The word psycho has also attained a common usage definition that means mean or easily pissed off. I think this is more likely the usage intended.
I believe any competent lawyer could argue this point. I have called people psycho in the past, often meaning they have gone off the deep end in anger or they are doing something very stupid, but never intended to imply a medical condition.
Right, but it is all context. It could very well imply a medical condition BECAUSE she is getting her medication prescription filled at the pharmacy.