Background
Hannah D. Browne suffered belladonna poisoning after OMS Pharmacy compounded a prescribed “pink cocktail” with belladonna measured in grams instead of milligrams. The resulting concentration was 1,000 times stronger than prescribed, and the pharmacy label also directed a tablespoon rather than the prescribed half-teaspoon. Browne required intensive-care treatment and later obtained a $4.75 million consent judgment against OMS. This separate action asked who, if anyone, had to bear that loss under OMS’s insurance arrangements.
Nationwide had issued OMS a standard premier businessowners liability policy. Although its insuring agreement covered bodily injury caused by an occurrence, the policy excluded injury arising out of professional services, expressly including service, treatment, advice, or instruction in the practice of pharmacy. Browne and OMS argued that at least the product-liability aspects of the underlying suit concerned a defective product rather than professional pharmacy services.
OMS also sued the insurance agencies involved in replacing its former Zurich policy. The earlier policy’s professional-services exclusion contained an exception for some pharmacological services by retail drug stores. Nationwide’s policy did not. OMS’s owner said the agent was supposed to replicate the prior coverage, but he received the Nationwide policy at each renewal and did not read its exclusions before Browne was injured. The Tuscaloosa Circuit Court entered summary judgment for Nationwide and the agency defendants.
The Court’s Holding
The Alabama Supreme Court unanimously affirmed the coverage ruling. Reading the policy according to the common understanding of its terms, the Court held that compounding medication for a customer is part of the practice of pharmacy and therefore a professional service. The exclusion’s broad “arises out of” language reached every claim originating from OMS’s compounding error, including claims framed under product-liability theories. The policy did not carve product claims out of the exclusion, so changing the theory of recovery did not create coverage for the same pharmacy-related injury.
The Court also affirmed summary judgment on negligent procurement. Alabama’s contributory-negligence rule is a complete defense when an insured’s own failure to exercise reasonable care contributes to the loss. Under the Court’s precedents, a competent adult generally has a duty to read an insurance policy. Had OMS’s owner read the exclusions, he would have seen the policy’s direct and unqualified reference to services in the practice of pharmacy and discovered that the replacement did not match the Zurich coverage. That failure made OMS contributorily negligent as a matter of law.
Finally, the evidence did not support wanton procurement. Wantonness requires conscious action or omission with awareness that injury is likely or probable. Although the agent reviewed only the prior policy’s declarations page and did not obtain the complete Zurich form, the record did not show that he consciously appreciated a probable injury to OMS. The Court therefore left intact all three summary judgments: for Nationwide on coverage and for the agencies on negligent and wanton procurement.
Key Takeaways
- A professional-services exclusion expressly covering the practice of pharmacy can reach product-liability claims when the injury arises from compounding medication.
- Under Alabama’s strict contributory-negligence doctrine, an insured’s failure to read clear exclusions can completely bar a negligent-procurement claim.
- Evidence that an agent failed to compare complete policies may support negligence allegations but does not, without conscious awareness of probable injury, establish wantonness.
Why It Matters
The opinion matters well beyond pharmacies because it connects two recurring Alabama insurance rules. Courts focus on the factual origin of an injury when applying broad “arising out of” language, not merely the label attached to a count in the complaint. And insured businesses cannot assume that a replacement policy duplicates old protection when the delivered contract plainly says otherwise.
Alabama coverage counsel should compare the operative endorsements and exclusions, not just declarations pages, whenever specialized professional activity is involved. Agents should document the requested scope and any material differences from prior coverage. Policyholders should conduct the same comparison upon delivery: in a contributory-negligence state, failing to read an unambiguous exclusion may eliminate a procurement claim even when the agent was asked to obtain equivalent coverage.