Professional Services Exclusions Bar Coverage for a Pharmacy Technician’s Mistake in Dispensing Medication

The Western District of North Carolina has held that the professional services exclusions of two different policies issued to a staffing agency negated any duty to defend a lawsuit alleging a pharmacy technician improperly administered a hydrating solution.  Phila. Indem. Ins. Co. v. Ronin Staffing LLC, 2022 WL 628518 (W.D.N.C. Mar. 3, 2022).  The court rejected the staffing agency’s argument that an exception to one exclusion applied, as neither the staffing agency nor pharmacy technician were operating as a retail druggist or drugstore.

The insurer issued two policies to the staffing agency, a Commercial General Liability Policy (“CGL Policy”) and a Businessowners Policy (“BO Policy”).  The staffing agency temporarily assigned a pharmacy technician to work for an infusion services company that operated at various pharmacies.  During the relevant policy period, a lawsuit was filed against the infusion services company alleging that the pharmacy technician improperly administered a hydrating solution due to the technician’s failure to adhere to proper safety checks.  The pharmacy technician reportedly administered a solution of 60% Dextrose instead of 10% which caused the recipient permanent brain damage.  The infusion services company sued for contribution from the pharmacy technician and contribution, indemnification, and damages from the staffing agency.  The staffing agency sought coverage for the suit, but the insurer denied coverage, arguing that the policies’ professional services exclusions applied.

The district court analyzed the two exclusions separately.  First, the CGL Policy’s exclusion provided, “This insurance does not apply to ‘bodily injury’ . . . due to the rendering of or failure to render any professional service.”  Because the CGL Policy did not define “professional service,” the court looked to North Carolina precedent to hold that a “professional service” is one that requires specialized knowledge or skills, and the skill is mental rather than manual.  The court held that administering a hydrating solution requires a specialized mental skill and thus is a professional service excluded by the CGL Policy.

The BO Policy similarly excluded coverage for “‘[b]odily injury’ . . . due to rendering or failure to render any professional service,” which included “services in the practices of a pharmacy,” but carved out from the exclusion “an insured whose operations include those of a retail druggist or drugstore.”  The court found the BO Policy’s exclusion to be applicable for the same reason as the CGL Policy’s exclusion.  Additionally, the court disagreed that the staffing agency or the pharmacy technician operated as a retail druggist or drugstore just because the staffing agency assigned the technician to work at a pharmacy.  The court thus found the exclusion’s carveout inapplicable.

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