Insurance Policy Exclusion Bans Payment for Pharmacy Technician Error

A North Carolina court has held the professional services exclusions of 2 insurance policies issued to a staffing agency negate any duty to defend a lawsuit against a pharmacy technician charged with negligence.

The pharmacy technician worked for the staffing agency, who assigned her to work for an infusion services company that provided products for various pharmacies. The infusion services company provided intravenous solutions and other health care services for patients who needed supplemental nutrition. The technician was asked to compound a hydrating fluid of saline and 10% dextrose; however, she ended up compounding a solution which contained 60% dextrose. During the compounding of the solution, the technician allegedly failed to secure a pharmacist’s pre-check to ensure the proper formula and components were used and failed to have the resulting solution checked by the pharmacist. When the solution was administered to the patient, he suffered permanent brain damage.

The patient’s family sued the infusion services company for damages resulting from the incorrectly compounded solution. After the case settled, the infusion services company sued the staffing agency and the pharmacy technician, seeking contribution from the technician and contribution, indemnification, and damages for fraud and negligent misrepresentation from the staffing agency. The staffing agency sought coverage for the suit from its insurer.

The staffing agency had 2 insurance policies­—a business owner’s policy and a commercial general liability policy. Each policy provided coverage for damages due to bodily injury. Both policies also contained a professional services exclusion, which basically excluded coverage for bodily injury caused by “the rendering of or failure to render any professional service.” In one policy, “professional services” were described as including but not limited to medical, surgical, dental, x-ray, or nursing services. The other policy did not specify what “professional services” included. Thus, the court looked at North Carolina precedent to determine what “professional service” means and concluded a “professional service” is one that requires specialized knowledge or skills, and the skill is mental rather than manual.

The staffing agency’s insurance company refused to cover the agency based on the pharmacy technician’s negligent rendering of professional services. The case went to court, with the insurance company asking the court to declare it had no responsibility to the staffing agency based on the technician’s actions. The court agreed and declared the professional services exclusion meant the insurance company did not have to defend the staffing agency, and the insurance company was not obligated to pay damages as a result of the incident.

Reference:
Philadelphia Indemnity Insurance Company v Ronin Staffing LLC. (WD NC 2022).