Mass. Hospitals Weigh Medical Marijuana Liability Risk

As Massachusetts lays the groundwork for medical marijuana, new clashes between the state law and a continuing federal ban on marijuana use are emerging. Hospitals, hospice care organizations and nursing homes are weighing the balance of serving their patients and protecting billions of dollars in federal funding.

Here's the dilemma: Towards the end of long forms that authorize federal payments to hospitals, an executive has to certify that yes, the hospital is in compliance with federal law. But that statement would not be true if patients at the hospital are using marijuana for medical purposes and a doctor at that hospital is helping them.

"It’s really challenging for the practitioners," says Larry Vernaglia, an attorney at Foley & Lardner who wrote a memo laying out the issues for the Massachusetts Hospital Association. If doctors say to themselves "'even though we have this new pathway under state law, we’re not going to help our patients for fear of our liability,' I think that’s a terrible position to be in," Vernaglia says.

And hospitals face significant possible risks. Tim Gens, executive vice president at the Massachusetts Hospital Association, says violating federal law could get hospitals in trouble with the IRS over their nonprofit status. Grants through the National Institutes of Health and the Department of Defense fund most of the research at Boston hospitals. And there’s the billions of dollars in payments hospitals receive through Medicare and Medicaid.

"More than half of the patients admitted to hospitals are paid for by Medicare and Medicaid," Gens says. "And hospitals certify that they’re in compliance with all applicable federal and state laws so their funding of those programs could come in question."

Hospitals contacted for this story say they are still reviewing their options. Some doctors, and by extension, hospitals, say they may have a legal loophole.

Under state law, doctors sign a certificate for medical marijuana. Patients take that certificate to the Department of Public Health, where the patient registers as a medical marijuana user. Doctors do not actually prescribe the drug.

But the distinction between "certificate" and "prescription" does not guarantee immunity.

"It’s not without risk that a third party would conclude that a certification is the same thing as a prescription and some courts have, I believe, taken that perspective," Vernaglia says.

The big question is whether federal prosecutors will come after doctors, hospitals, nursing homes or hospice agencies that help patients acquire or use marijuana. A U.S. Department of Justice update last August said the federal government has, and will continue to, let state and local authorities handles investigations involving marijuana.

The American Hospital Association is not tracking this issue. We could not find any cases in which federal funding has been jeopardized by patients or doctors who use or prescribe marijuana. But some attorneys are wary.

"It’s difficult to advise a client that you are absolutely immune from federal prosecution," says Jed Nosal, an attorney at Brown Rudnick. Nosal, who focuses on regulatory litigation and compliance, is also cautious about keeping himself out of any chain of events that leads to marijuana. He’ll advise hospitals about how to comply with the state marijuana law, but will not offer any guidance about how they might allow marijuana use without violating federal contracts.

"Under no circumstances can I be engaged in order to help anyone facilitate breaking that law," Nosal says.

For now, some hospitals, community health centers, nursing homes and hospice agencies are trying to come up with internal policies for physicians and other health care workers. The Massachusetts Hospital Association is not telling its members what to do.

"Although unbelievably challenging and difficult, it’s also very clear," Gens says. "Unfortunately what’s clear is that there’s confusion."

Pressure on Congress to end this confusion is growing as more states approve marijuana for medical purposes.