USA – MARYLAND Trends and Developments Contributed by: Bryan D. Bolton, James F. Taylor and Brett Baulsir, Funk & Bolton, P.A.
scape surrounding artificial intelligence (AI) in litigation and in the insurance industry. The US District Court for the District of Maryland (the “Court”) recently issued Standing Order 2026-03 (the “Order”) addressing the use of AI in court filings. The Order states that when litigants present a pleading, written motion, or other paper to the court, they are certifying the legal positions are warranted by existing law and factual representations have evidentiary support pursuant to Federal Rule of Civil Procedure 11. Despite this “clear directive”, the Order notes how litigants, increasingly relying on generative AI, have submitted filings that “include non-existent case citations, fake quotations, and unsupported factual assertions”. The Order cau- tions attorneys and unrepresented parties to verify the accuracy of all filings prior to submission, “especially when relying on AI”, and notes that filings with “fake or hallucinated citations, quotations, or representations may be subject to Rule 11 sanctions…”, including, inter alia, dismissal, filing restrictions, monetary sanc- tions, and any other sanction deemed appropriate by the presiding judge. Further, the presiding judge may refer attorneys to the Court’s Disciplinary and Admis- sions Committee for investigation and appropriate discipline for related violations. In 2024, the MIA also adopted guidance on the use of AI by insurers. Maryland Insurance Bulletin No. 24-11 reminds carriers they must comply with all applicable insurance law and regulations, including unfair trade practices and unfair discrimination laws, when mak- ing decisions or taking actions impacting consumers made or supported by advanced analytical and com- putational technologies. The Bulletin sets forth the MIA’s expectations as to how carriers will govern the development/acquisition and use of certain AI tech- nologies and advises carriers of the type of informa- tion and documentation the MIA may request during an investigation or examination of any carrier regard- ing its use of such technologies and AI systems. The MIA is also participating in a pilot programme from March to September 2026 to test and gather feed- back on a new AI Systems Evaluation Tool (the “AI Tool”) developed by the National Association of Insur- ance Commissioners (NAIC). The AI Tool is intended to provide a structured way for regulators to under- stand how insurers use AI, assess the effectiveness of governance practices in managing related risks,
and identify where additional oversight, training, and improvements may be needed. The AI Tool is slated to be considered for adoption at the NAIC’s National Meeting in November 2026. From a traditional judicial litigation perspective, the Supreme Court of Maryland has long followed the law of objective interpretation of contracts. The Supreme Court of Maryland’s recent insurance decisions con- tinue to reflect the court’s contract-focused perspec- tive. The Supreme Court of Maryland’s decision in CareFirst BlueChoice , Inc . v Skipper , 493 Md. 681 (2026), however, recognises that insurance contract language designed to meet statutory or regulatory requirements cannot be read in isolation, but must be read in the context of the related statutory and regulatory language. In Bowens v State Farm Mutual Automobile Insurance Company , 492 Md. 608 (2025), the Supreme Court of Maryland considered whether, for purposes of determining the Maryland District Court’s USD30,000 jurisdictional threshold under § 4-401 (1) of the Mary- land Courts and Judicial Proceedings Article (CJP), the phrase “debt or damages claimed” included only the amounts a plaintiff sought to recover in uninsured or underinsured (UIM) benefits from his own insurer, or also included sums previously paid to the insured by a tortfeasor’s liability insurer. George Bowens was injured in an automobile accident with an underinsured motorist, who the parties agreed was negligent. The underinsured motorist had automobile liability insur - ance with a USD30,000 limit; this sum was offered to Bowens in satisfaction of his claims against the under- insured motorist. Bowens forwarded the settlement offer to his UIM carrier, State Farm Mutual Insurance Company (“State Farm”), which consented to settle- ment and waived subrogation pursuant to procedures established for UIM coverage under Maryland’s Insur- ance Article. Bowens accepted the USD30,000 policy limits settlement offer, then filed a claim with State Farm for the remaining USD20,000 available under his own USD50,000 UIM policy. State Farm denied his claim. Bowens then filed a breach of contract lawsuit against State Farm in the District Court of Maryland, which has jurisdiction over contract claims “if the debt or damages claimed do
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