Alabama Supreme Court Holds Professional Services Exclusion Applies to Pharmacy Technician’s Compounding of Medication

The Supreme Court of Alabama, applying Alabama law, has held that a pharmacy technician’s act of compounding medication constitutes a “professional service” under a professional services exclusion in a commercial general liability policy. OMS Pharmacy, Inc. v. Nationwide Prop. & Cas. Ins. Co., 2026 WL 3031566 (Ala. Oct. 9, 2026). The court further held that the exclusion applied not only to claims for negligence, but also to products liability claims.

A patient sued a pharmacy after its technician incorrectly entered the formula for her medication, resulting in serious injuries. The patient’s lawsuit asserted causes of action for negligence and products liability. The pharmacy’s commercial general liability insurer declined to defend the lawsuit because the patient’s injuries were excluded under the policy’s professional services exclusion, which stated that the policy did not cover “bodily injury” or “property damage” “that arises out of or is a result of the rendering of, or failure to render, any professional service, treatment, advice or instruction.” The policy further stated that “[t]his exclusion includes, but is not limited to, any . . . [s]ervice, treatment, advice or instruction in the practice of pharmacy.”

The court held that the professional services exclusion applied to the patient’s lawsuit. The court reasoned that the professional services exclusion referred to the “practice of pharmacy,” and the compounding of medicine is a traditional component of the practice of pharmacy. The court observed that the patient alleged that the pharmacy breached the professional standard of care by improperly compounding and labeling her prescription, which resulted in her injuries. The court rejected the insured’s argument that, even if the professional services exclusion applied to the negligence claims, it did not apply to the products liability claims. According to the court, the “arises out of” language within the exclusion “is broad, but unambiguous, and it encompasses all claims for bodily injury arising from the rendering of a professional service, regardless of the claimant’s theory of recovery.” The court found that the products liability claims had their origin in, grew out of, or flowed from the pharmacy's error in compounding the medication, and therefore, “fall within the plain language of the professional services exclusion.”