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Again Embracing Opioid Alternatives, Commonwealth Court Requires Employer to Reimburse Injured Worker’s CBD Oil Expenses

This past May, the Pennsylvania Commonwealth Court, in Fegley v. Firestone Tire & Rubber, 291 A.3d 940, ruled that while the Pennsylvania Workers’ Compensation Act (WCA) does not require insurers to cover injured workers’ medical marijuana costs when insurers are billed
directly from a dispensary, it does require insurers to reimburse workers’ out-of-pocket medical
marijuana costs that are reasonable, necessary, and related to their work injuries. I explained that in doing so, the Commonwealth Court opened a new world of treatment options for injured workers in the state that could also lessen or eliminate future societal costs levied by continued widespread opioid use and abuse.

Once again embracing opioid alternatives as treatment for injured workers’ pain, the Commonwealth Court recently ruled in Schmidt v. Schmidt, Kirifides and Rassias, PC (Workers’ Compensation Appeal Board), No. 1039 C.D. 2021, that cannabidiol (CBD) oil was a reimbursable treatment under the WCA because it was both a medical “supply” and a “medicine” under the WCA. The injured worker in the case was himself a workers’ compensation attorney who admitted in his court papers that the main purpose of his case was to further develop case law regarding reimbursement of CBD products under the WCA. Mission accomplished.

Injured workers’ compensation attorney seeks reimbursement for use of CBD oil to treat his pain

Mark Schmidt, a workers’ compensation attorney at Schmidt, Kirifides and Rassias, PC, in Media, Pa., suffered a back injury while loading files into his trial bag. Schmidt was diagnosed with aggravating a preexisting degenerative disc disease in his lumbar spine. Schmidt’s work injury treatment involved pain management care, including Oxycodone and OxyContin prescriptions. He took the latter twice daily, and the former as needed. Because excessive sitting aggravated Schmidt’s pain, his treating physician suggested increasing the dosage of his pain medication.

Concerned that increased doses of opioids would affect his ability to represent clients, and unwilling to undergo surgery because of the risk of a prolonged recovery period, Schmidt initially underwent pain injections, but those provided only several days of relief. Ultimately, Schmidt’s doctor prescribed CBD oil to avoid increasing the OxyContin and Oxycodone dosages. The CBD oil treatment successfully treated Schmidt’s pain.

Schmidt’s employer refused to reimburse him for the out-of-pocket cost of the CBD oil because it was not a pharmaceutical drug. Schmidt filed a penalty petition alleging his employer violated the WCA by failing to reimburse his out-of-pocket costs for medical treatment. A Workers’ Compensation Judge (WCJ) concluded that the CBD oil was compensable under the WCA, finding that the treatment was reasonable and necessary to manage Schmidt’s work injury-related pain while avoiding increased opioid use and delaying the need for surgery. The WCJ also credited expert testimony that CBD oil was a “dietary supplement” rather than an over-the-counter drug and ruled that the oil qualified as a “[medical] supply” under the WCA.”

The Workers’ Compensation Appeal Board (WCAB) reversed the WCJ’s decision. First, it held there was no need to reach the question of whether CBD oil was a “supply” under the WCA because Schmidt did not comply with legal requirements that would trigger his employer’s duty to pay. Second, the WCAB held CBD oil could not be a reasonable and necessary medical treatment or supply under the WCA because the FDA has concluded that CBD oil has not been proven safe or effective.

The Commonwealth Court reverses the WCAB, holding that CBD oil is a compensable “medicine” and “supply” under the Workers’ Compensation Act

Schmidt appealed the WCAB’s decision to the Commonwealth Court, which reversed the decision and ruled in his favor.

First, the Commonwealth Court ruled the WCAB had violated the standard of review in reversing the WCJ’s decision. Specifically, the court found that the WCAB had improperly disregarded the WCJ’s findings of fact and instead engaged in its own fact-finding regarding Schmidt’s use of the CBD oil he purchased, his doctor’s prescribing CBD oil as part of his medical plan, and the evidence establishing non-payment of Schmidt’s CBD oil expenses. The court found that the WCAB did so to support its preferred conclusions.

Second, the Commonwealth Court agreed with Schmidt that the WCAB erred when it refused to define whether CBD oil qualified as a “medicine” or “supply” under the WCA because, as noted above, it concluded Schmidt did not trigger his employer’s duty to reimburse because he failed to submit certain paperwork. The court ruled the WCAB erred because, as discussed below, the submission requirement was for medical providers as they are defined by the WCA and not individuals.

Third, the Commonwealth Court agreed with the WCJ that CBD oil qualified as a “supply” as well as a “medicine.” Schmidt’s employer argued that “supplies” under the WCA had not been interpreted previously to include substances which are sold in health food stores without a prescription and that the FDA has determined are not safe or effective for any purpose.

Noting that a regular dictionary defined “medicine” as a substance that treats disease or “something other than disease,” a medical dictionary defined a medical “supply” as one that “is essential for treating illness or injury,” and Schmidt’s CBD oil benefitted his well-being by “reducing his pain, eliminating his need to increase the use of highly addictive opioid medications, and forestalling expensive and risky surgery,” the Commonwealth Court held CBD oil fits within the WCA’s definitions of “medicines” and “supplies.”

Fourth, the Commonwealth Court held the WCAB erred by concluding that Schmidt was required to submit the same billing forms required of treatment providers to obtain reimbursement for the costs of medicine and supplies to treat his work injuries. The court ruled that requirement applied to providers, which Schmidt was not. Thus, in order to obtain reimbursement, all Schmidt had to do was submit his doctor’s CBD oil prescription and receipts showing he purchased CBD oil. Schmidt had done both. To support its position, the court cited the Fegley case I mentioned in the introduction above.

Fifth, the Commonwealth Court dispensed with Schmidt’s employer’s argument that CBD oil could not be a reasonable and necessary treatment because it was not FDA-approved or was illegal under federal law. The court explained that the time for an employer to take issue with a treatment’s FDA approval is during a Utilization Review—not a penalty petition, which was the posture here—because a treatment’s FDA approval speaks to the reasonableness and necessity of the treatment.

Sixth, the Commonwealth Court ruled the WCAB erred by concluding that to reimburse Schmidt for his CBD oil would violate federal law by directing a claimant to be reimbursed for an over-the-counter dietary supplement. The court found there was no evidence that the CBD oil Schmidt used violated federal law, and because the WCAB was not the fact-finder, it exceeded its authority by concluding the contrary.

Finally, the Commonwealth Court held the WCAB erred by improperly focusing on the impact on insurers of having to reimburse CBD oil purchases to the detriment of the WCA’s humanitarian objectives concerning injured workers’ rights to treatment and the goal of getting those workers back on their feet and back to work.

This court’s decision, penned by Judge Anne E. Covey, was not unanimous. Judge Christine Fizzano Cannon authored a dissenting opinion arguing that CBD oil could not be a “medicine” or “supply” eligible for reimbursement under the WCA because it was not approved by the FDA for Schmidt’s intended use as a dietary supplement and for oral use to relieve pain. Judge Fizzano Cannon further argued that Schmidt’s oral use of dietary CBD oil was not within his doctor’s treatment plan. In a concurring opinion, Judge Stacy Wallace contended that under the WCA, CBD oil was a “medicine” but not a “supply,” referring to the dictionary definition of “medicine” as including “any drug or remedy.” Because the WCA expressly defined “drugs,” Judge Wallace concluded that the CBD oil as used by Schmidt still qualified as a reimbursable remedy for his pain.

Another step toward reimbursable opioid-free treatment for Pennsylvania’s injured workers

By holding that CBD oil is both a reimbursable “medicine” and a “supply” under the WCA, the Commonwealth Court has further communicated its belief that medical marijuana and similar derivatives like CBD oil are becoming increasingly accepted—and should be increasingly accepted—in the workers’ compensation community as an alternate means of pain control that avoids the significant risks of opioid use and the risks that come with invasive and expensive surgery.

Almost as important, the Commonwealth Court ruled that Schmidt and CBD oil users like him do not have to submit reams of paperwork to be reimbursed for CBD oil purchases. This makes it easier for injured workers to seek out-of-pocket reimbursement from insurers for CBD oil and similar treatments.

Schmidt is the latest piece of evidence that we are witnessing a real-time shift in Pennsylvania’s workers’ compensation landscape toward medical marijuana and its derivatives as reimbursable pain treatment alternatives. As I discussed in my previous article regarding Fegley, this is a mutually beneficial development for injured workers, insurers, and society.

When medical marijuana and CBD treatments successfully manage injured workers’ pain, they avoid racking up large medical bills and relying on long-term use of addictive opioids. Our society also benefits from both developments. That is the quintessential win-win.

Ashleigh Q. Gallagher is a workers’ compensation attorney at Pond Lehocky Giordano LLP, the largest workers’ compensation and disability law firm in Pennsylvania, and one of the largest in the United States. She can be reached at agallagher@pondlehocky.com.

Reprinted with permission from the January 11, 2024 edition of The Legal Intelligencer © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.

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