In a win for an insurer represented by Wiley Rein, the United States District Court for the Southern District of Florida, applying Florida law, has held that eleven claims by patients against a pharmacy and pharmacist for negligently repackaging two preservative-free drugs for injections by the same doctor to treat the same condition constituted “related claims.”  Amer. Cas. Co. of Reading, Pa. v. Belcher, 2017 WL 372094 (S.D. Fla. Jan. 26, 2017).

A Florida pharmacy contracted with a south Florida ophthalmologist to repackage two, nearly identical drugs from larger vials into single-dose syringes for injections into the eyes of patients to treat age-related wet macular degeneration.  The drugs did not include any preservatives to prevent microbial contamination and were required to be repackaged under sterile conditions.  During the repackaging of the drugs over a six-month period, a pharmacy technician allegedly failed to use any of the mandated procedures to ensure a sterile repackaging process—using only non-sterile gowning and equipment to repackage the drugs in a storage room at the pharmacy.  The pharmacist-in-charge of the facility also allegedly took no measures to ensure that the drugs were being properly repackaged.

Several of the syringes allegedly became contaminated during the repackaging process and were injected into the eyes of almost three dozen patients.  Eleven of those patients who suffered severe vision loss and/or blindness as a result of swelling related to the contaminated injections made claims against the pharmacy and pharmacist-in-charge for purported negligent repackaging of the drugs from larger vials into single-dose syringes.

Both the pharmacy and pharmacist-in-charge tendered the eleven claims to their professional liability insurer.  Both were insured under separate errors and omissions policies issued by the same insurer.  Each policy had a $1 million per claim and $3 million aggregate limit of liability.  The insurer agreed to defend its insureds under a reservation of rights but asserted that the eleven claims were “related claims,” subject to the $1 million per claim limit of liability under both policies.  The insurer negotiated a high/low settlement agreement, resulting in a complete release of its insureds but allowing the insurer and claimants to litigate the related claims issue to determine the amount owed under the policies for the eleven claims.

The court held that the related claims language in the policies was unambiguous.  Both policies provided that claims were related if they arose out of “acts, errors or omissions in the rendering of professional services or placement services that are logically or causally connected by any common fact, circumstance, situation, transaction, event, advice or decision.”  Relying on Eleventh Circuit precedent, the court reasoned that the express requirement of a logical or casual connection rendered the related claims definition “clear and unambiguous.”

Applying the related claims language to the eleven claims, the court held that all eleven claims were logically connected because both drugs “were negligently repackaged by the same individual at the same pharmacy for the same doctor over a relatively short period of time.” It rejected claimants’ contention that the claims could not be related because the insurer could not prove the cause of each contaminated syringe.  The court held that the cause of the contamination was irrelevant because the related policy language also applied when claims were logically connected and “the individual responsible for the contaminated syringes, the general processes used to repackage those syringes, and the precise location where the contaminations originated are common to all of the Claimants’ claims.”  It also rejected claimants’ contention that the claims could not be related because the insureds had no “common scheme or plan” to distribute contaminated drugs.  The court determined that the insureds were engaged a single course of conduct—repackaging the two drugs using the same non-sterile process across the same six-month period—thus logically connecting all claims arising from that conduct.