Legal Developments

Marijuana: The Great Pain Management Hope?

Some doctors are turning to marijuana when opioids fail to ease patient pain. And courts say the treatment is reasonable under workers' comp.
By: | July 6, 2015 • 4 min read
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Doctors supported workers’ comp claimants’ medical marijuana use when powerful opioid narcotics combined with other medications failed to relieve their chronic pain conditions, three recent New Mexico Court of Appeals rulings show.

Legal arguments in all three cases focused on whether insurers and employers must reimburse claimants for their medical marijuana consumption. In each case, the court ruled against insurers and employers, saying they must pay.

But the underlying facts in the three cases revealed that doctors supported their patients’ marijuana use when polypharmaceutical regimens — including several addictive opioid pain medications combined with numerous other drugs — failed to diminish chronic pain stemming from back injuries.

“The doctors, I don’t think, believe the opioids are a long-term solution [and the pharmaceutical pain medications may create their] own set of problems over time,” said Peter D. White, a Santa Fe, N.M., attorney who represented claimants in two of the cases. “I think they are hopeful medical cannabis will reduce the reliance, if not eliminate, the reliance on prescription pain medications.”

It is reasonable and not surprising that doctors treating patients suffering from intractable pain would try medical marijuana as an alternative to combinations of opioids and other prescription drugs, added Kevin T. Glennon, vice president of Clinical Education and Quality Assurance Programs at One Call Care Management.

“Physicians are always looking for alternatives,” to narcotics for patients with intractable pain because increased doses of narcotics become ineffective as patients build up a tolerance, while also increasing the risk of addiction, Glennon said.

Meanwhile, a June report published in the Journal of the American Medical Assn., based on a review of medical literature detailing existing clinical trials, found that “use of marijuana for chronic pain, neuropathic pain, and spasticity due to multiple sclerosis is supported by high-quality evidence.”

Several of the trials reviewed found that marijuana “may be efficacious” for pain, the report states. But the research does not support marijuana’s effectiveness for other illnesses, the review of past studies also found.

Court records in the three New Mexico cases do not reveal whether the doctors who authorized medical marijuana for the three workers’ comp claimants suffering from chronic pain based their decisions on such medical research.

“I think [doctors] are hopeful medical cannabis will reduce the reliance, if not eliminate, the reliance on prescription pain medications.”  —Peter D. White, attorney, Santa Fe, N.M.

But the records do show the doctors authorizing their patients’ marijuana use under New Mexico’s medical marijuana law called the Compassionate Use Act.

The latest of the New Mexico decisions, handed down on June 26, involved a chronic-pain patient consuming numerous prescription medications that commonly concern workers’ comp observers because of the drugs’ association with addiction and overdose deaths, while often failing to eliminate chronic pain long term.

Oxycontin, oxycodone, Soma, Norflex, gabapentin, Lyrica, Percocet, fentanyl, and Zantac are among drugs prescribed for the claimant, court records in the case of Sandra Lewis v. American General Media and Gallagher Bassett reveal.

In addition to those drugs, Lewis consumed medical marijuana and believed it was the most effective of the medications. One of three doctors who approved her marijuana use stated that other medications had failed to treat her chronic pain, and that the “benefits of medical marijuana outweigh the risk of hyper doses of narcotic medications.”

A court-appointed psychologist also supported her marijuana use for pain control, declaring it reasonable and appropriate. The court appointed the psychologist after the employer in the case requested an independent medical exam.

The appeals court eventually ruled that “marijuana constitutes reasonable and necessary medical care.”

Similarly, the January 13, 2015 appeals court opinion in the case of Miguel Maez v. Riley Industrial and Chartis shows that medications prescribed to claimant Maez for chronic back pain included Soma, Ultram, Sprix, Percocet, Lortab (oxycodone), and hydrocodone.

But when those failed to manage his pain, his doctor authorized medical marijuana as a trial, to see if it would help Maez.

In the third case, a May 19, 2014, appeals court opinion in Gregory Vialpando v. Ben’s Automotive Services and Redwood Fire & Casualty describes a workers’ comp claimant treated with “multiple narcotic pain relievers and multiple anti-depressant medications” for severe chronic pain.

His doctor also recommended marijuana services and provided the certification necessary under the Compassionate Use Act.

Employers in all three cases posed various arguments as to why they should not be responsible for funding the claimants’ marijuana use. But they found the court unsympathetic.

Many doctors remain skeptical about medical marijuana’s efficacy, said Victor A. Titus, a Farmington, N.M., attorney who represented claimant Miguel Maez. Therefore, the three cases may not represent a trend of doctors recommending marijuana as an alternative to prescription pharmaceuticals, he said.

“I know there are a lot of doctors who still don’t believe in medical marijuana,” he said.

But White has spoken with many injured workers who are certified to use medical marijuana in New Mexico, yet have not asked their insurer to pay for it.

They report, anecdotally, that the drug has effectively addressed their pain, White said.

Other cases could benefit from knowing whether medical marijuana helped the claimants in the three New Mexico situations eliminate their narcotic use, Glennon said.

“If they were willing to share that information that would substantiate that medical marijuana is beneficial,” Glennon said. “However, I have a feeling the reason that information is not readily available is they are still doing both.”Untitled-2

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.
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Risk Insider: Eamonn Cunningham

Is Stand-Alone Drone Coverage Necessary?

By: | July 6, 2015 • 3 min read
Eamonn Cunningham is Chief Risk Officer for Scentre Group. He was chief risk officer of the Westfield Group, which was restructured in 2014, when he became CRO for Scentre. A member of the board of The Risk and Insurance Management Society Australasia Limited, he can be reached at [email protected]

You see an increasing amount of comment on the very topical subject of drone cover. Some skeptics might argue that there is an element of self-interest at play here on the part of those initiating or promoting the discussion on this subject.

However, let’s just assume that this is all driven by the very best of intentions with one purpose in mind, the common good, indeed a lofty ideal!

My real issue with this development is the concept of what I call the proliferation of insurance products. The example of the commentary around the so-called drone insurance cover, is a case in point.

If the pursuit of separate policies for everything new continues, the insurance industry runs the risk of been seen as simply the provider of narrowly defined risk capital commodities.

Why do we need to go through the time consuming and expensive process of developing this supposedly fit-for-purpose insurance product, when there can be equally effective options available at a far cheaper development cost?

If something falls from the sky and someone suffers a “loss” in the form of bodily injury and/or property damage, there are existing remedies available which invariably revolve around conventional insurance products.

Why should all of this not be available when the “something” just happens to be a drone? What makes this event so particularly special that the liability arising from it cannot be covered under existing insurance products, even if minor adaption of those solutions is required?

The real point here is to try to not make our current market risk-transfer mechanisms even more complex than they already are. The better practice might be to investigate, indeed stress-test current solutions wherever possible to see if they can be utilized as new risks arise, or existing ones evolve.

There are exceptions to this, those obvious examples when that new risk is so unique that conventional solutions will just not provide the comprehensive cover required, cyber risk being a case in point.

The real point here is to try to not make our current market risk-transfer mechanisms even more complex than they already are.

If the pursuit of separate policies for everything new continues, the insurance industry runs the risk of been seen as simply the provider of narrowly defined risk capital commodities.

We should, as an industry, take a good hard look at new risks and see whether the current insurance market solutions can (even with adaption) work. Let’s not pre-empt that process by hastily imposing exclusions on an existing product which only serve to increase the impetus to buy the new product.

Good risk management leadership in 2015 adds value to the organization it serves when its response to questions raised about risks associated with new ventures or opportunities is, “Why not?” as opposed to the traditional “NO.”

Surely carriers (in fact all participants in the insurance industry) should also adopt similar thinking. Why can’t the existing solutions be made to work?

This insight covered the prospect of drone insurance now coming our way. What next? Policies for risks arising from nano-technology, solar flares or even artificial intelligence?

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Sponsored: Lexington Insurance

Pathogens, Allergens and Globalization – Oh My!

Allergens and global supply chain increases risk to food manufacturers. But new analytical approaches help quantify potential contamination exposure.
By: | June 1, 2015 • 6 min read

In 2014, a particular brand of cumin was used by dozens of food manufacturers to produce everything from spice mixes, hummus and bread crumbs to seasoned beef, poultry and pork products.

Yet, unbeknownst to these manufacturers, a potentially deadly contaminant was lurking…


What followed was the largest allergy-related recall since the U.S. Food Allergen Labeling and Consumer Protection Act became law in 2006. Retailers pulled 600,000 pounds of meat off the market, as well as hundreds of other products. As of May 2015, reports of peanut contaminated cumin were still being posted by FDA.

Food manufacturing executives have long known that a product contamination event is a looming risk to their business. While pathogens remain a threat, the dramatic increase in food allergen recalls coupled with distant, global supply chains creates an even more unpredictable and perilous exposure.

Recently peanut, an allergen in cumin, has joined the increasing list of unlikely contaminants, taking its place among a growing list that includes melamine, mineral oil, Sudan red and others.

Lex_BrandedContent“I have seen bacterial contaminations that are more damaging to a company’s finances than if a fire burnt down the entire plant.”

— Nicky Alexandru, global head of Crisis Management at AIG

“An event such as the cumin contamination has a domino effect in the supply chain,” said Nicky Alexandru, global head of Crisis Management at AIG, which was the first company to provide contaminated product coverage almost 30 years ago. “With an ingredient like the cumin being used in hundreds of products, the third party damages add up quickly and may bankrupt the supplier. This leaves manufacturers with no ability to recoup their losses.”

“The result is that a single contaminated ingredient may cause damage on a global scale,” added Robert Nevin, vice president at Lexington Insurance Company, an AIG company.

Quality and food safety professionals are able to drive product safety in their own manufacturing operations utilizing processes like kill steps and foreign material detection. But such measures are ineffective against an unexpected contaminant. “Food and beverage manufacturers are constantly challenged to anticipate and foresee unlikely sources of potential contamination leading to product recall,” said Alexandru. “They understandably have more control over their own manufacturing environment but can’t always predict a distant supply chain failure.”

And while companies of various sizes are impacted by a contamination, small to medium size manufacturers are at particular risk. With less of a capital cushion, many of these companies could be forced out of business.

Historically, manufacturing executives were hindered in their risk mitigation efforts by a perceived inability to quantify the exposure. After all, one can’t manage what one can’t measure. But AIG has developed a new approach to calculate the monetary exposure for the individual analysis of the three major elements of a product contamination event: product recall and replacement, restoring a safe manufacturing environment and loss of market. With this more precise cost calculation in hand, risk managers and brokers can pursue more successful risk mitigation and management strategies.

Product Recall and Replacement

Lex_BrandedContentWhether the contamination is a microorganism or an allergen, the immediate steps are always the same. The affected products are identified, recalled and destroyed. New product has to be manufactured and shipped to fill the void created by the recall.

The recall and replacement element can be estimated using company data or models, such as NOVI. Most companies can estimate the maximum amount of product available in the stream of commerce at any point in time. NOVI, a free online tool provided by AIG, estimates the recall exposures associated with a contamination event.

Restore a Safe Manufacturing Environment

Once the recall is underway, concurrent resources are focused on removing the contamination from the manufacturing process, and restarting production.

“Unfortunately, this phase often results in shell-shocked managers,” said Nevin. “Most contingency planning focuses on the costs associated with the recall but fail to adequately plan for cleanup and downtime.”

“The losses associated with this phase can be similar to a fire or other property loss that causes the operation to shut down. The consequential financial loss is the same whether the plant is shut down due to a fire or a pathogen contamination.” added Alexandru. “And then you have to factor in the clean-up costs.”

Lex_BrandedContentLocating the source of pathogen contamination can make disinfecting a plant after a contamination event more difficult. A single microorganism living in a pipe or in a crevice can create an ongoing contamination.

“I have seen microbial contaminations that are more damaging to a company’s finances than if a fire burnt down the entire plant,” observed Alexandru.

Handling an allergen contamination can be more straightforward because it may be restricted to a single batch. That is, unless there is ingredient used across multiple batches and products that contains an unknown allergen, like peanut residual in cumin.

Supply chain investigation and testing associated with identifying a cross-contaminated ingredient is complicated, costly and time consuming. Again, the supplier can be rendered bankrupt leaving them unable to provide financial reimbursement to client manufacturers.

Lex_BrandedContent“Until companies recognize the true magnitude of the financial risk and account for each of three components of a contamination, they can’t effectively protect their balance sheet. Businesses can end up buying too little or no coverage at all, and before they know it, their business is gone.”

— Robert Nevin, vice president at Lexington Insurance, an AIG company

Loss of Market


While the manufacturer is focused on recall and cleanup, the world of commerce continues without them. Customers shift to new suppliers or brands, often resulting in permanent damage to the manufacturer’s market share.

For manufacturers providing private label products to large retailers or grocers, the loss of a single client can be catastrophic.

“Often the customer will deem continuing the relationship as too risky and will switch to another supplier, or redistribute the business to existing suppliers” said Alexandru. “The manufacturer simply cannot find a replacement client; after all, there are a limited number of national retailers.”

On the consumer front, buyers may decide to switch brands based on the negative publicity or simply shift allegiance to another product. Given the competitiveness of the food business, it’s very difficult and costly to get consumers to come back.

“It’s a sad fact that by the time a manufacturer completes a recall, cleans up the plant and gets the product back on the shelf, some people may be hesitant to buy it.” said Nevin.

A complicating factor not always planned for by small and mid-sized companies, is publicity.

The recent incident surrounding a serious ice cream contamination forced both regulatory agencies and the manufacturer to be aggressive in remedial actions. The details of this incident and other contamination events were swiftly and highly publicized. This can be as damaging as the contamination itself and may exacerbate any or all of the three elements discussed above.

Estimating the Financial Risk May Save Your Company

“In our experience, most companies retain product contamination losses within their own balance sheet.” Nevin said. “But in reality, they rarely do a thorough evaluation of the financial risk and sometimes the company simply cannot absorb the financial consequences of a contamination. Potential for loss is much greater when factoring in all three components of a contamination event.”

This brief video provides a concise overview of the three elements of the product contamination event and the NOVI tool and benefits:


“Until companies recognize the true magnitude of the financial risk and account for each of three components of a contamination, they can’t effectively protect their balance sheet,” he said. “Businesses can end up buying too little or no coverage at all, and before they know it, their business is gone.”

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Lexington Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

Lexington Insurance Company, an AIG Company, is the leading U.S.-based surplus lines insurer.
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