Tag Archives: medical marijuana

Maine Says: Buy Your Own Marijuana

Bourgoin v. Twin Rivers Paper Co. (SJC Maine, June 14, 2018)

Maine has just joined the list of states that preclude worker’s compensation coverage for the cost of medical marijuana used to treat a workplace injury.

Bourgoin sustained a workplace injury that caused him to suffer chronic back pain and total disability. After receiving a certification to use medical marijuana, he obtained an order from the Worker’s Compensation Board directing Twin Rivers, his former employer, to pay for the cost of the marijuana. He found that marijuana was more effective and had fewer side effects than the opioid drugs he had been prescribed.

Twin Rivers appealed, arguing that the federal Controlled Substances Act (“CSA”) prevented an employer from paying for marijuana even when it is legal under state law. The Maine Supreme Court acknowledged that the CSA expressly disclaimed “field preemption” but held that there was an inevitable conflict between state law that ordered an employer to pay for marijuana and the CSA, which criminalizes marijuana.

The court concluded that, if Twin Rivers subsidized the cost of marijuana as a worker’s compensation benefit, it would inevitably be aiding and abetting a federal crime, which is itself criminal activity. The court emphasized that “the magnitude of the risk of criminal prosecution is immaterial in this case. Prosecuted or not, Twin Rivers would be forced to commit a federal crime if it complied with the directive of the Worker’s Compensation Board.” Two justices dissented.

This article was written with Meghan Shiner.

marijuana

Medical Marijuana’s Growing Pains

Since California led the way in 1996, 23 states and the District of Columbia have legalized medical or recreational marijuana sale and use. In 2016, several states are considering bills that would legalize medical marijuana, reduce jail time or fines for possession and amend existing marijuana laws. In 2014, Congress even put its support toward medical marijuana and hemp growers in the omnibus bill.

As the medical marijuana (MMJ) industry grows beyond infancy, so does the scrutiny of its business liabilities. It seems every week brings a new growing pain for the industry. Here are three important liability concerns that you and your clients should be considering.

Product Liability

Product liability insurance is typically excluded from general liability policies for MMJ dispensaries and grow operations. This is for a couple of reasons: (1) the illegality of the product on a federal level and (2) lack of FDA approval for marijuana for consumption.

Product liability is an essential coverage for MMJ operations as it protects them in the event of claims because of illness or injury from cannabis products. These claims are on the rise as more individuals are exposed to MMJ, particularly when those individuals experiment with various ways of consuming THC.

A class action filed in Colorado in 2014 (Coombs v. Beyond Broadway) alleges that people became ill after eating THC-infused chocolate samples at an event. The class action is open to all attendees who may have been served at the event, so the demand and settlement could be dramatic.

This claim would be handled under the product liability policy. This coverage is available as a stand-alone product, though some carriers may be willing to package it back in with the general liability and rate it separately.

Product Recall

In the Wild West that is the cannabis industry right now, a trend is emerging: product recall.

Cannabis products are being recalled at an alarming rate. Denver alone has recalled 13 products in 13 weeks, including a vape pen oil containing a dangerous, banned pesticide. In October 2015, a number of products were recalled because of banned pesticide content.

Product recall is expensive, and none of those expenses are covered by product liability insurance. In fact, in nearly all of the product recall cases in Denver, no one was sickened by the pesticide-laden products. Cannabis purchased to make the products was independently tested by the manufacturer and voluntarily recalled.

Independent third-party testing is important for quality control, especially in the marijuana industry. When every media outlet and government organization has their eyes on your clients, they need to be one step ahead, so testing product before shipment or sale should be part of any risk management plan.

Product recall insurance is becoming essential. This coverage is written on a manuscript basis to fit the needs of your client and can cover everything from retrieval and shipping costs to destruction costs and even provide public relations help to rebuild and maintain the insured’s reputation.

Professional Liability

With medical cannabis, the dispensary takes on the responsibility of a highly regulated pharmacy. Insureds may be compliant with all state and local rules and regulations, but mistakes do occur. The most common are:

  • Failing to give the correct product to the patient or an authorized caregiver.
  • Failing to confirm the identity of the patient or caregiver before dispensing.
  • Failing to protect patient privacy.

All of the above and more can be covered with a properly written professional liability or E&O policy. Protecting patient privacy can also fall under cyber liability, which your clients should also be concerned about.

MMJ business owners have the same concerns as any other business: profitability, legality, providing a valuable service to the community. As insurance professionals, not only must we look beyond the nature of the business to see the similarities, but also the industry-specific concerns.

Workers’ Comp Market Trends

Senior executives from some of the top California workers’ compensation carriers identified emerging trends that are of great importance to California employers at the 2015 California Workers’ Compensation and Risk Conference.

Panelists were:

  • Moderator: Pamela Ferrandino, national casualty practice leader at Willis North America
  • Mike Mulray, chief underwriting officer at Everest National
  • John Dickey, regional president at Liberty Mutual
  • Mike Hessling, chief client officer at Gallagher Bassett
  • Glen-Roberts Pitruzzello, vice president of workers’ compensation, group benefits claim strategy and clinical operations, at the Hartford

The WCIRB projects the estimated average medical cost-per-claim will be the lowest since 2007. What do you think are the key drivers behind this improvement?

  • The independent medical review (IMR) process. IMRs are being upheld in favor of the employer – around 90% of the time. That is showing that evidence-based protocols are being followed.
  • Medical inflation has decreased. Effective utilization review (UR) programs have had a positive effect on controlling medical costs.

Will the greater use of generic drugs in the California drug formulary materially lower workers’ compensation costs?

  • Texas is a good example. We have not seen any major pushback from what Texas has done. Texas communicated to the providers, so they know how to work within the new environment. There are reports showing that the new system has been successful.
  • It could help decrease employers’ costs by 10% to 15%. There could be much broader implications to the claimant, as well. It is not just about the money, though; the upside is also the social benefit of avoiding addiction issues.

How do you see medical marijuana affecting employers?

There are three areas:

  1. Intoxication policies come into play when you have an employee using marijuana not related to a workers’ compensation claim.
  2. To date, New Mexico is the only state that ruled for compensable treatment, but the employee was already using marijuana prior to injury. This will likely continue to be challenged in various states.
  3. Medical advocacy will continue to prove effectiveness vs. the alternatives, like opioids.

What insights have you gleaned from predictive modeling?

  • We have had some great success from the claims standpoint. There have been some great advances in tools to help with predictive modeling over the past five to 10 years, like text mining, which allows modelers to look for keywords in cases that show a trend.
  • Predictive modeling can be used to see how to prevent claims from even happening. It is more effective to try to keep the claim from occurring, rather than controlling costs once a claim has occurred.
  • We are using predictive modeling more to drive early intervention in claims to reduce the costs, but we also are trying to see how we can use this information for risk control and reduce claims altogether.
  • Almost all predictive models have a level of false positives. We need to learn to filter out the white noise that is not providing useful information.

Collectively, do you think SB 863 improvements will continue to adhere, or will they be chipped away just like the others?

  • The instant you change the rules, people try to find new loopholes. You cannot stop. One or two years of results is not a trend line to claim a victory. We will probably see erosion, and we will have to come up with solutions as an industry.
  • I’m not sure if we are seeing SB 863 play out as intended, because of issues like IMR and liens. There will probably be tweaking.
  • Many stakeholders are trying to prevent erosion, so there is cautious optimism.

What are trends to look for?

  • Formulary – we could adopt the Texas system, and, while it wouldn’t play out here exactly the same way, I think we need it.
  • Ways to reduce frictional costs for employers, like IMR.
  • The impact of a new president and immigration reform on the workers’ compensation system.
  • Attracting talent for claims adjuster positions.
  • The next generation of workers entering the workforce and becoming injured workers. Engaging with them as injured workers will be vastly different from how we have engaged with workers in the past. They will have different expectations.
  • Changes in the market cycle and how it affects the health of the workers’ comp system.

How to Think About Marijuana and Work

With a flip of the calendar, on July 1, Oregon became the fourth state in which recreational marijuana use became legal. For many Oregon employers, this status change from illegal to legal wasn’t a big deal. Medical marijuana is already legal in 24 states, including the Beaver State, and possessing less than an ounce was decriminalized in Oregon 40 years ago.

Recreational marijuana is just a new twist on an old story. All it really means is you can’t go to jail (or be fined) for smoking pot recreationally.

However, this “non-event” has made risk managers ponder the ramifications of recreational use, especially for their employees who work in the manufacturing industry. Manufacturers have strict policies to ensure a safe work environment. It goes without saying that people who are under the influence at work in a manufacturing or an industrial setting are far more likely to be injured on the job.

Being stoned at work should be treated no differently than being under the influence of alcohol or prescription medication. You certainly can’t show up drunk for work.

The employer is responsible for that employee as soon as he walks on to the job. Any drug use that affects an employee’s ability to perform the job should be a genuine concern for the employer.

The difficulty for employers is that there is no scientific method to determine a marijuana intoxication level, unlike a blood-alcohol level. Until there is definitive scientific evidence, employers are being advised to err on side of safety and forbid an employee to be under the influence of marijuana.

To do that, the employer needs a crystal-clear, zero-tolerance policy. Unless the employer has been living in a cave the past 50 years, it already has such a policy. But it should be updated to specifically address marijuana use, both on the job and recreationally, because it could affect the employee’s job performance.

It is predicted that in 2016 – the third election cycle in which marijuana legalization measures will be on ballots across the country – as many as seven more states could allow recreational use of marijuana. As each state approves the recreational use of marijuana, there looms in the background the knowledge, that under federal law, its use remains illegal.

Whether that will eventually force the feds to take a stand remains to be seen. Right now, the feds have just rolled over to let you scratch their belly.

But as each state joins the ranks of approving pot use recreationally, what was a minor irritant to the feds could grow too large for them to ignore.

The bottom line is that a stoned CPA might drop a number or two, but a stoned assembly line worker might drop a few fingers. It doesn’t matter if the cause is pot, alcohol or prescription medication. Smoke cannabis at work – or show up stoned – and you’ll be disciplined. It’s not about a worker’s rights; it’s about workplace safety.

Guidelines for Marijuana at Work

ACOEM/AAOHN recently published some guidance for employers on how to deal with the rapidly expanding legalization of marijuana in individual states across the U.S. that I believe are very important and that I wanted to share.

Because “presence” — having marijuana-related chemicals in the worker’s body — does not necessarily mean impairment, and presence lasts a lot longer than impairment, there is a conundrum on how to deal with workplace injuries and on what safety policies to enact to prevent injuries.

Many legal issues arise because individual states have policies around medical and recreational use (related to age, amount, location, etc.) that are inconsistent with cannabis’ illegal status at the federal level.

So we all need to be thinking about the issues. To quote myself from an article on Lexis-Nexis: “I personally think this should be required reading by general counsel and human resources at every employer, especially in states where legalization has already occurred but even for those where it isn’t, because it’s coming. Clear and proactive policies are absolutely required, and those can only be created by knowing every aspect of federal laws and their intersection with individual state laws (and not just your state, but surrounding states). To quote Facebook, ‘It’s complicated.’”