Mary Carter Agreement
The term “Mary Carter Agreement” applies to any agreement between the plaintiff and some (but less than all)
defendants whereby the parties place limitations on the financial responsibility of the agreeing defendants, the amount of which is variable and usually in some inverse ratio to the amount of recovery which the plaintiff is able to make against the nonagreeing defendant or defendants.
Maryland appellate decisions have identified three particular features of Mary Carter Agreements: (1) The agreeing defendant is to remain a party and is to defend himself in court. However, his liability is limited by the agreement. In some instances, this will call for increased liability on the part of other co-defendants. (2) The agreement is secret. (3) The agreeing defendant guarantees to the plaintiff that he will receive a certain amount, notwithstanding the fact that he may not recover a judgment against the agreeing defendant or that the verdict may be less than that specified in the agreement.
Carter Mary Agreements are permitted in Maryland but are prohibited in many jurisdictions. Mary Carter Agreements present several public policy concerns, particularly that parties to a settlement agreement may deceive juries by proceeding at trial as if their interests were adverse to one another, when in fact, their claims against each other are no
longer extant. In other words, a co-defendant remaining in the case despite having settled with the plaintiff risks creating a “sham of adversity.” To prevent a “sham of adversity,” trial judges may disclose the existence and terms of a Mary Carter Agreement to the jury by either by presenting the jury with the agreement itself or by reciting to the jury the terms of the agreement.
In a Maryland birth injury medical malpractice case against an OBGYN and a hospital, the plaintiffs’ lawyer revealed after the jury was impaneled, but before opening statements, that they had struck a deal with the defendant OBGYN but did not disclose the agreement’s terms. The plaintiffs denied that the agreement was a Mary Carter agreement and refused to disclose the terms. The trial judge was not provided the terms of the agreement. After hearing argument, the trial judge did not immediately rule whether the agreement was a Mary Carter agreement and did not immediately require disclosure.
Not knowing the terms of the deal, the defendant hospital argued throughout trial that the defendant OBGYN was neither their employee nor their agent, so the hospital was not vicariously liable for his negligence. After all evidence had been presented, but before either party had rested, the trial judge revisited the agreement. At this point the terms of the agreement were disclosed to the trial judge and to opposing counsel, but not to the jury. The trial judge determined that the agreement was indeed a Mary Carter agreement which required disclosure to the jury. The hospital moved for a mistrial on the basis that the agreement was not disclosed until the last day of trial.
The trial judge decided to present the jury the email memorializing the agreement in its entirety. The trial judge also allowed either party to recall witnesses to testify about the Agreement, but neither party opted to elicit any further
testimony. The hospital moved again for a mistrial, which the court denied. Alongside the Agreement itself, the trial judge delivered a stipulated statement of facts explaining the timing of the agreement to the jury and provided further clarification upon the hospital’s request. After being presented the terms of the Agreement and hearing closing argument, the jury found the hospital directly negligent through its nurse’s conduct and vicariously liable for the defendant OBGYN’s negligence. The jury awarded awarded the plaintiffs $13,385,000; the circuit court entered a final judgment totaling $12,020,000. The hospital appealed.
The Appellate Court of Maryland held in its April 10, 2026 unreported Opinion that the trial judge had discretion to disclose the agreement to the jury to avoid misleading the jury about the real relationship between the defendant OBGYN and the hospital. The Maryland appellate court further held that although a plaintiff may not release an agent who was solely responsible for the injury but continue to sue the principal as vicariously liable for the released agent, in this case the agreement did not release the defendant OBGYN; he remained a named co-defendant. Moreover, the plaintiffs’ complaint did not allege the hospital’s liability was solely vicarious to the defendant OBGYN. Also, the jury returned a verdict that the hospital was directly negligent through its nurse’s actions. “Because there is no requirement that a defendant who has entered into a Mary Carter agreement be dismissed, the trial judge did not err by allowing the [defendant OBGYN] to stay in the case.”
The Maryland appellate court held, however, “we conclude that requiring Appellant to defend [the defendant OBGYN’s] actions while unaware of the terms of the Agreement was prejudicial to Appellant’s ability to mount its defense … We note that the Maryland case law on Mary Carter Agreements does not mandate a specific time when the terms of an agreement must be disclosed. In this case we need not declare a bright line rule but hold only that in the circumstances of this case, the disclosure came too late to cure the prejudice caused by the Agreement’s secrecy throughout trial. Accordingly, we find that the trial judge erred in failing to grant a mistrial.”
Source Upper Chesapeake Medical Center, Inc. v. Lewis, No. 0679 September Term, 2023.
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