Case Title: Hager v. M&K Construction

Citation: 

Docket Number: 

State: new-jersey

Court: New Jersey Supreme Court

Date: 2021-04-13T00:00:00Z

Document:
SYLLABUS

This syllabus is not part of the Court’s opinion. It has been prepared by the Office of the
Clerk for the convenience of the reader. It has been neither reviewed nor approved by the
Court. In the interest of brevity, portions of an opinion may not have been summarized.

              Vincent Hager v. M&K Construction (A-64-19) (084045)

Argued December 1, 2020 -- Decided April 13, 2021

SOLOMON, J., writing for the Court.

       In this appeal, the Court considers the challenges brought by defendant M&K
Construction (M&K) with regard to a workers’ compensation court’s order (the Order)
that M&K reimburse plaintiff Vincent Hager for the ongoing costs of the medical
marijuana he was prescribed after sustaining a work-related injury while employed by
M&K. Specifically, M&K contends that New Jersey’s Jake Honig Compassionate Use
Medical Cannabis Act (Compassionate Use Act or the Act) is preempted as applied to the
Order by the federal Controlled Substances Act (CSA). Compliance with the Order,
M&K claims, would subject it to potential federal criminal liability for aiding-and-
abetting or conspiracy. M&K also asserts that medical marijuana is not reimbursable as
reasonable or necessary treatment under the New Jersey Workers’ Compensation Act
(WCA). Finally, M&K argues that it fits within an exception to the Compassionate Use
Act and is therefore not required to reimburse Hager for his marijuana costs.

       Hager suffered a back injury while working for M&K in 2001. He underwent
surgery, but his pain persisted and he continued to take prescribed opioid medication. In
April 2016, Hager began treating with a hospice and palliative care physician, who
enrolled Hager in New Jersey’s medical marijuana program both as an alternative pain
treatment and as a means to wean him off of opioids. Hager’s marijuana prescription cost
him more than six hundred dollars each month.

       At a worker’s compensation trial, Hager testified personally, and both he and
M&K presented testimony by medical experts. Identifying medical marijuana and
opioids as the only two choices for pain management, the court concluded that
“marijuana is the clearly indicated option” and ordered M&K to reimburse the costs of
Hager’s medical marijuana and reasonably related expenses. The compensation court
rejected M&K’s claim that, like a private health insurer or government medical benefit
program, M&K could not be required to reimburse the cost of medical marijuana.

      The Appellate Division affirmed,  462 N.J. Super. 146, 153 (App. Div. 2020), and
the Court granted M&K’s petition for certification,  241 N.J. 484 (2020).

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HELD: M&K does not fit within the Compassionate Use Act’s limited reimbursement
exception, and Hager presented sufficient credible evidence to the compensation court to
establish that the prescribed medical marijuana represents, as to him, reasonable and
necessary treatment under the WCA. Finally, the Court interprets Congress’s
appropriations actions of recent years as suspending application of the CSA to conduct
that complies with the Compassionate Use Act. As applied to the Order, the Court thus
finds that the Act is not preempted and that M&K does not face a credible threat of
federal criminal aiding-and-abetting or conspiracy liability. M&K is ordered to
reimburse costs for, and reasonably related to, Hager’s prescribed medical marijuana.

1. The Court first considers whether M&K is exempt from reimbursing Hager for his
medical marijuana under  N.J.S.A. 34:6I-14. The Compassionate Use Act,  N.J.S.A.
24:6I-1 to -30, was enacted by the New Jersey Legislature in 2010 in recognition of the
beneficial uses of marijuana and to protect authorized individuals from criminal and civil
penalties. Of relevance to the present matter, the Act provides that reimbursement for
medical marijuana costs is not required of “a government medical assistance program or
private health insurer.”  N.J.S.A. 24:6I-14 (emphasis added). (pp. 13-15)

2. Based that plain language, the Court agrees with the compensation court’s
determination, affirmed by the Appellate Division, that  N.J.S.A. 24:6I-14 does not apply
to M&K. The Court reads “or” as limiting the applicability of the exception to only the
two kinds of entities named, in accordance with general principles of statutory
interpretation and the Act’s recognition of the potential health benefits of medical
marijuana. See  N.J.S.A. 24:6I-2(e). That reading, further, is supported by the definition
of “Health insurance” in the Life and Health Insurance Code, which unambiguously
states “[h]ealth insurance does not include workmen’s compensation coverages.”
 N.J.S.A. 17B:17-4. In the Court’s view, if the Legislature sought to depart from that
general definition and treat workers’ compensation and private health coverage in the
same manner under the Compassionate Use Act, it could have expressly included
workers’ compensation insurance in its exhaustive list or broadened the exception more
generally, as other states have explicitly done. The Court concludes that the Legislature
clearly did not intend for workers’ compensation insurers to be treated as private health
insurers or government medical assistance programs under the Compassionate Use Act.
M&K is therefore not exempt from its reimbursement obligation. (pp. 15-18)

3. The Court next considers M&K’s argument that medical marijuana is not a
“reasonable and necessary treatment” for which the WCA provides coverage. The Court
reviews the legislative history of the WCA, which requires employers to provide “such
medical, surgical and other treatment . . . as shall be necessary to cure and relieve the
worker of the effects of the injury” incurred in the course of employment, and specifies
that all fees for the “treatment shall be reasonable.”  N.J.S.A. 34:15-15. Under
interpretive case law, it must be shown that the chosen treatment is “reasonable” and
“necessary” to cure or relieve the injury of the worker. A mere showing that the injured
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worker would benefit from the treatment is not enough. Nevertheless, palliative care may
be properly authorized under the WCA, and workers who are permanently disabled and
beyond hope of being cured are still entitled to continued treatment and services.
Competent medical testimony that a particular treatment or service will reduce symptoms
or restore function is sufficient to satisfy the requirement of reasonable and necessary
care. (pp. 18-20)

4. Like the compensation court and the Appellate Division, the Court concludes that
medical marijuana may be found, subject to competent medical testimony, to constitute
reasonable and necessary care under New Jersey’s workers’ compensation scheme. The
Court reviews Squeo v. Comfort Control Corp.,  99 N.J. 588 (1985), which instructs its
analysis here. In this appeal, the doctors who testified on behalf of Hager convinced the
compensation court that Hager remains in chronic pain and that ongoing treatment is
necessary. Identifying medical marijuana and opioids as the two treatment options
available, the court concluded, after thoughtful consideration of the medical testimony
discussing the risks and benefits of each, that marijuana was “the clearly indicated
option.” Reimbursement payments for the cost of Hager’s prescribed medical marijuana
-- the treatment ordered here -- may not yet be common, but they are certainly less unique
than the construction of a self-contained apartment, which the Court found appropriate in
Squeo. Indeed, marijuana’s ability to relieve pain has been expressly recognized by the
Legislature in the Compassionate Use Act.  N.J.S.A. 24:6I-2(a), -3. Thus, competent
evidence relating to medical marijuana’s ability to restore some of a worker’s function or,
as in Hager’s case, relieve symptoms such as chronic pain and discomfort, is sufficient to
find such a course of treatment appropriate. As in Squeo, the Court recognizes the
potential harm that may be inflicted on Hager by the alternative available treatment; here,
that would mean opioid treatment and a “likely path . . . [of] worsening addiction and
ultimately death.” Sufficient credible evidence in the compensation court record --
medical records and hearing testimony -- supported the Order. (pp. 21-23)

5. The Court next considers whether the federal CSA extinguishes M&K’s obligations
under state law. New Jersey law diverges from federal law not just as to medical
marijuana but as to its recreational use as well, given New Jersey’s recent legalization of
recreational marijuana. Notwithstanding New Jersey’s legalization of the medical and
recreational use of marijuana, the CSA must be considered. The principles of federal
preemption are rooted in the Supremacy Clause of the United States Constitution, U.S.
Const. art. VI, cl. 2, which unambiguously provides that if there is any conflict between
federal and state law, federal law shall prevail. Because the CSA explicitly leaves room
for state law to operate, see 21 U.S.C. § 903, the Court focuses on conflict preemption,
which occurs in two scenarios: where it is impossible for a private party to comply with
both state and federal requirements, and when state law stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress. The
Court explains that preemption is not to be lightly presumed and that deciphering
congressional intent is central to preemption analysis. (pp. 24-29)
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6. Enacted by Congress in 1970, the CSA replaced a network of drug laws with a
comprehensive regime, separating controlled substances into five schedules based on
their accepted medical uses, risk of abuse, and physical and psychological effects.
Marijuana was placed in the strictest schedule -- Schedule I -- at the time of the CSA’s
enactment. Substances on Schedule I must be found to have a high potential for abuse,
no currently accepted use for medical treatment, and a lack of accepted safety measures
for use under medical supervision. 21 U.S.C. § 812(b)(1). Marijuana remains a Schedule
I drug today, despite repeated efforts to petition for its rescheduling. Except as otherwise
authorized, the CSA makes it unlawful to knowingly or intentionally “possess with intent
to manufacture, distribute, or dispense, a controlled substance.” Id. § 841(a)(1). The
CSA also makes unlawful, subject to exceptions, the knowing or intentional possession of
a controlled substance “unless such substance was obtained directly, or pursuant to a
valid prescription or order, from a practitioner, while acting in the course of his
professional practice.” Id. § 844(a). (pp. 30-31)

7. The “valid prescription” language contained in § 844(a) cannot, however, apply to
marijuana because the CSA prevents marijuana from being validly prescribed. On the
enforcement front, guidance from senior personnel in the Department of Justice (DOJ) to
the offices of the United States Attorneys issued over the past decade or so has, at times,
deprioritized -- but not prohibited -- federal prosecution of marijuana activities that are
legal under state law. More importantly, Congress has also deprioritized prosecution for
possession of medical marijuana while leaving the CSA otherwise unchanged. In the
relevant rider to the most recent federal Appropriations Act, Congress prohibited the DOJ
from using allocated funds to prevent states, including New Jersey, from implementing
their medical marijuana laws. Similar language has been included in appropriations
riders dating back to the 2015 federal budget. (pp. 32-35)

8. The tension between Congress’s appropriations riders and the CSA’s classification
and criminalization of marijuana is manifest. Mindful that preemption analysis turns on
legislative intent, the Court reviews case law examining whether and under what
circumstances appropriations acts -- reflecting a shift in intent with respect to earlier
legislation -- are deemed to impliedly suspend or supplant the earlier law. “[A]lthough
repeals by implication are especially disfavored in the appropriations context, Congress
nonetheless may amend substantive law in an appropriations statute, as long as it does so
clearly.” Robertson v. Seattle Audubon Soc’y,