Detailed Answer

Short answer: Yes — some medical and chiropractic providers, and some government health programs, can reduce the money you receive from a personal-injury settlement in Hawaii. Which bills get deducted depends on who paid the bills, whether a provider has a valid lien or subrogation claim, and whether you or your attorney negotiate or resolve those claims before the settlement becomes final.

This explanation breaks down the common situations, the legal basis you are likely to encounter in Hawaii, and practical steps to protect your recovery.

Who can claim money from your settlement?

• Private medical providers (doctors, chiropractors, hospitals, clinics): Providers who treated you may assert an unpaid bill as a debt or seek to be paid from the settlement by claiming a lien, an assignment of benefits, or by stating they expect payment from the settlement proceeds. In many cases providers will demand payment and some will negotiate reductions.
• Health insurers and ERISA plans: If an insurer or employee benefit plan paid some or all of your medical bills, it may have a contractual or legal right to be reimbursed (subrogation or reimbursement). For employer-sponsored plans governed by ERISA, the plan’s written terms and federal law can control the plan’s ability to recover from your settlement.
• Medicare and Medicaid (government programs): Federal Medicare and Hawaii Medicaid (Med-QUEST) have mandatory recovery rights when they pay for medical treatment that relates to a claim against a third party. These programs typically require reimbursement from settlements or judgments. Federal rules (Medicare) and state-administered Medicaid rules apply.
• Workers’ compensation: If workers’ comp paid for treatment related to a workplace injury, the carrier likely has a lien or subrogation claim against any third-party recovery.

What legal authority controls these claims in Hawaii?

Hawaii’s statutory and regulatory scheme, contract law, and federal law (when applicable) control these claims. For statutes and for a search of Hawaii Revised Statutes, consult the Hawaii Legislature website: https://www.capitol.hawaii.gov/hrscurrent/. For Medicaid (Med-QUEST) third-party liability information, see the Hawaii Med-QUEST Division: https://health.hawaii.gov/medquest/. For Medicare secondary payer rules and repayment obligations, see the Centers for Medicare & Medicaid Services: https://www.cms.gov/.

How settlements are typically handled

When you (or your attorney) settle a personal-injury claim, the insurance company will issue settlement funds. The total available settlement is first reduced by attorney fees and litigation costs (if you used a contingency-fee lawyer). After that, outstanding liens, subrogation claims, and unpaid medical bills may be resolved in different ways:

• Some providers accept a negotiated lump-sum compromise (often a percentage of the billed amount).
• Insurers, Medicaid, Medicare, or ERISA plans may demand full or partial repayment and will provide a demand letter or statement of claim amount.
• Disputed claims can be resolved by negotiation, through escrow, or by court action (for example, an interpleader or a court-approved allocation of funds).
• If you do not address liens, a provider or payer can pursue collection from your share of the settlement.

Special note about Medicare and Medicaid

Medicare and Medicaid repayment obligations are different from ordinary private-provider debts. Medicare (a federal program) often requires that conditional payments be repaid from any third-party settlement and enforces repayment under federal rules. Hawaii Medicaid (Med-QUEST) also asserts recovery rights when the State pays medical care tied to a third-party claim. You must contact the responsible government agencies to obtain accurate payoff figures and to arrange resolution before you finalize the settlement.

What you should expect in Hawaii

• If a provider properly files a lien or shows a valid subrogation right, you should expect at least some portion of your gross settlement to be used to satisfy that claim unless you negotiate otherwise.
• Some providers will accept a reduced payoff; many insurers and government payors will negotiate, but Medicare requires formal processes to resolve conditional payments.
• Attorney fees and court-approved costs are usually paid first, then lienholders are addressed according to priority, contracts, and applicable law.

What to do before you sign a settlement

1. Request in writing all lien and subrogation statements from every entity that paid or provided your care. You need itemized bills and written demands or lien paperwork.
2. Notify Medicare, Med-QUEST (Hawaii Medicaid), your private insurer, and any workers’ comp carrier early. Each program has specific procedures and timelines for obtaining payoff amounts.
3. Ask for a written payoff demand with a deadline. For government programs, follow their published procedures to avoid later surprise claims.
4. Negotiate reductions where possible. Providers often settle for less than billed amounts. Put any agreement in writing and demand a lien release or satisfaction.
5. Use escrow or a court-supervised process if multiple claimants dispute priority. This can protect your distribution while claimants sort out rights to the money.
6. Get a written agreement from the settling parties that the settlement fully releases future claims by providers or that the insurer will pay off specified liens from the proceeds.

When you should get an attorney

If the settlement involves multiple liens, Medicare/Medicaid or ERISA claims, or if providers demand large or unclear payoffs, you should consult an attorney experienced with lien resolution and subrogation. An attorney can:

• Collect accurate payoff figures;
• Negotiate compromise amounts;
• Draft settlement language that protects you;
• Set up escrow or interpleader if needed.

Important: This article explains common rules and practical steps but does not replace direct legal advice about your specific case. Laws and procedures change; your facts may require tailored legal work.

Disclaimer: This is educational information, not legal advice. Consult a licensed Hawaii attorney for guidance specific to your situation.

Helpful Hints

• Ask for written lien payoff statements early — don’t wait until the day of settlement.
• Contact Medicare and Med-QUEST immediately if they paid for your treatment; they have formal payoff processes that can take time.
• Get any payoff or lien release in writing before you accept funds.
• Expect attorney fees and case costs to be deducted before lien resolution; plan accordingly.
• If you see a huge demand from a provider, ask for an itemized bill and push to negotiate a reasonable compromise.
• Keep clear records of who paid what, copies of medical bills, and all correspondence about liens.
• When in doubt, have an experienced Hawaii personal-injury attorney review settlement documents before you sign.
• Use the Hawaii Legislature site to locate any state statutes or to search terms like “lien” or “subrogation”: https://www.capitol.hawaii.gov/hrscurrent/.
• For Medicaid/Med-QUEST recovery questions visit: https://health.hawaii.gov/medquest/; for Medicare MSP rules visit: https://www.cms.gov/.