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What's Hot in Workers' Comp

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

January 1, 2024

by Francis X. Wickersham

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.
 

 

What’s Hot in Workers’ Comp, Vol. 28, No. 1, January 2024, is prepared by Marshall Dennehey 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 © 2024 Marshall Dennehey, 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

First DCA Reverses Excessive Jury Award Unsupported by the Evidence

In December 2019, the plaintiffs filed a claim with Universal for damages caused by a water and sewage back up through the plumbing system and existing through multiple fixtures including the washing machine drain, kitchen sink, dishwasher, bathtub and toilet. Universal investigated the claim, issued payment for resulting water damage totaling $7,000.00 in actual cash value ($12,000.00 in replacement cost value). The plaintiffs sought additional benefits for work needed to access the below-slab cast iron plumbing system due to the failure of the system from rust, deterioration, corrosion and breaks in the line. Universal denied any additional benefits for access. In 2021, the plaintiffs filed suit. During litigation, Universal sent a plumber to inspect the home and the plumber concluded the pipes were clogged but could be cleaned. The plaintiffs’ plumber testified that the plumbing system needed to be replaced due to holes and openings in the pipes. The plaintiffs introduced two estimates prepared by Triad Restoration services totaling $79,680.22 in replacement cost value and $50,219.97 in actual cash value and an executed contract with another company for repairs with the amounts of repair redacted. Since the insurance policy did not provide coverage for repair or replacement of the plumbing system, the jury only had to decide whether the plumbing system needed to be replaced, and if it did, Universal would owe for the access costs; the jury verdict form required the jury to determine both the replacement cost value and actual cash value amounts. The jury asked if it had to rely on the Triad estimates for their amounts. The trial court advised the amount awarded had to be based on the evidence presented at trial and the law given by the trial court. The jury awarded $335,000.00 in replacement cost value or $305,000.00 in actual cash value. Universal motioned for a new trial arguing the amount awarded was unsupported by the evidence and then moved for remittitur. The trial court denied both motions and this appeal followed. The court found that while a jury’s verdict should only be disturbed with caution and discretion, the trial court must give the properly challenged award close scrutiny and determine whether it bears a reasonable relation to the damaged provided, is supported by the evidence, and could have been reached in a logical manner by reasonable means §768.74(3), (5)(d)-(e), Fla. Stat. The court found the trial court did consider the statutory requirements at the hearing on Universal’s remittitur motion and was concerned about a reasonable relation to the amount of damages proved and injury suffered and whether the award was supported by the evidence, but ultimately denied the motion, reasoning that the jury had been properly instructed to fairly and adequately compensate the plaintiffs. The court noted the only evidence providing the basis for the jury verdict was Triad’s estimates and those valued the plaintiffs' claimed loss at $79,680.22 in replacement cost value and $50,219.97 in actual cash value; no valuation evidence reasonably supported the jury verdict. The plaintiffs argued that the jury was entitled to consider more than the estimates, but the court conveyed the evidence provided did not give the jury a way to reach the amounts they awarded. The court was also not swayed by the plaintiffs’ argument regarding inflation and later price increases, but the court noted that no evidence via the contract, nor testimony regarding increase in labor, material, fuel or construction costs were entered into the record.  The court concluded the jury may draw reasonable inferences from the evidence, but it may not supply a damages number by speculation. The court did not find any of the plaintiffs’ remaining argument persuasive either. The court reversed the denial of Universal’s remittitur motion and motion for new trial as to damaged and remanded the case. The court ended its opinion with advising the trial court must determine whether replacement cost value or actual cash value is the property measure of damages under the policy and order remittitur in an amount consistent with that determination and the evidence.

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