The term basket case denotes someone, or something, that is incapable of functioning normally.

Of American-English origin, this term initially denoted a soldier who had lost all four limbs during the First World War—as stated in the following from the Cleveland Plain Dealer (Cleveland, Ohio) of Saturday 18^th January 1919:

Absurd Stories Without Basis
No “Basket Cases” in Big New York Hospital, Correspondent Says.
By Karl K. Kitchen.

New York, Jan. 17.—I have just spent the greater part of a day in the largest military hospital in America. For “Debarkation Three,” as the United States Military Debarkation hospital No. 3 is called, with its 3560 beds has the largest bed capacity of any military hospital on this side of the Atlantic. As it occupies the old Greenhut department store building at 6^th avenue and 18^th street it is easily accessible and contrary to the prevailing opinion it is open to anyone who wishes to visit it.
For many weeks there have been rumors that wards of “basket cases”—soldier patients minus both arms as well as both legs—were in existence at this hospital. There have been rumors of terrible tragedies—meetings between fathers and horribly mutilated sons which ended in murders, followed by suicide. Other stories of wives who jumped out of the upper windows when they met their armless and legless husbands, have also gone the rounds. In fact, these rumors have been so persistent that the writer decided to visit the hospital and find out for himself if there was the slightest basis of truth for even the mildest tale.
Accompanied by an orderly, who had instructions to take me wherever I wanted to go, I visited every part of the great hospital and talked with dozens of patients in the various wards of the absurd rumors that are floating around. In addition I talked with Capt. W. E. Lang, the assistant to the commanding officer, who was one of the medical officers who planned and built the hospital as it stands today. And this is what I learned.
There is not a single “basket case” in “debarkation No. 3” at the present time. And what is more, there has never been a basket case in any of its wards since they were first opened. In other words there is no soldier in the hospital minus both arms as well as both legs and there never has been such a case there. Consequently the rumors of the existence of such patients, with the additional affliction of blindness, are utterly false. And as no such cases have ever existed there the stories of fathers who have shot their wounded sons and then committed suicide, the stories of the wives who jumped from the upper windows when they saw their armless husbands and so on ad nauseam, are too ridiculous for words. Yet they have been repeated thousands of times and what is more remarkable they have been believed by thousands of intelligent Americans.
“Every day we have people come here and ask to see the ‘basket cases’,” said Capt. W. E. Lang. “They are well intentioned people who want to do something for these poor unfortunates, as they call them. I have the hardest time convincing them that we have no such cases. If they seem unwilling to believe me I give them the freedom of the hospital and let them search for themselves. We have not had a single basket case since the hospital has been in existence and a good many thousand cases have passed through its wards. At the time we are running very light—only 1,700 patients—but we have been pretty full at times.
“At the present time there are only five men in the hospital who have lost both legs,” continued Capt. Lang. “All five of these men not only have both arms intact, but they are in excellent condition in every other particular. So you see that these absurd rumors are utterly without foundation.
“I wish you would make it plain to the public that there are no basket cases over there,” continued Capt. Lang. “There are enough badly crippled soldier boys without inventing these horrors. Nor have we any patients who were mutilated by the Germans. The stories about them are lies made of the same cloth as the basket cases.”

The term basket case originated in the fact that the soldiers who had lost all four limbs had to be transported in baskets—as one Private Bernard Keys, who had fought on the Western Front, explained in an interview published in the Dayton Evening Herald (Dayton, Ohio) of Friday 7^th March 1919:

“What were the saddest incidents which came into your military life at the front?”
“The basket cases,” was the answer. They were the most pitiable. Those are the soldiers who are carried off the field in baskets; without arms, legs, eyes—and who remain always in the baskets—helpless. There were 14 such cases on board ship coming to America. Yes, I think they are the saddest cases.”

The earliest instances of basket case that I have found are from Canada Pays the Price of War and Talks Not of Peace, by E. Arthur Roberts, published in the Cleveland Plain Dealer (Cleveland, Ohio) of Sunday 7^th July 1918:

Toronto knows all about the “basket cases.” The people know they come with each train load of wounded. They know that these wicker baskets hold poor fellows who will never walk again, never talk, never hear the sound of a human voice, never see the sunlight.
Some will be patched up. Skilled surgeons and devoted nurses are working miracles in Toronto’s military hospitals, but there are “basket cases” for whom the summons of the Great Reaper will come as a merciful release.
It isn’t want of sympathy that causes the crowd to disperse before the “basket cases” are removed from the trains. It isn’t because Toronto is afraid to learn the worst that the doctors and nurses stay out of sight until the crowds have gone. This way it saves a few needless heartaches.

The second-earliest occurrences of basket case that I have found are from The Redwood Gazette (Redwood Falls, Minnesota) of Wednesday 1^st January 1919:

No “Basket” Cases

There are no “basket” cases here or in France.
If you have heard the story, you know what is meant. Sometimes his wife falls dead, sometimes his mother loses her mind, sometimes his father commits suicide. Always some one dear to someone else has been returned from the front in a “basket”, having lost both legs, both arms, and sometimes an eye or two.
For the benefit of those who may have been tortured by the tale, the Red Cross announces that—on the authority of Surgeon General Ireland—there are no such cases among American soldiers in this country or France. Needless to say, the Reconstruction Hospital at Snelling has never heard of such a case.
In the future any person hearing such a story should get the name and military designation of the patient, the place of observation, and the name and address of the one reporting. This should be sent to the Northern Division of the American Red Cross. The case will be investigated, the offender will be notified of the truth. There are no “basket” cases.—Bulletin.