A federal court in Florida recently held that insureds’ compounding of veterinary supplements constitutes the rendering professional health care services as a pharmacist, and that coverage for claims resulting therefrom is excluded by policies’ professional services exclusion. Cincinnati Ins. Co. v. Quorum Mgmt. Corp., 2016 WL 2937461 (M.D. Fla. May 13, 2016).
Following the deaths of polo horses owned by the underlying plaintiffs, the underlying plaintiffs sued the insureds who had compounded and manufactured a nutritional supplement given to the horses immediately prior to their deaths. The underlying plaintiffs alleged that the insureds were in the business of “designing, formulating, compounding, manufacturing, selling, and distributing veterinary medications and nutritional supplements.” The insureds sought coverage under their CGL and umbrella policies. The insurer refused to defend the insureds and filed a declaratory judgment action seeking a declaration that it had no duty to defend or indemnify the insureds per a professional services exclusions in the policies. It provided that the insurance did not apply to “‘bodily injury’, ‘property damage’ or ‘personal and advertising injury’ arising out of the rendering or failure to render professional health care services as a pharmacist.” The policies did not define “pharmacist” or “professional health care service.” The parties filed cross-motions for summary judgment. The insureds and underlying plaintiffs argued that the terms “pharmacist” and “professional health care service” are ambiguous and that the underlying allegations did not fall within the exclusion.
The district court referred to Florida’s pharmacy statutory scheme and dictionary definitions and determined that the plain meaning of “pharmacist” under Florida law clearly includes “compounding.” The district court noted the insureds were not mass producing or manufacturing the alleged lethal drugs so as to fall outside the scope of “pharmacy,” but were compounding a specific supplement for one-time use. The district court also determined that the plain meaning of “professional health care services” could refer to animals and not just to humans because courts must look at the nature of the service and who is performing it, not the end user or patient. Accordingly, the district court found that the professional services exclusion clearly and unambiguously excluded coverage.