Will medical or chiropractor liens be deducted from my settlement funds?

Short answer: Yes — medical providers, including chiropractors, insurance plans, and government health programs can often seek repayment from a personal-injury settlement. Whether, how much, and in what order those amounts are deducted depends on whether there is a valid lien or assignment, federal or state subrogation rules (for Medicare/Medicaid), and any negotiations or court approvals. This article explains how those claims typically work in South Dakota and what you can do to protect more of your recovery.

Detailed Answer

1. What is a medical lien or reimbursement claim?

A medical lien or reimbursement claim is a legal or contractual right a health-care provider, hospital, insurer, or government program has to be repaid from money you recover for injuries caused by someone else. Common forms include:

• Provider lien or billing claim: a provider demands payment from the settlement for services rendered.
• Assignment of benefits: you signed paperwork assigning your right to payment from a third party (like an insurer or at-fault party) to the provider.
• Health-plan subrogation: your private insurer pays your medical bills and then asserts a right to be repaid from your recovery (subrogation).
• Government repayment: Medicaid (South Dakota Medical Assistance) and Medicare can demand repayment for services those programs paid.

2. How do these claims work in South Dakota?

South Dakota recognizes contractual assignments and liens where a provider has properly preserved its claim. The exact mechanics and priority depend on the type of claim (private provider vs. insurer vs. government). For details of state law and relevant statutes, you can search the South Dakota Codified Laws here: https://sdlegislature.gov/Statutes/. Use the site’s search to look for terms like “lien,” “subrogation,” and “assignment” to find the statutes most applicable to your situation.

3. Who can take money from a settlement?

• Private medical providers (doctors, chiropractors, hospitals) — if they have a valid lien or you assigned your right to them.
• Your health insurer — if the plan contract allows subrogation or reimbursement claims.
• Medicaid (South Dakota Medical Assistance) — the state can seek repayment for services paid on your behalf.
• Medicare — the federal program can make a conditional payment and later seek reimbursement from your settlement.

4. Order of payment and priorities

There is no single universal rule that applies to every claim. Typical priorities that affect how settlement funds are distributed:

• Attorney’s fees and litigation costs: often deducted first because they are the cost of obtaining the recovery, but the exact allocation may be negotiated or determined by fee agreement and case law.
• Government claims (Medicaid, Medicare) may have statutory priority or practical leverage; these agencies often insist on repayment.
• Private provider liens and insurer subrogation claims: their pay priority can depend on whether they recorded or filed notices, whether you assigned benefits, and negotiations.

Because the priorities can be complicated, it is common for attorneys to negotiate reductions or structured payments that protect a larger portion of the client’s net recovery.

5. Common scenarios (hypothetical examples)

Example A — No signed assignment, provider didn’t file lien: A chiropractor treated you but never filed paperwork or got an assignment. The chiropractor may have a billing claim against you but may lack an enforceable lien on settlement proceeds. You can often negotiate reduction or payment plan.

Example B — Insurance subrogation: Your health insurer paid your bills and your policy contains a subrogation clause. After you settle with the at-fault party, the insurer will demand repayment for amounts it paid. South Dakota law and your plan rules determine the insurer’s rights and any allowable reduction.

Example C — Medicaid/Medicare: If Medicaid or Medicare paid for your care, those programs can require reimbursement out of your settlement. Federal rules (for Medicare) and state Medicaid rules apply; often you must contact the program before settlement to resolve the claim.

6. What steps should you take before you accept a settlement?

1. Get a full list of medical providers and bills tied to the injury.
2. Ask each provider whether it has a lien or an assignment and request written statements of any claimed amounts.
3. Ask your health insurer for its subrogation demand and documentation.
4. Check whether you received Medicaid or Medicare for the injury and contact the appropriate agency’s recovery unit for payoff procedures (Medicaid recovery numbers and Medicare conditional payment processes vary).
5. Demand itemized bills and lien statements to verify amounts and dates of service.
6. Negotiate — many providers and insurers will accept less than the full billed amount to resolve claims promptly.
7. Ensure your attorney secures written lien releases or payoff letters before disbursing settlement funds.

7. How to reduce liens or avoid unfair deductions

• Negotiate reductions with providers (they often accept a percentage).
• Argue that certain bills are unrelated to the injury or were not reasonable/necessary.
• Challenge insurer subrogation amounts by auditing bills and payments and asserting allowable offsets (e.g., attorney-fee proportions some courts allow).
• For Medicare/Medicaid, follow the programs’ pre-settlement dispute and conditional-payment resolution procedures to prevent larger recovery demands later.

8. When should you involve an attorney?

If providers, insurers, or government programs claim repayment, hire an attorney experienced in South Dakota personal-injury and reimbursement/subrogation law before you finalize a settlement. An attorney can:

• Identify all potential lien holders and payors.
• Negotiate lower payoffs and structured settlements.
• Ensure fee agreements and lien priorities are fair and documented.

9. Where to find South Dakota laws and government resources

South Dakota’s codified laws are available online; you can search the statutes here: https://sdlegislature.gov/Statutes/. For questions about state Medicaid liens or third-party liability, check the South Dakota Department of Social Services (Medicaid) at: https://dss.sd.gov/. For federal Medicare conditional payment recovery guidance, see the Centers for Medicare & Medicaid Services: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-overview.

Helpful Hints

• Do not sign away your right to pursue a claim without understanding any assignment of benefits language — assignments can give providers direct access to settlement funds.
• Request written payoff letters and lien releases before funds are distributed.
• Get an itemized bill for every provider and verify that charges are related to the accident.
• If Medicare or Medicaid may be involved, resolve conditional payment or repayment demands before settling. Federal and state programs have their own claim procedures and deadlines.
• Ask your attorney to show how attorney fees and costs will be allocated and whether liens will reduce your net recovery.
• Negotiate: many providers prefer a quick reduced payoff to the uncertainty of litigation over a small net recovery.
• Keep careful records of all authorizations, assignments, and communications about payments and liens.

Disclaimer: This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. Laws change and every case is different. Consult a licensed South Dakota attorney to get advice specific to your situation.