The largest cannabis company in New Mexico and a group of medical cannabis patients are suing seven health insurance providers for refusing to cover the costs of medical marijuana.

“The idea of health insurance plans paying for medical cannabis may seem like an impossible dream,” said Ultra Health CEO Duke Rodriguez in a press release, “but all the foundational elements have already fallen into place.”

The class-action lawsuit, filed by Ultra Health and six medical cannabis patients, including New Mexico state Sen. Jacob Candelaria, argues that state law requires insurance companies to cover all behavioral health services and state approved medication used to treat mental health conditions—including medical cannabis.

The suit follows on the heels of a letter sent to the insurance companies and the Office of the Superintendent of Insurance in February in which Ultra Health pointed out that SB-317, the No Behavioral Health Cost Sharing Act—a New Mexico law that requires insurers to cover 100 percent of patients’ behavioral services costs—had gone into effect at the beginning of the year. The letter writers claimed that the change meant medical cannabis should be fully paid for by insurers when recommended to treat mental health conditions like PTSD.

“New Mexico already requires workers compensation insurers to pay for medical cannabis, and New Mexico already treats medical cannabis the same as conventional prescription medications,” stated the letter. “The fact that health insurers should—and will—pay for medical cannabis is not revolutionary at this point.” The letter was reportedly ignored.

Suit Alleges Insurance Companies’ Failure

Last week the lawsuit was filed against Blue Cross and Blue Shield of New Mexico, True Health New Mexico, Cigna Health and Life Insurance Company, Molina Healthcare of New Mexico, Presbyterian Health Plan, Presbyterian Insurance Company and Western Sky Community Care.

The suit argues that, as with a recent New Mexico Court of Appeals ruling that medical cannabis patients don’t have to pay gross receipts taxes on cannabis, “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.” In the cited case, the New Mexico Court of Appeals ruled that medical cannabis should be considered a reasonable medical treatment and treated as the “functional equivalent” of traditional prescription drugs when it comes to taxation. Since prescription-drug purchases were exempt from the gross receipts tax, so was medical cannabis that had been recommended by a state-approved doctor.

The lawsuit also highlights a 2014 Court of Appeals decision that requires companies to cover medical cannabis costs as part of workers’ compensation claims. As with the taxation case, the court ruled that medical cannabis was the legal equivalent of traditional prescription drugs and should be treated as such.

It also points out that research supports the notion that those who suffer from mental health disorders are more likely to live in poverty and be unable to pay for medical cannabis on their own. “In New Mexico, persons living in poverty should—at the very least—have proper medical care through Medicaid, which must include health services for behavioral health,” says the suit. It argues that medical cannabis must be covered by insurance in the name of equity.

The plaintiffs are seeking a declaratory judgment as well as court costs and attorneys’ fees. They also want to recover lost funds spent on medical cannabis for themselves and other patients in a similar position “and further seek disgorgement of the millions of dollars in excess profits and revenues retained by each Defendant by their blanket denials of coverage for the cost of behavioral or mental health services in violation of New Mexico law.”

A Costly Loss

It is believed that if the lawsuit is successful, it will open the door for many New Mexico patients to likewise sue insurers for failing to cover medical cannabis costs. The majority of patients enrolled in the state’s Medical Cannabis Program—74,006 patients, according to the latest report from the Department of Health—were recommended cannabis as a treatment for PTSD. The class-action lawsuit states that although it’s unknown just how many patients have been affected, the estimated number of class members is over 10,000 people.

Candelaria told the Albuquerque Journal he joined the lawsuit as a plaintiff to support “New Mexicans who are struggling to pay for their health care.” The state lawmaker has been treating symptoms of PTSD with medical cannabis since joining the program in 2019. “Senate Bill 317 was transformational,” Candelaria told reporters. “This suit, you know, it becomes necessary to actually make that transformation happen.”

Rodriguez says there will be more lawsuits like the current one if insurers don’t start covering their clients’ medical cannabis bills. “There will be more patients identified who have been harmed by insurers not lawfully abiding to the statutory duty of eliminating any cost sharing related to behavioral health services. Insurers have not acted in good faith.”

In an interview with NM Political Report, Rodriguez warned that other insurance companies will likely have to deal with this issue in the future as well. “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 flower, they have avoided a prescription cost for that health insurer,” Rodriguez said. Insurers could potentially be responsible for covering those purchases going as far back as the beginning of the year.

It’s unclear how the seven health insurance companies plan to respond to the suit. None of the named defendants have made a public comment regarding the case. If the plaintiffs win, insurers could collectively owe millions of dollars to patients.