.”  Because marijuana possession and distribution  remain illegal under federal law, the Court reasoned that requiring insurers to pay for insured patients’ marijuana usage creates “high stakes,” exposing the insurer to potential criminal prosecution.  As the Court put it, “[i]t is not unreasonable, given the current hazy regulatory environment and shifting winds of Federal enforcement, for insurance companies to fear that pay for a claimant’s marijuana could expose them to potential criminal prosecution.  Further, insurance companies are typically involved in interstate commerce, thereby raising Federal regulator’s concerns.  Requiring interstate insurers to participate in the Massachusetts medical marijuana scheme would extend the reach of Massachusetts act well beyond the Commonwealth’s borders.”

Even as states continue to expand the legalization and regulation of marijuana and other controlled substances as defined under the CSA, the Supremacy Clause of the U.S. Constitution provides protection for insurance companies that are called upon to reimburse costs and expenses associated with medical marijuana.  Nonetheless, as the country becomes more comfortable with legalized marijuana, it is possible that changes to federal law could result in insurers being obligated to reimburse their insureds for the costs associated with medical marijuana.