                             UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                             No. 06-1334



PHARMACISTS MUTUAL INSURANCE COMPANY,

                                             Plaintiff - Appellant,

           versus


G. DAVID SCYSTER, as Administrator of the
Estate   of   Mary   Virginia   Scyster   and
Individually Estate of Mary Virginia Scyster;
VIRGINIA RAUCH; VIVIAN CONRAD; DONALD M.
BOLES; ANNIE MCGILL,

                                            Defendants - Appellees,

           and


R. KEN MASON, JR.; URGENT CARE PHARMACY
INCORPORATED; W. RAY BURNS; EVELYN ARROYO;
DANIEL W. BOWMAN; JAMES HICKMAN; SHIRLEY KUS;
ROBERT BLACK; DEBORAH J. HENSLEY,

                                                         Defendants.



Appeal from the United States District Court for the District of
South Carolina, at Spartanburg. Henry M. Herlong, Jr., District
Judge. (7:04-cv-01922-HMH)


Argued:   January 30, 2007                    Decided:   May 7, 2007


Before WILKINSON, GREGORY, and DUNCAN, Circuit Judges.
Affirmed by unpublished opinion.      Judge Wilkinson wrote    the
opinion, in which Judge Gregory and Judge Duncan joined.


ARGUED: James Dunbar Myrick, BUIST, MOORE, SMYTHE, MCGEE, P.A.,
Charleston, S.C., for Appellant.      James B. Maxwell, MAXWELL,
FREEMAN & BOWMAN, P.A., Durham, North Carolina; H. Forest Horne,
Jr., MICHAELS, JONES, MARTIN, PARRIS & TESSNER, Raleigh, North
Carolina, for Appellees. ON BRIEF: Adriane Malanos Belton, BUIST,
MOORE, SMYTHE, MCGEE, P.A., Charleston, S.C., for Appellant.
William M. Grant, Jr., GRANT & LEATHERWOOD, P.A., Greenville, South
Carolina, for Appellees; Joe McLeod, THE MCLEOD LAW FIRM,
Fayetteville, North Carolina, for Appellee Virginia Rauch.


Unpublished opinions are not binding precedent in this circuit.




                                2
WILKINSON, Circuit Judge:

     Pharmacists Mutual Insurance Company appeals a decision that

a policy it issued to R. Ken Mason, Jr., covered claims against

Mason for injury and death caused by contaminated medications

produced at the pharmacy where Mason worked.   The insurer seeks to

avoid liability on the grounds that its policy excludes damages

from willfully illegal acts and damages from the manufacture of

pharmaceuticals, and on the grounds that some persons fell ill

during the policy period but received their injections of the

medication prior to the policy’s effective date.     We find that no

evidence supports an inference that Mason intentionally violated

the law or was engaged in manufacturing, and that under South

Carolina law, damages are covered so long as they arose during the

policy period.   We therefore affirm the judgment.



                                I.

     Pharmacists Mutual Insurance Company (“Pharmacists Mutual”)

brought this declaratory judgment action to determine its potential

liability for injuries and deaths from contaminated doses of

methylprednisolone produced at Urgent Care Pharmacy, Inc. (“Urgent

Care”), in Spartanburg, South Carolina. The insured, R. Ken Mason,

was Urgent Care’s pharmacist-in-charge and oversaw the compounding

of medications, although he did not personally compound drugs.    W.

Ray Burns owned the pharmacy. The defendant-appellees are a number


                                 3
of those who have filed suit against Mason because of the drug

contamination: G. David Scyster, Virginia Rauch, Vivian Conrad,

Donald M. Boles, and Annie McGill.



                                        A.

      Urgent Care distributed the contaminated methylprednisolone at

issue in this case to two medical practices in North Carolina, the

Johnston Pain Clinic and Pinehurst Anesthesia Associates.                    After

the     Upjohn     pharmaceutical       company       stopped     manufacturing

methylprednisolone, a sterile injectible drug used to treat severe

back and joint pain, Dr. Scott Johnston of the Johnston Pain Clinic

and   Dr.   Burt   Place   of   Pinehurst       Anesthesia      Associates     each

contacted Urgent Care to ask whether the pharmacy could compound

the drug for them.

      Dr. Johnston ultimately bought 525 vials of the drug from

Urgent   Care    between   March   5,    2002   and   August     20,   2002,    for

administration in his clinic’s offices.            Vivian Conrad was treated

with injections of Urgent Care’s methylprednisolone at the Johnston

Pain Clinic and contracted fungal meningitis because the medication

was contaminated.     Conrad passed away as a result on November 10,

2003.

      Dr. Place’s practice purchased 557 vials from Urgent Care

between May 6, 2002 and June 5, 2002.                   He and his partners

administered the drug at their practice to defendant-appellees


                                         4
Donald    Boles,    Annie     McGill,     and     Virginia         Rauch,     and    to    Mary

Virginia       Scyster,    whose    estate       is    administered         by    defendant-

appellee G. David Scyster.            Those patients allegedly fell ill with

meningitis       because    the     painkiller        was     contaminated,         and    Mary

Virginia Scyster allegedly passed away as a result.

        When    patients     from    Johnston          Pain    Clinic     and       Pinehurst

Anesthesia Associates became sick in mid-2002, the South Carolina

Board of Pharmacy (“the Board”), began an investigation of Urgent

Care.      Government       investigators         subsequently          determined         that

methylprednisolone produced by Urgent Care had been contaminated

with wangiella dermatitidis, a fungus mold that is linked to spinal

meningitis.

      The Board found multiple apparent violations of the South

Carolina Pharmacy Practice Act. It issued a cease-and-desist order

to Urgent Care, Burns, and Mason on September 27, 2002, stating, in

part,     that    Urgent     Care,       Burns        and     Mason     had      engaged    in

manufacturing       because       “you    have        not   been      adhering       to    good

compounding        practices         based        on        the       existence       of      a

pharmacist/patient/practitioner relationship.”                         Sheila Young, the

Board’s manager of regulatory compliance, said in a deposition that

the   Board      made     this    finding    because          Urgent     Care       had    been

manufacturing Bimix and Trimix. In contrast, she testified, Urgent

Care had been compounding methylprednisolone, not manufacturing it.

Paul W. Bush, a pharmacy director who reviewed records of Urgent


                                             5
Care’s activities, explained in a deposition that the evidence

supported   these    conclusions.        Urgent    Care   appeared   to   have

manufactured Bimix and Trimix because it distributed the drugs to

physicians who resold them for use outside their offices, even

though Urgent Care did not know the identity of the patients who

ultimately used the drugs. In contrast, there was no evidence that

Urgent Care’s methylprednisolone was resold or used outside of

physicians’ offices or medical institutions.

     The cease-and-desist order also stated that Mason and Urgent

Care appeared to have violated other requirements of the South

Carolina Pharmacy Practice Act, including sterilization standards,

contamination-monitoring procedures, and maintenance rules.               The

order   demanded    that   Mason   and    Urgent   Care   stop   compounding

activities.   Mason has since agreed to relinquish his pharmacy

permit, while admitting no wrongdoing.



                                     B.

     Pharmacists Mutual filed this action seeking a declaratory

judgment that lawsuits against Mason relating to methylprednisolone

would not be covered by the individual professional liability

policy that Pharmacists Mutual had issued to Mason, and that the

insurer had no duty to defend such lawsuits.          Pharmacists Mutual’s

policy covers only Mason, not Urgent Care, and provides only excess

coverage, available for damages not covered by another policy. The


                                     6
policy applies to losses from occurrences, personal injuries, and

advertising injuries “arising out of your rendering or failure to

render pharmacy services” for the period between June 19, 2002 and

June 19, 2003.

       Under the policy, “pharmacy services” are defined to include

compounding, which in turn includes “the preparation, mixing,

assembling, packaging, or labeling of a drug or device . . . as a

result of a practitioner’s prescription drug order or initiative

based on the practitioner/patient/pharmacist relationship in the

course of professional practice.”                  Compounding “also includes the

preparation of drugs or devices in anticipation of prescription

drug   orders    based      on    routine,        regularly       observed    prescribing

patterns” and “such other practices as are approved as a part of

the practice of pharmacy by the Board of Pharmacy in the state in

which you practice.”             The policy does not cover manufacturing,

which it defines to include “the preparation and promotion of

commercially available products from bulk compounds for resale by

pharmacies, practitioners, or other persons” and the “promotion and

marketing” of the drugs that a pharmacy produces.

       Pharmacists Mutual sought a declaratory judgment that Mason

and    Urgent        Care   had       been        engaged     in     manufacturing        of

methylprednisolone and argued that Mason had deliberately broken

the    law,   triggering         an   exclusion      to     the    policy    for    willful

violations      of    law   committed        by    the    policyholder       or    with   his


                                              7
knowledge and consent.       It also sought a declaratory judgment that

claims concerning the injury or death of three persons -- McGill,

Conrad, and Mary Virginia Scyster -- were not covered because they

involved bodily injury outside the policy period.              After cross-

motions for summary judgment, the district court rejected these

arguments and granted summary judgment to the defendants who sought

it, holding that Mason’s conduct did not amount to manufacturing or

trigger the illegality exclusion, and that the claims of the

defendants who sought summary judgment all involved injuries that

occurred during the policy period.          Pharmacists Mutual appeals.



                                      II.

       Pharmacists Mutual first argues that its policy does not cover

the contaminated drug claims against Mason because the policy

contains   an    exclusion   for    “[d]amages   caused   by   your   willful

violation of a regulation or statute pertaining to the practice of

pharmacy or any other willful violation of a penal statute or

ordinance committed by you or with your knowledge and consent.”

Under the law of South Carolina that the parties agree applies,

exclusions must be interpreted narrowly, Boggs v. Aetna Cas. & Sur.

Co., 252 S.E.2d 565, 568 (S.C. 1979), and ambiguities interpreted

in favor of the insured,           Gaskins v. Blue Cross-Blue Shield of

S.C., 245 S.E.2d 598, 602 (S.C. 1978).        When a policy is capable of

more    than    one   reasonable    interpretation,   courts     adopt   the


                                       8
construction most favorable to the insured. Id. The insurer bears

the burden of establishing that an exclusion applies.                 Boggs, 252

S.E.2d at 568.

     The    parties     both    interpret   the   exclusion     for   “willful”

violations to require an intent to violate the law.              See Brief of

Appellees at 14; Brief of Appellant at 13 n.8.            This reflects South

Carolina    decisions     that    define    a   willful   act   as    “one   done

voluntarily and intentionally with the specific intent to do

something the law forbids, or with the specific intent to fail to

do something the law requires to be done, that is to say, with bad

purpose either to disobey or disregard the law.”            In re Diggs, 544

S.E.2d 632, 632 (S.C. 2001) (internal quotations omitted). Since

Mason was the policyholder, Mason must have either intended to

break the law or have known and consented to a willful violation by

another person in order for the exclusion to apply.

     Pharmacists Mutual has not presented evidence to avoid summary

judgment on the applicability of this exclusion.                In this case,

Pharmacists Mutual presented evidence that Mason violated the South

Carolina Pharmacy Practice Act, but no evidence supporting an

inference that Mason broke the law deliberately. The only evidence

bearing directly upon intent is Mason’s testimony that he believed

Urgent     Care   had    been     compounding      methylprednisolone,       not

manufacturing it, and Mason’s testimony that the pharmacy’s owner,

W. Ray Burns, told Mason and other employees that he wanted the


                                       9
company to be in full legal compliance and held meetings and

briefings to educate his pharmacists about the requirements of law.

No pharmacist, doctor, or investigator suggested that Mason -- or

anyone else at the pharmacy -- knew that he was violating the law,

let alone that he intended to do so.

       Mason’s violations of South Carolina’s pharmacy laws are not

by themselves a sufficient basis to find that the violations were

committed “voluntarily and intentionally with the specific intent

to    do   something    the   law   forbids.”        Id.   (internal         quotations

omitted). The state’s statutory scheme is intricate.                         The South

Carolina Pharmacy Practice Act regulates matters from alkaloids to

veterinarians.         See generally S.C. Code Ann. § 40-43-10 et seq.

(2001).      It does not simply require safety and cleanliness, but

dictates hand-washing procedures, id. § 40-43-86(A)(16)(j) (“[A]ll

pharmacists,      before      compounding       prescriptions       .    .    .   shall

thoroughly cleanse their fingernails . . . ”), signage, id. § 40-

43-86(A)(14)      (stating     when   pharmacy      department      is       closed   or

licensed pharmacist is absent pharmacy must display “a sign stating

‘Pharmacy Department Closed, Pharmacist Not On Duty’”), and scent,

id.    §    40-43-86(A)(16)(a)        (stating      pharmacy     must        eliminate

“obnoxious odors” in the prescription department).                      Its numerous,

detailed provisions, some susceptible to multiple interpretations,

create      the    possibility        of        violations     by       mistake       or




                                           10
misinterpretation, as well as accidental violations by those who

understood the law’s requirements.

      Given the ease of inadvertent violation, the leap from a bare

violation to a conclusion of willfulness is too speculative for a

reasonable finder of fact.      Such a jump not only threatens to strip

the willfulness limitation of meaning.             It also interprets an

exclusion that is written to cover a narrow subset of violations in

a   manner   that   renders   uncertain    the   central   protection   that

insurance provides, as a shield against liability for negligent

acts.    Pharmacists Mutual could write an exclusion applicable to

any illegal act, but it did not do so, and the narrower exclusion

that it wrote covering willful illegal acts should not be treated

as identical to the broader exclusion the insurer chose not to

write.

      Pharmacists Mutual would give its narrowly drafted exclusion

even greater scope through its argument that willfulness can be

established from the fact that Urgent Care’s owner, W. Ray Burns,

sought to significantly increase the amount of Urgent Care’s

compounding work, because the sale of compounded medications was

more profitable than the sale of other drugs.         This fact by itself

is of limited relevance, because the exclusion requires that Mason,

the policyholder, intended to violate the law or knew of and

consented to a willful violation.         But Burns’ desire to foster his

most profitable line of business is unremarkable in any event:            It


                                    11
would be noteworthy if Burns did not wish to increase his business’

focus on its most profitable line of work.         There is no evidence

suggesting Burns sought to serve this end by willfully violating

state statutes, thereby jeopardizing his company’s ability to do

business at all.    To the contrary, while Pharmacists Mutual seeks

to place a sinister cast on the fact that Urgent Care “obtained

licenses in 50 states” for its compounding, this evidence hardly

suggests    that   the   company   sought   to   pursue   its   expansion

unlawfully.

     In sum, we find no basis in the record that could adequately

support excluding coverage based upon willful illegal conduct by

Mason.     While the district court did not hold a hearing prior to

its grant of summary judgment, “[t]here is no absolute requirement

that a ruling on a motion for summary judgment be preceded by a

hearing.”    Cray Commc’ns, Inc. v. Novatel Computer Sys., Inc., 33

F.3d 390, 396 (4th Cir. 1994).      The insurer does not suggest that

the company was prevented from putting relevant information into

the record. The company had ample opportunity to offer evidence to

meet its burden, and simply failed to do so.



                                   III.

     Pharmacists Mutual next contends that it is not liable for

damages from the contaminated methylprednisolone because the drugs

were manufactured, rather than compounded. Mason’s policy does not


                                    12
cover manufacturing, which it defines to include “the preparation

and    promotion       of    commercially            available       products       from    bulk

compounds     for     resale     .   .     .”   as     well    as    the     “promotion      and

marketing” of certain drugs.                In contrast, the policy covers the

compounding of medications, including “the preparation, mixing,

assembly, packaging, or labeling of a drug . . . as a result of a

practitioner’s prescription drug order or initiative based on the

practitioner/patient/pharmacist                  relationship         in     the    course    of

professional practice” and “the preparation of drugs or devices in

anticipation         of     prescription        drug     orders       based    on     routine,

regularly      observed       prescribing            patterns.”           Compounding       also

includes “such other practices as are approved as a part of the

practice of pharmacy by the Board of Pharmacy in the state in which

you practice.”

       We agree with the district court that Mason and Urgent Care’s

production      and       distribution      of       methylprednisolone            constituted

permissible         compounding      under       these      definitions,          rather    than

manufacturing.         There was evidence that Mason and Urgent Care had

produced      two    urological       drugs      --    Bimix        and   Trimix     --    which

physicians resold for use outside their practices, and that this

would   constitute          manufacturing.            But     the    Board    did    not    find

evidence that Urgent Care’s methylprednisolone was used outside

physicians’ offices and it did not conclude that Mason or Urgent

Care    had    manufactured          the    painkiller         based       upon     any    other


                                                13
consideration.       Pharmacists Mutual has offered no evidence in this

proceeding    that    methylprednisolone      was   resold    or    administered

outside physicians’ offices or medical institutions.                 And we find

unavailing its arguments that even though the Board made no finding

that Urgent Care manufactured methylprednisolone, this Court should

make such a finding on its own.



                                       A.

     Pharmacists Mutual argues that Mason and Urgent Care were

engaged in manufacturing by making drugs “in anticipation of

receiving prescriptions without a historical basis,” S.C. Code Ann.

§ 40-43-86(CC)(2)(f), but it does not offer evidence that the

pharmacy lacked a historical basis for any of its compounding of

methylprednisolone.       Under Mason’s policy, compounding includes

both the preparation of drugs “as a result of a practitioner’s

prescription drug order” and “the preparation of drugs or devices

in anticipation of prescription drug orders based on routine,

regularly observed prescribing patterns.”                South Carolina law

similarly     distinguishes     manufacturing,        which        includes     the

preparation    of    drugs   without   a    historical    basis,         id.,   from

compounding, which includes “the preparation of drugs or devices in

anticipation    of     prescription    drug   orders     based      on    routine,

regularly observed prescribing patterns,” id. § 40-43-30(7).                    All

the testimony in this case indicated that Mason and Urgent Care’s


                                       14
production     of    methylprednisolone           fit   within       the     compounding

definition.         Mason    and    Sheila    Young,    the    Board’s           manager   of

regulatory       compliance,             testified      that         the         doses     of

methylprednisolone          that    Urgent       Care   compounded          were     either

supported by a prescription order that the pharmacy had received at

the time of compounding or by historical prescription patterns.

       Pharmacists Mutual nevertheless argues that the historical

basis for some compounding was deficient.                   It notes that when new

customers     placed    their       first     orders,       Urgent    Care        sometimes

fulfilled the orders using drugs that had been prepared previously.

For instance, Urgent Care fulfilled an order for methylprednisolone

from the Johnston Pain Clinic on February 25, 2002 using drugs that

were compounded on February 6, 2002, even though the Johnston Pain

Clinic had not previously ordered methylprednisolone from the

pharmacy.     Similarly, Urgent Care used drugs from the February 6

lot to fulfill orders from two subsequent new customers, Dr. Robert

Feldman and Dr. Thomas A. Duc.                   These facts are not relevant,

however, because they do not contradict Mason and Young’s testimony

that    Urgent      Care’s    compounding         had   a    historical           basis    in

prescription data, even if the historical basis was derived from

different    physicians       than       those   who    ultimately         received        the

compounded drugs.            Neither the policy nor South Carolina law

require that the historical basis supporting compounding be derived

from   the   practitioner          who    ultimately     receives          the    batch    in


                                            15
question, and as a result, the acts to which Pharmacists Mutual

points do not indicate that Mason or Urgent Care engaged in

manufacturing.



                                        B.

       Pharmacists Mutual claims that even if Mason and Urgent Care

had a historical basis for their production of methylprednisolone,

they    engaged     in    manufacturing           because    they     distributed

methylprednisolone to doctors for in-office or institutional use

without knowing the identities of the patients treated in these

settings.      Pharmacists Mutual’s policy states that compounding

includes “practices . . . approved as a part of the practice of

pharmacy by the Board of Pharmacy in the state in which you

practice,” but the insurer argues that South Carolina does not

treat    a   pharmacy’s   production         or    distribution     of   drugs   as

compounding if the pharmacy does not have a prescription drug order

that identifies a particular patient.              The insurer relies upon the

South    Carolina   Pharmacy      Practice        Act   provision   that   “[t]he

compounding of drugs in anticipation of receiving prescriptions

without a historical basis or the distribution of compounded

products without a patient/practitioner/pharmacist relationship is

considered manufacturing.”         S.C. Code Ann. § 40-43-86(CC)(2)(f).

       South   Carolina   Board    of   Pharmacy        officials   explained    in

depositions, however, that this provision of state law did not bar


                                        16
the production of methylprednisolone for physicians’ in-office use,

based upon a history of past orders, and we do not read the state’s

statutes to indicate otherwise.          While the Pharmacy Practice Act

provides that “the distribution of compounded products without a

patient/practitioner/pharmacist          relationship      is     considered

manufacturing,”      id.,      it         does     not         define      the

patient/practitioner/pharmacist relationship.            It is by no means

self-evident that this relationship is absent when a physician has

relationships with both a patient and a pharmacist and obtains

medications from the pharmacist for in-office administration, as

Jeffrey Gibbs, a longtime food and drug lawyer who has served as

associate and chief counsel for enforcement at the Food and Drug

Administration, noted in a deposition.

     Several specific code provisions suggest, to the contrary,

that state officials were correct that the provision concerning the

“patient/pharmacist/physician       relationship”       does    not     require

prescription orders naming individual patients when a pharmacy

produces drugs on the basis of historical data, for physicians’ in-

office administration.      South Carolina’s Pharmacy Practice Act

repeatedly indicates that a history of prior orders can be an

adequate basis for the compounding of medications -- and thus

indicates that compounding can occur in the absence of a drug order

for a particular named patient.      See S.C. Code Ann. § 40-43-30(7)

(“Compounding also includes the preparation of drugs or devices in


                                    17
anticipation        of    prescription      drug       orders   based      on     routine,

regularly observed prescribing patterns.”); id. 40-43-86(CC)(2)(d)

(“Pharmacists        may      compound     drugs    before      receiving         a    valid

prescription based on a history of receiving valid prescriptions

that    have     been         generated     solely       within       an    established

pharmacist/patient/practitioner relationship.”).

       State officials also emphasized a provision that appears to

countenance compounding in the very circumstances of this case.

The Pharmacy Practice Act states that “pharmacists may compound

products    based        on   an   order   from    a    practitioner        for       use    by

practitioners for patient use in institutional or office settings.”

Id. § 40-43-86(CC)(2)(e).             The Board’s director, Lee Ann Bundrick,

its    manager   of      regulatory      compliance,      Sheila      Young,      and       the

investigator Eddie Durant each stated that in the context of in-

office or institutional use, a pharmacist may compound drugs based

upon a physician’s order without the pharmacist’s knowing the

identities of the patients for whom the drugs were intended.                                 We

need not decide whether the provision on in-office use is an

independent authorization of the compounding that it describes, as

some Board officials suggested, or simply a confirmation that

production of drugs that already qualified as compounding remains

so.    On either reading, we find no basis to dispute the apparent

conclusion     of    the      state   officials     charged     with       the    Pharmacy

Practice     Act’s       implementation      that      Mason    and    Urgent         Care’s


                                            18
production of methylprednisolone was compounding under state law.

As   a     result,        Mason   and     Urgent      Care’s     production      of

methylprednisolone also qualified as compounding under Pharmacists

Mutual’s    policy,       which   incorporated       the    state’s    compounding

definition.



                                         C.

     Finally, we find no merit in Pharmacists Mutual’s argument

that drug contamination claims against Mason are not covered

because Urgent Care engaged in promotion or marketing.                   Promotion

and marketing of certain drugs are not covered activities under

Mason’s    policy,    because     the    policy    states    that     manufacturing

includes “the promotion and marketing of such drugs.”                   The policy

does not define “promotion” or “marketing,” however, or otherwise

illuminate what separates these activities from the communications

between pharmacist and doctor that are necessary to create and

transmit a prescription drug order.               Interpreting these ambiguous

terms liberally in Mason’s favor and against Pharmacists Mutual,

Gaskins, 245 S.E.2d at 600, we cannot commit the leaps that would

be necessary to bring Mason’s activities within the “promotion” or

“marketing” categories.

     In    order     to    find   that    Mason’s    activities       amounted   to

“promotion” or “marketing,” we would have to read the undefined

terms to sweep beyond South Carolina law, which differentiates


                                         19
between    compounding        and     manufacturing      communications        with   a

precision absent from the insurer’s policy.                  The state’s Pharmacy

Practice Act provides, “Compounding pharmacies/pharmacists may

advertise       or   otherwise      promote    the    fact    that    they     provide

prescription compounding services . . . when requested; however,

they may not solicit business by promoting to compound specific

drug products, e.g., like a manufacturer.” S.C. Code Ann. § 40-43-

86(CC)(2)(e).

       The record contains no evidence that Urgent Care’s activities

with      respect      to     methylprednisolone          would       render        them

“manufacturing” under this provision.                Urgent Care had a full-time

sales     and    marketing     employee,       Douglas    Pait,      who    met     with

representatives of the practices that received contaminated drugs.

Pait testified, however, that he did not mention methylprednisolone

to members of those practices until they inquired as to whether

Urgent Care could compound the drug for them.                 No doctor testified

to the contrary.          And while Urgent Care hired a telemarketer, had

a website, paid commissions to affiliated nurses and physicians,

and described the company’s compounding practices and some drugs it

could   provide      in     printed    literature,     Pharmacists         Mutual   has

produced no evidence that methylprednisolone was identified in the

printed materials or was compounded pursuant to any telemarketing

promotion or commission agreement.               In sum, the record does not

contain evidence that Urgent Care or its employees sought to


                                          20
promote   the    “specific   drug   product[]”   of   methylprednisolone,

triggering the definition of manufacturing under South Carolina

law, rather than simply “promot[ing] the fact that they provide

prescription compounding services” in their communications with the

practices.      Id.



                                    IV.

     Lastly, we affirm the district court’s holding that the claims

of all of the defendant-appellees are covered under Pharmacists

Mutual’s policy, even though three defendant-appellees received

methylprednisolone that was compounded and injected before the

policy period of June 19, 2002 to June 19, 2003.        The policy states

that the insurer will pay “damages because of an occurrence,

personal injury, or advertising injury to which this insurance

applies, and arising out of your rendering or failure to render

pharmacy services.” “Occurrence” is defined as “an act of rendering

or failure to render pharmacy services which results in bodily

injury or property damage . . . during the policy period” and as

“an accident, including a continuous or repeated exposure to

conditions . . . .”

     South Carolina precedent is squarely on point concerning the

interpretation of such an occurrence policy, and establishes that

Pharmacists Mutual’s policy covers all damage that occurred during

the policy period even if the compounding and the injections


                                     21
leading to the damage occurred before the policy took effect.   The

South Carolina Supreme Court interpreted virtually identical policy

language in Joe Harden Builders, Inc. v. Aetna Cas. & Sur. Co., 486

S.E.2d 89 (S.C. 1997), and “adopted a modified continuous trigger

theory for determining when coverage is triggered under a standard

occurrence policy,” Century Indem. Co. v. Golden Hill Builders,

Inc., 561 S.E.2d 355, 357 (S.C. 2002).        “Under this theory,

coverage is triggered whenever the damage can be shown in fact to

have first occurred . . . and the policy in effect at the time of

the injury-in-fact covers all the ensuing damages.”    Joe Harden,

486 S.E.2d at 91.   Coverage is triggered continuously while damage

progresses thereafter, id., because an occurrence policy “clearly

focuses on the time the damage occurs and not on the time of the

underlying event that eventually caused the damage,” id. at 90. It

is undisputed that all of those who received injections fell ill

and suffered damages during the policy period.    Their claims are

therefore covered by Pharmacists Mutual’s policy.

     Pharmacists Mutual seeks to distinguish Joe Harden and Century

Indemnity, but these attempts are unpersuasive. The insurer argues

that “the facts in the case at hand are quite distinct from the

situation facing the court” in Joe Harden and Century Indemnity,

because those cases involved property damage rather than bodily

injury and because the time of the harm-causing act in those cases

was more difficult to ascertain than in the case at hand.   Brief of


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Appellant at 43.   Neither Joe Harden nor Century Indemnity relied

on the facts upon which Pharmacists Mutual focuses, however.    Joe

Harden framed its subject broadly, as “coverage under an occurrence

policy when there is progressive damage that is not apparent at the

time of the underlying injury-causing event,” 486 S.E.2d at 90, and

it cited approvingly a case involving a policy covering bodily

injury from asbestos, rather than merely property damage, id. at 91

(citing Abex Corp. v. Md. Cas. Co., 790 F.2d 119 (D.C. Cir. 1986)).

In addition, Joe Harden stated that one reason underlying its

continuous-trigger rule was that “this theory of coverage will

allow the allocation of risk among insurers when more than one

insurance policy is in effect during the progressive damage,” id.,

a rationale that applies with equal force to progressive injuries

caused by compounded medications.    Under South Carolina case law,

Pharmacists Mutual’s policy covers claims based upon progressive

damage that occurred during the policy period even if the actions

causing the harm occurred before the policy took effect, and we

therefore find the claims of all the defendant-appellees to be

covered.



                               V.

     For the foregoing reasons, the judgment of the district court

is

                                                          AFFIRMED.


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