• Robert Mikos

Are State Workers’ Compensation Laws Preempted? The Answer May be in the Framing

State marijuana reforms spawn a host of interesting and complicated questions for employers. One such question has recently divided state courts. Namely, courts in at least two states have reached different conclusions regarding whether employers must compensate employees for the costs of treating workplace injuries with medical marijuana. The key issue dividing these courts is whether such a requirement – imposed as part of a state workers’ compensation program – is preempted by federal law.

In this post, I’ll discuss two recent state court decisions that take different sides on the preemption issue. I’ll then offer a few comments and observations about the merits of each side.

Bourgoin v. Twin Rivers (Maine Supreme Court, June 2018)

Bourgoin was an employee of Twin Rivers Paper Company. After a work-related injury left him with chronic back pain, Bourgoin sought medical treatment. Pursuant to the state’s worker compensation law, the Maine Workers’ Compensation Board (WCB) ordered Twin Rivers to pay for the costs of that treatment—which, in this case, happened to be medical marijuana recommended by Bourgoin’s physician under Maine’s medical marijuana law. Twin Rivers objected, citing the fact that marijuana remains illegal under federal law. Although a state appeals court upheld the WCB’s order, the Maine Supreme Court reversed.

The Bourgoin Court found the WCB order was preempted because it forced Twin Rivers to violate federal law—namely, it forced the employer to aid and abet an employee’s possession of marijuana. The order thus created a rare impossibility conflict with federal law. The court explained:

“Compliance with both [the WCB order and federal law] is an impossibility. Were Twin Rivers to comply with the hearing officer’s order and knowingly reimburse Bourgoin for the cost of the medical marijuana . . . , Twin Rivers would necessarily engage in conduct made criminal by the CSA because Twin Rivers would be aiding and abetting Bourgoin—in his purchase, possession, and use of marijuana —by acting with knowledge that it was subsidizing Bourgoin’s purchase of marijuana. . . . Conversely, if Twin Rivers complied with the CSA by not reimbursing Bourgoin for the costs of medical marijuana, Twin Rivers would necessarily violate the [WCB order].”

Bourgoin (pages 15-16) (emphasis added).

Hager v. M&K Construction (New Jersey Superior Court, Appellate Division, January 13, 2020)

The facts of the second case are similar. The employee (Vincent Hager) had been injured on the job back in 2001 and suffered chronic back pain as a result of that injury. Although Hager tried a variety of more traditional treatments – including physical therapy, spinal surgery, and Oxycodone – none of those treatments worked satisfactorily and / or they came with serious side effects (like the risk of addiction associated with opioid painkillers).

In 2016, the employee’s physician recommended a new course of treatment: medical marijuana. Hager, who satisfied all of the requirements for becoming a Qualifying Patient under New Jersey’s medical marijuana law, tried the drug and reported that it gave him “some relief from the pain.” Hager at 8. Hager then asked M&K to reimburse him for the cost of his medical marijuana (roughly $600 per month for two ounces), citing New Jersey’s worker’s compensation law. Under that law, an employer “must provide a worker injured in the course of employment with medical treatment and services necessary ‘to cure and relieve the worker of the effects of the injury and to restore the functions of the injured member or organ’ if possible.” Id. at 26-27 (quoting New Jersey Statutes 34:15-15.)

However, M&K refused to reimburse Hager for his medical marijuana. Among other things, the employer claimed the state could not order an employer to pay for a drug banned by federal law (i.e., that any such requirement is preempted). In particular, the employer argued that the federal CSA preempts any reimbursement requirement because it is “impossible to simultaneously comply” with both the federal law and the state reimbursement order. Id. at 14.

This same preemption claim prevailed in Bourgoin v. Twin Rivers. However, the New Jersey court rejected the preemption defense, for two main reasons.

First, the court held that the employer wouldn’t actually violate federal law by reimbursing the employee for the costs of his medical marijuana:

“Under the CSA, the possession, manufacture, and distribution of marijuana is a criminal and punishable offense. But an employer’s reimbursement of a registered MMA patient’s use of medical marijuana does not require the employer to commit those offenses.”

Hager at 20-21.

The court noted that the state worker’s compensation program “does not require an employer to possess, manufacture or distribute marijuana – the actions proscribed by the CSA.” Id. at 21. But it also found that the employer would not be “aiding and abetting” the employee’s commission of a federal crime (possession of marijuana) either. Id.

As I explain in my book on pages 571-577, there are two basic elements to any aiding and abetting offense: (1) provide some assistance (however trivial) in the commission of a crime; and (2) do so with the desire to help the crime succeed. The second element (the mens rea) is the more difficult one for the government to satisfy.

In Hager, the court found that the employer would lack the necessary mens rea (intent) to aid and abet its employee’s possession of marijuana. Why? Because M&K did not want to help Hager get the drug – it was only being forced to do so by a state administrative agency:

“Under the circumstances presented here, M&K is not an active participant in the commission of a crime. The employer would be complying with an order requiring it to reimburse a person for the legal use of medical marijuana under this state’s law. M&K has not established the requisite intent and active participation necessary for an aiding and abetting charge.”

Hager at 22. (The dissent in Bourgoin made a nearly identical argument.)

Let me offer three thoughts on the opinions.

1) Bourgoin probably reached the correct result, but its reasoning is flawed

The Hager court highlights a serious problem with the majority’s reasoning in Bourgoin. Namely, forcing employers (like Twin Rivers or M&K Construction) to compensate injured employees for the costs of medical marijuana does not necessarily put the employers in violation of federal law. After all, such employers probably lack the desire to help their employees violate the federal Controlled Substances Act – a key element of aiding and abetting liability.

However, the Hager court runs into its own problem: if its logic is correct, impossibility conflicts probably should not exist. After all, state orders to violate federal law would always (or almost always) absolve private citizens of liability under federal law. Under the Hager court’s reasoning, for example, a state order to M&K Construction to dump toxic waste into the ocean in violation of federal law—or else pay a steep state fine—would not be preempted by federal law, because the company could probably raise a successful duress defense against any federal enforcement action.

Ultimately, I think the Bourgoin court could have avoided the problem flagged by the Hager court simply by reframing the preemption claim. For one thing, the majority could have found that it was the state (namely, the Workers’ Compensation Board) – rather than the private employer – that would be aiding and abetting Bourgoin’s marijuana possession. Indeed, for purposes of preemption, the focus is usually on the actions and mindset of the state, not the employer regulated by the state. And it appears that the state wants to enable the employee to obtain marijuana. Focusing on the mindset of state officials avoids the mens rea issue raised by the Hager court, but the result would be the same – i.e., the workers’ compensation order would be preempted by federal law.

2) Both courts curiously ignore obstacle conflict preemption

Obstacle conflicts arise when state law undermines the objectives of a federal statute, even when state law does not make it impossible to comply with the federal law. Here, for example, the court could have found that the workers’ compensation order undermined federal law, even if it does not (as the court held) require an employer to violate federal law, because the order subsidizes use of a substance federal law seeks to eradicate altogether.

But curiously, neither Bourgoin nor Hager bothers to address obstacle conflict preemption.

To be sure, I’m relieved the courts didn’t address obstacle preemption. For reasons I discuss at length in this article, I think courts should limit preemption under the CSA to impossibility conflicts — and ignore any obstacle conflicts. Obstacle conflict doctrine is notoriously malleable, and courts and commentators have done a poor job applying that doctrine to state marijuana reforms. To date, however, most courts have rejected that view, thus making Bourgoin and Hager outliers. Ultimately, obstacle conflict preemption might have provided an alternative grounds upon which to hold these state workers’ compensation laws preemption.

3) Nonetheless, I think courts could preserve state workers’ compensation orders by reframing these cases.

Even though I think Bourgoin probably reached the correct result (for both reasons just discussed), let me suggest a different way of framing these cases that would enable courts to preserve state workers’ compensation orders from federal preemption claims.

The key is in recognizing that the state isn’t necessarily requiring an employer to cover the cost of medical marijuana (per se), as the Hager and Bourgoin courts assume. Rather, perhaps the state is just requiring the employer to pay for an injured employee’s reasonable medical expenses, whatever those expenses might involve. In Hager, for example, the state could order the employer to reimburse the employee the reasonable costs of his medical treatment – in this case, $600 per month – without declaring that the money is necessarily for medical marijuana or that Hager necessarily must spend it on medical marijuana.

Put another way, the payment from an employer like Twin Rivers or M&K could be considered compensation for medical injuries an employee suffered on the job. Under this framing, the employer would not be liable for aiding and abetting the employee’s possession of marijuana (even if the employee does use the money to buy the drug), because the employer was just seeking to reimburse him for his medical injury. In similar fashion, the state workers’ compensation board would not be aiding and abetting the employee’s purchase of medical marijuana, because it was just seeking to ensure that the employee was fairly compensated for a work-related injury. Even if the employer / workers’ compensation board knows that the employee will spend the money on medical marijuana, they’re still not giving the employee the money with the intent to help her buy the drug – i.e., they’re still not aiding and abetting such possession; rather, they are paying her because she was injured on the job.

In sum, state workers’ compensation laws pose an interesting – and complicated – question of federal preemption. Although courts have reached different results on the preemption issue, I think none has yet adequately addressed the issue. Ultimately, the resolution of these claims may depend on how one frames the state workers’ compensation law. On the one hand, these laws would be preempted if the state is portrayed as affirmatively assisting an individual in violating federal law—here, by forcing an employer to pay for the employee’s marijuana. On the other hand, these laws might be preserved if the state instead is portrayed as merely ensuring that an employee is justly compensated for being injured on the job.

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