September 26, 2022
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NM cannabis company, medical cannabis patients sue health care providers

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The New Mexico Legislature last year approved a bill aimed at eliminating out-of-pocket costs for behavioral health. When Gov. Michelle Lujan Grisham signed the measure into law, she said in a press release that the bill could “make a real, meaningful difference” by eliminating copays for behavioral health services. 

Now, a class action lawsuit filed last week is challenging New Mexico medical insurance providers for not covering medical cannabis expenses. New Mexico cannabis producer Ultra Health, along with six medical cannabis patients, filed the suit against seven New Mexico medical insurance providers and are seeking unspecified damages, reimbursement for their respective cannabis purchases going back to January of this year and for medical cannabis to be covered by medical insurance providers going forward. The case seems to be the first of its kind in the nation. 

The cannabis company and medical cannabis patients are being represented by Christopher Saucedo, who is also a New Mexico State University regent and served last year on the state’s redistricting committee.

Ultra Health has established a reputation for filing numerous suits against state departments on various cannabis issues like increasing medical cannabis production limits and overturning medical cannabis rules and regulations. But Duke Rodriguez, Ultra Health’s president and CEO and former New Mexico Health and Human Services secretary, said this suit is the most meaningful. 

“Of all the litigation we’ve had to pursue over the last decade, this class action may be the single most significant issue we brought forward, and I think it is our strongest legal position to date,” Rodriguez told NM Political Report

Rodriguez said if the judge in the case approves medical cannabis patients as a certified class, the case could include more plaintiffs and more medical insurance providers named as defendants. 

“Every time one of these 75,000 medical cannabis patients walks into one of our dispensaries, reaches into their pocket, and buys that gram of [cannabis] flower, they have avoided a prescription cost for that health insurer,” Rodriguez said. 

In the suit, Saucedo cited a number of studies that show the effectiveness of medical cannabis for conditions like stress, anxiety and post-traumatic stress disorder. While post-traumatic stress disorder is a qualifying condition for medical cannabis in New Mexico, general stress and anxiety are not. But stress and anxiety are often cited as side effects of post-traumatic stress disorder. Saucedo also cited public comments made by state senators Martin Hickey, D-Albuquerque, and Jeff Steinborn, D-Las Cruces, who sponsored the bill that became the law that requires insurance providers to cover 100 percent of behavioral health treatment costs. 

“In response to a media request in February 2022, Senators Steinborn and Hickey said that ‘the law makes it clear insurance coverage of medical cannabis should be offered to patients,’” Saucedo wrote. 

There are two other recent cases that Saucedo argued support the notion that medical cannabis should be treated the same as other, more traditional forms of behavioral health treatment. He cited a 2014 New Mexico Court of Appeals decision that workers’ compensation is required to compensate injured workers for legal medical cannabis purchases. 

“As New Mexico has recognized the need to exclude gross receipts from sale of medical cannabis for those with debilitating conditions, the same is true with medical cannabis and behavioral health and the relevant statutes should be read harmoniously so that treatment is more accessible through insurance coverage,” Saucedo wrote.

More recently, the state court of appeals ruled that while medical cannabis is not prescribed the same way pharmaceutical drugs are, a medical professional’s recommendation to use medical cannabis is effectively the same as a prescription.    

“The New Mexico Court of Appeals held that, within the workers’ compensation context, medical cannabis may be a reasonable and necessary medical care or service,” Saucedo wrote. 

No coverage for cannabis 

Last year, the state Legislature approved what was then known as Senate Bill 317, which, in part, required healthcare providers to cover all behavioral health services. Lujan Grisham, in a press release, said she was “proud and grateful” to sign the “priority measure.”

“This legislation is an important first step in helping 23,000 uninsured New Mexicans gain access to affordable health insurance,” the governor said. 

Nearly a year later, after an inquiry from Ultra Health, the state department tasked with overseeing insurance regulation issued a letter to the cannabis company, stating that state regulators cannot force insurance companies to cover medical cannabis purchases. 

Cassandra Brulotte, an attorney with the state’s Office of Superintendent of Insurance, in her letter to Ultra Health, wrote that the department could not mandate medical cannabis coverage without a clear mandate from the Legislature.

“Senate Bill 317 specifically prohibits cost-sharing for behavioral health services covered by any health care plan,” Brulotte wrote in February of this year. “Please also know that this office does not direct insurers to enroll specific providers. Building a provider network for behavioral health services is the responsibility of insurers themselves.”

Lujan Grisham’s office did not respond to questions about whether the governor views medical cannabis as a behavioral health treatment that should be covered by insurance or whether she might guide the Office of the Superintendent of Insurance to change its stance.  

In March of this year, NM Political Report asked several New Mexico health insurance providers if they planned on covering medical cannabis purchases as a form of behavioral health treatment. Two providers pointed back at the Office of the Superintendent of Insurance and another avoided answering the question altogether. 

Joanie Griffin, a spokesperson for True Health New Mexico, said the decision to cover medical cannabis purchases lies with state regulators.   

As a health insurance company providing group and individual coverage to New Mexicans, True Health New Mexico is regulated by the New Mexico Office of the Superintendent of Insurance,” Griffin said. “Health plan coverage is a determination appropriately made by the OSI based on all applicable state laws.”

Laurie Volkin, the chief of staff for Blue Cross and Blue Shield of New Mexico, praised the letter from Brulotte, but Volkin sidestepped the issue of why the company might not cover the costs of medical cannabis purchases or even address whether the company would consider it. 

“Blue Cross and Blue Shield of New Mexico appreciates and supports the Feb. 24, 2022 response of the Office of Superintendent of Insurance to Ultra’s Feb 18, 2022 letter regarding medical cannabis,” Volkin wrote in an email to NM Political Report. “Our benefit plans are designed to help members have access to safe, appropriate and effective health care solutions.”

Melanie Mozes, the director of communications for Presbyterian Health Plan, in March told NM Political Report in an email that the organization supported the change in law, but deferred back to Superintendent of Insurance Russell Toal.  

“PHP supports the intent of the new law, which focuses on ensuring that New Mexico residents can access the behavioral health services they need,” Mozes wrote. “The Superintendent of Insurance has also provided standardized guidance for health plans on behavioral health services that are not subject to cost sharing.” 

The guidance Mozes referenced, which is a bulletin from Toals regarding behavioral health coverage, does not mention medical cannabis and only references pharmaceutical drugs.

“It is up to the carrier to determine whether the drug should be treated as a BH drug for cost-sharing purposes,” Toals wrote in the June 2021 bulletin. 

Rodriguez said when his company looked into coverage of medical cannabis purchases, the Office of the Superintendent and providers pointed fingers at each other and that there was “a lot of foot shuffling and paper passing around.”

“It was clear that without some sort of judicial push, they weren’t going to meet their obligations,” Rodriguez said. 

Rodriguez said he expects lawyers for the seven healthcare providers to not only challenge the case on procedural issues but to also claim that the providers could get in trouble with the federal government as cannabis is still federally illegal.  

“The first thing they’re going to talk about is a conflict with federal law,” Rodriguez said. “We’re expecting to see the run-of-the-mill, standard objections, but I think in New Mexico, they will not prevail.”

In the state court of appeals case regarding workers’ compensation and cannabis, an employer challenged a workers’ compensation judge’s ruling that medical cannabis purchases should be reimbursed. The employer, in part, argued that reimbursement of medical cannabis purchases would constitute breaking federal law. 

Former appellate judge James Wechsler wrote that the employer failed to prove that point. 

“…Employer does not cite to any federal statute it would be forced to violate, and we will not search for such a statute,” Wechsler wrote. 

For years, there seems to have been a misconception that banks and other ancillary cannabis businesses had trouble doing business with cannabis producers and dispensaries. But in a recent episode of the cannabis podcast Growing Forward, a collaboration between New Mexico PBS and NM Political Report, former Bernalillo County Commissioner and cannabis banking expert debunked that idea.  

Talbert and other cannabis banking experts agree that the risk cannabis banks face is a loss of assets, not criminal charges from the federal government. Further, federal agencies have continually signaled that they would not prioritize cannabis charges in states where it is legal, with the exception of at least one case on sovereign government land. 

When asked if insurance coverage of medical cannabis purchases might drive up the cost of medical cannabis in general, Rodriguez said dispensaries would likely be held to what is referred to in state rules and regulations as usual and customary charges, meaning that dispensaries would not be able to charge more than what is usual or customary. 

Rodriguez added that full coverage of medical cannabis purchases could save insurance providers money as well as patients’ lives. 

“If this avoids one hospitalization, avoids one suicide, avoids whatever other medical catastrophe that could be out there, it is, without a question, cost saving to the insurers,” Rodriguez said. 





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