What Is a Mary Carter Agreement in Personal Injury Cases?

James Wong — Founder & CEO, LienScripts | March 4, 2026 | 6 min read

A Mary Carter agreement is a secret or semi-secret settlement between a plaintiff and one co-defendant in a multi-defendant personal injury case, where the settling defendant remains in the case and may benefit from a larger verdict against the non-settling defendant.

A Mary Carter agreement is a settlement arrangement in a multi-defendant personal injury case where the plaintiff reaches a confidential agreement with one defendant while the case continues against the remaining defendants. Under a typical Mary Carter agreement, the settling defendant agrees to pay a guaranteed amount to the plaintiff but remains in the case — and the settling defendant's payment may decrease if the plaintiff recovers a larger judgment against the non-settling defendants, effectively aligning the settling defendant's financial interest with the plaintiff's.

• Named after the 1967 Florida case Booth v. Mary Carter Paint Co., these agreements create unusual incentive structures where a settling defendant may secretly benefit from helping the plaintiff's case against co-defendants
• Mary Carter agreements are banned in some states, required to be disclosed in others, and permitted with varying restrictions in the remainder
• In multi-defendant personal injury cases involving pharmacy liens, these agreements affect how settlement proceeds are allocated and how lien holders are paid
• LienScripts generates a MERIT (Medication Evaluation & Rationale for Injury Treatment) report for every case, providing pharmacist-signed documentation for demand packages
• According to James Wong, PharmD, founder of LienScripts, "In multi-defendant cases, the settlement structure directly affects lien resolution — pharmacy lien holders need to understand how proceeds flow regardless of the settlement mechanism used"

How a Mary Carter Agreement Works

In a typical multi-defendant personal injury case without a Mary Carter agreement, each defendant faces liability independently, and any settlement with one defendant reduces the plaintiff's claim against the others by the settled amount.

A Mary Carter agreement changes this dynamic:

1. The plaintiff and Defendant A reach a confidential settlement for a guaranteed amount (e.g., $100,000)
2. Defendant A remains in the case as a nominal party
3. If the plaintiff recovers more than a threshold amount from Defendant B at trial (e.g., $200,000), Defendant A's payment decreases or is eliminated
4. Defendant A may cooperate with the plaintiff during trial — providing testimony, documents, or strategic assistance — because Defendant A benefits financially from a larger verdict against Defendant B

The result is that the settling defendant has a financial incentive to help the plaintiff win a larger verdict against the remaining defendants, while appearing to the jury as an adversarial party.

State Treatment of Mary Carter Agreements

States take varying approaches to these agreements:

Banned entirely:

• Texas — the Texas Supreme Court banned Mary Carter agreements in Elbaor v. Smith (1992), holding they violate public policy
• Several other states have followed suit

Required disclosure:

• Florida — Mary Carter agreements must be disclosed to the court and opposing parties, removing the secrecy element
• Many states require disclosure to the jury or at minimum to the trial court

Permitted with restrictions:

• Some states permit Mary Carter agreements but require disclosure before trial and allow the non-settling defendant to inform the jury of the agreement's existence and terms

No specific rule:

• Some jurisdictions have not addressed Mary Carter agreements by statute or case law, leaving their enforceability uncertain

Why Mary Carter Agreements Matter in PI Cases

For personal injury attorneys managing pharmacy liens, Mary Carter agreements are relevant in several ways:

Settlement allocation — the Mary Carter agreement creates a complex allocation of settlement proceeds. The pharmacy lien holder needs to understand the total recovery from all defendants — not just the Mary Carter settlement amount — to determine how the lien is satisfied.

Lien notice requirements — pharmacy lien holders and other medical lien holders must receive notice of settlements. In states where Mary Carter agreements are confidential, the question arises whether the agreement constitutes a "settlement" requiring notice to lien holders.

Disbursement complexity — when a case involves both a Mary Carter settlement and a trial verdict, the attorney must carefully structure the disbursement to satisfy all liens, account for the Mary Carter payment offsets, and comply with the settlement terms.

Ethical Considerations

Mary Carter agreements raise ethical concerns:

• Jury deception — if the agreement is not disclosed, the jury may believe the settling defendant is genuinely adverse to the plaintiff when the opposite is true
• Collusion risk — the alignment of interests between the plaintiff and the settling defendant can produce coordinated trial strategy that disadvantages the non-settling defendant
• Attorney obligations — attorneys involved in Mary Carter agreements must navigate disclosure requirements, candor to the tribunal, and obligations to lien holders

Connection to Pharmacy Lien Resolution

In multi-defendant personal injury cases managed through LienScripts, the pharmacy lien is typically resolved from the total recovery — regardless of how that recovery was structured among defendants. As Amar Lunagaria, PharmD, LienScripts' Chief Pharmacist explains, "The LienScripts lien attaches to the settlement proceeds of the personal injury case. Whether those proceeds come from a single defendant, a multi-defendant settlement, or a Mary Carter arrangement, the lien resolution process follows the same framework."

Attorneys handling multi-defendant cases with pharmacy liens should:

• Account for all sources of recovery when structuring the disbursement
• Ensure lien holders receive proper notice of all settlements, including Mary Carter agreements where disclosure is required
• Work with the pharmacy lien provider early to understand the lien amount and negotiate resolution alongside the broader settlement structure

Related Resources

• What Is a Covenant Not to Sue?
• Multiple Pharmacy Lien Coordination
• Settlement Allocation for Pharmacy Costs
• Pharmacy Lien Mediation Strategies