.

What's Hot in Workers' Comp

The New Jersey Supreme Court addresses medical marijuana in workers’ compensation cases.

Hager v. M&K Constr., 246 N.J., 1247 A.3d 864 (2021) and Calmon v. Pepsi Bottling Group, No. A-2160-19, (App. Div. May 11, 2021)

July 1, 2021

by Kiara K. Hartwell

In Hager v. M&K Constr., the respondent, M&K Construction, appealed a workers’ compensation order to reimburse the petitioner for medical marijuana, which was prescribed after a work-related injury. The petitioner was injured in August 2001 while employed as a laborer for M&K. He underwent two back surgeries, but due to persistent pain, he took opioid medication. He began treating with Dr. Joseph Liotta in 2016, when he was enrolled in the medical marijuana program as an alternative pain treatment and a means to wean him off opioids. Although he started with an ounce per month, his dose increased to the maximum allowed—two ounces—which cost more than $600.00 per month.

At trial, Dr. Liotta testified for the petitioner, noting that he suffered adverse side effects from opioids and was “motivated” to stop, which happened a month after starting medical marijuana. Dr. Liotta indicated there is a smaller risk of addiction to marijuana and fewer serious side effects. The petitioner also testified that it helped him wean off opioids, lessened his pain and helped with muscle spasms. In addition, Dr. Cary Skolnick testified for the petitioner that he needed long-term pain management as a result of the August 2001 injury and that he was 100% permanently and totally disabled, apportioning 65% for the back injury and 35% due to medication effects.

On the other hand, Dr. Gregory Gallick testified for the respondent, finding the petitioner to be 12.5% permanently disabled and still capable of certain jobs. Dr. Robert Brady also testified in describing side effects and risks of medical marijuana. He noted both medical marijuana and opioids were equally psychologically addictive, though opioids were more physically addictive. He opined that medical marijuana was not proven effective for conditions such as the petitioner’s and, rather, the best form of relief would be physical therapy and home exercise.

The Workers’ Compensation Judge found 65% permanent partial disability, apportioning 50% for the orthopedic condition and 15% due to medical marijuana effects. In choosing between medical marijuana and opioids, the court noted medical marijuana was the “clearly indicated option” and ordered M&K to reimburse the petitioner for its costs. The judge found Dr. Liotta and the petitioner’s testimony to be more credible than that of Dr. Brady, specifically emphasizing the petitioner’s ability to wean off opioids. The court indicated that “the Legislature intended to make available the benefits of medical marijuana to persons displaying a medical need, despite the federal attitude toward the substance.” Finally, the judge rejected the notion that M&K was like a private health insurer or government medical benefit program, which would not be required to reimburse medical marijuana costs.

The Appellate Division affirmed the workers’ compensation court’s findings and further went on to analyze whether the New Jersey Jake Honig Compassionate Use Medical Cannabis Act (Compassionate Use Act) was preempted by the federal Controlled Substances Act (CSA). In doing so, the Appellate Division found the Compassionate Use Act did not require employers to “possess, manufacture, or distribute” marijuana per the CSA. In addition, the Appellate Division concluded there was no aider-and-abettor liability for assisting in the petitioner’s possession as M&K did not have the requisite intent and, thus, did not face a credible threat of federal prosecution.

The Supreme Court then granted M&K’s petition for certification. First, the Supreme Court considered M&K’s argument that it should not have to reimburse the petitioner for costs of medical marijuana under the Compassionate Use Act and N.J.S.A. 24:6I-14 as it exempts “a government medical assistance program or private health insurer” from reimbursement. The court rejected this argument, citing to the plain language of the statute and indicating a workers’ compensation carrier does not fall into either category. Furthermore, the court looked to the legislative intent in not specifically including workers’ compensation insurance in the Compassionate Use Act, as other states have done. Because the Legislature did not exclude workers’ compensation carriers and included “chronic pain” as a qualifying medical condition, M&K was not exempt from reimbursing the petitioner.

Next, the Supreme Court rejected M&K’s argument that medical marijuana was not a “reasonable and necessary treatment.” The court looked to a prior decision in Squeo v. Comfort Control Corp., 99 N.J. 588 (1985), where construction of an injured worker’s apartment was found to be reasonable and necessary. The Squeo court not only considered the petitioner’s loss of use of his arms and legs, but also the possible psychological harm due to the petitioner’s multiple suicide attempts after an offer for placement in a nursing home. Similarly, in this case, the court recognized a potential harm to the petitioner in continuing to use opioids. In addition, reimbursement of medical marijuana was noted to be much less unique than the construction of an apartment found in Squeo.

In returning to the first point, as the Supreme Court found M&K was obligated to reimburse the petitioner under the Compassionate Use Act and the workers’ compensation statute, the court then analyzed whether the federal CSA quashed M&K’s state law obligations. After finding guidance from the United States Supreme Court and several circuit courts, the court determined M&K could follow both the Compassionate Use Act and CSA, as the first does not create any obstacles in accomplishing congressional objectives. The court also acknowledged that its decision differed from other state supreme courts, but it noted they were not binding and that its decision was in line with legislative intent, an analysis of federal authorities and the principles of preemption.

Finally, the Supreme Court discussed M&K’s contention that reimbursing medical marijuana costs would be aiding and abetting the petitioner’s possession of marijuana. The court initially noted that M&K was not “electing” to aid the petitioner’s possession of marijuana but, rather, that it was being compelled by court order. Further, the court indicated M&K failed to demonstrate specific intent to aid-and-abet. Again, it was reiterated that M&K was being compelled by the court and, thus, could not be considered as intentionally committing an offense.

Approximately a month after the Supreme Court’s decision in Hager, the Appellate Division in Calmon v. Pepsi Bottling Group affirmed the workers’ compensation order to reimburse the petitioner for medical marijuana prescribed for a work-related back injury. As Hager addressed the same issues raised by Pepsi Bottling Group, the Appellate Division issued this decision after relying on Hager.

 

What’s Hot in Workers’ Comp is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2021 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

Two Tracks, No Preclusion: Ohio Supreme Court Preserves Separate Damages Claims After Chapter 2506 Appeals

The Supreme Court of Ohio has clarified that an administrative appeal under Ohio Revised Code Chapter 2506 does not bar a separate action for damages and declaratory relief that could not have been pursued in the administrative appeal. The Ohio Supreme Court considered Sheetz, Inc. v. Centerville (2026-Ohio-3531) as a result of a certified question from the Southern District of Ohio. The question was whether Sheetz, the gas station/convenience store brand, was barred from seeking damages in a separate action since damages were not sought in their administrative appeal. Ultimately, the Ohio Supreme Court ruled that res judicata does not bar a separate action for damages after ruling on an administrative appeal because R.C. Chapter 2506 is limited to judicial review and cannot grant affirmative relief. The case arose after Centerville’s city council rejected a site plan proposed by Sheetz, Inc. that had received unanimous approval from the City’s planning commission. Sheetz filed an administrative appeal pursuant to R.C. 2506 in the Montgomery County Court of Common Pleas, and two months later filed a complaint for damages and declaratory relief under 42 USC § 1983 as a takings action with the city, city council, and other objectors as improper takings and a violation of due process, as well as interference with business and contractual relationship. The city and city council removed the § 1983 action for damages to federal court. Montgomery County Court of Common Pleas reversed the city council’s denial, and allowed the Sheetz project to move forward. Upon that ruling, the federal court issued a show-cause order questioning whether the § 1983 action was barred by the doctrine of res judicata via claim preclusion (which includes all theories of recovery).  Sheetz argued that Ohio courts of common pleas do not have authority to award damages or declaratory relief as party of the R.C. Ch. 2506 appeal, therefore res judicata could not be triggered to apply to the § 1983 action. Additionally, Sheetz moved to certify the issue to the Ohio Supreme Court, citing differing results between the second and sixth districts on this same issue. Centerville approached the question, not from a claim preclusion standpoint, but from the holding in Grava v. Parkman, Twp which states that a final judgment rendered on the merits bars all subsequent action based on the same transaction or occurrence.  In yet another approach, an objector argued that claim preclusion was satisfied because Sheetz could have raised its damages claims in the administrative appeal – Sheetz disagrees. In their analysis, the Supreme Court of Ohio broke down the elements of a claim preclusion analysis: 1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or their privies, as the first; (3) a second action raising claims that were or could have been litigated in the first action; and (4) a second action arising out of the transaction or occurrence that was the subject matter of the previous action. The Court held that R.C. Ch. 2506 does not permit a party to argue damages as R.C. Ch. 2506 limits the common pleas jurisdiction as if it were sitting on appeal, and therefore can only affirm, reverse, vacate, or modify the appealed order, or can remand the case to the administrative body. Further, the Court held that Grava’s conclusion that a final judgment precludes additional litigation for different relief is inapplicable under this fact pattern because it was meant only to apply to those matters in which the plaintiff brings the exact same case twice, but for new relief. The Court found Grava was inapplicable because Sheetz could have requested damages or declaratory relief in the R.C. 2506 appeal. Therefore, Grava would be nothing more than dicta if it even did apply. Going further, the Ohio Supreme Court disavowed Sixth Circuit precedent which, in reliance on Grava and other district court decisions, permitted an owner to seeking relief under 42 U.S.C. § 1983 alongside an administrative appeal. See Moore v Hiram Twp., 988 F.3d 353 (6th Cir.2021). The Ohio Supreme Court found that the Sixth Circuit had disregarded a critical decision in Community Concerned Citizens, Inc. v. Union Twp. Bd. of Zoning Appeals, 1993-Ohio-115, which clearly held that a R.C. Ch. 2506 appeal cannot be combined with a complaint seeking other claims for relief. Id. at ¶ 11. To that end, the Ohio Supreme Court has determined that the decisions Moore relied on (outside of Grava) are no longer good law, and that Moore was wrongly decided. The decision draws a clear procedural boundary: Chapter 2506 provides judicial review of an administrative decision, not a forum for independent claims seeking affirmative relief. Although Grava may place claims arising from a single transaction within the potential scope of claim preclusion, those claims are not barred unless the complete claim-preclusion test is satisfied. Because Sheetz could not have pursued damages or declaratory relief in its Chapter 2506 appeal, the separate action was not precluded. The remaining question for practitioners looking to apply or defend against this exception is when does the statute of limitations begin to run on damages and declaratory relief claims related to an administrative decision on appeal? A takings action in federal court has a 2-year statute of limitations, or as a state claim, 4 years (like the other tortious claims raised therein). Correlating this case with others, an administrative appeal will not likely toll the statute of limitations on claims based on a final decision by a municipal authority. Therefore, practitioners should look for these cases to be brought simultaneously.

Thought Leadership

The Search-Incident-to-Arrest Doctrine Does Not License Strip Searches

In Beatty v. Gardner, No. 25-2860 (3d Cir. Sept. 16, 2026), Kyle Beatty sued police officers Clinton Gardner and Calvin Irvin under 42 U.S.C. § 1983 after they stopped, arrested, and searched him three times during a drug investigation in Williamsport, Pennsylvania. The officers initially smelled marijuana coming from the car in which Beatty was sitting and observed marijuana residue, giving them probable cause to arrest him. Beatty consented to the first pat-down, and the second search was conducted incident to his lawful arrest; neither search uncovered weapons or contraband. The officers then transported Beatty to the police station solely to strip-search him, but the strip search also revealed nothing. The District Court granted the officers summary judgment, concluding that the initial stop, arrest, and first two searches were reasonable and that qualified immunity protected the officers from liability for the strip search. The Third Circuit affirmed, but held that the strip search itself violated the Fourth Amendment. The court concluded that the search-incident-to-arrest doctrine does not automatically permit officers to strip-search an arrestee outside the jail or prison setting. Because strip searches are highly intrusive and the traditional justifications for searches incident to arrest (officer safety and preservation of evidence) did not justify the search of Beatty, the officers generally needed either the arrestee’s consent, exigent circumstances, or a warrant supported by probable cause to believe that a search beneath the clothing would reveal weapons, contraband, or evidence. Here, the officers had none of those justifications. Nevertheless, the court held that qualified immunity barred damages liability because, at the time of the search, the right against a warrantless strip search of an arrestee outside the institutional setting was not clearly established by Supreme Court or Third Circuit precedent. The court likewise upheld qualified immunity on Beatty’s First Amendment retaliation claim and affirmed summary judgment for the officers.

Thought Leadership

Pennsylvania Supreme Court to Review Whether Legal Malpractice Claims May Be Recast as Breach of Contract Claims

The Pennsylvania Supreme Court recently granted allowance of appeal to consider whether a plaintiff may pursue a breach of contract claim against an attorney based on allegations that the attorney failed to provide competent legal services. The issue is significant in professional liability litigation because it concerns whether a plaintiff may avoid the statute of limitations applicable to professional negligence claims by characterizing the alleged misconduct as a breach of contract. Antoine Poteat retained attorneys Gary Asteak and Nino V. Tinari to represent him in a criminal matter. After his conviction was subsequently overturned through a Post Conviction Relief Act proceeding, Poteat filed suit against his former attorneys alleging that they breached their retainer agreements by failing to provide competent legal services. The attorneys argued that the claims sounded in professional negligence, rather than breach of contract, and were therefore time-barred. The trial court dismissed Poteat’s complaint, but the Superior Court, sitting en banc, reversed. The Superior Court held that the gist-of-the-action doctrine did not bar Poteat’s breach of contract claim because the alleged failure to provide competent legal services could constitute a breach of the parties’ agreement. The Court further held that a legal-services agreement contains an implied duty requiring an attorney to provide competent legal services, even where the agreement does not contain an express provision requiring such services. The Pennsylvania Supreme Court granted review in July 2026 and will consider whether the Superior Court’s decision conflicts with Pennsylvania precedent distinguishing contract and tort claims, including Bruno v. Erie Insurance Co. The Supreme Court will also address whether a plaintiff may maintain a breach of contract claim based on an implied duty to provide competent legal services without identifying a specific contractual provision that was breached. The Supreme Court’s decision could have significant implications for professional liability litigation in Pennsylvania, particularly where plaintiffs seek to characterize claims arising from alleged professional negligence as contractual claims.