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