Schedule I Bar: Medical Marijuana Is Not a Reimbursable “Reasonable and Necessary” Medical Expense Under LHWCA § 7

1. Introduction

Peña Garcia v. Department of Labor (2d Cir. Mar. 5, 2026) addresses whether an injured worker may obtain reimbursement, under Section 7 of the Longshore and Harbor Workers' Compensation Act (“LHWCA”), as extended by the Defense Base Act (“DBA”), for physician-recommended medical cannabis products that are lawful under Puerto Rico’s medical marijuana framework.

Parties. Petitioner Luis Peña Garcia (“Peña”), a permanently disabled worker residing in Puerto Rico, sought reimbursement from his former employer (Calzadilla Construction Corporation) and its carrier (IMS Insurance Company of Puerto Rico). The federal respondent was the Director, Office of Workers' Compensation Programs, United States Department of Labor.

Factual backdrop. After a 1994 work injury and an earlier (1998) determination that Peña was entitled to ongoing medical care under LHWCA § 7, Peña’s Puerto Rico physician recommended “edibles such as cookies infused with a specific dosage of medical cannabis” for chronic pain (2019). Peña sought reimbursement; it was denied by the carrier, then by an ALJ, and then (by a 2–1 vote) by the Benefits Review Board.

Key issue. Whether medical marijuana can qualify as a reimbursable “reasonable and necessary medical expense” under LHWCA § 7 despite marijuana’s federal classification as a Schedule I controlled substance under the Controlled Substances Act (“CSA”).

Holding. The Second Circuit denied the petition for review, concluding that so long as marijuana remains Schedule I under the CSA, it is categorically barred—under federal law—from being treated as reimbursable medical treatment under LHWCA § 7.

2. Summary of the Opinion

  • LHWCA § 7 requires employers to furnish medical treatment and reimburse “reasonable and necessary” medical expenses for covered injuries.
  • The CSA defines Schedule I substances as having “no currently accepted medical use in treatment in the United States,” and marijuana is listed as Schedule I.
  • Because of that federal classification, marijuana cannot be deemed “reasonable and necessary” medical treatment under the LHWCA.
  • Congressional appropriations riders limiting DOJ interference with state medical marijuana laws do not amend, repeal, or reclassify marijuana under the CSA.
  • Presidential pardons, research-facilitation legislation, and executive actions directing review/rescheduling efforts do not change marijuana’s current Schedule I status.
  • More permissive state workers’ compensation approaches do not control federal benefit determinations; federal law governs in case of conflict.

3. Analysis

3.1. Precedents Cited

Standard of review and administrative posture

  • G4S Int'l Emp. Servs. (Jersey), Ltd. v. Newton-Sealey, 975 F.3d 182 (2d Cir. 2020): The court reiterated that it reviews questions of law de novo and an ALJ’s fact findings for substantial evidence. Here, the dispositive question was legal (interaction between LHWCA § 7 and CSA scheduling), making de novo review central.

Forum/jurisdiction for DBA review

  • Serv. Emps. Int'l, Inc. v. Dir., Off. of Workers Comp. Program, 595 F.3d 447 (2d Cir. 2010): The opinion used this case to explain why the petition properly lay in the Second Circuit after transfer from the First Circuit: DBA review lies in the district where the relevant deputy commissioner office is located (here, OWCP’s New York suboffice).

“Reasonable and necessary” medical expenses under LHWCA § 7

  • Amerada Hess Corp. v. Dir., Office of Worker's Comp. Programs, 543 F.3d 755 (5th Cir. 2008): Cited for the proposition that § 7 and its regulations require reimbursement of “all reasonable and necessary medical expenses.” The Second Circuit did not dispute this standard; it held marijuana fails it as a matter of federal law.
  • Bath Iron Works Corp. v. Preston, 380 F.3d 597 (1st Cir. 2004); M. Cutter Co. v. Carroll, 458 F.3d 991 (9th Cir. 2006); Romeike v. Kaiser, 22 BRBS 57, at *3 (1989): These authorities reinforced that the “reasonable and necessary” frame is widely accepted across circuits and by the Benefits Review Board. Their role here was foundational: they identify the governing compensation test that the CSA then constrains.

CSA meaning and effect of Schedule I status

  • McFadden v. United States, 576 U.S. 186 (2015): Cited for the CSA’s basic prohibition framework regarding controlled substances, providing statutory context for why federal classification matters.
  • Gonzales v. Raich, 545 U.S. 1 (2005): Treated as decisive confirmation that Schedule I classification reflects an express congressional finding of “no acceptable medical uses.” The Second Circuit relied on this principle to reject the argument that state authorization or physician recommendation can override CSA’s federal finding.

Appropriations riders and implied repeal

  • Me. Cmty. Health Options v. United States, 590 U.S. 296 (2020): Quoted for the Court’s strong “aversion to implied repeals,” especially in the appropriations context. This case supplied the interpretive rule that appropriations restrictions on DOJ spending cannot be read to silently amend the CSA’s scheduling scheme.

3.2. Legal Reasoning

(a) The court’s interpretive pivot: CSA scheduling controls the “medical use” premise

The court accepted the familiar LHWCA § 7 reimbursement framework—employers must furnish medical care and reimburse “reasonable and necessary” expenses. The dispute turned on whether a treatment that Puerto Rico permits and a physician recommends can qualify as “medical treatment” under federal workers’ compensation law when federal law itself declares the substance has “no currently accepted medical use.”

The court treated the CSA’s Schedule I definition as dispositive: Congress has defined Schedule I substances as lacking accepted medical use in U.S. treatment, and Congress has listed marijuana as Schedule I. On that basis, the court concluded federal law “categorically bars” marijuana from being treated as a reasonable and necessary medical expense under the LHWCA.

(b) Appropriations riders: enforcement discretion limits, not substantive amendments

Peña’s core counterargument relied on appropriations riders (e.g., the Consolidated and Further Continuing Appropriations Act, 2015) that restrict DOJ from using funds to prevent states from implementing medical marijuana laws. The court characterized these riders as:

  • constraints on DOJ spending and enforcement discretion,
  • not amendments to substantive drug scheduling law, and
  • incapable of impliedly repealing the CSA’s classifications (invoking Me. Cmty. Health Options v. United States).

The court further emphasized that the riders’ phrase “medical marijuana” describes state-law subject matter; it does not change federal “accepted medical use” determinations or create an entitlement under a federal compensation statute.

(c) Executive actions and research legislation: signals are not rescheduling

The court addressed developments that might suggest a softening federal posture: former-President Biden’s pardons (Proclamation No. 10467), Congress’s research statute (Medical Marijuana and Cannabidiol Research Expansion Act), former-President Biden’s rescheduling review announcement (Statement on Marijuana Reform), and President Trump’s directive to expedite rulemaking (Exec. Order No. 14370).

The court treated all of these as legally irrelevant to the controlling question because none changed marijuana’s current Schedule I status. The opinion underscored a separation-of-powers point: removing marijuana from Schedule I requires an Act of Congress or completed administrative rulemaking, not a judicial determination in a reimbursement dispute.

(d) State-law trends do not alter federal benefit eligibility

Even if states increasingly reimburse medical marijuana in state workers’ compensation regimes, the court held that such policies “bear no relation” to federal reimbursement under LHWCA/DBA. Relying on Gonzales v. Raich and supremacy principles, the court concluded that where federal drug regulation is more stringent, it prevails.

(e) Criminal liability arguments deemed beside the point

Peña argued that aiding-and-abetting distribution concerns do not implicate reimbursement. The court bypassed the criminal-liability framing and reiterated that the dispositive fact is marijuana’s Schedule I classification—i.e., Congress’s determination of “no accepted medical use” for federal purposes.

3.3. Impact

Immediate doctrinal effect in the Second Circuit

  • Bright-line rule for LHWCA/DBA § 7 medical marijuana claims: So long as marijuana remains a Schedule I substance, it cannot qualify as a reimbursable “reasonable and necessary” medical expense under federal workers’ compensation administered through LHWCA/DBA.
  • Administrative adjudication simplified: ALJs and the Benefits Review Board can treat CSA Schedule I status as a threshold legal bar, rather than litigating medical necessity, efficacy, or local legality.

Interaction with possible rescheduling

  • The opinion is explicitly conditional on current federal scheduling. If marijuana is rescheduled (by Congress or completed rulemaking), claimants will likely argue that the categorical bar disappears and that marijuana should then be evaluated under the ordinary “reasonable and necessary” test.
  • The decision also signals that partial federal shifts (research authorization, spending riders, pardons, executive directives) will not be treated as functional rescheduling in benefits litigation.

Broader implications for federal benefits programs

  • Although framed under LHWCA/DBA § 7, the reasoning may be invoked in other federal reimbursement contexts where “medical treatment” is a statutory prerequisite and where the item sought is a Schedule I substance.
  • The ruling may encourage litigants to focus efforts on rescheduling or statutory amendment rather than case-by-case reimbursement litigation.

4. Complex Concepts Simplified

  • LHWCA § 7 (“furnish” medical care): A federal workers’ compensation provision requiring employers/carriers to pay for medical care that is reasonable and necessary for a covered work injury.
  • DBA extension: The DBA extends LHWCA coverage to certain employment connected to U.S. territories and defense-related work; here it brought Puerto Rico-based facts under the federal scheme.
  • CSA “Schedule I”: The strictest category of controlled substances. By statutory definition, Schedule I drugs have no currently accepted medical use in U.S. treatment (plus high abuse potential and lack of accepted safety). The court treated this as a binding congressional determination for federal-law purposes.
  • Appropriations rider: A limitation attached to a funding law that restricts how an agency may spend money. It may affect enforcement but typically does not amend underlying substantive statutes.
  • Implied repeal (and why it is disfavored): The idea that a later law silently overrides an earlier one without saying so. Courts are especially reluctant to find implied repeal via appropriations measures (per Me. Cmty. Health Options v. United States).
  • Supremacy Clause: When valid federal law conflicts with state law, federal law prevails. Thus, state legalization does not itself change federal statutory consequences.
  • De novo vs. substantial evidence review: “De novo” means the appellate court decides a legal issue fresh; “substantial evidence” is a deferential standard for fact findings. This case turned chiefly on statutory interpretation (a legal question).

5. Conclusion

Peña Garcia v. Department of Labor establishes (for the Second Circuit) a clear rule: marijuana’s current classification as a Schedule I substance under the Controlled Substances Act precludes it from being treated as a reimbursable “reasonable and necessary” medical expense under LHWCA § 7, even when a licensed physician recommends it and local (Puerto Rico) law authorizes medical use.

The opinion is a strong statement of statutory primacy and institutional role: until Congress or formal rulemaking changes marijuana’s federal scheduling, federal courts will not use workers’ compensation reimbursement disputes to recognize medical marijuana as compensable treatment under federal law.