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Insurer says it shouldn’t have to pay for medical marijuana

The Maine supreme court is wading into the issue of medical marijuana and workers’ compensation

AUGUSTA, Maine (AP) — The Maine supreme court on Wednesday began considering whether a paper millworker left suicidal by narcotic painkillers should receive workers’ compensation for medical marijuana.

It’s the first time the court has considered the question of insurance reimbursement for medical marijuana.

Madawaska resident Gaetan Bourgoin won a ruling from the state’s Workers’ Compensation Board two years ago saying the paper mill’s insurer must reimburse him for medical marijuana. He contends marijuana is cheaper and safer than narcotics.

But Twin Rivers Paper Co. and its insurer appealed the ruling, arguing that paying for pot use, even for medical purposes, could expose the companies to prosecution since marijuana still is illegal at the federal level.

With medical marijuana legal in Washington, D.C. and 29 states, insurers across the country have been confronted with the same dilemma. Uneven state laws on reimbursement further complicate the issue.

Five states — Connecticut, Maine, Minnesota, New Jersey and New Mexico — have found medical marijuana treatment is reimbursable under their workers compensation laws, according to the National Council for Compensation Insurance. Florida and North Dakota, meanwhile, passed laws this year excluding medical marijuana treatment from workers’ compensation reimbursement.

Members of the Maine Supreme Judicial Court posed hypotheticals to the attorneys arguing the case. One asked Bourgoin’s attorney what he’d do if a client needed cocaine for pain treatment, and another asked Twin Rivers’ attorney whether she believes the federal government will start prosecuting insurers for medical marijuana reimbursement.

Justice Donald Alexander repeatedly questioned whether marijuana use should remain illegal under federal law and contrasted the drug with opioid-based painkillers, which he said drug companies have lobbied Congress to protect.

“Opioids are killing people every day in Maine,” he said.

Bourgoin’s case dates to 1989, when he hurt his back as a 29-year-old at the paper mill now known as Twin Rivers.

His attorney, Norman Trask, said Bourgoin pays for medical marijuana out-of-pocket and receives reimbursement from Twin Rivers’ insurer. Bourgoin previously took opioid-based painkillers, which caused other problems.

“At one point he was on such high dosages that they were concerned about his oxygen levels at night,” Trask said. “He became suicidal.”

Twin Rivers attorney Anne-Marie Storey said paying for medical marijuana puts the company in violation of federal law. The company contends that Maine’s medical marijuana law does not explicitly require an insurer to cover the cost of medical marijuana.

“This is not a case about making judgment over whether someone should use or not use marijuana as a matter of personal choice,” she said. There’s a scarcity of research on medical marijuana, and “nobody knows” how safe it is, she said.

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As marijuana attitudes ease, workplace drug testing companies brace for fight

July 12, 2015 12:00 AM

Jeff Fox, of Finleyville, Pa., signs off after his drug testing with Kelly Wilhelm at a construction site in the Uptown section of Pittsburgh. Fox is a carpenter with Easley & Rivers Construction of Monroeville. Wilhelm is with Mobile Medical Corp., a Bethel Park drug-testing company.

 

By Daniel Moore / Pittsburgh Post-Gazette

As attitudes toward marijuana become more lenient and states authorize its use for medicinal — or even recreational — purposes, a long simmering debate over the efficacy of workplace drug testing has found a new flash point.

Marijuana accounts for more failed workplace drug tests than any other substance, and the new laws have the potential of decreasing or eliminating employer testing for it.

Defenders of drug testing maintain that employees who use drugs, including marijuana, have been found to miss more work, cause more accidents, change jobs more frequently and ultimately cost employers more money.

Many of those defenders happen to be part of the drug test industry, comprising large diagnostic laboratories and smaller third-party companies, which has mobilized to oppose the wave of legislation and litigation that it expects to rise from the conflict between workplace policies and changes in laws.

But voters in four states and the District of Columbia have voted to legalize recreational marijuana, and nearly half of states allow it for medical treatment. This month, Oregon’s recreational pot laws went into effect.

 

Employers typically give drug tests as part of the hiring process, immediately after a workplace accident or at random times. “No single drug test is going to detect all use,” acknowledged Dr. Barry Sample, director of science and technology at Quest Diagnostics Employer Solutions.

A Pennsylvania bill that would allow medical marijuana use has passed the state Senate and is under debate in the House. Democratic Gov. Tom Wolf has signaled support, and a Quinnipiac poll in March showed six out of of seven registered voters in Pennsylvania support it.

“No one is following the marijuana issue more closely,” according to the Drug & Alcohol Testing Industry Association’s website. The association has assembled pamphlets to assist businesses in defending their drug testing programs, complete with talking points that bust “the top 10 marijuana myths.”

It has also aggregated all U.S. state bills attempting to change marijuana’s legal status and is soliciting donations to fund its own research to help businesses understand the risk of abandoning drug testing programs.

The association’s Executive Director Laura Shelton tells business clients to follow federal regulations, which list marijuana as a Schedule I drug — an illegal substance with no acceptable medical use in treatment and a high potential for abuse.

“Our advice at that if you want to maintain a safe and drug-free workplace, test for those drugs” outlawed under federal regulations, Ms. Shelton said.

Effectiveness debated

Experts and researchers have disagreed on the effectiveness of drug testing since the 1980s, when it began in earnest after President Ronald Reagan, a Republican, signed an executive order requiring it for federal employees. A separate U.S. Department of Transportation rule shortly thereafter added certain safety-sensitive jobs, such as truck drivers, railroad operators, pilots and pipeline workers.

The standard test collected urine samples and flagged those that showed use of any one of five drugs: marijuana; cocaine; amphetamines and methamphetamines; opiates; and phencyclidine or PCP.

Private sector employers outside of those requirements soon followed suit. In a 1987 survey, the American Management Association found 21 percent of major U.S. firms had testing programs. By 1996, that had risen to 81 percent.

In 2014, one of the largest clinical laboratories, New Jersey-based Quest Diagnostics, tested 9.1 million urine samples — 6.6 million for employers who chose to institute drug testing programs. That compares with 7.6 million tests in 2013, with 5.6 million from workplaces who instituted drug testing policies.

It is difficult to tie drug testing numbers directly to employers’ appetites for such services because the number of tests given is most dependent on hiring trends; the more people that businesses are hiring, the more drug tests are typically done.

The number of failed drug tests has fallen nearly every year from a rate of 13.6 percent in 1988 to 3.9 percent in 2014, according to Quest. Most of that decline happened in the early years of drug testing; in the past decade, the rate has stayed mostly flat.

Barry Sample, director of science and technology at Quest Diagnostics Employer Solutions, said the fact that federal data shows that workplaces without testing programs have seen a bigger increase in current drug users confirms the deterrent effect.

That “really reinforces for those employers why they should continue to remain vigilant and not relax,” he said.

Dave Daquelente, director of labor management & operations at Mobile Medical Corp., a Bethel Park drug testing service, said Pittsburgh-area businesses are demanding the tests more than ever and asking for expanded tests for opiates and amphetamines to counter a trend of prescription drug abuse involving substances such as Vicodin and Oxycontin.

But privacy groups have questioned whether businesses are realizing the promised results.

The American Civil Liberties Union criticized much of the data the drug testing industry has cited, instead backing a 1994 National Academy of Sciences study that found no evidence that marijuana use was any more of a workplace detriment than alcohol.

Michael Frone, senior research scientist at the State University of New York at Buffalo, said there has been no credible evidence that testing programs deter workers from using drugs. Rather, heavy drugs users may go to workplaces without testing programs and others may simply use less frequently to avoid detection.

Mr. Frone, who wrote the 2013 book “Alcohol and Illicit Drug Use in the Workforce and Workplace,” also said little research has directly assessed the effect of testing programs on productivity and attendance. Even if employees fail a test, he added, it doesn’t prove that they were unproductive on the job.

“A positive drug test provides no information on when an illicit substance was used, how often or how much is typically used or if the person was or has ever been impaired at work,” he said.

Legal Confusion

Drug testing’s supporters and critics both agree that changing marijuana policies pose a threat to the practice.

“For an employer who has facilities in several different states, it makes it difficult to have a uniform policy when you have multiple state with different laws,” said Clare Gallagher, a labor and employment partner at Eckert Seamans Cherin & Mellott, a Downtown firm that last November created a regulated substances practice group.

Mr. Daquelente said business clients of Mobile Medical Corp., particularly those spread across the country, are confused.

“They’ve had real concerns about their employees who may visit somebody or go to work in Colorado and Washington,” he said. “What happens if someone goes away for the weekend and smokes marijuana and comes back to the job site Monday morning?”

Under Pennsylvania’s medical marijuana bill now being considered, employers would not be allowed to fire employees who are using marijuana off work hours and with a valid doctor’s recommendation. Employers would retain the right to fire marijuana patients if they are intoxicated on the job.

Robert DuPont, president of Rockville, Md.-based Institute for Behavior and Health Inc., thinks the U.S. Supreme Court will ultimately have to reconcile the disagreement between state and federal laws.

“There’s a conflict issue around privacy and productivity and concern about worker’s health,” Mr. DuPont, who was a director of the National Institute on Drug Abuse in the 1970s.

Policy analysts and lawyers said, at least in the short-term, employers can expect the courts to rule in favor of federal law. Last month, the Colorado Supreme Court unanimously affirmed that Dish Network, as a private employer, had the right to fire an employee for failing a drug test, despite that employee’s legal right to use the drug in that state.

A hiring hurdle?

In Pennsylvania workplaces that have federally regulated jobs, such as manufacturing plants and energy production, some employers have said they struggle to find enough applicants who can pass drug tests.

A survey last year commissioned by the Pennsylvania Manufacturing Association found as many as a third of all applicants either fail drug tests or fail to show up for them. “The fact that 19 percent refuse to take drug tests as a condition of employment and 16 percent fail these tests raises a red flag,” it read.

“It’s a problem. It’s a real thing,” David Taylor, president of the manufacturer’s association, said. “It’s a great source of frustration.”

Unemployment advocates have denied that there is a hiring issue.

“You know, it’s funny how much I don’t hear about this anymore,” said Tim Styer, jobs developer for the Philadelphia Unemployment Project. “I think people out there looking for work, they clean their stuff up as much as they can.”

Daniel Moore: dmoore@post-gazette.com, 412-263-2743 and Twitter @PGdanielmoore.

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High on Marijuana Insurance

By Amy O’ Connor | September 8, 2014

 

Specialty brokers looking to get insurers hooked on emerging industry

The legal marijuana industry in the United States is experiencing tremendous growth.

Legal cannabis markets in the United States are expected to grow 700 percent over the next five years, according to an industry report titled, “The State of Legal Marijuana Markets 2nd Edition,” published by The ArcView Group.

The report values the U.S. legal marijuana market, which comprises all states that have active and open sales of cannabis to people legally allowed to possess it under state law, at $1.53 billion. The national market is projected to grow 68 percent to $2.57 billion by the end of 2014.

The five-year national market potential is $10.2 billion, according to ArcView. Gains will stem from increased demand in existing state markets, as well as from new state markets coming online within a five-year horizon.

As individual states try to determine where they stand on the legalization of medical and recreational marijuana use, insurers are also evaluating this segment and what coverages – if any – they are prepared to offer to the businesses selling and growing medical or recreational cannabis products.

Those who specialize in this class say agents and brokers shouldn’t be deterred by the stigma that goes along with it; instead they should learn about the segment’s needs so they can take advantage of growing business opportunities.

The legalization of marijuana for recreational use in both Colorado and Washington has led to a slew of new business ventures in both states. The Associated Press reported in December 2013 that the state of Washington received nearly 1,700 business applications between when the license application window opened on Nov. 13, 2013, and mid-December for those looking to grow, process or sell cannabis under the new recreational marijuana law.

Marijuana sales in Colorado totaled $15.3 million for the first five months of the year, according to the Colorado Department of Revenue, and the Denver Post reported the state has seen record tourism numbers so far in 2014.

Whether they are a grower, dispensary owner, supplier or processor, marijuana entities looking to sell to the public are now businesses that need insurance, says Ed Kuhn, president of Creative Edge Nutrition (CEN) and the newly formed Wellness Medical Protection Group/Liability Insurance Solutions.

“These business owners need help figuring out issues like: Where can I set up a dispensary? What are the state regulations? What is my workers’ comp liability? And what are the liabilities that other businesses have like theft, fire, business interruption, etc. They have unique issues and those need to be seen and be addressed,” he says. “They have a lot of investment dollars going into this industry and they are concerned about what happens to their investment dollars if they are shut down or don’t obey state regulations.”

Insurance coverage requirements can include and are not limited to: workers’ compensation, business interruption, theft, products liability, cargo insurance, BOP coverage, equipment breakdown, and cyber liability – particularly for those medical marijuana dispensaries that store patients’ personal information.

There is also opportunity for agents beyond the marijuana-related businesses themselves because they work with vendors that welcome the expertise an agent that specializes in the marijuana industry can offer, says Mike Aberle, vice president of sales and marketing for Next Wave Insurance Services, the program administrator for the marijuana-focused entity MMD Insurance.

“It is a brilliant marketing campaign. Most of these people also have businesses outside cannabis and they made money before this,” says Aberle. “The agent, by promoting that they do this segment, can also get other policies from those working with the [marijuana entity] but have nothing to do with cannabis except for how they work with the operations.”

Aberle says MMD’s core program started with indoor/outdoor cultivators and retailers and has since grown to cover the businesses that work with them like construction, security and supply companies.

“These ancillary businesses can help you feed your company based on a single classification, which is cannabis. And if you are an agency that relies on referrals, then hopefully those people will turn around and refer you to other industry business owners too,” he says.

Cannarisk, a division of BIM Agency, a Washington-based construction insurance brokerage, is the result of agent Matt Gunther’s figuring that as the marijuana industry became more accepted, the businesses that sell products would need insurance.

“I am 36 years old and I felt like insurance was an old man’s game, particularly on the commercial side. I realized as recreational goes legitimate, just like in construction, it will be required to have insurance,” says Gunther. “This is unprecedented and unchartered territory and nobody knows what the risks are ahead of us. It makes sense for state and local governments to require liability insurance to protect the public.”

Cannarisk launched in Washington state in early 2014 around the time producers, growers and retailers were getting licensed. It is focused on serving medical and recreational marijuana-related businesses in the state. Gunther says being located in the state has proven to be a big advantage.

“We are trying to establish ourselves as a local face that understands the business and provides the needed services. We also provide additional value because we can be a wholesale access point for retail agents too,” he says.

Gunther says right now they are just targeting the recreational facilities that must carry insurance, not the medical facilities because insurance is optional for them. He has found that many medical facilities don’t want to pay the cost even though premiums are low for the medical dispensaries.

Recreational growers, however, are required to disclose their growing locations by Washington state law, which Gunther says his agency has been able to use to its advantage.

“We can convey to the growers that their locations are public information and people know where you are growing your product. Now you really have an exposure,” he says.

Creative Edge Nutrition sees opportunity on the medical side. The health, wellness and alternative treatments company entered into a joint venture with RXNB Inc. in June to offer marijuana liability insurance in North America through The Wellness Medical Protection Group (WMPG).

Kuhn heads the new venture, which offers medicinal marijuana coverage for the grow and harvest of product, extracts, facilities, landlords, dispensaries and the medicinal prescriber. Coverage is available through Lloyd’s of London. He says WMPG’s coverage is available through its CANNAPROTECT program for all medical marijuana-related areas, including anti-aging and aesthetic treatments, cash-based practices, and alternative treatment facilities.

WMPG will be mainly focused on medical cannabis practices but will also cover recreational facilities in Washington and Colorado.

“We think there will always be two segments of the market – the prescription-quality marijuana that is only available through the medical side, and recreational that isn’t used for ailments,” says Kuhn.

Carrier Reaction

Not surprisingly, Kuhn says insurance markets are currently more comfortable with covering the medical side because it is a more established industry with more controls in place. He says he has heard from carriers that will not work with recreational facilities at this time.

“Carriers are spooked by the lack of a federal position and if they have big limits exposed and something happens in Washington or Colorado, it could be huge for them,” he says. “Markets feel more comfortable with medical marijuana because it is dispensed through a physician.”

Cannarisk’s Gunther says he didn’t expect there to be much competition from other agencies because of the exposures, which has so far turned out to be true. He says the reaction from the rest of the industry toward this segment – particularly carriers – has been skeptical and prudent. He said they are working with a “limited number of carriers,” with three main ones really willing to insure the risk.

“There are a few on the outskirts looking in. They are being very cautious, as they should be, because how do you measure the risk?” he says. “But these [business owners] are professionals. There is a misconception from people in other states that these are all stoners starting a business, and that is not the case at all. These are professionals who are extremely educated and they are opening up with the desire to work with a local broker.”

MMD’s Aberle says it is customary for states to start with legalizing medical marijuana before they will look at the recreational side. These frequent changes and unknowns in the industry are a put-off to carriers, he says. Lloyd’s has been the only carrier Aberle has found that will be flexible in adjusting the coverage and limit options on a needed basis.

“If I were to request as many changes as I have made in a given year with another carrier, they would have dropped the program. This industry has so many changes and needs all the time that you have to be consistently moving forward,” he says.

MMD has also received requests from states, counties, cities, and policy departments for its loss guidelines and has lent its expertise to answer questions about the role insurance will play in the development of a legitimate marijuana industry. As state government or regulatory agencies set certain insurance standards, Aberle says the industry will play a big part. However, carriers’ leeriness in offering the required limits or coverages can make it difficult for the marijuana industry to move forward.

“We will continue to work with these people to help carve out a proper industry. … We have had to do a lot of work in the insurance industry and show a lot of data to say this is a viable business and you will be profitable writing,” he says. “We have also had to work with cities and states to show them that certain insurance options are just not available because there is no carrier willing to do it.”

Products completed or products liability coverage is an area that makes carriers nervous, says Aberle, and it is also a coverage that is required of all recreational operations in both Washington and Colorado.

MMD launched the coverage for recreational facilities on a claims-made form in January, though it always offered the coverage for medicinal facilities on an occurrence form. Aberle says carriers were more comfortable offering the coverage on a claims-made basis for the marijuana industry.

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Aberle is encouraged by the movement he’s seen from other carriers that haven’t written this class in the past, but for now they are mostly “window shopping.”

“They want to know about it because it sounds cool and the industry loves to talk about it and know more and that’s a great thing,” he says. “For us, it is has gone from ‘can we even mention we are writing it?’ to ‘we love telling everyone about it.’ The carriers still won’t write the business, but they love hearing about it.”

Editor’s Note: The marijuana products and facilities in this article were photographed at Top Shelf Cannabis in Bellingham, Wash.

About Amy O’ Connor

O’Connor is associate editor of MyNewMarkets.com.

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