When Should a Trial Judge Disclose the Contents of a Mary Carter Agreement to a Jury?

Upper Chesapeake Medical Center, Inc. v. Kenyetta Lewis, et al., No. 0679, September Term, 2023. Opinion by Reed, J.

        This appeal stems from a jury verdict reached in a medical negligence case in favor of Appellees Kenyetta Lewis and her child (“Appellees”).  This verdict followed a twelve-day jury trial on medical negligence claims against Appellants, Upper Chesapeake Medical Center, Inc. (“UCMC”) and Dr. Arthur Morey (collectively “Appellants”).  Lewis filed this suit against Appellants for a birth injury her child suffered in 2004.  At the time, Dr. Morey was the obstetrician responsible for Lewis’ care at UCMC.  As a result of the birth injury, Appellees sued the hospital for negligence due to errors made by its nurses and for vicarious liability due to Dr. Morey’s negligent actions. 

        Prior to the start of opening statements, Appellees’ counsel revealed to the jury that Appellees had struck a deal with Dr. Morey.  However, the contents of this agreement were not disclosed to the jury until the last day of trial.  UCMC took issue with this lack of disclosure of the Agreement’s terms because it was their position that the Agreement was a “Mary Carter Agreement.”  As such, UCMC believed that the terms of the Agreement were required to be disclosed to UCMC and the jury.  Appellees disagreed.  The trial judge did not immediately rule on whether the Agreement was a Mary Carter Agreement and did not immediately require the disclosure of the Agreement’s terms. Therefore, without any knowledge of the terms of this Agreement, during the trial, UCMC asserted that Dr. Morey was neither their employee nor their agent and, thus, they were not vicariously liable for his negligence. 

        Before each party rested, the terms of the Agreement were finally presented to the trial judge and opposing counsel.  The trial judge then determined that this Agreement was, in fact, a Mary Carter Agreement, which required disclosure to the jury.  In response, UCMC moved for a mistrial on the basis that this Agreement was not disclosed until the last day of trial.  Eventually, the trial judge decided to disclose the Agreement to the jury by presenting the e-mail that memorialized the Agreement.  UCMC, for a second time, moved for mistrial, but it was denied. 

        After hearing the terms of the Mary Carter Agreement and closing arguments, the jury found UCMC directly negligent through its nurse’s conduct and vicariously liable for Dr. Morey’s negligent conduct.  On appeal, Appellant UCMC presented two questions for the Appellate Court’s review:

 

1.  Did the trial court err by failing to dismiss Dr. Morey from the case after discovering he had entered into an agreement with the Appellees?

 

2.  Did the trial court err by refusing to grant a mistrial after discovering the existence of

the Agreement, and after discovering the terms of the Agreement?

To understand the implications presented by such an agreement, one must first understand what the term “Mary Carter Agreement” means. The Court in Gen. Motors Corp. v. Lahocki, described a “Mary Carter Agreement” to be “…any agreement between the plaintiff and some (but less than all) defendants whereby the parties place limitations on the financial responsibility of the agreement 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.” Gen. Motors Corp. v. Lakocki, 286 Md. 714, 720 (1980).  Maryland appellate courts have identified three specific 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.”

 

Franklin v. Morrison, 350 Md. 144, 171 (1998) (quoting Lachocki, 286 Md. At 720).  While these features can be used as a guidepost to determine if an agreement qualifies as a Mary Carter Agreement, these factors are neither exclusive nor exhaustive. Franklin, 350 Md. at 174 (1998).  

        Although these agreements are legal in Maryland, they can lead to several public policy concerns.  Particularly, parties to this type of 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.” Id. at 170.  This deceit can create a risk known as a “sham of adversity.” Id.   To prevent this “sham” from taking place, trial judges are granted discretion to disclose the existence of a Mary Carter Agreement to the jury. Lahocki, 286 Md. at 730. 

        Upon review of the UCMC appeal, the Appellate Court deemed the Agreement between Dr. Morey and the Appellees to be a Mary Carter Agreement. Specifically, in satisfying the features identified in Franklin, the Appellate Court found that (1) Dr. Morey remained in the trial as a named defendant; (2) the Agreement, as established by its own terms and Appellees’ repeated refusal to disclose its contents, was a secret; and (3) there was an exchange of benefits—financial or otherwise—which created the impression of adversarial roles not actually in existence. Thus, to avoid the “sham of adversity,” the Appellate Court agreed that the trial court had discretion to disclose the Mary Carter Agreement to the jury.

        In answering the first of two questions presented by Appellants, the Appellate Court found that since Maryland law on Mary Carter Agreements does not require dismissal of the agreement defendant, the trial court did not err when it allowed Dr. Morey to remain a defendant in the case. 

        However, as to the second question presented by the Appellants, the Appellate Court agreed with Appellants’ argument and found the late disclosure of the terms of the Agreement denied Appellants a fair trial.  First, the trial court erred by allowing Dr. Morey to testify prior to revealing the existence and terms of the Agreement to the jury.  The Appellate Court agreed that Dr. Morey’s testimony was deemed misleading because his motives for testifying could not be brought into question or even considered until after all of the evidence and the Mary Carter Agreement was presented.  Second, the Appellate Court concluded that the late disclosure of the Agreement prevented Appellants from using the “empty chair” strategy.  Due to the terms of the Agreement, Dr. Morey was unable to actively defend himself.  Therefore, without knowledge of the terms of the Agreement, Appellants were unable to focus its defense strategy on blaming Dr. Morey exclusively.  The Appellate Court ultimately reversed the trial court’s ruling and remanded the case for a new hearing on Appellant’s motion for mistrial.

        In accordance with Maryland case law, the decision reached in this case did not declare any bright line rule as to when the terms of a Mary Carter Agreement are to be disclosed.  Thus, discretion remains with the trial court to determine when to do so, as long as the decision does not result in uncurable prejudice. 

 - Aaminah Woods, Associate