arXiv:2605.00675v1 Announce Type: new Abstract: Medical imaging datasets are often characterized by extreme class imbalances, where rare pathologies are significantly underrepresented compared to common conditions. This imbalance poses a dual challenge for Open-Set Recognition (OSR): models must maintain high classification accuracy on known classes while reliably rejecting unknown samples unseen during training in the clinical settings. While recently proposed Deep Simplex Classifier (DSC)~\cite{cevikalp2024reaching} and UnCertainty-aware Deep Simplex Classifier (UCDSC)~\cite{Aditya_2026_WACV} successfully leverage Neural Collapse to ensure maximal inter-class separation, they rely on a uniform margin that does not account for the varying densities of medical classes. In this paper, we propose DMDSC an enhanced framework featuring a dynamic margin approach. Our approach automatically adapts class-specific margins based on label frequency, enforcing a higher penalty and tighter feature clustering for rare pathologies to counteract the effects of data imbalance. Extensive experiments conducted on diverse medical benchmarks on BloodMNIST\cite{medmnistv2}, OCTMNIST\cite{medmnistv2}, DermaMNIST\cite{medmnistv2}, and BreaKHis~\cite{spanhol2015dataset} datasets, demonstrate that our framework outperforms state-of-the-art methods.