Two U.S. Supreme Court decisions affecting Workers’ Compensation

Musta v. Mendota Heights Dental Center

By declining to review a Minnesota Supreme Court decision that held employers can’t be required to reimburse injured workers for medical cannabis because it would violate federal law, SCOTUS left the question of reimbursement for medical marijuana in workers’ compensation in the hands of the states. The issue presented was, “Whether the Controlled Substances Act, 21 U.S.C. 801 et seq., preempts a state workers’ compensation order that compels an employer to reimburse an employee for the cost of marijuana used in response to pain arising from a work-related injury.”

The Supreme Court invited the Department of Justice (DOJ) to file its views on the case. The DOJ urged denial of the Writ indicating that the legislative and executive branches of the federal government are “best situated to consider any potential tailored measures to address specific instances of interaction between federal and state marijuana laws.”

There has been a patchwork of decisions in state courts regarding how to apply state marijuana laws in the shadow of the federal prohibition on marijuana. Five states – Connecticut, New Hampshire, New Jersey, New Mexico, New York – allow reimbursement, whereas Florida, Maine, Massachusetts, Minnesota, North Dakota, Ohio, and Washington prohibit it. Most states are silent on the issue. Employers and employees waiting for clarity will have to wait longer.

Gallardo v. Marstiller

On June 6, 2022, the U.S. Supreme Court decided Gallardo v. Marstiller, which involved a 13-year-old who was permanently disabled after being struck by a truck and, as a result, became a Florida Medicaid beneficiary. Her parents sued the responsible parties and ultimately agreed to an $800,000 settlement, of which $35,367 was allocated as past medical expenses. While all parties agreed that Florida was permitted to take the portion of a settlement that addressed past medical expenses, the family disputed whether the state could take the portion of the settlement allocated to future medical expenses.

The Supreme Court held that the federal Medicaid Act does not preempt Florida’s policies dictating how the state can obtain Medicaid reimbursements from third parties and that Florida was, therefore, able to seek reimbursement from settlement payments allocated for future as well as past medical care. While this case was specific to Florida’s laws, all states have laws regarding the right to seek reimbursement from third parties in the context of Medicaid beneficiaries. Laws vary but they should be considered when settling tort claims with a third party involving an injury of a Medicaid beneficiary.

The dissenting opinion argued that states now may reimburse themselves from settlement funds for future medical care for which Medicaid has not paid and might never pay. Further, Medicaid beneficiaries’ willingness to bring personal injury lawsuits declines as state’s rights to recover damages expand.

This decision is something to consider in work comp settlements. While much focus is given to Medicare’s interests when a settlement involves future medical care, do not lose sight of Medicaid’s potential lien in your settlement analyses.