The Alabama Supreme Court has ruled in favor of Nationwide Property and Casualty Insurance Company, affirming a lower court's decision that the company is not liable for a $4.75 million judgment against OMS Pharmacy, Inc. This ruling stems from a case where a patient, Hannah D. Browne, suffered severe injuries due to a medication that was improperly compounded by the pharmacy. The court's decision clarifies the limitations of liability insurance coverage for pharmacies and sets a precedent regarding professional services exclusions.
The case, OMS Pharmacy, Inc., d/b/a The Pharmacy at Midtown; and Hannah D. Browne v. Nationwide Property and Casualty Insurance Company; Baldo-Downs Insurance, LLC; and Roger Downs, Inc., was filed under docket number SC-2025-0165. The court's opinion was delivered by Chief Justice Jay Stewart on October 9, 2026.
Background
OMS Pharmacy, founded in 1984, was operated by Tim Wright, an Alabama-licensed pharmacist. The pharmacy began compounding medications, including a prescription for Browne in March 2013. Browne was prescribed a liquid medication known as a "pink cocktail," which was supposed to contain specific amounts of phenobarbital, maalox, and belladonna. However, due to an error by a pharmacy technician, the belladonna was compounded in a dosage that was one-thousand times stronger than prescribed, leading to Browne suffering from belladonna poisoning.
Browne filed a lawsuit against OMS and Wright in October 2013, resulting in a $4.75 million judgment after a settlement was reached in 2015. The lawsuit alleged several claims, including negligence and products liability, due to the improper compounding of the medication. OMS's insurer, Nationwide, declined to cover the claims, arguing that the policy contained a professional-services exclusion that applied to the case.
The Ruling
The Alabama Supreme Court ruled that Nationwide's policy did not cover Browne's claims against OMS due to the professional-services exclusion. The court stated, "Browne's bodily injury claims 'arise[] out of or [are] a result of the rendering of … [s]ervice, treatment, advice or instruction in the practice of pharmacy.'" This ruling was based on the determination that the act of compounding medication is a professional service requiring specialized knowledge and training.
The court also addressed the claims against the agency defendants, Baldo-Downs Insurance, LLC, and Roger Downs, Inc., which alleged negligent failure to procure the appropriate insurance coverage. The court affirmed the lower court's summary judgment in favor of the agency defendants, concluding that OMS had received a policy that clearly excluded coverage for professional services, thus precluding any claims of negligence against the insurance agents.
Impact
This ruling has significant implications for pharmacies and their insurance coverage. It clarifies that general liability policies with professional-services exclusions will not cover claims arising from errors in the compounding of medications. This decision may lead pharmacies to reevaluate their insurance policies and consider obtaining specific coverage that includes protection against claims related to professional services.
The ruling also emphasizes the importance of understanding policy exclusions and the potential consequences of not reading insurance documents thoroughly. It serves as a reminder for pharmacy operators to ensure they have adequate coverage that addresses the unique risks associated with their profession.
What's Next
It remains unclear if OMS Pharmacy plans to appeal the ruling, as the court has affirmed the summary judgments in favor of Nationwide and the agency defendants. There are currently no related cases pending that could impact this decision.