Marshall Dennehey: Commonwealth Court Holds That an Employer’s Failure to Reimburse a Claimant for Out-of-pocket Payments for CBD Oil is in Violation of the Act.

Schmidt v. Schmidt, Kirifides & Rassias, Pa. C. (WCAB); No: 1039 C.D. 2021; filed Nov. 14, 2023; Judge Covey

In this case, the claimant, an attorney, sustained a work injury on April 14, 2017, while loading files into a trial bag. Benefits were awarded pursuant to a Claim Petition granted by a workers’ compensation judge. The decision indicated that the claimant’s treatment consisted of pain management and prescriptions, including CBD oil. The CBD oil was prescribed by the claimant’s treating doctor to avoid increasing Oxycontin and Oxycodone dosages. Receipts for both topical and oral CBD oil were submitted to the employer, who denied payment on the basis that CBD is not a pharmaceutical drug.

The claimant filed a penalty petition, alleging the employer violated the Act by failing to reimburse out-of-pocket costs for the CBD oil. In granting the penalty petition, the judge directed the employer to reimburse the claimant’s costs, but did not assess penalties. The employer appealed to the Workers’ Compensation Appeal Board.

The Appeal Board reversed the judge’s decision, concluding that CBD oil is not a reasonable and necessary medical treatment, considering that the FDA has issued several warnings to firms marketing CBD products. The Appeal Board also found the judge’s decision would compel the employer to violate federal law.

The claimant appealed to the Commonwealth Court, which reversed the Appeal Board. In doing so, the court addressed the issue of whether CBD oil is a medicine or supply within the meaning of the Act. Section 306(f.1) of the Act provides that an employer shall provide payment in accordance with the Section for reasonable medicines and supplies, as and when needed. The claimant argued there is nothing in the Act restricting compensable medicines and supplies to items which can only be obtained through a pharmacist and there is no language prohibiting reimbursement for medicines and supplies that can be obtained over the counter. The employer maintained that “supplies” was not to be interpreted to include substances sold in health food stores without a prescription and which the FDA has determined are not safe or effective, for any purpose. The employer additionally argued that Section 306(f.1)(1)(i) of the Act applies to reasonable surgical and medical services.

The Commonwealth Court held that CBD oil is a supply for purposes of Section 306(f.1)(1)(i) of the Act. The court noted that CBD oil was prescribed by a physician and that it benefited the claimant by reducing his pain and eliminating his need to increase the use of highly-addictive opioid medications. Further, the court found that CBD oil fits within the Act’s definitions of “medicines” and “supplies.”

The court additionally indicated that, if the employer did not consider CBD oil to be a reasonable and necessary form of medical treatment, it had the opportunity to submit the claim to the Utilization Review process, which it did not do. The Commonwealth Court found that CBD oil is both a medicine and a supply under the Act.

Finally, the court held that the Appeal Board erred in concluding that it would violate federal law if it directed reimbursement to a claimant for an over-the-counter dietary supplement. According to the court, although some companies marketing CBD products may violate federal law, that does not make a claimant’s use of CBD oil or an employer’s reimbursement of it illegal. No record was made that the CBD oil the claimant used was illegal under federal law.

An Appeal was filed on behalf of the carrier with the Pennsylvania Supreme Court on December 14, 2023.

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