Skip Short and Ioanna Olivia Zevgaras
Skip Short and Ioanna Olivia Zevgaras ()

In July 2014, the New York state legislature enacted the Compassionate Care Act to provide a comprehensive, safe and effective medical marijuana program available to certified patients with serious conditions.

New York is now part of a movement that has seen a majority of the states provide for some form of medical marijuana, with the number expanding in recent years. On a federal level, however, marijuana remains illegal. As a result, the reimbursement aspect of marijuana is unsettled and subject to further developments on both a state and federal level.

There is a difference of opinion over the medical value of marijuana. With enactment of the Compassionate Care Act, New York has taken the position that marijuana does offer medicinal value. The sponsor’s memo to the bill stated: “The purpose of this program is to expedite the availability of medical marihuana to avoid suffering and loss of life … .” Public Health Law §3362 states that so long as the conditions of the law are met, “The possession, acquisition, use, delivery, transfer, transportation, or administration of medical marihuana by a certified patient or designated caregiver possessing a valid registry identification card, for certified medical use, shall be lawful under this title.”

The federal treatment of marijuana is quite different. The federal Controlled Substances Act lists marijuana as a Schedule 1 narcotic, the drug is not U.S. Food and Drug Administration (FDA) approved, and strict penalties exist for possession, use or distribution of marijuana. On Aug. 12, 2016, the Drug Enforcement Administration published its position in the Federal Register based upon a study by the Department of Health and Human Services stating: “Marijuana has a high potential for abuse, has no accepted medical use in the United States, and lacks an acceptable level of safety for use even under medical supervision. Therefore, HHS recommended that marijuana remain in schedule I.”

While the positions of New York and the other states legalizing medical marijuana are diametrically opposed on both legality and value, at present the federal government is not proceeding with criminal prosecution, although this remains subject to change within the present administration. Congress has attached a provision in its appropriations bills that federal funding not be used to interfere with state marijuana laws. Last year, the U.S. Court of Appeals for the Ninth Circuit held that using federal funds to prosecute private individuals using marijuana pursuant to a state law program was illegal. In United States v. McIntosh, 833 F.3d 1163, 1177 (9th Cir. 2016) the Ninth Circuit applied the limits of the Consolidated Appropriations Act and stated: “We therefore conclude that, at a minimum, §542 prohibits DOJ from spending funds from relevant appropriations acts for the prosecution of individuals who engaged in conduct permitted by the State Medical Marijuana Laws and who fully complied with such laws.”

In a signing statement of a similar appropriations bill on May 5, 2017, President Trump stated concerning this limitation that “I will treat this provision consistently with my constitutional responsibility to take care that the laws be faithfully executed.” The issue thus remains unsettled and future actions uncertain. It is against this backdrop that determinations of the legality of reimbursement of medical marijuana must be considered.

New York’s Program

New York’s medical marijuana program launched Jan. 7, 2016 and provided access to certified patients suffering from cancer, HIV/AIDS, ALS (Lou Gehrig’s disease), Parkinson’s disease, multiple sclerosis, intractable spasticity caused by damage to the nervous tissue of the spinal cord, epilepsy, inflammatory bowel disease, neuropathies and Huntington’s disease. On Dec. 1, 2016, chronic pain was added as a qualifying condition. 10 NYCRR §1004.2(a)(8)(xi). These severe conditions must also be accompanied by one or more of the following associated or complicating conditions: cachexia or wasting syndrome, severe or chronic pain, severe nausea, seizures, or severe or persistent muscle spasms. Under New York law, smoking marijuana is not permitted.

The program has strict requirements. The doctor, dispensary and the patient must each be certified and/or registered pursuant to the statute.

Marijuana must be obtained through a registered organization selected by the Department of Health. Public Health Law §3360 relating to certification of patients sets forth the process as follows:

1. A patient certification may only be issued if: (a) a practitioner has been registered with the department to issue a certification as determined by the commissioner; (b) the patient has a serious condition, which shall be specified in the patient’s health care record; (c) the practitioner by training or experience is qualified to treat the serious condition; (d) the patient is under the practitioner’s continuing care for the serious condition; and (e) in the practitioner’s professional opinion and review of past treatments, the patient is likely to receive therapeutic or palliative benefit from the primary or adjunctive treatment with medical use of marijuana for the serious condition.

The Department of Health reviews the proposed prices of the registered organizations and sets price limits. Because marijuana remains illegal under federal law, there are limits to banking transactions and most payments are made in cash.

There are concerns about certification being made based upon video or telephone consultations. Public Health Law §3361 requires that there be “continuing care” by the practitioner to the patient and that the condition be specified in the “patient’s health care record.” Thus, there must be more than a phone call. The practitioner should have some records showing the serious condition being treated and there must be “continuing care for the serious condition.” We inquired with the Department of Health on the possibility of consultations by telemedicine and the Department responded as follows:

The compassionate care act is silent in regards to telemedicine. The only requirements it states is that the doctor must be caring for the patient. Caring for the patient is defined as having detailed knowledge about the patient’s condition/disease, maintaining records of the patient, and conferencing with this patient. While it is possible that all of this may be done electronically (like video conferencing) more often than not due to the nature of the requirements of the compassionate care act it is done in person. Notable exceptions are if the patient is unable to meet with the doctor/go to the dispensary due to their ailments. A patient can assign to legal caregivers to be authorized to pick up medical marijuana from the dispensary, due to their ailments forcing them to be confined to a location. If the patient is a child, or deemed legally unable to consent, it is mandated that they have 2 caregivers. So, there is nothing that explicitly prohibits medical marijuana from being recommended follow a video conference, as long as doctor is meeting the care requirements of the compassionate care act.

Since New York’s program is restrictive in that it allows certifications to treat severe, life threatening and debilitating diseases, and chronic pain, issuance of a certification after only oral consultation does raise concerns and the nature of the consultation and relationship might be considered on the question of reimbursement.

Reimbursement and Insurance

New York’s medical marijuana program is relatively new and the expansion to include chronic pain very recent so there is no clear case law as to whether marijuana must be afforded insurance coverage. There remains the possibility of further action on the federal level which could significantly affect the issue. At present it is our opinion that in New York an insurer is not required to cover medical marijuana and may do so dependent on the nature of the coverage.

Medical marijuana remains illegal under federal law and an insurer could take the position that there is no coverage based on the federal position. When queried informally on the issue, a representative of the New Jersey Department of Insurance and Banking set forth such a concern.

New York’s medical marijuana statute itself states that coverage is not required by the statute. Public Health Law §3368(2), provides that: “Nothing in this title shall be construed to require an insurer or health plan under this chapter or the insurance law to provide coverage for medical marihuana.”

On April 12, 2017, the Department of Financial Services issued Circular Letter No. 6 (2017), which also states that insurers “are not required to cover the cost of medical marijuana under the Insurance Law.” The Circular Letter goes on to state that the office visit in which a marijuana certification is made cannot be denied solely on the ground that a marijuana certification was issued in the visit so long as there is some other service provided. If the sole purpose of the visit is to obtain such certification, then coverage, in the opinion of the department, is not required.

While coverage is not required under the medical marijuana statute or the Insurance Law, it could be afforded by an insurer. The no-fault statute, for example, is a consumer-oriented statute and an insurer could afford coverage, if it chooses, for medical marijuana.

Key factors for an individual seeking such coverage and/or for an insurer considering such a claim could include the extent of the doctor patient relationship with the certifying practitioner, whether that relationship is continuing, the in depth nature of the consultation and whether or not the use of medical marijuana is reducing the need for other treatment. It is here that one visit only consultations resulting in certification might not be as persuasive in convincing insurers to provide coverage.

New York’s Workers’ Compensation Board has not set forth a clear ruling on the issue. While there have been rulings in other states providing for workers’ compensation coverage for medical marijuana, unless the Board were to take an affirmative position in favor of coverage, we do not believe such coverage would be required in light of Public Health Law §3368(2)’s statement that the statute does not require coverage.


Given the difference between the federal and New York state positions and the recent nature of the program, the issue of coverage of medicinal marijuana is novel and subject to change and will require monitoring of future legislation, regulations, opinions and developments. At present in New York it is our opinion that such coverage is not required but may be provided by insurers.