Cannabis-Related Reimbursement Claims Hit Healthcare Insurers

Healthcare insurers are used to dealing with claims for reimbursement by hospitals, providers, and patients. Medical marijuana treatment provides another vehicle for such claims.

New Mexico passed the Behavioral Health Services Equity Act (BHSEA) last April, effective January of 2022, which mandates that health insurance must cover in full the cost of services or medication used to treat behavioral health services. In February, New Mexico Top Organics – Ultra Health sent a letter to several insurers and the Office of the Superintendent of Insurance seeking affirmation that the insurers will provide coverage as prescribed by the act for the 74,000+ patients currently enrolled in the medical marijuana program as a result of PTSD. The request was denied. Now, several New Mexico health insurance companies are defending against a class action lawsuit filed by New Mexico Top Organics – Ultra Health, and six medical marijuana patients, seeking “recovery for themselves, and for every other similarly situated behavioral or mental health patient unlawfully subjected to paying for the entire cost of medically necessary cannabis in violation of state law” for failing to pay for the cost of medical marijuana as provided under the act.

Other legislatures are discussing similar laws that provide for insurance coverage of medical marijuana programs. For example, New York has pending legislation that if passed, would define medical marijuana as a “prescription drug,” “covered drug,” or “health care service” that would qualify for coverage under public programs. The United States Supreme Court recently denied certiorari for a pair of cases concerning workers’ compensation for medical marijuana, an issue that has not been decided uniformly amongst the states. For example, Minnesota and Maine have determined that the Federal Controlled Substance Act preempts the state law requiring reimbursement for medical marijuana due to a work-related injury, while New Hampshire and New Jersey have ruled in favor of reimbursement regardless of federal preemption.

The passage of New Mexico’s Act mandating behavioral health coverage in full and subsequent lawsuit brings a new wrinkle into cannabis litigation, with broad implications across the healthcare industry. Indeed, early clinical reports and case studies have shown positive results from the use of medical marijuana to treat PTSD, a disorder that effects an estimated 12 million Americans, and with medical marijuana available in 37 states, the class action lawsuit seeking reimbursement under the BHSEA may serve as a preview of a type of cannabis-related litigation that may be brought against healthcare insurers.

Another Positive Development for the Medical Marijuana Industry

Just one week after the DEA and FDA reiterated the federal government’s willingness to allow broader research into the health benefits of cannabis, the Ninth Circuit Court of Appeals issued a decision barring the DOJ from using federal funds to prosecute individuals and businesses conducting activities in compliance with state medical cannabis laws and regulations.

In U.S. v. McIntosh, No. 15-10117, (9th Cir. 2016), the Court determined that a rider (§ 542) to the appropriations act that funded the government through September 30, 2015, which provided that funds made available under that act could not be used “to prevent [] States from implementing their own State laws that authorize the use, distribution, possession. of cultivation of medical marijuana,” was to be read as prohibiting the federal government from prosecuting individuals and businesses acting pursuant to those state laws and regulations because such prosecution would effectively prevent the states from implementing their cannabis laws and regulations.

As the Court explained, “DOJ, without taking any legal action against the Medical Marijuana States, prevents them from implementing their laws that authorize the use, distribution, possession, or cultivation of medical marijuana by prosecuting individuals for use, distribution, possession, or cultivation of medical marijuana that is authorized by such laws. By officially permitting certain conduct, state law provides for nonprosecution of individuals who engage in such conduct. If the federal government prosecutes such individuals, it has prevented the state from giving practical effect to its law.”

The Court was also careful to warn industry participants that cannabis-related conduct falling outside a state’s cannabis laws and regulations would not be protected from federal prosecution:  “We conclude that § 542 prohibits the federal government only from preventing the implementation of those specific rules of state law that authorize the use, distribution, possession, or cultivation of medical marijuana. DOJ does not prevent the implementation of rules authorizing conduct when it prosecutes individuals who engage in conduct unauthorized under state medical marijuana laws. Individuals who do not strictly comply with all state-law conditions regarding the use, distribution, possession, and cultivation of medical marijuana have engaged in conduct that is unauthorized, and prosecuting such individuals does not violate § 542.”

 

 

Congress Passes Legislation Providing Protection to States that Have Legalized Medical Marijuana

On August 19, 2013, the U.S. Department of Justice issued its current Guidance Regarding Marijuana Enforcement, which effectively deferred enforcement under the Controlled Substances Act, 21 U.S.C. § 811 et. seq. (the “CSA”) with respect to medical marijuana to those states “that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of marijuana.”

On December 13, 2014, Congress passed government spending bill, H.R. 83 (the “Act”), which included provisions that appear to further insulate the participants in the medical marijuana industry in states that have legalized medical marijuana from enforcement under the CSA.   In particular, the Act provides that the funds made available to the Department of Justice pursuant to the Act may not be used to prevent those states that have enacted medical cannabis legislation “from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Continue reading “Congress Passes Legislation Providing Protection to States that Have Legalized Medical Marijuana”

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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