Civil Actions - Settlement Agreements - Payment and Release

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb0526*

HOUSE BILL 526
D3 6lr1737

By: Delegate Kaufman
Introduced and read first time: January 27, 2026
Assigned to: Judiciary

A BILL ENTITLED

AN ACT concerning 1

Civil Actions – Settlement Agreements – Payment and Release 2

FOR the purpose of requiring a settling defendant in a tort action for money damages to 3
provide a proposed release to a plaintiff within a certain period of time and to pay all 4
sums due to a plaintiff under a settlement agreement within a certain period of time; 5
providing for the protection by a plaintiff of certain third–party rights of recovery or 6
subrogation; establishing the accrual of interest on settlement sums under certain 7
circumstances; and generally relating to settlement agreements in tort actions. 8

BY adding to 9
Article – Courts and Judicial Proceedings 10
Section 5–11A–01 and 5 –11A–02 to be under the new subtitle “Subtitle 11A. 11
Payment of Settlement Agreements” 12
Annotated Code of Maryland 13
(2020 Replacement Volume and 2025 Supplement) 14

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 15
That the Laws of Maryland read as follows: 16

Article – Courts and Judicial Proceedings 17

SUBTITLE 11A. PAYMENT OF SETTLEMENT AGREEMENTS. 18

5–11A–01. 19

IN THIS SUBTITLE, “IOLTA ACCOUNT” MEANS AN ATTORNEY TRUST ACCOUNT 20
ESTABLISHED UNDER § 10–303 OF THE BUSINESS OCCUPATIONS AND PROFESSIONS 21
ARTICLE. 22

5–11A–02. 23
2 HOUSE BILL 526

(A) THE PURPOSE OF THIS SECTION IS TO ENSURE THE PROMPT EXCHANGE 1
OF RELEASE DOCUMENTS AND PAYMENT OF SETTL EMENT PROCEEDS FOLLO WING 2
THE ORAL OR WRITTEN CONFIRMATION OF SETTLEMENT. 3

(B) (1) THIS SECTION APPLIES ONLY TO A TORT CLAIM FOR MONEY 4
DAMAGES. 5

(2) THIS SECTION DOES NOT APPLY TO AN INDIVIDUAL PAYING FOR A 6
SETTLEMENT WITH PERSONAL ASSETS. 7

(C) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , A SETTLING 8
DEFENDANT SHALL: 9

(I) PROVIDE A PROPOSED RELEASE TO A PLAINTIFF WITHIN 10 10
DAYS AFTER AN ORAL OR WRITTEN A GREEMENT FOR A SPECIFIED AMOU NT OF 11
MONEY TO RESOLVE A CLAIM BEFORE TRIAL; AND 12

(II) PAY ALL SUMS DUE TO T HE PLAINTIFF WITHIN 15 DAYS 13
AFTER: 14

1. THE PLAINTIFF PROVIDES T HE EXECUTED RELEASE 15
AND ANY APPLICABLE DOCUMENT REQUIRED UNDER SUBSECTION (D) OF THIS 16
SECTION; OR 17

2. IF COURT APPROVAL IS RE QUIRED BY LAW OR AS 18
PART OF THE SETTLEME NT AGREEMENT, COURT APPROVAL OF THE SETTLEMENT 19
AGREEMENT. 20

(2) DURING A TIME PERIOD DESCRIBED IN PARAGRAPH (1) OF THIS 21
SUBSECTION, THE PARTIES MAY MUTUALLY AGREE TO AN EXTENSION OF THE TIME 22
PERIOD. 23

(D) IF THERE IS A KNOWN A ND ASSERTED THIRD –PARTY RIGHT OF 24
RECOVERY OR SUBROGAT ION INTEREST , INCLUDING AN ATTORNE Y’S LIEN , A 25
HEALTH CARE PROVIDER LIEN, OR A RIGHT OF RECOVERY ASSERTED BY MEDICARE, 26
THE CENTERS FOR MEDICARE AND MEDICAID SERVICES, MARYLAND MEDICAID, 27
OR A PRIVATE HEALTH INSURANCE COMPANY , A PLAINTIFF MAY PROT ECT THE 28
THIRD PARTY’S RIGHT OF RECOVERY OR SUBROGATION INTER EST BY TENDERING 29
TO A SETTLING DEFENDANT: 30

(1) FOR AN ATTORNEY ’S LIEN , A SIGNED RELEASE OF THE 31
ATTORNEY’S LIEN; 32
HOUSE BILL 526 3

(2) FOR A HEALTH CARE PROVIDER LIEN: 1

(I) A SIGNED RELEASE OF THE HEALTH CARE PROVIDER LIEN; 2

(II) A LETTER FROM THE PLAINTIFF’S ATTORNEY OR LANGUAGE 3
IN A MUTUALLY AGREED ON RELEASE STATING T HAT THE PLAINTIFF ’S ATTORNEY 4
WILL HOLD THE FULL AMOUNT OF THE CLAIMED LIEN IN THE IOLTA ACCOUNT OF 5
THE PLAINTIFF’S ATTORNEY PENDING FINAL RESOLUTION OF THE LIEN AMOUNT; OR 6

(III) DOCUMENTATION OF ANY OTHER METHOD OF RESOLUTION 7
OF THE LIEN OR RIGHT OF RECOVERY AS AGREED TO BY THE PARTIES; OR 8

(3) FOR A RIGHT OF RECOVERY CLAIMED BY A HEALTH INSURER: 9

(I) DOCUMENTATION OF AN A GREEMENT BETWEEN THE 10
PLAINTIFF AND MEDICARE, THE CENTERS FOR MEDICARE AND MEDICAID 11
SERVICES, MARYLAND MEDICAID, OR PRIVATE HEALTH IN SURANCE COMPANY 12
REGARDING THE AMOUNT OF THE SETTLEMENT TH AT WILL BE ACCEPTED IN 13
SATISFACTION OF THE RIGHT OF RECOVERY; 14

(II) A LETTER FROM THE PLAI NTIFF’S ATTORNEY , OR 15
LANGUAGE IN A MUTUAL RELEASE, AGREEING TO HOLD THE FULL AMOUNT OF THE 16
CLAIMED RIGHT TO REC OVERY IN THE PLAINTI FF’S IOLTA ACCOUNT PENDING 17
FINAL RESOLUTION OF THE AMOUNT OF THE RIGHT TO RECOVERY; OR 18

(III) DOCUMENTATION OF ANY OTHER METHOD OF RESOLUTION 19
OF THE LIEN AS AGREED TO BY THE PARTIES. 20

(E) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , A 21
SETTLEMENT AMOUNT SHALL ACCRUE INTEREST AT THE LEGAL RATE OF INTEREST 22
ON A JUDGMENT, ASSESSED BEGINNING THE DATE THE PARTIES REACH AN ORAL OR 23
WRITTEN SETTLEMENT AGREEMENT, AND UNTIL PAYMENT IS MADE IF: 24

(I) THE SETTLING DEFENDANT D OES NOT PROVIDE A DR AFT 25
RELEASE AS REQUIRED UNDER SUBSECTION (C)(1)(I) OF THIS SECTION; OR 26

(II) THE SETTLING DEFENDAN T DOES NOT PAY ALL SUM S DUE 27
AS REQUIRED UNDER SUBSECTION (C)(1)(II) OF THIS SECTION. 28

(2) THE P ARTIES MAY MUTUALLY AGREE TO A N INTEREST RATE 29
DIFFERENT THAN THE INTEREST RATE DESCRIBED IN PARAGRA PH (1) OF THIS 30
SUBSECTION, BUT AN AGREEMENT MAY NOT WAIVE THE ACCRUAL OF INTEREST. 31
4 HOUSE BILL 526

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to 1
apply only prospectively and may not be applied or interpreted to have any effect on or 2
application to any settlement agreement ratified before the effective date of this Act. 3

SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 4
October 1, 2026. 5