Federal—Marijuana Reimbursement Under the Longshore and Harbor Workers’ Compensation Act (LHWCA)
On March 5, 2026, the United States Court of Appeals, Second Circuit, in Garcia v. Director, Office of Workers’ Compensation Programs, held that marijuana is not reimbursable medical treatment under Section 7 of the Longshore and Harbor Workers’ Compensation Act (LHWCA).
In this case, a federal maritime employee sought reimbursement for cannabis‑infused edibles that were recommended by his treating physician as treatment for his work‑related injuries. After the employer’s insurer denied the request, an administrative law judge (ALJ) concluded that marijuana could not qualify as a “reasonable and necessary medical treatment” under the LHWCA because, as a Schedule I substance, it has no accepted medical use under federal law. The Department of Labor’s Benefits Review Board affirmed the ALJ’s decision.
On appeal, the Second Circuit reasoned that Section 7 of the LHWCA requires reimbursement of “all reasonable and necessary medical expenses” for eligible work-related injuries. However, the court noted, the Controlled Substances Act (CSA) defines Schedule I substances—including marijuana—as drugs with “no currently accepted medical use in treatment in the United States.” Thus, the court held, federal law categorically bars marijuana from being deemed a reasonable and necessary medical expense for purposes of the LHWCA.
In its opinion, the court rejected the employee’s arguments that recent congressional riders concerning state medical marijuana programs, or federal actions facilitating marijuana research, amount to recognition of marijuana’s medicinal value or a more permissive federal policy with respect to marijuana. The court explained that none of these actions amend the CSA or alter marijuana’s Schedule I status and, therefore, do not permit reimbursement under the LHWCA.
With this decision the court affirmed the ALJ’s ruling that marijuana cannot be treated as reimbursable medical treatment for purposes of Section 7 of the LHWCA.
Florida—Validity of Proposed Regulations Authorizing Physician Dispensing in Workers Compensation (WC)
On February 25, 2026, the Florida Court of Appeal, First District, in Publix Super Markets, Inc. v. Department of Financial Services, invalidated two proposed regulations that would have allowed physicians authorized to dispense medication to dispense drugs to WC claimants and to submit reimbursement claims to WC insurers.
In this case, a group of employers and WC insurers challenged the validity of two proposed regulations issued by the Florida Department of Financial Services (DFS) in 2022. These proposed regulations—which were not yet effective—stated that WC insurers could not deny payment when registered dispensing physicians submit reimbursement claims for the medications dispensed to WC claimants. The DFS asserted that the proposed regulations were to implement Florida statute 440.13, which gives WC claimants the “free, full, and absolute choice” to select any pharmacy or pharmacist to dispense their medication.
The court reasoned that an executive agency, such as DFS, may adopt regulations only to the extent those regulations implement or interpret a statute, and that a regulation is invalid if it “enlarges, modifies, or contravenes” the statute it seeks to implement. In this case, the court noted, the proposed regulations sought to implement Florida statute 440.13, which guarantees injured workers the right to choose a “pharmacy or pharmacist.” The court reasoned that the terms “pharmacy” and “pharmacist” have specific legal definitions that do not include dispensing physicians. The court concluded that, because the proposed regulations would expand the statutory language to cover dispensing physicians, they improperly enlarged Florida Statute 440.13 and were an invalid exercise of legislative authority. As a result, the court held the regulations could not be implemented.
This decision may be appealed. NCCI will monitor for any future developments.
Utah—Allocation of Attorney Fees and Litigation Expenses from a Third-Party Recovery
On February 26, 2026, the Supreme Court of Utah, in HB Construction v. Labor Commission of Utah, clarified how attorney fees must be allocated between an employer and employee when the employee settles a third-party lawsuit that arose from a workplace accident, and the employer seeks reimbursement for past benefits paid and an offset against future benefits.
In this case, an injured employee settled a tort lawsuit against third parties involved in the workplace accident and used a portion of the settlement to pay attorney fees and litigation expenses. A dispute arose between the employee and the employer as to the share of those expenses that the employer was required to pay pursuant to Utah statute 34A-2-106, which provides that the reasonable expenses of a third-party action, including attorney fees, shall be “charged proportionally against the parties as their interests may appear.” The employer argued that only past benefits should factor into its proportional share because future benefits were too uncertain and contingent.
The court held that, because the employer sought not only reimbursement for past payments but also to use the settlement as an offset against future obligations, its proportional share of attorney fees and expenses had to be calculated using both past and projected future benefits. The court reasoned that the statutory phrasing “as their interests may appear” does not require the certainty the employer argued and does not exclude projected future benefits. The court further emphasized that, when an employee has already borne all litigation expenses, the employer must pay its proportional share of those expenses before taking any offset against the employee’s third‑party recovery.
With this decision, the court affirmed the Labor Commission’s conclusion that the employer’s share of attorney fees and litigation expenses necessarily includes consideration of the cost of the employee’s future benefits because the employer’s interest includes an offset against the cost of paying those future benefits.
