Does my insurer have to pay for medicinal cannabis?

21 JUN 2022


Whilst medicinal cannabis is legal in NSW, it is still uncommon for an insurer to pay for this type of treatment in a compensation setting. Although cannabis is generally recognised as an effective treatment, there are still difficulties in gathering proper evidence on its practical use. 

The NSW Personal Injury Commission recently heard a matter, in which a worker requested medicinal cannabis to treat his chronic back pain. He had tried taking a large number of opioid medications, however, they were no longer working. A request was made to the insurer on the basis that he would require the medicinal cannabis on an ongoing basis.

The insurer denied the request, on the basis that is was not “reasonably necessary”. The insurer took this view, not because medicinal cannabis is not a recognised treatment under the Workers Compensation Legislation, but because the cost submitted by the worker for the treated was too uncertain.

The worker argued that the medicinal cannabis would only cost an estimated $300 - $500 per month, however, the insurer lodged evidence from a licensed pharmacist that the real cost would be $5,000.00 per month. In other words, the insurer said that the ongoing cost was too expensive and therefore unreasonable.

The insurer also tried to argue that the treatment was not reasonably necessary because the worker had a prior history of drug misuse and there was some evidence to suggest that he may continue using cannabis, even after it was no longer required on medical grounds.

The Commission found in favour of the insurer, however, this was only because of the issue of the cost of the treatment. It was found that it was not reasonable to expect the insurer to pay $5,000.00 per month, on an ongoing basis. 

Interestingly, the Commission also said that the worker’s previous drug misuse and the potential that he would keep taking the cannabis after his prescription had ended was not relevant. 

In summary, the key things to take away from this decision are:

  1. Medicinal cannabis is a recognised medical treatment, for which insurers are liable to pay if reasonably necessary.
  2. Medicinal cannabis will generally not be considered reasonably necessary if other treatments have not been tried. 
  3. The worker’s previous drug misuse and potential that he would keep using the cannabis were not relevant.
  4. It is very important for workers (or their lawyers) to obtain proper evidence in relation to the cost of treatment.
  5. The cost of treatment, particularly if it is ongoing, will be taken into account to determine if the treatment is “reasonable necessary”. 

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.       

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