In a win for an insurer represented by Wiley Rein, the United States Court of Appeals for the Eleventh Circuit, 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, No. 17-10848, 2017 WL 4276057 (11th Cir. Sept. 27, 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 repacking 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 suffered severe vision loss and/or blindness as a result of swelling related to the contaminated injections, and they made claims against the pharmacy and pharmacist-in-charge for purported negligent repackaging of the drugs.

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 what amount was owed under the policies for the eleven claims.

Applying the unambiguous related claims language to the eleven claims, the district 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.”  A summary of the district court’s decision can be found here.

The Eleventh Circuit affirmed the district court’s ruling that the eleven claims constituted “related claims” under both policies.  As a threshold matter, the court determined that the “related claims” analysis was not determined by “whether there are any differences between the defendants’ individual claims” but by whether the claims are logically or causally connected by any common fact or circumstance.  The court determined that the claims were logically connected because each syringe was prepared in the same location, by a single technician supervised by the same pharmacist, and the technician “used the same process to prepare all the syringes, repeating the same violations of health and safety regulations.”  The court also rejected claimants’ contention that its interpretation would make coverage illusory.  It held that its interpretation did not negate the aggregate limit because there could be situations where multiple claims were distinct and because the policies provided coverage for the claims, albeit confined to the $1 million per claim limit.