Client Update: Where there’s smoke, there may be coverage: an insurer’s obligation to indemnify for medical cannabis

Jon O’Kane and Jamie Watson

Legal cannabis will have numerous implications for insurers. The federal Cannabis Act (discussed here), the provincial acts (discussed here) and the regulations (discussed here) are all going to add layers of nuance to the governance of cannabis in Canada.

Auto insurers will be affected by the uncertainty created by impaired driving, as we discuss in our article: Driving high – the future is hazy for Canadian automobile insurers once cannabis goes legal. However, other insurers, who deal with health and benefits, are already grappling with medical cannabis and coverage – as is discussed in the Nova Scotia Human Rights Tribunal decision of Skinner v Board of Trustees of the Canadian Elevator Industry Welfare Trust Fund, 2017 CanLII 3240 (NS HRC) (“Skinner“).

Skinner: what is it about?

Gordon “Wayne” Skinner worked for ThyssenKrupp Elevator Canada when he was injured on the job in a motor vehicle accident in 2010. After two other medications became ineffective in managing his symptoms, Mr. Skinner obtained a medical cannabis license in 2012. Once he exhausted his employer’s insurer’s coverage limit of $25,000, Mr. Skinner turned to the Canadian Elevator Industry Welfare Trust Plan (the “Trust”) to cover his medicinal cannabis. The Trust provides health and related benefits for employees and former employees working in the unionized sector of the Canadian elevator industry.

The Trust denied the request for coverage, taking the position that (a) medical cannabis had not been approved by Health Canada and, consequently, lacked a drug identification number (“DIN”); and, (b) Skinner’s injuries were the result of an otherwise compensable workplace accident and therefore ought to be covered by the provincial Medicare plan.

Mr. Skinner complained to the Nova Scotia Human Rights Commission (the “Commission”). Earlier this year, a Board of Inquiry (“BOI”) issued its decision. The BOI concluded that denial of coverage for medical cannabis amounted to unjustifiable discrimination and ordered the Trust to reimburse certain expenses.

Skinner provides guidance on how to draft language limiting coverage for medical cannabis within an insurance or group benefits policy. However, the impact of this decision may change, as an appeal is presently slated for October 2017 before the Nova Scotia Court of Appeal.

Skinner’s implications for insurers and coverage providers (at present)

1. Medical cannabis should be explicitly excluded from coverage, if that is the intent.

In Skinner, the BOI concluded it was not necessary that cannabis be assigned a DIN as a condition for coverage. Since the Trust’s plan in Skinner included coverage for both “drugs” and “medicines”, the BOI concluded it was prima facie discriminatory to deny coverage for medical cannabis as opposed to other medicines (thereby imposing a burden on the Trust to prove that the denial was justifiable).

2. Coverage for medical cannabis cannot be denied arbitrarily. Insurers or benefit providers seeking to deny coverage must be able to justify that decision with evidence.

In Skinner, there was little evidence presented that showed coverage of medicinal cannabis would have rendered the Trust financially unviable. The Trust argued it would cost $60 per day to provide the medicinal cannabis to Mr. Skinner when justifying the alleged discrimination and denial of coverage. The BOI concluded that absent any context or comparators, the $60 daily expense to the Trust was not prohibitive to providing coverage to Mr. Skinner. Furthermore, the BOI decided that exclusion of medical cannabis was contrary to the purpose of the Trust’s plan, which was to maximize the benefits for members without compromising the financial viability of the trust funds supporting the plan.

Skinner‘s future implications 

Two items will have direct impacts on Skinner‘s continuing utility as a precedent in this area:

1. Legalized recreational cannabis, which is fast approaching, will require insurers and benefit providers to think critically about the relationship and overlap between recreational and medicinal cannabis when drafting coverage provisions; and,

2. The results of the October, 2017 appeal before the Nova Scotia Court of Appeal, which we will be following closely.

SHARE

Archive

Search Archive


Generic filters
Filter by Custom Post Type

 
 

Client Update: Nova Scotia announces changes to defined benefit pension funding

March 13, 2019

Level Chan and Dante Manna On March 12, 2019, the Nova Scotia legislature introduced long anticipated amendments to the Pension Benefits Act (“PBA”) which, according to a statement by Finance Minister Karen Casey, are aimed…

Read More

Client Update: Supreme Court rules bankrupt companies cannot walk away from their environmental liabilities in Redwater decision

March 6, 2019

Julia Parent and Graham Haynes In the long-awaited decision in the case of Orphan Well Association v Grant Thornton Ltd, the Supreme Court of Canada held that end-of-life environmental cleanup obligations imposed by Alberta’s provincial…

Read More

Client Update: Richards Estate sets the limits on actions against LTD insurers

March 6, 2019

Michelle Chai & Jennifer Taylor Justice Ann Smith of the Supreme Court of Nova Scotia recently dismissed an action against a disability insurer for being out of time. The case, Richards Estate v Industrial Alliance…

Read More

Client Update: Outlook for the 2019 proxy season

February 28, 2019

In preparing for the 2019 proxy season, you should be aware of some regulatory changes and institutional investor guidance that may impact disclosure to, and interactions with, your shareholders. This update highlights what is new…

Read More

Client Update: New regulation under New Brunswick’s Occupational Health and Safety Act tackles workplace violence and harassment – coming into force April 1, 2019

February 7, 2019

Chad Sullivan and Bryan Mills New Brunswick has recently introduced a new regulation under the Occupational Health and Safety Act on the topic of problematic workplace conduct. The change will bring New Brunswick in line…

Read More

Client Update: Not a “token gesture”: Nova Scotia Court of Appeal confirms deductibility of future CPP disability benefits from tort damages

January 18, 2019

Jennifer Taylor In an important decision for the auto insurance industry, the Nova Scotia Court of Appeal has confirmed that future CPP disability benefits are indeed deductible from damages awarded in Nova Scotia cases for…

Read More

Client Update: Change is the only constant – Bill C-86 changes in federal labour and employment regulation

January 18, 2019

Brian Johnston, QC and Matthew Jacobs Bill C-86, enacted as SC 2018, c. 27, will effect massive changes upon how federal labour and employment relations are regulated. They come into effect in 2019 with staggered…

Read More

2018 Year in Review: Atlantic Canada Labour & Employment Law Developments

January 17, 2019

We can all make 2019 a success by building on the year that was. For employers, 2018 was a year of many notable developments in labour and employment law across the country. We saw Ontario…

Read More

Client Update: Atlantic Canada pension and benefits countdown to 2019

December 28, 2018

Level Chan and Dante Manna As 2018 comes to an end, we countdown some pension and employee benefits developments in the last year that we anticipate may lead to developments in 2019. Discrimination in benefits…

Read More

Client Update: Canada’s Proposed Cannabis Edibles, Extracts and Topicals Regulations Revealed

December 21, 2018

Kevin Landry The first look at regulations for cannabis edibles, extracts and topicals has arrived. The Federal Government has opened a 60-day consultation period respecting the strict regulation of additional cannabis products. Notice of the consultation was accompanied…

Read More

Search Archive


Generic filters
Filter by Custom Post Type